The consensus tolerated or encouraged nationalisation, strong trade unions, heavy regulation, high taxes, and an extensive welfare state.
[1] The notion of a post-war consensus covered support for a coherent package of policies that was developed in the 1930s and promised during the Second World War, focused on a mixed economy, Keynesianism, and a broad welfare state.
Embedded liberalism has been applied to describe the post-war consensus on a global stage, around the same period from World War II to the crisis of the 1970s, and contrast it with the paradigm shift led by neoliberalism that followed.
[5] The basic argument is that in the 1930s Liberal intellectuals led by John Maynard Keynes and William Beveridge developed a series of plans that became especially attractive as the wartime government promised a much better post-war Britain and saw the need to engage every sector of society.
[6] The report, in shortened terms, aimed to bring widespread reform to the United Kingdom and did so by identifying the "five giants on the road of reconstruction": "Want… Disease, Ignorance, Squalor and Idleness".
[7] In the report were labelled a number of recommendations: the appointment of a minister to control all the insurance schemes; a standard weekly payment by people in work as a contribution to the insurance fund; old age pensions, maternity grants, funeral grants, pensions for widows and for people injured at work; a new national health service to be established.
The post-war consensus included a belief in Keynesian economics,[6] a mixed economy with the nationalisation of major industries, the establishment of the National Health Service and the creation of the modern welfare state in Britain.
Some historians such as Ralph Miliband expressed disappointment that the consensus was a modest or even conservative package that blocked a fully socialised society.
Crosland demonstrates the variety of socialist thought over time, and argues that a definition of socialism founded on nationalisation and public ownership is mistaken, since these are simply one possible means to an end.
Crosland also argued that an attack on unjustified inequalities would give any left party a political project to make the definition of the end point of 'how much equality' a secondary and more academic question.
", Crosland argued that post-war capitalism had fundamentally changed, meaning that the Marxist claim that it was not possible to pursue equality in a capitalist economy was no longer true.
"Butskellism" was a somewhat satirical term sometimes used in British politics to refer to this consensus, established in the 1950s and associated with the exercise of office as Chancellor of the Exchequer by Rab Butler of the Conservatives and Hugh Gaitskell of Labour.
The term was inspired by a leading article in The Economist by Norman Macrae which dramatised the claimed convergence by referring to a fictitious "Mr.
Paul Addison, the historian most credited with developing the thesis, has engaged in discussions on the subject with figures such as Kevin Jeffreys, who disagrees.
Addison addresses many of Jeffreys' claims, such as the argument that if the Conservatives could have capitalised upon the Beveridge report they would have been the ones with a powerful mandate for pursuing policy, not the Labour party.
Addison also changes his stance in this article, stating how he "exaggerated the extent to which 'middle opinion' already prevailed on the front benches" and determining that, in fact he "agree(s) with much of Dr Jeffreys' analysis".
[29] Political scientists Dennis Kavanagh and Peter Morris defend the concept, arguing that clear, major continuities existed regarding policies toward the economy, full employment, trade unions, and welfare programs.
They rediscovered Friedrich Hayek's The Road to Serfdom (1944) and brought in Milton Friedman, the leader of the Chicago school of economics as Monetarism began to discredit Keynesianism.
At this point the Bank of England had exhausted its foreign reserves trying to prop up the currency, and as a result the Callaghan government felt forced to ask the International Monetary Fund for a £2.3 billion loan, then the largest that the IMF had ever made.
[35]A cause of the supposed collapse of the post war consensus is the idea of the state overload thesis, chiefly examined in the UK by political scientist Anthony King.
"[38] Economists Stephen Broadberry and Nicholas Crafts have argued that anticompetitive practices, enshrined in the post-war consensus, appear to have hindered the efficient working of the economy and, by implication, the reallocation of resources to their most profitable uses.
When the Conservative Party won the 1979 general election in the wake of the 1978–79 Winter of Discontent, they implemented New Right ideas and brought the post-war consensus to an end.