Economic Policy

Abstract

‘All political history’, Harold Wilson argued in 1968 after four years’ experience as Prime Minister, ‘demonstrates that the standing of a Government and its ability to hold the confidence of the electorate at a General Election depends on the success of its economic policy.’ This may or may not be true (and some recent surveys suggest that public order and welfare may count for at least as much as economics); what is important is that it is believed. Every British prime minister since the war has grasped with enthusiasm the opportunities for state involvement in the economy which Keynesian economics offered, not least Margaret Thatcher, who beneath an appearance of laissez-faire economics has placed herself more centrally within the mechanism of economic policy-making than any predecessor. In this chapter we will first consider how the mechanism of economic policy-making works. In subsequent sections we consider the success of attempts of governments to control the economy, and the implications, and probable future, of the ‘monetarist experiment’.