Chapter 7 - Questions - Britain's Political Economy...

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Britain’s Political Economy – Questions (Ch 7) 1. What was the postwar collective consensus? Was the collective consensus a departure  from Britain’s economic history? Was Britain’s economic history different from other  countries we’re studying? The Postwar Collective Consensus is an adoption of Keynesian Welfare policies. Both  the Conservatives and Labour engage in greater state management of the economy.  This period sees the nationalization of key industries, the creation of the social welfare  state, including the National Health Service in 1948. Collective Consensus is a departure  from the laissez-faire policies of Britain’s economic history, but in comparison to France  and Italy, the reforms are moderate. Britain does nationalize some industries, but never  becomes statist like France. The role of state ownership is not to make the economy  grow.  2. What role did Britain’s power war economic record play in the collapse of collective  consensus? Collective Consensus began as an attempt to rebuild a war torn nation. The Keynesian  Economic policies contributed to economic stagnation, and in 1976, the economy was so  poor that the UK received a third-world style bailout from the IMF.  Inflation increased  and there was reduced growth. The Winter of Discontent put the final nail in the  collective consensus coffin. In 1978, the unions break from the Labour government over  frustration about wage increases well below inflation rates. Large work stoppages and  strikes occur throughout the winter demonstrating Labour’s inability to manage its allies.  Thatcher is elected a few months later and collective consensus comes to an end. 3. How would you summarize Thatcher’s policies? In which policy areas did she succeed?  Why? How have Thatcher’s policies influence Blair’s? Thatcher was ideologically firm in laissez-faire economic policies. New economic policy,  moved away from Keynesian to monetarism. Monetarism assumes that there is a  “natural rate of unemployment” determined by the labour market. Get the government  out of the economy. Thatcher was strategic in her implementation of Monetarism. For 
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