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'There is a great deal of evidence to support the view that the relative decline of the British economy in the late Victorian period was due to the ineptitude of Britain's entrepreneurs'. Discuss.

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Introduction

'There is a great deal of evidence to support the view that the relative decline of the British economy in the late Victorian period was due to the ineptitude of Britain's entrepreneurs'. Discuss Although there is yet no agreement on the nature and extent of Britain's economic decline before World War 1, British entrepreneurs are often accused of failing to meet the challenges of the time. Especially in comparison with their competitors, who were catching up and in some areas even overtaking between 1870 and 1914, British employers have been characterised by deficient competence and waning dedication to their businesses. Writers stressing the shortcomings of businessmen have linked them to amateurism, the family ownership of firms, complacency based on past achievement, an underemphasis of technical education and a range of other factors. Others, sceptical of explanations of retardation reliant on entrepreneurial failure, have provided alternative explanations focusing on international factor price differentials and the size of available markets. In his article, 'The Entrepreneur and the British Economy, 1870-1914', D H Aldcroft put forward the hypothesis that Britain's relatively poor economic performance can be attributed largely to the failure of the British entrepreneur to respond to the challenge of changed conditions. Aldcroft argued that 'there is ample evidence, both in contemporary and recent literature, to suggest that British businessmen were weighted down by complacency, conservatism and antiquated methods from the 1870s onwards'. In 1902 McKenzie wrote 'If our workmen are slow, the masters are often enough right behind the times. In spite of all recent warnings, there is a stolid conservatism about their methods, which seems irremovable. Even great houses, which have the name of being most progressive, often enough decline to look into new improvements.' This contemporary literature could well have exaggerated the truth, yet, Hoffman writing in the early 1930s was hardly less severe in his condemnation of British industrialists and merchants. ...read more.

Middle

Aldcroft argues that an important factor contributing to this was the failure all along the line to adapt commercial procedure to meet the needs of the time. Industrialists and traders were finding it not only difficult to sell new goods in new markets but they were also finding increasing difficulty in selling traditional goods in established markets. In explaining why there was the existence of entrepreneurial sluggishness over a wide sector of Britain's industrial economy, Aldcroft believes that the general economic climate or public opinion in Britain was not conductive to change or to the acceptance of new ideas to the same extent as in America. There, Stressman argued 'society in the nineteenth century was basically predictable for innovations in producers' goods because it was not a society hostile to cheaper and better methods of production'. Part of the lethargy of British manufactures may be explained by the lack of response from the demand side. In general Americans, and to a lesser extent Germans, were more responsive to change. Floud and McCloskey offer alternative explanations for the poor economic performance in macro terms. Resource endowments may be one possibility. Though Britain had plenty of coal, the best seams had been worked out earlier and coal was now less accessible than in other countries; a similar story might be told of iron ore, and there were few other resources compared, say with the United States. They go on to argue however that at the same time, compared with most continental countries, coal was cheap, and the wasteful use of energy, the failure to use the latest fuel saving technology in Britain, might thus have a perfectly rational explanation. Another alternative explanation they give is the particular nature of the market facing the British producer and its growth rate. Population growth was slower than in the countries cited in comparison, and since Britain started at a higher level of incomes than continental countries at least, the possibilities of growth were more restricted in that way also. ...read more.

Conclusion

Insofar as these decisions and the action arising from there were inconsistent with the needs of the time, then to that extent British growth indices compared less favourably with those of our competitors. He states that 'the effects on productivity movements were averse, unit costs were raised and rates of growth retarded'. In conclusion he argues that 'the British economy could have been made more viable had there been a concerted effect on the part of British enterprise to adapt itself more readily'. The ideal entrepreneur has seldom been found in large numbers, and even contemporary Germany and the USA had their record of failure: Germany, for example, failing to develop a motor car industry on what was largely a German invention; the USA for her poor showing in coal-tar dyes and in shipbuilding, and for failing to adopt the idea of radio when offered to it. Aldcroft's article remains controversial and furthermore there is by no means agreed exactly how the failure is to be measured. Overall macro-economic statistics provide no clear verdict. There is no doubt tat the rate of British economic growth slowed down at some time after 1870, though the exact turning point is hotly debated; there is also no doubt that some other countries, notably the USA and Germany, were growing at a faster rate. Nevertheless, slower growth is no adequate proof of poor entrepreneurship; there may be man other reason for it (McCloskey 1970). In conclusion, we can say that there was no representative Victorian 'entrepreneur' and that in many areas there were considerable numbers of vigorous, innovative, risk-taking entrepreneurs; in others, at least individual achievements rescue the British from the taunt of technological conservatism; but there were areas in which entrepreneurial performance was disappointing, the failure of entrepreneurship only too obvious. We have found that there are many criticisms of British entrepreneurs of the time but we can also put forward alternative causes. Floud and McCloskey explain that 'In short, some failures there undoubtedly were, but they were surely not characteristic of the period as a whole'. ...read more.

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