The Lost Opportunities

An outstanding fact that emerged from Chapter 1 is that Britain could have achieved almost everything for which the most optimistic hoped. The really crucial obstacle to rapid growth in any economy is slow productivity growth. If productivity advances only 2 per cent a year and a country’s labour force is fixed, no power on earth can produce long-term growth at more than 2 per cent a year. If more workers are unavailable the rate at which existing workers raise their output each year, in this case 2 per cent, sets the upper limit to growth. Now in Britain from 1962 onwards output per man-hour in manufacturing industry started to advance at an annual rate of 4.2 per cent in place of the mere 2.2 per cent per annum achieved from 1951 to 1962. The first published forecasts of the National Economic Development Council, Britain’s first planning body, were influenced by evidence that technical progress was accelerating1 but few appreciated that in industry it would actually all but double from 1962 onwards. If this greatly increased potential had been turned into faster actual growth, as it could and should have been, Britain would have had about one-and-a-half times as much growth from 1962 onwards as it achieved up to then.