Reconstruction: A Lesson from the Last War

The act of putting ideas into words should be a means of achieving greater clarity and understanding, for writer as well as reader. It should help to clear the way for action, but often smooth words and rounded phrases serve only as a brake on action. If anyone doubts this he has only to read again some of the optimistic plans for a new world which were being drafted in great number a quarter of a century ago. They promised a world without war, without want and without insecurity. Little or nothing came of it all. Precious years were wasted while the world drifted to another war and now a new generation of sentimental (or sometimes cynical) planners are at work who have seemingly learned nothing and forgotten everything. In international affairs it is only necessary to recall the League of Nations. Hardly a hand is raised in its defence now and the Atlantic Charter drafted by President Roosevelt and Prime Minister Churchill did not trouble to mention it.

In the matter of social reconstruction compare the Labour Party’s recent pronouncement, “The War and the Peace,” adopted by 2,430,000 votes to 19,000 at the Labour Party’s annual Conference at Whitsuntide, 1941, with an earlier Report, “Labour and the New Social Order,” adopted by the Labour Party in 1918. The comparison brings out many interesting points. Much of the new document reproduces the arguments and assumptions of the old. Other parts are different but the difference often reflects not an advance of thought towards Socialism but an adaptation to new trends in capitalism.

The New Order, 1918

The Labour Party’s 1918 plan, “The New Social Order,’’ suffered from three fatal defects. It started off from a wrong belief that the year 1918 was witnessing if not the death, “at any rate the culmination and collapse” of capitalism. “The individualist system of capitalist production,” said the Report, “may, we hope, indeed have received a death-blow.” Its second error was in assuming that the battle for a new order was already more than half won, based on a belief that one of the main pillars of the Labour programme (called “The Universal Enforcement of a National Minimum”) “had already gained the support of the enlightened statesmen and economists of the world” (page 6). This belief was buttressed by a curious confidence that a plan was bound to be accepted if it could be proved that it was based on the teachings of “political’ science. ” Time and time again this idea crops up in the 20 pages of the Report.

The third defect was that the Labour Party had not a practical alternative to offer to capitalism and one that would be understood and accepted by the electorate. The Report was so worded as to imply in a rather guarded way that the remedy was Socialism. Thus it opened with the statement that “what has to be reconstructed after the war is not this or that Government Department, or this or that piece of social machinery; but, so far as Britain is concerned, society itself,” and on page 4 is a reference to the “socialisation of industry.” But in the rest of the Report it was clearly shown that the Labour Party was far from being finished with capitalism. It desired to control but not to abolish it; hence, for example, the remark in connection with taxation, “we are at one with the manufacturer, the farmer, and the trader in objecting to taxes interfering with production or commerce, or hammering transport and communications” (page 10). They could hardly be at one with these sections of the capitalist class if their intention was to eliminate them.

All of these assumptions were groundless. Capitalism was not dead. Once the war was over it resumed its course, not much different from what it had been in 1914. The employers, and of course their “enlightened statesmen and economists,” soon showed what they thought of the plan and of its detailed proposals when the post-war unrest had to be dealt with. Nor would the Labour Party’s proposals stand serious criticism. They did no doubt appeal to a large number of electors and this enabled the Labour Party to take office in 1923-1924 and again in 1929-1931, but those two Governments found that the administration of capitalism left them no time or inclination to introduce the main parts of their own programme. The Labour Party had by then forgotten its pledge of 1918 that it would “certainly lend no hand” to the revival of capitalism.

It is a melancholy thought that in 1941 most of these assumptions can still be cherished by the Labour Party.

The “four pillars” of the 1918 plan were (a) The Universal Enforcement of the National Minimum; (b) the Democratic control of industry; (c) the Revolution in National Finance; and (d) the Surplus Wealth for the Common Good.

There was to be a national minimum wage of 30s. a week (to be revised according to the level of prices), and this was also to be the basis of payment to the unemployed, the sick, the aged, and the victims of industrial accidents.

Industry and the land were to be nationalised, starting immediately with the mines, the railways and electric power, followed by the “expropriation” of the insurance companies. There was to be democracy in industry as well as in Government, with “the progressive elimination from the control of industry of the private capitalist” (page 12).

Taxation was to be changed and a capital levy introduced, both based on the principle of a very high levy on the highest incomes. The phrasing of these proposals throws light on the outlook of those who drafted the Report and of the delegates who accepted it. Taxation was to rise “up to 16s. or even 19s. in the pound on the highest income of the millionaires,” and the capital levy was likewise to start at a small deduction from the wealth of people owning more than £1,000 “and a very much larger percentage from the. millionaires.” There seems to have been an idea here that while the very rich must be “soaked” they must not be extinguished, and this presumably is what was meant by the aim defined as “a systematic approach towards a healthy equality” (page 4). Evidently “healthy equality” was a roundabout way of retaining a fairly large measure of inequality of wealth and income though nowhere was there an attempt to explain or justify this.

Among the specific demands were the retention of war-time Government control of industry and of the minimum wage of miners and land workers, “equal pay for men and women,” an extended scheme of unemployment insurance, educational reforms and a school leaving age of 16, “complete abolition of the House of Lords,” various extensions of the franchise, and the organisation of schemes of public work to even out and to reduce the amount of unemployment.

Among a very large number of other proposals was one for a League of Nations and the peaceful settlement of disputes between nations, and another for the development of international trade.

Nothing Came Of It

It will be seen that hardly any of the proposals came to anything, and those that were adopted have left capitalism essentially unchanged and unregenerate. It is true that the franchise was extended, unemployment insurance was made general, and the League of Nations was set up, but apart from these and a few social reforms neither the Labour Governments nor the Tory and National Governments did anything to carry out the plans. The House of Lords is still with us, enriched by some Labour peers, unemployment has been greater than ever before, taxation on the rich has been increased but without any marked effect on the production of new millionaires, there has been no national minimum and the war-time Minimum Wage Acts for miners and landworkers were soon repealed after the war. No industries have been nationalised.

The inequality of wealth, the national minimum wage and nationalisation of industry are three questions worth a little more attention. Here are two statements on inequality, one from the 1918 Labour Party Report, the other from an article by a prominent Labour Party supporter in World Digest, June, 1941. They show how little capitalism changed.

  Meanwhile innumerable new private fortunes are being heaped up by those who have taken advantage of the nation’s needs; and the one-tenth of the population which owns nine-tenths of the riches of the United Kingdom, far from being made poorer, will find itself, in the aggregate, as a result of the war, drawing in rent and interest and dividends a larger nominal income than before.—(1918 Report, page 19.)

That was 1918; now for 1941:— .

In Britain on the eve of this war for democratic principles, nearly half the total national income went to 10 per cent, of the people; 80 per cent. of the total capital belonged to less than 6 per cent. of the community. . . .  At one end of the social scale twelve million people earned less than 50s. a week. At the other end there were many thousands with incomes of over £200 a week and some with incomes of over £1,000 a week.—(Mr. Francis Williams, former editor, Daily Herald., World Digest, June, 1941.)

In 1918 the Labour Party demanded a national minimum wage for everyone. They thought it had the support of “the enlightened statesmen and economists of the world.” On August 18th, 1919, the Lloyd George Government introduced a Bill to set up a Royal Commission “to inquire into legal minimum time-rates of wages,” but the Bill was not proceeded with. Then on March 4th, 1924, when the first Labour Government was in office, a Labour motion was put down and carried that “in view of the practically universal acceptance of the principle that a living wage for all workers should be the first charge upon industry . . . this House urges the Government to proceed without delay with the Bill introduced by the Government of the day in 1919, constituting a Commission to inquire into and report upon legal minimum time-rates of wages.”

The Labour Government whole-heartedly accepted the principle of the resolution but pleaded pressure of business which would have to be cleared away before anything could be done. The opportunity did not arise before the Labour Government was defeated and left office. Nor was it done in the second Labour Government, and when on March 31st, 1931, Mr. Kirkwood asked the Minister of Labour, Miss M. Bondfield, if it was the intention of the Labour Government to introduce legislation for a minimum wage in mining, steel, textile, engineering, agriculture and other industries and in the railway and other services, her reply was a blunt “ No, sir.”

At the present time the idea is given little attention in Labour circles, and minimum wage schemes seem to have been replaced by schemes to pay allowances to families with children.

Then there was the idea of nationalisation, on the lines of the Post Office. It was urgently demanded in 1918 but was pressed with less and less enthusiasm until in 1930 it was quietly allowed to die. In its place came the demand for public utility corporations like the London Passenger Transport Board. This was due not so much to a change of heart but to the recognition that capitalism was moving in a different direction. As has been pointed out by Mr. Geoffrey Crowther, editor of the Economist—

The choice now is not between individual competitive enterprise and centralised organisation by the State; it is between centralised control by the State and by private trust.—(World Digest, September, 1941.)

One or two lessons should be plain. Even from the narrow point of view of trying to do the best possible for the workers within the framework of capitalism the 1918 Labour. Programme was wrongly conceived and far too ambitious. If instead of aiming to legislate on everything it had concentrated on a few simple social reform demands it would obviously have had a better chance of achieving some results. Instead, it dissipated interest and energy on all kinds of impracticable projects for reorganising industry when it ought to have realised that any Government facing the post-war troubles of capitalism would be far too busy to want to risk its position by a policy of troublesome and not very popular interference with existing arrangements.

From the wider standpoint of solving the social problems instead of trying to patch things up the Labour Party was in a false position. It wanted to be drastic but had not the understanding or desire to come out for Socialism. Neither the leaders nor the rank and file understood the limitations of their position. They were not prepared to face the fact that there could be no Socialism until the hard and long task of winning over a majority to Socialism had been completed but equally they were not prepared to struggle for those limited things that a non-Socialist majority might have supported. They needed the support of Liberal and Tory and unattached workers if they were to be at all effective but they were forced by their own vague desires for the drastic reform of capitalism to put forward demands which only antagonised large groups of capitalists and groups of workers in the industries affected. They confused two different conceptions, that of a working class struggling to maintain and improve its standards under capitalism and that of a Party aiming to take over the reins of Government and administer things on a different principle. They forgot that capitalism if it is to work at all forces the hands of those who think to control it. Then as now the only alternative to capitalism run on capitalist lines is Socialism, there is no tenable half-way position.