GROWTH IN EXPENDITURE AND NATIONAL INCOME began to increase at a rate faster than the rate of growth of real national ond half of the ninete nth century,but the absolute prdcirilremarkablyall and w have already seen)real government expenditure as a whole did not constitute an increasing share of national income over the same period.Neverthe- less,there is reason to believe that,before the period of this study,the s ds ofinc ing govern nent eco mic activity had already been so The old liberalism was giving way to the new.In a publi c speech in September 1885,Joseph Chamberlain said,"The greater part of municipal work is Socialism,and every kindly act of legislation by which the community has sought to discharge its responsibilities and its obligations to the poor is Socialis sm,but it is e the worse for that."6A younge contemporary was to add to this the Wagnerian argument: "The wh tendency of civilization is,however,towards the multiplication of the collective functions of society.The ever-growing complications of civil- ization create for us new services which have to be undertaken by the state, n。 ate for us a of the existing services."Fifty yea later the sel same speaker presided over a government responsibl directly or indirectly for spending a sum equal to no less than 37 per cent of the peacetime national income. Government Expenditure and Gross National Product Since 18go We now examine the annual statistics of total government expenditure since 1890,its secula r growth secular changes in the proportion government expenditure to GNP,and the shorter-term changes in expenditure that make up the time pattern of growth and (perhaps) show a displacement effect in some periods that encourages further study We also consider how these things are affected by changes in populatior ces,and the level of e t The analysis leads o th nclusion cor rable e growth in goverment expenditurei real terms per head of population,that the rate of growth over the period as a whole was considerably faster than the rate of growth of gross national product in real terms per head of population,and (what is in some ways more important for our general thesis)that when we have taken account of population growth,price change and changes in the level of emp ment,we are left with an important ph omenon to explain time pattern of expenditure growth.The examination and explanation of this displacement effect provides the theme of later chapters. ullock and Shock,cP.210. 40 GROWTH IX EXPEXDITURE AXD NATIOXAL INCOME began to increase at a rate faster than the rate of growth of real national product in the second half of the nineteenth century, but the absolute size of such expenditure was still remarkably small, and (as we have already seen) real government expenditure as a whole did not constitute an increasing share of national income over the same period. Neverthe￾less, there is reason to believe that, before the period of this study, the seeds of increasing government economic activity had already been sown. The old liberalism was giving way to the new. In a public speech in September 1885,Joseph Chamberlain said, "The greater part of municipal work is Socialism, and every kindly act of legislation by which the community has sought to discharge its responsibilities and its obligations to the poor is Socialism, but it is none the worse for that."6 A younger contemporary was to add to this the Wagnerian argument: "The whole tendency of civilization is, however, towards the multiplication of the collective functions of society. The ever-growing complications of civil￾ization create for us new services which have to be undertaken by the state, and create for us an expansion of the existing services."7 Fifty years later the self-same speaker presided over a government responsible directly or indirectly for spending a sum equal to no less than 37 per cent of the peacetime national income. Government Expenditure and Gross Yational Product Since 1890 We now examine the annual statistics of total government expenditure since 1890, its secular growth, secular changes in the proportion of government expenditure to GNP, and the shorter-term changes in expenditure that make up the time pattern of growth and (perhaps) show a displacement effect in some periods that encourages further study. We also consider how these things are affected by changes in population, prices, and the level of employment. The analysis leads to the conclusions that there has been a considerable growth in government expenditure in real terms per head of population, that the rate of growth over the period as a whole was considerably faster than the rate of growth of gross national product in real terms per head of population, and (what is in some ways more important for our general thesis) that when we have taken account of population growth, price changes and changes in the level of employ￾ment, we are left with an important phenomenon to explain—the irregular time pattern of expenditure growth. The examination and explanation of this displacement effect provides the theme of later chapters. 6 Cited in A. Bullock and N. Shock, eds., The Liberal Tradition from Fox to Keynes, London, 1956, p. 207. Extract from a speech delivered in Glasgow in 1906 by Winston S. Churchill, subse￾quently republished in his book Liberalism and the Social Problem, London, 1909. See Bullock and Shock, eds., cit., p. 210. 40