Confessions of an Economic Heretic/Chapter 10

by John Atkinson Hobson

CHAPTER X

BREAK-UP OF CREEDS AND PARTIES

Even after the War, it seemed as if in this and other democratic countries, something like a restoration of pre-War conditions was feasible. The material havoc of the Great War was quickly repaired, many of the worst conditions of the Bad Peace were in process of correction: the monetary instability which impeded trade was in course of cure. Then came the Slump, worse, longer, and more general, than any previous one, and breaking upon peoples whose minds were no longer attuned to waiting for a natural recovery — after years of misery, poverty, and unemployment.

I am first concerned with the effect of this disaster upon the structure of political government, as I saw it in this country. The Liberal Party had already crumbled before the rise of a nominally Socialist Labour Party, placed in office, though hardly in power, by a popular vote largely drawn from former Liberals. The payment of Members helped to bring into keen politics the trade unions whose leaders saw their way to an honourable career in the House of Commons. The rank and file of the Labour Party are not Marxian or any other brand of Socialist, though they accept the title and send representatives to Conferences and Congresses which pass Socialist resolutions, Some of their leaders are Socialists in a secondary distant sense, their prime and immediate policy being the betterment of conditions in their own trade, with assistance from the State. A scattered minority in most cities and industrial areas have been getting education in Socialist principles from the handful of middle- and upper-class “intellectuals” whose thought and sympathies have led them to a fuller adoption of Socialism or Communism. But the wide gap in education and in personal bearing between the “workers” and the intellectuals makes solidarity of thought and policy a difficult process. Those who criticize the ineffectiveness of the Labour Party in Parliament, whether as Government or Opposition, should take account of these ‘“class’’ distinctions with the misunderstandings and suspicions they involve. The basic cause of the collapse of the second Labour Government was the failure of most of its leaders and followers to realize the dangers of a financial situation which lay outside their understanding of politics and economics. The Nationalist Government which followed may be regarded as a testimony to the collapse of the older party distinctions rather than to the triumph of Conservatism which it seemed to many. For the fact is that the same opportunist Socialism which was the professed policy of the new Labour Movement permeated in milder degree the two older parties. Conservatism had throughout the nineteenth century been less closely attached to Capitalism than had Liberalism. As Sir John Marriott has pointed out, most of the State interferences with private enterprise and laisser-faire, i.e. with capitalist dominion, were carried out by Conservative Governments in the teeth of Liberal opposition. Though in later times most industrial magnates have left a decaying Liberalism for the more potent and reputable Conservatism which they have helped to transform into a safeguard for Capital versus Labour, the Conservative Party still retains some of its traditional humanitarianism in the conduct of industry. The large increase of public expenditure on social services since the beginning of the nineties met much approval and but little opposition from Conservative statesmen, while their far-reaching influences have brought immense gains to the social and economic well-being of the working classes.^[1]

Though the direct contributions of the employees to many of these services, together with the indirect taxation involved in a Protectionist policy of tariffs, embargoes, and subsidies, is a large qualification of this humanitarian policy, it none the less remains true that Conservatism is not a conscious technique of the defence of capitalism by a policy of minor concessions, but carries a new and more conscious interest in the welfare of the workers. There is, indeed, a little group of Conservatives whose “Socialism” carries them further in the reform policy than most Liberal politicians are yet prepared to go. While, therefore, the belief of most Conservatives in the “rights of property” and the control of industry by the owning class remains unimpaired and forms the basis of opposition to Socialism and Communism, this belief is modified or even undermined in the minds of an influential minority.

It is, however, in the Liberal Party that the shattering effects of recent events are most discernible. Free Trade, its most cherished policy, was a War casualty. For though the tariffs of the War Government were intended as emergency measures, their extension into the post-War period indicated the early jettisoning of the whole Free Trade system. During the War Liberals reluctantly bowed before the emergency and later on lent their support to its continuance for a period of post-War settlement. Then came the demand of the Dominions for a practical response to their voluntary preferences, and Liberals as a party were divided. Most leaders and the rank and file remained Free Traders “in principle,” but it soon became evident that they could not look forward to an early escape from the now strongly rooted Protectionism, and when the Nationalist Government absorbed Sir John Simon and other old-school Liberals, it became clear that Free Trade, together with “economy” and anti-bureaucracy, the bulwarks of nineteenth-century Liberalism, were doomed to disappear. There remains a remnant of stalwarts who have refused to bow down in the House of Simon, and continue to hope for a revival of Liberalism on the ancient formula of Peace, Retrenchment, and Reform, though it is difficult to know what meaning they would attach to the last of the three terms. My old and valued friend, F. W. Hirst, is a revivalist of this order, convinced that with truth upon his side he will appeal successfully to the reasonable self-interest of the ordinary citizen for an escape from the entanglements of Protectionism, Militarism, and Imperialism.

A considerably larger section of this dwindling party takes what may be termed the middle course, developing, as in their “Five Years’ Plan,” a progressive Liberalism which does its best to advocate public control of key industries and finance, with extension of public services, on lines that elude the charge of Socialism by confining public ownership to a few national and municipal monopolies and leaving detailed administration of “controlled” industries in private hands. It seems possible that, if our electoral system were worked along the lines of Proportional Representation, a powerful Liberal Party could be created on this platform. For the rank and file of Labour is not enamoured of bureaucratic rule, and, if there were a reasonable likelihood of coalition with a powerful Liberal Party along the lines of the “Five Years’ Plan,” many electors who now vote Labour, without a close Labour attachment, would vote Liberal.

For this progressive Liberal policy is nearer to the average electoral mind than any full-blown Socialism. The strong distrust of officials (dubbed “bureaucrats”) may seem excessive in view of the high general ability, honesty, and public spirit in our services. I think it is excessive, so far as the socialization of monopolies and routine industries is concerned. For in these industries the incentive of free competition is either absent or is wasteful in its operations. The danger that besets Labour-Socialism is its failure to recognize the fact that over a large area of industry, prize-money, in the shape of profit, must continue to be a serviceable method of getting the best results of inventive ability, risk, and enterprise, into the productivity of industry. The notion that a sense of public service will operate upon all types of mind so as to get the best they have to give in contributions towards technological and business ability, cannot be accepted for purposes of present practical progress.

The distinction here indicated between industries that can and should be “socialized” in ownership and control and those which cannot and should not, is one of the most important economic lessons to be learnt in our time. More and more, as I shall show, it has affected my own economic thinking, and my political attachments. For loosely but sincerely attached to Liberalism before the rise of a Labour Party, I formally resigned my membership when during the War Liberals of the Government abandoned Free Trade. The only time I stood for Parliament was in the 1918 election when I conducted a hopeless campaign as an Independent. Though since then my sympathies have been with the Labour Party, I have never felt quite at home in a body governed by trade union members and their finance, and intellectually led by full-blooded Socialists. For neither section of this Labour Party avowedly accepts that middle course which seems to me essential to a progressive and constructive economic government in this country. It may be that Socialism under its present leadership is shedding the dogmatism of its early shape. But it still seems a long way from the formulation of a policy which commands the intellectual assent and the moral enthusiasm needed to break the indifference and traditional servitude of the mass of an electorate unaccustomed to thinking and subject to the wily propaganda of “vested interests” in moments of real or fabricated crisis.

Notes

1. The Report of P.E.P. (1937) (Political and Economic Plan- ning) upon the Social Services groups them as follows:
   
   (1) Constructive community services, including education, public health, and medical services, the mental health services, the welfare of the blind, and the work of the Ministry of Labour’s employment exchanges and training centres.
   
   (2) The social insurance services, including national health insurance, unemployment insurance, and widows’, orphans’ and old-age contributory pensions — the workmen’s accident compensation scheme is also put in this class.
   
   (3) The social assistance services, including non-contributory old-age pensions, the work of the Unemployment Assistance Board, and the manifold services of local public assistance committees.