Any explication of the political economy of the Alternative Economic Strategy (aes) must begin with its critique of Keynesian social democracy. For, in many respects, the former defined its position with reference to the latter's failings, and consciously, and for a time successfully, set out to replace it as the dominant political economy of British democratic socialism. In this regard, the AES clearly elucidated the theoretical and prescriptive deficiencies of Keynesian social democracy, traced through their consequences, provided a competing explanation of the workings of the post-war economic world and its economic history and charted the alternative available paths to a manifestly socialist future. It was, therefore, as hegemonic in its ambitions as the programme it attacked and represented an attempt, perhaps the very last, to construct a holistic British democratic socialist political economy. In so doing it established the terms of socialist economic debate in the early 1980s, and, even with its disintegration after 1983, it was to have a continuing influence on the directions in which socialist economic thinking in Britain subsequently evolved.

What Keynesian social democracy offered was an alluring vision of socially harmonious material progress free from the depression and mass unemployment which had characterized the inter-war period. It held out the prospect of steadily rising real incomes, generalized affluence and, with a trade union movement occupying a position of strength in a tight labour market, a distribution of income more favourable to the working class.