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Essay: Nationalization and Privatization in Post-World War II Britain

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  • Published: 1 February 2018*
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  • Words: 970 (approx)
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Following the end of World War II in Europe, June 1945, the United Kingdom government, which was controlled by the Labour Party, moved to nationalize industries. Nationalization is when control over industries are transferred from private owners to the government. The government also decides how the profits are spent. During Clement Atlee’s tenure as Prime Minister, Great Britain nationalized the coal, electricity, gas and railway industries. The political and economic policy — or theory — of privatization was adopted by the Conservative Party, under the leadership of former Prime Minister Margaret Thatcher, during Great Britain’s 1979 election. The broad definition of privatization is the transferal of the manufacturing of goods and services from the public sector to the private sector. However, privatization also includes charging for state-provided services, education vouchers, tax concessions for healthcare, and establishing freeports. The policy also reduces the influence trade unions had in the government. Opposition to the policy came from the Labour Party who believed economic and industrial strength could only come through public enterprise – an organization owned and managed by the government. Party members also believed the policy harms citizens because it benefits the upper class and hinders the lower class.

 During the 1979 election the United Kingdom’s Conservative Party – under the guidance of Margaret Thatcher – grew tired of the nationalization policy championed by the Labour Party. “The British people strongly oppose Labour's plans to nationalise yet more firms and industries such as building, banking, insurance, pharmaceuticals and road haulage.” Nationalization is when the government owns industries and make the decisions on how profits will be spent. In the United Kingdom, profits were typically spent on public services. In post-World War II Britain, under the guidance of Prime Minister Clement Atlee, the Labour Party nationalized industries such as coal, gas, railways, and electricity.

Historians and economists do not agree on the genesis of the nationalization policy in Britain after World War II. They are mixed between it being based on ideology or economic reasons. According to Robert Millward, one of the reasons for the debate is not every industry was nationalized. He said eighty percent of the enterprises that were nationalized occurred in the 1940s.  The enterprises that were nationalized after the war needed government intervention during the war. Therefore, the Labour Party possibly believed nationalization was the best way to ensure the country maintained stability.

Before the election in 1979 conservative politicians attempted to move the country away from nationalization, but failed to make the attempts to be permanent. Therefore, nationalized policies remained during conservative governments before 1979. However, after the “Winter of Discontent” in 1978, the momentum of popularity and trust began to swing from the Labour Party to the Conservative Party. James Callaghan, the Labour prime minister, pursued policies that led to massive unemployment rates, which in turn led to the union strikes of 1978. Thatcher and the Conservative Party was able to use this information as a way to showcase the Labour Party’s inability to maintain economic control. “More nationalisation would further impoverish us and further undermine our freedom.” The manifesto of the Conservative Party never mentioned the word privatization — which will later be referred to as “Thatcherism” — but their solution does indirectly advocate the policy. “We will offer to sell back to private ownership the recently nationalised aerospace and shipbuilding concerns, giving their employees the opportunity to purchase shares.”

One of the driving forces behind privatization was to allow businesses control how its profits are spent and make management decisions. As a result, the market would become more competitive, and employees would make more money. As a result of Thatcher’s win in the 1979 election, industries such as Britoil, British Airways, British Steel, British Gas, and British Telecom have been sold to private owners. According to Stephen Martin and David Parker, shortly after an announcement was made that an industry would be privatized, a period of increased production followed. This period led to more profits. However, following privatization, production declined while profits still remained higher than when the business was state owned.

Historians and economists also argue about why the country maintained the nationalization policy after industries recovered from the war. One possible reason is the country’s market transitioned to a mixed economy. If Britain was to remain economically prosperous, the Labour Party believed the government had to help the industries. The Labour Party argued for nationalization because it will help the people and the country. “The Conservatives will not admit that nowadays governments must step in to help create employment, to limit prices rises, to assist industry to modernize itself.” In fact, the Labour Party claimed the Conservative Party was detached from what a modern Britain needed to survive. The policy of privatization would drag the country back into an outdated way of life. “They are ready to gamble the people's future on a return to the nineteenth century free market' – despite its pitiless social consequences.”

The Labour Party and the Conservative Party have been at odds for years over the policy of privatization. One Party enforced it when they won the 1979 elections, and the other continually fight to reverse it today. One Party claims state-owned enterprises impoverish citizens. The other claims private-owned enterprises benefit the upper class and take public services away from the lower class. There is some economic proof that the policy has helped the country of Britain. Profits for businesses have been proven to be higher when private owners are in control. However, there is also proof showing otherwise. Under nationalization, industry profits were spent on items such as public service. Today opponents of privatizations claim basic public services are underfunded and British citizens are not receiving necessary help. Political policies need to adapt. Privatization helped Britain when nationalization was reaching its limits. However, if privatization is to continue helping Britain, changes need to be adopted.

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