Diane Coyle: The Long Arc of UK Productivity: "Nick Crafts has a compact book... about the trajectory of the British economy... Forging Aahead, Falling Behind and Fighting Back.... Nick’s somewhat idiosyncratic–but highly plausible–view that the seeds of the country’s post-world war 2 relative decline were sown in the institutions that enabled it to perform so well during the 19th century...
...The argument is that being caught up by other countries was no shame, but being overtaken in absolute income per capita levels by all other comparator countries in the second half of the 20th century reflected significant policy failures. The policy failures, in Nick’s view, date to the emergence of liberal market economy institutions in the early phases of the Industrial Revolution. Although understandable at the time–notably the development of equity financing with dispersed shareholdings, rather than bank financing, and decentralized strong craft unions due to the importance of skilled labour for the young technologies–their persistence into the 20th century meant Britain lacked the ‘social capability’ that would have enabled it to take productive advantage of 2nd and 3rd Industrial Revolution technologies. The continental co-ordinated market economies fared better. The other key policy failure underlined in the book is the weakness of competition policy in the domestic market, combined with the slow removal of barriers to competition from imports due to delayed entry into the European Economic Community.... It’s a persuasive account...
#shouldread
