ABSTRACT
After World War II, along with the dismantling of the British Empire, the United Kingdom had periodic crises in its balance of payments position. By the time Labour came again to power in 1964, the problem of the balance of payments was at the crisis level. The most fundamental economic question was whether this was a temporary problem that could be papered over with loans or a continuing condition requiring emphatic adjustment in the exchange rates. It was at this time that Kaldor was invited to join the government as adviser to the chancellor of the exchequer James Callaghan.
