During this pandemic we have seen a whole new way of life emerge. Whether it be social distancing, retail deliveries or working from home, everyone has seen some form of change in their daily life.
This has caused some shockwaves to run through the heart of the UK’s economy, however, it is not all doom. We have seen in the past that when we put less barriers and restrictions on the market then it is best suited to adapt and show its flexibility, which is what we will need in the upcoming recovery.
If we are to see a proper economic revival on the other side of this crisis we will have to focus on giving businesses and entrepreneurs the freedom to adapt to the market.
We have seen during this pandemic the age-old truth that true innovation comes from a free-market economy, and innovation sustains continued growth. Unlike the results we see in government-dominated economies, free markets can pivot easily in new and different directions as times change. On the other hand, economies with a top-down economic system have performed far worse than their free-market counterparts in the longer run. This is because they are far more rigid and lacking in true flexibility and innovation.
We have seen the best flexibility and innovation during this crisis in the private sector with supermarkets having to adapt and innovate the fastest. Now they are reaping the rewards of such quick changes.
Top-down economies rarely thrive for extended periods. Take the UK in the 1970’s: the UK governments of the day decided to lump all of our ‘eggs’ in the coal and steel basket. These were the chosen industries that the Government decided to subsidise and push. So, they dictated the roadmap of the economy.
If you compare the UK to Japan, at the end of the 1970s, both had top down economic systems – although Japan had far more success due to focussing on electronics. In the 1980s Japan stayed true to its top-down strategy; the UK decided to implement a free market economy. Under Margaret Thatcher Britain was able to move to this new system which brought increased innovation, standard of living, investment and a renewed period of growth, which In turn lead to the UK having a much stronger economy. This was the perfect example of how a free market economy will adapt, innovate and overcome challenges put in its way.
If we are to see a proper economic revival on the other side of this crisis then we will have to focus on giving businesses and entrepreneurs, the freedom to adapt to the market and overcome the obvious challenges they will face in their recovery. Conversely, if we follow the managerialist route: allowing too much state planning and interference once we get back to some semblance of normality, then we could see a very sluggish response to a rapidly moving world market.
So, for the UK to recover properly from this pandemic we need a new impetus to create a freer market. A top down approach won’t work. It will only lead to stagnation and our economy being overtaken by those nations allowing the innovators and job creators the lead the recovery. This will be a huge moment in our history. We need to make sure this isn’t the beginning of a slow downturn.
Instead this needs to be the start of a new, freer, environment for us to all work and live in, one where the government doesn’t needlessly interfere with the market and allows innovation to lead us forward.
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