BRITAIN'S ECONOMIC PROBLEM: THE GROWTH OF THE NON-MARKET SECTOR?

This article examines Great Britain's economic problems and the growth of the public sector, specifically, the non-market sector of the economy. The economy is divided into productive and non-productive sectors bypassing the complex theoretical problems involved. But both this division and the division into tradable and non-tradable sectors are rejected in favor of the distinction between a market and non-market sector. It is argued that the growth of the non-market sector is responsible for Britain's problems. Three propositions on the increase in the non-market sector are discussed. First, the increasing taxation required for a rising ratio of non-market output has caused net-of-tax profits to be falling. Second, falling of net-of-tax profits have led to falling investment and thus to a lower rate of growth and balance of payments difficulties. Lastly, the worker's refusal to bear any of the taxation burdens has meant that wage inflation accelerated, unemployment rose and income policies had to be made increasingly strict.