The Ideas That Shaped Post-War Britain. Anthony Seldon

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СКАЧАТЬ the demand is carefully selected this palliative cannot last long. It cannot in any event last indefinitely unless ultimately world conditions improve.³⁶

      Conversely, in John Parker’s account there was a residual flavour of socialist scepticism about relying on market mechanisms – ‘since it must be remembered that in one sense labour is always being “directed” by the demands of consumers’ – to achieve what Cripps was now terming ‘democratic’ planning, as distinct from the ‘totalitarian’ kind.³⁷

      Yet Hogg’s and Parker’s accounts of the 1930s are on broadly similar lines. A wrong-headed approach, it was held, had been adopted in meeting the 1931 crisis; but this could be extenuated and excused in the absence of a fully articulated Keynesian agenda. According to Quintin Hogg, it was not really a partisan matter – ‘The Labour Government are not to be blamed for not following this course’ – and instead he cited the Keynesian claim, ‘with which I, as a Conservative, agree, that given low rates of interest, high wages, and adequate social security (for this is what redistribution means) this terrible scourge can again be relegated to the category of minor nuisances and we shall be free to face the real problem of civilisation – the lifting of humanity out of the primeval slime’.³⁸

      Writing in the New Fabian Essays, five years later, John Strachey appealed to the post-war experience of both Britain and the USA to show how a democratic government could raise the standard of life – provided it had not only the will but also the expertise. ‘The government of the left when installed must know how to give effect to the push of the democratic forces,’ he wrote, mindful of the historical contrast with Leon Blum in France and Ramsay MacDonald in Britain. ‘The techniques for making an economic system work at full power – granted one has the will to do so – were in fact only worked out in the nineteen-thirties. The elucidations of the late Lord Keynes have in this respect played a genuine historical role.’³⁹

      What were these much-lauded techniques? Keynes himself had a long-standing record of wishing to regulate investment so as to make full use of resources, and in the General Theory he accordingly suggested ‘a somewhat comprehensive socialisation of investment’. The post-war nationalisation measures in Britain, however, hardly fulfilled his criteria of controlling the overall volume of investment, whether public or private – ‘it is not the ownership of the instruments of production which it is important for the State to assume’.⁴⁰ Nonetheless, Labour appealed to a synergy between its nationalisation programme and a full-employment policy, under the elastic rubric of planning. They had seen the future – and it worked. Thus, looking back on the record of the Attlee Government in 1952, Austen Albu could claim that, insofar as the rationale for the nationalisation programme had lain here, it had achieved its objective: ‘The dominating motive in 1945 of planning for full employment has been satisfied with only one-fifth of industry nationalised, and there is a growing view that, in so far as internal conditions are concerned, this can be continued.’⁴¹

      In regulating the level of effective demand Keynes’s instincts were always to concentrate on investment. Practically all that the General Theory said about consumption was: ‘The State will have to exercise a guiding influence on the propensity to consume partly through its scheme of taxation, partly by fixing the rate of interest, and partly, perhaps, in other ways.’⁴² Under the Labour Government, there was a commitment to macroeconomic management of the level of demand through fiscal policy, supplemented by the use of direct controls to keep inflationary pressure in check. This is how Sir Stafford Cripps explained the matter in his Budget speech of 1950: ‘Excessive demand produces inflation and inadequate demand results in deflation. The fiscal policy of the Government is the most important single instrument for maintaining that balance.’⁴³

      By contrast, the use of monetary policy as an economic regulator smacked of the bad old deflationary days of the Gold Standard, and was abjured by Labour. In taking this line Dalton could initially claim both theoretical and practical endorsement from Keynes. Keynes repeatedly stressed the desirability of bringing down the rate to a low and stable level (in this sense ‘fixing’ the rate). Keynes’s often-quoted notion of bringing about ‘the euthanasia of the rentier’⁴⁴ made a natural appeal to Labour supporters, not least Dalton himself. But although the Bank of England’s discount rate remained fixed at the level of only 2 per cent until the Labour Government lost office at the end of 1951, it is now clear that Gaitskell as Chancellor was ready in principle to use monetary policy in support of budgetary policy – a case which his revisionist supporter Crosland was to elaborate in The Future of Socialism (1956).⁴⁵

      It was in the New Fabian Essays (1952) that Crosland broached his fairly complacent assessment of the post-capitalist nature of contemporary Britain:

      The trend of employment is towards a high level, and a recurrence of chronic mass unemployment is most unlikely. The Keynesian techniques are now well understood, and there is no reason to fear a repetition of the New Deal experience of a government with the will to spend its way out of a recession, but frustrated in doing so by faulty knowledge. The political pressure for full employment is stronger than ever before; the experience of the inter-war years bit so deeply into the political psychology of the nation that full employment, if threatened, would always constitute the dominant issue at any election, and no right-wing party could now survive a year in office if it permitted the figures of unemployment which were previously quite normal.⁴⁶

      Such confidence – hubris is another word – had not grown overnight. At the end of the war there had been a general expectation that the post-1945 experience would parallel that of post-1918: a couple of years inflationary boom, with a slump around the corner. This fear was implicit in the 1944 White Paper. It was a prospect which, as John Parker reported, ‘most British socialists believe to be inevitable, although they are not agreed on the date when the slump is likely to arrive, nor what course it is likely to follow.’⁴⁷ True, Dalton’s Budget speech in April 1947 said that inflation rather than deflation was now the immediate danger. Yet Meade, writing in 1948, when inflation was already at the front of his own mind, prefaced his arguments with the comment: ‘We are all agreed that measures must be taken to stimulate total monetary demand and to prevent it from falling below the level necessary to sustain a high output and high employment when the time next comes – as sooner or later it assuredly will come – when a deficient total demand threatens to engulf us in a major depression.’⁴⁸

      It was only from 1951 that a wholly different assumption about the nature of the economic problem supplied a new context for all these arguments. This occurred initially in the context of a rearmament programme which injected a huge boost of demand into the economy; as a proportion of GNP, defence spending rose by 3.5 per cent in three years while the budget surplus was cut by nearly 5 per cent between 1951–4.⁴⁹ Little wonder that economists – a fortiori the Keynesian revisionists represented in New Fabian Essays – stopped worrying about a slump. Even so, Strachey still qualified his judgement that, in most major respects, ‘our economy is exhibiting behaviour quite different from that which it exhibited during the whole of the inter-war period’ with the proviso that ‘it may be argued that it is as yet too early to claim that we have succeeded in eliminating trade depressions’.⁵⁰ But although it may have been judged premature to dismiss any possibility of a slump, fear of a slump had nonetheless disappeared because the weapons now existed to fight it – even if there should prove to be insufficient cleverness in anticipating and obviating it. The old-fashioned capitalist misery had been abolished, perhaps capitalism too. ‘It is now quite clear that capitalism has not the strength to resist the process of metamorphosis into a qualitatively different kind of society’ was how Crosland put it, and a further conclusion naturally followed: ‘Such an economy is far more likely to give rise to chronic inflation than chronic deflation.’⁵¹

      Out of the frying pan into the fire? Not a bit of it! Strachey peremptorily refused to admit that ‘the unmistakable fact that a full employment economy generates powerful СКАЧАТЬ