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Conservative and Labour Economic Policies

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  1. Introduction.
  2. The Thatcher-Major years.
    1. The change.
    2. Reduction in civil servants.
  3. A new context.
    1. Recent economic and social history of the United Kingdom.
    2. The political situation in Britain.
    3. Left/right division.
    4. Globalization.
  4. The Rrse of 'New Labour'.
    1. The leader of the maximalists.
    2. Socialism and neo-liberalism.
    3. M. Thatcher's policies.
    4. The party transformation.
    5. Vision of Tony Blair.
  5. Analysis of the New Labour.
  6. The characteristics Blair's policies.
    1. The third way.
    2. Importance on enterprise and fairness.
    3. The priorites of third way.
  7. The Limits of Blairism.
  8. Conclusion.
  9. Bibliography.

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. [...]

[...] The Third Way is actually meant to be an alternative political philosophy to neoliberalism in that, although markets are deemed to be a good thing (competition eg means choice for the consumers and responsibility for the producers), it recognizes markets are not self-regulating and can lead to severe social disruption caused by job losses as a result of economic slumps or technological change. While they prefer to work with business rather than against it, ?Third Wayers? think that cyclical fluctuations, lack of competitiveness, the tendency of financial markets towards crisis and monopoly tendencies have to be checked by either outside or collaborative intervention, which is a vital element they share with the social democrats. [...]

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