What led to the breakdown of the post war political consensus?

The post war political consensus as a term meant the union between the conservatives and the Labour party on issues including economic and social policy. It is said that the consensus was starting to crumble away from as early as 1968. This was down to several different reasons which all played a factor in the over all breakdown. After the 1951 conservative win in the general election, little happened to change the agreements that were made by both parties but nonetheless continued to work along the same lines as the consensus, but for a long time there was always said to be several differences between the two parties, just because they implemented the same policies does not mean that they were always working on the same lines. In fact their styles, attitudes and emphasis all differentiated in the long run.

By the 1970’s, Britain’s living standards were seen as much improved and generally there was little discontent among the people but on the economic level things was not so brilliant. The economic decline on all levels was starting to really show firstly beginning with the welfare state, the expenses that were needed to fund it espicailly the NHS were very great and with the lack of extra capital not present it became a major issue for discussion. Changes to peoples lives and social standings played a big part to this decline with regard to the NHS because people were living longer and working less than they used to which meant that less money was coming into government from the tax payer and people were becoming concerned with the way the NHS was being looked after and over all the way the welfare state was being managed. Dissatisfaction from the public now began to kick in as they thought the government were not doing enough but what the people never realised is the fact that keeping a welfare state in tact is not as easy as it was thought to be and nonetheless they had no idea what trouble the government was in with regard to different areas of policy.

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Secondly one must note that Britain’s standings on the international scene were at a low level as well. Previous governments had failed to toughen up on international competition level and this was to become a major draw back as time went on. Britain was exporting more than it was importing and its colonies were starting to demand independence. At this point in time Great Britain was seen as ‘the sick man of Europe’ who, was suffering the ‘British disease’ and the symptoms of this disease were unemployment, inflation and regular strikes which were led by the much powerful trade unions among many other issues. Further more the oil crisis of October 1973 brought Britain and the rest of the world to a temporary halt as oil prices went up by 400% during the Middle East war that was happening at the time which Edward Heath at the time described ‘the gravest situation by far since the end of the war.’

Despite the ongoing international crisis with the oil prices, Britain’s unemployment levels were increasing and inflation was increasing too, this came to be known as stagflation. It was because of the international recession that Britain was forced into a three-day week and also because the number of worker strikes were attacking the economy very badly. Another major issue facing the state was the amount of days wasted because of worker strikes; by 1973 the total was 23 million, the highest number since 1923.

The post war consensus was now being used as a scapegoat for all the many issues that were arising. The Edward Heath government were now looking for fresh new ideas on ways to improve the economy and came up with the idea that we must ‘encourage enterprise and the free market if our economy was ever to improve’, not too long after he made this statement he dropped it and went back to 'a return to Keynesians with a far more neo-liberal face.’ The conservative government called a general election in 1974. The outcome of that election saw the labour party back in control and it came at a time when many world domestic crises were at the very beginning, the party was unable to manage the many ongoing problems such as inflation.

Keynesian theories were now being questioned because of the concerns with the ever growing economy and its struggle associated with it. The ‘winter of discontent’ was a justification by Margaret Thatcher that the consensus was not working which paved the way for Thatcher’s New Right Strategy. Keynes ideas were now being attacked from all corners because they were not seen as reliable anymore but then again they were said ‘to have been misused’ in context. It was in the year of 1976, that Britain really was a state of emergency, there was no money and it was needed urgently in order to mend the already ruined economy so money had to be borrowed from the International Monetary Fund; they borrowed 4 billion pounds in order to get the economy stable again and to save the sterling from complete disaster but conditions were set by the IMF on the other hand as well.

After many years of discontent and a disastrous economy, it was the year of 1979 that the conservative government under Thatcher were elected to run the country. Thatcher was not like any of her previous successors; she had a different attitude towards policymaking was under the great influence of American economist Milton Friedman. Thatcher believed that it was not the government’s responsibility to get involved in wages and peoples affairs and that it was up to the people to support them selves even when they were in the greatest need. Thatcher did not believe in ‘Keynesianism’ but believed in ‘Monetarism’ instead. Monetarism rejected the economic aims that were set out by Keynes. The key point that has to be made about monetarism is that its aims were to keep inflation down even if it meant rising unemployment

Figures where as with Keynes it was exactly the opposite. Thatcher was the one who eventually made cracks in the consensus.

Thatcher never had a good relation with the trade unions at all and was working in order to ‘neutralise’ their powers so that they would not be able to interfere with industry with as much authority as they used too. Many more of her famous policies included reducing inflation which even though this meant high unemployment, people would be inclined to take low payed jobs so that it would ensure competitiveness through out the market. She believed that privatisation was the better way as opposed to nationalisation and that ‘the structure of British industry would be changed through privatisation of public enterprises’ and lastly ‘taxes would be reduced so that incentives would be provided for public enterprise.’ These policies famously came to be known as ‘Thatcherism.’

The trade unions faced a battle with Thatcher and the miner’s strike in 1984 proved promising of what Thatcher had in mind. She would introduce legislation that would seriously put a halt on their powers and the defeat of this strike just proved this. At this point in time the trade unions were ‘dead.’ She also wanted to restructure the whole of the mixed economy into a private market based economy through a program of privatisation which she eventually believed would make sure that everything was in private hands rather than in those of the public. Everything that Thatcher hand in mind would formulate the government agenda for the many years that the Conservatives were in power.

In conclusion, the consensus provided Britain with many years of stable economy and a happy nation. It must be said that even though the consensus did eventually crumble away over more than 10 years, it was the basis of the political agenda up until the mid seventies and that on its own has to be worth something. Both political parties wanted to achieve ‘social citizenship’ based on the Michael Beveridge report of 1941 who was a liberal and the person who created the idea of a welfare state and with the Keynes ideas, the Atlee government of 1945 implemented it later. These were known as the consensus years. The disadvantages out weigh the advantages at the time because of the painful consequences that the consensus years suffered, but that does not actually mean that none of it ever happened for a reason either.