1.

1-The Post-War Consensus

What is a « consensus »?
The consensus is an agreement of a group process where the input of everyone is carefully considered so that to
result in a positive outcome. It is a process of synthesizing the wisdom of all the participants so that to have the
best decision possible of that time. Actually, it is the agreement of the Conservative and the Labor party on
series of policies advanced by both parties to recover from the devastation of the Second World War. Since it
was after the war, it has been named “the post-war consensus”, having other names like: Bi-partisan agreement
(since it was between two parties), or the constructed Consensus.

The Post-war Consensus in Britain

Britain emerged from 1939-1945 a war triumphant, but economically exhausted. It was one of the top three
superpowers, although in reality a distant third behind the United Stated and the Soviet Union. Nonetheless,
British political system and state had been vindicated by success in war, and over the next few years, Britain
emerged as a model social democracy.

In 1945, the Labor Government was largely responsible for what is called the « post-war consensus ». However,
some of the key elements can trace their origins to the war time coalition government and the influence of some
figures like the economist John Maynard Keynes.

The Labor Victory

In 1940, the Labour Party was part of the war time coalition. Although the Labours remained out of office for
most of the interwar period, the party was able to control many local authorities and put its socialist principles
into practice on a small scale. In 1941, all the British private economies were at war at a time when the country
needed many important products. So, unlike the Conservatives who were for privatization, the Labour Party
was able to measure and apply the state ownership to run the economy. This nationalisation of economy played
a major role in the Labour’s success in the 1945 Geneneral Elections. When the Labour Party took the office
under Clement Attlee as a Prime Minister, the latter made many reforms in the British economy. For instance,
taxes increased, industries were nationalized, and the welfare state was created. Then, Labour party was
responsible for the creation of the post-war consensus. It was a plan for the sake of recovery from the
devastation of the Second World War.

The major features of the domestic politics during the Post-war Consensus
1- The British government accepted a commitment to maintain full employment by Keynesian techniques
of economic management. Ministers would use taxes and boosting state spending to increase the level of
economy.
2- The acceptance and some encouragement of the role of trade unions. The unions’ access to government
was increased by full employment.
3- The mixed economy (both state and private sectors), but with a large role for state ownership of
utilities, such as: (gas, electricity, coal, rail...etc), and intervention and planning in the economy.
4- The welfare state as a major policy by the labour power. This policy is the object of national insurance
system and the National Health Service. To provide an adequate income and free health. For instance,
when a family is hit by: sickness, old age, unemployment, or death of the main breadwinner. The
services were provided by the general taxation, or insurance, and represented the social citizenship.

These policies were pursued by both Labour and Conservative parties and governments during the post-war
consensus. The conservative thought that it was necessary to gain the working class support to gain the general
elections and the consent (acceptance) of the major interest groups.

The term consensus could keep its idealistic view although the previous policies were often challenged by the
left of the Labour party, and by the right wing of conservatives due to their differences. The Post-war consensus
lasted from 1945 until 1979. At the beginning it was broadly accepted by all the political parties (1945-1960).
Yet, during the late of the 1960’s and the 1970’s, the fissure (state of division) began to appear on the
constructed consensus. Margret Thatcher burst and break the post-war, bi-partisan agreement, but what were
the reasons that push her to do so?

The decline of the Post-war Consensus

During the 1960’s and 1970’s, the main parties competed to reserve Britain’s economic declined caused by the
post-war consensus. There was a growing awareness that the economic league table showed that Britain was at
the wrong way regarding the spread of strikes, inflation, economic failure, and raising the living standards.

Virtually, all European countries were called “Economic Miracles” except Britain which had been named “The
sick man of Europe”.

The targets for blame included:

1- The failure to invest a new plant (factories) and machinery.

2- The Loss of markets and the rise of competition.
3- The problem of inflation.
4- Low growth and irresponsible trade unions powers.
5- Economic problem of the 1970’s that broke the Labour government’s long commitment to welfare
expansion. In other words, many right wing economists blamed the welfare state for economic
problems, claiming that high taxes fuelled inflation and reduced economic incentives (motivations).
6- Many services felt that education and health were sub-standards.
7- “The Winter of Discontent” in 1979 was a key event. The rush of strikes in crucial public services
against the Labour government. This destroyed the government’s reputation for economic management
and its ability to gain the cooperation of the unions.
8- Lastly, economic theories based on Keynesian economic principles. That what made the conservatives to
attack the Labour’s ideological and economic basis.

To save the British economy, both parties turned to the income policies as an answer to inflation. However they
failed dramatically with Edward Heath government in 1979. This was the date of the decline and the end of the
post-war consensus, as well as the emergence of Margret Thatcher, the saviour.

There were two responses to the failure of the consensus. From the right, the new economic ideas of Friederich
Hayek and Milton Friedman who stressed individualism and economic freedom. They claimed that the free
market was an economic saviour for Britain, while the welfare state was viewed as a threat to basic individual
freedom (remember the labour socialist economy). I.e. the welfare state was viewed as a restrictor of consumer
choice and removing his control. In this analysis, the new right thinkers won out over the ideas of the left
labours who were seen the reason of the decline.