By Brian Brivati
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Second, the competitiveness issue raises problems about the attitude to the balance between manufacturing and services. In the 1960s Labour’s attitude was clear. In a fully employed economy, the belief was that workers should be transferred from service to manufacturing employment in order to raise average productivity. This was based on the belief that a substantial part of the higher productivity growth of western European countries in the 1950s had been the result of the transfer of large numbers of workers from agriculture to industry, and that Britain, lacking that source of labour, should squeeze workers out of services.
Conclusions The policies of the Labour Government of 1964 showed a strong initial faith in the capacity of structural policies to deliver more rapid growth, whilst avoiding the need to revert to stop-go strategies to deal with the balance of payments problem. Ultimately this approach failed, and there was a complete change of direction, under 24 Economic policy crisis circumstances, towards deflation. This in turn failed, and was succeeded by a devaluation coupled to deflation which finally delivered the economy from the balance of payments constraint, albeit at the cost of higher unemployment and a reversal of previous public spending plans.
8 N. Tiratsoo and J. Tomlinson, Industrial Efficiency and State Intervention: Labour 1939–51, Routledge, 1994; J. Tomlinson, Democratic Socialism and Economic Policy: the Attlee Years, Cambridge University Press, 1997. 9 Labour’s 1964 manifesto is reprinted in F. W. S. 43–60. 11–13 10 A. 35 11 S. Pollard, The Wasting of the British Economy, Croom Helm, 1984. 12 D. Corry and J. Michie, ‘EMU: the Left Debate’, Political Economy Research Centre, University of Sheffield, Policy Paper No. 4, 1997. 13 A.