Year | Unemployment RateMy observations:
1870 | 4.4%
1871 | 3.6%
1872 | 2.7%
1873 | 2.8%
1874 | 3.3%
1875 | 4.0%
1876 | 4.8%
1877 | 6.6%
1878 | 7.9%
1879 | 9.1%
1880 | 6.6%
1881 | 5.7%
1882 | 5.0%
1883 | 4.9%
1884 | 6.3%
1885 | 8.0%
1886 | 7.9%
1887 | 7.1%
1888 | 5.8%
1889 | 4.3%
1890 | 4.0%
1891 | 4.9%
1892 | 6.1%
1893 | 7.3%
1894 | 7.0%
1895 | 7.3%
1896 | 6.1%
1897 | 5.9%
1898 | 4.9%
1899 | 4.3%
1900 | 4.3%
1901 | 5.7%
1902 | 6.0%
1903 | 6.5%
1904 | 8.0%
1905 | 7.5%
1906 | 6.0%
1907 | 5.1%
1908 | 8.2%
1909 | 8.7%
1910 | 6.7%
1911 | 5.5%
1912 | 4.6%
1913 | 4.2%
1920 | 2.1%
1921 | 12.2%
1922 | 10.8%
1923 | 8.9%
1924 | 7.9%
1925 | 8.6%
1926 | 9.6%
1927 | 7.4%
1928 | 8.2%
1929 | 8.0%
1930 | 12.3%
1931 | 16.4%
1932 | 17.0%
1933 | 15.4%
1934 | 12.9%
1935 | 12.0%
1936 | 10.2%
1937 | 8.5%
1938 | 10.1%
1939 | 8.5%
1946 | 2.0%
1947 | 1.4%
1948 | 1.6%
1949 | 1.6%
1950 | 1.7%
1951 | 1.3%
1952 | 2.2%
1953 | 1.8%
1954 | 1.5%
1955 | 1.2%
1956 | 1.3%
1957 | 1.6%
1958 | 2.2%
1959 | 2.3%
1960 | 1.7%
1961 | 1.6%
1962 | 2.1%
1963 | 2.6%
1964 | 1.7%
1965 | 1.5%
1966 | 1.6%
1967 | 2.5%
1968 | 2.5%
1969 | 2.5%
1970 | 2.6%
1971 | 3.4%
1972 | 3.7%
1973 | 2.6%
1974 | 2.6%
1975 | 4.1%
1976 | 5.6%
1977 | 5.7%
1978 | 5.6%
1979 | 5.2%
1980 | 6.7%
1981 | 10.2%
1982 | 11.9%
1983 | 13.0%
1984 | 14.1%
1985 | 14.5%
1986 | 14.8%
1987 | 13.3%
1988 | 10.7%
1989 | 8.3%
1990 | 7.7%
1991 | 10.6%
1992 | 12.7%
1993 | 13.4%
1994 | 12.2%
1995 | 10.8%
1996 | 9.8%
1997 | 7.4%
1998 | 6.3%
1999 | 5.8%
(Boyer and Hatton 2002: 667).
(1) Full employment is usually defined as any percentage less than 1% up to about 4% unemployment (< 1–4%). The late 19th century only had full employment from 1871–1875 and in 1890, and always at the upper range of 2.7–4%: in all other years, unemployment ran at over 4%. So much for the wonderful glories of gold standard capitalism! Some particularly bad periods of unemployment were 1876–1880, 1884–1888 and 1892–1896. The 1876–1880 unemployment figures are very strange, because the real GDP estimates for this period (see Appendix) show real output growth in all years but 1879. As in the case of the US, something went badly wrong with Western capitalist economies in the mid to late 1870s. My guess is that debt deflationary dynamics were at work. The 1890s look like a good candidate for another serious economic crisis (as was the case in the US), and there was a serious recession in the UK from 1891 to 1893. (2) The UK had a very serious unemployment problem through both the 1920s and 1930s. The Great Depression was already preceded by high levels of unemployment.APPENDIX
(3) The period from 1946–1973 had the lowest rates of unemployment in any period. It is the hands down winner. I have highlighted it in green.
This is what full employment looks like. The average unemployment rate in these years was 2.01%, and in many years unemployment was less than 2%. This was the era of Keynesian full employment fiscal policy – what we now call “the golden age of capitalism.” We can look back on it wistfully and see what a disaster the subsequent period of neoliberalism was in terms of unemployment and opportunities for growth.
(4) The data from the 1980s confirms starkly (if we really needed it confirmed) that Thatcherism was one of the worst periods in British economic history. In terms of unemployment, it was close to the levels of the Great Depression.
(5) Even the 1990s recession had fairly severe unemployment: in the order of 10–13%.
Some data on real GDP in the UK for the period from 1870–1950 (to compare with the unemployment data above) are below:
UK Real GDP, 1870–1950BIBLIOGRAPHY
Year | GDP* | Growth Rate
Millions of international Geary-Khamis dollars
1870 | 100180 | 6.19%
1871 | 105570 | 5.38%
1872 | 105795 | 0.21%
1873 | 108266 | 2.33%
1874 | 110063 | 1.66%
1875 | 112758 | 2.45%
1876 | 113881 | 0.99%
1877 | 115004 | 0.99%
1878 | 115454 | 0.39%
1879 | 115004 | -0.39%
1880 | 120395 | 4.69%
1881 | 124663 | 3.54%
1882 | 128257 | 2.88%
1883 | 129155 | 0.70%
1884 | 129380 | 0.17%
1885 | 128706 | -0.52
1886 | 130728 | 1.57%
1887 | 135894 | 3.95%
1888 | 141959 | 4.46%
1889 | 149596 | 5.38%
1890 | 150269 | 0.45%
1891 | 150269 | 0%
1892 | 146676 | -2.39%
1893 | 146676 | 0%
1894 | 156559 | 6.74%
1895 | 161500 | 3.15%
1896 | 168239 | 4.17%
1897 | 170485 | 1.33%
1898 | 178796 | 4.87%
1899 | 186208 | 4.14%
1900 | 184861 | -0.72
1901 | 184861 | 0%
1902 | 189578 | 2.55%
1903 | 187556 | -1.07%
1904 | 188679 | 0.58%
1905 | 194295 | 2.98%
1906 | 200808 | 3.35%
1907 | 204627 | 1.90%
1908 | 196316 | -4.06%
1909 | 200808 | 2.29%
1910 | 207098 | 3.13%
1911 | 213162 | 2.93%
1912 | 216307 | 1.47%
1913 | 224618 | 3.84%
1914 | 226864 | 0.99%
1915 | 245058 | 8.01%
1916 | 250449 | 2.19%
1917 | 252695 | 0.89%
1918 | 254268 | 0.62%
1919 | 226640 | -10.9%
1920 | 212938 | -6.04%
1921 | 195642 | -8.12
1922 | 205750 | 5.16%
1923 | 212264 | 3.16%
1924 | 221024 | 4.17%
1925 | 231806 | 4.88%
1926 | 223270 | -3.68%
1927 | 241240 | 8.04%
1928 | 244160 | 1.21%
1929 | 251348 | 2.94%
1930 | 249551 | -0.71%
1931 | 236747 | -5.13%
1932 | 238544 | 0.76%
1933 | 245507 | 2.92%
1934 | 261680 | 6.59%
1935 | 271788 | 3.86%
1936 | 284142 | 4.54%
1937 | 294025 | 3.48%
1938 | 297619 | 1.22%
1939 | 300539 | 0.98%
1940 | 330638 | 10.01%
1941 | 360737 | 9.10%
1942 | 369721 | 2.49%
1943 | 377807 | 2.19%
1944 | 362983 | -3.92%
1945 | 347035 | -4.39%
1946 | 331985 | -4.34%
1947 | 327044 | -1.48%
1948 | 337376 | 3.15%
1949 | 349955 | 3.73%
1950 | 347850 | -0.60%
(Maddison 2003: 47, 49, 51).
Boyer, George R. and Timothy J. Hatton. 2002. “New Estimates of British Unemployment, 1870–1913,” The Journal of Economic History 62.3: 643–667.
Maddison, Angus. 2003. The World Economy: Historical Statistics. OECD Publishing, Paris.
Interesting information. What is the Post-Keynesian perspective on the stagflation period of the 1970s? The 1970s actually do not look so bad compared to the neoliberal period.
ReplyDeleteAlso, what is your opinion of the Kaleckian theory that Thatcherism was mostly a political effort to break the power of organized labor through high unemployment rates?
(1) Yes - despite stagflation - UK unemployment in the 1970s was actually not too bad, as compared with what followed.
Delete(2) On the Post Keynesian view of stagflation, see here:
http://socialdemocracy21stcentury.blogspot.com/2011/06/stagflation-in-1970s-post-keynesian.html
(3) There is no doubt that the Thatcherites were ideologically hostile to organised labour.
It's part of the story obviously, but not the whole picture: Thatcher also adopted, in the early years, an unusually stupid form of monetarism, which (not surprisingly) failed to control money supply growth rates and induced the severe recession 1980-1982. Then monetarism was quietly abandoned about 1982-1983 for cuts in interest rates (a sort of conventional neoliberal monetary policy).
Thanks for the information. Keep up the great work.
ReplyDeleteThe unions were largely responsible for the high unemployment rates by pushing for extravagant wage increases.The Thatcher government refused to inflate to accommodate these.
ReplyDeleteNo, they were not "largely responsible for the high unemployment rates". They were partly to blame, but the story is far more complex than your morality tale about unions:
Delete(1) there was arguably an issue of excessive wage rises in the stagflationary era, but the solution to that was income policy, not savage attacks on unions or policy-induced recessions.
(2) as for unemployment, right up to Thatcher's election it was historically low, so whatever effect excessive wage rises had in this era, the result was not huge unemployment:
1971 | 3.4%
1972 | 3.7%
1973 | 2.6%
1974 | 2.6%
1975 | 4.1%
1976 | 5.6%
1977 | 5.7%
1978 | 5.6%
1979 | 5.2%
1980 | 6.7%
1981 | 10.2%
1982 | 11.9%
The main reason unemployment soared was Thatcher's monetarist shocks to the economy (both misguided attempts to control money supply growth rates and fiscal austerity), which had the further disastrous consequence of making British manufacturing uncompetitive by causing the sterling exchange rate to soar (exacerbating a problem the UK already had from the commodity boom in North sea oil, a version of the Dutch disease).
Thatcher refused to allow the State to prop up over-manned, inefficient industries. She privatised them, allowing them to shed the workers they did not need, and become world beaters. She saw the inefficiecy of state-run enterprises in the 1970s, and the growing miltancy of trade unions (which you seem to ignore). That's why unemployment zoomed up under her, because (1) the state does not belong in business and (2) a suddenly privatised economy needs time to pick itself up, restructure and start employing the unemployed.
DeletePartly correct, in that Thatcher had a deluded laissez faire ideology that caused mass unemployment, owing to her unnecessary privatisations and (what you neglect to mention) fiscal austerity.
DeleteYou are also -- like Thacher -- deluded if you think the austerity was not a significant cause of the mass unemployment.
As for UK industry, a lot of it was struggling under the effects of the so-called Dutch disease malaise: an overvalued pound sterling from the commodity boom in North sea oil. If that had been fixed, UK industry would have been far more competitive.
Thirlwall and Kaldor found that boosting demand via deficit spending is constrained by balance of payments. Attempts to boost nominal demand in the 1960s led to a worsening balance of payments problem which became a full blown crisis due to external supply shocks. Kaldor realised that he'd blown it while working with the Treasury. These failures of Keynesian theory allowed the ascent of the neoclassicals and the beginning of the neoliberal era. Kaldor and Thirlwall have both tried to fix this aspect in PK theory. The relevant reading is Thirlwall, Harrod and Kaldor.
DeleteI am well aware of that.
DeleteLove your stuff, LK. But did you ever consider using Excel to graph this stuff? I can post instructions here if you want. Its pretty easy and its much tidier than tables.
ReplyDeleteThanks, Philip, some help with Excel for graphs would be much appreciated, if you can post some links or help here, as I'm not really very "tech savvy" with that kind of thing.
Deletecheers
Quality is pretty bad. But fullscreen it and you can make it out:
Deletehttp://www.youtube.com/watch?v=WAp2vNYebBI&feature=youtu.be
Cheers, that was very useful - will post a "test run" graph at some stage in the next few days.
DeleteAre you ignoring the meat grinder effect of WWII?
ReplyDeleteWhat about the period of rebuilding in the decades following.
There's more to a free market than just the gold standard.
(1) UK wartime rebuilding ended a long time before 1973: it was virtually complete by the early 1950s.
Delete(2) total British dead in WWII: 449,700
http://en.wikipedia.org/wiki/United_Kingdom_casualties_of_war#1900_to_1945
Total population at the time: 48 000 000.
In others words, a wartime death toll of 0.93% of total population. The effect on unemployment was minimal.
(3) If you think strict Rothbardian anarcho-capitalism (with a ban on FR banking) is the only "free market" system that exists, you're wrong.
In fact, that Rothbardian system is anti-capitalist, for FR banking is neither fraudulent nor inherently immoral. It's a fundamental basis of modern capitalism.
In the mid 1970s, wages took an all time record 65% of GDP. In contrast, they took 59% over the previous 20 years and about 56% over the next 20 years. Thus its pretty clear that wage demands had a lot to do with the 1970s stagflation.
ReplyDeleteRe Lord Keynes’s suggestion that “incomes policy” would have solved the inflation plus stagflation of that era, that’s very naive. Politicians, both Labour and Tory sweated their guts out to try to get some sort of incomes policy in place with very mixed results. Thatcher’s way of solving the problem, i.e. imposing deflation and unemployment, obviously had a high cost. She’d have been mentally sub-normal if she hadn’t realised that. But her options were about as limited as the options facing the EZ and indebted Euro countries. The EZ “cure” for the latter is severe deflation. We’ve all worked out that the costs are horrendous.
But if anyone’s got some magic cost free solution, they’ll get a Nobel Prize if they tell us what it is. And if anyone has some magic cost free solutions that Thatcher might have tried, I’m all ears.
Ralph Musgrave@February 26, 2013 at 3:10 AM
DeleteYet unemployment remained low right up until Thatcher's deflationary shocks.
No one denies that the excessive wage demands drove the wage price spirals, but you're missing the crucial factors that sent this over the edge: the first and second oil shocks.
Another reason why inflation fell in the early 80s was that the price of oil fell.
As for incomes policy: other nations managed it
Inflation isn't just caused by wage demands. All money is created in the form of a debt.
DeleteIf I give an analogy. We are like a man who, unable to pay his monthly credit card bill borrows more money from that card or else where to make a minimum payment. The debt just grows until he goes bankrupt. What or boy needs to do is get a job to pay down his debt this "debt free money".
Our society is exactly like that man except there is no "debt free money" in the system.
So we as a society can never get out of debt to a banking system that crates all if the money.
So we have to borrow more and more money with the results that more money has to be created, out of thin air on the back of our PROMISE to repay our loans.
As the money supply increases it the value of money falls, ie inflation.
"Thus its pretty clear that wage demands had a lot to do with the 1970s stagflation."
ReplyDeleteIt's not clear that's the case at all.
You can data select from the period to fit pretty much any preconceived idea you fancy short of alien invasion.
LK, I'll make a Youtube video in the next day or two and post a link in your comments section. Its very simple and definitely worth learning how to do. It would take all of five minutes and you'll not only have tidier data, but data that others can reproduce elsewhere.
ReplyDeleteI have already analyzed the economic data of reaganeconomy and it can be said that essentially fails his term of office in front of the bad date coming just from the UK (with a double-digit unemployment in the years when Reagan substantially waiver , remaining within the liberal , the credit closure) in which the four years in which the Thatcher gets big results in terms of GDP (from 85 to 88 is around 4%) but disastrous from the point of view of employment ( for almost the entire duration of his sent the unemployment rate is over 10% and for three years from 84 to 86 exceeds 14% . E.Heath When you consider that in 1973 he obtained the 7.6 % increase of GDP by 2.6% the unemployment rate without acquiring any special merit in the British crown you understand which side are opinion makers and the British and estabelishment mondiale.Ah forgot Heath was a political labor while the iron lady we all know who she was.
ReplyDeleteIn 1982, the second year of the reaganeconomy gnp usa loses probably because of deflationary policy of the administration of 2% in real terms, that is, the annual rate of gnp adjusted for inflation this year , the 1983 has a gnp growth in real terms about 7 points that out as 2 points lost in the previous year mean real growth of 5% compared to the data that you understand the current economy can not be considered a huge success given the elements of euphoria generated idologically in American finance circuit right of Reagan.Nel 1984 in the heart of the Reagan economic therapy there is an increase in real annual rate of 4.0% gnp as we will see later that the administration will not be able to see matenere.In 1985 the Reagan economical policy has lost of aggressivity and the real rate of the economy rises by only 3% since it is repeated in 1986.In 1987 back to 4 %, but in the context of a return to infflactionary policy in fact inflation from 1 , 9 % in 1986 , which is the minimum figure during the Reagan era , back to 3.6% but it is clear that the inflationary policy in the context of liberalism is different from that of Keynesianism,the Keynesian inflation is a monetary methods with which the state finances the expenditure which always means a form of expansionary policy while the inflationary policy of liberalism often is combined with the concentration of investments in high technology and luxury that yes gives high profits but often have little impact in terms employment, redistribution of income per capita and economic stability as substantially as a result of the economic history of these years shows.In 1988 in spite of this change to its policy, the real growth back to 3% as real terms while inflation goes to 4.1% .In 1989, growth is reduced to 2.2% and inflation goes to 4.8%. So ends what has been considered the economic turn of the century whose achievements doubts should be compared with the results of the trend ' employment.The liberism doctrine in economy has its crowning glory recently with President Bush in 1990 that has a gross growth of 4.6% and an inflation rate of 5.4% in 1991 with inflation of 4% 4.2% , in 1992 the economy has a real shot with a growt of 3 % , in 1993 the growth rate is 4.5% , with inflation at 3%. in 1994, the first year of democratic Clinton gnp fly to 6% and inflation goes to 2.6% but that's another storia.Cosa say that the Reagan administration will be remembered more for the nuclear non-proliferation treaties and the meetings in front of the fireplace with the head of the evil empire that Michael Gorbachev than for the economic successes of all far-fetched to say he has sworn to fight communism and it was eventually agreed with it, promised to solve the economic problems Americans and eventually returned with the usual inflationist policy and rigor in economic load of the proletarian classes of America.That i suppose about the mitical success of reaganeconomy is that economists watch to the gnp without face it with the rate of inflation who knows why.
ReplyDeleteObserving the dates of unemployment during the presidence of Ronald Reagan we can observe that during the first two years of his administration there is an important grown of the unemployment rate (from7,1 of 1980 to 9,7 of 1982)this thing coincides with the moment of more aggressiveness of reaganeconomy.In the successive years from 1982 al 1986 the rate backs to the level of precedent administration from the moment in wich the administration rinounces to the deflationist policy there is a trend to the fault of rate under the level of Carter administration in particular we have in 1988 a rate of 5,5%..
To understand the reason because Reagan administration passed from the deflationist policy to an expansive one is the consideration of consequences by the excess of rigidity in economical policy may have at social level like demonstrated by english experience.Indeed the grown of inflation in Usa restart in 1986 exactly in the same year of the highest rate of unemployment in Tathcher's age.