British manufacturing financial performance, 1950-79: Implications for the productivity debate and the post-war consensus

This article applies accounting rates of return (ROCE) to the debate on the post-war consensus. Using a sample which contains over 39,000 company years divided between 15 manufacturing industries, we examine the speed and extent of convergence in ROCE through time, between industries, and between firms. We find there is some support for the Broadberry-Crafts argument that anti-competitive practices, enshrined in the post-war consensus, appear to have hindered the efficient working of the economy and, by implication, the reallocation of resources to their most profitable uses. However, this support depends crucially upon the type of measurement adopted. We find that the Broadberry-Crafts argument works best when applied to differences in ROCE between industries rather than firms. We suggest that differences in ROCE between firms can be equally well explained by appeal to the resource based view of the firm.