The Enterprise Economy

188 Pages·1992·15.029 MB·English

by  John Wigley, Carol Lipman (auth.)

The
Enterprise EconoIllY
ECONOMICS TODAY
Edited by Andrew Leake
The Economics Today series surveys contemporary headline
topics in applied economics. Each book in the series is written by
an expert in the field in a style that is fluently readable. It serves
the student of introductory economic principles while also making
the subject accessible to a more general reader. The series
embraces the problem-solving skills of the new generation of
students and stresses the importance of real-world issues and the
significance of economic ideas.
Published
Andrew Leake: The Economic Question
Jean-Louis Barsoux and Peter Lawrence: The Challenge of British
Management
Andy Beharrell: Unemployment and Job Creation
Frank Burchill: Labour Relations
Kenneth Durham: The New City
S. F. Goodman: The European Community
Jenny Wales: Investigating Social Issues
John Wigley and Carol Lipman: The Enterprise Economy
Margaret Wilkinson: Taxation
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Standing Order Service, Macmillan Distribution Ltd,
Houndmills, Basingstoke, Hampshire, RG21 2XS, England.
THE ENTERPRISE
ECONOMY
John Wigley
and
Carol Lipman
M
MACMILLAN
© John Wigley and Carol Lipman 1992
All rights reserved. No reproduction, copy or transmission of
this publication may bc made without written permission.
No paragraph of this publication may be reproduced, copied or
transmitted save with written permission or in accordance with
the provisions of the Copyright, Designs and Patents Act 1988,
or under the terms of any licence permitting limited copying
issued by the Copyright Licensing Agency, 90 Tottenham Court
Road, London W1P 9HE.
Any person who does any unauthorised act in relation to this
publication may be liable to criminal prosecution and civil
claims for damages.
First published 1992 by
THE MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 2XS
and London
Companies and representatives
throughout the world
ISBN 978-0-333-56309-0 ISBN 978-1-349-22037-3 (eBook)
DOI 10.1007/978-1-349-22037-3
A catalogue record for this book is available
from the British Library
Typeset by TecSet Ltd, Wallington, Surrey
Contents
List of Tables and Figures viii
Acknowledgements xi
1
Can Enterprise Cure the British Disease? 1
The Sick Man of Europe 1
How Sick? 3
Relatively Sick 6
Doctors Differ 7
2
What is the Function of the
Entrepreneur? 13
Enterprise and Profit in Economic Theory 13
Entrepreneurs in Economic History 21
1880s and 1980s 24
3
Does Capitalism Compete with
Morality? 29
The Classical Economists 29
The Dismal Science 35
The Classical Revival 37
Mrs Thatcher 39
vi Contents
4
Did the British Economy Grow in the
1980s? 44
J.B. Say versus J.M. Keynes 44
J.M.Keynes versus M. Friedman 48
Economic Experiment? 50
Economic Miracle? 53
Supply Constraints 61
5
Is Britain a Free Market Economy? 66
The Market and the Price Mechanism 66
Competition and the EC 71
Factor Markets 75
6 Has the British Government Encouraged
Enterprise? 83
Private Enterprise 83
Small Firms Policy 85
Lord Young 90
Training and Enterprise 94
7
Do Plans and Regulations Stifle
Enterprise? 98
Political and Economic Planning 98
Regional Planning and Policy 102
Enterprise Zones and Urban Development
Corporations 105
Deregulation 109
8 How Do Taxes and Subsidies Influence
Enterprise? 116
Taxation in Theory 116
Taxation and Politics 121
Fiscal Neutrality and Tax Shelters 128
Contents vii
9
Can Government be Enterprising? 133
Motivation and the Market 133
Nationalisation and Privatisation 137
Central Government and Local Government 141
Education 143
Health 146
10
Enterprise: Culture or Vulture? 151
Hearts and Minds 151
Wake Up Britain 156
Winners and Losers 160
Index 169
List of Tables and Figures
Tables
1.1 Government Receipts and Expenditure in Relation to
Economic Growth Rates 10
1.2 Social Welfare Expenditure as a Percentage of GDP in
1981 10
2.1 Average Percentage Growth in GDP Per Annum,
1945-73 27
4.1 UK Output and Productivity, 1951-89 59
7.1 Percentage Net Change in Businesses Registered for
VAT, by Region, excluding N. Ireland 106
7.2 Urban Development Corporations, 1990 110
8.1 Marginal Tax Rates and Social Security Benefits 125
8.2 Average Gains at Different Levels of Household Income,
1979-89 127
10.1 Distribution of Employment by Establishment Size,
1981 (%) 158
Figures
1.1 Industrial Output, 1979-85 8
2.1 An Entrepreneur and His/Her Firm Equating Marginal
Cost to Marginal Revenue 15
viii
List of Tables and Figures ix
2.2 An Entrepreneur and His/Her Firm Adjust Output in
Response to Exogenous Changes in Marginal Cost and
Marginal Revenue 16
2.3 A Perfectly Competitive Firm Making Super-Normal
Profit 19
2.4 Normal Profit 20
2.5 Sub-Normal Profit 20
3.1 A Perfectly Competitive Firm in Short-Term Equilibrium,
Making Super-Normal Profit 32
3.2 A Perfectly Competitive Firm in Long-Term Equilibrium,
Making Normal Profit 32
3.3 The Entry of New Firms into a Perfectly Competitive
Industry 33
3.4 Long-Term Equilibrium in a Perfectly Competitive
Industry 34
3.5 Long-Term Equilibrium in a Monopolised Industry 34
4.1 The Interaction of Total Demand and Total Supply 47
4.2 The Phillips Curve 47
4.3 Monetarist Short-Run Total Supply Curve 49
4.4 Monetarist Long-Run Phillips Curve 49
4.5 Nominal Interest Rates and the Sterling Exchange Rate,
1979-90 54
4.6 Inflation and Unemployment, 1979-90 54
4.7 Government Expenditure, 1965-90 55
4.8 Ratio of UK Exports to Imports, 1975-90 (£bn) 56
4.9 UK Current Account Balance, 1975-90 (£bn) 57
4.10 UK Real Interest Rates, 1975-90 58
4.11 UK Manufacturing Investment as a Percentage of GOP,
1975-90 58
4.12 Unit Labour Costs in Manufacturing, 1980--91 60
4.13 Inflation, Outstanding Consumer Credit, Savings,
1979-89 61
4.14 Composition of Consumer Debt, 1980--9 62
4.15 Current Account and National Income 63
4.16 UK Manufacturing Output, 1979-90 64
5.1 Supply and Demand Diagrams 67
5.2 The Common Agricultural Policy 74
5.3 The Labour Market 76
7.1 Assisted Areas, 1984 103