Crisis and Transformation in Modern Britain, 1945-2009: The global economy, the state, and national identity

This paper analyses the crisis that transformed the modern British state in the second half of the twentieth century and examines the consequences for social stability. The crisis shifted Britain from a nation that relied upon a social democratic state to one where the balance was tipped more in favour of the market. Social democracy required governments to deliver welfare and employment to the people, in return for their political support. This close relationship was intended to support a homogeneous society in which reciprocity between people and government was well understood. It also featured the collective organisation of interests powerfully linked to production. The liberal market system that emerged from the crisis of the social democratic state saw a looser relationship between state and people, with less direct government responsibility for economic management and greater stress on individual choice. Its key actor is the consumer not the producer. This form of state has considerable strength because of the way it conforms to global influences in the economy and communications. It also seems to be consistent with a more heterogeneous society produced by greater mobility of people. But there are also criticisms that it provides an imperfect means of sustaining collective and individual identity, so its value as a source of social stability may be qualified.The paper begins by comparing two classic analyses of conditions in the middle of the twentieth century, which give powerful insights into social transformation: J.A.Schumpeter's Capitalism, Socialism, and Democracy, and F.A Hayek's The Road to Serfdom. It considers their contrasting views as to what causes the transformation of societies, as well as a number of related issues: the importance of knowledge; the nature of democracy; and the significance of private property. At the conclusion of this analysis it is possible to make some comments on the foundations of social order, as differently conceived by both authors. The significance of the British Prime Minister, Margaret Thatcher (1979-1990), in this transformation will be analysed. The importance of culture for the cohesion of societies, a factor which carries little weight in liberal market societies, will also be assessed.Although much of the material in this paper relates to Britain, it is also relevant to more general questions arising from globalisation and change. The centrality of the economic process suggests that all societies will continue to be subject to almost universal influences driven by modern communications and patterns of consumption. Yet at the same time, culture and tradition-which are essentially local and specific in their character-continue to make real and important contributions to personal and collective identity.