THE PRIDE AND THE FALL The Dream and Illusion of Britain as a Great Nation By Correlli Barnett Free Press. 359 pp. $22.95

TO THE British people, the struggle against Hitler's Germany has always been regarded as a "good war." This was in part no doubt due to the relief at avoiding those massive losses in Flanders that had characterized the First World War. It was also caused by the broad-based belief that the Nazi menace had to be defeated -- a conviction which grew with the later revelations about the death camps.

In addition, however, the British were proud of their role in the war because they believed that they had fought hard and worked hard; that the splendid military victories of the Battle of Britain, the North African, Italian and Normandy campaigns, the struggle for the sea lanes, the strategic bombing of Germany, and the reconquest of Burma, had complemented those scientific and industrial victories like radar and jet-fighters, the breakthroughs in anti-submarine warfare and the massive surge in armaments output in every area. Willing workers, enterprising managers and brilliant scientists had helped to win the war and, by 1945, stood ready to "win" the peace. Britain was still one of the Big Three, and still possessed an empire covering one-quarter of the land surface of the globe. Basking in the glow of victory, the nation strode into a postwar world, seeking to create a "New Jerusalem" of social reconstruction at home, balanced by a deep sense of responsibility for the troubled international scene abroad.

But was this rosy self-image correct? And did the British, in clinging so avidly to it, blind themselves to reality and thereby contribute to the steady, relentless decline in their wealth and power, relative to other nations, that has taken place in the four decades since V-E Day?

This, certainly, is the view long held by the iconoclastic, acerbic, pugnacious English writer Correlli Barnett, a figure who deserves more attention in this country than he has hitherto been given. His first book The Desert Generals, published as long ago as 1960 and just reissued in a second edition, included a full-scale assault upon the most famous of British wartime commanders, Montgomery, whose reputation never recovered from that bruising. Twelve years later, in his brilliant book The Collapse of British Power (also just reissued), Barnett's target had widened to include the greater part of the British political nation, especially its gentlemanly-trained elites, who were not only ineffective in stopping the dictators' aggressions in the 1930s but who had also, in a well-meaning but disastrous way, supervised the erosion of Britain's overall will and capacity to remain a Great Power. Placing tradition before innovation, compromise before challenge, "fair play" before winning, tolerance before excellence, the British people as a whole were not well equipped to handle the rough, cold, competitive world of the 20th century. Neville Chamberlain's replacement by a more vigorous Churchill, Barnett concluded, ought not to obscure the blunt fact that, unless they changed their ways, the British were on the way out.

The Pride and the Fall is to be seen, therefore, as a further round in Barnett's campaign. To peel away what he regards as the national mythology of a "good" war that demonstrated the national genius, he has dug deeply into the mass of recently-opened official records, particularly those of the ministries of education, labor and production as well as of the various cabinet subcommittees. In addition, he has extensively consulted the secondary literature in all those fields -- science, technology, management, technical education, labor relations -- that he considers to constitute the vital underpinnings of a successful Great Power.

THE RESULT is a trenchant and withering indictment -- written with a Swiftian rage and power -- of a national system that he feels had failed to adapt and modernize. Industry after industry (coal, shipbuilding, steel, even the much-trumpeted aircraft industry) is subjected in turn to an exhausting analysis -- especially as compared with conditions in the United States and Nazi Germany -- that is intended to demonstrate the heavy British wartime reliance upon foreign machines and ingenuity, the lack of investment, the paucity of scientific and managerial talent, the bloody-mindedness of the trade unions and the dreadful lack of proper education and even proper levels of health among the masses of the British population. What was more, Barnett argues, because those social needs were so evident, a post-1945 generation of politicians turned eagerly towards the creation of a welfare state instead of directing resources toward a root-and-branch reform of education, science, industry and management; just as, in another sphere, those same leaders failed to rethink Britain's much-reduced place in the world, at a severe cost to their long-term well-being.

One puts down The Pride and the Fall, shaking slightly at the sheer comprehensiveness of Barnett's attack. Indeed, this reviewer was from time to time reminded of Burke's warning that it was false to indict an entire nation. At times Barnett's denunciations seem too sweeping, his praise of (say) German achievements too unqualified. There are implications, cultural and political, in turning a nation into a hard, competitive, success-oriented power that he does not explore. Judging from the controversy this book has already caused in Britain, there are many who feel that Barnett's iconoclasm has once again gone too far. The concern with his message in today's circumstances is easy to guess at. What is more difficult to forecast is whether this debate will stimulate Mrs. Thatcher to intensify her own policies, since she herself has similarly criticized such features as the educational system, the lack of skilled engineers and scientists, managers without business training, obstructionist trade-unions and a national preference for compassion before competitiveness.

What is certain is that The Pride and the Fall is not just another book about British policy during the Second World War. It is much more than that, a work with a larger and contemporary message. As the author meaningfully suggests in the conclusion of the preface of this American edition, "Although this history concerns itself with a particular nation in a particular time, other nations at other times might profit from the moral."

Paul Kennedy is Dilworth Professor of History at Yale. His next book, "The Rise and Fall of the Great Powers," will appear this fall.