Crisis, Ideas, and Economic Policy-making in Britain during the 1970s Stagflation

Abstract

This article examines the relationship between crisis, ideas, and economic policy-making in Britain during the 1970s stagflation, looking specifically at the turbulent years 1974–76. It argues that existing ideas-based approaches either fail to define ‘idea’ with any precision, or explain both the causes and resolution of the crisis in terms of competition between ideas, and therefore appear tautological. Instead, the article develops an Open Marxist framework suggesting that crises should be understood as an inherent systemic feature of capitalist social relations, which requires constant management so that governments can simultaneously achieve international financial market credibility and domestic political legitimacy. It uses this framework to produce an interpretation of economic policy change in Britain during the 1970s that argues policy-making was problematised in terms of the competing demands of international financial market credibility and domestic political legitimacy, and not in terms of a debate about economic ideas conducted in a context of crisis.

Keywords:

• crisis
• ideas
• economic policy
• depoliticisation
• Open Marxism
• Wilson
• Callaghan

Notes

This article was written during an ESRC-funded post-doctoral fellowship, and I am grateful to the ESRC for this award. I would also like to thank James Brassett, Ben Clift, and the anonymous reviewers for helpful comments on earlier drafts of this article.

For instance, it is interesting to note that despite being a 30-year retrospective for which a whole host of primary documents were available, that Hay's (2010: 468–70) recent contribution on this period cites only 10 archival sources.

It is not only Open Marxists who have recognised the potential benefits that might be gained from attempts to depoliticise certain aspects of economic policy-making. Matthew Flinders and Jim Buller (2006: 295–6, original emphasis) for instance, also refer to the ‘range of tools, mechanisms and institutions through which politicians can attempt to move to an indirect governing relationship and/or seek to persuade the demos that they can no longer reasonably be held responsible for a certain issue, policy field, or specific decision’, which include establishing formal delegation relationships, strong and distant rules, and convincing rhetorical arguments. Hay (2007: chs 3 and 4) has likewise suggested that governments might use certain rhetorical devices in order to build arguments that state managers have no option but to respond to certain difficulties in a given way.

TNA T 171/1053, Note of a Meeting, 7 March 1974.

TNA CAB 130/726, Misc 9 (74) 2, 12 March 1974.

TNA T 171/1053, Note of a Meeting, 15 March 1974.

TNA T 364/16, Wass to France, 15 June 1974.

Ibid.

TNA T 364/16, Richardson to Wass, 18 June 1974.

TNA T 364/16, Note of a Meeting, 21 June 1974.

TNA CAB 128/55, CC (74) 29^th Conclusions, 26 July 1974.

TNA T 277/3053, PCC (74) 4, 20 December 1974.

Ibid.

Ibid. The emphasis is my own.

TNA T 277/3057, PCC (75) 55, 14 May 1975.

TNA CAB 134/4814 PCO (74) 5^th Meeting, 12 August 1974.

Ibid.

TNA CAB 134/3814, Carey to Wass, 29 August 1974.

TNA T 233/2778, Bank of England Paper, 5 September 1974.

See TNA T 233/2778, CPRS Staff Paper, 19 September 1974.

TNA T 277/3057, PCC (75) 56, 14 May 1975.

TNA T 277/3067, STEP (75) 16, 25 June 1975.

TNA T 357/425, Note of a Meeting, 13 February 1975.

See TNA T 358/207, Walker to Barratt, 11 March 1975.

See TNA T 358/207, Note for the Record, 7 April 1975 and TNA T 358/207, Note for the Record, 8 April 1975.

TNA T 358/207, Walker to Mitchell, 11 April 1975.

TNA T 358/207, Barratt to France, 22 April 1975. Douglas Wass expressed similar views on intervention, see TNA T 358/208, Note of a Meeting, 11 May 1975.

TNA T 358/208, Hedley-Miller to Wass, 11 June 1975.

TNA CAB 128/56, CC (75) 27^th Conclusions, 12 June 1975.

TNA CAB 128/57, CC (75) 31^st Conclusions, 1 July 1975.

For instance, one official argued that the introduction of incomes policies would be an attempt to ‘overcome a financial crisis by doing damage to the economy’, see TNA T 357/424, St Clair to Couzens, 16 January 1975.

See TNA T 277/3175, PCC (76) 14^th Meeting, 11 March 1976 and TNA CAB 134/4048, MES (76) 6^th Meeting, 17 April 1976 respectively.

TNA CAB 128/59, CM (76) 2^nd Conclusions, 29 April 1976.

See TNA T 277/3175, PCC (76) 25^th Meeting, 23 June 1976 and TNA T 364/17, Kaldor to Monck, 1 July 1976.

TNA CAB 128/59, CM (76) 13^th Conclusions, 6 July 1976.

TNA CAB 129/193, CP (76) 52, 13 July 1976.

TNA T 277/3175, PCC (76) 32^nd Meeting, 14 September 1976.

TNA CAB 134/4025, EY (76) 13^th Meeting, 23 September 1976.

TNA T 277/3175, PCC (76) 38^th Meeting, 2 November 1976.

TNA T 364/50, Note of a Meeting, 11 November 1976.

TNA T 364/50, Note of a Meeting, 11 November 1976.

TNA CAB 129/193, CP (76) 111, 22 November 1976.

Bank of England, C40/1439, Targets for Monetary Policy, 15 March 1976.