 So, consequences of the Industrial Revolution for democratization and also for mass democratization, I'm sorry, for mass democratization and also imperialism. So, British and Germany, I somehow, somehow I repeated myself. Okay. Now, I want to talk about the 20th century. So what happens in the 20th century? First half of the 20th century, World War I, Great Depression, World War II. This is a period in which we see the phenomenal expansion of the growth of the British government. So, the government, with respect to its interventions into markets, interventions into the economy, grew phenomenally. Okay. And the markets, I'm sorry, the state steps into the economy, intervenes into markets, starts managing the economy and provides expanded social welfare. And all throughout World War I, state activity in markets, economic activity, intervention into markets, expand even further. Of course, war efforts mean that states expand, right? Because states, it is the state which consumes a lot of goods and services. So, in times of war, don't be offended by this. I'm going to remind you something you've learned a few years ago. No worries. Just try to remember, aggregate demand is equal to all kinds of expenditures. Do we remember what kind of expenditures these were? Okay. Government expenditures. Consumption expenditures. Investment expenditures. And net exports. Okay. When you look at this, this equation or equality, aggregate demand or aggregate expenditure is a function of all these. The role of government here is of utmost importance. In wartime economy, the government spends a lot on, for example, ammunitions. So military expenditures increase phenomenally. And there was also in the British case, nationalization, which is the opposite of what we witness in the contemporary period, which is privatization. So, the opposite of privatization is nationalization or collectivization. So, railroads become collectivized. What used to be private companies come under state ownership. The state purchases them. So, G increases. The state also purchases, confiscates, and also simply buys mines, all kinds of minerals and others. The state also purchases shipping industries. What used to be privately owned, now it becomes part of the state. All of these mean that we have expanding G in the economy, in wartime periods. The state not only does that, but also sets prices of foodstuffs. So, price setting, or sets price ceilings. So, price of foodstuffs, of bread, salt, cannot exceed this much. The state also says you cannot send that much capital, excuse me, outward. So, I wanna keep exports of capital. Okay, so I wanna keep them inside my country. So, I wanna use your resources. So, all kinds of war efforts mean that the G as a share of all income increased. So, G as a share of GDP increases. What is GDP, ladies and gentlemen? Thank you very much. But what does it stand for? Gross domestic product. Very good. So, it's the value, not only production, but also the value of all goods and services produced in the economy in a given year. Okay, all value of all goods and services produced in an economy in a given year. And the share of G in that gives you the role of the government, or the size of the government. So, how much does the state intervene into this GDP? How much of the GDP is in fact purchased by the state? So, G as a share of GDP, G as a share of all income or all output, gives you how much does the state expend, like spend as a share of all value, I mean, the value of all goods and services produced in that economy in a given year. So, when you look at the figures here, oh, I'm sorry, I had these figures. When you look at the figures here for Britain, by about 1870s, the British government was spending less than 10%, so about, I mean, less than one tenth of all goods and services produced in Britain in that year, 1870s, end of 19th century, right before the emergence of the Bell Epoch. And you always see the average is about that, I mean, one percentage point higher than that. World War I, right before World War I, the British state spends less than 13% of all goods and services produced in Britain in that year. Let's look at end of World War I with all these collectivization, nationalization, war effort and all that. The British state starts spending on all these goods and services by more than a quarter. So, more than a quarter of all goods and services produced in the British economy purchased by the government. As you can see, there is a phenomenal rise in the size of the British government. And this is way much higher than the OECD average. OECD stands for the organization, for the OECD stands for the organization for, and very good, economic cooperation and development. A child of the post-World War II world emerges in 1960s. First emerges as OEEC, then rebirth reborn as OECD in 1961. Club of the Rich, it's the Club of Advanced Industrialized Countries. The five cases, which we shall be focusing throughout this term are all members of the OECD, founding members of the OECD. So, when you look at the OECD, the advanced industrialized countries, the average is less than 19%, but Britain is doing, Britain is expanding the size of the British government in the economy is massive. Compare that to Germany, compare that to France. So, these are big, big spenders, and also Italy, yeah. Big spenders in the economy, so large states. So, this means that we have an expanding, I really ruined the surprise element, but anyway. So, expansion of the British government, the size of the government, intervention, or intervening into the economy. And there is always tensions between free markets, on the one hand the ideology of free markets, and the ideology of interventionism. So, there's always tension in Britain with respect to these. Should we go the laissez-faire way? Our founding father, or one of the founding father of British laissez-faire is Adam Smith. Should we go along Smithian way? Or should we go along some other way? Then a new founding father will emerge, Lord John Maynard Keynes, starting writing in the 1930s. So, this period right before World War II, right before World War II, between 1910s and 1940s. Not about 30 years. No clear consensus. Yes, there is collectivization. The state expands, but ideology-wise, there is no consensus, okay? One consensus emerges. A certain specific consensus emerges only after mass devastation during or through World War II. World War II, common misery, poverty, destitution. This is the Reichstag. I know this is Germany, but I'll show you some pictures of Britain. But imagine the devastation here. The Reichstag, 1945, end of World War II. Frankfurt, Ale, Berlin, in Berlin, 1945. Shambles, Brandenburg Gate in the contemporary period. I think that photo was taken back in the mid-1990s. Look at what happens here. This is Untedain Linden, this way. Just imagine that big boulevard. And look at what it's full of. Untedain Linden, that way. And 1945, 50 years later, 50 years ago. No rooftops. All bombarded. So Berlin was plastered, almost flat. Berlin Cathedral. Anyone to Berlin, been in Berlin? So it's a very modern-looking city in which there is constant construction. There's cranes everywhere, right? So it's under construction. It's a city which has been under construction as far as I remember. And I've first been to Berlin back in the 1990s. Berlin was under construction back then. It's still under construction day by day, minute by minute. Look at Rotterdam. Do you see anything? Anyone been to Kern, Cologne? You'll remember the dorm, the cathedral. It was almost the only building in the city, in Kern, in Cologne, which wasn't bombarded. And I asked, oh, everyone believes in God. That's why it wasn't bombarded. But that wasn't the answer. The cathedral, which had been built for years, for decades, centuries ago, was not bombarded because the Allied powers used it as a telecommunications tool, the spires. So they really used it for wartime effort. That's why it wasn't bombarded. So, London, 1940. And this is not the end of it, though, 1940, just the beginning where the raids were going on. All shattered, common misery, devastation. So what do we do? Who takes responsibility? What do we do? What does one do? Whom do we call for help? Whom do we call for help? We call the state for help. So massive expansion continuing well into the form of the 1940s, starting of World War II, end of World War II, 1960s. So massive expansion of the British state. And this period, the glorious period, the glorious 30s, the French call it the glorious 30, the glorious 30, the glorious 30 years, the glorious three decades. Post-war settlement, but how do we settle? On what grounds do we settle? Remember, early part of the 20th century was a period of should we go right or should we march left? Should we go the laissez faire way or should we go the collectivist way? Should the state intervene into the economy massively or should the state withdraw from economic activity? But there was some inclination towards expanding the state sector because of the First World War, of course. So states had to intervene, but if and when World War II happened, so there was kind, there emerged a consensus in which or after which there was a more or less clean consensus on the expanded role of government. So the dream of prosperity, the dream of reconstruction, the dream of development could only be made possible through the very visible hand of the state. Not the invisible hand, like Smith says, but the visible hand of the state. So the state had to intervene. And the dream, this dream after common misery, this dream of reconstruction, this dream of prosperity was more important than ideology. Forget about ideology. Whatever works, let it work, let it operate. So expanded role of the government, post-war settlement on the collectivist consensus where the government rebuilds, reconstructs, and also reconciles. Reconciles who? Reconciles labor, isn't tight, and business, okay? The state is there as a mediator of conflict, of social conflict. So in that sense, it is a consensus. In that sense, it reconciles class-based functional interests, class-based actors. So the method was economic governance and also social welfare. The left says, I'm not asking for a revolution, a socialist revolution, I'm not going for it. And business says, okay, you state, you can build, reconstruct, and we can live side by side, we can coexist. I'm not saying I will be taking, I will be the prima donna on the stage. You can also work through for reconstruction, for development. And also, I also acknowledge you, both parties left and right, and labor and capital, business and working masses, they also concede to the state by saying, okay, you state, we acknowledge that you are the mediator here, okay? So the state really assumes new roles, new functions, which it hadn't in the past. Remember the absolute estates 500 years ago? That they were territorial, that they were characterized by strong bureaucracy. This doesn't look at what the state means now, okay? So the 20th century is the century of phenomenal expansion of the state. Yes, it is the century of mass enfranchisement, mass democratization, but it's also the era of the state, especially in what's called the golden age of capitalism, which is sometimes referred to as the embedded liberalism, the period of embedded liberalism. It's liberalism because we work or states work through markets. It's embedded because it's embedded socially and culturally that everyone agrees on the collectivist consensus, okay? So that's it for this period. The role of the state expands phenomenally under the Keynesian ideals or ideology, and the state assumes a massive role with a massive, going through a massive expansion. Britain from 30%, 19, I mean, right before World War II, 1970, almost 40%, 1980, 45% of British GDP is purchased by the British government, almost half of all goods and services produced in that country is purchased by the government. So imagine the role of the state intervening into British markets. Massive, and Britain is no exception. As you can see, 1930s, 1913, I'm sorry, pre-World War I, about 13%, jumping to about 19% and the World War I. Right before World War II, after Great Depression, the state responds across the OECD about 23, 24%, 1960, 28% passes a threshold of a quarter. 1970, 33% almost. So one third of all goods and services produced across the OECD or in the OECD or within the OECD are purchased by governments. Almost 40% across the OECD, 39%, 38.7%, 39% of all GDP. And it's continuing. It's also interesting. It's even higher now, but all this unravels with the onset of the conservative revolution that starts in Britain, 1979, that continues with the other side of the Atlantic, with Reagan in the U.S., but not only there, but also on the continent, Helmut Kohl, CDU, CDU. Christian Democrats come to power. Felipe Gonzales, Suarez in the Iberian Peninsula, Mitterrand comes to power socialist, but by about 1983, he normally goes left, then makes a U-turn, 1983, comes to power 1981, but makes a U-turn. So the conservative revolution, haunting all Europe. So this period, how did it come about in Britain? What was the politics like? This period was one of turmoil, economic downturn, industrial strife, the winter of 1978 and 79. We remember it as the winter of discontent, workers of all industries, mining and all that, everyone taking up to the streets, everyone says enough is enough, we want to enjoy prosperity, there is mass unemployment, and there is also political stagnation, a lot of tensions, neither the conservative Heath government nor the Labour Callaghan government managed to bring about, bring back prosperity. So what to do about it? And then emerges, or there emerges the Iron Lady. Margaret Thatcher comes to power who personally believed that it was the collectivist dogma, collectivist ideology that undermined, ruined British economy. So it was the previous Keynesian ideas of strong states, heavy states, clumsy states that really undid, undue, I'm sorry, that really undue prosperity, wealth and stability. And her response was, or her answer to this was that we need to cut taxes, we need to reduce social services and we need to stimulate competition. So in order to jump start the economy, roll back the state, make room for firms, yes, do enough of a regulation, but do not compete with the private sector, sell crowns assets, crowns jewels, crush unions, so that the costed advantages of firms emerge and stimulate all kinds of competitive forces. So this was the name of the game back in the early 1980s and it, I mean, the conservative revolution on the Thatcher continues well into, Well, Thatcher remained in power for more than, for about 12 years, for about 11, 12 years. And when we look back at Thatcherism, we see, we remember strong leadership, she was called the Iron Lady. We remember new economic ideas, the old passe economic ideas of, what was this guy's name? John Maynard, John Maynard Keynes, all passe, we don't wanna remember it, and the new culture, which she wanted to call, or she wished to call, enterprise culture, which was all about individual responsibility, individual commitment to family, commitment to thrift, saving, okay? Commitment to the entrepreneurial spirit, roll back the state, let markets work, let firms get stronger, and me and myself, I am responsible for myself, and she declares, I remember very vividly, she says, there is no such thing as society, there are individuals. So the idea of individualism, which really, of course, is one of the backbones of Britishness, so reinventing this culture of individualism, this culture of entrepreneurial spirit, so that we reinvent British society. Forget about John Maynard Keynes' collectivist ideas, let's adopt our own ideas, re-adopt our own ideas, and the inspiration comes from Friedrich von Hayek and others, and Milton Friedman, so monetarism and all that, we'll talk about this in more detail next class. 1990s continue under conservative governments, then something happens, another milestone, towards the end of the 1990s, yes, the conservative revolution is still there, but it is losing some steam, there are new backlashes to neoliberalism, and a group of guys reinvent the left, and they call it the third way. Blair and Brown offers a new alternative to thatcherism on the one hand, and old labor's collectivist ideas on the other. So we go neither the thatcherite way nor the old labor way, we go a third way, and in Germany, another idea, I mean a similar idea under the Schroder government came or emerged as the Neue Mitte, the new middle, okay? So the idea of a third wave or a third way of doing things, we don't want to opt for the conservative way, we don't want to opt for the old style, excuse me, collectivist way, we do a new, we build a new ideology, and Blair, followed by Brown, they reject interest-based politics. Normally in the British party system, labor would be, I mean like working classes, working masses would be voting for labor governments or labor party, and business would be favoring conservatives when they are before the polls. So Blair and Brown, they were set to expand their class base, so let's not restrict or limit ourselves to working masses, let's also start exchanging ideas with business or pro-business groups. So the government really gets votes across the socioeconomic political spectrum. So they really, they started rejecting their ties, their filial ties, their brotherly and sisterly ties with the unions, and they really emphasized partnerships with business, not only these, but also they opted for a conditional approach to welfare benefits. Yes, you may receive welfare only on the condition that you search for work or you continue to retrain yourself. You will be entitled to unemployment benefits if and when you're unemployed, if you're when you're fired. Yes, you will be entitled to these, but there are conditions that you need to search for work that you also search for new work, but you also retrain yourself. So the idea was to activate the labor force. So I'm not giving you unemployment insurance, unemployment benefits as a passive benefit. I want to bring you back to the labor force by providing you incentives okay, here is the benefit, but in return I want to make sure that you continue searching for work, that you continue producing for my economy, okay? So a conditional approach to welfare benefits or welfare approaches and leadership in Europe. So Thatcher had always been much reserved when it came to the European Union and the European Union started to expand back in the 1997, 1990s and Blair came to power and said, hey, we're not as reserved anymore. So we want to shake hands with Europe, with the European Union. In fact, we have lots to contribute to modern day Europe. A leadership role in Europe plus a new idea that had always been lingering, the idea of devolution. So devolving more powers to, or away from the core. Okay, I'm not talking about federalism, we're not talking about federalism, no. The F word was a touchy word all throughout 1990s and early 2000s. We're not going the federal way but we're devolving some powers to the Scottish Parliament. We're devolving some powers to Wales and Northern Ireland. So we're giving some powers, giving away some of the powers without really undermining our unitary conception of the state. Then comes 9-11. There emerged this special relationship with the US which really undermined a trust in the British government, in the running British government of the late 1990s and early 2000s. There was a huge disenchantment. And the criticism was that the Blair and Brown governments really overstretched, over committed, above and beyond what they could do. In international relations theory, we sometimes refer to this phenomenon as the expectation credibility rift. You expect as a government, you expect to do a lot but you're not credible enough. You cannot deliver. So there was an over stretch in the eyes of many. There was a lot of criticism, harsh criticism against the Blair governments which was followed by four, the Brown governments. So Britain overly committed beyond its reach, beyond its control. And many argue that it is this over stretch going in beyond what was possible. That was responsible for the 7-7 attacks, that there was an explosion in London, that, I mean a terrorist attack, or a series of explosions in London, that all of these policies have overstretched, promising too much beyond what you could do, what you could deliver. All these policies were responsible for, for all these security risks and security problems. Then comes the conservative governments after the onset of the Great Recession, 2008, 2009, 2010. Conservative governments come to power. David Cameron gets elected and re-elected almost by accident in the most recent elections. He confessed that he didn't even himself expect to win. And he had promised a referendum on whether to stay, whether to remain in the EU or not, that there was also the Scottish referendum. So this was a period of, again, some ups and downs, some upsetting events. And we're now talking about the Brexit, whether it's no longer, it seems, a question of whether or not, despite the 48 percent, 48 percent, 48. something percent, the will of the, almost the other 50 percent, that we're now talking about the terms of the exit, which is kind of interesting to observe. But of course politics is not a spectator sport like tennis. You enjoy a tennis game, a game of tennis. But politics is, it has ramifications, political, economic, cultural, societal, social, for all of our daily lives. And beyond the ordinary British citizen, many were joking in the papers or they were op-eds during, on route to the referendum that other citizens or citizens of other countries, they said, oh, we want to share the vote. We want to have a stay in the vote. So because it also concerns us, concerns everyone. So we'll convene Friday. We're not running the quiz this time, but we'll have the quiz next week, next Friday, but I'll see you on Friday. Thank you.