ABSTRACT
The key question emerging from this analysis is, when and why did this discursive link between Britain's defence effort and relative economic decline emerge. This explanation formed an important element in the declinist accounts, which began to appear in the late 1950s. These accounts reflected the growing concern among policy-makers as well as the informed public about the apparent differential in British and Western European growth rates.5 An outstanding example of this literature is Andrew Shonfield's critique of British post-war economic policy, which blamed excessive defence expenditure for exacerbating the strain on the economy in this period. Shonfield argued that high overseas defence expenditure contributed to the repeated balance of payments crises, which forced the government to adopt restrictive measures to curb overall demand for imports. Throughout his book, he argued that such measures disproportionately affected industrial investment. In this context, he suggested that the decision to rearm during the Korean War slowed the rate of capital formation, because of a cut in the initial allowances for business investments.6 However, Shonfield offers no empirical evidence for his assertion that government intervention reduced the rate of industrial investment or that higher investment would have led to higher economic growth.7 Moreover, he provides no proof that British industrialists would have invested more if the government had spent less on defence. His claims, that too many resources were devoted to the development of military technology, were mainly supported by anecdotal evidence. Nevertheless, policy-makers used this suggestion to justify their decision to scale down Britain's defence effort as the result of a comprehensive review of military strategy.
