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INTRODUCTION
There was a transformation in the scale and scope of government involvement in the economy between the mid-Victorian era and the early twenty-first century: from small, laissez-faire government at mid-nineteenth century through to the current modern managed market economy and welfare state. This transformation was profound, but distinctly non-linear; it is also very far from straightforward to explain in terms of either origins or its effects upon the real economy. For exegetical purposes, we divide this transformation into four epochs:
1 1870s to the First World War (hereafter, pre-war), during which the traditional defences of the minimalist state came under pressure but the citadel of laissezfaire was not breached.
2 The period from the First World War to the reconstruction phase immediately following the Second World War (hereafter, trans-war) in which the first conflict breached the citadel on many fronts, the interwar period marked the origins of modern micro-and macroeconomic management, while the second total war brought unparalleled dirigism, followed by micromanaged reconstruction.
3 A period, roughly coinciding with the ‘Golden Age’ of post-war capitalism (c. 1950–73), and often termed the Keynesian era, in which big government came of age and modern economic management was crystallised.
4 The period within which we still reside, in which, initially with some ideological force (Thatcherism), but later more pragmatism and nuance, a neo-liberal economic agenda was pursued against a background of renewed globalisation; this raised profound questions about national varieties of capitalism (VoC) and thus the future of national economic policies.
The evolution of British economic policy and the debates surrounding its impact on the real economy form our focus. Necessarily, this is very selective. Thus the account is more macro- than microeconomic; and less a complete narrative and chronology than an exploration of trends, key themes and major policy episodes. It is also framed by two conditions. First, the axiom that economic policy is as much about politics as economics, meaning that the fullest insights into policy formulation and economic impact – both crucially dependent upon the configuration of factor markets – occur when economic historians adopt a political economy methodology.
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