BRITISH INDUSTRY AND ECONOMIC POLICY By the same author THE INDUSTRIAL DEVELOPMENT OF BIRMINGHAM AND THE BLACK COUNTRY BRITISH INDUSTRIES AND THEIR ORGANISATION THE STRUCTURE OF INDUSTRY IN BRITAIN MONOPOLY AND RESTRICTIVE PRACTICES A SHORT ECONOMIC HISTORY OF MODERN JAPAN JAPAN'S ECONOMIC EXPANSION BRITISH INDUSTRY AND ECONOMIC POLICY G. C. Allen Emeritus Professor of Political &onomy, University of London © G. C. Allen 1979 Softcover reprint of the hardcover 1st edition 1979 978-0-333-25972-6 All rights reserved. No part of this publication may be reproduced or transmitted, in any form or by any means, without permission First published 1979 by THE MACMILLAN PRESS LTD London and Basingstoke Associated companies in Delhi Dublin Hong Kong Johannesburg Lagos Melbourne New Tork Singapore Tokyo British Library Cataloguing in Publication Data Allen, George Cyril British industry and economic policy l. Great Britain-Industries-History-20th century 2. Great Britain-Economic policy- 1918-1945 3. Great Britain-Economic policy- 1945- I. Title 338.941 HC256 ISBN 978-1-349-04477-1 ISBN 978-1-349-04475-7 (eBook) DOI 10.1007/978-1-349-04475-7 In memoriam Eleanorae conJugis amantissimae Contents Preface IX Introduction 1 2 Structural Changes in the 1920s 16 3 Industrial Organisation in the West Midlands, 1860-1927 20 4 Labour Mobility and Unemployment 33 5 Economic Thought and Contemporary Economic ~cy ~ 6 State Intervention in Industry 62 7 The Reorganisation of Contracting Industries 74 8 Economic Planning and Private Enterprise 87 9 The Efficiency of British Industry 103 10 Industrial Prospects in the Early 1950s 115 11 Economic Progress, Retrospect and Prospect 127 12 Restrictive Practices m the Copper-Mining Industry 144 13 Policy Towards Competition and Monopoly 155 14 Britain's Economic Performance in the 1960s 171 15 A Critical Appraisal of Galbraith's Thinking 179 16 Economic Advice for Lloyd George 196 Notes and References 208 Index 215 Preface The papers collected and presented in this book were written over a period of 55 years; the earliest of them was first published in 1923, and two of the latest in 1975. The majority deal with some aspect of the structure and organisation of British industry or with economic policy as it has affected industrial efficiency. I have followed the principle of presenting the papers with their original content and form unchanged, except where verbal changes, or even the recasting of sentences, seemed necessary in the interests of clarity or style. There are, however, two exceptions. The argu ments and proposals contained in a few paragraphs of the paper that now appears as Chapter 4 have been overtaken by events, and there was no point in republishing them in full. The other exception is provided by Chapter 13 which is the result of con Bating two papers, one read at a conference in 1970 and the other at a seminar in 1973. I have tried, in an Introduction, to indicate in summary form the burden of the several papers and, at the same time, to bring out whatever themes they have in common. I express my thanks to the following for permission to republish the articles and addresses of which the book is composed: the Editors of Economica, the Sociological Review, the New Statesman (for an article in the Nation and Athenaeum), the Economic History Review (for two articles in Economic History); the Cambridge University Press (for three articles in the Economic Journal); the National Westminster Bank Ltd (for two articles in the Westminster Bank Review); the Editorial Committee of the Three Banks Review; John Murray (Publishers) Ltd (for an article in the Quarterly Review); the Confederation of British Industry (for an article in British Industry); University College London (for my Inaugural Lecture) ; the Society of Business Economists (for a paper delivered at a Conference); the Institute of Economic Affairs (for a paper read at a Seminar); and the Schweizerisches Institut fiir Auslandsforschung (for an address subsequently pub lished in a volume entitled Der Streit um die Gesellschaftsordnung). Acknowledgements in detail are given in the references to the individual papers. IX I wish to thank Mr Ralph Harris and Mr Arthur Seldon of the Institute of Economic Affairs for their help and encouragement to me in the preparation of this book. May 1978 G. C. Allen X 1 Introduction A theme common to most of the papers in this collection is industrial change, the forces that bring it about and the response of societies, or groups within society, to technical and commercial innovation. The present volume pursues this theme in the context of British industry, and particular attention is directed towards the economic policies of government as they affect industrial change. For the second volume, the field of inquiry is Japan's economic progress, and in several of the papers in the present volume I have sought to interpret the recent course of economic development in Britain by pointing to the contrasts between her experience and Japan's during the last half century. When in the early 1920s I began to write on economic affairs, Britain was still the leading industrial power after the United States. Japan was still pre dominantly a peasant country with a well-developed infra structure but scarcely more than a fringe of modern, large-scale industry. In the period since the first of these papers was written Japan has stepped into Britain's place as a manufacturing country, while Britain's industrial achievements, in spite of a substantial absolute advance in production and national income, have been far surpassed by those of several Western countries as well as by Japan herself. This reversal of positions, like every change in a nation's history, is to be ascribed to the convergence of many causes. Some of these lie too far beyond the range of an economist's competence to call for more than an acknowledgment of their potency, but it would be unrealistic to ignore them, and I have tried to give them their due. For the last forty years the majority of applied economists have been preoccupied with macroeconomic problems, especially since the influence of Keynes became paramount. Their attention has been focused on the management of aggregate demand and on policies by which economic progress can be promoted, or fluctua tions in employment and income avoided, by the use of the fiscal and monetary instruments available to the government. Few economists today dispute the necessity and high practical import ance of such inquiries. Unfortunately this concentration of 1