Commentary Magazine

British Labor's Half-Way House:
The Socialist Government Faces the Electorate

In recent weeks two members of the British Commonwealth of Nations, Australia and New Zealand, have seen the passing of their well-established Labor governments. Now, after more than four years of Labor party rule—a period marked by crises both foreign and domestic—Britain’s own socialist government faces the test of its first peacetime general election. The specific issues of the election range in scope from the nationalization of the steel industry to the devaluation of the pound, but it is a much broader question that will ultimately turn the tide: has the attempt to create a welfare state in one of the most highly industrialized countries in the world succeeded or failed? Here George Lichtheim raises this question with all its implications and evaluates the Labor party’s four-year performance in office. 




In deciding not to hold a general election during 1949, the Labor government has defied the combined pressure of the Conservative opposition, the Liberals, and its own left wing, all of whom, though for different reasons, had been pressing for an early appeal to the electorate. It also (or so it is believed) disproved the confidential forecasts made to the State Department by the United States Embassy here, which is rather apt to reflect Tory opinion and in any case has no great faith in the political strength of Clement Attlee and his colleagues. Even more important, the Labor government gave itself time to complete its 1945 election program and to initiate the first “crisis measures.”

Completion of Labor’s election program involves the final legislative acts required to nationalize the steel industry and to curtail the powers of the House of Lords. However, insofar as the present final session of the LONDON 1945 Parliament is concerned with the crisis arising from the balance-of-payments problem, it can legitimately be said to be doing work that any legislative assembly—whether controlled by the Conservative or Labor party—would have to do. There are differences in emphasis: a Tory government would probably cut expenditure on education before pruning the military estimates, rather than the other way around, and it is unlikely that a Conservative chancellor would have stiffened the profits tax. But by and large, the leadership of the two parties are a good deal closer together than their respective followers, many of whom still hold the simple belief that “the crisis” can best be met by the full-blooded application of some favored political nostrum.

Does this mean, then, that the socialist experiment undertaken in 1945 has come to an end? Both Liberals and Tories believe that it does, and are saying so openly; the former with a touch of sorrowful regret, the latter with an air of “I told you so,” but both with conviction. There is much to bear them out. Certainly there is nothing specifically socialist about the government’s latest crisis measures, and British Labor had promised to solve Britain’s postwar problems by the methods of socialist planning. To argue, as of course most Labor supporters do, that the opposition has no alternative to offer the voters, and that Labor is likely to come back (though with a reduced majority), is not a completely satisfying answer to the critics. For even if Labor is returned to power this year—and this is by no means certain—it looks on present indications as though the next Labor government would have to spend much of its time passing measures demanded by non-political experts (most of whom are in fact non-socialists). This represents a sharp descent from the high hopes of 1945. As the Communists, and some socialists, are not slow to point out, it is “not what the workers voted for.”



To this, the Labor party has two answers. First, it asserts that the electorate voted not for socialism but for full employment and the welfare state, and that Labor has made good on its promises in this field. Second, it holds that socialist planning is not the answer to Britain’s “external” economic problem, simply because the problem is inherently insoluble in terms of British national policies alone, of whatever kind. In other words, Labor contends that the function of a British government at the present time cannot be to “solve” Britain’s economic problems, but to make it possible for Europe as a whole to solve its problems with the aid of the United States. This contention, needless to say, is rarely made in public, if only because Transport House believes that many undecided voters can be persuaded to support Labor by talk of “economic independence.” But it represents the inmost conviction of the government, and particularly of the group of advisers—socialists and neutral experts—around Ernest Bevin and Sir Stafford Cripps.

Differences of opinion center upon the degree of help that can be expected from America. There are those who doubt whether the administration, let alone Congress, will actively help to set Britain and Europe on their feet if it means cutting tariffs in earnest. There are others who have persuaded themselves, notably since the success of last September’s talks in Washington, that America can and will help, even to the extent of underwriting Britain’s sterling obligations to India and other overseas countries.

This last, incidentally, would be the most practicable way of turning President Truman’s Point Four into reality, and Whitehall seems confident that things are moving in the right direction at long last. The industrialization of Southeast Asia and, possibly, of the Middle East, would then be undertaken in the guise of a massive program of American capital investment in countries that are large holders of “blocked” sterling, thus relieving Britain of an intolerable burden and at the same time placing the weight of American economic power behind the Commonwealth’s crumbling political bastions. Britain would profit indirectly from being at last enabled to right its economic imbalance, and with Labor in power the proceeds would go to the maintenance and expansion of the welfare state. (This, of course, assumes the continuance of a Fair Deal administration in Washington.)

The program is clearly liberal-labor rather than socialist-labor, or, to be exact, its socialist-labor component is smaller than seemed likely in 1945, being confined to such domestic measures as the Labor party can squeeze from the existing social set-up. Nationalization in its present bureaucratic form is more a means to cheapen the cost of coal and transport to the rest of industry than a step towards “industrial democracy” or “workers’ control.” And though the machinery of central economic planning has been sustained and even improved, especially on the statistical side, it has not been used so far to abrogate property rights in the interest of efficiency. Nor, it is fair to add, has it been seriously employed to interfere with the worker’s freedom of movement from job to job. The Labor government has in fact refrained from breaking with its liberal allies, whether at home or abroad, or even from giving them serious cause for concern. It has deliberately built a half-way house.



The chief aim and the sine qua non of Labor’s political strategy is to keep the United States from supporting the Tories, while insinuating into the minds of the average British voter a vague suspicion that Winston Churchill is a little too subservient to American “free enterprise” thinking. The Tories are actually doing everything in their power to confirm this suspicion. By constantly echoing the more stupid sort of American criticism of Britain, they have well-nigh contrived to make Labor look the more “national” of the two parties. At the same time, the “imperial” enthusiasm generated whenever large numbers of Tories meet in conference has the effect of making middle-of-the-roaders shudder and move closer to Labor. The Conservative party has some intelligent leaders among its Parliamentary figures, but a popular Tory rally is a pretty frightening sight, overpowering in its display of well-meaning, but retrograde and potentially dangerous, imbecility.

There is, nevertheless, a distinct possibility of a Tory comeback, assisted by direct Tory control of most of the press and all of the films, and indirect control of the BBC, whose programs subtly and perhaps unconsciously, but quite definitely, condition the electorate to regard socialism as a sort of foreign excrescence upon the surface of national life. This absence of a new spirit in the field of publicity—some of it state-controlled, as in the case of broadcasting—is one of several symptoms of weakness traceable to Labor’s continued lack of self-assurance. There is as yet no socialist governing elite, or, what amounts to the same thing, no wholesale infusion of socialist spirit into the existing bureaucratic hierarchy outside certain limited fields connected with the administration of the social services. (This is also true of the boards of the new nationalized industries, where the managerial element is careful to avoid the danger of being mistaken for the controlling force of an experiment in socialist planning.)

As every visit to a cinema shows, the privately-owned newsreel companies, despite their pose of political neutrality, are carrying on a blatant propaganda campaign on behalf of Toryism and the status quo. It is as though the Labor government, against which their sneers are directed, were not His Majesty’s Government in the United Kingdom, but an obscure sect of political upstarts unaccountably in possession of the seats of authority. Social snobbery; systematic obfuscation of the government’s constructive achievements; a careful selection of news items designed to contrast the “enduring” elements of society—royalty, the Established Church, popular customs, sport, etc.—with the “transitory” features of Labor rule; the deliberate ignoring of all socialist, democratic, or labor activity and achievement, both at home and abroad—these and a hundred other means (down to photographic trick shots contrasting the “noble” countenances of Churchill and other Tory leaders with the “plebeian” features of Labor ministers) are constantly employed to impress upon the public the “illegitimacy” of its political choice of 1945.

Nor is this propaganda actively resented by audiences, aside from the minority of conscious socialists and Labor supporters. The British working class, a sizable proportion of which continues to support the Tories, is as yet no more than half-convinced that Labor has come to stay, while the middle and professional classes, having recovered from their short-lived radicalism of 1945, are already more than half convinced that the socialist experiment has proved a failure. This mood could be changed by the result of another election, but for the time being the tide is running strongly in the direction of treating Labor as an adjunct to a settled society founded on non-socialist principles. Herbert Morrison’s “silent revolution” is very silent indeed.



Elections, however, are not won by propaganda alone, and the British Labor experiment must be viewed against the factual background of postwar Britain’s efforts to attain “economic independence.” This much-used phrase can be given a somewhat more precise meaning by contrasting Britain’s postwar financial position with that of 1939. It then appears that although the economy showed a net deficit on its overseas balance-of-payments before the war, it is only since 1945 that it has lacked the reserves necessary to cover temporary balance-of-payments deficits without foreign aid. Before 1939 Britain possessed overseas investments (valued at approximately five billion pounds by a writer in the Economic Journal for June-September 1943) which not only contributed an annual “invisible” income of about two hundred million pounds but, more important, constituted a cushion for its international economic position. Its disappearance, taken together with the growing production disparity between Europe and the Western Hemisphere, has meant that the postwar adaptation to long-range changes in the flow of world trade could not be carried out by Britain unaided, but required American dollar loans and, eventually, outright gifts.

It follows that for Britain to become “economically independent,” it is not sufficient for the immediate balance-of-payments gap to be stopped. Britain must also rebuild its capital assets, both at home and abroad. The extent of this need can be gauged when it is borne in mind that the war destroyed about a quarter of the total national wealth, if obsolescence in the industrial structure is taken into account. The war did not, it is true, liquidate the bulk of Britain’s overseas investment. Only about a quarter (£1,118 million) was sold outright to pay for imports before lend-lease became effective. But the remainder either declined in value or was offset by the colossal growth of sterling indebtedness, now exceeding three billion pounds, to countries like India and Egypt.

On top of these losses, the war accentuated long-range changes in the relation between import prices of food and raw materials, and export prices of British manufactures. The prices of the former rose in comparison with the latter, making more difficult the government’s declared program of raising Britain’s annual exports, composed almost entirely of manufactures, to 175 per cent of the 1938 figure. The sum of these changes presented a picture such as to cause even Churchill in 1945 to talk bluntly (but in private) of the country’s being “bankrupt.”



The Labor government, having entered into this inheritance, was thus faced with the double problem of rebuilding Britain’s capital assets and of raising domestic living standards. The latter aim is sometimes treated as though it were a political fad, irrelevant to the “national emergency.” Actually, the sharp decline in living standards during the war had a direct bearing upon the lowered productivity of British workers. Between 1938 and 1944, per capita expenditure on consumer goods and services declined by sixteen per cent, while in the United States and Canada, despite the war, it rose in the same proportion. By the autumn of 1945 people in Britain were in urgent need of relief after the strain and exhaustion of the war years. Yet it was at this moment that a vast capital investment program was started, and rightly so, to replace wartime losses and obsolescence, while on top of this the export drive got under way. Lend-lease having been cut off with surprising abruptness a few weeks after the Labor government came into office, there was no alternative but to go to Washington for a loan and, eventually, for Marshall Plan aid.

What has become clear since then is that despite loans and ERP the long-range problem is fundamentally insoluble in terms of Britain’s own productive efforts, largely because the terms of trade have shifted permanently against European countries exporting manufactures. Both Western Hemisphere and other overseas prices of goods imported into Britain have risen much more since 1945 than prices of British exports, and there is apparently no prospect of returning to the pre-war equilibrium between import and export prices, at which Britain barely managed to keep solvent. Devaluation has accentuated the change by further depressing the market price of British exports. The fact that this was brought about by a comparatively moderate recession in the United States, leading in turn to a slight drop in Britain’s dollar earnings, points to the extreme instability of Britain’s postwar position.

This, of course, is not a question of socialist finance. It simply means that socialism by itself is no cure for impoverishment. The postwar experience has already demonstrated that many Keynesian techniques for maintaining full employment, whatever their value for a country like America, are irrelevant to the problems of the British economy. Full employment is assured as long as Britain can pay for imported raw materials on which her export industries depend; what is not assured, and cannot be assured by internal financial manipulation, is the ability to finance such imports.



The conjunction of these changes is frequently represented as a rebuke to Labor theorists, but the total picture does not encourage the notion that a non-socialist government would have done better. It was not in Britain’s power to prevent the rise in world food and raw material costs relative to the prices of British exports. A Churchill government might, indeed, have delayed India’s rise to independence and its turning economically toward the United States, but only at the cost of a disastrous and hopeless struggle. Instead, by keeping India in the Commonwealth, the Labor government has scored its one great success in the field of foreign relations. The grant of independence to India, without a struggle and with no strings attached, may indeed have proved the final straw to the back of the sterling camel (Churchill would probably have repudiated the sterling debts to India along with the promise of independence), but it seems likely to pay off, politically and economically, in the long run. On this issue Labor also had the full support of liberal middle-class opinion, both in Britain and in the United States.

The carrying out of the Labor program with regard to India is interesting and suggestive, especially against the background of the complete failure of British policy in Germany, where a definitely socialist policy—notably in the Ruhr—was required to make democracy a success. Where Labor could fall back on its liberal-radical heritage, as in relation to India, it showed political courage and reaped a corresponding reward. Where specifically modern issues presented themselves, as in Germany, it fumbled and missed the goal. Over India, even the Tories were uncertain in supporting Churchill’s intransigence, and in the end have given way without much signs of struggle. Over Germany, they had no difficulty in cooperating with Bevin’s policy, or lack of policy, which resulted in control of the Ruhr being handed back to the former owners. Thus the Labor government scored its principal success where it was in fact applying non-socialist policies: Indian independence was actually an important condition of close Anglo-American cooperation. Socialization of the industry of the Ruhr was not—quite the contrary.

The upshot, then, is that neither the socialists nor the Tories have got what they wanted, the ambiguity of the term “Labor” concealing the fact that a good part of the Labor party’s program was and is in fact liberal-radical rather than socialist. The degree of Labor’s success or failure was from the start determined by factors over which no British government could have had much control: as an economic unit Britain depends upon the world market, which in turn depends upon the United States. Only in the sphere of domestic policy has Labor made something like an approach to socialist planning, and it is here that the political struggle is waged with real and growing bitterness.



The national economy that came under socialist control for the first time in 1945 was not only impoverished by the war; it also suffered from the pre-war legacy of insufficient capital investment, stifled competition, mass unemployment, and inequitable distribution of income. Between the wars, Britain never invested more than fifteen per cent of the national product in new capital construction, including housing. Industrial equipment lagged by comparison not only with the United States but with Germany and other countries, and productivity per worker rose more slowly than in the rest of the Western world. By contrast, the rise in productivity since 1946 has been sharper than anywhere else in Europe (from 97 to 108, taking 1938 as the base year) and much greater than a similar rise in Britain after World War I, while outlay on new capital construction last year engaged twenty-two per cent of the entire national income, as against fifteen per cent in 1938. This intensified effort was largely made possible by Marshall Plan aid, but its second pillar has been a rate of taxation higher than in any other country in the world. Central and local authorities between them take forty per cent of the national income, and since small taxpayers have had their contributions considerably reduced, the bulk of this huge assessment falls squarely upon middle and higher incomes. This fact is behind the Conservative and Liberal complaints that the middle class is being wiped out, and though the claim is extravagant there is just enough truth in it to make Labor strategists wonder whether they can hold a sizable fraction of the middle-class vote in this year’s election.

What is causing most concern to socialists is the growing evidence that while the middle class continues to feel the pinch, the working class has failed to hold all its gains. This is perhaps no more than a clumsy way of saying that the whole country has only lately discovered the extent of its impoverishment. Labor supporters have hitherto been able to make two important points: that despite the vast capital investment program, living standards have regained their 1938 level; and that within the increased national income a larger proportional share has gone to wage-earners. The first assertion is true of the national standard of life as a whole, taking into account both the rise in working-class and the fall in middle-class incomes. The second point has been somewhat blunted in the past year, for although wage-earners work slightly shorter hours and draw considerably larger nominal wages than they did in 1938, a rise in prices has recently tended to cancel out some of the gains made in the postwar period. As a result of this and other factors, the lower-paid workers are now once more in danger of being pushed below the poverty line, and the whole process of social equalization seems to have come to a temporary halt. True, the working class still draws a larger proportion of the national income than before the war; but the total consumable income—i.e., after deducting the cost of capital equipment, the larger outlay on defense, and the flow of exports to other countries—is smaller than it was in 1938, and the proportion of income retained after taxation is smaller for all groups than it was before the war. It is only among the worst-paid workers and the former unemployed that there is a definite sense of economic gain since the “social revolution.”



British society is now so securely wedded to the principle of supplying every individual with a minimum standard of living, that no conceivable political change could affect it. A Conservative government would doubtless refuse to subsidize low-rent housing on anything like the present scale, but it would not challenge the principle of leveling out income differentials by taxation. In this sense the welfare state has come to stay. It has not yet, however, become as notable a feature of the social landscape as Labor supporters would like to make themselves believe, or as their opponents, both in England and the United States, sometimes charge. Defense and capital investment are absorbing such huge chunks of the national income, and price inflation presses so relentlessly upon a domestic market denuded of most exportable consumer goods, that the social services can do no more than even out the worst income inequalities. The health service, for example, though extremely costly, is a much less impressive affair than it was planned to be in the palmy days of 1946, when there was talk of establishing elaborate health centers in every community.

Much the same is true of education. In this field, however, Labor has been hampered not merely by lack of funds but by a characteristic reluctance to tackle a really thorny issue. Thus, while the school-leaving age has been raised from fourteen to fifteen, and efforts are being made to improve the standards of elementary schooling, nothing has been done to eliminate the notorious cleavage between the products of the elementary schools and those of the “public” (that is, private) schools. The complexity of this problem can be gauged from the fact that nearly all Labor politicians and intellectuals, while deploring the existence of the “public” schools, are determined to send their own children to them. It is true that “public” schools now accept a larger proportion of non-paying pupils, but this system merely serves to siphon off the brighter children of working-class parentage, and the class structure of British society is such that entry into the “higher” educational milieu automatically entails the acceptance of social and political standards the reverse of those which a socialist society seeks to inculcate.

The official Labor party solution of the problem is to improve the quality of state-controlled education, meanwhile allowing the “public” schools to die of inanition—the hope being that the intelligentsia will gradually turn away from them. This it shows no inclination to do. From a recent controversy between Richard H. S. Crossman and others, one gathers the impression that in the long run a conflict may be brewing between those socialists who dislike the public schools on principle, and those who would retain them for the purpose of raising a consciously socialist elite as the governing class of the new society. At present Labor is content to ignore both the privileged schools and the no less privileged universities of Oxford and Cambridge—perhaps the real centers of power, measured in social rather than in financial terms—just as it continues to ignore the closely related problem of democratizing the armed forces. Their turn, it is implied, will come later. For the time being, there is no energy to spare from bread-and-butter problems.



“Accidents of history,” said the Economist in a recent article, “insulated the British economy in the inter-war years from the effects of neglecting efficiency, but they are now falling upon us in their full weight.” These were the years during which the Labor party grew into a mass movement and acquired a dearly defined political program. That program inevitably laid stress on economic security and social equality rather than on productivity. It was assumed that, for Britain at any rate, the problem of production had been solved, and the unsolved problems were those of promoting greater social equality and preventing recurrent mass unemployment. Full employment, indeed, appeared as the economic complement of social democracy (because unequal income distribution and complete freedom for private enterprise led to oversaving, and oversaving led to crises and mass unemployment), and Labor, as the workers’ party, presented itself as the historic instrument for effecting the transition from an unregulated to a regulated economy. Whether the latter should be termed “socialism” or “planned capitalism” seemed a hair-splitting distinction important only to academic theorists.

From the standpoint of Labor’s election tactics, the Keynesian economic analysis and the political program built upon it had the inestimable advantage of blurring the lines between “capitalism” and “socialism,” so that socialist ideas could be put forward in the guise of “practical proposals” for regulating the domestic economy—proposals that Tories and Liberals could not resist without putting themselves out of court with the voters. If it was not actually assumed that socialism could come in by the back door, it was certainly taken for granted that its coming would take place by an agreed retreat from laissez-faire. No serious political party, after all, could resist “planning,” but only Labor, it was asserted, knew how to plan, because only Labor, being the workers’ party, was ready to plan on socialist lines.

What has happened since 1945 has not so far invalidated the negative part of the Labor party’s formula for turning Britain by gradual stages into a socialist economy: it is still evident that the Conservatives do not know how to plan (their most “advanced” document, the Industrial Charter, lays stress on corporatism rather than on national planning). It has, however, become extremely doubtful whether Labor can effectively plan an economy whose main problem is no longer unemployment but low productivity. In order to pay its way in the world, Britain must produce not merely more goods, but more goods at cheaper cost. Productivity, it is true, is increasing; but it is not increasing fast enough to keep step with the national emergency. Devaluation became inevitable when it turned out that Britain could balance its accounts with the rest of the world only at the price of cutting its domestic standard of living. But lower living standards add no incentive to production.

After more than four years of Labor rule, socialist economists who strongly support the Labor government, like Professor Arthur Lewis and Dr. Thomas Balogh, have joined such anti-planners as Professor Lionel Robbins in stating plainly that results have fallen short of targets. Indeed, the very word “target” has become a laughing-stock. There is no real drive behind the ministerial exhortations to workers and employers to achieve this or that “target,” and “planning” has for this reason been brought into disrepute. As one critic put it, “One can plan by direction alone, or by inducement alone, but one cannot plan by exhortation alone, when the major result of one’s actions is to make the inducements work in the opposite direction. Nearly all the planning in this country in the last three years, with its apparatus of targets and speeches, has been of this character, and that is why all the targets have been unfulfilled. . . . This is not planning but merely pretending to plan.” (Arthur Lewis, Principles of Economic Planning.)

Professor Lewis is a liberal socialist on the right wing of the government’s defenders. Like many of his colleagues he would like to see controls and rationing abolished, save for a few commodities, and “planning by inducement,” i.e. long-range control of market prices via taxation, take the place of present policies. Dr. Balogh, who stands further to the left, is convinced that only “planning by direction” can make the experiment work. Direction of labor does not frighten him, if it is accompanied by tighter control over capital. But both are agreed that “planning by exhortation” is nearly useless. In this they are now joined by nearly all economists, civil servants, and even politicians.



There are really only two ways of making planning more effective than it is in Britain at present. One is to intensify its working by more detailed bureaucratic centralization, by abrogation of trade-union rights and democratic controls, by state-imposed wage differentials, by massive direction of labor, and sequestration of capital—in the last resort, by the processes adopted under totalitarianism. This choice is ruled out not merely by the legal and political framework of the existing parliamentary democracy, but (a fact usually ignored by such liberal anti-planners as Hayek) by the character of the democratic labor movement itself: before the Stalinists and other totalitarians could impose their version of planning, they had to smash not only liberal democracy but the labor movement as well. In Britain the labor movement is not likely to be smashed, and its leaders—whether leftist or rightist, whether Bevan or Bevin—will never compromise with totalitarianism. The solution of “planning from above,” without recourse to democratic control, can therefore be ruled out.

The other, somewhat less disagreeable, course is to dilute the wine of planning, full employment, and social security, with a little laissez-faire water in the hope of making it more potable. This is the solution recommended by the Economist, the Manchester Guardian, and Labor’s liberal well-wishers and semi-allies generally. Its advocacy rests upon the consideration that while socialism is no doubt very fine, “human nature” nonetheless demands that the goal be approached by cautious and unhurried steps. Full employment, it is pointed out, can remove one of the few existing powerful incentives to hard work and efficiency, to wit, the fear of losing one’s job. If everyone has his work and his minimum income guaranteed, there is no particular reason why he should make that extra effort which sharp competition for jobs undoubtedly does tend to promote. Social equality, too, is desirable only to the extent that it does not interfere with the human urge for advancement, as the trade unions in fact recognize when they resist the ironing-out of wage differentials between skilled and unskilled workers. In short, it is contended that planning can only be made more effective, and Britain more efficient, if the planners will admit that they need to plan on liberal-capitalist rather than socialist lines.

What these critics would like best is not a Tory government but something like the contemporary socialist regime in Sweden, which devotes most of its energy to making capitalism more efficient and less inhuman. The Swedish socialists, it is pointed out, have not nationalized any of Sweden’s basic industries, nor have they tried to construct an elaborate planning apparatus. The implication—although it is admitted in these quarters that in Britain coal mining and transport had to be nationalized to bring industrial costs down—is that British Labor might do worse than follow the Scandinavian example. The British economy would still, in some sense, be planned, and the country would still be governed by the Labor party, but the attempt to “build socialism in our time” would be halted. Instead, Labor would bend its main efforts to the task of making British industry (most of it capitalist) more efficient.



The weakness of this viewpoint is that, in its desire to take the sting out of political debate, it pretends that all problems are basically technical and can be solved without reference to social motivations. This is just the sort of thing that the British worker, and especially the active Laborite, resents most. The point can be established by asking what should be the criterion of successful nationalization. The leading liberal organs of opinion would undoubtedly reply “efficiency,” the implication being that where nationalization can be shown to have important technical and economic advantages, as in the case of coal and railways, it is justified on objective grounds. But to Labor supporters it is equally important that “workers’ control” should become a reality, that the workers should be actively associated with the management of industry, and that the whole industrial sphere should be run on democratic rather than authoritarian lines. And they will add that this is the key to higher productivity!

Here is an issue that simply cannot be brushed off as “technical” or subjected to some sort of statistical measurement. In the last resort it is a question of political faith. Socialists regard state control as a step to genuine socialization—industrial democracy plus planning—and they reject as naive or politically determined the “objective” managerial appraisal which ignores the workers’ growing dissatisfaction with their present impersonal status. On this issue even the Tories with their milk-and-water corporatism are probably closer to social reality than the intellectual spokesmen of the neo-liberal school.

Judged by this test, the Labor government’s greatest failure has been its refusal to link the issue of workers’ participation in management with that of public ownership. No attempt has been made to represent the nationalization of key industries as a measure involving a profound change in social relationships throughout industry. The government, in fact, has throughout spoken the technical language of the “managerial revolution,” even where its actions have been openly welcomed by its supporters as steps towards socialism. This ambiguity, it is hardly necessary to point out, is the essence of Fabianism. It has certainly bewildered the Tories and disarmed the technicians, who had braced themselves for a struggle against long-haired theorists and to their great relief found themselves addressed in their own language by men who shared their concern for efficiency above everything else. But in the process it has also confused and saddened the labor movement. It may even have taken the heart out of it.



The dull and spiritless little ceremony at which Attlee inaugurated the official establishment of the National Coal Board in January 1947 has become the symbol of the whole experiment. It was no doubt to be expected that the Red Flag would not be shown on this occasion (after all, it is not even shown at the annual Labor Party Conference), but something might have been done, at least in the mining areas, to give the festive air of a national victory celebration to the occasion. Nothing of the sort was even attempted; there was not even the dimmest note of Labor triumph. A former coal owner and a retired admiral were put in charge of the Coal Board, to the profound indifference of everyone concerned. The Board immediately began to haggle with the miners about wages and working conditions, and eventually reached a settlement which certainly represented a great advance for the miners. But although there has been plenty of talk, and some action, about production committees composed of workers and technicians, nothing was done to dramatize the change of ownership. Instead, Sir Stafford Cripps went out of his way to inform a Labor audience that syndicalism was out of date and that in any case few workers were “as yet” fit for managerial jobs.

By the time it was the railways’ turn, public boredom with the whole subject of nationalization had grown so profound that even the Tories gave up trying to make an election issue out of it. The proposed nationalization of steel, it is true, has roused Tory anger, but although it excites Churchill and Lord Woolton, it leaves their supporters cold and does not, by now, greatly interest Labor voters.

The fact is that “public ownership” has come to mean state control, and state control has come to mean bureaucracy. This equation the Labor party owes to its spiritual ancestors, the Webbs, whose victory is now complete, for even the Tories have swallowed state ownership of mines and transport, and the Economist supports it on the ground that it is likely to bring industrial costs down. But if social revolution à la Webb and Morrison turns out to mean no more than this, then we shall wait in vain for Labor to build “socialism in our time.”

We shall also wait in vain for a socialist solution of the British production crisis, for although “neutral” technicians and efficiency experts may deny it, the British workers in this generation will not give of their best unless an appeal is made to their deeper collective feelings. “The old belief that there are reserves of productivity, to be summoned by oratorical magic from the vasty deeps of the Labor movement, has disappeared,” writes the Economist in an ironical appraisal of the government’s policy. But the “reserves of productivity” did and do exist. Exhortation has failed because it has not been accompanied by really rapid and dramatic changes in the social structure and in the general quality of social life. If the Labor government now has no choice but to revert to orthodox methods of stimulating efficiency, the fault lies not with “human nature” but with its own failure to rise to the unique opportunity offered it by the election victory of 1945.

This is not to say that the main accomplishments of the past four years are in danger. The house that Labor has built is not going to collapse. But it remains a half-way house. Labor’s liberal critics are probably right in holding that, short of totalitarianism, there can now be no socialist solution of the British crisis, and that nothing now remains but an ordered retreat to the orthodox Keynesian position, to be executed, according to one’s choice, under Labor or Tory leadership. Britain must be made more efficient, even if it means jettisoning some of the hopes of 1945-46. This conclusion is inescapable. What should not be forgotten, however, is that for a fleeting moment the opportunity given by popular fervor to master the problem along socialist lines did exist.



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