Posthumously, the Webbs have won their battle, and converted a generation to their standards. Now the time has come for a reaction: for a greater emphasis on private life, on freedom and dissent, on culture, beauty, leisure, and even frivolity. Total abstinence and a good filing system are not now the right sign-posts to the socialist Utopia: or at least, if they are, some of us will fall by the way-side.
C. A. R. Crosland, The future of socialism, 1956
Is it capitalism?
If in the interwar period socialist political economists were forced to grapple with the consequences of economic depression and the limitations it imposed upon socialist advance, in the two decades after 1945 they had to confront the theoretical and practical difficulties posed by the growing material prosperity and rapidly rising living standards of Western industrial nations. As one writer put it, ‘the capitalist system having accepted and digested the implications of Keynesianism and the reforms of the Attlee administrations has once again proved that it can operate efficiently’.1If in the 1930s the Labour Party had to come to terms with being in the political wilderness and the business of finding a way out, in the immediate postwar period it had to cope with its conquest of political power and its success in implementing a significant part of the programme it had presented to the electorate in 1945. As Richard Crossman wrote in 1950, ‘All that talk about
“capturing the bastions of capitalism” and then nobody resisted . . . Those who manned the defences of Jericho could not have been more surprised than those socialists who saw the walls of capitalism tumble down after a short blast on the Fabian trumpet.’2Or, as Crosland saw it, the things the Webbs had cared for had all been done. In the light of all this, in view of the altered economic and political circumstances they confronted, many socialist thinkers believed it imperative that they rethink and revise the political economy to which they adhered. In particular they considered it necessary to reassess the changed and changing nature of British capitalism, for only then would it be possible to consider what had been achieved and what, for the future, might prove feasible and effective lines of socialist advance.
As regards the nature of capitalism, most socialist writers in the post-1945 period believed that its character had, in fact, been fundamentally altered. Indeed, for Tony Crosland, the social and economic arrangements that existed in postwar Britain could no longer, legitimately, be labelled capitalist at all; for all practical, policy purposes capitalism no longer existed and the major problem confronting socialist thinkers was how to accommodate that fact. Some shared Crosland’s view. The authors of Socialism, a new statement of principles (1952) argued that
‘full employment, planning controls, housing programmes, social security, the national health service, progressive taxation, have produced a situation to which no ready-made label can be tagged’.3Capitalism’s own inner dynamic and the social and economic policies that resulted from democratic pressure had effected such fundamental changes in the economic system that it had, in its essentials, ceased to be capitalist. Roy Jenkins in In pursuit of progress(1953) stated that what existed in Britain, by that date, was ‘well-removed from capitalism in the traditional sense of the word’; what had emerged was ‘a managerial society controlled by a privileged elite’;4the dream of the Fabians turned nightmare. Others were convinced that something that could legitimately be categorized as capitalism still existed. Yet even they accepted that the label required a qualifying adjective.
Richard Crossman wrote of ‘welfare capitalism’ and John Strachey of ‘last-stage capitalism’.5For them, capitalism might exist but it had been critically altered, in particular by Labour’s creation of the welfare state and the successful pursuit of full employment.
In addition to its dynamism and its consequenct capacity to furnish rising living standards for the bulk of the working population, many socialists also believed that the capitalism they confronted was now characterized by a radically altered dis- tribution of economic power. As these writers saw it, power was now dispersed;
a pluralistic dispensation prevailed. Power was no longer monopolized by a class of capitalist owners.6The state, for example, now possessed considerable authority and responsibilities in the economic sphere. Specifically, nationalization and the commitment to full employment both served to limit the power that capitalists could wield: the former circumscribing the area of the economy over which private enterprise held sway, the latter significantly enhancing the bargaining power of trade unions. Further, for many socialists, the managerial revolution had effec- tively taken power out of the hands of capitalist owners and placed it in those of professional managers. Roy Jenkins considered the capitalist class to have surrendered their power, ‘partly to the state, partly to their own managers and partly to the trade unions’.7They could, therefore, no longer play their traditional role of exploiters of labour or enemies of social progress. In addition, these professionally managed, private enterprises were increasingly subject to a network of legislative controls.
Some also argued that such enterprises were driven by different motives and pursued different objectives from the traditional capitalist goal of profit maxi- mization. In consequence, productive activity responded to imperatives radically different from those that had previously set it in motion. This was certainly the view of Crosland, who, for that reason too, believed that existing economic arrangements
could no longer be denominated capitalist. For Crosland the professional manager was motivated not by the self-interested pursuit of gain but, primarily, by the desire to enhance the ‘social prestige’ enjoyed by the enterprise over which he exerted control; for it was that which determined his own social standing. Such an objective could be achieved in a variety of ways – ‘by gaining a reputation as a progressive employer’ or by donations from company funds to worthy causes – but its pursuit would generally ensure that firms were run with greater sensitivity to public opinion than had previously been the case. The ‘new-style executive . . . subconsciously longed for the approval of society’ and the ‘sociologist’, with the result that the ‘aggressive individualism of the capitalist entrepreneur’ had given way to ‘a suave and sophisticated sociability’.8Where such motives drove the economic machine forward, capitalism, as Crosland saw it, had ceased in any meaningful sense to exist.
These views were prefigured in essays and articles written in the early 1950s but were to be most fully developed in one of the classics of postwar socialist revisionism,The future of socialism(1956): a book in which Crosland sought to redirect the critical thrust of British socialism and, by so doing, radically alter its policy agenda. For if the demise of capitalism was a fait accompli, then much of con- temporary socialist thinking was effectively redundant, formulated as it had been in opposition to a set of economic and social arrangements and attendant iniquities that no longer existed.
However, whether, like Crosland, socialist political economists saw capitalism as dead or dying or transformed, they recognized that both the critical and the constructive aspects of their socialism required revision in the light of radically altered circumstances. Opinion might differ on the degree of revision and what socialist principles and policies were to be revised but there were few who did not accept the need for some reconsideration of how the cause of socialism might be advanced. There were exceptions. There was a fundamentalist opposition to the many and varied forms that revisionism took. But it was small in number and, for a time at least, it was swimming against a powerful current of intellectual fashion and a rising tide of material prosperity that, for all but the most ideologically purblind, made clear the imperative need to reconsider the economic principles and practice of social democracy.
Public ownership
This rethinking is particularly evident in the discussion surrounding the role and future extension of public ownership. For Crosland, the fact that capitalism had ceased to exist, that the capitalists’ monopoly of economic power had been broken and that private enterprise now followed more socially acceptable objectives led him to question the central place that nationalization and municipalization had previously been accorded in the policy prescriptions of the Labour Party. If the extension of public ownership was to be justified it had to be on grounds other than the collective appropriation of capitalist economic power so that it might be used for social purposes.
Socialism in an age of affluence, 1945–64 149
InThe future of socialismCrosland considered three. First, he appraised the Fabian argument that public ownership was necessary to set about a conscious planning of economic activity; one designed to ensure that resources were allocated to the satisfaction of real social needs rather than the indulgent desires of the rich. Here Crosland considered that the market could now be relied upon to achieve that objective. The more equitable distribution of wealth that had resulted from social welfare legislation, full employment and the attenuation of capitalist power meant that ‘production for use and production for profit may be taken as broadly coinciding now that working-class purchasing power is so high. What is profitable is what the consumer finds useful and the firm and the consumer desire broadly the same allocation of resources’.9
Secondly, it had been argued by many socialists that the extension of social ownership was required to give planners the power necessary to ensure a full and efficient allocation of economic resources. Here Crosland argued that the planning required to attain this objective was now that which focused on broad macro- economic aggregates, and for this the requisite powers were already in the planners’
hands. An extension of public ownership was not what was required to permit effective planning of this kind, but rather the political will to use the power already possessed. ‘If socialists want bolder planning’, wrote Crosland, ‘they must choose bolder Ministers.’10
Thirdly, there was the argument that nationalization was required as a redistributive measure, permitting as it did the appropriation and more equitable distribution by the state of an economic surplus that would otherwise accrue to capitalist owners. This argument was rejected, first, because compensation to owners of nationalized firms severely limited the redistributive effects of extending public ownership and, secondly, because such effects would be significant only where efficient and profitable industries were nationalized – industries whose nationalization would, in political and economic terms, be the most difficult to justify, accomplish and defend.
For Crosland, therefore, the traditional objective of public ownership had ceased to have any kind of central importance. It was no longer the touchstone of socialism or crucial to distinguishing the Labour Party from its opponents. As he wrote in 1960:
for many years past the Labour Party has not fought elections primarily on the issue of nationalization. It has fought them rather on housing, education, social services, planning, the distribution of income and foreign and colonial policy and it has found no difficulty whatsoever in differentiating itself from the Conservatives.11
That said, Crosland might have added that in those years it had found considerable difficulty in winning elections.
Crosland’s was an extreme position among the revisionists and one that provoked considerable opposition, as evidenced by the defeat of an attempt to remove Clause IV from the Labour Party Constitution after its third successive General Election
defeat in 1959.12Yet in the aftermath of the nationalizations of 1945–51, there were few commentators and theorists who did not have doubts and reservations about what had been achieved and what could in future be achieved by similar extensions of public ownership. In particular, many socialist commentators expressed concern about the consequences of the form that nationalization had assumed. The public corporations Labour had created were in the Morrisonian mould (effectively autonomous as regards the day to day running of the industry) and, for some, this posed problems for the pursuit of socialist ends. Even those who, in contrast to Crosland, stressed the fundamental importance of expanding the sphere of public ownership were often critical of this autonomy, seeing it as inimical to the use of nationalized industries as an instrument of socialist economic planning. For, to the extent that such corporations were independent of government, they ceased to be a means by which socialist planners could achieve socialist objectives. As the authors of Keeping left(1950) saw it, ‘we are prevented by it [their autonomy] from integrating their price policies into national economic planning . . . they cannot be used to influence the price mechanism according to social priorities. We thus rob ourselves of a flexible and useful tool in the task of correlating demand and supply.’13Further, there were fears that in the absence of political and thence democratic control, nationalized industries might come to lay the basis not for socialism but for a new managerialism. As Bevan wrote in 1952, in In place of fear: ‘we have still to ensure that they [the boards of nation- alized industries] are taking us towards democratic socialism, not towards the Managerial Society.’14
Similar fears were expressed by Roy Jenkins, who wrote of the emergence of a
‘horrid managerialism’ that encompassed both public and private corporations wielding monopoly powers; while Hugh Gaitskell too wrote of the defects of
‘large scale management’ which ‘have been evident in the nationalised industries’.15 In the same vein the authors of Socialism, a new statement of principlessaw nationalized industries as a key component of ‘a managerial society’, a society that ‘is in essence run by administrators out of reach of popular control. By virtue of their role and responsibility – in Government, in industry, in the social services – these rulers can easily come to treat ordinary folk not as persons but as means to an end.’16 Further, in contrast to the early Fabians, these writers did not see managerialism and capitalism as inimical. On the contrary, they could well come to ‘reinforce each other because the administrators virtually lean towards an alliance with the powerful representatives of the old order’.17The ‘old’ Fabians believed that the ideal of social service that would inspire the managers of public corporations was necessarily antagonistic to the pursuit of the self-interested objectives that drove private entrepreneurs. In fact, as these writers saw it, both public and pri- vate managers were united by a common interest in the untrammelled exercise of power.
Concern was also expressed about the insulation of autonomous public monop- olies from competitive pressures. Gaitskell, for example, wrote that it was necessary
‘to weigh the gains from eliminating the wastes of competition against the disadvantages of destroying the competitive spirit’.18Similarly, it was argued by Socialism in an age of affluence, 1945–64 151
those on the liberal-socialist wing of the Party that the public accountability of public corporations might ‘inhibit flexibility and experiment’.19Such views were, of course, profoundly at odds with the argument that initiative would be inspired by the ideal of social service.
So, many had doubts about the institutional form that public corporations had assumed. Yet while some, in particular those who favoured the extension of public ownership by traditional methods, argued the need for greater democratic control from the political centre, others, such as Roy Jenkins, tended to look to ‘far more intimate patterns of ownership and control’ as a solution to the problem.20Jenkins advocated more decentralized and more diverse forms of public ownership and control, looking to move away from the national corporation that embraced a whole industry. Specifically, to ensure the dispersal of economic power, he argued for individual firms rather than whole industries to be taken into public ownership and for ‘local authorities [and] consumers’ and producers’ co-operatives’ to be
‘encouraged to play a full part in the ownership of enterprises’.21In addition, a number of writers in this period suggested the possibility of the state taking a stake in particular firms through the buying of shares by a national investment board.
Such expedients, it was believed, would go some considerable way to removing the bureaucracy, the managerialist ethos and the lack of enterprise and innovation that many saw as likely to result when public ownership took the form of wholesale nationalization.
However, there were doubts about public ownership other than those relating to its institutional form, most of which concerned its effectiveness in attaining socialist objectives. As regards its power to redistribute wealth, Crosland’s scep- ticism has already been noted and this was shared by a number of writers. In addition, many postwar socialist political economists were convinced that its extension was not central to the pursuit and maintenance of full employment, for which the use of Keynesian demand management was sufficient. It was also argued, and with increasing force as the period progressed, that the limits of the useful extension of public ownership had been, or were being, reached. As early as 1950, we find Crosland writing that ‘all the industries which for the last half century have featured in our election programmes and Party manifestos . . . have now passed safely into public hands and the result is something of an intellectual void’.22 Richard Crossman too accepted that the postwar Labour government had ‘finished . . . some time in 1948 or 1949 . . . the job which the Fabians had laid down’.23The obvious candidates had been nationalized and it was not immediately apparent where, and with reference to what criteria, a Labour government would find others.
For most, though, the doubts, criticisms and reservations that have been detailed were reason for a more cautious, a more selective, even a more imaginative approach to the extension of public ownership; they did not represent a case for its abandonment. Crosland was the major exception to this general proposition but in this respect, and many others, Crosland, or at least the Crosland of The future of socialism, cannot be taken as representative of even the liberal socialist wing of the Labour Party, let alone the Party as a whole. Hugh Gaitskell, for example, writing in the same year that Crosland’s book was published, was adamant that:
It still remains true that nationalisation of the means of production, distribution and exchange should assist the advance to greater equality, contribute to a full employment policy, associate with the power to make important decisions a far greater sense of national responsibility, ease the development of industrial democracy and diminish the bitterness and friction in economic relationships.24 This was a classic statement of the case for nationalization and it was echoed by others. For Gaitskell, nationalization facilitated the maintenance of full employment because it served as an antidote to the volatility of ‘the expectations of business- men – that intensely variable variable’.25Nationalization therefore provided the means of ensuring greater stability as regards the level of aggregate investment in the economy. Also, while there might be limits to the redistributive effects of nationalization, there were still gains to be made in that respect.
The point that nationalization was necessary to provide the means to ensure that crucial economic decisions were made in the public interest was articulated not only by Gaitskell but also by a number of other liberal socialists, though more often with respect to the extension of public ownership in general than nationalization in particular. Roy Jenkins wrote of the ‘need for a substantial extension of public ownership’ to provide the ‘public control’ necessary for ‘planning purposes’.26 In this context he argued that its extension should be defended primarily on the basis of the need to ‘change the balance of power’. ‘The case for public ownership’, he wrote, ‘is essentially a political casetied up with the stability of the whole economy andthe transference of a great concentration of economic power from private to public control’.27 For that reason alone its extension should be ‘substantial’.
In this context too, other writers emphasized the threat that the private ownership of capital still posed to what had already been achieved, to the possibility of future socialist advance and to the maintenance of political democracy; par- ticularly where that ownership involved monopoly power. As Strachey saw it inContemporary capitalism(1956), ‘economic power’ threatened ‘to submerge political power’ and he cited the experience of the postwar Labour governments as providing evidence that capitalists did seek to ‘frustrate the work of contempo- rary democracy to [their] own advantage’.28Here he had particularly in mind the battles over the nationalization of the sugar industry (lost) and the steel industry (temporarily won).
This threat to democracy, posed by the concentration of economic power in a few private hands, was seen by Strachey as particularly manifest in the ownership of the press and in a threatened corruption of the judicial system. Many courts had become ‘not courts of law but private courts administering rules and regulations laid down by private organisations in their own interest’.29For Strachey, therefore, given the power still wielded by capitalists, there had arisen a ‘state of antagonistic balance’ between ‘democracy and last stage capitalism’, a tension that it was vital to resolve in favour of the former by a further transference of economic power to the state.30
Failure to accomplish this, as Strachey saw it, would not only block socialist advance, through inability to give effect to the democratically expressed wishes of Socialism in an age of affluence, 1945–64 153