THERE are at least two separate problems about the British economy, which are not sufficiently distinguished. First there is the long-standing gap between the growth rate of the United Kingdom and that of other industrial market economies. This goes back over a hundred years. Alfred Marshall remarked that by the 1860s and 1870s "many of the sons of manufacturers" were "content to follow mechanically the lead given by their fathers. They worked shorter hours; and they exerted themselves less to obtain new practical ideas."' Secondly, there is the simultaneous occurrence of high unemployment, high inflation, and incipient protectionism that has affected most Western countries in the 1970s, which is known by the ugly word "stagflation" and which has put a check to many hopes after a generation of postwar prosperity. The inflationary disorders of the business cycle of the early 1970s, the depth of the subsequent recession, and the troubled and unsatisfactory nature of the latest recovery have been problems common to most countries. But, partly because they were superimposed on an economy which in any case had a low growth rate, they affected Britain with particular severity and gave rise to an orgy of pessimism and self-doubt among British leaders. It was this phenomenon, so surprising in a country of such long-established political culture, which impressed many foreign visitors and which made the diagnosis of the "condition of England" such a growth industry in the United States. The so-called British disease is thus a mixture of different maladies-slow growth, a severe recent attack of stagflation, and accompanying political strains. Although I hope to find common elements in the explanation of these phenomena, it is first necessary to distinguish them from each other.