Readjustment of the British Industry During the Inter-War Period

Abstract

The inter-war period witnessed a transformation of economic attitudes and policies in most of the caditalist countries In this trotlbled period, the recovery policy of the British government was remarkable for its orthodoxy. In other countries, new and old industries developed at the same time, but, in Britain, the 1920's formed a watershed between the old industrial regime and the new industrial economy. In spite of the fact that the old industry had entered the stage of decline, most of the factors of production were over-committed to the old industry, and it still continued to develop. Thus, the readjustment of the British economic structure was delayed. When, however, the rapid and full shift of resources from the old staple industry to the new one took place during the inter-war period, it became the major determinants of the British economic performance. Despite many difficult factors, such as heavy unemployment, declining export, and stagnating old industry, the overall growth of the British economy was respectable in this period. The early start thesis have applied to the intra-industry (old staple industry), particularly in the 19th century Britain. But the problem of inter-war period was the inter-industry (new and developing industry) approach. The purpose of this paper is to analyse the extent to which the early start proved a handicap when it became necessary to transfer resources to new industry. Over-commitment was one of the most important factors cxplaining the s1ow growth of the new industry in the early decades. It could be argued that Britain benefited from the fact that adjustment of the economic structure had been delayed in the past, and, through the readjustment of the economic structure, the new industry played the major role in the economic recovery of Britain in the 1930's.