On the surface the 1950s and early ’60s were years of economic expansion and prosperity. The economic well-being of the average Briton rose dramatically and visibly. But when prosperity created a demand for imports, large-scale buying abroad hurt the value of the pound. A declining pound meant higher interest rates as well as credit and import controls, which in turn caused inflation. Inflation hurt exports and caused strikes. These crises occurred in approximately three-year cycles.
The economic concern then of the British government in the 1950s and ’60s and indeed through the 1970s was to increase productivity and ensure labour peace so that Britain could again become an exporting country able to pay for public expenditure at home while maintaining the value of its currency and its place as a world banker. A drastic run on the pound had been one of the pressing reasons for the quick withdrawal from Suez in 1956, and throughout the 1950s and ’60s Britain’s share of world trade fell with almost perfect consistency by about 1 percent per year. On the other hand, Britain benefited from an unprecedented rise in tourism occasioned mostly by the attraction of “Swinging London.”
All of this made Britain’s decision, after fierce political discussion, not to join the planned EEC, established by the Treaty of Rome on March 25, 1957, an event of signal importance. It meant that although economic conditions in Britain did indeed improve in the last years of the 1950s and through 1960—Prime Minister Harold Macmillan could remark with only slight irony that the British people had never “had it so good”—Britain nevertheless did not share in the astonishing growth in European production and trade led by the “economic miracle” in West Germany. By the mid-1960s there were signs that British prosperity was declining. Increases in productivity were disappearing, and labour unrest was marked. Prime Minister Macmillan quickly realized that it had been a mistake not to join the EEC, and in July 1961 he initiated negotiations to do so. By this time, however, the French government was headed by Charles de Gaulle, and he chose to veto Britain’s entry. Britain did not join the EEC until 1973.
In the aftermath of increasing difficulties for industry and increasing labour conflict, the Thatcher governments after 1979 set about a far-reaching restructuring of the economy, one based less on economic than on political and moral factors. Thatcher set out to end socialism in Britain. Her most dramatic acts consisted of a continuing series of statutes to denationalize nearly every industry that Labour had brought under government control in the previous 40 years as well as some industries, such as telecommunications, that had been in state hands for a century or more. But perhaps her most important achievement, helped by high unemployment in the old heavy industries, was in winning the contest for power with the trade unions. Instead of attempting to put all legislation in one massive bill, as Heath had done, Thatcher proceeded step by step, making secondary strikes and boycotts illegal, providing for fines, as well as allocation of union funds, for the violation of law, and taking measures for ending the closed shop. Finally, in 1984–85, she won a struggle with the National Union of Mineworkers (NUM), who staged a nationwide strike to prevent the closure of 20 coal mines that the government claimed were unproductive. The walkout, which lasted nearly a year and was accompanied by continuing violence, soon became emblematic of the struggle for power between the Conservative government and the trade unions. After the defeat of the miners, that struggle was essentially over; Thatcher’s victory was aided by divisions within the ranks of the miners themselves, exacerbated by the divisive leadership of the militant NUM leader Arthur Scargill, and by the Conservative government’s use of the police as a national constabulary, one not afraid to employ violence. The miners returned to work without a single concession. In all these efforts, Thatcher was helped by a revival of world prosperity and lessening inflation, by the profits from industries sold to investors, and by the enormous sums realized from the sale abroad of North Sea oil. From 1974 the unexpected windfall of the discovery of large oil reserves under the North Sea, together with the increase in oil prices that year, transformed Britain into a considerable player in the field of oil production (production soared from 87,000 tons in 1974 to 75,000,000 tons five years later). The political use of oil revenues was seen by some as characteristic of the failure of successive British governments to put them to good economic and social use.
The restructuring of the economy away from the manual and industrial sectors, which was a consequence of the rapid decline of manufacturing industry in Britain in the 1990s, also meant the decline of the old, manual working class and the coming of what has been called “postindustrial” or “postmodern” society. Within industry itself, “post-Fordist” (flexible, technologically innovative, and demand-driven) production and new forms of industrial management restructured the labour force in ways that broke up traditional hierarchies and outlooks. Not least among these changes has been the expansion of work, chiefly part-time, for women. There has been a corresponding rise of new, nonmanual employment, primarily in the service sector. In the early phases of these changes, there was much underemployment and unemployment.
The result has been not only the numerical decline of the old working class but the diminishing significance of manual work itself, as well as the growing disappearance of work as a fairly stable, uniform, lifelong experience. The shift in employment and investment from production to consumption industries has paralleled the rise of consumption itself as an arena in which people’s desires and hopes are centred and as the basis of their conceptions of themselves and the social order. However, in the 1990s there was a considerable move back to the workplace as the source of identity and self-value. At the same time, new management practices and ideas developed that were in line with the still generally high level of working hours.
Central to the new economy and new ideas about work has been the staggering growth of information technology. This has been especially evident in the operations of financial markets, contributing hugely to their global integration. One of the great beneficiaries of these changes has been the City of London, which has profited from very light state regulation. The financial sector, in terms of international markets and the domestic provision of financial goods and services, has become a major sector of the new economy. Speculation in markets, with ever-increasing degrees of ingenuity (for example, the phenomenon of hedge fund trading), has helped create a cohort of the newly rich in Britain and elsewhere. It has also led to an increasingly unstable world financial system. The spoils of this new society have been divided between large-scale multinational corporations and new kinds of industrial organizations that are smaller and often more responsive to demand, evident in development of the dot.com and e-commerce phenomena. Internet shopping, along with the unparalleled development of giant supermarket chains, transformed the traditional pattern of retailing and shopping and, with it, patterns of social interaction. This, however, was only one aspect of a general transformation of the economy and society that even as recently as the early 1990s had hardly been glimpsed.