corporatism

Under the governments of Harold Wilson (Labour) and Edward Heath (Conservative), corporatism was used to attempt to achieve the central goal of full employment without that leading to too big a rise in wages and prices, which could lead to a wage-price spiral (higher prices leading to workers asking for higher wages, leading businesses to raise prices higher and so on). Policies included ‘voluntary wage restraint’ and also full-scale ‘incomes policies’ that restricted the amount wages could be raised.

Corporatism fell apart in the UK for two reasons. Firstly, both trade unions and businesses are self-interested groups whose first priority is to represent the interests and needs of workers and shareholders respectively. But also because the success of agreements made were affected by external influences such as the exchange rate – which could make oil and food more expensive regardless of what British industries did with prices, thus leaving trade unions needing to ask for higher wages. Also unions never really felt they were getting a good deal. Limits on pay wree always disproportionately more panful to ordinary people than limits on price rises which tended to lead to unemployment, and restraint on investment income was never part of the deal. But the idea of an economy manged by the big interests of capital and labour with 'beer and sandwiches' at Number 10 was called corporatism and was seen as a golden age of union influence- even if this was never really true.

Margaret Thatcher put an end to corporatism, in part because in only representing the needs of large businesses and trade unions, it ignored the needs of small businesses and the self-employed, who had no real representation.