British Economy Paradoxes. Patterns and Trends in the UK Economy. — Moscow : IMEMO, 2024. — 178 p.
Authors: Podkolzina I. 
Published: December 2024

The book examines the evolution of the UK’s version of “shareholder capitalism”, or liberal market economy. The focus is on the influence of governing institutions on this evolution and on the changing role of the state in the economy. As the research shows, the liberal market economy that developed in the UK corresponded to the historical and geographical patterns, institutional characteristics, political and cultural tradition. The combination of these factors led to early industrialization and Britain's leading role in the global economy in the 19th century, a lag behind competitive countries in the first half of the 20th century, the failure of corporatism in the post-war decades, and conversely, the success of Thatcherism. The main characteristics of the UK’s liberal market economy include a relatively low state regulation, corporate access to capital through the financial markets, and profit maximization as the primary goal of corporate governance. These elements ensured a specific response of the economy to internal and external shocks and strategies for overcoming crises. A high level of competition - both domestic and international - is crucial for the sustainability of liberal market economy. Historical experience confirms that the British economy performed best during periods of high globalization, minimal regulation, and widespread of radical innovation. A similar model has emerged in the United States and other English-speaking countries that share common historical roots and cultural tradition with Britain. A distinctive feature of the UK version of a liberal market economy is the peculiar position of trade unions —relatively decentralized but quite influential due to special relationships with the Labour party. Another distinguishing trait is a strong socialist / social-democratic tradition that has dominated British political landscape since the late 19th century. Depending on external and internal conditions, these features begin to conflict with the liberal market economy and create a demand for its transformation. The presence of significant contradictions can be seen as a key factor contributing to the instability of the UK’s economy model. Regarding political views, ideas of mixed economy and welfare state are accepted in one form or another by the main competing political parties, and at different times this has formed a basis for a consensus approach to economic policy. Historically, adherence to the "third way" among Labour’s members is expressed in a somewhat greater inclination towards redistribution, while among Conservatives’ it leans towards paternalism. As a result, part of the electorate whose character and interests are tied to principles of individualism and economic freedom is not represented in this framework. This may explain the phenomenon of Margaret Thatcher in the 1980s and a significant shift of voters towards Nigel Farage's Reform Party in 2024. Major events such as the global financial and economic crisis, the UK's exit from the EU, and the Covid-19 pandemic were accompanied by an increase in state intervention in the economy, a reassessment of corporate governance principles and industrial relations regulation, and a limitation of market mechanisms. The corporate sector's transition to ESG (Environmental, Social, and Governance) and DEI (Diversity, Equity, and Inclusion) principles, as well as an increase in its social responsibility, are important conditions for transforming the institutional structure of a liberal market economy. A significant factor in the transformation of the UK’s Economy model is the strengthening of the state apparatus and quasi non-governmental organizations that are not free from political bias. After 2020, there are clear signs that the established structure differs significantly from what was observed two decades earlier. Paradoxically, after Britain's exit from the EU, there has been a more intense convergence of its economic model with the continental one than during its membership.