After World War II, a new economic philosophy called “Keynesianism” – different from the “laissez-faire” of old – became prevalent; to his main proponent, John Maynard Keynes (1883-1945), free operation of the market was a good thing but it might prove insufficient to ensure full employment in the long term. The State itself should therefore see to it that effective demand (Keynes attached primary importance to it rather than supply) was always renewed by spending money (expanding the money supply, a policy known as reflation) in order to increase purchasing power and encourage private investment, i.e. rejuvenate economic activity. The government had therefore to be much more interventionist and to operate demand management (which meant economic planning). This is what the Labour government did when the core of the economy (steel, coal, airlines, railways, banks, petroleum, telephone logic), seen as too important to be left to the marketplace, was nationalized. For a number of reasons (e.g. large monopolies were to a degree able to insulate their investment and employment policies from central government ones; large amounts of money were invested abroad by the profit-seeking middle-classes), and despite the 1964-1970 Labour governments' efforts (an incomes policy, a national plan, devaluation of the pound in 1967), this new approach did not work at all.
[...] Besides, despite the fact that New Labour sets great stores by the public-private partnerships and that they beware of state intervention, because it failed to a large extent to bring economic success, New Labour intends to use the market only where it is more effective and never in order to undo the State. In fact, for T. Blair, New Labour can therefore not be seen as a betrayal of principles, quite the opposite since it is all about retrieving the party's lasting principles. [...]
[...] In an attempt to stay faithful to the party's principles (solidarity, equality, etc.) and at the same time become more suitable to be elected following a second electoral defeat in 1987, moderate economic policies, under the leadership of Neil Kinnock (1983-1992), were recommended by Labour in the spring of 1989 (modification of the policy of widespread nationalization of firms e.g.). Major innovations, whose nature was a tell-tale sign of the changes that were being introduced, were also announced: 1 there was to be a minimum wage, while 2 the role of the government was to help the market work properly. [...]
[...] ( ) an enterprising economy and a fair society advance together.' In his April 2003 budget speech, Brown went on to underline: ) the flexibility I propose - in employment, in pay, in the liberalisation of capital, labour and product markets generally, flexibilities important for competitiveness in the global economy and our engagement in Europe - is not bought at the cost of fairness to families but is underwritten by policies for full employment, tackling poverty through tax credits, and more investment in public services. [...]
[...] To these Conservative politicians, the new policies which have often been referred to as “Thatcherism” were to be implemented all the more urgently since, by the late 1970s, manufacturing output was in steep decline as has been seen, with unemployment rising by 836,000 in 1980 (the largest rise in one year since 1930), and the following year saw the biggest collapse in industrial production in one year since 1921. Consequently, there was a reduction by of the number of civil servants during the 1979-1982 period (the government's ambition in the early 1980s was indeed to achieve the lowest civil service total since 1945). [...]
[...] As Blair insists in a book about the Labour party: ) we failed as a party to keep the trust of the people ( ) not because of our values ( ) but because the ideology built on them became fossilised and out of date.' Winning elections again meant policies had to be moderated, and the gap left by the absence of Keynesian social democracy (see above) had to be filled just as the potential for conflict within the party had to be reduced and an ideology provided that would retain Labour's commitment to social justice without alienating middle class support without which victory would be impossible. [...]
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