The Social Liberalism of Keynes and Beveridge, 1922 – 1945
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‘RELUCTANT’ OR LIBERAL COllECTIVisTS? ThE SOciAL LIBERAlism OF KEYNES And BEVERidgE, 1922 – 1945 At the 1945 British General Election, held in the wake of the Allied victory in Europe, the Liberal Party addressed the electorate in an assertive, heir social liberal creed but because, in their view, it would prescribed an extended role entail productive forms of state even confident, spirit. Tfor the State in both eco- activity that were compatible with Its election campaign, nomic and social policy, involv- liberal values – with the defence of ing commitments to a managed individual freedom and the pursuit chaired by Sir William market economy, to the goal of of rational progress in promoting full employment, and to a welfare the common welfare. Beveridge, promoted society. But this expansion of the Reflecting, then, those State’s role was justified by Keynes ideological influences, as well as a clear and radical and Beveridge not for its own sake, the prevailing climate of popular programme which involved, in several important respects, a broadly collectivist approach towards the nation’s acute economic and social problems. That approach was itself consistent with the kind of social liberalism which both Beveridge and Maynard Keynes, by 1945 the Liberal Party’s most influential policy intellectuals, had, in their different ways, advocated during the interwar and wartime years. Tudor Jones examines their approach. 32 Journal of Liberal History 78 Spring 2013 ‘RELUCTANT’ OR LIBERAL COllECTIVisTS? ThE SOciAL LIBERAlism OF KEYNES And BEVERidgE, 1922 – 1945 opinion, the Liberal manifesto Security and Full Employment, been destroyed or damaged beyond stressed the need for post-war the Liberal Party leads a frontal repair during World War II. Land social reform and reconstruction, attack on this Fear.1 development rights outside built- declaring that: up areas were to be ‘acquired for In addition, the Party advocated the public’ and ‘a periodic levy on mankind is a prey to Fear – fear a Ministry of Housing to oversee all increases in site values’ was pro- of poverty and want through a post-war housebuilding drive, posed in order to secure for the unemployment, sickness, acci- including an expansion of afford- community any appreciation in the dent and old age. With the able housing, in a country in which value of land that was due to com- Beveridge schemes for Social more than 500,000 dwellings had munal action.2 The Liberal manifesto also called for the public ownership of the coal-mining industry, depicted as ‘the key to the health of our basic industries and our export trade’, and therefore accorded the status of ‘a public service’. The rail- ways and electric power similarly should be organised as public utili- ties, and in general it was argued that where there was ‘no further expansion or useful competition in an industry’, or where an industry had become a private monopoly, it should become a public utility.3 In British industry Liberals believed in ‘the need for both private enter- prise and large-scale organisation under government control’, and, in deciding which form was nec- essary, identified as the tests to be applied in each particular case ‘the service of the public, the efficiency of production and the well-being of those concerned in the industry in question’.4 All in all, the Liberal election manifesto of 1945 was thus, as Alan Watkins later noted, ‘surprisingly leftist both in content and in tone’.5 Certainly, by 1945 a more collec- tivist strand of thought was widely evident within the Party. It under- lay both its economic and its social policy proposals, reflecting the Journal of Liberal History 78 Spring 2013 33 ‘RELUCTANT’ OR liBERAL COllECTIVisTS? THE SOciAL liBERAlism OF KEYNES And BEVERidgE, 1922–1945 highly influential contemporary played a leading part.8 These con- movement – including Keynes, ideas of Maynard Keynes and Wil- sisted of, first, the Liberal Sum- Henderson, Layton, Muir and liam Beveridge. mer School movement, established Ernest Simon. To some extent, too, the shift to in 1921 and running from 1922 Rejecting the traditional antith- state collectivism in Liberal policy onwards; second, the Liberal peri- esis between individualism and col- and thought by 1945 was due to odical, The Nation, founded in lectivism, Britain’s Industrial Future the influence of a pressure group 1907 and managed by Keynes as offered radical proposals for state within the Party originally estab- active chairman from 1923 until intervention in the British econ- lished in 1941 under the name, the its absorption into The New States- omy without recourse to the ortho- Liberal Action Group, and renamed man in 1931; and third, the Liberal dox socialist remedies of large-scale Radical Action in 1943. It sought Industrial Inquiry, financed by state or collective ownership of to campaign for imaginative and David Lloyd George, and culmi- industry or central state economic radical policies for post-war social nating in Britain’s Industrial Future, planning. In addition to advocat- and economic reconstruction and, published in 1928, the key propos- ing joint consultation in industry more immediately, to question or als of which later appeared in We between workers and managers, challenge the Party leadership’s Can Conquer Unemployment and Can the Yellow Book put forward as its support for the wartime electoral Lloyd George Do It?, the pamphlets key proposal a Board of National truce between the three main par- that launched the Liberals’ 1929 Investment, which would oversee a ties. Founded by Donald Johnson, general election campaign. wide-ranging programme of state a doctor and publisher, Honor Bal- Like their Edwardian New Lib- investment in public works. This four, a journalist, and Ivor Davies, eral predecessors, these intellectual anticipated Keynes’s case in The another publisher, the group later movements and influences may be General Theory of Employment, Inter- included among its most prominent described as social liberal, rather est and Money, published eight years members the Liberal MPs, Clem- than classical liberal, in character To some later, for large-scale public invest- ent Davies, Dingle Foot and Tom since, while supporting a market ment as a crucial means of stimulat- Horabin. In 1942 Lancelot Spicer economy, they advocated a signifi- extent, too, ing economic activity and reducing replaced Donald Johnson as the cant measure of state intervention mass unemployment. group’s chairman. By the time of in modifying or supplementing the shift to The authors of Britain’s Indus- the dissolution of Parliament in market outcomes in order to reduce trial Future, published a few months 1945, six of the 19-strong Parlia- mass unemployment and to pro- state col- before the Wall Street Crash, suc- mentary Liberal Party were mem- mote social welfare.9 During the ceeded, as Ed Randall has observed, bers of Radical Action.6 1920s the Liberal Summer School lectivism in in ‘fashioning a Liberal programme Aiming to radicalise the party movement thus sought to build on for national recovery calibrated to in respect of its policy, strategy the foundations of Edwardian New Liberal policy needs of their own times’.14 Their and organisation, Radical Action Liberalism by recommending selec- most significant proposals were strongly supported the Beveridge tive state intervention in the cause and thought popularised a year later in the two Report and its far-reaching pro- of social reform whilst turning by 1945 was 1929 election pamphlets, Can Lloyd posals for social security after its away from the path of doctrinaire George Do It?, co-written by Keynes publication in December 1942. It state socialism.10 due to the and Hubert Henderson, and We also claimed credit for encouraging The Liberal Summer School Can Conquer Unemployment, pub- the party leader, Sir Archibald Sin- movement was, as Michael Freeden influence of lished in Lloyd George’s name.15 clair, and other senior party figures has observed, ‘the linchpin of lib- The latter document’s centrepiece eventually to support Beveridge’s eral and progressive thought during a pressure was its proposal for massive public proposals. It succeeded, too, in the 1920s’.11 Its leading lights were investment in road-building, hous- pressurising the Liberal leadership drawn partly from Manchester - group within ing, electrification and other pub- into fighting the forthcoming 1945 including Ramsay Muir, Ernest lic works. The Yellow Book, and General Election as an independ- Simon and Edward Scott - and the Party the documents that it generated, ent political organisation, and into partly from Cambridge – includ- thus reflected the major influence keeping free of any subsequent coa- ing Keynes, Hubert Henderson originally that Keynes had exerted during his lition arrangements once the war and Walter Layton. The movement period of closest involvement in the had ended.7 became particularly influential established politics of the Liberal Party, that But more significantly, the after Lloyd George assumed the is, between 1924 and 1929 – years ascendancy of Liberal collectiv- Party leadership in 1926. During in 1941 under in which he had set out, in Rob- ist ideas in 1945 could be traced that year he personally initiated ert Skidelsky’s words, ‘to supply it back to the currents of social lib- and financed the Liberal Industry the name, with nothing short of a new philos- eral thought that flowed during Inquiry which resulted in the pub- ophy of government’.16 the interwar years. In that period lication of Britain’s Industrial Future, the Liberal In ideological terms, Keynes of electoral decline and internal ‘the Yellow Book’ as it was popu- Action Group, saw the central task of this govern- strife, the Party had nonetheless larly known, in February 1928.12 ing philosophy, his version of social continued to display its intellectual That ‘formidable and … exceed- and renamed liberalism for the 1920s, as one of vitality.