is Member of Parliament R. H. S. CROSSM for Coventry East and a member of the Executive Committee of the Fabian Society. FABIAN TRACT 325 This pamphlet is based on a lecture given before a Fabian audience in London in November 1959. THE FABIAN SociETY 11 Dartmouth Street, London, S.W.l Note.-This pamphlet, like all publications of the FABIAN SOCIETY, represents not the collective view of the Society but only the view of the individual who prepared it. The responsibility of the Society is limited to approving the publications which it issues as worthy of consideration within the Labour Movement. Jun , 1960 I. Introduction T T HE title I have chosen derives, of course, from Professor Kenneth Galbraith's famous hook.1 The Affluent Society has been largely disregarded by professional economists, although (or should I say because?) it is the most iconoclastic study of political economy since Keynes's General Theory of Employment, Interest and Money. Some of us may feel that the conclusions Professor Galbraith draws are timid stuff, in comparison with the ruthless exposure of orthodox economics which precedes them. But conclusions-especially conclusions about the domestic politics of the United States-are not what concern me here. For my topic is the future of the Labour Party in the British version of the Affluent Society which has emerged under successive Tory Governments since 1951. The fact that the Conservatives won their third successive victory la t October has shocked the Labour Party into a bout of intros ective self- analysis -inspired by an almost masochistic deter mmation to find the fault mourselves and not in our stars. Yet there is one thing on which all observers agree. The Government won because a great majority of the voters (including many who voted Labour) accepted Mr. Macmillan's contention that they had never had it so good. Apathy and fear-still the two most important factors in modern democratic politics -were this time on the side of the Tories, and both were exploited with considerable skill in the final stages of their campaign. Among the under-thirties, where in previous elections Labour had a large majority of the votes, there were widespread abstentions. True, the old age pensioners felt ure they would do better under a Labour Government. But the number of very poor old people who voted Labour for the first time was exceeded by the prosperous young wage-earners who gave their promise to the Labour canvasser and their vote to the Tory candidate. Apparently they felt at the last moment that it was safer to keep the Tories in ower than to take the risk of a Labour Government. The Revisionist Case What conclusion should we draw from the fact that Labour's defeat last October was caused by yet another defection of working-class voters, even larger than that we suffered in 1955? Already one group of Labour Party economists has come forward with a 'Revisionist' diagnosis of what is wrong and a formula for remedying it. Mr. Roy Jenkins, Mr. Douglas Jay and Mr. C. A. R. Crosland predict that Labour will decline into a minority party, representing an ever shrinking working class, unless it scraps its old-fashioned critique of capitalism and modernises its policies, its images and its constitutiOn. ~r. Roy Jenkins, for example, recently listed what be regarded as the five major obstacles in the way of a Labour victory at the next election: (1) fear of a financial crisis if Labour came \ to power; (2) blame for unofficial strikes; (3) resentment against the anti- libertarian behaviour of Labour groups on certain local councils; (4) a The Affluent Society, by J. K. Galbraith. Hamish Hamilton, 1958. LABOUR IN THE AFFLUENT SOCIETY widespread feeling that Labour is a narrow, class party; and (5) the un l\ popularity of nationalisation. His conclusion was that, if we could only excise these five tumours from the body of the Labour Party, its health would be restored and it would have a good chance of benefiting next time from the swing of the endu urn. Mr. Crosland and M'"r. Jay, I fancy, would not dissent from this view. They agree with Mr. J enkins that, since the Affluent Society has come to stay, the over-ridin task of the Labour Party in the next four years is to persuade the e ectorate that a Labour Government~n take over the modtfie form of ea italism which has emerged since 1945, wtthou1 precipitating a crisis, and manage it at least as well as tqe Conservatives. Only if we convince the voter of this, it is argued, will he give us the chance to introduce our Socialist improvements, designed to make the Affluent Society more equitable and just. In fact, the leitmotif of our next general election campaign must be, 'Vote Labour because you will be as safe with Gaitskell as you were with Macmillan'. Implicit in this kind of Revisionism is the theory of the 'swing of the pendulum'. British two-party politics, we are told, function healthily only if the two big parties change places regularly and if neither of them is excluded from power for a long period. Thanks to an intuitive appreciation of this requirement, the British electorate tends -all else being equal to favour a change of Government at each general election. Normally, therefore, the odds are slightly against the party in power and in favour of the Opposition. Applying this theory to the recent general election, the Revisionists conclude that, despite Mr. Macmillan's skill in choosing a particularly favourable moment, Mr. Gaitskell could and should have won, if the confidence of the electorate had not been unnecessarily alienated by the image of the Labour Party as dogmatically wedded to wholesale nationalisation. Shadow Opposition An important corollary of this 'swing of the pendulum' theory is the view that it is the main function of the Opposition not to o w._e -to attack the Government or to crusade for radical causes -but to provide the alternative Governmen(which can expect under normal circumstances to take office after the next general election, without any violent break in policy. The idea of the Opposition as 'the Alternative Government' is a relatively new growth in the Labour Party. Its development was fortuitously assisted by the practice, adopted by Mr. Attlee and expanded by Mr. Gaitskell, of adding to the twelve elected members of the Parliamentary Committee on the front bench some 45 nominated Shadow Ministers and_§hadow Parliamentary Secretaries. In this way a complete Alternative Government was created to face a real Government acro~s the floor of the Commons. As a result, the phrase 'Shadow Cabinet', which at first was, ,quite wrongly, used to describe the executive committee of twelve, elected by the Parliamentary Labour Party in order to conduct its business, has begun to approximate to the truth. More and more the leadership of the Parliamentary Party behaves as though it were a Shadow Administration. Instead of concentrating on a strategy of attack, exposing topical grievances while crusading continuously for three or four clearly LABOUR IN THE AFFLUENT SOCIETY 3 I defined Socialist objectives, the Opposition tends to behave with the cautious t responsibility normally associated with a Government. This shift from the dynamic of opposition to the balanced postures of shadow responsibility is intelligible enough on the assumption that, if nothing is done to upset the normal course of things, the Shadow Cabinet will become the real Cabinet after the next election. If 'the swing of the pendulum' accurately describes the rhythm of British politics, then it is natural that a party out of office should present itself not as an 'irresponsible' Opposition but as a staid Alternative Government. It is also clear that, if it is to play this role, the Labour Party must be prepared to abandon the claim that it is the party of radical change. What it must ~~ become, in fact, is not the anti-Establishment party but an alternati~ea1Jl <[ of mana e e · s"de the Establishment-a party not unlike the Democrats in the United States. And this is precisely the change in the Labour Party image which the Revisionists recommend. 2. The Fallacy of the Swing I I T will be convenient to consider separately the theory of the swing of the pendulum and the concept of the Opposition as the Alternative Government. Taking 'the swing of the pendulum' first, I suggest that, at least since the coming of democracy, it has not operated in British politics. Last October, for example, there was no sign of it. Even -iC the Tories had fought the election badly and the Labour Party had not made a single mistake, there is no reason to believe that we should have seen a change of Government. Mr. Macmillan was able to ride back to office on a wave of .universal. omplacenc , and no thin the :Labour Part said or did bad more than a uite secondar 1m ortance. The most that a /aultless Labour campaign could have achieved was the election of a Labour Government without a mandate for change and based on an inadequate majority. So far from profiting from a desire for a change of Government, the Opposition had to deal with an electorate strongly prejudiced in favour of the status uo. or can we fin any evidence in history for the swing of the pendulum. Those who believe in it usually quote electoral statistics starting from the great Reform Bill of 1832. It is true enough that, if we count years of Coalition in the figures for both Left and Right-wing parties, we reach a total of 71 years of Labour /Liberal rule and 77 of Conservative rule. When we break these figures down, however, we discover that whereas- after a period of Whig rule -the swing of the pendulum did operate in the middle years of the last century, when the middle class were first admitted to power, it was replaced by a very different electoral rhythm as the country moved towards universal suffrage. · -If we take the yearT884-the i ntroduction of universal household uffrage -as our starting point, we find that, in the course of the 75 · · years up to 1959, there have been only two Left-wing Governments with outright majorities, the Liberal Government elected after the Boer War LABOUR IN THE AFFLUENT SOCIETY and the Labour Government elected after World War 11. Moreover, within five ears each of these Left-wing Governments had lost most of its poP\iiar support: at the succeeding election Mr. Asquith and Mr. Attlee oii y just scraped back to office-without effective power. Indeed, the most obvious characteristic of these first 75 years of British democracy has been the success of the Conservatives in retaining working-class support and either keeping effective power for themselves or rapidly denying it to the Left-wing parties whenever they do attain office. There have been two len thy periods dominated by the Tories. The first lasted from 1884 until 1905-with t e exceptwn o e three years of Gladstone's last Government. The second covered the inter-war years, from 1923 to 1940-from the break-up of the Lloyd George war coalition until the formation of the Churchill war coalition. During these 17 years there was almost con tinuous mass unemployment, as well as the disasters of appeasement. Yet the Conservatives retained control-apart from the brief and ill- fated interludes of the two minority Labour Governments, headed by Ramsay MacDonald. Those Socialists who rely on the historical evidence for the swing of the pendulum should pay particular attention to the election of 1935. After the anti-Soci is landslide oi.J931, this was an occasion when the electoral pendulum, if it existed, should have made itself evident. Yet the La our Opposition made only mode t gains and there is no evidence to suggest that the next election -bound to take place before 1940 if the war bad not intervened-would have ended in a Tory defeat. Throughout the 'years of the locusts' a large majority of the British people remained staunchly anti-Socialist. What lesson can we draw from the history of the e 75 years, during which we passed from household suffrage in 1884 to full adult suffrage in 1928? The first thing a Socialist should observe is the failure of ¥ r. Asquitb in 1910 and Mr. Attle~-in 1950 to retain the momentum of chan e. otli ha been given a clear mandate for a big leap forward. Both lost that clear mandate in a very few years. We should learn a lot about the role of Left-wing parties from a detailed study of their failures. Office without Power Meanwhile we can point to the danger into which a Left-wing leadership falls once it surrenders to the temptation to cling to office -without effective power. That was the situation of the Liberals after J9l0 and it was the situation of the two minority Labour Governments. The 1931 debacle, which nearly destroyed the Labour Party, was largely due to the eagerness with which not only Ramsay MacDonald but a majority of the Labour leadership seized the chance of office, even though they knew that, as a minority Government, they had neither a mandate for radical change nor the power to carry it out. It seems to be a rule of British 1 democracy that parties of the Left can retain their strength and enthusiasm through extended periods of Opposition, provided the leadership remains committed to radical change. But that strength and enthusiasm rapidly ebbs away if ever the leadership becomes obsessed by electoral con('iAo•· LABOUR IN THE AFFLUENT SOCIETY 5 ations and succumbs to the temptation to jettison its radical policies for the sake of office. The study of history, in fact, refutes the theory of the swing of the pendulum and suggests that there are two preconditions which must be fulfilled before a Left-wing Government is elected with an adequate majority. (1) The country must have been through troubles sufficiently! serious to destroy confidence in the Tories. (2) The Opposition party must ~ have won the confidence of the voters by opposing the Government, even \ when it was popular, and putting forward its own radical remedies when they were ridiculed by the Establishment. A Left-wing Government is required only where the change must be ra-Ica an mvo ve a repudiation o orthodoxy; and the occasion for it will be a crisis in which the peop e, shaken out of its complacency, loses confidence in its traditional rulers, berates them on the ground that they have betrayed the nation and quite deliberately insists that what the country needs are new men and a big step forward. The Role of Opposition If this, and not the swing of the pendulum, is the true rhythm of British political development, it follows that the prime function of the Labour Party, as of the Liberal Party before it, is to provide an 1 eo ogy for nonconformist critics of the Establishment and a political instrument for interests and-social groups which are denied justice unaer the status quo.1 So far from trying to show that its leaders can manage capitalism as competently as the Tories and reshaping itself in the image of the American Democratic Party, the Labour Party, if it is ever to return to power with a mandate from the people, must remain a Socialist challenge to the established order. A Labour Party of this kind is likely to be out of office for much longer periods than the Tories. I have heard it said that-such an admission is defeatist and that, if it is publicly made, most of the talent and ambition will be forced off the Opposition front bench, since gifted political leaders cannot be expected to be· content to be deprived of office and responsibility for the best years of their lives. I find this a quite astonishing argument. No doubt it is frustrating for those who have held high office to it for years on the Opposition front bench as mere members of a Shadow Administration . No doubt it is true that the effectiveness of our democratic 1 The following anecdote uggest that the rhythm of American politicaldevelopment is much the same. 'Roosevelt told Robert H. Jack on that he bad once uggested that Wilson withhold part of hi reform program for his second term. Wilson replied in substance: We do not know that there will be a econd term, and, if there is, it will be less progres ive and constructive than the fir t. American history shows that a reform administration comes to office only once in every twenty year , and that it forward impulse does not outlast one term. Even if the ame party and per ons remain in power, they become complacent in a econd term. "What we do not accompli h in the fir t term is not likely to be accomplished at all." (When Roosevelt told thi story ~o his pres . conference in the fir t year of his second term, be lengthened the penod of po stble accompli hment from four to eight year .) (The Coming of the New Deal, by Arthur M. Schle inger, Jr. Heinemann, 1960.) LABOUR IN THE AFFLUENT SOCIETY checks on the Executive would be endangered if the electorate began to rate the Labour Party as a permanent minority and to feel that there was no prospect of ever getting rid of the Tory Government. To be effective, an Opposition must be a genuine threat to the Government and that means that it must have a genuine will to turn it out. Nevertheless, those who assert that the sole object, or even the main object, of the Labour Party today should be to regain office seem to me to misconceive not merely the nature of British Socialism but the workings of British democracy. For politicians who e sole object, or even whose main object, is to regain office tend to be opportunists, to hedge and to equivocate in order to appease the voter. The onservatlve arty, with the clear purpose of retaining power for a traditional ruling class, is fully justified in abandoning e tabli bed policies, extricating itself from its promises and betraying the pledges to large groups of its supporter , if by so doing it defends the E tablishment. Appeasement and equivocation are tactics e sential to the great Tory traditio- n by which the British ruling class has adapted itself to changing circumstances. But a Left-wing party which adopts such tactics de troys itself. 3. Opposition or Alternative Government T T HE most important decision we have to take i which role the Labour Party hall play in the three or four year before the next election -a Fighting Opposition or the Alternative Government? Of cour e, the roles are not completely exclu ive. Both the 'Shadow abinet' and tfie National Executive consist of a mixture of Right-wing admini trator. , who feel them elves at home as members of an alternative Government, and Left-wing crusaders, who want to lead a fighting Opposition. During the three years before the general election, it was the Right-winger who mainly had their way in rethinking Socialist policy in formulating the election programme and, mo t important of all, in creating the new image of the Labour Party in the pre s, in radio and on television. Under the per onal leadership and with the personal in piration of Mr. Gaitskell, the ima e of a cru ading Socialist 0 o ition wa uppre ed and the Labour arty preented itself-aSa. humane decen: bu ine -like alternative to the Torie . ince the election the Revi ioni ts have argued that the conce wns-made for the ake of unity to the traditional Left proved fatally e pen ive and that the only way of wooing the modern electorate i to remo e the la t trace of 'Lefti m' and pre ent the Labour Party quite uncompromi ingly a an alternative board of management for the Affluent ociety. These Revi ionist demands have provoked an equal and oppo itc campaign, in i ting that the Labour Party hould break with the E tabli hment and pre ent it elf a a fighting Oppo ition. Now there i a real danger that the net result of thi conflict will be a flabby compromi e, irrelevant to the problems with which the Government, Tory or Labour, will ha e to cope in the next decade. How, then, can unity of purpose be re-establi bed? The truth is that there i no principle by recour e to which the eternal conflict between LABOUR IN THE AFFLUENT SOCIETY 7 Right-wingers and Left-wingers, between administrators and crusaders, between professional ex-Ministers and professional Oppositionists can be settled in the abstract. The only ra a to settle it is to examine the kind of problems we shallface in the 1960s and to ask ourselves what kind of Labour Party will be capable of dealing with them. I believe that, in posing the problem in this way, I shall win cordial assent from Mr. Crosland, Mr. Jay and Mr. Jenkins. Their proposals for changing the image of the Labour Party and eradicating many of its radical traits are all based on certain assumptions about the nature of the post-war world and the prospects of the British economy in the next decade. Both in his book, The Future of Socialism/ and in the occasional writings which have succeeded it, Mr. Crosland has consistently maintained the view that the inherent contradictions in capitalism, which formed the central feature of the old-fashioned Socialist analysis, are now outmoded myths, since we have developed an economy so different from 19th-century capitalism that it merits a new name. So he looks to the United States as t' the model of the new, managed capitalism, in which it is possible permanently to a void mass unemployment and to achieve a steady and satisfactory rate of economic expansion without falling into inflation. Off course, each of these post-war Affluent Societies still shows grave imperfections- here too slow a rate of growth; here headlong growth alternating with indiscriminate restriction; here injustice committed to a whole social group; here an imbalance between the private and the public sector! But none of these imperfections, in his view, is inherent in the system and most of them could be evened out by a sensible, moderate J,eft-wing Government, led by men who both understand the management of modern capitalis_m and feel an urge to remove its injustices and inequalities. A Labour Government, in fact, once it can persuade the electorate to give it an adequate majority, will, if Mr. Crosland's analysis proves correct, be able to plan and control the economy without any radical change in its structure and, in particular, without any drastic enlargement of the public sector. Let me say at once that, if I agreed with this picture of our post-war economies and accepted Mr. Crosland's optimistic predictions about the way the world will move during the 1960s, I should at once accept his political conclusions as well. But with one difference. If I were as convinced as he is that modern capitalism is a workable, sen ible economy and so successful that sooner or later the Communist States are likely to remodel themselves on the American pattern, I should decide that the Labour Party as such had no further role to play and the time had come to reconstruct the Liberal Party as the main alternative to Conservatism. It may be replied that the revival of Liberalism would be a formidable task, but surely it would be no more formidable than the job of persuading the Labour Party that its critique of capitalism and its belief in public ownership as the central tenet of its creed are both entirely obsolete. And that, after all, is what the Revisionists have set themselves to do. 1 Published by Jonathan Cape, 1956. 8 LABOUR IN TilE AFFLUENT SOCIETY 4. The Reaction Against Socialism I I NOW turn to an examination of the basic assumption on which the Revisionists rest their case. Are they right in assuming the stability of the Affluent Society? Are they correct to anticipate -if it is properly managed -a satisfactory rate of economic expansion? Is their confidence justified when they believe that the contnidtctiOiiS of pre-war capitalism have been removed? Or does our new post-war capitalism contain within it new contradictions, which cannot be resolved so long as the 'commanding heights of the economy' are privately owned and controlled? I realise, of course, that the optimism of the Revisionist analysis i shared by the vast majority of the opinion-makers throughout the Western world. Most of them, indeed, are reluctant to admit the strength either of their war-time fears that peace would bring a return to mass unemployment or of their post-war sense of relief as, year by year after 1945, the 'inevitable' slump was postponed. At the end of the war, even John Maynard Keynes himself assumed that the American economy would drift into a crisis that would probably engulf Britain as well. In the United States, where fear of unemployment is much less acute, uncritical confidence in free enterprise was rapidly restored. In Britain, on the other hand, this swing of opinion away from Socialism back to free enterprise was postponed during the period of office of the Attlee Government, who were able to convince the electorate that they had averted a return to unemployment by the application of Socialist planning and controls. Actually the Labour Government did very little planning, in the strict sense of that word, i.e. the settling of social priorities in terms of a long-term plan. True, they transferred to public ownership a number of basic industries and services and this enabled them to control investment in the newly created public sector. But, so far as over-all planning is concerned, all the Attlee Government did was to retain the cumbersome system of wartime controls and apply it -not unsuccessfully -to the increase of exports, the prevention of a post-war collapse of agriculture, the stimulation of private investment and the maintenance of full employment. Inevitably, as the war receded into the past, these wartime controls became more and more unpopular; even worse, they became more and more irrelevant a wartime shortages disappeared and the terms of trade unrexpectedly improved. Already by 1950 the Attlee Government was unertain whether to liberalise the economy or to substitute a new system of Socialist peace-time planning for the war economy it had taken over in 1945. The irrelevance of wartime controls, however, wa not fuJly realised until after the Tories just scraped home in 1951 and proceeded to 'set the people free'. In the 1951 election, the Labour Party piled up the biggest popular vote in its history, largely as the result of predicting that the return of the Tories would lead not only to war but also to mass unemployment, and it was the falsification of these predictions that made the British electorate react so violently against nationalisation. And so LABOUR IN THE AFFLUENT SOCIETY when the Election came in 1955, Briti h public opinion had swung from a fatuous pe simism about the prospects of We tern capitalism into an equally fatuous complacency. Throughout the 1950s that mood persisted. Less than a decade of expanding prosperity has been sufficient to erase from the voter's mind the doubts and anxieties about Western free enterprise which were still o powerful when the war finished; and to engender a complacent optimism which dismisses nationalisation as an obsolete concept, with no relevance to the second half of the 20th century. It is worth noticing, however, that these bland assumptions are challenged as oon as one leaves the North Atlantic area. Whatever doctrinal differences there may be between the Communist of Russia and of China, of Poland and of Czechoslovakia, they all agree on the premise that, outside agriculture, old-fashioned nationalisation i the prerequisite for the kind of national planning nece~ary to achieve a balanced economic development. The Communist Achievement Which of these as umptions, the Western or the Eastern, is justifit.;u by the facts? The best judge , surely, are the leaders of the uncommitted peoples. Though their preference may be for the Western way of life, they have little doubt who, in the la t decade, ha been winning the peaceful competition between East and West. They can see that, in a Western democracy today, life is far freer and far more comfortable for far more of the citizens than ever before in the history of the human race. Given a free choice between living in capitalist West Germany or Communist East Germany, for example, a majority of Germans opt for the We t. Judged in terms of that individualistic 'pursuit of happiness' which the American founding fathers laid down as the aim of their Republic, Communism is still an inferior way of life compared to that of the Affluent Societie of the West. But this does not alter the fact that, in terms of military power, of industrial development, of technological advance, of mass literacy and, eventually, of mass consumption too, the planned Socialist economy, as exemplified in the Communist States, is proving its capacity to outpace and overtake the wealthy and comfortable Western economies. What strikes me about the Revisionists i their parochialism. Their eyes are so firmly fixed on the mood of the British electorate, the tastes of Western consumers and the problems of the North Atlantic area that they have scarcely noticed that the enormous lead held by the West in 1945 is being narrowed by two factors. The fir t of these factors is the contrast between the economic use of resources possible under the planned e onomies of the East and the wastefulness of the artificially induced obsolescence which is the motive force of our Affluent Societies of the West. The second reason why the Communists are overhauling us is the fact that whereas, in their planned economies, inflation can be brought11under control by planned income distribution, it is still the scourge of our managed Western capitalism. Reading the writings of the Revisionists, however, one would hardly be aware that the combination of these two factors has already set in motion a historic shift m the balance of world power which may well, LABOUR IN TilE AFFLUENT SOCIETY before the 1960s are out, have demonstrated in the most decisive way possible the victory of nationalisation over free enterprise. At first the technological and economic achievements of the Communists were blandly disregarded. Now that it is impossible to deny their reality, three arguments are employed in order to depreciate their importance and allay the alarm they have caused. We are told (1) that, while the 'great leap forward' is natural enough in backward economies, starting on the early stages of industrialisation, this rate of increase is bound to slow down as the absolute strength of the Communist States approaches that of the West; (2) that the Russian sputnik and other achievements in rocketry are the results of quite abnormal concentration of effort, such as a totalitarian State can always make and from which no conclusion can be drawn about the general efficiency of the system; and, finally, (3) that, as living standards improve and education spreads, a new public opinion will be created in the Communist States, with liberalistic demands for extensions of freedom and a shift of balance from production to consumption industries. Provided, therefore, that nuclear war can be a voided, we are assured that we can look forward for the next fifty years to a period of peaceful competition, in which the intrinsic differences between Communism and Western capitalism will become less and less marked as the backward Communist nations gradually find fulfilment in a Western 'pursuit of happiness'. 5. A New Challenge I I AM not surprised that, with the change in the balance of power, the fulminations against the wickedness of ommunism and the aggres i e menace of the Kremlin's designs have been replaced, in Washington a well as in London, by such comforting predictions. But what doe urpri e and alarm me is that some Socialist economists should have joined in peddling these complacent illusions. For one of the main objectives of :t fighting Socialist Opposition must be to expose the false assumption of our Affluent Society and so force the British people to face hone tly the challenge that confronts them. Far more than the revision of its constitution or of its electoral programme, the Labour Party needs today a new Socialist critique, applied both to the Western and to the Eastern economies, which would enable us to foresee and prepare for the 'creeping crisis' that will confront the West before the end of this decade. Britain's Special Danger -The Common Market We can be sure that this crisis will not repeat the pattern of the 1930 and present us once again with spectres of mass unemployment and underconsumption, spreading from the United States to engulf the whole world. Indeed, we hould be wise to assume that, in the kind of Affluent Society which is now common to Western Europe and North America, the ma se will from now on be provided with an ever wider choice of con umer goods-but only at the co t of neglecting each nation' long-ter-m interests LABOUR IN THE AFFLUENT SOCIETY 11 scamping vital public services and imposing gross injustices on the weaker sections of the community-particularly upon the sick and the old, who rely so heavily upon State benefits. Unfortunately Britain is likely to prove the weakest member of the Western community, since the inflation and over-consumption inherent in the Affluent Society are aggravated in this country by the deep conserv-1 atism displayed by both sides of industry. The employers' insistence on quick profits and the demand for annual wage rises forced upon the unions in a free-for-all economy have combined to keep capital investment down to a dangerously low level. As a result, this country, in the race for higher productivity, has not merely fallen far behind Russia but has been beaten by Western Germany, France and the United States. Moreover, our foreign trade is now seriously threatened by the emergence of the Common Market, whose threat has been consistently underrated y successive Governments. Squeezed between three giants -the United States, the Common Market and the Communist bloc -there is a risk that, while the rest of the world is improving its material conditions, the British people may suffer an actual cut in their living standards.1 How can a people as politically mature as the British be so blind to these dangers? How can the electorate give a third vote of confidence to the Conservative Party, which has so consistently sacrificed long-term national interests in order to provide short-term improvements in living standards? No objective observer will deny that, since 1951, there has been a scandalous neglect of many of the essentials of a healthy community -capital investment in industry, pure and applied scientific research, technological training, the expansion of higher education, the extension of hospital services and improved retirement pensions. Public connivance in this neglect has been obtained by two methods. (1) A mass demand for profitable\ but inessential consumer goods and luxuries has been stimulated by extravagantly expensive mass advertising and satisfied at the cost of the public services, but at a satisfactory rate of profit to private industry. (2) The commercialised media of mass communication have been system-~ atically used to dope the critical faculties which would normally have been stimulated by the improvement of popular education since 1945. By the continued application of these methods it may well be possible to 1 Anyone who thinks these statements too gloomy should remember that Germany, France -and even the much poorer Italy -are devoting a larger share than we are of their national income to production investment and increasing their industrial efficiency much faster. Whereas our output since 1953 ha increased by 28 per cent. theirs has increa ed by 70 per cent. The inferiority of our economic performance to that of the Soviet Union is even more striking. Russian production per head i likely to surpa s ours in the early 1960 , and that of the U.S. by the late 70s. Moreover, a large part of our affluence during the 1960s was due not to our own efforts but to the cheapening of our import . A 10 per cent. worsening of the terms at which we exchange our industrial exportfor food and raw materials would be sufficient to condemn u to material stagnation. Nor hould it be forgotten that Rus ia, owing to the very high cost Gf producing food and raw materials at home, may well enter the e market and tart exporting manufactures in order to import food and raw material . Byforcing up the price of ugar, meat and maize, he could benefit herself and the e producer of raw materials at qur expen!e, I ABOUR IN FLU NT 0 I TY keep the Briti h people compl cently apathetic, while the ocial and m r, 1 inew of the national organi m are rapidly weakened by fatty degener ti n. What will finally confront u a a re ult of thi decline will not be a return of the ma unemployment of the 1930 but a hrinking f th frontier of democracy a the world balance of power hift and the uncommitted peoples of A ia and Africa accept the economic aid and p Iitical leader hip of the ommuni ts in the moderni ation of their communitie . If the Kremlin were manned by Cold Warrior determined to overrun the West by a di play of aggres ive brinkman hip, the decline of Western power which we are now witne sing might well re ult in a erie of internati nal cri e . In terms of military trength it i now within the capacity of the Ru ian and Chinese Communists to force a showdown on such issues a. Berlin, Persia and Formosa and to confront the We tern power with a choice between nuclear suicide and a serie of Munich-type surrender . ommitted to the defence of a whole serie of po ition which have been rendered indefensible now that we have been overtaken in the nuclear arm race, we could do little to protest if the Ru sians were barbari enough to call our bluff -by proceeding to mop up three key po ition which we now hold only by the tolerance of Mr. Khrushchev in We t Berlin, Quemoy and eheran. By igning a peace treaty with the a t German , in tiga ting a revolution in Persia or providing the hinese with nuclear weapon , the Ru ian could now make e eh of the e p itions untenable. Why We Are Losing o one can ex lude the pos ibility of a erie of urrender of tbi. kin . Ne erthele , I am not n inced that thi i the m in anger v hi h th We t now face . It eem to me probable th t the ommunisL ha\ t k n our mea ure fairly accurately. Unlike , talin, hru hche probabl ciates that the only thing which can rally the We t and f r e it t m bih it trength is a repetition of the kind of trong-arm action which w a'' in the Berlin blockade and the attack on outh Korea. Jn an ctu 1 war. or under direct threat of military aggre ion, th Affluent octetJe f the We t can be per uaded to cut ack their o tentatious p nding and pt degree at lea t of nation 1 planning and internati nal c -operati n. Though Mao T e-tung ma b tempt d to follow a talinite line, it eenn to me unlikely that Khru hchev will commit the mi take of aving the We tern power from the comfortable proce of peace-time degeneration n which the have now begun. or the Kremlin is now c nvinc d th t th nly thing whi h ould pr ent the ultimate ictory of world mmuni m j..., nucle r w r. Th ir determinati n to pr cti e pe eful c i ten e, ther f r . i ign not of weakne but of c nfidenc . Wh n they h 11 nge u l di rm immediate! and enter into p aceful mpetition, the d be ·nt e they are ure th y will win the cont t. Whi h y tern i e t equipp d for r pidly moderni ing th un erde el ped territorie r i ing their li ing tand rd , nd helping t provi educ tion the e tern ffiuent iet r tern mmuni m'! r mlin i ure th t in the our e of the n t h ent ve r , the orth LABOUR IN THE AFFLUENT SOCIETY Atlantic area will become a prosperous backwater, while vast areas of Asia, the Middle East, Africa and, finally, South America -which at present still accept some of our ideals of freedom and still look to us for assistance-are absorbed into the Communist bloc. Recent history supports their confidence. Anyone who suggested ten years ago that the new Aswan dam would be financed by Russia and constructed by Russian engineers would have been dismissed as either a fellow traveller or a defeatist. Even five years ago it would have been difficult to take seriously the prediction that a Cuban Government in 1959 would be entertaining Mr. Mikoyan and considering the possibility of buying Russian arms with which to defend its freedom fron1 mainland interference. The fact that the e two 'absurditie ' have become sober truth illustrates the hift in the balance of power, and they will be followed throughout the 1960s by even more humiliating examples, unles we are prepared radically to transform the nature of our Affluent Societies and, in particular, their economic relations ith Asia and Mrica. It has often been stated that the whole future of Western freedom depends upon the amount of aid which the Western democracies are prepared to give to the Indian nation in its effort to modernise and industrialise itself while retaining the political forms of Western democracy. What is not so often stated is that the chances of the Indian Government succeeding in this attempt depend very largely upon the role which the nationali ed industries are permitted to play in the Indian economy. If the price of large-scale Western aid is that the Indian Government should increase the proposed size of the private and decrease that of the public sector of the economy, then the aid we give may actually decrease the chances of success. Political democracy, in fact, can only be assured in this overpopulated and underdeveloped sub-continent in the kind of Socialist planned economy which would be condemned by Top People in London, W a hington, Paris and Bonn as totalitarian. Nor can we assume that public opinion in these countries will always prefer Western democracy to the Communist way of life. For whereas we can still claim that life in Western Europe is much more comfortable and much freer for the mas es than it is in Eastern Europe, the same is not true when we compare Eastern Europe with, for example, the Middle East or South East Asia. Many Poles who visit both London and Moscow are deeply envious of our way of life; but an Iraqi, Egyptian, Burmese or Siamese who makes the same two-way trip could reach a rather different conclusion. Instead of preferring Western freedom to Communist totalitarianism, he may well feel he has more to learn in Moscow, East Berlin and Prague than in Washington, London or Bonn about the task of rapidly modernising a backward country and raising the living standards of the masses. The luxuries, gadgets, entertainments and packaged foodstuffs which so many workers enjoy in our Affluent Societies may strike him as irrelevant and even vulgar and immoral, compared with the solid respectability of the Communist way of life. It is, indeed, a most dangerous assumption that, even if they could be given a truly free choice between the 'Roundhead' standards of Communist collectivism and the 'Cavalier' luxurie · of Western individualism, all the peoples of Asia and Africa would LABOUR IN THE AFFLUENT SOCIETY be bound to prefer our Restoration. And, anyway, such a free choice will not be given them. In the next twenty years the big decisions will be taken in these countries not by mass electorates but by eager, educated elites, to whom the enthusiastic( certainties of Communist dogma make a much stronger appeal than the sophisticated scepticism of our Western democracy. It is possible, therefore, to predict with a good deal of assurance that, until and unless there is a fundamental change in the structure of our modern managed capitalism, the peaceful competition which has now begun between East and West must result in a series of Communist successes. Good Intentions Not Enough True enough, the peoples of the West have recently recognised the evils of colonialism and at long last begun to realise that the principles of democracy-equality as well as liberty and fraternity-must be applied between nations as well as within each nation. In Britain, for example, there has been national approval for the decision of the Conservative Government to abandon Empire throughout Africa and to make it clear that the white settler cannot rely on British support in maintaining hi ascendancy. But good intentions -even mass good intentions -are not ufficient. What matters in relations with Asia and Africa is not what ordinary people think and feel but what economic policies our Governments adopt. Our Western way of life may seem tolerable to the nonpolitical worker in the British or American motor-car factory. It may at first sight seem heaven on earth to a visitor from East Germany or Poland. But the colonial peoples are bound to view it more su piciously, and they will regard us as enemies if our Governments decide that our economic relations with those countries should for the most part be conducted by private financial and business interests, who e ole concern it must be to buy cheap and sell dear. It is not sufficient merely to wind up colonialism, in the sense of ending the direct administration of these territories by European officials. What is even more important is to end indirect colonialism, and that can only be done by subordinating all private enterprise in our trade with these ex-colonial areas to strict public control. Until that is done, no British Colombo Plan or American programme of economic aid, however ambitious, can halt the advance of Communist influ~nce in Asia and Africa. This advance has already begun and will proceed even more rapidly in the course of this decade. How will the Western people react when they are confronted with what will eem to them a hameful and inexplicable eries of diplomatic rever es and withdrawals? There are some who will claim that public opinion will not be tirred out of its complacency. Why should anyone in Du seldorf, Birmingham, Montreal or Detroit be disturbed by the shrinking of Western world influence, provided his own standard of living is not affected? If the peoples of the North Atlantic area can be as ured, they ay, of their material well-being and national ecurity, they will be only too ready to gi e up the 'white man's burden' and leave hi civili ing mis ion and world leader hip to Moscow and Peking. LABOUR IN THE AFFLUENT SOCIETY Personally I have sometimes been tempted by the arguments for a Little England policy, and I have never doubted that there are a very large number of Americans who would also be content with a 'Little America' policy. It is by no means irrational to hold the view that our Western civilisation has had its day, that the cultural leadership of the world i rapidly moving eastwards and that our role in the next hundred years is to be not the sun in the centre of the system but an unambitious outer planet, placidly rotating in the reflected light of the new, Communist world civili ation. Nevertheless, it would be self-deception to base our policies on the assumption that the Affluent Societies of the West can so easily opt out of their world re ponsibilities and surrender leadership for the sake of material comforts. Once Again -Guilty Men It is far more likely that, when the trend of world development becomes clear and the Communist victories are undeniable, a deep revul ion will set in. Gradually our peoples will be shaken out of their comfortable affluence. Gradually their eyes will be opened to the threat to democratic values which for years has been concealed from them by Governments systematically appeasing the private profit-makers at the cost of public service and public enterprise. And one day anger will replace complacency. There will be a return of that sense of betrayal and that readiness to repudiate the 'guilty men' with which the British people, in November 1938, awoke to the crimes of appeasement. In those days, however, once the spell was broken, the Churchillian way of salvation was blessedly clear. In 1940 Britain had to make good the damage caused during the 'years of the locusts' by fighting alone and so giving the Americans and Russians time to win a war that need never have grown great if we had dealt with the disease in good time. In the nuclear age, however, war will provide no solution of our crisis. We shall have to drag ourselves out of the comfortable sloth of the 1950s -without blowinR the world to pieces. Churchill could enjoin a policy of blood and weat and demand a suspension of free enterprise and the rights of property in order to produce the weapons with which to defeat the enemy. In the crisi which lies ahead, we shall need a leadership that enjoins ju t as arduous a sacrifice of material comforts and insists just as sharply on the subordination of private property to the national interest. But this time there will be no enemy to fight and the object will be to make the community capable not of winning a war but of holding its own in a peaceful competition, which will decide whether the pattern of World Government will be democratic or totalitarian Socialism. In 1940 Mr. Churchill asked only for a temporary subordination of private profit- making to the public interest, and five years after that war was over he himself headed the Government which reasserted the primacy of the private over the public interest. This time the 'commanding heights of the economy' must be captured and held permanently for the public interest. It is, I believe, for this creeping crisis of the 1960s and 1970s that the leadership of the Labour Party should hold itself in reserve, refusing in any way to come to terms with the Affluent Society warning the electorate LABOUR IN THE AFFLUENT SOCIETY of the troubles that lie ahead and explaining why they can only be tackled by ensuring that public enterprise dominates the whole economy and creates the climate in which private enterprise works. By starting the job now, when the public still retains its blind trust in the Tory Government, the Labour Party may incur a temporary unpopularity, but it will be creating the conditions for gaining the confidence of the electorate when its harsh predictions come true. * * * 'When its predictions come true? By what right,' it may be asked, 'can the future be anticipated with such gloomy confidence? Is not the Sociali t who bases his political strategy on this kind of prediction falling into the mistake of those Marxists who discredited their theory of capitalism by demonstrating that its inherent contradictions would inevitably lead to its breakdown?' It would be folly indeed if we failed to learn from this sad example. But, as Aneurin Bevan and John Strachey have pointed out in two remarkable and sadly underestimated books/ the failure of Marx's predictions was largely due to his rigid assumption that capitalism could not modify itself. What he failed to recognise was not only that the entrepreneurs' survival instinct would stimulate them to evolve a modern, managed capitalism, but also that democracy was a dynamic force in its own right. Mr. Strachey's greatest contribution to Socialist thinking has been his subtle and perceptive demonstration of the revolutionary changes in the economy produced by the workings of Western democracy. So far from remaining a mere superstructure, wholly conditioned by economic forces, our democratic institutions have revealed a potent power of social and economic change and in so doing have resolved one of the inherent contradictions that Marx attributed to capitalism. On his theory, the capitalist system must break down owing to an ever growing unbalance between an exaggerated production of capital goods and an equally exaggerated dwindling of consumers' demand. But in fact, as a result of democracy, the development has gone in exactly the opposite direction, so that now the prevailing characteristic (which is also the greatest weakness) of the Western economies is that they consume too much of their resource and reserve too little for public services and capital development. Ironically enough, the nations which do show the true Marxist . contradictiqn are those of the Communist bloc, where consumption is nearly always starved for the sake of rapid capital development. The actual developments of the last hundred years, therefore, have completely falsified Marx's central prediction. But the lesson we should draw from his failure is that which both Mr. Bevan and Mr. Strachey draw. Marx was not wrong to insist that Socialists must base their poli y and strategy on the best available analysis and anticipation of how the political economy will develop. The errors he made and which we must seek to avoid were, first his refusal to admit that in social change politics may be as dynamic a force as economics; and, secondly, his failure to In Place of Fear, by Aneurin Bevan, Hejnemann, 19~2. ContemporaryCapitalism, by John Strachey, Gollancz, 1956. lABOUR IN 1HE AFFLUENT SOCIETY foresee the strength of the survival instinct and the powers of adaptability which would be revealed by the Conservative forces that control capitalism. These forces, as we now know, are ready to accept even radical <.:hanges, uch a those recommended by Keynes, in orders to preserve their power. As a result, just a hundred year after the writing of Da · Kapital, the We tern world has resolved the central contradiction of prewar capitalism. But this ha only been achieved at the cost of producing a new and equally dangerou contradiction. This new contradiction can be resolved, as its predece sor wa re olved. Indeed, the main function f the ciali t in the 1960 i to explain how this can be done, and the main function of the Labour Party i to do it. For once again it is perfectly po sible to cure what look at fir t sight like an inherent and in urable weaknes in our economic ystem by political action, designed to adapt our democratic in titutions to the needs of the time . 6. Capitalist Contradiction T T HERE is an urgent need for political economists and sociologists to follow up Profe or Galbraith' brilliant initiative by driving his analy is to it real conclu ion and also by describing in detail the Briti h ariant of the Affluent ociety.1 All I can hope to do here is to li t in ummary form the main features of the central contradiction that now confront us; to indicate why that contradiction, unless it is re olved, will inevitably make us the losers in peaceful competition with the East; and finally, to suggest the measures necessary to get Britain out of her special 1mpasse. Our analysis must start by noting two central features -one a strength, the other a weakness -which all the Western democracies, despite the differences between them, have in common and which separate them from Communist governments. The strength of the democracies is the existence of civil and political liberties as organic parts of the State structure. Their weakness is the complete failure to subject irresponsible economic power to public control. One of the most alarming symptoms of Western decadence i the modern tendency to treat the liberties of the citizen as a 'weakness' of democracy and to explain the succes es of the Krernlin by pointing to the 'obvious' advantages any Communist leader has as the unquestioned head of a totalitarian State. The reverse, of cour e, i true. All the weaknesses of ommunism derive from the crude brutalitie of the one-party State and the absence of the institutions of civil liberty -an independent judiciary, an independent civil service, independent organs of public opinion and truly voluntary organisations, including trade unions. Those who imagine that Ru sian Communi m would be weakened if Khrushchev 1 This work has already been begun by Dr. Thomas Balogh. 1 should like t acknowledge here the debt I owe not merely to hi occa ional writing but even more to the stimulu of his conver ation. I have also profited greatly by reading, in advance of publication, some chapter of hi forthcoming book The Political Economy of Co-existence (Weidenfeld and Nicolson, 1960). LABOUR IN THE AFFLUENT SOCIETY succeeds in liberalising the system and encourages the growth of these free institutions are under a grave delusion. If the Russian Communists could really add these democratic strengths to the strength of a Socialist State which has already conquered irresponsible economic power and subjected it to public control, they would make their system irresistible. Planning -the Strength of Communism What enables the Communist States to achieve their successes -despite all the inefficiences and brutalities perpetrated by their totalitarian rulers -is the fact that their governments possess (1) the power to take vital decisions and the knowledge on which to base them, and (2) the political and social instruments by means of which those vital decisions can be put into effect. A Communist government, for example, can allocate the national resources according to a system of priorities, allotting so much to producer goods, so much to consumer goods, so much to health, education, defence, thereby reducing the hazards of investment and accelerating development. In contrast, the government of a Western democracy, even under the post-war system of managed capitalism, cannot even begin to draw up a national resources budget of this kind, far less put it into effect. Whereas it can impose its will on the small public sector of the economy, it has only the crudest instruments for regulating the development of the dominant private sector. This is the reason why growth is retarded in comparison with that achieved by the Communists. But the difference goes even further. The motive forces which regulate the development of a Communist econamy are the five-year plan and the instruments for putting it into practice. The motive force which drives a modern capitalist economy is neither the Government nor the Government Departments but the decisions of those who direct the great combines which now dominate the private sector. In dealing witb the oligopoiist , the Government in Britain today is in a position not unlike that of the luckless King John, when confronted with his feudal barons. Like him, our modern Executive has been constrained to concede a Magna Carta, which lays down the rights not of the ordinary citizen but of an oligarchy, deeply divided against itself but united in its determination to resist domination by the political Executive. More and more decisions which determine our development have been removed from Westminster and Whitehall. Then where are they taken? The truth is that normally they Jare not taken at all and the determination of some of the greatest issues of our national economy is left to the free interplay of the great concentrations of power. Occasionally, however, a decision is forced upon the Government by the pressures of the democratic system. If the absence of national planning threatens serious injury to organised labour, to the farming interests, to the Catholic Church or to any other of the well organi ed and powerful pressure groups that operate in our ociety, then the Government may be forced to intervene -even to curb the activities of the oligopolists. An example of this process is to be found in the Government's reactions to local unemployment. Strictly speaking, a modern managed capitalism LABOUR IN THE AFFLUENT SOCIETY 19 is not harmed by local unemployment: indeed, the competition on which it depends may be discouraged by governmental action which seeks to bring jobs to the worker instead of compelling the worker to move to the job. Since, however, the Briti h electorate is still quite unusually sen itive to the threat of unemployment, the Government has found it expedient to induce prosperous industries to move into hard-hit areas -Merseyside and the Glasgow area, for example. It is worth noticing, however, what happens in such cases. There i no question of the Government ordering Fords or Vauxhalls or the Rootes Group to establish their new factories in a particular area. It might, like King John, like to do so, but it lacks not only the will to give a command of this kind but the instruments with which to put it into effect. So what happens is a long-drawn-out negotiation between the Mini ter and the oligopolists in question, after which they graciously agree to tretch a point and help the nation-provided the Government gives them a suitable reward. This explains one odd contradiction in the Affluent Society. The ordinary citizen feels that he is living in a community where the State grows ever more powerful, remote and arbitrary; and, from his point of view, this description is correct. But, in its relations with the oligopolists, the 'all-powerful' State behaves very differently, negotiating agreement instead of issuing edicts. The ordinary citizen must pay his taxes \ or go to pri on; the oligopoli t negotiates an annual tax agreement, in which he can often et his own terms. A hundred years ago, when the scale of industry was small, it was at least rational to argue that, by reducing the power of the State over the economy and substituting the working of free competition for governmental decision, a society might develop more healthily and achieve more human happiness than under a paternal and interfering government. But in our age, with its tendency for ever greater concentrations of economic power and ever more centralised control of commercial mass communications, the relationship between free enterprise and individual freedom _..or eo sumer's choice has, as Galbraith shows, become exceedingly remote. Democratic constitutions, therefore, which were traditionally evolved in order to check the power of the Executive and prevent central despotism, are now employed mainly to preserve the irresponsible power of oligopoly from any kind of popular control. The Retreat from Government In his Fabian Lecture,1 Professor Richard Titmuss carried Galbraith'3 analysis of modern oligopoly one stage further by applying it to a ingle and apparently relatively harmless segment of the British economy. He showed how, since 1945, an immense new jungle of irresponsible power I has been created by the growth of pension schemes, stimulated by lavish tax concessions and financed partly by insurance companies and partly by 1 The Irresponsible Society. Fabian Tract 323, April 1960. LABOUR IN THE AFFLUENT SOCIETY trustee funds. Professor Titmuss declared that the creation of these huge pension funds constitutes 'a major shift in economic power in our ociety. It i a power, a potential power, to affect many important a pect of our economic life and our ocial values in the 1960 . It is power concentrated in relatively few hand , working at the apex of a handful of giant bureaucracie , technically upported by a group of profe ional expert , and accountable, in practice, to virtually no on .' He showed how these private pension schemes did something to fill the acuum created by the failure of the State to provide an adequate ubistence pension. But he also showed how this mushroom development has created gross inequalities as between those inside and those out ide the chemes. Even worse, it tempts the Government to renege on its re ponsibility for providing security in old age and leave it to Big Busines , at its own discretion, to build up its own 'private-enterprise welfare tate'. As the scale of organisation gets larger and as the concentrations of power grow ever greater, there should be a corresponding increase of public service and democratic control. But in fact what we see is a dwindling role for Government. 'This is retreat from Government', he concludes; 'a retreat into irresponsibility'. At first sight it is surprising that this retreat from Government has been greeted with enthusiasm by the voter in all the countries of the West. When the war ended, public opinion, in North America a well as in Western Europe, still dreaded the return of mass unemployment and wa ready to welcome great extensions of public owner hip, of State control and interference in the private sector and of State provision of social I ervices. Now, fifteen years later, public opinion has turned not only against nationalisation but against extensions of the Welfare State· and mo t of the European Labour movements have either abandoned their Social- i m already or begun to consider the possibility of doing so. The reason for this extraordinary rever al is clear. Together with the rapid movement towards irresponsible oligopoly, there has proceeded a rapid, if uneven, improvement in living standards. Since World War Il, throughout the West, democratic institutions have been used with even greater ucce than before the war to create effective consumer demand. The con tant trade union pressure for higher wages, the success of farmer ' organi ations in extracting huge subsidies from their government , and the favour hown by the woman voter to any politician who promi e to increa e her spending power -these and other factors, when combined with full employment, have obtained huge conce sions for the mas e and given them the feeling that they 'have never had it so good'. The oligopolists, moreover, once they had learnt the Keyne ian do trine, were quick to ee that it wa in their interest to en ure that the volume of private pending was constantly increa ed, while the volume of pub]ic expenditure was kept as low a possible. During the war and the immediate I po t-war years, a gigantic volume of pent-up popular demand for con umer / good , household good , gadget and luxurie had been created. In tead of having plenty of money in our pockets and little to pend it on e e t cheap rationed e ential we all wanted a world in whi h rationing wa replaced by the widest range of con umer choice. And when our n tural LABOUR IN THE AFFLUENT SOCIETY 21 desire to make up for wartime scarcity was further stimulated by enormously expensive and sophisticated adverti ing campaigns and the temptations of hire purchase, the consumer demand welled even further. At the very moment, however when each of u wanted to re-tock our I homes, the community had equally urgent needs for repairing the damage J of war, for building not only the hou e but road and railway , the hospitals, chools and universities and -mo t important of all -for reequipping our basic indu tries. Thu a tremendous conflict developed between the demands of the community and the individual con umer, and between those of the public and private sectors of the economy. It wa a conflict, however, in which victory for one ide wa predetermined. Whether, as was done under the ttlee Government. the attempt 1 was made to exert direct control on the pri ate ector or whether control was limited, a under the T orie to fiscal anctions made surprisingly little difference. For the dynamo which keeps our modern Affluent Society moving is the big consumption industries, particularly the motor-car industry. It is only by permitting a constant increase in the size, profitability and political importance of these industries that an old-fashioned slump is avoided. The pro perity of America, it has been ironically observed, and with it the ecurity of the whole Western world, depend on whether the American people can be per uaded each year to consume ix million new car . If, in any year, that figure fall to four million, there i a sh rp rece ion; if to two million a (non-ornmuni t) world lump. There is one important deduction from Profe or Galbraith' analy i which British Socialists have been extremely reluctant to make. If the health of the Western economies depends on artificially creating an ever more extravagant demand for increasingly unnecessary consumer goods, then the maintenance of public service mu t always take econd place to the satisfaction of private consumer need . or the money to pay for these public services derives from taxation, whose level so long as the private sector dominates the economy, mu t depend on the profitability of mdus ry. ow many schools we can have, how many roads we can build, how much of our resources we can allocate to scientific research -the answer to the e questions depends, under our system of managed capitalism, on the number of golden eggs that are laid by the e oligopolistic geese. The Limits of Fiscal Socialism Theoretically, of course, these deficiencie in the public ervice ould be made good over a period by impo ing taxation heavy enough to rai e all the revenue required. A Socialist Government, it is often argued, would be able to finance the huge extensions of welfare education and other public services to which it is committed by encouraging a much faster rate of development in the private sector of industry and then taxing away a sufficient amount of the profits. This was the policy put forward by the Labour Party at the October election and in the short run any Labour Government would have to attempt it. But experience should have taught us that the run might be very short iadeed. In the Affluent Society no Government is able to give orders to Big Business. After one Budget a LABOUR IN 1JIE AFFLUENT SOCIETY Labour Chancellor who tried to squeeze private industry too hard would soon discover that he was not master in his own house and that there is a relatively low level above which taxation rates, whether on the individual or on the company, are only raised at the cost of provoking ta evasion and avoidance so widespread that revenue is actually reduced. If the I motive force of your economy is the profit-making of arge-scale modern private enterprise, a Labour Chancellor must be prepared to allow very large profits indeed and to admit that the number of golden eggs he can remove is extremely limited. In recent months we have seen remarkable evidence of resistance by Big Business to public spending, even where national security is involved. When faced with clear evidence that the Russians are rapidly overtaking it in the nuclear race, many of us assumed that the Eisenhower Administration would feel itself compelled to allocate enough of the national resources to nuclear warfare in order to keep ahead. No doubt the White House would have liked to do so, but it proved impossible. Although he knew that the present levels of American defence spending would permit the Russians to forge ahead, Mr. Eisenhower has preferred to accept defeat in the nuclear race. As a Socialist, I do not myself believe that, by accepting Russian dominance in nuclear weapons, the Americans subject themselves to any very acute military risks. But the American politicians and Big Businessmen who refused to increase the defence budget did so though they were convinced that they were thereby putting their country in the deadliest peril. Nothing could demonstrate more clearly than this the 'inherent contradiction which ensures that, in our Affluent Society, while the individual grows rapidly more comfortable, the community becomes /even more rapidly weaker and weaker. For the inherent inability of the ' system to allocate sufficient resources for national defence is repeated in relation to education, scientific development, health and welfare services. The price which the modern, managed capitalism pays for avoiding the old-fashioned crisis of mass unemployment is the continuous sacrifice of public service, community welfare and national security to private profit. 7. The Case for Public Ownership ~ rruiAT is why we can predict with matlwnatical certaint{that, as long ..l as the public sector of industry remains the minority sector throughout the Western world, we are bound to be defeated in every kind of peaceful competition which we undertake with the Russians and the Eastern bloc. It is not that our workers are less skilful and energetic, that our managers are less competent, or even that our politicians do their job any worse. The truth is that, whatever our intentions, wishes or individual capabilitie , the nations of the Western world will be unable to strengthen themselves by developing adequate public services until the public sector becomes the dominant sector in our economies. The idea that we can achieve the same ends by leaving the great concerns in private hands and controlling their development from Whitehall is a illusory as the concept that their profits can be taxed to pay for the LABOUR IN THE AFFLUENT SOCIETY Welfare State. We are faced with a sharp choice. Either we accept Affluent Society as we know it, including the limitations on State act and public spending that it implies. In that case there is everything tc said for permitting the Labour Party to die away and building in its I a Liberal Party as an alternative Government within the Establishn Alternatively -if we are not prepared to see the Labour Party wither t -we must be prepared to reshape its policies so as to present an out. Socialist challenge to the Affluent Society and give warning of the co1 crisis. In so doing we should make it unambiguously clear that, iJ are given a mandate, we shall overcome this crisis by deliberately reve the balance of the economy and ensuring that the public dominates the private sector. For only in this way shall we make it possible to ' out a true national resources budget, which strikes the proper ba1 between production and consumption goods and ensure~ that comm1 interests are given their proper priority over individual consumption. Transfer of Power A Socialist programme of this kind will involve transferring gig powers, which are now dispersed among the oligopolists, to the ce Government and the planning authorities which it would have to estal Of course there would be dangers to freedom in this process of subje1 irresponsible economic power to public control. The increased power oJ Executive which Socialist planning must bring will be in danger of deg( ating into the kind of totalitarianism we have seen in Eastern Europe UJ it is counter-balanced by a revival of the challenge which Parliament to make to the Executive. Since the war we have watched a dreary prc by which the House of Commons has been progressively deprived of ef ive authority until it is in danger of becoming one of the ceremonial as.r of the Constitution, alongside the Monarchy and the House of Lords. this draining away of the power of decision which used to resid€ Parliament has not brought an increase of Cabinet or Ministerial autho On the contrary, the power of decision which Cabinet, before the era oligopoly, used to possess, at least within limited spheres, has been stea decreased, until today, as Professor Titmuss has shown, we are witnes: a retreat from Government. Democratic control of the forces which de mine social and political development is steadily declining and with it ability of the nation to act as a nation and of the people to exert a j democratic will. If the West ern world is free, as it certainly is, from terrible evils of totalitarianism, it is the victim of an even more debili ing disease -the emergence of a modern feudalism , which is strangl our democracy before it has had time to grow up. Five years ago I pointed to the danger of this 'new despotism' ~ indicated the dilemma with which the modern Socialist is faced.1 'Since abuses of oligopoly,' I wrote, 'cannot be checked by free competition, only way. to enlarge freedom and achieve a full democracy is to sub' the economy to public control. Yet the State bureaucracy itself is one those concentrations of power which threaten our freedom. If we incre Socialism and the New Despotism. Fabian Tract 298, 1956. 24 LABOUR IN THE AFFLUENT SOCIETY its authority still further, shall we not be endangering the Uberties we are trying to defend?' And I suggested that this dilemma could only b resolved by ensuring that the necessary extensions of public ownership -should be counter-balanced by expanding the constitutional and judicial safeguards of personal freedom; by reviving Parliament's traditional function of controlling and checking the Executive; and by curbing tl;te oligarchic tendencies both in the trade unions and in the party machines. It seems to me that, in the five years since this lecture was published, the case has been strengthened by events. The oligopolists have increased their power; the authority of the Executive has been correspondingly weakened; and the vitality of Parliament has even further declined. That is why I still believe that 'constitutional reform, designed to enlarge freedom and stimulate an active democracy, is at least as important as the extension of public ownership and a redistribution of wealth'. But this is really the subject for a separate study. In this pamphlet I have limited myself to the single issue of Revisionism, as propounded by Mr. Crosland, Mr. Jenkins and Mr. Jay. In my view the kind of Labour Party which they would like to see would fail even in its narrow object of winning the next election. But, much more important, it would be incapable of fulfilling its role as the saviour of our democratic freedoms which may be forced upon it by history before the 1960s are out. What is wrong with the Revisionists is that they misjudge altogether the times in which we are living and, in particular, the stability and strength of the Affluent Societies in which we have lived for under a decade. I am convinced that the kind of Keynesian managed capitalism which has evolved since the war is intrinsically unable to sustain the competition with the Eastern bloc to which we are now committed. Of this inability we shall see some devastating examples before the end of this decade. I believe that the choice with which the nations will soon be confronted will be between a purely authoritarian regime (there is an ominous example in de Gaulle's France today) and a Labour Government which undertakes a radical Socialist reconstruction, while preserving civil liberties and reviving Parliamentary democracy. But we shall not get a Labour Government of this kind unless we start warning the people now of the coming crisis and preparing the party for the tremendous test that lies ahead . •