Death at the centre
Labour should heed lessons from the interwar period on attempting reform in hard times, writes Hopi Sen
Imagine a government faced with enormous public debt which proposes the building of council houses in vast numbers. A government that spends more on health and the unemployed, increases pensions and raises public sector pay. This government would surely be the toast of social democrats for decades. But this was the result of no Labour landslide, nor even a Liberal administration. This was David Lloyd George’s Tory-dominated postwar coalition.
In the two years after the first world war, a coalition government embarked on a programme of social reform nearly as vast in scale as that of the postwar Labour government. Then, in the face of depression and public debt, it halted, reversed, and split asunder.
The radical reforms of the Lloyd George coalition may have ended in failure, but as Labour historian Kenneth Morgan has argued, its programme of social reform was ‘a range of new policies put forward on a wide front, with the general acclaim of the political left, and reformers and welfare workers generally.’
It introduced universal unemployment insurance; a near-doubling of the value of pensions; a major increase in teachers’ salaries; a plan to buy land so soldiers could turn bayonets into ploughshares; and, most important of all, a plan to build 500,000 new houses.
Today this agenda seems almost too good to be true. And so it proved. The postwar boom was followed by recession, high interest rates and an ever-heavier burden of public debt. The press and public turned against ‘waste’ and the reformers retreated. First, Christopher Addison, the minister responsible for the housing programme, was removed. Then a commission on reducing expenditure was agreed, and finally the axe fell. The cuts foreshadowed Lloyd George’s fate: dispatched by the Tories soon after, he spent the rest of his career in creative impotence.
What replaced the ‘dynamic force’ of liberal reformism? First, a ‘safety first’ conservatism, grounded in ‘economy’: national and unifying in rhetoric, solidly middle class in self-image, timid and sectional in practice. The main achievement of Stanley Baldwin’s 1924 government was the defeat of the general strike. Unemployment fell from a peak in the early 1920s, but stayed stubbornly high, and the value of wages fell.
What of the left? Labour had a rhetoric of radical change, but it lacked anything resembling a programme to deliver such. An example came when Labour’s Philip Snowden led a debate in 1923 on the ‘failure of capitalism’. His critique was a tour de force: replace ‘capitalism’ with ‘neoliberalism’ and it would serve today as a speech for a left-of-centre conference: ‘The capitalist system … enables a very large rich, idle class to grow up, and their spending power is to a very great extent exercised, not in the support of the staple industries of the country but in the maintenance of unremunerative and unproductive labour’. Yet, in reply, Liberal MP Sir Alfred Mond had a point when he said, ‘Our socialist friends are very much like the vendors of patent medicines. They describe the horrors of the disease … and then, when it comes to the remedy, they say very little about it.’
Snowden said very little about remedies because he had few to offer. Months after lambasting capitalism, Snowden was chancellor. He delivered a budget of perfect Gladstonian Liberalism, cutting taxes and adding only, in the words of historian Martin Pugh, a ‘token programme’ of relief.
In both 1924 and 1929 Labour’s rhetoric of radical change was quickly replaced by inaction. It saw some governing success in the interwar period, such as the work of John Wheatley and Arthur Greenwood in housing, but even this was largely a revival of the Addison housing programme. This was not simply a result of minority government, but an inevitable consequence of Labour’s general lack of a worked-up, costed policy programme. So on one side there was complacency and inaction. On the other, rhetoric and impracticability. For both, failure.
Yet in all parties a variety of plans for concrete reform were struggling to be heard. On the left, Herbert Morrison’s sturdy municipalism and Addison’s ‘practical socialism’ contested with George Lansbury’s self-destructive ‘Poplarism’, Ernest Bevin’s pragmatic unionism and the fiery James Maxton’s desire for a full socialist programme. On the right, Noel Skelton’s ‘constructive conservatism’ called for the wide distribution of capital. This social Toryism contended with the hard-faced Tories of whom Skelton said the ‘harrow will have to go over their backs again and again before they accept the necessity of thinking’. Among the divided Liberals, meanwhile, Lloyd George offered first the Green Book, on agriculture, then the Yellow Book on Britain’s industrial future, while others slowly moved into the Tory orbit. The Liberals were a declining, divided force, their surges and retreats serving only to elect weak Labour or inactive Conservative governments.
Each of these strands of practical reform eventually came to fruition. Addison’s reformism combined with Morrisonian pragmatism and the radical Liberal remnant of William Beveridge and John Maynard Keynes to underpin the postwar Labour government, while Skelton leads us directly to the One Nation Toryism of Harold Macmillan. But these postwar revivals of practical reformism and constructive conservatism came too late for two decades of the unemployed, the poorly paid and the badly housed. The failure of the progressive centre was rooted in an inability to convincingly answer how social ambitions could be delivered and afforded. Before this question, reformers retreated, collapsed or took refuge in airy waffle. Keynes supplied an answer, but it took a cataclysm to make it palatable. Today, we must consider the same challenges.
When the coalition government was formed in May 2010, it was possible that once more the infusion of liberalism to the Conservative party could create a modern constructive conservatism that appeared consensual and unifying. Instead, they have turned to a bastardised ‘safety-firstism’. They did not even need to get rid of the Liberal leader to do so.
But if the Conservatives have not learned their lessons, the temptation for the left is once more to hide from practical challenges in evasive vagueness. Such an approach can succeed in opposition if your opponents are sufficiently idiotic. In government it cannot.
Today, we face a deficit of demand that must be addressed. But when the immediate crisis departs, we will be left with high unemployment, sluggish growth, low living standards and a long debt hangover. In the face of such challenges, the lesson of the 1920s is that we need careful planning of reform. What might such a practical reformism look like? First, I suggest a commitment to long-term fiscal stability. We would spend to end depression. Equally, we must be clear that we must save during growth. We must tie ourselves tightly to the mast if this is to be credible. This will mean a limit on state spending increases in real terms, even with extra taxes on the ultra-wealthy and bank bonuses. Therefore we must focus on public sector efficiency, reductions of unproductive spending, such as subsidies to the better-off, and the transfer of resources to directly encourage private sector jobs growth.
Next, how we spend will be as essential to social justice as how much we spend. We will not be able to please everybody so we will have to make choices about what matters most. I believe the two key issues are private sector jobs and living standards. A focus on policies like an industrial bank, increased apprenticeships, better vocational education, and support for small business in depressed areas, will mean reductions in programmes elsewhere. To pay for this we will need to develop a new universalism that limits wasteful spending on the wealthy regardless of need in favour of a truly cradle-to-grave system that gives support to all during major life changes, like birth and early parenthood, jobseeking and health emergencies. We will need to embrace welfare conditionality and co-production in public services.
Frankly, such an agenda is not an easy sell to our movement or to the country. But people know our peach-fed days are past. Such a programme will at least be honest, straightforward and deliverable: it will be a constructive, practical social democracy.
Hopi Sen is a contributing editor to Progress
capitalism, David Lloyd George, Ernest Bevin, Labour history, liberalism, neoliberalism, Stanley Baldwin