Anthony Seldon - The Ideas That Shaped Post-War Britain

Communities are scattered to the winds by the gale of creative destruction. Endless ‘downsizing’ and ‘flattening’ of enterprises fosters ubiquitous insecurity and makes loyalty to the company a cruel joke. The celebration of consumer choice, as the only undisputed value in market societies, devalues commitment and stability in personal relationships and encourages the view of marriage and the family as vehicles of self-realisation. The dynamism of market processes dissolves social hierarchies and overturns established expectations. Status is ephemeral, trust frail and contract sovereign. The dissolution of communities promoted by market-driven labour mobility weakens, where it does not entirely destroy, the informal social monitoring of behaviour which is the most effective preventive measure against crime. 11

These intimations are still tentative and inchoate (not to say confused). Only time will tell if they can provide the basis for the kind of intellectual and moral leadership I have been discussing. Through the fog, however, it is possible to discern the outlines of a third phase and a new political divide. This new divide cuts across the divides of the last fifty or even one hundred years, and the political vocabulary of the twentieth century does not capture it. On one side are those, of left and right alike, who believe that institutions are the guarantors of freedom, and collectivities the schools of individuality. On the other are those, also of left and right, who see institutional pressures as harbingers of tyranny, and who put their faith in the spontaneous mutual adjustment of unconstrained individuals. As Robert Skidelsky has suggested, it may perhaps be a divide between political and economic liberals, or on a deeper level between pessimists and optimists. 12Be that as it may, it is clear that, just as the final act of a play can give unforeseen meaning to the earlier acts, the tentative emergence of this new divide puts those that have preceded it in a new and unexpected light.

So far, perhaps, so obvious. The final chapter of this story may be unfamiliar, but the first two are well-known. The inner meaning, however, is not obvious at all. Three sets of arguments underpinned post-war Keynesian social democracy, each with a long pedigree. The first was economic. As Keynes put it in his famous essay, ‘The End of Laissez-Faire’,

The world is not so governed from above that private and social interests always coincide. It is not so managed here below that in practice they coincide. It is not a correct deduction from the Principles of Economics that enlightened self-interest always operates in the public interest. Nor is it true that self-interest generally is enlightened; more often individuals acting separately to promote their own ends are too ignorant or too weak to attain even these. Experience does not show that individuals, when they make up a social unit, are always less clear-sighted than when they act separately. 13

In short, markets fail. Their failures are systemic, not accidental. They fail because market actors cannot know enough to maximise their interests in the way that market economics postulates. They fail because they cannot, by themselves, ensure that social costs are borne by those who incur them. And, as Adam Smith knew, they fail because they cannot secure the production of public goods. Because they fail, they have to be both regulated and supplemented; and it is the state that has to regulate and supplement them. The Keynesian social-democratic paradigm left plenty of room for debate about the extent and form of state intervention, but on two points all Keynesian social democrats were agreed. They were for extensive state intervention in the market, and against state suppression of the market. In James Meade’s language, they were ‘Liberal Socialists’; 14in Andrew Shonfield’s, they wanted a ‘mixed economy’, in which ‘supplies of goods and services are largely determined by market processes’, but in which the state and its agencies ‘have a large capacity for economic intervention’. 15

The second set of arguments was moral and political. To make a reality of civil and political rights, Keynesian social democrats insisted, social rights had to be guaranteed as well; indeed, social rights were the emblems of social progress. In his seminal 1949 essay, ‘Citizenship and Social Class’, T. H. Marshall offered a classic summary of the argument. 16Citizenship, said Marshall, had three dimensions – civil, political and social. Over the preceding three centuries, the struggle for citizenship rights had shifted from the first to the second, and then from the second to the third. Civil citizenship, manifested in equal civil rights, had been established in the eighteenth century, or at any rate in the 150 years between the Glorious Revolution and the first Reform Act. Political citizenship – equality of political rights – was largely the work of the nineteenth century. In the twentieth century, the focus had shifted to social citizenship – the struggle for equal social rights. The post-war welfare state had now enshrined the principle of equal social rights in legislation.

The implications went wider than appears at first sight. The essence of citizenship lies in its autonomy: the fact that citizenship rights are held independently of market power or social status. If the domain of citizenship expands, the domain of the market-place contracts. In celebrating the extension of citizenship, Marshall was also celebrating the growth of the public domain at the expense of the market domain. In writing the history of the preceding 250 years as a history of growing citizenship, he was saying that successive aspects of social life had been ring-fenced from the operations of the market-place. In presenting that process as evidence of social progress, he was also saying that it had been right to ring-fence them: if the democratic promise of equal citizenship were to be honoured, the market domain should not be allowed to invade other domains.

Buttressing the arguments from market failure and democratic principle was an argument from historical necessity. As Albert Hirschman has suggested, one of the stock themes of ‘progressive’ rhetoric is an appeal to irrevocable laws of motion, carrying society, willy-nilly, in the desired direction. 17In the eighteenth and nineteenth centuries, the founding fathers of market economics had employed that trope to devastating effect. The invisible hand of free competition, and the accompanying switch from status to contract, produced opulence; opulence produced civility; with civility came felicity; with both came progress. Not the least of the achievements of the intellectual progenitors of Keynesian social democracy – and not the least of the reasons why Keynesian social-democratic governments exercised leadership as well as power – is that they turned this historiography on its head. The irrevocable laws of motion, as depicted by them, pointed in very nearly the opposite direction – from the disorganised to the organised, from the dispersed to the concentrated, from the individual to the collective. The visible hand of oligopoly had gradually, but inexorably, replaced the invisible hand of free competition. Big firms, big unions and big government were the inescapable hallmarks of the modern age. So the maverick Conservative Harold Macmillan saw existing forms of economic organisation as ‘a temporary phase in the onward march of developing social history’, 18which would, sooner or later, terminate in a planned economy. And so the Labour economist, Evan Durbin, dismissed the ‘liberal’ economics of Mises, Hayek and Robbins with a kind of mocking determinism. It was not, he wrote,

wholly inconceivable that the politician of the future, inspired by these economists, should persuade the trade unions voluntarily to disband, and the people to accept a permanent reduction of the social services with the enthusiasm that greeted the sharp deflationary budget of 1931. It is not impossible that the British working class could be persuaded, by the compelling force of ideas, to abandon with cheerful courage the social hopes that they have entertained for generations; and thus to acquiesce in a mournful return to a world that they had left behind them for ever. It is not impossible to conceive this; but such a change is, surely, in the highest degree improbable. Social systems have rarely developed backwards. 19