Twentieth Century Brit Hist 2003 Tomlinson 201 21

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JIM TOMLINSON* Brunel University

The Decline of the Empireand the Economic Declineof Britain

AbstractIn the 1950s and 1960s, decolonization coincided with the golden age of British

capitalism, with record rises in popular living standards. Economic historians have

understandably used this coincidence to suggest that by this period the British

Empire was no longer offering substantial economic benefits to the mass of the

metropolitan population. Yet there were links between economic performanceand the decline of the Empire. First, despite the good performance, profoundly

pessimistic declinist accounts of British society and the economy abounded in

the early 1960s, and these had a major impact on policy formation. A key

underpinning for such accounts was the culture of decline intimately linked with

the loss of imperial status. Secondly, while it has become a commonplace of

discussion of post-war Britain to assume that reversing decline and modernizing

the economy required a re-orientation of policy away from the Empire and

Commonwealth towards Europe, such a reorientation was not a constant feature

of modernization strategies. Indeed, a central feature of the initial period ofWilsonian modernization after 1964 was its attempt to use closer links with the

Commonwealth to achieve this objective.

Introduction

In a recent essay, Charles Feinstein has highlighted the fact that the 1950sand 1960s saw the dissolution of the formal British Empire at the same

Twentieth Century British History, Vol. 14, No. 3, 2003, pp. 201221 OUP 2003, all rights reserved

* I am grateful to participants in a seminar at the Institute of Contemporary British HistorySummer Conference, July 2002, and especially to Peter Cain, for helpful comments.


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time as Britain was enjoying an equally remarkable phase of successfuleconomic performance, the best ever achieved in more than two centuriesof modern economic growth.1 He goes on to argue that this combination

reflected the fact that for the British economy as a whole (as opposed tosmall groups of shareholders and landowners), colonial possessions didnot offer significant benefits; they did not offer expanding markets, cheapimports, or returns on assets large enough to affect the living standards ofthe mass of the population. In his view, while the Empire may haveimposed substantial costs on British possessions, after 1951 at least therewere no commensurate benefits to Britain lost by imperial decline. Linkswith the White Dominions and India mattered more to Britain than thosewith the colonies, but by this time the former were able to bargain with

Britain, so that any concessions to British interests were offset bycompensating advantages to themselves.2

The perception of the 1950s and 1960s as the golden age for the Britisheconomy is clearly accurate, but equally it is retrospective. While HaroldMacmillan may have suggested in 1957 that the British had never had it sogood, such positive views were soon to be drowned out by a wave ofnegative assessments of British economic performance, so that to mostcontemporary actors the golden age increasingly became seen as a periodof economic decline. By the early 1960s a discourse of declinism had been

established, with profound effects on British society and politics that wereto last for much of the rest of the century.3

The purpose of this paper is to explore the links between this discourseand the economic policies associated with it, and imperial decline in thepost-war period. How far did contemporary perceptions of imperial issuesfeed into belief in decline, and how did those who wanted to reversedecline by modernization perceive the imperial connection? In otherwords, how important was the Empire to British understandings of theireconomy and the policy options available to British governments?

Examination of these questions may also provide a different perspective onthe long-argued view that British imperial decline had surprisingly littleimpact on British politics.4

1 C. Feinstein, The Endof Empire andtheGoldenAge, in P. ClarkeandC. Trebilcock (eds),Understanding Decline: Perceptions and Realities of British Economic Performance (Cambridge,1997), 213.

2 Ibid., 2313.3

A. Horne,Macmillan, Vol. 2. 195786 (London, 1989), 3; J. Tomlinson, The Politics of Decline(Harlow, 2001); idem., Inventing Decline; the Falling Behind of the British Economy in thePost-war Years,Economic History Review, 49 (1996), 73157.

4 J. Darwin, Fear of Falling: British Politics and Imperial Decline Since 1900,Transactions ofthe Royal Historical Society, 36 (1986), 2743.

202 J I M T O M L I N S O N


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Declinism

While the debate on decline focused on the perceived failure in economicperformance, especially growth, that failure led to critiques of Britishsociety that went much wider than strictly economic issues. A huge bodyof literature was generated which linked decline to almost every facet ofBritish society, a body of literature which in retrospect appears extra-ordinarily negative in proportion to the scale of the economic problemseven as they were calculated at this time. The culture of declinism wasarguably overblown, ill-focused, and quite often absurd, but there is nodoubt about the strength of feeling it signified, at least amongst the chatter-ing classes.5 What could explain the strength of these feelings? Stuart Wardhas persuasively argued that a key underpinning was the post-Suez sense

of declining global power, hinging on the decline of the Empire, which wasreaching a key phase, with the winds of change speech being made atprecisely the same time as the Whats Wrong with Britain literature wasgetting into its stride.6 At its most general, what linked the rhetoric ofdeclinism and imperial decline was the belief that Britain had lost its senseof purpose, a key word in the declinist lexicon.7 Ward quotes AnthonySampsons characteristic linking of these issues:

A loss of dynamic and purpose, and a general bewilderment, are felt by many

people, both at the top and bottom in Britain today . . . it is hardly surprisingthat, in twenty years since the war, Britain should have felt confused about herpurposewith those acres of red on the map dwindling, the mission of the wardissolving, and the whole imperial mythology of battleships, governors andgenerals gone forever.8

Those searching for culprits for decline commonly focused their anger onthe incapacity of Britains rulersthe Establishmentwhose wholeeducation and outlook was deemed inadequate to rule modern Britain.This incapacity, it was alleged, derived in large part from the public schools

and Oxbridge, who produced a conservative, effete clique suited to bepro-consuls of Empire but unfitted to the requirements of purposiveeconomic modernization.9 Declinists, largely located on the centre-leftof the political spectrum, generally welcomed the formal process ofdecolonization. But the virulence of their response reflected a politicallymore ambiguous position; to some degree possession of an empire was, in

5 For the depths of declinism (in both senses) see, for example, A. Koestler (ed.), Suicide of aNation(London, 1963).

6 S. Ward (ed.),British Culture and the End of Empire(Manchester, 2001), 811.7

For the importance of purpose, see, for example, M. Shanks, The Stagnant Society(Harmondsworth, 1961), introduction; H. Wilson, Purpose in Politics(London, 1964); idem.,Purpose in Power(London, 1966).

8 A. Sampson,Anatomy of Britain(1962), xiii and 620, quoted in Ward,British Culture, 9.9 J. Vaizey, The PublicSchools, in H. Thomas (ed.), The Establishment (London, 1959), 2437.

T H E D E C L I N E O F T H E B R I T I S H E M P I R E A N D E C O N O M Y 203


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economists terms, a status good, and so, as Feinstein puts it: The blow tothe countrys pride and sense of national greatness from the loss of statusassociated with possession of a glorious empire may also have had an effect

on morale and attitudes at all levels of British society, not excluding, onemight add, the progressive intelligentsia.10

While the broad linkage between imperial decline and the breadth andvirulence of what might be called the culture of 1960s declinism needs to bestressed, a more specific, directly economic link was also very important inaccounts of Britains problems. This was articulated most clearly andinfluentially by Andrew Shonfield in his British Economic Policy since theWar. This may stand alongside Michael Shankss The Stagnant Societytoform the foundation texts of most of the narratives of decline down to

the present day.11

While Shanks focused on the attitudinal/culturaldeficiencies of British societys elites, including especially of trade unionleaders, Shonfield argued that the main reasons for economic declinewere errors of economic policy. These errors were fundamentally ones ofoverstretch, of excessive overseas, primarily imperial, commitments thatthe domestic economy could not afford. Hence the balance of paymentswas burdened with too high a level of military expenditure, excessiveforeign investment and, above all, the costs of the sterling area. ForShonfield these burdens linked directly to slow growth through the

creation of a vulnerable balance-of-payments position, requiring frequentpolicies of restraint and deflation that inhibited investment.12

The argument that Britains decline was the consequence of theseimperial hangovers has subsequently generated a huge body of literature,which, until recently, had tended to elaboration and refinement rather thanfundamental critique. But recent work allows us to insert considerablescepticism into any such account. In part, this is an effect of revaluations ofhow much decline actually occurred in Britain in this period, with theconvergence and catch-up literature suggesting that while Britain could

undoubtedly have grown faster, the scope for this was much more limitedthan much pessimistic literature suggests.13 Linked to this has been agrowing attack on many of the broad suppositions of the declinist critiqueof Britain; for example, the supposedly anti-technological character of

10 Feinstein, End of Empire, 215. As Ward shows, there was great deal of politicalambiguity in much of the satire that formed part of the declinist outpouring: No NationCould be Broker, in Ward, British Culture, esp. 1067.

11 A.Shonfield, British EconomicPolicy SincetheWar(Harmondsworth,1958);M. Shanks,TheStagnant Society(Harmondsworth, 1961).

12

Shonfield did not use the term stopgo, though the process he described was soon togain notoriety under that name.13 N. Crafts, The GoldenAgeand Economic Growth in Western Europe, 195073,Economic

History Review, 48 (1995), 42947; C. Feinstein, Structural Change in the Developed CountriesDuring the Twentieth Century,Oxford Review of Economic Policy, 15 (1999), 3555.



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British culture has been devastatingly criticized by David Edgerton.14 Morespecifically, there has been powerful criticism of the imperial overhangargument, especially the linking of Britains decline to the impact of the

sterling area.The sterling area was formed of all those countries that held their

international reserves largely in sterling and fixed their exchange rate tothe pound. It was not coterminous with the Empire, Canada being anotable absentee, while non-Empire counties like Kuwait were importantmembers. Nevertheless, as Miller argued, Although there was a clearformal distinction between theSterling Area and theCommonwealth, therewas no such distinction politically . . . Britains leadership of the economicgrouping helped to reinforce its traditional leadership of the political

grouping.15

The idea that defence of the sterling area damaged Britainseconomy did not originate with Shonfield; there had been a rising tide ofsuch criticism from the mid-1950s.16 Shonfields contribution was to linksuch criticisms to a general critique of British economic policy, but un-doubtedly making defence of that area the cardinal error. His argument has

been most effectively criticized by Catherine Schenk.17 She shows that fromthe 1950s all four of the alleged deleterious effects of the area on Britainwere greatly exaggerated. First was the idea that accumulations of sterling

balances overseas were like a sword of Damocles hanging over the

reserves; in fact, a large part of these wereremarkably stable, certainly fromthe mid-1950s, acting as backing to colonial currencies. Secondly, shedisputes the view that sterling area markets were a soft touch for Britishproducers, thus weakening their competitive edge. Britain was losingmarket share in the Commonwealth just as fast as elsewhere, the problem

being a general one of rising competition for British exports.18 Thirdly,while the sterling area did facilitate the outflow of capital as Shonfieldsuggests, this outflow played a small part in Britains slow growth. Even ifit had all been invested at home, on any plausible calculations about rates

of return to investment it would not have raised growth more than a smallfraction of a percentage point. Finally, she attacks the idea that defence of

14 D. Edgerton,England and the Aeroplane(London, 1991); idem.,Science, Technology and heBritish Industrial Decline(Cambridge, 1996).

15 J. B. D. Miller, Survey of Commonwealth Affairs: Problems of Expansion and Contraction19531969(Oxford, 1974), 271.

16 For example, A. Day,The Future of Sterling(Oxford, 1954). That such discussions wereaffecting policy debate is evident from the public records: for example, PRO, CAB 134/1675,Problemsof theSterlingArea, 25June 1956; PRO, CAB134/1674, EconomicPolicyCommitteeMinutes, 20 February 1957.

17

C. Schenk, Britain and the Sterling Area: from Devaluation to Convertibility in the 1950s(London, 1994).18 D. K. Fieldhouse The Metropolitan Economics of Empire, in Oxford History of the British

Empire, Vol. 4. The Twentieth Century (Oxford, 1999), 88113; but see R. Major, Note on BritainsShare in World Trade in Manufactures,National Institute Economic Review, 44 (1968), 506.



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the sterling area was crucial to the failure of Britain to devalue the poundmore frequently or move to a floating exchange rate. There were manyother reasons why this was done, the views of the sterling area being but a

minor consideration.This critique is wide ranging and powerful, undermining both the

specific case against the sterling area and the related suggestion byShonfield that excessive overseas investment was central to Britainsproblems. This latter argument has continued be a particularly importantfeature of declinist literature post-Shonfield, and has commonly been

joined to a broader thesis about the dominance of finance and the City inBritain. This view can be found in such varied work as that of Elbaum andLazonick, Pollard, and Hutton.19 More importantly in the context of

discussion of the Empire, it can be found in the highly important work ofCain and Hopkins on British imperialism and gentlemanly capitalism.Their thesis focuses on the links between financial interests and theformation of imperial policy, with the key contention that throughout thehistory of the British Empire it was gentlemanly capitalists who wereeffectively in control.20 Their argument as applied to the pre-1939 years has

been criticized by a number of reviewers who dispute the City dominancethesis, arguing that both City and industry were commonly divided onimperial issues, and that in any event state policy cannot be reduced to the

machinations of economic interest groups.21

Cain and Hopkinss discussion of the post-1945 period is entitledAftermath, without the enormous depth and detail of their discussions ofthe previous centuries. Nevertheless, in the account of this period they doreiterate the main thrust of their overall argument. After the war, theysuggest, the central preoccupation of British policy . . . was the preser-vation of sterlings role in financing international trade and investment,and with it the maintenance of the earning power of the City of London.However, the time of formal empire was running out, and by the late 1950s

policy-makers calculated that the City, and invisible earnings generally,had more to gain from emerging opportunities in the wider world thanfrom remaining penned in the Sterling Area. As the value of the imperialcomponent of the Sterling Area diminished, so did the economic obstaclesto decolonisation. Cain and Hopkins clearly align their discussion of thepost-war period with the work of declinists like Shonfield, the link being

19 B. Elbaum and W. Lazonick (eds), The Decline of the British Economy (Oxford, 1986);S. Pollard,The Wasting of the British Economy(London, 1982); W. Hutton,The State Were In

(London, 1995).20 P. Cain andA. Hopkins, British Imperialism: Innovation and Expansion 16881914(London,1993); idem.,British Imperialism: Crisis and Deconstruction 19141990(London, 1993).

21 M. Daunton, Gentlemanly Capitalism and British Industry, 18201914, Past and Present,122 (1989), 11958.



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most obviously the assumption that financial interests largely dictatedpolicy, whether it be in relation to domestic, international, or empireissues.22

On the general character of British post-war policy, it should beemphasized that we are only just beginning to see archivally based work onthis topic for the 1950s and 1960s, and much remains unexplored. However,it can be argued that while Cain and Hopkins rightly stress the importanceof the external orientation of much policy-making, this needs to be putalongside an undoubtedly important concern with domestic economicstability and living standards; indeed, policy-makers in the 1950s wereincreasingly concerned with the reconciliation of these two ambitions.23

Secondly, on the perceived domination of policy-making by financial

interests, it is sufficient to note here that the same kind of criticisms madeabout Cain and Hopkinss treatment of the pre-1939 period have relevanceto the post-war decades. For example, the city was divided over policy atcrucial points e.g. over ROBOT in 1952, and the actual policy outcome wasnot one that was dictated by the City.24 A similar point can be made aboutthe debate over public spending in 19578, where again the morefinancially conservative forces were defeated.25 The problem with anysimple equation of City interests with support of the sterling area/defenceof the pound is also illustrated by policy after 1964. After Labour came to

power their dogged defence of sterling owed much more to politicalcalculation about the reputation of the Party and the realistic assessment ofthe impact of devaluation on working-class living standards than to Cityinterests.26

On the more specific issue of the demise of the sterling area as a motivefor decolonization, Hopkins has reiterated this linkage in recent work.Undoubtedly, as he shows, Macmillans audit of the Empire was concernedwith the economic consequences of imperial dissolution; nobody wouldsuppose that would be a matter of indifference.27 But to see this as the

defining issues seems implausible. As Hyam argues,

22 Cain and Hopkins,Crisis and Deconstruction, 2656, 283; also D. Kroweski,Money and theEnd of Empire: British International Economic Policyand the Colonies, 194758 (Basingstoke, 2001);A. Hinds,Britains Sterling Colonial Policy and Decolonization, 19391958(Westport, CT, 2001).

23 R. Holland, The Pursuit of Greatness: Britain and the World Role, 19001970(London, 1991),ch. 8; N. Tiratsoo and J. Tomlinson, The Conservatives and Industrial Efficiency, 195164: ThirteenWasted Years? (London, 1998), ch. 2.

24 Schenk,Britain, 11419; A. Booth Inflation, Expectations and the Political Economy ofConservative Britain, 19511964,Historical Journal, 43 (2000), 82747.

25 G. Peden,The Treasury and British Public Policy(Oxford, 2000), 48693.26

R. Stones, Government-finance Relations in Britain, 196467: a Tale of Three Cities,Economy and Society, 19 (1990), 3255; T. Bale, Dynamics of a Non-decision: the Failure toDevalue the Pound, 19647,Twentieth Century British History, 10 (1999), 192217.

27 A. Hopkins, Macmillans Audit of Empire, in Clarke and Trebilcock, UnderstandingDecline, 23460.



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political considerations were predominant in decolonization. Economic con-siderations were in the nature of nihil obstat. Just as economic considerationshad once facilitated the acquisition of territory, so now they operated in reverse.

Territories could be given up when nothing essential seemed to be lost bytransfer of political power-a conclusion reached for India by the 1940s andAfrica by the 1960s.28

One final strand of Shonfields original argument is that of overseasmilitary expenditure. Here the view that imperial and global politicalambition placed a damaging burden on the British economy seems betterfounded. By the 1960s, overseas spending of this type was a significant

burden, running at 250m per annum at a time when this figure roughlyequated to the scale of the governments target for the current account

surplus.29

But again, this problem needs to be kept in proportion. Whileoverseas military spending was a problem, and damaged overseasconfidence by suggesting that the British balance of payments was weakerthan the commercial accounts implied, it was not the key issue in Britainsgrowth performance. The key to the latter, as Feinstein argues, was not todo with the Empire but with savings and capital, technological progressand skilled labour, buoyant exports and a stable international economy.30

Modernization and the Commonwealth

Declinism associated the Empire and Commonwealth with outdated-ness, nostalgia, and lack of purpose. Unsurprisingly, this led many of itsadherents to regard entry into the European Economic Community (EEC)as a key to reversing decline and modernizing the British economy. Shanksand Shonfield, characteristically, were both pro-Europeans. From theclimate of ideas of the early 1960s arose that long-persistent centre-leftassumption that serious economic modernizers would necessarily beenthusiasts for Britains membership of the EEC and, conversely, that

modernization would involve rejection of Commonwealth illusions.31

Whatever the polemical and political force of this link, it is highlymisleading as an understanding of the ideas of many modernizers inthe mid-1960s. This can be seen if we look at Labours attitude to theCommonwealth in the 1950s and 1960s.

28 R. Hyam, The Primacy of Geo-Politics: the Dynamics of British Imperial Policy,17631963,Journal of Imperial and Commonwealth History, 27 (1999), 2752.

29 A. Manser,Britain in Balance(1971), ch. 9; R. Middleton, Struggling with the Impossible:Sterling, the Balance of Payments and British Economic Policy, 194972, in W. Young and

A. Arnon (eds),The Open Economy Macro Model: Past Present and Future(Amsterdam, 2002),20231.30 Feinstein, End of Empire, 232.31 For example, R. Denman,Missed Chances, Britain and Europe in the Twentieth Century

(London, 1996); R. Broad,Labours European Dilemmas from Bevin to Blair(London, 2001).



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As is well known, Labour was enthusiastic about the Commonwealth inthe 1940s, undoubtedly helped by the clear economic benefits arising fromthe use of Commonwealth exports to supply scarce dollars to the sterling

area.32

But the link also fitted with Labours ideological predispositions tosee the Commonwealth as both an important arena for maintainingBritains influence and an arena in which social democratic ideas might bepromulgated. In the long years in opposition that followed the Attleegovernment, Labour worked to strengthen Commonwealth links. In 1958theCommonwealth Advisory Committee of thePartys National ExecutiveCommittee became a full Commonwealth Department, energetically led

by John Hatch. It held meetings of Commonwealth Socialist leaders, andthough the practical results of these are difficult to see, they did provide a

channel for articulating Labours allegiance to the Commonwealth, and inthe early 1960s for attacking the Conservatives betrayal in the CommonMarket negotiations.33 Some voices were raised against this posture, with,for example, Roy Jenkins dismissing the idea of the Commonwealth asa feasible tight economic unit in 1962.34 But in the years running up tothe 1964 election, the main thrust of Labour policy was to present theweakening economic link with the Commonwealth as an undesirable andreversible consequence of Conservative policy. This stance flowed from anumber of factors. Doctrinally, the Commonwealth (along with the sterling

area) could be made to fit with long-held notions of planned trade and therejection of Tory laissez-faire and liberalization. Such views were stillstrong in Labour circles into the 1960s, articulated most forcefully byThomas Balogh, a key economic adviser and long-term critic of post-warmutilateralism.35 Particularly on the left of the Party such views were oftenallied to a growing concern with aiding the development of the poorcountries of the Commonwealth, who were seen as potential gainers fromgreater exchanges of their exports of commodities for Britains manu-factures. The establishment of Overseas Development Ministry under

Labour signalled the seriousness of this concern with development, buthow far such concerns were compatible with an emphasis on encouraging

32 Krozewski, Money, chs 4 and 5; Hinds, Britains Sterling Colonial Policy, chs 24; for acontrary view, see T. Rooth, Economic Tensions and Conflict in the Commonwealth,1945c.1951,Twentieth Century British History 13 (2002), 12143.

33 Labour Party Archives (Manchester), Conferences with Commonwealth Labour andSocialist leaders, June 1957 and September 1962; P. Gupta,Imperialism and the British Labour

Movement 19141964(London, 1975), ch. 11.34 Roy Jenkins in Fabian International Bureau,The Common Market Debate (1962), 11.35

T. Balogh, Unequal Partners, Vol. II(Oxford, 1963); K. Morgan, Imperialism at Bay: BritishLabour and Decolonization, Journal of Imperial and Commonwealth History27 (1990), 242, saysLabour saw the Commonwealth as an international laboratory of experiment for a broadprogramme of economicadvance, technologicalimprovementandeducational change to raisethe skills of the third world.



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Commonwealth links was to prove a thorny issue for Labour whilst inpower.36

Another economic aspect of the Commonwealth link was the access it

gave Britain to the cheap temperate food products of the developedCommonwealth (grain from Canada, butter and cheese from New Zealand,meat from Australia), products that could be seen as significantcontributors to the standard of life of the British worker. This was a keyconcern of figures such as Douglas Jay, on the right of the Party.37

Of course, these seeming economic attractions of the Commonwealthissue were combined with political and electoral calculation. TheConservative attempt to secure British entry into the EEC in 19613 (andthe hostility this approach aroused in the Commonwealth) provided

an opportunity for Labour to present itself as the champion of theCommonwealth, a theme of Hugh Gaitskells famous anti-EEC speech of1962.38 Gaitskells successor, Harold Wilson, had been Trade Minister in the1940s, when the Commonwealth economic link was at its peak, butcombined this potent memory with an only partly sentimental view thatthe Commonwealth was a key to Britains status as a world power. It wascharacteristic, therefore, that in a House of Commons debate in 1961 on theEEC application he had acted as a defender of the Commonwealth: Weare not entitled to sell our friends and kinsmen down the river for a

problematical and marginal advantage in selling washing machines inDusseldorf. But Wilson and Labours concern with the Commonwealthwas not just opportunistic politics and high-flown words. In the pre-election years a detailed programme aimed at reinvigorating the economiclinks with the Commonwealth was developed, and this was central toLabours approach to the economy in 1964, a fact obscured in most of theaccounts of the period by the subsequent turn away from the Common-wealth and application for EEC entry.39

In a debate in the Commons in 1964, Harold Wilson cited the figures on

the weakening of the Commonwealth trade link and attacked Tory defeat-ism on the issue. This doctrine of the inevitability of Commonwealthdecline has become part of the tribal mythology of the party opposite.In his speech, Wilson put forward a ten-point plan to encourageCommonwealth trade. This included a proposal for preferences in the wayof capital contracts in publicly financed projects, guaranteed markets for

36 For an insider but critical account, see D. Seers and P. Streeten, Overseas DevelopmentPolicies, in W. Beckerman (ed.),The Labour Governments Economic Record 19641970(London,1972), 11856.

37

D. Jay,Change and Fortune: a Political Record(London, 1980), ch. 13.38 P. Williams,Hugh Gaitskell(Oxford, 1982), 4068.39 P. Ziegler,Wilson:TheAuthorised Life (London,1993),131,also 64, 66, 219;B.Pimlott,Harold

Wilson (London, 1992), 4334; J. B. D. Miller, Survey of CommonwealthAffairs (Oxford, 1974), 291.On the second application, see O. Daddow (ed.),Wilson and Europe 196467(London, 2002).



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Commonwealth products in Britain, development of industries in Britainto supply Commonwealth investment needs, world-wide commodityagreements to stabilize primary product prices, and the expansion of world

liquidity especially to favour underdeveloped countries. Most of theseproposals found their way into a prominent position in Labours electionmanifesto, which asserted that the Labour Party is convinced that the firstresponsibility of a British Government is still to the Commonwealth.40

These were the main elements in a programme that was to be at the centreof Labours economic discussions about the Commonwealth in the yearsafter 1964, but which was ultimately to prove largely unworkable.

The failure to find a plausible Commonwealth alternative in the earlyyears of the Wilson government was one important element in Labours

decision to apply for EEC membership, as analysed further below. But wasthis immense change of direction simply a giving up of a sentimentalillusion in the face of the realism of policy-making in office, or was theCommonwealth option ditched too easily for the sake of what was in somerespects an equally problematical and emotional attachment to Europe?

Governmental discussions of Labours programme for strengthen-ing Commonwealth links was largely organized around major formalCommonwealth meetings. The first of these following the 1964 electionwas of Commonwealth Prime Ministers in June 1965. The agenda of this

meeting was dominated by the contentious issue of Rhodesia, which waspreparing to make a unilateral declaration of independence (in November1965), but it provided a platform for Wilson to push the key itemsof his plan, focusing especially on gaining an agreement to have aCommonwealth Trade Ministers conference to encourage trade linksameeting to develop the idea of co-ordinating Commonwealth countriesplans as a basis for preference in public procurement.41 The Trade Ministersmeeting was a key event in exposing doubts about the plan, the meetingitself and the preparatory gathering of officials showing the difficulties of

reversing the trend away from close Commonwealth economic ties.Much of the internal governmental discussion on Commonwealtheconomic issues came together in the Official Committee on CommercialPolicy. A key initial paper was put to this committee in spring 1965 bythe Board of Trade, its disappointing conclusions being endorsed byother departments.42 This paper expressed scepticism on the prospects of

40 House of Commons,Hansard, 6 February 1964, reprinted in H. Wilson,The New Britain:Selected Speeches 1964(1964), ch. 8; manifesto statement in Craig, General Election Manifestos

195987(Aldershot, 1970), 56.41 H. Wilson,The Labour Government 196470: A Personal Record, (London, 1974), 161.42 PRO, CAB 134/1470, Chairmans note, Britains Trade with the Commonwealth,

29 March 1965, covering Board of Trade, Britains Trade with the Commonwealth, 1 March1965.



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realizing the governments ambitions on grounds which were to be largelyechoed in all discussions over the next few years. These grounds, thoughoverlapping and inter-related, may be summarized as fourfold: how far the

Commonwealth was the key arena in which Britain should pursue its tradepolicies; whether Britain could expect any reciprocal gains from any tradeconcessions it might make to other Commonwealth countries; whetherthere was any realistic scope for co-ordination of plans leading toCommonwealth preference in public procurement; and whether therecould be closer links between British provision of finance to Common-wealth countries and their trading decisions.

On the first point, the core aim of Labours international trade policy,following that of the Conservatives, was to support liberalization through

the General Agreement on Tariffs and Trade (GATT) process, which meantat this time pushing for tariff and quota reductions in the KennedyRound, which began in 1962 but was not concluded until 1967, withimplementation beginning in 1968.43 This strategy reflected worries thatthe world was developing a growing number of trading blocs whichthreatened to restrict British trade opportunities. Such fears had, of course,informed the Conservative approach to the EEC at a time when that bodywas seen as likely to develop a forbidding Common External Tariff. As theBoard of Trade spelt out in frank terms, this focus clearly meant the

Commonwealth had second place in British policy: Since our main concernin the Kennedy Round is to negotiate concessions with the majornon-Commonwealth developed countries (and we would not wish to

jeopardise an advantageous settlement with themmerelyin deference toCommonwealth interests) . . .44 (emphasis added). Officials at the pre-paratory meeting in November 1965 endorsed this view, spelling out theimplications that: The world-wide reduction of tariffs and other barriers totrade was likely to be the most successful and rapid method of developingtrade both within and between the Commonwealth and the rest of the

world, and Commonwealth trade has to be considered in the context ofworld trade and a closed Commonwealth trading system would be neitherfeasible nor desirable.45

The practical implication of this perspective was that the primary arenasfor Britain and the other Commonwealth countries to pursue trade policy

43 D. Lee,Middle Powers and Commercial Diplomacy: British Influences at the Kennedy TradeRound(New York, 1999); E. H. Preeg,Traders and Diplomats: An Analysis of the Kennedy Roundunder the GATT(New York, 1970).

44

PRO, CAB 134/1472, Board of Trade, Commonwealth Preference and the KennedyRound, 13 May 1965.45 PRO, CAB 134/1475, Board of Trade, Meeting of Commonwealth Trade Officials

Nov. 1965, 15 December 1965; also DO 215/135, Note by Chairmanof Economic Development(Official) Committee, Commonwealth PMs Conference June 1965, 7 April 1965.



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aims should be global bodies like the GATT and the United Nations Con-ference on Trade and Development (UNCTAD), not the Commonwealth.Thus, when, for example, Ceylon suggested a revival of the Common-

wealth Shipping Committee, the Commercial Policy Committees viewwas clear: the Commonwealth was not an economic unit nor a shippingunit, and the issue should be pursued through UNCTAD. This meant that,at best, Commonwealth trade discussions would be about co-ordinatingapproaches to GATT and UNCTAD meetings.46 But even this muchreduced aim was reliant on a belief in a commonality of interest withinthe Commonwealth, which became an increasingly difficult view tosustain. The result was that Commonwealth meetings became more of aframework for bilateral bargaining than a basis for general discussion and

agreement.47

This leads on to the second problem mentioned above, the degree oflikely reciprocal concessions between Britain and her Commonwealthpartners. As far as the underdeveloped countries of the Commonwealth(the majority by the early 1960s) were concerned, any belief in commonalityof interest that might have existed was undermined by the deterioration intheir terms of trade from their Korean War peak, especially when this waswidely seen as a secular trend rather than a cyclical phenomena. Thispessimistic view was most ably articulated by Raul Prebisch, who became

the first Secretary-General of UNCTAD in 1962, that body in turn becominga mouthpiece for the poor countries of the world in their search for morefavourable market conditions.48 Because of the concern to be seen assupporting the aims of the poor countries, Britain and other rich countriesaccepted, at least in principle, the view articulated at UNCTAD that theyshould grant trade concessions to underdeveloped countries withoutseeking reciprocity.49

Because it had adopted this role as advocate of the poor, UNCTAD hadobvious attractions to underdeveloped Commonwealth countries,

attractions superior to those of a body which contained both the rich andthe poor. Increased consciousness and articulation of the division betweenrich and poor was unlikely to aid the coherence of the Commonwealth.More practically, a concern with raising global primary product prices,central to the politics of underdevelopment in this period, was bound toleave the Commonwealth largely on the sidelines, as its main markets for

46 PRO, CAB 134/2626, Official Committee on Commercial Policy, Minutes, 2 May 1966;PRO, CAB 134/1475, Meeting of Officials.

47

PRO, CAB134/1473, Board of Trade ,UK Objectives at Meeting of CommonwealthTradeOfficials, 6 September 1965.48 S. Dell, The Origins of UNCTAD, in M. Z. Cutajor (ed.),UNCTAD and the South North

Dialogue(Oxford,1985), 1032.49 PRO, CAB 134/1472, Britains Trade with the Commonwealth.



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such products (within which Britain overwhelmingly predominated) weresimply not large enough to be able to seriously affect the world pricetea

being the one and only major exception to this generalization.50

While the Labour governments concern with the conditions of theworlds poor was genuine, it clearly had its limits. Trade concessions thataided (mainly) poor countries, such as the Commonwealth SugarAgreement (CSA), were under scrutiny because of the perception of theirradical impact on import prices. The CSA, begun in 1951, was until 1967rolled-over annually for a further period of six years. The stated reasonfor ceasing to do so was the impending discussions with the EEC, butthere seems to have been a determination to restrict its scope and costirrespective of the EEC issue.51

Poor countries were concerned to expand their exports of manufacturedgoods as well as to get better prices for primary products. Here again, theCommonwealth proved to be of limited benefit to them. While Britain wasmore generous than other rich countries in allowing access to key productssuch as textiles, for balance-of-payments and employment reasons thetrend in this period was towards a tightening not loosening of importcontrols.52

Britain under Wilson was, of course, seriously concerned with thebalance of payments and public expenditure, and this was bound to lead to

questioning of the amount of aid to poor countries. The establishment ofthe Ministry of Overseas Development signalled Labours recognition ofthe new agenda of world poverty, but the level of aid channelled throughit was constrained by these macroeconomic problems. This aid (most ofwhich went to Commonwealth countries) rose sharply in the early years ofthe Wilson government, but then, after sharp internal disputes, fell back.53

Conversely, the view of poor members of the Commonwealth in this periodwas increasingly that the purpose of belonging to that body and attendingits meetings was to increase economic aid, rather than to bargain over

mutual benefits.54

This circle might have been squared by more aid tied topurchases of British exports, but the results of investigations into thepossibility of this were uniformly negative. It was pointed out that Britainwas not and could not be a big enough aid giver to greatly affect trade

50 PRO, CAB 134/1474, Board of Trade, Commodities, 22 November 1965.51 CSAprices were commonly asserted to be twice world prices, but world prices had very

little meaning in such a restricted market. Miller,Survey, 289; PRO, CAB 134/3036, Extensionof Commonwealth Sugar Agreement, 9 November 1967; Extension of Commonwealth SugarAgreement, 29 October 1968. Australia also benefited from the CSA.

52

A. D. Morgan, Commercial Policy, in F. T. Blackaby(ed.), British Economic Policy 196074(Cambridge, 1978), 527.53 Seers and Streeten, Overseas Development Policies; compare B. Tew, Policies Aimed at

Improving the Balance of Payments, in Blackaby,British Economic Policy, 31920.54 Wilson,Labour Government, 161.



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volumes; that in any event, tied aid was generally unpopular with itsrecipients; and that tying might even worsen the situation, becausecurrently Britain did well in competing for orders from untied aid in

countries like India, whereas if more were tied we might end up with asmaller share of the market.55

Reciprocal trading agreements with the rich White Commonwealthcountries faced obstacles well known since the time of Joseph Chamberlain.Australia, Canada, and New Zealand, while happy with any concessionsgranted in the British market, were developing their own manufacturingindustries, and wanted protection against British manufactures. They werenot willing to play the role of simply suppliers of cheap food and rawmaterials to Britain, and recognized that to develop their manufacturing

exports they had to look well beyond Britain and the Commonwealth. Thiswas well understood in Britain: they wish to build up their new industriesand would not wish to impair their relations with their other tradingpartners who now do twice as much business with the Commonwealth aswe do, and offer more scope for increase. In addition, while some Britishministers emphasized the benefits to the consumer and to industrial costsof cheap food and raw materials, the National Plan of 1965 had called forfurther subsidized expansion of agricultural production.56

The Wilsonian enthusiasm for domestic economic planning had its

reflection in debates about the Commonwealth. Wilsons idea was thatdiscussion of each others plans would enable market opportunities to beidentified, especially in capital goods, and governments would thenencourage Commonwealth preference in those areas where the state hadprocurement responsibilities. Such a policy faced clear obstacles. First,planning was not in vogue in all of the Commonwealth, especiallyAustralia and Canada, so there was often little to co-ordinate. On the otherhand, India, with much more planning than Britain, had to be remindedthat in a capitalist economy the amount of control exercised by government

was strictly limited.57

Secondly, all governments were wary of buying otherthan on the basis of cost effectiveness. Somewhat embarrassingly, theBritish government itself made little use of procurement as a domestic

55 PRO, CAB 134/2628, Treasury, Procurement by Public Authorities, 2 May 1966;T312/1113, Treasury, Financial Advantages of Commonwealth Membership, 16 March 1965,pointsout that theFranczonewas nota relevant modelforCommonweathrelations,consistingof a small groupof poor countries andone overwhelmingly dominant mothercountry. On thissee also DO 215/135, Commonwealth PMs Conference.

56 PRO,CAB134/1472, Britains Trade;Department of EconomicAffairs, The National Plan(London, 1965), 13541.

57

PRO, CAB 134/3038, Board of Trade, Imports of Butter, 24 January 1969; ibid., Boardof Trade, UK Objectives at Meeting of Commonwealth Trade Officials, 6 September 1965;PRO, CAB 134/2626, Official Committee on Commercial Policy, Meeting, 2 May 1966;PRO, CAB 134/2627, Three Indian Papers for Discussion by Commonwealth Trade Officials,20 March 1966.



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policy instrument, the only example where this was done in the early yearsof Labour being computers. Finally, even if the political will existed, keycountries such as Australia and Canada had federal constitutions, where

central government did not control the activities of state or provincialgovernments. This meant the proposal was at best only plausible in areassuch as defence, where national governments were always the responsible

bodies. But here, Commonwealth governments had often developedstrong ties to American armaments suppliers that would be hard for Britainto break. In sum, while pious declarations on this issue, such as the onealready secured at the Commonwealth meeting in Montreal in 1958, might

be endorsed, the idea of international planning remained largely emptywords.58

All of the lines of argument outlined above tell a story of unrealistichopes being entertained by Labour at the time it entered office about theprospect of developing closer economic ties with the Commonwealth.Overwhelmingly, the advice from within the official machine was that suchexpectations were unrealizable. But was this a case of civil servantsarticulating a Whitehall view and blocking more radical policies thatmight otherwise have been pursued by a Labour government?

Three arguments tell against such a view. First, powerful ministerialadvocates of closer Commonwealth ties, most notably Douglas Jay at the

Board of Trade, were unable to find any arguments against those putforward by the civil servants. He was reduced to making proposalsnotably for Commonwealth free trade areaswhich he himself stated to beunrealistic and purely gestural. This rather pathetic posturing was clearly arecognition that there were no other serious proposals that could be putforward, and that all Britain could offer was gestures.59

Secondly, lack of enthusiasm was a feature not just of Whitehall in theface of Wilsons Commonwealth ideas. Governments in other Common-wealth countries reacted extremely cautiously to invitations to discuss

Britains initiatives; they were willing to discuss British proposals, but theyfound little to engage their enthusiasm. Many were more concerned withpursuing their own trade agendas, such as Nigerias search for a trade linkwith the EEC, which was causing much annoyance in Whitehall at thistime.60

Thirdly, the only persistent advocate of the Commonwealth idea was

58 PRO, CAB 134/2628, Treasury, Procurement by Public Authorities, 2 May 1966;PRO, CAB 134/1473, Board of Trade, Proposals for Meetings on Commonwealth Trade

Agreements, 22 July 1965.59 PRO, PREM 13/183, D. Jay to H. Wilson, 3 June 1965.60 PRO, CAB 134/1746, Meeting of Commonwealth Trade Officials, 29 November 1965;

PRO, DO 162/37, Michael Stewart to Harold Wilson, 3 March 1965; PRO, CAB 134/1475,Official Committee on Commercial Policy, Meeting, 23 March 1965.



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Balogh, and apart from the general distrust he aroused, there was the clearproblem that he unashamedly saw the Commonwealth as a protective

block, which put him at odds with the general Labour as well as Whitehall

perception the such blocs were a danger to Britain. A key reason for Laboursupport for the Kennedy Round was the belief that it offered a defenceagainst the perceived threat of the growth of trade blocs; similarly, itseventual approach to the EEC was based on fears of being left out of this(initially) highly protected bloc. For these reasons, most senior figures inthe Labour Party had become noticeably more pro-free trade than in the1950s. Balogh seems to have underestimated the strength of this tide ofopinion amongst Labours leaders, and this led him to focus too muchattention on official attitudes as the obstruction to his proposals. He was

also out of kilter with the increasingly consensual common sense viewthat British industry needed more competition rather than protectedmarkets in order to become more efficient.61

The failure of these ambitions for closer economic links with theCommonwealth was evident soon after Labour took office. After theCommonwealth Trade Ministers conference of 1965 it was clear to allwho looked that, as Wilson later put it: there was virtually no willingnessto improve intra-Commonwealth trading arrangements. The followingyear he told the Commonwealth Secretary-General of a more a general

disillusion: The Commonwealth showed little disposition to help Britainor to play a constructive part, for example, at the UN.62 Part of the problemwas the souring of relations by political issuesmost importantly,Rhodesia. But the economic obstacles were also immense. As noted above,intra-Commonwealth trade had been declining from its post-war peaksince the early 1950s. This was not largely the result of what Wilson calledConservative neglect, except in the sense that it followed from the generalConservative encouragement of trade liberalization. This dismantling ofthe discriminatory trade rules of the 1930s and 1940s allowed market forces

to exert themselves, and the resulting trade pattern reflected the newdynamics of international trade emerging in the 1950s and 1960s. Britainshistoric nineteenth-century role as overwhelmingly an importer of foodand raw materials was shifting as manufactured goods became increas-ingly dominant in imports as well as exports, aided by support fordomestic agriculture (Table 1). This was a key part of the golden age ofcapitalism, as the major Western European and North American economiesincreasingly swapped manufactures for manufactures as the staple oftheir trade. In this process, the Commonwealth outside Britain, consisting

61 PRO, PREM 13/182, Commonwealth Trade and Aid, 1 April 1967.62 Wilson,Labour Government, 117; Miller,Survey, 293, 300; PRO, PREM 13/1367, Note of

Meeting of PM with Secretary General of Commonwealth, 5 April 1967.



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largely of rich but small or large but poor countries, was increasinglymarginal to Britain, and they themselves were also enthusiasticallydeveloping trade links with non-Commonwealth countries.

Most Labour policy makers were reluctant to accept this trend. In part,this related to a hostility to the trade liberalization, which was seen asallowing this fragmentation of the Commonwealth. Such views weremost consistently aired by Balogh, long an advocate of retainingdiscriminatory rules to encourage Commonwealth trade.63 But eventhose with more liberal economic views tended to believe that it wasTory mis-management between 1951 and 1964 which was weakeningCommonwealth trading links, rather than this reflecting new patternsof trade growth. A more sophisticated view recognized the growth ofintra-industry (and, by extension, largely non-Commonwealth) trade, butargued that this was less advantageous than the Commonwealth pattern ofswapping manufactures for food and raw materials. In this view, swappingRenault Dauphines for Morris Minors was less beneficial than swappingcars for raw materials.64 Even if one ignored the rising appetite of British

consumers for sophisticated imported manufactures made by other richcountries, the obvious problem of the Commonwealth was that it con-tained too few of the rich of the world to form a major expanding market forthe products of the poor. The degree of commonality of interest was limitedand declining.

The pro-Commonwealth attitudes of Labour around 1964 were in part areflection of Labours accurate perception that the Attlee government hadeffectively encouraged Commonwealth trade, and that this had been toBritains immediate advantage. Disillusion swiftly followed from Labour

63 T. Balogh,The Dollar Crisis, Causes and Cure(Oxford, 1949); Balogh Papers: PRO, CAB147/5662, Import Policy, 19647.

64 P. Streeten and H. Corbet (eds),Commonwealth Policy in a Global Context(London, 1973).

Table 1Composition of British Trade, 19469 to 19609 (percentages of total imports)

Period Manufactures Primary products

19469 17.2 82.819509 23.0 77.019609 40.8 58.0

Source: R. Rowthorn and J. Wells,De-Industrialization and Foreign Trade (Cambridge,1987), 173.



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bringing a 1951 approach to bear on a situation which fourteen years hadradically changed.65 But, more specifically, the pro-Commonwealthattitude was reinforced by Labours hostility to the first Conservative

application to join the EEC in 1961. The likely implications of this policy forlinks with the Commonwealth provided an easily wielded stick for Labourto beat the Tories with duringthe latters last years in government.66 Labourpresented itself as the defender of Commonwealth interests against Tory

betrayal. Yet such a stance became less politically attractive as relationswith much of the Commonwealth cooled after 1964, and simultaneouslyCommonwealth countries became less vociferous in their concerns aboutBritains possible entry. Whereas the Commonwealth had been portrayedas a key obstacle to EEC membership in 1961, by 19667 Labour was willing

to treat the question as one of a limited number (New Zealand dairyproducts, tropical produce) of negotiable problems.67 Despite this eventualdowngrading of the Commonwealth, it is important to emphasize that itwas not just nostalgia for the 1940s that fuelled Labours initial Common-wealth enthusiasm. Committed progressive internationalists such as Seers,Streeten, and Lipton regarded the Commonwealth as the best mechanismfor Britain to fulfil its aims of tackling world poverty, and were bitterlydisappointed by the failure to use it in this way.68

Economic Policy and the Empire

Because of the prevalence of teleological accounts of post-war Britain, inwhich the country was inevitably led fighting and screaming into the EECas the only rational place to go, it is important to be clear why an alter-native, Commonwealth path, though seriously considered in the 1960s,was not viable. First must be the issue of trade. Douglas Jay and others triedto resurrect the Edwardian cheap loaf argument in the 1960s, but this nolonger had much resonance. Far less working-class income was now spent

on food, and cheap refrigerators were now more politically important thancheap bread.69 Unlike food, manufactured goods were bought mainly fromcountries at similar levels of income, hence Britains growing trade with

65 Miller,Survey, 293.66 For Tory attempts to revive Commonwealth links after failure of the application for

Common Market entry in 1963, see PRO, T312/706, A. Douglas-Home to CommonwealthSecretary-General, 31 January 1964; PRO, T312/1114, Proposals for Strengthening Economic,Commercial and Cultural Links with the Commonwealth, 2 February 1964.

67 A. May (ed.), Britain, the Commonwealth and Europe: The Commonwealth and BritainsApplications to Join the European Communities (London,2001); C. Schenk, Sterling, International

Monetary Reform andBritainsApplicationstoJointheEuropean Communities,ContemporaryEuropean History, 11 (2002), 34569.68 M. Lipton, Labour andBritish Economic Policy Towards Asia, in C. Jackson (ed.),Labour

in Asia(London, 1973), 415.69 Tomlinson,Politics of Decline, 3, 512.



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Western Europe that accompanied the commodity composition changesshown in Table 1.

But the change in trade patterns was not just about the changing

composition of British demand. Commonwealth countries were recog-nizing the limited scope for expansion of Britain, and Canada wasdeveloping her trade with the USA, Australia, with Japan. Only NewZealand found it hard to find alternative customers for her lamb and dairyproducts. For the poor countries of the Commonwealth the most obviousproblem was that Britain (along with other developed countries) wasincreasingly unwilling to import the narrow range of relatively un-sophisticated manufactured goods that they wanted to exportmostobviously in the case of textiles. In addition, foreign exchange constraints

cut the possibility of providing a major expanding market for Britishexports. In the 1960s Indias trade links declined not just proportionately,

but in absolute terms.70

These trade patterns were not immutable. But the key issue for the morerapid development of markets such as India was inward investment(providing both capital for development and foreign exchange), and herethe problem was that Britain was simply not a large enough economy toprovide resources on the scale that would have made a large difference toan economy like India. British capital did flow into India (though more

went to Australia and South Africa), but it was concentrated in a fewsectors, while India, with some success, played the USA off against theUSSR to obtain external investment funds on a scale Britain could notmatch. As already noted, the addition of government aid to privateinvestment was quantitatively significant from a British point of view, butrelatively trivial for the Indian economy.71

While trade and investment were the key components of imperialeconomic relations, the attenuation of migration also symbolized thelimited common interests of much of the Commonwealth. While still

exporting over 100,000 people a year in the 1950s and 1960s, largely to theWhite Commonwealth, tight controls were imposed on (Black and Asian)immigration by the Immigration Acts of 1962 and 1968, though within thisregime Britain continued to denude poor Commonwealth countries ofsignificant numbers of skilled professionals.72

70 M. Lipton and J. Firn,The Erosion of a Relationship: India and Britain since 1960(London,1975), appendix table 2.3. For the changing relations with other parts of the Commonwealth,see J.B.D. Miller, Britain andtheOldDominions (London,1966);Y. Bangura,Britain and Common-wealth Africa: the Politics of Economic Relations(Manchester, 1983).

71

Lipton and Firn,Erosion of a Relationship, 11015.72 Labour Party Archives, Study Group on Immigration, June 1969April 1971. For theend of mass emigration from Britain, see S. Constantine, Waving Goodbye? Australia,Assisted Passages and the Empire and Commonwealth Settlement Acts, 194572,Journal ofImperial and Commonwealth History26 (1998), 17695.



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The declining economic links with the Commonwealth were then theresult of a wide array of forces, both metropolitan and centrifugal. How farwas this decline a result of British policy? The key policy decision here did

not relate directly to the Empire, but was one which led Britain, albeitslowly and unevenly, down the road to international economic liberal-ization. Once the effects of this were felt, it was evident that the close tiesof the 1940s were highly contingent, and that, above all else, the effect ofrising incomes would be an insatiable demand for manufactures that theCommonwealth could not satisfy. In the new politics of the 1950s and1960s, satisfying the demand for consumer prosperity became politicallyimperative, and this condemned the Commonwealth link to growing in-significance.

Feinsteins identification of a paradox, the coupling of the decline of theEmpire with unprecedented British prosperity, cannot be faulted. But inthis paper I have tried to suggest that the Empire did matter to Britisheconomic policy in the 1950s and 1960s, both because of its links to thedeclinist discourse and because (for a while at least) an alternative,Commonwealth, path to the economic future provided a key part of theattempt to modernize the British economy in the 1960s. This latter needsto be rescued from the condescension of posterity if we are to understandsome of the tensions in economic policy in post-war Britain.


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