Artikel

Economische structuur en politiek: de Britse economie en politiek in de jaren zeventig, van Eduard Heath tot James Callaghan

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Abstract

Economic structure and politics. The British economy and policy in the seventies, from Eduard Heath to James Callaghan - The political development in Britain from July 1970 till now may be considered as a good example of the application of the law of convergence to economic policies in one country. In accordance with this law, political parties, no matter what their doctrinal principles, have to apply similar economic policies when in analogous economic structures they are confronted with the same economic problems. In 1970 the doctrine of the Conservative party could be seen as the complete opposite of the policy practised by the Labour government during their term of office. The Labour party had tried to increase economic growth and technological progress by systematic government intervention. To reduce the inflationary effects of such policies during the greater part of the time it was in office it practised a rather strict prices and incomes policy. The Conservatives promised to reduce government interference in trade and industry and to drop the prices and incomes policies restoring in this way the working of the free market mechanism. In order to reduce the monopolistic power of the trade unions they promised the electorate that they would introduce legislation dealing with the regulation of industrial relations, which would impose on the unions legal obligations preventing them from disrupting the working of the economic mechanism by strikes and excessive wage-claims. In 1970-71 the Conservative party attempted to apply its programme but circumstances obliged its leader, Mr. Heath, to return step by step to a policy akin to that practised by the previous Labour government. When he tried to curb the power of the unions, he succeeded in wooing them for about one and a half years, but then he had to face a sharp confrontation with the miners’ union. Their strike drove the British economy to the wall and when Mr. Heath appealed to the country for support for his resistance to their wage-claims he lost the election. The majority of the electorate clearly did not wish to be bothered and preferred a reconciliation as proposed by the Labour party rather than further confrontation between the government and the unions. The Labour party had promised more economic growth by means of the extension of the socialized sector, a return to free negociations on wage-claims between the unions and the organisations of British enterprises, and last but not least a more egalitarian fiscal and social policy. 209 When in March 1976 Harold Wilson left the premiership to James Callaghan, he had already given up trying to realise these goals. The Labour government had from the outset increased the fiscal rates on high incomes and the taxes on luxury goods. However, to push up the very low rate of industrial investment to an acceptable level the same government was obliged to grant big fiscal favours and government subsidies to investing firms, introducing in this way a brake on the further equal distribution of incomes. The strong increase in the cost of living that followed upon the raising of oil prices at the end of 1973 and the beginning of 1974 led to such wage hikes that the Labour government had to resume the incomes policy, in the hope of reducing in this way the rate of inflation. Thus the history of the last six years has shown that the leaders of the Labour party as well as those of the Conservative party are driven by circumstances and fear of the floating vote to a middle-of-the-road policy. By such a policy they have tried to reduce inflation, unemployment and the balance of payments deficit to bearable proportions, but have not been able to eliminate the structural deficiencies of the British economy.

How to Cite:

Van De walle, G., (1976) “Economische structuur en politiek: de Britse economie en politiek in de jaren zeventig, van Eduard Heath tot James Callaghan”, Tijdschrift voor Sociale Wetenschappen 21(3), 208–239. doi: https://doi.org/10.21825/tvsw.96032