We argue that if we want to understand the implications of Big Bang for Britain’s present, we should first go back and make sure that we adequately understand the origins of the Big Bang and the political-economic context where it took place, and then deal with the theoretical issue of ideational-institutional continuity in the face of a policy failure, and the emergence of a broad political consensus around a failed policy.
Using recently released documents we show that senior officials were very conscious of the disadvantages of the proposed liberalisation but still decided to make it happen. We then explain why they thought it was worth it given the attendant risks and uncertainties, and how, after the Big Bang had generated the Big Bust, this spectacular policy failure became the corner stone of an enduring, consensual growth model shared by both of the governing parties. This paper establishes the peculiar ideational-institutional mechanisms that constructed the history of Big Bang as a policy success and its effects as a sustainable growth model.
