Continental leaders are fond of using “Anglo-Saxon” as a synonym for “free-market.” The implication, of course, is that free markets are not only ruthless and cold-hearted, but foreign, too. In a word, un-European. Witness President Chirac’s May 2005 assurance to the French that proposed reforms amounted not to “a model of the Anglo-Saxon type,” but offered instead “a model founded on dynamism and individual initiative, on solidarity and social dialogue.” (As if solidarity and social dialogue had no place in the Anglo-Saxon world.)

The postwar U.K. was not beholden to any inherent ‘Anglo-Saxon’ embrace of capitalism; in the 1970s, the U.K. was far more socialist than West-Germany and France.

Those who assume such an easy equivalence between Anglo-Saxon identity and capitalist economics are either disingenuous or forgetful of the recent past. Picture a country where the economy has stagnated and social unrest is escalating. As the middle class frets about the future, powerful labor unions defend their vested interests with violence, acting as the de facto fourth branch of government. The country’s economic malaise has become notorious, a topic of nervous debate among policy analysts both at home and abroad. Chirac’s France of 2007? Try the U.K. in the 1970s.

In the words of BBC political correspondent Paul Wilenius:

It is difficult to comprehend today how much power union barons like the then miners’ leader Joe Gormley and transport union boss Jack Jones wielded in those days. There were endless strikes afflicting the Post Office, steel industry, the ferries, steelworks and much more.

There was also “Red Robbo”, the union leader Derek Robinson who repeatedly brought car and truck-maker British Leyland to a standstill in the Midlands. 

Labour ministers courted union chiefs; Conservative governments were humiliated by them.

The British experiment in socialism began shortly after World War II, with Labour party prime minister Clement Attlee’s nationalization of hospitals, gas and electricity, railroads, civil aviation, the Bank of England, and the iron, steel, and coal mining industries. If anyone in the halls of power subscribed to the “Anglo-Saxon” free-market philosophy, they mostly kept it to themselves; the Zeitgeist was perhaps best captured by influential Labour politician Herbert Morrison: “The public corporation must be no mere capitalist business, the be-all and end-all of which is profits and dividend. Its board and its officers must regard themselves as the high custodians of the public interest.”

The public interest, of course, suffered the most from socialism, and while it took some time for the full damage to become apparent, by the 1970s socialism had given Britain so many recognizable problems that it had given rise to an internationally recognized term: “British disease,” a phrase which referred to Britain’s chronic labor unrest in combination with economic stagnation.

For Britons, too, it was obvious that something was amiss; a simple task such as purchasing a new telephone, today as easy as walking into an electronics store, could take months because of the inefficiency of government-owned British Telecom.

Public sentiment finally shifted from acquiescence to anger in 1978-79, the famed “winter of discontent,” when weeks of public sector strikes left mountains of trash in the streets, bodies unburied, and ambulances nowhere to be found. Labour Prime Minister James Callaghan, when confronted in Parliament by a Tory MP, could only ask meekly, “What action can I take?” Such was the powerlessness of the government and the public—and the unaccountability of the unions. The crisis was so severe that when voters responded by electing Margaret Thatcher, not even left-leaning civil servants resisted her privatization program: “The response within the bureaucracy to the new conservative government was that it could not get any worse than it had already got.”

The postwar U.K., then, was not beholden to any inherent ‘Anglo-Saxon’ embrace of capitalism; in the 1970s, the U.K. was far more socialist than West-Germany and France. And the U.K. is not the only Anglo-Saxon country to have succumbed over the years to socialism’s siren song.

With the label ‘Anglo-Saxon,’ European politicians hope to portray free-market reforms as inherently alien to continental culture.

The beautiful island nation of New Zealand may be characterized today by relatively low tax rates and a lean public sector, but, according to former Minister of Finance Roger Douglas, from the 1930s through the early 1980s increasing controls threatened to make it “‘the most regulated economy outside communist Europe.’” The OECD was just as harsh in its assessment of the policies New Zealand pursued until the early 1980s: “ [T]he New Zealand economy… supported high effective tax rates… The government's persistent tendency to accommodate external shocks resulted in high and variable rates of inflation…. Investment was often misdirected, and there was little competitive pressure to control costs.”  

The United States has had its own love affairs with socialism, though these were never as far-reaching as those of the U.K. and New Zealand. Franklin Roosevelt, justifying his unprecedented expansion of the federal government’s economic role, said in 1936: “Private enterprise, indeed, became too private. It became privileged enterprise, not free enterprise.” President Roosevelt’s numerous new government programs are well known, but less commonly remembered today is the fact that he hiked income taxes until the top tax rate exceeded a confiscatory 90%. It was not until the Kennedy administration that the top income tax rate was cut to 70%, a rate that is still far higher than what most of the highest-earning Europeans pay today, even considering relevant deductions.

Lyndon Johnson, with broad public support, massively expanded the federal government with new entitlements in his quest to build a “Great Society”; Richard Nixon, Johnson’s Republican successor, established the Environmental Protection Agency, approved massive increases in social spending, and even implemented, with broad public approval, wage and price controls. Even many so-called conservatives in the United States today applaud an increased reliance on government: former top Bush adviser Michael Gerson, for one, has written that small-government conservatism “strangles mercy.”

None of these developments fit the presumed pro-capitalist “Anglo-Saxon model”; indeed, there is no such thing. Economic policies in the Anglosphere have fluctuated widely in response to political changes and economic challenges.

Why, then, do continental Europeans like President Chirac so often refer with derision to some imagined “Anglo-Saxon model”? With the label “Anglo-Saxon,” European politicians hope to portray free-market reforms as inherently alien to continental culture. This ploy has been in vogue since French writer Michel Albert used the phrase “Anglo-Saxon model” to refer to free-market economies in his 1991 book Capitalism Against Capitalism. Albert contrasts the so-called “Anglo-Saxon” model to the model he favors, the “Rheinish model,” a more socialist form of capitalism prevalent in continental Europe.

If anything, the Anglo-Saxon experience offers not a warning to continental Europeans, but reason for hope. As the British and New Zealanders have demonstrated, the decision to embrace socialism is never irrevocable. Culture and geography don’t determine economic policy; people do, and the ability to throw off the yoke of socialism is hardly limited to those who speak English. Indeed, in the same postwar years that saw the U.K. headed towards crisis and chaos, across the Channel France and Germany enjoyed unprecedented prosperity thanks to policies that respected economic freedom. Far from betraying their cultural heritage, continental Europeans who embrace free markets are reclaiming the best of their own past.

Jurgen Reinhoudt is a Research Assistant at the American Enterprise Institute.

Image credit: "Jacques Chirac s'adresse à la nation" by Flickr user humain