Figure 1.--.

The history of the English economy is an especially important subject. Some basic information on the neolkitic era is available througharcheology. Written records are notbavailable intil the Roman conuest. This was followed by the medieval erra and the feudal system. England was part of the feudal system that dominated Western Europe. Ther were , however, dufferences. Both Celtic and German influences (Anglo-Saxon and Vikings) were important. This helped undercut divine right monarch anndvafter the Normann invasin, the Barions would rise up to prevent the rise of royal absolutism in England. This woold evetuallyb play out in the development of demicracy and capiyalism. Until the 18th century, it was like other countries, primarily reliant on agriculture. Pastoral profuction of wool was especially important. And as England became a seafaring nation (16th centyry), trading became important as well. Then all of a sudden the industrial revolution took hold which transformed not only England, but eventually the world. A student of both economics and history has to explain why the various social, political, and economic forces came together in England during the 18th century to create the first modern economy. The economy of medieval England was based on the wool trade. Before the 18th century several important elements were in place. Laws protected private property even from royal excesses. The English appropriated capitalism which the Dutch invented. And social attitutudes a well as laws protected and even promoted free thought, including scientific inquiry which led to practical applications. This combined with the availability of key natural resources (coal and iron) led to the industrial revolution (mid-18th century). The first steps were to develop textile weaving machines. The need for efficent naval construction also helped bring about the industrial revolution. The result was an extrodiarily efficent economy and the creation of great wealth. At about the sane timne, the loss ofthe American colonies (1783) taught the British an important lesson, to allow the colonies to participate in free trade with relatuively few trade limitations compared to the other European empires. The economy allowed England to resist Napoleon and to emnerge after the Napoleon as the preminent world power. The United States followed the English system, only without an empire. The English capitalist economy is often accused of creating poverty. Marx of course wrote Das Kapital in the British Library. This is a major error. English capitalism created wealth. Poverty existed in England before the industrisl revolution. Capitalism fid create greater disparities in wealth because of the wealth it created. Gradually Germany emerged as a major economic competitor with capitalist system developing with greater government direction. After World War II, the governing British Labour Party embarked on an experiment with socialism. Some social inequities were addressed, but Britain fell behind many continental countries. The Thstcher era only partially reversed this course. Britaian today along with many other European countries is facted with Mrs. Thatcher's famous dictum, "Socialism is fine until they run out of other people's money to give away."

Pre-history

Neolithic/Stone Age

Most of British pre-history was the long neolithic or Stone Age. Relatively little is known about these people as they left no written record. Writing developed in the Middle East durting the lste Stone Age (about 3,500 BC), but did not touch the Neolithic people of Britain. hey did leave numerous sites which have been found by archeologists, the most famous being Stonehenge. Major developsment occurred in the late Stone Age, including the first elaborate burials, the introduction of pottery, huge engineering projects and the construction of Britain's most famous ancient monuments, both Stonehenge and Avebury. The economy of these peoplewas baserdon agriculture. At is no accident that ritual observances at Stonehenge and other sites was oriented towards the midwinter sun with obvious association with agriculture. European Neolithic agricultural practices and the domesticated crops spread to Britain. Pastoral herding was also practiced. Animal husbandry (especially cattle). They were important as portable wealth. In addition to meat, there were many valuable byproducts, including milk, cheese and leather. Britain became part of the Bell Beaker material culture, idespread across much of Western Europe in period before the Bronze Age.

Bronze Age

Briton remained pre-literate even in the Bronze age. There were trade connection with the mainland which appears to be how bronze technology reched Britain.

Iron age: Celtic Britain

Much of Britain exceot thefsr north (modern Scotland) was conquered by Celtic tribes. The Celts had masterted iron technology. Iron technolog may have reached Britin before the Celtic conquedst as a result of trade.Gradually iron undermines bronze and takes over its economicand social function. In the later Iron Age, an apparent shift is visible, revealing a change in dominance from cattle rearing to that of sheep. Economically, sheep are significantly less labour-intensive, requiring fewer people per animal.

Roman Britain

Medieval England

The medieval era is generally dated from the decline of Rome, in Britain's case the departure of the Legions (5th century to the onsert of the Renaissance (16th century). That is an epic of over a millenium which encompassed massive social and political shape. And for a substantial part of that period, England did not even exist and was instead divided into warring Anglo-Saxon kingdoms as well as the Dane Law. Modern england did not begin to choalenseuntil Alfred the Great defeated the Vikings (Danes) (9th century). But it was not until Duke Willian invaded (1066) tht England as weknow it today began to take shape. As a result, economic historians commonly separate their work into the early- and late-medieval periods with Willian the Conqueror and the Battle of Hasings (1066) the dividing point. Agriculture dominated the economy throughout the middle ages, but the character of agriculture and the growth of cities separated the early- and late-medieval period. Hastings is a good dividing point for economic historianrs because it was not until William and the assent of the Normans that the Feudal System was fully planted in England. The Normans imposed Feudal institutions like serfdom upon the existing Saxon/Danish system of open fields and mature, well-established if small towns. Under the Normans perhaps the major economic factor besides Feudalism was the growth in population. Two developmets had huge economic consequence (14th century). First was the the twin disasters of famine and plage which substabtially reduced the population. Some historians believe thart as much as lalf the population perished. The second was the enclosures and shit to pastoral agricultute. England is a well-watered country where grasses grew well. Gradually sheep and wool became a vital part of the late-medieval economy. This set up trade between England and the Low Countries where the wool was used to weave textiles. This tied England firmly into the wider European economy.

Mercantil England

Mercantilism was an economic system designed to maximize a favorablde ttrade ballance by oromoting exports nf mimimizing imports. National power wa to be develped thriugh wealth an resource acquisition through developing greagt empires, As aesult building powerful military forces were a high primority. Britain's developing naval power put it in a position to compete wityh other powers because of tde importance of maritime commerce. Mercasntilist policies included trade trade restruictions like tariffs, quotas, and other restructions or restrictions as well as legal institutions like monopolies. Tax policies were also imprtnt. Adam Smith in the Wealth of Nations detailed the folly of restricting economic activity. Smith did not coin the term 'capitalism'. That was done by carl Marx as a derogatory term.

Industrial England

The history of the English economy is an especially important subject. Until the 18th century, it was like other countries, primarily reliant on agriculture. Pastoral profuction of wool was especially important. And as England became a seafaring nation (16th centyry), trading became important as well. Then all of a sudden the industrial revolution took hold which transformed not only England, but eventually the world. A student of both economics and history has to explain why the various social, political, and economic forces came together in England during the 18th century to create the first modern economy. The economy of medieval England was based on the wool trade. Before the 18th century several important elements were in place. Laws protected private property even from royal excesses. The English appropriated capitalism which the Dutch invented. And social attitutudes a well as laws protected and even promoted free thought, including scientific inquiry which led to practical applications. This combined with the availability of key natural resources (coal and iron) led to the Industrial Revolution in England (mid-18th century). 【Baten, p.3.】 The first steps were to develop textile weaving machines. The need for efficent naval construction also helped bring about the industrial revolution. The result was an extrodiarily efficent economy and the creation of great wealth. At about the sane timne, the loss ofthe American colonies (1783) taught the British an important lesson, to allow the colonies to participate in free trade with relatively few trade limitations compared to the other European empires. While it was capitalism that largely enabled England to resist Napoleon. It was industrialization that poweered Britain's emergence as the preminent 19th century power. Being the first to industrilize fought many advantages. Brutain led the world in manufacturing, communication, and transportation. The initial innovations were in the textile indistry. The team engine was central to he Industrial Revolution (pumps needed for mining, powering factories, and transport--railway locomotives and steamships). Btitish factories erte nrenoned for tool making. The telegraph revolutionlized communication and began the creation of a wole new sector with still unfolding potential--elrctronics. Briton’s Royal Navy protected British commercial interests, but it was its highly prifuctive capitalist powered economy that enable Britain to build a powerful navy. London became te economic capital and focus of the world economy. The United States followed the English system of marrying deocracy and capitalism, only without the need for an empire to exploit. The English capitalist economy is often accused of creating poverty. Marx of course wrote Das Kapital in the British Library. This is a major error. English capitalism created wealth. Poverty existed in England before the industrisl revolution. Capitalism did create greater disparities because of the huge wealth it genrated. Gradually Germany emerged as a major economic competitor with capitalist system developing with greater government direction. After World War II, the governing British Labour Party embarked on an experiment with socialism. Some social inequities were addressed, but Britain fell behind many continental countries. The Thatcher era only partially reversed this course. Britain today along with many other European countries is facted with Mrs. Thstcher's famous dictum, "Socialism is fine until they run out of other people's money to give away."

Co-operative Movement

One alternative to capitalism that developed in the 19th century was the Co-operative or Co-op Movement. The Rochdale Pioneers' shop in northern England launched what would become the Co-op Movement (1844). It was part of the Victorian era of reform as the English grappeled with the social problems resulting from the Industrial Revolution and Capitalism. The Co-op Movement was seen as an alternative to the corporation. A wide range of co-ops were organized, including credit unions, energy, football supporters, funeral care, health care, hosing, manufacturing, retail, schools, and various worker-owned businesses. This effort went far betond the cooperative movement in America which was primarily limited to agriculture, cedit unions, and rural electic coops. The British Co-operative Movement is most commonly associated with The Co-operative brand, best known for its supermarketd. There are, however, thousands of registered co-operative businesses. The movement has declined in recent years. Co-ops now generate some £35 billion, onlky about 1 percent of the country's GDP. Most active cooperatives belong to Co-operatives UK -- the central membership organisation for co-operative enterprise throughout the UK. This is a co-operative of co-operatives: a co-operative federation. Most kinds of co-operatives are eligible to join Co-operatives UK. A range of develooments have led to the decline of the movement, including e-industrialisation, association with the working poor, edevelopment of terraced housing which had many Co-op stores, featured co-op stores dotted throughout) to newer purpose-built estates, with around 18,000 co-op stores. Inflation and a strong pound during the 1970s which led to cheap imported goods, devastating many manufacturing businesses. The retail sector transitioned toward large supermarkets and hypermarkets. A serious problem through the history of coopeartives has been the lack of maagerial talent, especially with the retail operations. The stoes were often not price competitive or offered trendy fashions.

Labor Movement

The British labour movement developed in a class-bound society. The Industrail Revolution began in Britain and as might be expected, Britain's labour movement is the oldest in the world. Marxist doctrine was an important component of the the country's labor movement. From an early point the labor movement took on a political character. As a result, the history of the labor movement in Britain becomes the history of socialism in the country. The Communists unlike many other Europen contrues gnered only limited support. The movement's goals gradually went far beyond demanding higher wages and sworking conditions. The movement rejected the profit motive and the market capitalism. Rather the British Labour Party, a socialist party, aspired to nationalize basic industry including steel, coal, and transport and to run them as state corportations. The Labour Party finally won a general election (1945). The Labour Government proceeded to carry out their goals of nationlizing industry. The result was economic failure. Britain had to continue World War II rationing into the post-War era. The economy lagged behinf that of theor continental neigbors which had more market based economies. State-owned industries fared pooerly and as a result were unable to pay wages as high as on the Cintinent. Britain had been the wealthiest, most affluent European country, fell behind Continental Western Europe. The German Economic Miracle soon offered the people of Germany rebuilding from a sea of rubble a higher living stndard than the British. The political showdown with the Labour Party came with the premiership of Margaret Thatcher.

The Welfare State

Although there were some medieval and early industrial precursors like the Work House, The foundation of the British welafe system was layed by Liberal Party. This began under the leadership of Prime Minister H. H. Asquith and Chancellor of the Exchequer David Lloyd George in the years preceeding World WarI. British liberals unlike the Labour Party was not hostile to capitlism and big business. The Liberals had been primarily interested in free trade (19th century). This was classical liberalism, free trade and laissez faire economics. They were competing with the Conservative Party which at the time was defending the interests of the lannded aristocracy. The Liberal Party by the turn of the 20th century began to shift and became concerned with social legislation to achieve opportunities for working people. They were competing with the Labour Party with a Marxist iderology hostile to capitalism and a Conservative Party which was replacing the Liberal connection with business and the middle-class. Chancellor Bismarck's success in Germany with social reforms, especially old pensions, was influential in Britain. The Old-Age Pensions Act enacted by the Liberal Government was the first major step in building Britain's the modern welfare system (1908). Further reforms followed both World War I and even more importantly World War II following the Labour victory in the 1945 General Election. The Liberals had begun a second pillar to the welfare system in the inter-War era--public housing. After World War II, Labour added the third pillar--the National Health System. A fourth pillar, state ownership as proscribed by Marxist ideology proved to be an unmitigated disaster. Labour differed from the Liberals in that as a result of their Marrxist foundation, did not understand the importance of a sucessful capitalist economy to pay the bills for their costly welfare system. The result was that after World War II, the British economy and as a result the prosperity of the country fell behind America and even war-wrecked Continental Western Europe. Labour leaders bek=lieved rgat state ownershipof industry would lead to a new era of poesperity. Instead Brutain which had once been the most prosperous country un Europe becme the Sicj Msn of Europe ith wages falling well behind the major European ciuntries--including Germany which had lost the War and been devestated. Lasbour simply maintained their left-wing ideological commiment despite the griwing body of ecidence thast socilism does not wirk. This did not change until the premiership of Margaret Thatcher. Lasbour itself dis not chnge its outlook, but the British public finally firmly voted them out of office.

Mrs Thatcher

Sources

Baten, Jörg. A History of the Global Economy. From 1500 to the Present (Cambridge University Press: 2016).

Created: 8:46 PM 7/14/2023
Last updated: 8:46 PM 7/14/2023