Rise and Fall of Alternative Economic Strategy - Literature review Example

? Rise and fall of Alternative Economic Strategy: From the Internationalization of Capital to Globalization The Alternative Economic Strategy (AES) was developed after the defeat of the Wilson Government in 1970 following a series of deliberations and extensive self-examination within the Labour Party. AES was a series of proposals detailing the plans of the Labour Party in attaining renewal of Britain’s economy following the British economic crisis that had worsened in the 1970’s, and to address the problem arising from increasing internationalization of the economy. The AES was to form the frameworks of an economic strategy to be utilized in the future by the left Labour government. The disintegration of the Labour left, particularly after the losing elections in 1983, significantly contributed to the fall of the AES (Callaghan 2000, p. 105). Nonetheless, even before this, advocates and radicals had earlier started to criticise the strategy calling for its major review and modification prior to the Labour party’s elections defeat. The element that several more radical and original contributors and supporters of the strategy voiced these criticisms was an indication of anausterere-evaluation of what the AES would have accomplished in addressing the dynamic circumstances the economy of the country was facing at early 1980’s. They were calling for an adoption of a regional trans-European strategy. Nevertheless, despite the calls for a shift towards a trans-European model were profound, the Labour party did not yield to the pressures. After Harold Wilson took the helm in 1964, the economy was having payment deficits amounting to about ?0.8 billion, and speedy measures were needed on the future of the sterling pound (Callaghan 2000, p. 105). The two options to fix the deficits were either to devalue the currency or to impose a temporary surcharge and quotas on imports. Wilson’s administration adopted the latter in a bid to uphold its promise to maintain the value of the sterling pound. Later, the Wilson government lost elections to the labour party, paving way for numerous reforms, which culminated in the AES in order to address the economic crisis Britain was facing. The AES was originally a creation of the NEC subcommittees although numerous individuals and institutions were later allowed to contribute to the policy. Some of the major contributors included the Labour Coordinating Committee, Tribune MPs, The Conference of Socialist Economist, The Communist Party, Several Trade Unions, And the Cambridge Political Economy Group (Callaghan 2000, p. 108). The AES branded the fundamental problem of the British economy as emanating from low number and quality of investments; some highlighted the low number of investments in the manufacturing industry while others stressed the qualitative side and the association of investment with social relations at the point of production. The AES was aimed at tackling these issues through programs of industrial rejuvenation encompassing a strong and well financed National Enterprise Board and Mandatory Planning Agreements. The AES also stressed the problem of international corporations’ infiltration into the British economy. The developers of the AES believed these international corporations through their activities were the main cause of the British economic crisis, and several proposals of the strategy were directed at addressing this problem. The AES also aimed at imposing import controls. This was for protectionist reasons as well as to increase the state control of trade. It also aimed at boosting the government’s trade talks with other countries on progressive terms. The AES failed, in part, due to opposition from both right and far left radicals and later, criticism from some of its architects. First, there were the arguments that market economics ought to be left to dynamics of the forces of demand and supply since interfering would affect the equilibrium of Pareto principles. The strategy was unrealistic and irrelevant since perfect knowledge is not feasible in a market economy. The perfect competition model they endeavoured to create is out-of-date and not achievable. The full employment as envisioned by the model was also unachievable. Doubts and reservations were forecasted about the strategy’s unilateral bid to decrease Britain’s susceptibility to global forces. For instance, the model did not consider the long-term effects of the proposed strategies and measures on Britain’s economy and the relationship with the world economy (Callaghan 2000, p. 112). Another argument was centred on the decline or collapse of the capitalism. There is a tendency of the rates of profits to decline and the principle that capitalism ultimately recovers from any crisis, downturn and stagnation. Therefore, shifting from capitalism can only be primarily a political move. The increased integration and interdependence of the British economy on the European economy necessitated calls for a shift to trans-European approach. The AESwould have increased Britain’s isolation when the capitalist system was going transforming into a conservative system. The trans-European approach got support because it was absurd to get Britain out of Europe since about 60% of her foreign trade were mainly exports and imports from Europe and EEC (Callaghan 2000, p. 115). This necessitated the search for an alternative economic strategy for the whole Europe rather than just Britain alone. The fragmentation of the labour party largely due to defeat at elections and the realization that Keynesian measures would not work largely contributed to fall of AES. The defeat at the ballot box deepened the disunions among the leftist. Following the divisions, the Labour party undertook massive restructuring that aimed at centralising the policy making and leadership of the party. In conclusion, the Alternative Economic Strategy was a consultative model that has been deemed among the most far-reaching and all-inclusive plan ever developed by the Labour party. The architects were the NEC subcommittees with the contribution of several trade unions, organizations and groups. The principal proposals of the model were on the economic planning and industrial planning. The AES was aimed at tackling these issues through programs of industrial rejuvenation encompassing a strong and well financed National Enterprise Board and Mandatory Planning Agreements. The AES also stressed the problem of international corporations’ infiltration into the British economy. The AES was aimed at tackling these issues through programs of industrial rejuvenation encompassing a strong and well financed National Enterprise Board and Mandatory Planning Agreements. The AES also stressed the problem of international corporations’ infiltration into the British economy. The disintegration of the Labour left, particularly after the losing elections in 1983, significantly contributed to the fall of the AES. The AES model faced opposition from both the right and the far left. Nonetheless, even before this, advocates and radicals had earlier started to criticise the strategy calling for its major review and modification prior to the Labour party’s elections defeat. AES cannot be viewed merely as an alternative policy for centralised actions of the state. It also needs massive political mobilisation. References Callaghan, J. (2000). Rise and fall of the Alternative Economic Strategy: from Internationalisation of capital to globalization. Contemporary British History, Vol. 14. No. 3 pp. 105-130. Read More