ABSTRACT
The period before the First World War is full of interest to economists and Arthur Lewis, in particular, has contributed greatly to our understanding of it. He has brought economic theory to bear on the historical evidence, and in doing so has helped to illuminate the complex process of economic development for the benefit of theorists. He is particularly fascinated by the experience of the United Kingdom as industrial leadership passed to other countries; and as this is a fascination I share, it seemed appropriate, in contributing to a volume in his honor, to look back at that experience, concentrating on the twenty years or so before 1914. Arthur Lewis has provided his own answers to many of the conundrums posed by the record of those years, and if I agreed with all his answers, there would be no point in my taking up the subject. Points of disagreement are the natural starting point rather than the wide range of other issues on which I am in full agreement. I shall, therefore, have little to say on the behavior of prices and wages, as developed in chapters 3 and 4 of his Growth and Fluctuations, 1870–1913, and will concentrate on chapter 5 on “The British climacteric” with its rousing concluding paragraph:
Britain was caught in a set of ideological traps. All the strategies available to her were blocked off in one way or another. She could not lower costs by cutting wages because of the unions, or switch to American-type technology because of the slower pace of British workers. She could not reduce her propensity to import by imposing a tariff or by devaluing her currency, or increase her propensity to export by devaluing or by paying export subsidies. She could not pioneer in developing new commodities because this now required a scientific base which did not accord with her humanistic snobbery. So instead she invested her savings abroad; the economy decelerated, the average level of unemployment increased and her young people emigrated.
(Lewis, 1978, p. 133)