Britain's Economy: The Roots of Stagnation

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052130816X

It has long been recognised that Britain has declined relatively to other countries, although there are differences of view both on the beginning of the decline and its causes. The author pinpoints two causes: first, a technological inferiority which has resulted in the country's exporting goods of poorer quality and importing goods of higher quality; secondly, the tendency for an upward pressure on incomes, from a society of political equals where each individual has expectations of a level of income reasonably comparable with others. The claims of different groups are easily accommodated in a semi-monopolistic industrial structure and are passed on in higher prices. Keynes recognised the latter problem of cost-push; but his intellectual revolution was not accompanied by a change of institutions, which continued to act in accordance with an earlier tradition. The present Government has reached a false diagnosis in ascribing the country's problems to too much money. It has therefore worsened the situation and weakened such hopes as there were of improvement.