RODERICK FLOUD and PAUL JOHNSON (eds), The Cambridge Economic History of Modern Britain, Volume III: Structural Change and Growth, 1939–2000 (Cambridge: Cambridge University Press, 2004. Pp.xix + 473. H/back ISBN 0 521 52738 4, £70; p/back ISBN 0 521 82038 3, £24.99).
This is the final volume of a three-decker survey of modern British economic history that, despite appearances, is obviously the successor to the two earlier editions of 'Floud and McCloskey'. But appearances matter. This edition is encased in the larger format and emblazoned with the reassuring imprimatur of the general Cambridge history series.
The obvious question to ask is does this new image indicate a change of substance? Those who are familiar with Floud and McCloskey will immediately detect a softer tone in the new editors' opening comments. Floud and Johnson allow themselves no mention of 'new economic history'; instead they emphasise that these volumes belong to a tradition that aims to disseminate research and scholarship to as wide an audience as possible, though they add that 'this certainly does not obviate the use of the most ingenious and complex techniques to tease out the mysteries of the past'. But lest the reader should be alarmed by this warning, the editors emphasise that such alchemies 'are explained clearly, concisely and in language which anyone interested in the topic can understand'. These assurances are set within broader observations on the state of economic history as an academic pursuit, which amount to a justified claim that research in the subject remains vigorous and varied, combined with a recognition that all is not well in terms of student demand and the declining number of academic posts. Floud and Johnson are nothing if not optimistic, however; they point to the need to be careful to distinguish between cycle and trend, with emphasis on the former. But, perhaps, they ignore the effect of hysteresis.
There is a strong case to be made that the so-called 'new economic history', for all its intrinsic value, was frequently presented with a brashness, and at times arrogance, that deterred potential students of economic history and alienated many within the wider historical community. Some practitioners of the new approach – unencumbered by the need for archival research – frequently over-reached themselves as they sought to graft selective historical evidence onto the latest fashion in economic theory and sell it as economic history. It would be foolish, nevertheless, to attribute the difficulties that have engulfed the subject exclusively to this development. Were it so, the cure for current ills would be straightforward. There is reason to claim that, among other things, the subject has not been well served by academic bodies that should represent its interests; and as pressures on resources for teaching in higher education intensify, it is perhaps not surprising that undergraduates do not choose to study economic history but opt for softer alternatives on offer in the broader field of historical study. The need to regain lost ground is the laudable aim of Floud and Johnson. How well does the volume under review meet this challenge?
At the general level, it is possible to apply three tests to what is on offer: chronological coverage, topic range and level of difficulty. As to the first, there is one respect in which the reader might well be disappointed, namely, by the absence of a coherent treatment of the period 1945–50. Whilst important aspects of these years are picked up in some chapters – in particular, in those dealing with state ownership, monetary policy, the welfare state and regional development – more generally, discussion of this period tends to be brief and is used as an introduction to what is presented as the real story beginning in 1950. Yet a great deal of research has been done which has revealed how formative were the economic experiences and policies of this period for the remainder of the century. The return of a Conservative government in 1951 and the end of wartime controls can easily lead to the false impression of the emergence of a totally new post-war economic order.
In terms of topic range, this volume scores high marks. Floud and Johnson host 15 chapters as compared with 11 in the 1994 edition of Floud and McCloskey. New subjects included are technology, fiscal policy, regional development and industrial relations. But readers of this journal might well regret the omission of a chapter dealing with business organisation and development. As with the post-war period, aspects of this subject are dealt with in various chapters – indeed, on a number of occasions stress is laid on failures in management training and performance – but a separate treatment that drew on the large volume of research available would have been particularly helpful.
The other area that is not as well served as it might be is external economic relations. Obviously, chapters covering monetary and more general economic policy cannot avoid this issue, but significant gaps remain. One of the new chapters is that by Neal – 'Impact of Europe' – but unfortunately it amounts to a major lost opportunity: it is heavily narrative and fails to set Britain's economic relations with Western Europe within the context of Commonwealth relations and, more importantly, relations with the USA. It is amazing to see hardly any reference to such important studies in this connection as those by Milward and Strange.
It is inevitable that there are variations in levels of difficulty between the chapters simply because of the nature of the topics covered, but this is obviated by excellently presented tables and figures. The chapter by von Tunzelmann on technology is a model of how to link theory with empirical studies. In contrast, Howson's chapter on money and monetary policy since 1945 might reasonably cause students to struggle. In what is little more than an extended version of her earlier chapter in Floud and McCloskey, she first presents the reader with a survey of alternative monetary theories which is too compressed; and this section remains largely detached from the narrative of events that follows. Of course, this might be a fair reflection of reality.
What of the picture in detail? Howlett's opening chapter gives a clear insight into the impact of total war on the economy, but the editors might have allowed him a little extra space to develop more fully his quick-touch assessment of the long-term impact, and in this way added to the coverage of the immediate post-war period. The dominant theme of the chapters that follow is the interplay of policy and performance, though the balance necessarily varies. An overall evaluation of performance in comparative terms is provided by Kitson, who is good both at explaining economic theory and exposing its limitations in this context. Kitson places the emphasis firmly on relative decline and, in varying degrees, this view is common to most contributors.
Broadberry's analysis of manufacturing draws on his comparative study of Britain and the USA combined with some individual industry studies. He underlines the productivity lag of British manufacturing, though he does not get to grips with the inter-related problem of de-industrialisation. Performance is central to Hannah's discussion of nationalisation, and he illustrates it with a series of telling examples; and he is especially good on electricity generation. Whilst being critical of the record of state industries, he acknowledges that they can be efficient and thus the issue is not just one of ownership. The ambiguity of Hannah's conclusion in respect of state ownership versus privatisation reflects the fact that it is still too early to judge the outcome. State provision is obviously central to O'Mahoney's account of employment, education and human capital. She provides data that place Britain as losing out to both Germany and the USA.
As has been noted, Howson covers money and monetary policy, and this is paralleled in Watson's informative chapter on financial services. Her main point is that the exponential growth in this area has not been in any way matched by productivity; the record is not good either in comparison with other domestic sectors or within the international financial services sector.
The chapter on economic policy by Tomlinson is odd in two respects. First, he obviously prefers to discuss performance rather than policy, and does so within the context of a wider debate on economic decline. Policy is dragged in as and when, whereas it needs to be analysed within a framework of process, aims and effectiveness, even though in the last respect definitiveness is frequently impossible. The second oddity is that Tomlinson seems to have taken little account of other contributions when they were discussed at a conference convened specially for that purpose. But at least this might stimulate students to compare the claims made here – for example with regard to the alleged success of rapid structural change in the British economy – with the data and analysis provided by Kitson, Broadberry and von Tunzelmann, in particular.
Fiscal policy receives excellent treatment by Clark and Dilnot. They expose a number of canards concerning the nature and effects of government taxation and spending on the one hand and borrowing on the other. Clark and Dilnot make the important point that attention should be paid to political priorities as much as to economic constraints in exploring policy changes; and they find little evidence to support various versions of the 'crowding out' thesis.
Two of the new chapters as compared with Floud and McCloskey are those dealing with regional development and industrial relations. In the former, Scott provides a wide-ranging and informative survey that brings out the complexities involved. Scott demonstrates how difficult it is to evaluate the effectiveness of policy when judged against the realities of political economy. The survey of industrial relations by Brown stands with the chapter on Britain's relations with Europe as a major lost opportunity. It is too descriptive and does not engage effectively with matters of policy and performance. This is all the more surprising since the conclusion offers the challenging assertion: 'Trade unions are fundamentally reactive organisations ... The failures and achievements of trade unions in terms of the performance of the economy unavoidably reflect those of the employers with whom they deal'. Well, maybe.
It is a common occurrence for students to display a strong negative reaction to the subject of technology, but an outstanding chapter by von Tunzelmann should provide the necessary corrective. A clear exposition of theoretical concepts is matched by a sound grasp of historical evidence, the whole set within a comparative framework. The conclusion is that there is some justification for taking a mildly positive view of British technological performance until the 1970s, but that thereafter Britain significantly under-performed. Technical change is an important element in the account of the rise of the service economy by Millward. The chapter ties in well with those of Broadberry and von Tunzelmann, though it would have benefited from a little re-ordering: the explanation of the difficulties involved in measuring productivity and in defining the service sector would have been better placed earlier in the chapter.
The general approach of this volume is predominantly from the side of production as against distribution and consumption. Perhaps more attention should have been given to the latter, but there is a first-rate chapter by Johnson on the welfare state, income and living standards. Johnson examines the concept, structure and problems of the welfare state and highlights the growth in income inequality since the late 1970s, which, in effect, turned the clock back to the 1940s. He is careful, nevertheless, to place his analysis within the context of broader changes in social and economic structure and he provides a corrective to the simplistic view that welfare expenditure has been a drain on economic performance. Johnson's analysis demonstrates that the widespread popularity of the welfare state endures because its limited success (and in some senses its failure) in achieving significant redistribution, has kept the middle classes on-side.
The frame is certainly new and attractive, but what of the picture? Both in composition and detail the picture differs considerably from that portrayed by earlier editions of Floud and McCloskey. Whilst it remains firmly in the school of national income accounting (as the sub-title indicates), and is a little lacking in colour, it offers new perspectives; and, notwithstanding a few poor patches, it deserves to succeed in its aim to encourage readers to engage more widely with the subject. Floud and Johnson are right to claim that at the level of research, economic history is very much alive; but it must remain firmly a matter of hope that at the undergraduate level interest in economic history is experiencing a cyclical downturn and not a secular decline.
By BWE Alford
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