Abstract
Prices and Incomes Policy was once a key tool of British economic management. Thus, in 1966, one could find William Brown, fresh from Oxford, engaged at Labour’s new National Board for Prices and Incomes (NBPI) in a ‘very British attempt at trying to deal with a rather bewildering problem, by actually going out and finding evidence’.1 By 1973, that great Tory fixture Arthur Cockfield was complaining to Heath that his extensive powers at the Price Commission were still not strong enough.2 In any conventional reading, Prices and Incomes Policy would surely be a central plank in the post-war settlement. It combined the belief (or illusion) that governments could manage the economy with the imperative of doing so in conjunction with the trade unions. It also represented, at least tacitly, an attempt to direct the economy in a way compatible with equitable outcomes, in particular full employment: inflationary pressures were to be controlled so as to avoid placing strain on the goal of full employment.
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Notes
See, for example, David Smith, ‘Incomes Policy’ in M. Parkin and M. Sumner (eds) Incomes Policy and Inflation (Aldershot, 1972);
Philip Arestis, ‘Wages and Prices in the UK: The Post Keynesian View’, Journal of Post Keynesian Economics, vol. 8, no. 3 (Spring, 1986), pp. 339–358.
Not all studies came to this conclusion: for another view, see Ken Mayhew, ‘Traditional Incomes Policies’ in D. Robinson and K. Mayhew (eds) Pay Policies for the Future (Oxford, 1983), pp. 15–32.
See William Brown, ‘Incomes Policy in Britain’ in R. Dore, R. Boyer and Z. Mars (eds) The Return to Incomes Policy (London, 1994) p. 35.
See Andrew Dean, ‘Incomes Policy and the British Economy in the 1970s’ in R. Charter, A. Dean, and R. Elliott, Incomes Policy (Oxford, 1981) pp. 9–25, Table 1, p. 11.
As to wages, see Frank Blackaby, ‘Incomes Policy’ in F. Blackaby et al. British Economic Policy, 1960–74 (Cambridge, 1978) pp. 360–401, at p. 392. As to prices, see Frank Blackaby, ‘Narrative, 1960–1974’ in Blackaby et al. British Economic Policy, pp. 11–76, at pp. 52–62.
As to prices, see Allan Fels, The British Prices and Incomes Board (Cambridge, 1972) pp. 245, 248.
In fact, some have suggested that the problem with the policy was not that it went too far but ‘that it was never really tried’: Joan Mitchell, The National Board for Prices and Incomes (London, 1972) p. 273.
See, for example, Christopher Saunders, Winners and Losers: Pay Patterns in the 1970s (London, 1977) pp. 84–87;
Brian Towers, British Incomes Policy (Leeds, 1978) pp. 30–32.
Denis Healey in 1975, quoted in Warren Fishbein, Wage Restraint by Consensus (London, 1984) p. 179.
Brittan, ‘Why British Incomes Policies have failed’; Leo Panitch, Social Democracy & Industrial Militancy: the Labour Party, the Trade Unions, and Incomes Policy, 1945–1974 (Cambridge, 1976), esp. pp. 235–242.
See also Roger Tarling and Frank Wilkinson, ‘The Social Contract: Post-War Incomes Policies and Their Inflationary Impact’, Cambridge Journal of Economics, vol. 1 (1977) pp. 395–414.
Macmillan in 1962, quoted in Robert Taylor, ‘The Need for an Incomes Policy’ in Charter et al. Incomes Policy, (Oxford, 1981) pp. 149–167, at p. 149.
See Mark Wickham-Jones, ‘The Debate about Wages: the New Left, the Labour Party and Incomes Policy’, Journal of Political Ideologies, vol. 18, no. 1 (2013) pp. 83–105.
See Henry Phelps Brown, The Origins of Trade Union Power (Oxford, 1983) p. 296.
Henry Phelps Brown, Collective Bargaining Reconsidered: the Stamp memorial lecture delivered before the University of London on 15 November 1971 (London, 1971) pp. 9–12.
The civil service generally favoured incomes policies: see Douglas Hurd, An End to Promises: Sketch of a Government, 1970–74 (London, 1979) p. 30.
See, for example, A.G. Ford, Income, Spending and the Price Level (London, 1971) p. 171;
James Meade, Wages and Prices in a Mixed Economy (London, 1971).
See, for example, Barbara Wootton, Fair Pay, Relativities and a Policy for Incomes (Southampton, 1974);
Hugh Clegg, How to Run an Incomes Policy, and Why We Made Such a Mess of the Last One (London, 1971);
William Brown and Keith Sisson, A Positive Incomes Policy (London, Fabian Society, 1976).
See John Lawler, ‘United States: Control in the Free Market’ in B. Bilson (ed.) Wage Restraint and the Control of Inflation: An International Survey (London, 1987) pp. 13–45: 1951–53, 1962–1966, 1971–1973, and 1978–1980.
Paul McCracken, ‘Economic Policy in the Nixon Years’, Presidential Studies Quarterly, vol. 26, no. 1, ‘The Nixon Presidency’ (Winter, 1996), pp. 165–177.
See, for example, Lloyd Ulman and Robert Flanagan, Wage Restraint: A Study of Incomes Policies in Western Europe (Berkeley, 1971), pp. 48–215: Netherlands, Sweden, Denmark, France, Germany and Italy;
see also Hilde Behrend, Incomes Policy, Equity and Pay Increase Differentials (Edinburgh, 1973): Ireland.
The National Board for Prices and Incomes: Machinery of Prices and Incomes Policy (London, HMSO, 1965), Cmnd 2577, para 18.
Aubrey Jones, The New Inflation: The Politics of Prices and Incomes (London, 1973) p. 52.
By 1964, many people did not see themselves wholly or mainly as employers or trade unionists, as evidenced by the rise of the consumer movement. See Matthew Hilton, Consumerism in Twentieth-Century Britain: The Search for a Historical Movement (Cambridge, 2003) pp. 217, 270–279.
See Campbell Balfour, Incomes Policy and the Public Sector (London, 1972) at pp. 236/237.
John Wood (ed.) A Nation not Afraid: The Thinking of Enoch Powell (London, 1965) p. 102.
Sewill Interview; see also John Campbell, ‘Conservative Party Policy Making, 1965–70’, Contemporary Record, vol. 3, no.3 (1990) pp. 36–38, at p. 38.
Peter Sinclair, ‘The Economy — a Study in Failure’ in D. McKie and C. Cook, (eds), The Decade of Disillusion: British Politics in the Sixties (London, Basingstoke, 1972) pp. 94–121, at p. 116.
Margaret Thatcher, What’s Wrong with Politics? (London, CPC, 1968) pp. 9/10.
See Joe Gormley, Battered Cherub (London, 1982) pp. 94–115.
See Martin Holmes, Political Pressure and Economic Policy: British Government 1970–1974 (London, 1982) pp. 87/88.
See Barry Bracewell-Milnes, The Counter-Inflation Act 1973 (London, 1973)
Geoffrey Howe, Conflict of Loyalty (London, 1994) p. 74.
Bank of England Quarterly Bulletin (1971) vol. 11, no. 2 (June 1971) pp. 189–193.
Thus, in 1974, a parliamentary select committee condemned Prices and Incomes Policy as ‘impracticable and objectionable’: see Jock Bruce-Gardyne, Myths and Magic in Economic Management (London, 1976) p. x.
Robert Lanzilotti, Mary Hamilton and Blaine Roberts, Phase II in Review: The Price Commission Experience (Washington, 1975) p. 204. Two of the authors had been members of the Price Commission.
See, for example, John Kenneth Galbraith, A Theory of Price Control (Cambridge, Mass. 1952, 1980 printing).
Geoffrey Norman, “Playboy Interview: Milton Friedman,” Playboy vol. 28, no. 2 (Feb. 1973) pp. 51–68, 74.
Reprinted in Milton Friedman, Bright Promises, Dismal Performance: An Economist’s Protest, (Harcourt Brace Jovanovich, 1983).
Samuel Brittan and Peter Lilley, The Delusion of Incomes Policy (London, 1977).
See also: F.W. Paish, Rise and Fall of Incomes Policy (London, 1971); Harris, ‘A View from the Outside’.
Michael Parkin, et al. ‘The Effects of Excess Demand, Generalized Expectations, and Wage-Price Controls on Wage Inflation in the UK: 1956–1971’ in K. Brunner and A. Meltzer (eds) The Economics of Price and Wage Controls (Amsterdam, 1976) pp. 193–221, at p. 213.
See S.G.B. Henry and P. Ormerod, ‘Incomes Policy and Wage Inflations: Empirical Evidence for the UK 1961–1977’ National Institute Economic Review, vol. 85 (Aug. 1978) pp. 31–39.
See Richard Lipsey and Michael Parkin, ‘Incomes Policy: A Reappraisal’ in M. Parkin and M. Sumner, Incomes Policy and Inflation (Aldershot, 1972) pp. 85–110.
See Chris Pond, For Whom the Pips Squeak: Differentials in the Pay Policy (London: Low Pay Unit, 1977).
Harry Johnson (et al.) Memorial to the Prime Minister (London, 1972). The authors of this pamphlet included Alan Walters and Brian Griffiths.
See, for a summary of hostile Trade Union opinion, Frank Blackaby (ed.) An Incomes Policy for Britain: Policy Proposals and Research Needs (London, 1972) p. 12.
See Ken Gill, ‘Incomes Policy: The Trade Union View’ in R. Charter, A. Dean, and R. Elliott, Incomes Policy (Oxford, 1981) pp. 180–192.
See, for example, Andrew Glyn and John Harrison, The British Economic Disaster (London, 1980) pp. 116–119.
Andrew Glyn and Bob Sutcliffe, British Capitalism, Workers and the Profits Squeeze (Harmondsworth, 1972) pp. 58/59.
See, for example, Richard Layard, Is Incomes Policy the Answer to Unemployment?: an inaugural lecture presented at the London School of Economics on 7th October 1981 (London, Centre for Labour Economics, London School of Economics, 1982);
Maurice Peston, ‘Incomes Policy’ in Peter Nolan and Suzanne Paine, Rethinking Socialist Economics (Cambridge, 1986), pp. 315–325;
James Meade, Full Employment Without Inflation (London, 1994).
See William Brown, Incomes Policy in Britain: Lessons from Experience (Cambridge, Department of Applied Economics working paper, no. 9309, 1993).
Paul Willman, Fairness, Collective Bargaining and Incomes Policy (Oxford, 1982) p. 145.
For a contemporary view, see J. Corina and A.J. Meyrick, Incomes Policy in Crisis: An Overview, 1973–4 (Manchester, 1974).
See Trades Union Congress, Economic policy and Collective Bargaining in 1973 [and] Report of Special Trades Union Congress, March 1973 (London, 1973) pp. 24–26;
Trades Union Congress Collective Bargaining and the Social Contract (London, 1974) pp. 8–10.
Labour Party, Election Manifesto February 1974 (London, 1974).
See Trades Union Congress The Development of the Social Contract (London, 1975) pp. 13/14 and The Attack on Inflation (London, HMSO, 1975), Cmnd 6151, paras 6–10.
See Memo, Donoughue and Haines to Wilson, 30.6.75, at DNGH 1/1/5 Part 2. See also Policy Unit Note, 3.7.75, at DNGH 1/1/6 Part 1. See also Joe Haines, The Politics of Power (London, 1977) pp. 44–59, at p. 58.
The main dissenters were the promoters of the AES on the Left and at Cambridge. See, for example, Tony Benn, The Benn Diaries 1940–1990 (London, 1996, paperback ed.) pp. 364/365.
Trades Union Congress The Social Contract 1976–77: Report of the Special Trades Union Congress 1976 (London, 1976) p. 13, author’s emphasis.
See also: Trades Union Congress — Labour Party Liaison Committee Into the Eighties: An Agreement (London, 1978).
Labour Research Department, Guide to the Pay Policy Phase 4 (London, 1978), p. 12;
Robert Willott, Guide to Price Controls, 1977–78 (London, 1977).
http://www.margaretthatcher.org/speeches/displaydocument.asp?docid=110607 (Preston speech, 5.9.74); see also Keith Joseph, ‘Inflation: the Climate of Opinion is Changing’ in Stranded on the Middle Ground?: Reflections on Circumstances and Policies (London, 1976).
See Ronald McIntosh, Future British Industrial Strategy (Reading, 1977).
Conservative Party, The Right Approach (London, 1976) p. 38.
Ronald McIntosh, Challenge to Democracy: Politics, Trade Union Power and Economic Failure in the 1970s (London, 2008): diary entries for 27.2.76 to 29.2.76 and 2.3.76 (pp. 254–257).
C.C. Conran, Guide to the 1977 Counter-Inflation Legislation (London, 1978) p. 4.
For example, the Consumer Protection Act 1961 and the Consumer Credit Act 1974: see John Mickleburgh, Consumer Protection (Abingdon, 1979) pp. 3, 8, 239–243.
Roger Miller and Raburn Williams, Unemployment and Inflation: The New Economics of the Wage-Price Spiral (St. Paul, 1974) p. 58.
Robert Shepherd, Iain Macleod (London, 1994) p. 462.
As to what lay ahead, see Simon Deakin, Jonathan Michie and Frank Wilkinson, Inflation, Employment, Wage-Bargaining and the Law (London, 1992) pp. 23–33.
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Williamson, A. (2015). From Prices and Incomes Policy to Sado-Monetarism?. In: Conservative Economic Policymaking and the Birth of Thatcherism, 1964–1979. Palgrave Studies in the History of Finance. Palgrave Macmillan, London. https://doi.org/10.1057/9781137460264_4
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