One: Crisis in the Labour Movement

Slouching to "Victory"

By all normal indicators, the labour movement should start 1994 in good spirits. The Tories look finished. They have bungled the economy. They are split on every important issue. They are led by a man whom they pity when they don't despise. For the first time in almost 30 years, there seems a real prospect of a majority Labour Government not too far ahead.

Or so it seems. But forget the normal indicators. They haven't signified in a generation. Look behind the Labour leaders, with their snappy soundbites and snappier suits, look to the labour movement as a whole, and you'll find something approaching the most utter despair. Compared with this, a 24 point lead in the polls is like the winter sun on permafrost.

It isn't that the Tories have won every election since 1979. That is depressing, to be sure; but they almost lost in 1992, and they might lose next time. No - the run of electoral defeats is not the cause of our despair, but only its collateral effect. The real cause is that the Tories have won the battle of ideas. They won this back in 1976, before they came into government; and, whatever the headline result, their victory is set to outlive the next election. By 1997, the Labour Party may again be in government: no more than today need the labour movement be in power.

The basic end of the British labour movement, uniting it across all sectarian boundaries, is to combine equality with freedom and progress. For much of our century, the means to this end have been state socialism. In the first place, this has meant nationalisation and state control of industry. It is the agreed, traditional policy of the Labour Party, memorably expressed in Clause Four of the Party Constitution, adopted in 1919 -

to secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration of each industry or service.

In the second, it has meant a comprehensive welfare state, to shelter the old, the sick and the unlucky from the worst hardships of a capitalist economy, and from those that will remain in even a socialist economy.

These were the means that seized the popular imagination in the 1940s, and propelled the Labour Party to its huge 1945 majority - and put the British right onto the defensive until the 1970s, whichever party happened to be in government.

However, they failed. They did not achieve their desired end. In some respects, they even frustrated its pursuit. The failure of public ownership I will not discuss: it is an accepted fact almost across the political spectrum. Nor will I discuss whether the State can usefully have any active role in economic matters: though more controversial on the left, this also is in practice increasingly accepted.

The Bankruptcy of the Welfare State

Far more painful to accept is the failure of the welfare state. It's painful because it is about the only thing left to be accepted. Since 1979, nearly every other institution of the post-War settlement has been abolished or radically transformed. Only the welfare state remains in something like its original form. What in the 1960s would have received a share of the labour movement's regard now receives it all. To call it in question, to suggest that the Government's analysis may not be so far out, is for many in the movement little short of heresy. Yet it too has failed.

Take welfare benefits. The only means by which in the long-term a community can improve its standard of living is by hard work, honesty, and thrift. We currently have a welfare system that rewards idleness, dishonesty, and fecklessness. Of course, many of the five million unemployed do want work, on any terms; and their poverty is an indictment of Tory economic policies. Many, though, don't want to work. After 15 years of recession, their unemployment is no longer an economic but a sociological phenomenon. They have developed a lifestyle that excludes the notion of gainful employment. They are the underclass - a financial and social drain on the whole community.

We don't have to share the bogus moralism of the Tory Ministers to lament this development. It's one thing to side with the poor - to find ways of raising them from their poverty. It's something else entirely to support policies of mass-pauperisation.

Again, take pensions. Since 1980, these have risen only with the increase of prices, not of incomes. In 1979, the basic pension has fallen in value from more than 23 per cent of average earnings to less than 18 per cent. Continue this policy for another generation, and the pension's value will have fallen to less than 10 per cent of average earnings.⁽²⁾ To continue this reduction is Government policy. Michael Portillo, Chief Financial Secretary to the Treasury, has made this plain, with his warning that young people who don't take out private pensions will receive only a "nugatory" state pension when they retire in the 21st century.⁽³⁾ He followed this with the further warning that many other areas of state provision will gradually contract.⁽⁴⁾

We can denounce this as "Tory heartlessness" - which much of it undoubtedly is. Even so, what would Labour do? Undeniably, the population is ageing. In 1901, people over the age of 50 made up 14.8 per cent of the United Kingdom population. By 1951, they made up 27.6 per cent; and by 1981, 31.8 per cent.⁽⁵⁾ This proportion will continue rising into the foreseeable future.

What is the labour movement's answer to this? So far, we've endorsed a system that pays present contributions to past contributors, and promises future contributions to present contributors. It's a big chain letter that the present generation of contributors is happy to let the Government break: knowing that it will never be paid in full, it's limiting its own obligation. Promised decent pensions when they retired, the workers of the first post-War generations felt little incentive to save for themselves. When they did save, they were often penalised by taxes and inflation. The result is an army of the pauperised old.

Certainly, given political will, we could afford decent pensions for the present old. But while the crisis of funding predicted by Portillo is still in the future, it will eventually be with us. And the labour movement has no viable notion of how to face it.

Yet again, take the National Health Service. It was set up in 1946 to provide a universal, comprehensive system of health care free at the point of use. It grew into a huge, unmanageable bureaucracy, employing more people than any other organisation in the world - the Indian state railway system aside - and with a budget larger than the GNP of most countries. It soon came to treat its lowlier employees like dirt. Consultants at the top can nowadays earn £200,000 a year without trouble, while junior doctors work 80 hour weeks, and ancillary staff earn almost East European wages.

This is compounded by the failure of the NHS to deliver what was promised. It is notorious for its long waiting lists for every treatment not deemed vitally necessary, and for low standards of non-medical service. The ration book is a dying memory - dying out with the crowds who danced on VE Day and thought the council estates rather smart. Most of the living - certainly those still at work - take prompt service in pleasant surroundings for granted. The interminable queues and delays of the NHS are not taken lightly. They are tolerated by those unable to choose anything better. Those able to choose have opted out in their millions.

In 1955, 1.2 per cent of the British population was covered by private insurance. In 1991, 11.4 per cent was covered.⁽⁶⁾ According to one estimate, 20 per cent will be covered by the end of the century.⁽⁷⁾ This, moreover, is only an aggregate. Looking at the insured on a class basis, it seems that in London and the South East, 50 per cent of the professional classes are already covered.⁽⁸⁾

Certainly, the Government has done much to turn the NHS into a second-class service for the poor. At 5.9 per cent, it spends on health care a consistently lower proportion of GNP than any other main European country. But even if spending were raised to the European average of about 10 per cent, would this make matters any better? On the whole, probably not. The waiting lists would still be there; or at best, would soon reappear. The problems of the NHS don't have any permanent solution in terms of increased funding alone. Consider:

First, there is the general truth that the demand for free health care is infinite, while resources to supply it are only finite.

Second, there are the rising real costs of medical treatment. In 1946, there was little the doctors could do for most conditions. Today, the range of treatments is endless - and equally endlessly expensive.

Third, our ageing population produces an increasing demand for these expensive treatments. In 1910, 84,000 people lived long enough to die of cancer and heart disease; in 1950, 229,000; in 1980, 323,000.⁽⁹⁾

Waiting lists aren't a response to underfunding in any culpable sense. Nor are they necessarily evidence of mismanagement. They are an inevitable non-price limitation of demand.

Not every area of the welfare state yet faces bankruptcy, intellectual or financial or both. But every area is approaching crisis: and it serves no purpose beyond the purely electoral - and perhaps not even that - to answer every cry of pain with a promise of more money. As regards welfare benefits, more money would in itself make things worse. As regards pensions and health care, what extra can be afforded would make no difference to the underlying problems.

Time to Think Again

Some in the labour movement still deny this bleak analysis. John Smith at least pretends that, given a few dozen more seats, he can take us back to 1965. The Socialist Workers believe that one more push will bring on the dictatorship of the proletariat. But these are the anti-Darwinists of the labour movement - in the case of the latter, they are even the flat-earthers. Most members are in the sad position of wanting state socialism to work, but knowing that it won't.

The labour movement seems currently like one of those stone age tribes suddenly put in touch with the modern world. Traditional rituals and beliefs lose their meaning. The outsiders are seen as effortlessly superior. The choice is presented: integrate, put on Western clothes, learn to read and write, move to the nearest town; or sit in the rubble of the old culture, minds blown on cheap alcohol, objects of warning to the young and of interest to the anthropologist.

The Tories know that the post-War settlement has irreparably broken down, and they haven't been afraid to try replacing it. That has made them the true radicals of the past generation. Where they have led, Labour has resisted then followed. The resulting division in the labour movement is plain. Here are the Scargillites, lamenting their vanished or non-existent pasts, objects variously of derision and pity. Here are the integrators, with their filofaxes and their cosying-up to the City. What a wretched end to the brave hopes of 1945!

But the comparison can be pushed too far. The labour movement is not a stone age tribe, and the Tories are not effortlessly superior. They were first in realising the nature of the problem, but their solutions cannot be taken as final or even right: they are, indeed, often ghastly beyond imagining. There must be some other alternative to statism that isn't simply an enthronement of the most callous greed. But to find this, we must be absolutely clear in our minds about the distinction between ends and means.

Remember our basic end - the combining of equality with freedom and progress. The value of this is unaffected by any failure of the chosen means. A driver may set out from London to York, and arrive in Taunton. To point this out is no indictment of the driver's wish to get to York or of York as a destination: It is an indictment only of bad map-reading. Equally, if we accept that the labour movement has lost its way to the New Jerusalem, the correct response is to sit down and devise a better route.

And this we already have. Just like the Tories, we are heirs to a rich and varied tradition of thought; and just as they did in the late 70s, we also must delve into our traditions. We shall see then that the Conservative Party has no monopoly of anti-statism; nor need it retain one of post-statist reforms. Long before Clause Four and the Beveridge Report, our intellectual ancestors were anarchists, syndicalists, voluntarists, co-operativists, and much, much else. Their ideals did not fail, but were simply pushed aside. If the labour movement is ever to taste power again, and not only watch while a Labour Government does Tory things, these ideals must be recovered and reinstated. As Frank Field has so bluntly said,

[t]he starting point for the left needs to be the acceptance that, politically, welfare issues are fast becoming part of a new ball game. Consumers will willingly listen to right-wing schemes promising more consumer choice if that is all that is on offer. The fightback from the progressive left comes from examining the [historical] roots of the welfare state.⁽¹⁰⁾

And in examining these roots, we must accept that socialism isn't limited to statism - and even that the labour movement isn't limited to socialism.

Two: Socialism Without the State

In European terms, the British labour movement has always been idiosyncratic. Continental socialism emerged among the Parisian working classes in the 1790s. In its actions and its intellectual formulations it was an explicitly revolutionary movement, devoted to taking over and finishing the work of the aristocratic and middle class parliamentarians who had destroyed the French Monarchy. It was hardly born before it was suppressed. The Directory, the Consulate, the Empire, the restored Monarchy, and the continuing organs of state - these all were agreed on the danger presented by socialism. In these circumstances, it remained a doctrine of revolution. In times of repression, it functioned as a revolutionary conspiracy. In more liberal times, it functioned as a revolutionary movement.

So it was in Europe as a whole, where politics swung between extremes of legitimist reaction and chaotic disorder. The rise of Marxist ideology merely systematised what was already an old tradition. The function of the socialist agitator was to bring on a revolution that would seize control of the State and use its powers to sweep aside every vestige of the old order.

In Britain, socialism of this kind never took the interest of more than a minority within the labour movement. At its worst, the British State always remained the most liberal in Europe. The worst disorders of the 19th century never matched the upheavals periodically seen in Europe. In consequence, British socialism emerged as something uniquely peaceful and gradualist. Indeed, its precise emergence is almost impossible to date. As in France, it can be traced to the 1790s - but in this country only as an extension of a movement that had already long existed. The radical dissenters of the 17th and 18th centuries had begun - and to some extent succeeded in - an attack on privilege and the other worst aspects of the old order. Predominantly middle class, their ambitions were limited to a reform of the franchise and a sweeping away of the impediments to capitalist enterprise. But they provided both a model and some continuity of personnel and ideology for the radical working class organisations that industrialism and the example of the French Revolution brought into being at the end of the 18th century.

Part of the ideological inheritance was a lack of confidence in the State. Quite unlike the absolutist monarchies of Europe, the British State not only failed to increase in size, but actually shed functions during the 17th and 18th centuries. Much of its administrative structure was dismantled after 1641. The peculiar constitutional balance established after 1688 prevented any regrowth. War and the maintenance of justice aside, the 18th century British State tended to discharge what few functions it retained both inefficiently and corruptly.

Therefore the absence of an active state from much early socialist writing in this country. Take Robert Owen, the first great British socialist, and creator of the first mass-organisation of the labour movement. His utopia was little more than a network of anarcho-syndicalist communes. In France, the socialists were proposing to abolish poverty by minimum wages, by redistribution of wealth, by "national workshops", and other measures all to be enforced by the State. In Britain, the Owenites proposed that the Government should divert the poor rates from paying doles to building "villages of cooperation" modelled on Owen's own commune at New Lanark. The poor would be settled in these, and there would become self-supporting and develop a new civilisation based on love and cooperation. When the Government turned this idea down as half-baked, the Owenites simply turned to raising their own funds.

While he proposed only the poor for these communes, Owen assumed that the Government could carry on much as before, but with a great saving of money from the eventual abolishing of poor rates. Once he thought of asking everyone to share his "new view of society" and settle in the communes, it's difficult to see what use at all there would be for a government.⁽¹¹⁾

Some British socialists had ideals more revolutionary and statist. Feargus O'Connell and the other Chartist leaders fall into this category. But so far as socialism influenced working class thought in this period, it was Owenite utopianism that predominated. No one could make it work. All the communes failed miserably. But its guiding principle, of self-help through cooperation, took firm root in the labour movement.

Three: the Spirit of Self-Help

It's a commonplace to say that 19th century Britain came as close as any country in history to the liberal ideal of laissez-faire. Market forces had their freest known play. Those who succeeded could expect fantastic wealth - and almost tax-free. Those who failed faced the gutter or the workhouse.

Yet, if this was the golden age of unhindered competition, it was so no less of voluntary cooperation. To give even a complete overview of the achievements of the self-help movement in Victorian Britain would seriously unbalance this pamphlet. We can today scarcely imagine the intricate carpet of chapels, schools, adult education institutes, cooperatives, savings and friendly societies, trade unions, and sporting societies, that by 1900 it had laid over the hard ground of industrial capitalism. Two of its achievements, though, are of special importance: the cooperative movement and the friendly societies.

Cooperative Societies

The Cooperative movement was an offspring of Owenism. One reason why the communes always failed was shortage of capital. There was never enough to buy decent land, or to ride out the first years of high spending and low income. One solution tried was to start small grocery shops run on cooperative principles. These required little starting capital, but might accumulate large profits. By the early 1830s, there were over 400 such cooperative shops.⁽¹²⁾ Sadly, most were very small, and most failed in business. However, they set the pattern for later success.

This begin in 1844, with the founding of the Rochdale Equitable Pioneers Society. Another Owenite cooperative, its aim was to make enough money to start a socialist commune in which

those members desiring to assist each other in improving their domestic and social condition may reside.⁽¹³⁾

Almost immediately, though, a less utopian use was found for any trading profits. These would be divided among the members of the Society in proportion to their purchases from the cooperative. Thus the profits of this branch of the retail trade would go not to any capitalist, but to the consumers.

The success of the Rochdale society was spectacular. After its first quarter of trading, it paid a dividend to its members of 3d in the £. This rapidly increased to 1s 4d in the £; and in some years it varied between 2s and 2s 6d.⁽¹⁴⁾ It was soon imitated, and there was soon a network of dividend cooperative societies throughout the north of England, and soon one throughout the whole country. Despite the opposition of the private shopkeepers, who resented the ethics and feared the competition of the cooperatives, membership of all societies had reached 403,010 by 1874, and their business turnover £15 million. By 1900, they had a membership of 1,681,342 - or 4.1 per cent of the United Kingdom population - and a turnover of £68 million.⁽¹⁵⁾

The cooperative societies succeeded to some extent by dropping their utopian aims. Yet by doing so, they became a powerful means of practical improvement for their members. They were schools of self-government at a time when the working classes were shut out from the franchise. They encouraged habits of thrift and self-respect in their members. And, despite their retreat from the Owenite socialism that had inspired them, they remained testimony to the ability of the labour movement to create structures of long-term cooperation that owed nothing to the intervention of the State.

The Friendly Societies

The growth of the friendly societies began in the second half of the 18th century. They were products of an early industrialism that brought large numbers of workers together in conditions of great insecurity, yet also gave them enough to provide against at least moderate hardship. Typically, a group of industrial workers would come together in a pub and agree to put regular sums into a common fund. From this, members would be able to draw if they fell sick or lost their jobs; or a lump sum would be paid in the event of death. The managing committee would be decided by election or rotation. Sometimes, the society grew into a trade union. Sometimes, it emerged as an adjunct to a union. More often, it was conceived and maintained purely as a friendly society.

There were frequent problems. Often, the treasurers would be incompetent or corrupt, and the funds would vanish. Often the members themselves would grow tired of waiting for hard times, and spend the funds on drink. As late as 1874, a Royal Commission could report that there was hardly a village in the South of England where a friendly society had not failed and disappointed its members within living memory.⁽¹⁶⁾ But these were problems to be evaded by common vigilence and self-restraint. During the 19th century, the tendency of the societies was to grow larger and more solidly based. They could afford to employ officers with sufficient skill to invest the funds in secure places, and to check the cruder frauds.

More seriously, it was almost impossible to proportion contributions to likely risk. Vague rules were developed, but these were no substitute for proper actuarial tables; and these only became available towards the middle of the 19th century.

Even so, the societies grew rapidly. Already by the end of the 18th century, they had become established institutions. In 1797, they were eulogised F.M. Eden; and his words are worth quoting in full:

No institution has ever made a more considerable progress in so short a time than has been made within a few years by the benefit clubs or friendly societies. I regret that it is not in my power, to state either the numbers of such societies or the numbers of their respective members. This is an inquiry far beyond the power of a single individual. As there is, however, not a district in the kingdom in which societies are not found, the whole amount of their number must be very considerable. These societies do not owe their origin to Parliamentary influence; nor to private benevolence; nor even to the recommendations of men of acknowledged abilities, or professed politicians. The scheme originated among the persons on whom chiefly it was intended to operate: they foresaw how possible, and even probable, it was that they, in their turn, should ere long be overtaken by the general calamity of the times and wisely made provision for it. a stronger proof could well not be given to show that the great mass of the people, prompted only by what they themselves saw and felt, were convinced of the inefficacy of all legislative regulations and therefore resolved in at least one instance to legislate for themselves. Rejecting, as it were, a provision gratuitously held out to them by the public, and which was to cost them nothing (the Poor Law), they chose to be indebted for relief, if they should want it, to their own industry and their own frugality, And I would fain hope that I do not deserve to be set down as wanting in all due respect for Parliamentary wisdom if, in a case like this, I should declare my preference for the wisdom of the people. I cannot recollect any act of the legislature for many years that has either produced such important national advantages or been so popular as the institution and extension of friendly societies.⁽¹⁷⁾

Eden later did investigate the number of friendly societies and their members. In 1801, he estimated that there were about 7,200 societies with a total of 648,000 members.⁽¹⁸⁾ Other estimates give 821,319 members in 1813, 838,728 in 1814, and 925,429 in 1916.⁽¹⁹⁾ These figures suggest that 8½ per cent of the population was insured against sickness through a friendly society. In Lancashire, the figure may have been as high as 17 per cent by 1821.⁽²⁰⁾

Growth continued throughout the century. By 1877, there were 2.75 million known members of the societies, and their known funds had reached £12.7 million. By 1897, these figures had risen to 4.8 million and £30.5 million, and by 1904 to 5.6 million and 41 million.⁽²¹⁾ These were the figures known to the Government, which had provided a regulatory framework of registration and protection for societies. But many societies preferred to avoid even the minimal interference of the 19th century British State, and failed to register. Asked in 1892 what proportion of the working classes was insured against sickness through a building society or through a trade union, the Chief Registrar of Friendly Societies answered that of seven million male industrial workers, 3.86 million belonged to registered societies and another three million to unregistered societies.⁽²²⁾ he added that

[i]t would look as if there was really merely a kind of residuum left of those who are in uncertain work or otherwise, and are not able to insure in some shape or another.⁽²³⁾

At the end of the century, he wrote that

it remains one of the great glories of the Victorian era that... welfare has been established in a very large degree by the labours and sacrifices of working-men themselves, and by the wise and judicious legislation which has permitted and encouraged their endeavour in the direction of self-help.⁽²⁴⁾

Extrapolate these achievements a half century into the future, and the problems of poverty would have been solved. Of course, the 20th century was to be rather different from the 19th; and so far from being the foundation for another great leap forward, these achievements were instead to be smashed into fragments.

Four: Socialism Plus the State

By the 1880s, after its long Mid-Victorian eclipse, British socialism began to take on a more continental flavour. At last, the works of Marx and Engels began to be read, and the socialists began to make what has been called their "journey from fantasy to politics".⁽²⁵⁾ This meant their conciliation to the idea of an active state. For H.M. Hyndman and his quasi-Marxist Social Democratic Federation, socialism began with the seizure - preferably, though not necessarily, by democratic means - of the State:

That the land, and with the land, mines, and rivers, &c., will come under the control of the people, we have already seen, nor is it reasonable to suppose that any compensation will be given to the landholders, the fund-holders, or the railway or water shareholders, when it has been determined to assume administration of all for the public benefit. To compromise in order to avoid bloodshed, may be a course that would recommend itself to the workers; but this would be a mere transfer of holdings for a time. In the end the entire power and means of production will belong to the State or its delegates, who will then be like the State itself, simply one great body of equal men organised to act in concert, with leaders chosen by themselves.⁽²⁶⁾

However, the Marxists of all varieties were a small minority. For most other socialists, the State was seen as a more modest weapon against the established order. For them, it was neither currently a committee of the ruling class nor prospectively a dictatorship of the proletariat. Instead, it was something to be used for making employers pay better wages, or cut working hours, or generally pay more attention to conditions of work. It could also fund unemployment relief.

Indeed, though more statist, the older socialism persisted. For William Morris and Edward Carpenter - as later for G.D.H. Cole and R.H. Tawney, the true ideal was a modified and updated Owenism. The State was to help in establishing this - but only by easing its way past the inevitable death of the old social order. For G.D.H. Cole, writing as late as 1917,

[t]he proper sphere of the State in relation to industry is the expression of those common needs and desires which belong to men as consumers or users of the products of industry. It has no claim to decide producers' questions or to exercise direct control over production; for its right rests upon the fact that it stands for the consumers, and that the consumers ought to control the division of the national product, or the division of income in the community.⁽²⁷⁾

And though the socialists were not averse to more state action, they took little part in the huge expansion of the British State that occurred between around 1870 and the Great War. For some reason that no one has yet really discovered, the spirit of the age had turned statist. There was no single scheme of statism. The State grew instead in response to specific demands made by the advocates of different and often mutually hostile ideologies. There were the Tory paternalists, still lamenting their defeats of earlier in the century, and longing to return to a vanished golden age of deference and protectionism. There were the militant imperialists, deeply impressed by German collectivism, and disturbed by what they saw as the "flabby liberalism" of their own country. There were the eugenicists, with their scheme of a Master Race - in the creation of which the State was to weed out the unhealthy and promote the strong. There were the religious activists, frightened of secularism and crying out for the suppression of sin, no matter what civil liberties stood in their way. There were the professional bodies, willing to combine with any movement whatever for the sake of increasing the status and earnings of their members. So far as socialists participated in this coalition of special interests, they belonged not the labour movement, but to a middle class intelligentsia, and they shared many of the above ideologies.

This brings us to Sidney and Beatrice Webb, George Bernard Shaw, and many of the other Fabian Socialists. If these rejected the revolutionary dreams of the Marxists, they also had no time for the decentralised, anti-statist socialism of the British tradition. The French historian Elie Halévy could still write of them with horror after 40 years:

[T]heir socialism was profoundly anti-liberal. They did not hate the Tories, indeed they were extraordinarily lenient to them, but they had no mercy for Gladstonian Liberalism. It was the time of the Boer War and both the advanced liberals and the men who were beginning to form the Labour Party had generously sided with the Boers against British Imperialism, in the name of freedom and humanity. But the two Webbs and their friend, Bernard Shaw, stood apart. They were ostentatiously imperialistic. The independence of small nations might mean something to the liberal individualist. It meant nothing to collectivists like themselves. I can still hear Sidney Webb explaining to me that the future belonged to the great administrative nations, where the officials govern and the police keep order.⁽²⁸⁾

In 1907, Sidney Webb could with burning conviction address the Fabian Society on the dangers of unrestricted immigration. Unless there were some "sharp turn", he warned, the country would gradually be given over to the faster-breeding Irish and Jewish immigrants - and even to the Chinese. What had at all costs to be avoided was "race deterioration, if not race suicide".⁽²⁹⁾

Equally, his view of socialism was avowedly statist and bureaucratic. For him,

[t]he Socialist is distinguished from the Individualist, not so much by any special Shibboleth as by a complete difference as to the main principles of social organisation.... On its economic side, Socialism implies the collective administration of rent and interest, leaving to the individual only the wages of his labour. On the political side, it involves the collective control over, and ultimate administration of, all the main instruments of wealth creation.⁽³⁰⁾

The early Labour Party was a coalition of different currents of thought within the labour movement. There were the cooperative societies. There were the trade unions. There were the old utopians. And there were the Fabians, semi-detached middle class outsiders. The shame is that they had the organisational and networking skills to give the Party before long a taste for bureaucratic centralism that it has never yet lost.

Five: the 20th Century Assault on Cooperation

The National Insurance Act 1911

The modern welfare state begins with the National Insurance Act 1911. This provided a safety net against both sickness and unemployment, and - with some important exceptions - covered all those between the ages of 16 and 70 who were manual workers or earned less than £160 per year, or worked in industries "known to be subject to severe and recurrent unemployment". The scheme was funded by weekly contributions from the insured worker, from the employer, and from the Government. The basic weekly sickness benefit was 10s for men and 7s 6d for women. In addition to direct payments, the Act provided for the setting up of general medical and pharmaceutical services.

This Act is so closely the model of the present system that it's almost inconceivable for anyone within the labour movement to have attacked it - save perhaps on the grounds of its not going far enough. Yet attacked it was.

Though neither Minority nor Majority Reports had recommended its provisions, the Act was prompted by the findings of the Royal Commission on the Poor Law and Relief of Distress, which sat from 1905 to 1908. Among the evidence heard by the Commission was a submission from the Social Democratic Federation. This argued that poverty wasn't a problem to be solved either by the existing Poor Law or by some replacement administered by middle class specialists. "[W]e are convinced" the SDF argued, "that inability to find employment is at the bottom of the trouble."⁽³¹⁾ Let there be full employment - even if by statist measures - and the workers could be left to make their own provision for sickness.

Moreover, the Act tended to undermine voluntary cooperation for sickness and unemployment benefit. Those workers made subject to compulsory insurance would normally have insured themselves through friendly societies. But why now should they bother with these, when the State had settled the matter for them?

True, the scheme was to be administered through approved friendly societies. But this was only a further undermining. To become approved, a society was required to have at least 10,000 members, and to conduct its business under far closer state supervision than ever in the past. In effect, the sickness and unemployment insurance of the working classes was monopolised by the State, which then handed the business to a few favoured societies made into virtual government agencies - and the thousands of small and unregistered societies were left searching for what little market remained. They were left like many third world farmers today, watching their land dry up and crack downstream of some gargantuan and unnecessary dam built by the public for private gain.

Nor was this all. Those excepted from the scheme included the self-employed. This was on the insistence of the commercial insurance companies, determined to keep the whole of their own market. The story is told by W.J. Braithwaite, one of the officials connected with the National insurance Bill:

The reception of the bill had been very friendly. There had, however, been one discordant note from... the spokesman in the House [of Commons] of the Industrial Insurance interest, far the most formidable interest affected by the bill. Interests are very real forced in Parliament. They are alive and active. The public interest which should come before them is inert and dead compared with them, and had no spokesman or representative.... The history of the bill is how they were bought off, conciliated, and in very few instances over-ruled. L[loyd] G[eorge] made promise after promise, did one dodge after another....

...The Industrial storm had already blown up. It was very cleverly worked, and I suppose that Kingsley Wood [legal adviser to the insurance interests] was at the bottom of it. At any rate he said to me one day when the storm was in full blast, 'We have got L.G. there' (putting his thumb on the desk) 'and shall get our own terms'.⁽³²⁾

Remember how in the age of laissez-faire, the private shopkeepers had been powerless to stop the cooperative movement. In this age of the new compassion for the worker, the private insurers very nicely got themselves privileged against competition from the cooperative insurers - a paradox that George Orwell might have enjoyed, had he only understood what was happening.

The National Health Service Act 1946

All else that followed the National Insurance Act is little more than an application of its principles. Statism was hugely advanced by the crises of the Great War, and then by the interwar Slump, and then by the Second World War - which ended with a Labour Government as far divorced as can be imagined from the original ideals of the labour movement.

Consider the contrast:

In 1887, a Select Committee of the House of Commons asked if the friendly societies had any objection to the principle of compulsory national insurance. It was answered by Reuben Watson, actuary of the Manchester Unity of Oddfellows:

Well, I think I should object to it. I consider that friendly societies have voluntarily done a very great deal of good in this country, and I think that they ought not to be interfered with by the establishment of any system which would be injurious to them.⁽³³⁾

A year later, he added in a pamphlet on the same subject that

state subsidisation appears likely to be appealed to in some cases to accomplish that which intelligent men in these dominions seem determined to do for themselves without unnecessary state or other interference or aid.⁽³⁴⁾

60 years' later, Douglas Jay, middle class Fabian and a Minister in the Attlee Government, could assert as if self-evidently that,

in the case of nutrition and health, just as in the case of education, the gentleman in Whitehall really does know better what is good for people than the people know themselves.⁽³⁵⁾

The practical expression of this revolution in thinking was the creation of the NHS. By the National Health Service Act 1946 the Minister of Health was empowered to take any hospital into public ownership that he thought appropriate, and to organise these under Regional Health Boards. At the same time, every general practitioner in the country was offered public employment, to provide health care at first instance or such health care as did not require attendance at a hospital. When the Act came into force, the Minister took possession of 3,118 hospitals and clinics, with 388,000 staffed and 57,000 unstaffed beds. Only 230 hospitals and clinics were disclaimed by the Minister and left in the private sector.⁽³⁶⁾ Many of these were small hospitals run by religious orders and certain charities. Others were run by trade unions. The great majority of general practitioners accepted public employment. The varied system of private and voluntary health care that had existed before the War largely disappeared.

The supporters of the 1911 Act at least confined themselves to compulsory insurance. They never tried to outlaw the unapproved friendly societies. Many supporters of the 1946 Act took a firmer line on competition. According to Harry Eckstein,

[they] found the voluntary hospital system morally obnoxious, particularly due to the repellent practices used in the latter days of the system to extract money from the public: stunt appeals, bridge tournaments, flag days, midnight matinees, and soap sales and, not least, the sale of advertising space on hospital walls to patent medicine manufacturers.⁽³⁷⁾

The Manchester Guardian feared that allowing competition might even destroy the NHS:

Poor patients will claim their rights and be convinced that they are getting an inferior service: rich patients - and many others who cannot really afford it - will insist on paying fees in the expectation of preferential treatment, and will go elsewhere if they do not get what they are paying for. This, in short, is a false freedom that can only survive to the extent that it is abusing the doctor-patient relationship. It is the reef on which this splendid venture, with all its prospects for development, might founder at its outset.⁽³⁸⁾

With this, we come back to the present - off the road, in a ditch, and not a sign in sight marked "To the New Jerusalem".

Six: What is to Be Done?

For a New Vision of Socialism

After a hundred years of travelling in the wrong direction, turning back will be an immense challenge for the labour movement. So much of what has been denied must be admitted as true. So many passionate beliefs must be discarded as false. Some Tories will point at us and laugh, shouting "We were right all the time". Others will write patronising articles in The Sunday Telegraph on the theme "Please, do borrow our clothes - we have so many more just like them, but better".

But it must all be done. We must face the predictable uproar and continually repeat that we are simply going back to the first practice of the labour movement, as permitted by its ideology and developed now in the light of modern circumstances.

The new truth is that the only socialism worth fighting for is the sort that can exist in a free market.

The market isn't inevitably a jungle where the strong prey on the weak, and are in turn preyed on by the strongest. This can happen if a spirit of corrupted enterprise is sufficiently encouraged, and then preserved by corrupted institutions. And that is what the Tories have done. Instead, the market is an area of moral choice. It allows cut-throat competition, and it allows harmonious cooperation: which prevails depends on the moral outlook of those within it. This being accepted, the task of the labour movement a long way into the future is to change our current moral outlook, and devise pure to replace corrupted institutions, and to match the Tory right in finding political mechanisms to translate dreams into reality.

Two of these pure institutions are obvious to suggest. First, the limited liability laws should be repealed. The big joint stock company is before all else a conspiracy for the trading of favours with the State. It is an open conduit for bribes to politicians, and always at least a potential agent of state control. It also tends to dehumanise those who work within it, alienating them from their labour, subordinating them to a most unattractive power structure. Ending its limited liability will be like exposing the roots of some noxious weed. Its death will allow the flourishing of healthier forms of organisation - these being the sole trader, the small company, and the workers' cooperative.

Second, the law of succession should be changed. At present, subject to a few restrictions, property may be left just as a testator pleases. So far, the labour movement has tried to oppose the concentration of wealth across generations by death duties or capital gains tax. These either haven't worked or have only enriched the State - a far worse enemy than the merely rich. A more certain course is to tax only bequests of more than 10 per cent of estates over a certain value to single individuals - the product of this tax being hypothecated to something like repaying the national debt.

For a New Socialist Welfare

Turning to welfare, some work has already been done within the labour movement. Though often sketchily, and without any unambiguous statement of the restored ideology, Frank Field, the Labour MP and Chairman of the Commons Select Committee on Social Services, has laid down the path that all must tread.

"For the whole of my political life" he says in a recent book, "Labour has espoused a view of human nature which is simply wrong".⁽³⁹⁾ He adds that the Party must accept the desire of individuals to get on in the world by their own efforts. Welfare provision must be revised to take account of this.

On pensions, he proposes that employers should be compelled to pay at least six per cent of their employees' salaries not, as now, to the State, but to private pension schemes. There should be a further compulsory minimum of four per cent from employees. Contributions for the unemployed would be made by the State.

If adopted, this scheme would tear up the present chain letter, and guarantee a private pension to everyone. Contributions would be invested as capital. Payments would be from income. On present costings, to introduce the scheme in 2010, by which time many would already have private pension schemes, would save £4 billion compared with the projected costs of the present scheme.⁽⁴⁰⁾

Field suggests the further reform of giving individuals control over their pension plans. Bearing in mind that the insurance companies own half of British industry, this would at a stroke bring on the collective ownership of the means of production - and in a market environment.⁽⁴¹⁾

On unemployment, Field suggests a combination of workfare and privatised benefit provision similar to his scheme for pensions. In a return to the principles of administering the 1911 Act, Field suggests that

Parliament would continue to lay down what the minimum rates of benefit would be. Individuals would choose which friendly society they joined so as to qualify for these minimum benefits. As customers, they would be free to move to another friendly society.... The friendly societies would be free to offer additional benefits. Indeed, they would find it crucial to do so. Other societies would try to poach members by offering additional top-up benefits. These would range from second pensions and additional sick pay and unemployment entitlement, through to extra help with the cost of community care.⁽⁴²⁾

The 1911 Act was so bad because it undermined the friendly societies. Returning to its principles in 1994 would have the opposite effect, of reviving the friendly societies. Like a zero bank balance, the 1911 Act is bad depending only on the direction from which it's approached.

Turning to the NHS, Field has so far given little guidance. However, his approach is sufficiently plain to allow others to imagine what he might say.

We should begin by condemning the internal market. It is a good idea to try to improve the performance of hospitals. No doubt, as in the other nationalised industries, state control of the hospitals resulted in massive waste and other misallocations. It is hard to see ill-paid ancillary workers turned out of their jobs after a lifetime of devoted service. But it ought to be plain that the purpose of a hospital is to cure the sick, not to provide employment.

Equally plain, though, the present reforms are replacing one form of waste and incompetence with another. Since 1979, administration costs in the NHS have risen from six per cent of total spending to 11 per cent - and much of this has taken place during the past five years.⁽⁴³⁾ At the same time, the stories are piling up of doctors forced out of hospital car parks to make room for new senior accountants, of vast fees paid to "health consultants" for buzz-phrase banalities, of massaged waiting list figures and Stakhanovite hours for medical staff.⁽⁴⁴⁾

No, if the NHS is to be broken up, it should be replaced by a system of localised, cooperative health care. In the short term, the State will need to underwrite a system of compulsory private insurance, just as Field proposes elsewhere. But this must be seen as an interim measure. The private sector in its present shape is barely less objectionable on moral grounds than the NHS. This is not to call for any direct attack on the private healthcare sector. On voluntarist principles, those who want to spend on having their piles treated in bad hotels must be left to their folly. The large profit-seeking corporations that have come to dominate the British market since 1979 will pass away with company law and moral reform: they need no special treatment. It is to call, though, for a fostering of the cooperative and charitable sectors, which even today make up 38 per cent of the non-NHS healthcare market.⁽⁴⁵⁾ Take, for example, the Post Office and Civil Service Sanatorium Society, founded in 1905 by individual postal workers, its hospital disclaimed by the Minister in 1946. In 1988, it provided to its members a total of 24,503 consultations, and spent £10,260.317.⁽⁴⁶⁾

Again, take the Industrial Orthopaedic Society, another charitable institution. In 1992, it provided various kinds of health care to 61,211 patients, at a cost of £12,007,273.⁽⁴⁷⁾

These remnants from the past are the models for the future. People should be encouraged to ensure their healthcare through the setting up of similar voluntary schemes. Despite the hammer blows of the past decade, the trade union movement still claims more than eight million members. Individually, the unions remain very wealthy. Here is obvious scope for development. Many other kinds of association, some existing already, some yet to evolve, will provide an excellent basis for a return to the golden age of voluntary cooperation.

Conclusion

The Tories have won every election since 1979 because they appear to have answers to the problems raised by the crises of the State. They know what they want, and they know roughly how to translate this from dreams to reality. The labour movement will never challenge this intellectual ascendency until it too combines relevant ideology to electoral politics. As said, making the challenge will be supremely hard for a movement in which one mode of thought has held sway for longer than anyone can recall. Even so, it must be made. Perhaps one day, just as socialists now write approvingly of "the Road to 1945", they will write no less approvingly of "the Road from 1945".

1. From his Self-Government in Industry - extracts collected in Anthony Wright, British Socialism: Socialist Thought from the 1880s to the 1960s, Longman, London and New York, 1983, p. 79.

2. Peter Riddell, "Is my pension going to be worthless?", The Times, 9th December 1993.

3. Ibid.

4. Arthur Leathley, "Portillo predicts more welfare opt-outs", The Times, 14th December 1993.

5. David and Gareth Butler, British Political Facts: 1900-1985, Macmillan Press, Basingstoke, 6th Edition, 1986, p. 325.

6.

Source: compiled from figures supplied by Messrs Laing & Buisson, London, NW1, 0EB.

7. According, that is, to Leon Kreitzman of the Henley Centre, writing in 1988 - see Margaret Hughes, "Fierce competition proves a headache for private sector" The Guardian, 30th November 1991.

8. Estimate by Dr Michael Calman of the University of Kent - reported by Jeremy Laurence, "In sickness and in wealth. The NHS is suffering a haemorrhage of the well-off from which it may not recover", The Guardian, 19th September 1991.

9. Butler & Butler, op. cit., p. 325.

10. Frank Field MP, "Giving the public a bigger dole of authority", The Sunday Times, 22nd July 1990.

11. His writings are collected in Robert Owen, A New View of Society and Other Writings (1927), "Everyman" edition, J.M. Dent & Sons Ltd, London, 1971. I owe my summary of Owen's views to the Introduction by G.D.H. Cole.

12. P.H.J.H. Gosden, Self-Help: Voluntary Associations in Nineteenth Century Britain, B.T. Batsford Ltd, London, 1973, p. 182.

13. From the Society's original rules - quoted, ibid, p. 183.

14. Ibid, p. 184.

15. Ibid, p. 195. Gosden gives a more detailed picture of this growth on p. 196:

16. Ibid, p. 18.

17. F.M. Eden, The State of the Poor, 1797, pp. 630-31 - quoted in Gosden, op. cit., pp. 9-10.

18. F.M. Eden, Observations on Friendly Societies for the Maintenance of the Industrious Classes during Sickness, Infirmity, Old Age and Other Exigencies, 1801, p. 7 - cited Gosden, op. cit., p. 12.

19. Gosden, ibid.

20. Ibid, p. 13.

21. Ibid, p. 91.

22. Ibid.

23. Ibid, pp. 91-92.

24. Quoted ibid, p. 259.

25. See, for example, S. Pierson, British Socialists: The Journey from Fantasy to Politics, Harvard University Press, Cambridge (Massachusetts) and London, 1979.

26. H.M. Hyndman, The Historical Basis of Socialism in England, 1883 - extracts collected in Wright, op. cit., p. 43.

27. Cole, op. cit. - quoted Wright, op. cit., pp. 81-82.

28. Translated from Elie Halévy, L'Ere des Tyrannies, Paris, 1938, p. 217.

29. Sidney Webb, The Decline of the Birth Rate, Fabian Tract 131, London, 1907, pp. 16-17 - cited Sir Leon Radzinowicz and Roger Hood, A History of English Criminal Law and its Administration from 1750, Stevens & Sons, London, 1977, volume 5, p. 29.

30. Sidney Webb, Socialism in England, 1890 - extracts collected in Wright, op. cit., p. 61.

31. Report of the Royal Commission on the Poor Law and Relief of Distress, HMSO, London, 1909 (Cmnd 4755), Appendix to Volume Three, "Minutes of Evidence, 49th-71st Days", para 19.

32. Sir Henry N. Bunbury (ed.), Lloyd George's Ambulance Wagon, The Memoirs of William J. Braithwaite, 1911-12, Methuen Ltd, London, 1957, pp. 161-68.

33. Quoted Gosden, op. cit., p. 276.

34. Ibid.

35. Douglas Jay, The Socialist Case, Victor Gollancz, London, 2nd edition, 1947, p. 258.

36. John E. Pater, The Making of the National Health Service, King Edward's Hospital Fund for London, London, 1981, p. 148.

37. Harry Eckstein, The English Health Service: Its Origins, Structures and Achievements, Harvard University Press, Cambridge Massachusetts, 1958, p. 178.

38. Editorial, Manchester Guardian, 22nd March 1946.

39. Frank Field, An Agenda for Britain, HarperCollins, London, 1993, p. 2.

40. Suggested in a recent Fabian discussion paper - reviewed by Sara McConnell, "Getting enough to live on for life", The Times, 17th july 1993.

41. Jill Sherman, "Labour urged to rethink welfare", The Times, 21st December 1992.

42. Frank Field MP, "Giving the public a bigger dole of authority", The Sunday Times, 22nd July 1990.

43. "NHS costs rise", The Independent, 13th January 1994.

44. See for example:

"South West Thames RHA has rounded up six health professionals to assess elderly care and sent them to Florida. Their report concluded that good healthcare is of "real importance to older people" and that the "consumer's voice should be heard". SWTRHA's Frimley Park hospital recently had to cancel the opening of a geriatric unit because it is £2 million overspent"
("Doing the Rounds", Private Eye, No. 837, 14th January 1994).

45. Ibid.

46. The Post Office and Civil Service Sanatorium Society, Annual Report, 1988.

47. The Industrial and Orthopaedic Society, Report and Accounts, 1992.