Table Of ContentEconomic Growth in Twentieth-century Britain
Other books by Derek H. Aldcroft
BRITISH RAILWAYS IN TRANSITION
THE ECONOMIC PROBLEMS OF BRITAIN'S RAILWAYS
SINCE 1914
With H. W. Richardson
BUILDING IN THE BRITISH ECONOMY BETWEEN
THE WARS
Editor and author of
THE DEVELOPMENT OF BRITISH INDUSTRY AND
FOREIGN COMPETITION, 1875-1914
Editor and author with H. W. Richardson
THE BRITISH ECONOMY 1870-1939
J.
With H. Dyos
BRITISH TRANSPORT: AN ECONOMIC SURVEY FROM
THE SEVENTEENTH CENTURY TO THE TWENTIETH
Economic Growth
in Twentieth-century
Britain
Edited hy
DEREK H. ALDCROFT
PETER FEARON
Palgrave Macmillan
ISBN 978-0-333-10595-5 ISBN 978-1-349-15344-2 (eBook)
DOI 10.1007/978-1-349-15344-2
Introduction, editorial matter and selection
© Derek H. Aldcroft and Peter Fearon 1969
Chapter II © T. Wilson 1969
Softcover reprint of the hardcover 1St edition 1969 978-0-333-10041-7
Published in I969 by
MACMILLAN AND CO LTD
Little Essex Street London WC2
and also at Bombay Calcutta and Madras
Macmillan South Africa (Publishers) Pty Ltd Johannesburg
The Macmillan Company of Australia Pty Ltd Melbourne
The Macmillan Company of Canada Ltd Toronto
Gill and Macmillan Ltd Dublin
Contents
Preface vii
Acknowledgements viii
Introduction ix
1 Production and Productivity 1920-1962 C. H. Feinstein 1
2 Growth and Productivity in the United Kingdom K. S.
Lomax 10
3 Economic Growth in Britain in the Inter-War Years: A
Reassessment Derek H. Aldcrojt 34
4 Growth in the Inter-War Period: Some More Arithmetic
J. A. Dowie 55
5 Some Aspects of Post-War Growth in the British Economy
in Relation to Historical Experience R. C. O. Matthews 80
6 Britain's Growth Performance: The Enigma of the 1950S
John Knapp and Kenneth Lomax 101
7 The Growth of Services in the Economy: I. Their Stabilis-
ing Influence C. W. McMahon and G. D. N. Worswick 125
8 The Growth of Services in the Economy: II. Do They Slow
Down Overall Expansion? C. W. McMahon and G. D. N.
Worswick 138
9 Goods and Services Once Again G. D. N. Worswick and
C. G. Fane 151
10 The Management of the British Economy F. W. Paish 166
I I Instability and Growth: An International Comparison,
1950-65 T. Wilson 184
12 Economic Growth and the British Balance of Payments
W. A. Eltis 196
13 Long-Term Growth and Short-Term Policy W. A. H.
Godley and J. R. Shepherd 208
Bibliographical Guide 233
Index 239
Preface
THIS volume contains a selection of some of the recent articles
written on the growth and development of the British economy in
the twentieth century. With one exception the articles appear as
published in the original apart from one or two minor revisions and
corrections. We should like to thank the authors, and the editors
of the journals concerned, for permission to reproduce them here.
D.H.A.
University of Leicester P. F.
Acknowledgements
THE editors and publishers wish to thank the following for permission
to reproduce the articles contained in this volume. They are listed in
the order in which they appear.
C. H. Feinstein, 'Production and Productivity 1920-1962', London
and Cambridge Economic Bulletin, Dec 1963 in The Times Review of
Industry and Technology.
K. S. Lomax, 'Growth and Productivity in the United Kingdom',
Productivity Measurement Review, XXXVIII (1964). The Appendix Table
to this article is reprinted from Journal of the Royal Statistical Society,
AI22 (1959).
Derek H. Aldcroft, 'EconoInic Growth in Britain in the Inter-War
Years: A Reassessment', Economic History Review, xx (1967).
J. A. Dowie, 'Growth in the Inter-War Period: Some More Arith
metic', Economic History Review, XXI (1968).
R. C. O. Matthews, 'Some Aspects of Post-War Growth in the
British Economy in Relation to Historical Experience', Transactions
of the Manchester Statistical Society (1964).
John Knapp and Kenneth Lomax, 'Britain's growth Performance:
The Enigma of the 1950s', Lloyds Bank Review (Oct 1964).
C. W. McMahon and G. D. N. Worswick, 'The Growth of Services
in the Economy: I. Their Stabilising Influence', District Bank
Review (Dec 1960).
C. W. McMahon and G. D. N. Worswick, 'The Growth of Services
in the Economy: II. Do They Slow Down Overall Expansion?',
District Bank Review (Mar 196 I ).
G. D. N. Worswick and C. G. Fane, 'Goods and Services Once
Again', District Bank Review (Mar 1967).
F. W. Paish, 'The Management of the British Economy', Lloyds
Bank Review, (Apr 1965).
T. Wilson, 'Instability and Growth: An International Comparison,
1950-65'. Based on a paper read to the Business Economists'
Conference held at Oxford in April 1968.
W. A. Eltis, 'Economic Growth and the British Balance of Payments',
District Bank Review (Dec 1967).
W. A. H. Godley and J. R. Shepherd, 'Long-Term Growth and
Short-Term Policy', National Institute Economic Review (Aug 1964).
Introduction
THE study of economic growth and development, both in a
theoretical and empirical context, has advanced rapidly in the last
two or three decades. In developed and underdeveloped countries
alike, planners, government officials and economists have beyn
anxiously seeking ways of raising rates of growth. Interest in growth
has not been confined solely to the present however. In fact a
by-product of the work in this field has been the collection of new
statistical time series on a long-term basis. Thus for Britain and a
number of other developed economies continuous statistical series
extending well back into the nineteenth century are now available
for such aggregates as national income, domestic output, capital
formation, industrial production and exports. It is, therefore, much
easier to compare the performance of different countries over time.
Yet although we now have a much better idea of the long-term
dimensions of growth we are still far from clear as to its causes.
This volume offers a selection of the most recently compiled
long-term economic indicators together with a number of essays
dealing with various aspects of growth and short-term fluctuations
in the twentieth century. These studies are primarily empirical in
nature and are concerned specifically with the British economy,
though in a number of cases comparative data for other countries
is used as a means of assessing British performance. Thus the main
statistical series are presented in the first two articles and then
followed by two dealing specifically with inter-war developments.
The fifth and sixth essays put Britain's recent growth performance in
historical perspective, while the next three deal with the develop
ment, and show the importance, of the service sectors. The remaining
essays are devoted largely to short-term problems of economic
growth and instability in the post-war period.
Although the general theme of growth is common to all the essays
contained in this volume the latter do not necessarily represent a
unanimous approach to the problems of Britain's growth in the
twentieth century. On some issues there is a certain amount of
conflict. From the reader's point of view it would be rather futile
x Introduction
simply to summarise the main points of each contribution. Each
one should be read in its entirety. On the other hand, it may be
helpful, especially to those approaching the subject for the first time,
if some of the main trends in the British economy over the past
half-century are examined in this introductory essay.
The chief concern in the last decade or so has been that of raising
the British rate of growth. Efforts in this direction eventually led to
the formulation of long-term plans in the 1960s which laid down
target rates of growth to be achieved over a period of five years. The
reason for this interest is quite simple. Since the war, or more
especially from the early 1950s, Britain's growth record has been
poor in comparison with that of most Western countries. This is
true whatever standard of measurement one uses! and it is one point
at least about which most economists are agreed. The British
record is fairly well known and only a brief resume need be given
here. In 1962 the Organisation for Economic Co-operation and
Development published a study showing that in the 1950S Britain
came bottom of a growth league ranking all member countries, and
that the U .K.'s rate of growth of gross national product was only
half that achieved by the six countries of the European Economic
Community.s Similarly, a recent study by Denison into the causes
of differences in growth between countries found that Britain's
growth of national income and income per capita was very much
lower than that of most west European countries over the period
1950-64, and only the United States had a lower rate of growth of
national income per capita. 3 Britain's relative position has not changed
very much in recent years. Given the magnitude of the lag it would
be impossible to explain away the poor British performance by
alternative criteria or methods of assessment.4
But what of the long-term record? How does the recent perform
ance compare with past trends? It is important to put the problem
in perspective since there is reason to believe that Britain's overall
rate of growth has never been very high. In fact the post-war record
compares very favourably with the long-term trend. In the fifteen
years or so from 1950 the British economy grew faster and more
steadily than at any time in the last hundred years, with the possible
exception of the third quarter of the nineteenth century. The long
term growth of income has been very modest indeed; between 1870
and 1913 real income per head rose by 1·6 per cent per annum
1 The main standard of measurement used here is national income.
s O.E.O.D., Ec()nomic Survey of the United Kingdom (1962).
3 E. F. Denison, Why Growth Rates Differ (196B) p. lB.
C See W. Beckerman, The British Economy in I975 (1965) p. 19.
