the limits of tawney's ethical socialism: a historical perspective on the labour party and the...
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The Limits of Tawney's Ethical Socialism:A Historical Perspective on the LabourParty and the MarketJim TomlinsonPublished online: 06 Sep 2010.
To cite this article: Jim Tomlinson (2002) The Limits of Tawney's Ethical Socialism: A HistoricalPerspective on the Labour Party and the Market, Contemporary British History, 16:4, 1-16, DOI:10.1080/713999479
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The Limits of Tawney’s Ethical Socialism:A Historical Perspective on
the Labour Party and the Market
JIM TOMLINSON
This article attempts to place Tawney’s ethical socialism in the broad context of thedevelopment of (Old) Labour’s traditional ideological hostility to the market. Itsuggests that a key period in the solidification of that hostility was the 1920s, and thatTawney’s ideas played an important role (along with Fabianism) in entrenching anti-market attitudes in the party, defeating the more nuanced approach of Hobsonian‘liberal socialism’. The core of the article is a critique of Tawney’s approach to themarket, especially his failure to deal with the key ‘pro-market’ argument of thebenefits of the operation of the invisible hand. It also argues that Tawney’s hostility tomarkets was allied to a wholly negative and unreasoning rejection of the developingfield of economics.
The accession to power of New Labour has led to the history of the partybecoming a focus of attention as the new leadership of Labour sought todefine itself against alleged features of the party’s past. Central to theheritage that is rejected is Old Labour’s principled hostility to the operationof market forces. The new Clause Four celebrates those forces in a waywhich is clearly at odds with the tenor of past constitutional andprogrammatic statements.1
This New Labour version of party history is, of course, tendentious,designed to serve current political purposes. In stepping back to assess itshistorical accuracy we need to clearly distinguish between the policies andthe ideology of Old Labour. In policy terms Labour (especially when ingovernment) has accommodated itself to markets to a striking degree. Forexample, for all the central focus on planning as the core of the Attleegovernment’s beliefs, as developed in the 1930s and shown clearly in the1945 manifesto, in practice once in power after 1945 market forces were,however reluctantly, slowly re-instated across most of the economy.2 Asimilar pattern is evident for the Wilson government in the 1960s. Thatgovernment was strongly committed to its own ‘third way’ betweendeflation and devaluation as ways of running the economy, centred again onnotions of economic planning, albeit with a much more ‘positive’, growth-
Jim Tomlinson, Brunel University
Contemporary British History, Vol.16, No.4 (Winter 2002), pp.1–16PUBLISHED BY FRANK CASS, LONDON
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oriented emphasis than the austerity and controls associated with 1940splanning. As in the 1940s, commitment to these ideas reluctantly gave wayto more market-oriented policies, not only symbolically evident in thedowngrading of the National Plan, but substantively in the mostinstitutionally innovative policy of the government, the selectiveemployment tax, and also in the devaluation itself. Both these policies wereabout using market signals to shift the allocation of resources.3
But the gap between aspiration and policy brings out the extent to whichLabour was indeed ideologically committed against market forces throughmuch of the post-war period. In this qualified sense the New Labour storyis accurate – Labour has historically been a party committed to a significantextent to overriding market forces, usually in the name of something calledplanning. Planning has had no simple meaning in Labour’s thinking; indeed,it is precisely the recurrence of that term with variations in precise meaningthat brings out its ideological role as signifying a broad, and often ill-defined, hostility to the market.
The general aim of this article is to ask where that ideologicalcommitment came from. The normative assumption is that the gap betweenideology and policy has been damaging to Labour, because it has involvedchanges in policy direction, and these in turn have provided a powerfulbasis for many of the accusations of ‘betrayal’ that have bedevilled theparty’s history.4 The central contention made here is that Tawney’s ethicalsocialism was an important but problematic underpinning to thatcommitment. The next section sets the 1920s context from existingliterature, followed by the core arguments concerning Tawney’s attitude tothe market. The final section discusses Tawney’s relationship to theemerging field of economics, before concluding with some speculation onsome wider issues involved in the article’s arguments.
For and Against the Market
While it is clear that 1918 marks a constitutional and organisationalwatershed for Labour, the extent to which it was also an ideological andpolicy turning-point has been disputed. Oldfield saw the party’s enthusiasmfor planning being established in 1918, but others, most recently Toye, haveseen the 1930s as marking the real beginning of both a consistentideological commitment to planning and policy-making deriving from thatcommitment.5 This latter view seems most convincing; the initialenthusiasm for planning brought about by the perceived success of theBritish and German war economies seems to have diminished in the whollydifferent climate of the early 1920s. But if the key role of planning inLabour’s approach to the economy was not established until the 1930s, this
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role was predicated on a pervasive distrust of market forces which onlysolidifies in the 1920s. It was in that earlier decade that attitudes to themarket were established as both core to the doctrine but also the ‘ethos’ ofthe party. Of course, the arguments of the 1920s drew on a long history ofdebate; anti-market ideas were powerful formative influences in the LabourParty.6 But in the 1920s, after great dispute, anti-market positions becamemuch more deeply entrenched as a result of the specific party alignment ofdoctrinal forces in those crisis years.
In seeking to understand Labour’s economic policy debates of thatdecade, and the eventual triumph of anti-market views, Thompson hascontrasted the arguments of J.A. Hobson with those of the Fabians, makingclear how inaccurate it is to suggest, as does Elizabeth Durbin, that ‘Hobsonrejected market economics’.7 He sets out three main areas of disagreementbetween the two about the desirability of allowing market forces a majorrole in shaping the economy.
First is the Fabian hostility to markets grounded on notions about thewaste created by competition, both from the replication of activity incompeting units and the inevitable element of speculation involved inproducing for markets. This attitude led to Fabian writers showing a notableenthusiasm for ‘trusts’ and monopolies, which were seen as embodyingefficient production methods, but leading to unacceptable patterns ofincome distribution. Hobson’s objection to this line of argument was that,while agreeing that monopolies, where present, should indeed benationalised for distributional reasons, they did not represent, as Fabianssuggested, the pinnacle of productive efficiency. Rather, they should beviewed as a passing phase in the evolution of capitalism, linked tohomogenous demand and mass production, to be displaced by smaller scaleproduction as incomes rose and consumer demands became moredifferentiated. In this future phase competition between smaller units wouldbe both technically efficient and desirable.8
Second, Fabians put little store by the desires of consumers. For them,consumers were likely to be ill-informed about their ‘true’ needs, misled byadvertising, and in any event consumption was an over-rated human activity.Hobson, on the contrary, saw consumers’ desires as more legitimate, and inparticular saw consumption as an agent of aesthetic and moral advance, withmore sophisticated and differentiated consumption demand feeding back intoless mechanical and more craft-based forms of production.9
Third, the Fabians assumed that the ‘motive of service’ would be all theincentive needed by producers under a socialist regime, while Hobsonregarded such assumptions as Utopian, and believed that monetaryincentives would play some role in any functioning economy. The market,he argued, has positive virtues, bringing constraints, discipline and
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incentives to bear on individual behaviour, and along the way imposing anorderly basis of co-operation.10
These arguments underpinned the debates between Fabians and Hobsonin the 1920s, debates from which the Fabians emerged successful. Inparticular, these Fabian arguments were an important element in the defeatof the main policy challenge from the Left, the ‘Living Wage’ proposals ofthe Independent Labour Party (ILP), which were grounded in an expansionof working-class consumption as central to a strategy of macro-economicrevival and the reduction of unemployment. The search for new directionsin economic policy was in significant part stymied by these Fabianpredilections.11
Ethical Socialism and the Market
While Thompson’s argument is both important and persuasive, it can onlybe part of the story of the development of Labour’s thinking. As he himselfnotes, alongside Fabianism, ethical socialism was central to Labour Partythinking in the 1920s, and it was these two strands together whichunderpinned what he calls Labour’s ‘unimaginative and prescriptivelyinfertile mix’ of policy ideas, and what Booth has less kindly called ‘ahopeless mess in economic policy’.12 So we need to look at the ethical strandof socialism, and its attitudes to markets, alongside Fabianism, to get afuller picture of the foundations of Labour’s thinking in this period.
Ethical socialism is a well-recognised but often under-specified element inLabour thinking. But as the standard text on this type of socialism emphasises,in the inter-war and early post-war years one person stands head andshoulders above all others in developing and publicising this doctrine – R.H.Tawney: ‘the great modern master of ethical socialism’.13 Tawney’s place inthe Pantheon of Labour thinkers is largely unchallenged: all shades of Labouropinion have been willing to pay obeisance to his writings.14 In particular, hisThe Acquisitive Society (1921) and Equality (1931) have good claim to beingthe most influential writings by a British socialist in the twentieth century,down at least to, and probably beyond, Crosland’s Future of Socialism (1956).But Tawney was not just an academic scribbler. He largely wrote the keyLabour Party document, Labour and the Nation, in 1928 (which was themajor basis of Labour’s election campaign in 1929), and much of ForSocialism and Peace, (1934) and so both directly and indirectly helped shapethe public language and understanding of Labour.15 In the current context it isThe Acquisitive Society which is the focus of attention.
In looking at Tawney’s place in contemporary arguments about marketswe can first of all see how, despite his affinity in some respects withHobson’s thought,16 he effectively sides with the Fabians in all three of these
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areas of dispute over the market noted above. First, Tawney shared most ofthe Fabian notions about the economy, including the ‘wastefulness’ ofcompetition. For example, he wrote of marketing costs, especially‘advertisement and competitive distribution’ as ‘pure loss’ to theconsumer.17 Like the Fabians, Tawney also saw an ineluctable tendency forthis competition to be succeeded by monopoly under capitalism, though hetended to focus on the ‘psychological’ inhibitions this put on worker moraleand efficiency rather than the ‘technical’ (economies of scale) efficiencycombined with distributive inequities that Fabians were likely to see as themajor consequences.18
Second, Tawney had little enthusiasm for consumption. His proclaimedasceticism was heartfelt.19 It was crucial to his critique of the AcquisitiveSociety that, in the absence of any overriding principle governing conduct,such a society produced an insatiable desire for more goods on the part ofboth capitalist and worker, but ‘nothing short of infinity could bring themsatisfaction’.20 At a less elevated level of argument this attitude produceddenunciations of the ‘pouring of resources’ into ‘picture-houses’, thecinema being indeed a favourite target of socialist displeasure with theconsumption habits of the workers.21
Third, it was central to Tawney’s thought that economic incentivesshould play little role in the economy. He argued that in practice suchincentives only lead to minimum acceptable standards, and that even inexisting society other, non-pecuniary motives are highly important.22 Hisideal of socialism was turning every job into a profession, the incentive toefficiency coming from professional pride. His model of the worker of thefuture was the doctor.23
Ethical Socialism and the Invisible Hand
As far as Thompson’s three arguments about markets are concerned, Tawneywas clearly on the side of Fabian anti-market sentiment against the moredifferentiated approach of Hobson. But to picture Tawney as simply asupporter of the Fabians in this context is hardly adequate, because, forTawney, these three specific anti-market sentiments were part of a wider setof arguments against modern capitalism, called by him the ‘AcquisitiveSociety’, and to understand the full force, as well as the problems with hisanti-market sentiments, we need to look at that these arguments in the round.
For socialists of all types, Adam Smith’s work, and above all hisdoctrine of the invisible hand, is perhaps the central intellectual challenge tounderstanding capitalism, and one which must be grappled with. It wouldnot be too much to say that a large part of the economics of modernsocialism has been an attempt to refute Smith’s arguments. But for ethical
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socialists like Tawney, Smith is an especial problem, because, it is integralto the doctrine of the invisible hand that we can wholly detach individualmotives for action from outcomes; the public good emerges as theunintended consequence of self-regarding actions. For the socialist, likeTawney, who wants to define socialism in large part as the re-moralisationof motives, it is crucial to surmount the Smithian problem. Tawney indeedtries to do so; Smith and the invisible hand are frequent reference points inThe Acquisitive Society; one could say that the implicit subtitle of the bookis ‘a critique of the invisible hand doctrine and its consequences’.
Tawney’s strategy in this critique is to ‘historicize’ Smith. He argues forthe largely beneficial and progressive nature of Smith’s work in thehistorical context in which it was produced. In the circumstances ofeighteenth-century state-sponsored monopoly, Smith and his allies, Tawneyargues, ‘represented all, or nearly all, that was humane and intelligent in themind of the age. It was individualistic, not because it valued riches as themain end of man, but because it had a high sense of human dignity, anddesired that men should be free to become themselves’.24 This historicallocating of Smith and similar thinkers is simultaneously a defence of theirwork and a claim about its contemporary irrelevance: ‘It is as absurd tocriticise them as indifferent to the evils of a social order they could notanticipate, as to appeal to their authority in defence of it’.25
For Tawney, what has rendered the invisible hand outdated andirrelevant is above all the evolution of the economic structure, using thatterm in two senses. First is the creation of the modern joint stock company,and the alleged consequence of a divorce of ownership from control. Thisdevelopment means that private property as defended by Smith, that is, as aframework creating a secure entitlement to the results of one’s own labour,is no longer appropriate. That justification ‘has been refuted not by thedoctrines of rival philosophers, but by the prosaic course of economicdevelopment’.26 As a result, ownership of property has become detachedfrom economic function, a crucial term for Tawney. Second, this newinstitution of the joint stock company has facilitated the rise of monopolyand trusts, and it is this that has fatally undermined the relevance of theinvisible hand theorem. ‘The principle upon which our society professed tobe based for nearly a hundred years after 1789 – the principle of freecompetition – has clearly spent its force’, and we can ‘no longer retain theillusion that the consumer is protected by the rivalry of competingproducers’. The choice is not between competition and monopoly, ‘butbetween a monopoly which is irresponsible and private, and a monopolywhich is responsible and public’.27 The result of these processes is rampantindividualism, which justifies private property and markets with argumentswhich are no longer valid. Applied in today’s context, Tawney asserts,
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Smithian arguments become pernicious. They license unconstrained self-seeking, perverting individualism into ‘industrialism’ which is the assertionof the economic rights of individuals without regard to social purposes.28
There are two ways of assessing Tawney’s assertion that Smith’sarguments were essentially outdated by the 1920s. One is to look at theevidence on changes in economic organisation which Tawney believes haveundermined the relevance of Smith’s points, and whether they did indeedhave the implications suggested. The second is to ask whether Smithianarguments are adequately encapsulated in Tawney’s treatment, and whetherhe deals adequately with the Smithian defence of markets.
First, on the issue of the rise of joint stock company: Tawney sees themdestroying the direct link between function and income. He is quite happy todefend private property in the means of production as long as the ownerserves a function, but this, he avers, is a link that the joint stock form oforganisation severs. The difficulty here is that ‘function’ is used in a moralrather than an economic sense; it provides no clear basis for remuneration,because while the targets of Tawney’s wrath are clear (landlords, speculators,absentee capitalists), in other cases the classes deserving remuneration arevague.29 Indeed, as Collini argues, Tawney’s notion of the functional societyis not only unpersuasive but also ‘potentially coercive. Tawney simply ducksthe hard questions about the authoritarianism in deciding which activitiesconstitute desirable “functions” and which do not’.30 It is clearly true, asTawney asserts, that with joint stock companies a class of passive ‘couponclipper’ rentiers is created, who do not contribute any labour of any type tothe production process. The joint stock company, in Marx’s terms, separatesthe supply of capital from the ‘labour of superintendence’.31 But byconceiving the issue in this purely individualistic moral sense, Tawneyignores the concept of ‘functionality’ in a broader, economic sense. Theclassic defences of the joint stock company in terms of ability to raise morecapital from a wider range of sources, with security for the investor, and theidea that the market in shares is a way to allocate capital efficiently betweenalternative uses are not argued against by Tawney but wholly absent from hisdiscussion. Because for him function is related solely to individuals’conduct, it cannot deal with institutional relations and the functionality theymay have for the system as a whole. In fact this area provides a particularlyclear and important example of Tawney’s unwillingness to grapple witheconomics arguments, grounded in a dismissive attitude to the wholediscipline, a key general point returned to below.
The second empirical argument concerns the effects of ‘monopoly’. Thebelief that monopoly has undermined invisible-hand and pro-capitalistarguments has served many socialists as well as Tawney; it is one of themost favoured rhetorical devices of socialists in economic argument. For
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example, it was, in this period, a key part of Snowden’s speech in thefamous attempt in 1923 to get a parliamentary motion condemningcapitalism.32 But the argument is certainly more complex that Tawneyallows. There is, to start with, of course, substantial variation in the meaningascribed to the term monopoly, which has been used by socialists in threedifferent senses. The first is the use of monopoly as the defining feature ofcapitalism, involving a majority of property-less workers confronting anowning class who monopolise the means of production. The second is thepeculiar Fabian notion of monopoly, as the general structure of incomereceipts reflecting the fact that all income receivers obtain a monopoly rentfrom the shortage of the factor they supply (the generalisation of theRicardian theory of rent). The third sense of the term is the orthodoxeconomists’ one, where monopoly describes the control of producers overmarkets, where their ability to limit competition raises profits.33 WhileTawney sympathised with the specifically Fabian notion of monopoly, inthe context of the invisible hand, and its alleged refutation, it is the third ofthese senses of monopoly which is deployed. Thus Tawney argues that: ‘Noone who reads the Reports of the Committee on Trusts appointed by theMinistry of Reconstruction and of the Committees set up under theProfiteering Act upon soap, or sewing cotton, or oil, or half-a-dozen otherproducts, can retain the illusion that the consumer is protected by the rivalryof competing producers.’34 But this is a poor casual empiricism on which tofound such a sweeping conclusion about the extent of competition in theeconomy. Of course, as always (and as Smith himself famously emphasised)producers are always attempting to monopolise, but as a broadgeneralisation it would be right to say that their success rate in earlytwentieth-century Britain was usually low. In the 1920s a key factor indetermining how much competition British firms faced was the almostunqualified continuation of free trade, which prevented monopolieseffectively establishing themselves in most industries, and this is clearlyshown in aggregate profit levels, which were depressed throughout thedecade.35 Tawney, like so many others, tended to confuse both monopolisticambition and outcome, and scale with monopoly; the undoubted trendtowards larger producer units with effective monopoly of markets.36
These empirical issues should be set alongside the question of theanalytic adequacy of Tawney’s account of Smith’s arguments. Tawneyargues that Smith was a defender of individual self-interest, withoutexploring what exactly that highly elastic term might mean (there are nodirect citations to Smith’s work at all in The Acquisitive Society). There aregreat difficulties inherent in assessing Smith’s arguments, and a hugeliterature devoted to this purpose, especially to what has become known as‘the Adam Smith problem’, but as a minimum it should be noted that in The
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Theory of Moral Sentiments (where he develops the idea of unintendedconsequences which lies behind the famous term, the ‘invisible hand’),Smith made much of the argument that self-regarding individuals wouldhave as one of their concerns the regard of others. He discussed in detail theconcept of ‘sympathy’ (close to what we today would call empathy) as a keyelement in allowing us to understand how others saw us, and how we canincrease their regard for us. In this way individuals would, for their ownpurposes, do things which would improve this regard, so that Smith’sindividualism was not restrained simply by law but by a complex code ofmoral assumptions about what would increase the regard of others.37 Sucharguments are a clear and direct challenge to Tawney’s simple dichotomy ofself-regarding actions versus those with a social purpose. But again, they areignored by Tawney.
In revolving around a simple dichotomy between a ‘golden age’ whenall actions, including economic actions, were guided by a higher socialpurpose (religiously inspired), and self-regarding actions, Tawney’s accountof Smith fails to come to terms with another key part of Smith’s position.Smith’s argument builds on earlier eighteenth-century assertions that incommercial society, self-interested actions displace ‘passions’, and hencehe argues, what is lost is not Tawney’s world of actions motivated by thecollective good. Instead, ‘commerce and manufactures gradually introducedorder and good government, and with them, the liberty and security ofindividuals, among the inhabitants of the country, who had before livedalmost in a continual state of war with their neighbours, and of serviledependency upon their superiors’.38
The point at issue here is not that Smith’s arguments about the invisiblehand are in some transcendent sense ‘right’ but that Tawney’s treatment ofthem misleads as to their sophistication. By not confronting them in aserious manner, Tawney reinforces a moralism about markets which was apoor legacy for the Left. Samuel has argued that in his major historicalworks, Religion and the Rise of Capitalism and The Agrarian Problem inthe Sixteenth Century, Tawney ‘offered, in essence, a secular version of theFall, a reverse Utopianism in which commercial forces accomplish thedestruction of communal solidarities, and society as a spiritual organismgives way to the notion of society as an economic machine’.39 The sameunhelpful framework is offered in The Acquisitive Society.
Tawney, Labour and Economics
The conclusion which emerges from this summary of Tawney’s attitude tomarkets is that it was of little use in aiding the inter-war Labour Partytowards an adequate understanding of modern capitalist society. While
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Tawney’s writings undoubtedly had powerful motivating effects on many ofhis readers, as a contribution to understanding they must be countedunhelpful. In defence of Tawney it may be argued that his prime purposewas to assert the centrality of (Christian) fellowship to socialism, and thathis concern with economic issues was always secondary to that purpose.But, as argued above, in his major works he did attempt to engage with atleast some key economic arguments, and the weakness of that engagementdid function to reinforce crude anti-market sentiments. Moreover, thismattered because of Tawney’s role and influence in the Labour Party andthe Left more generally.
A less negative assessment of Tawney’s role would note his(unsuccessful) attempts to get much more specific issues such as companyreform on to Labour’s agenda.40 This argument has some force; to someextent we can separate Tawney’s ideological role from his input into specificpolicy debates. On the other hand, the strength of hostility to markets didhave another unhelpful consequence, by influencing the relationshipbetween the Labour Party and contemporary economic thinking.
Tawney had an ambiguous relationship to economics. He was commonlyregarded as ‘an economist’ and this reputation helped him play importantpublic roles, including membership of the Economic Advisory Council.41 Yethe did little to hide his disdain for academic economics, famously recordingin his commonplace book (with Alfred Marshall in mind) that: ‘There is nosuch thing as a science of economics, nor ever will be. It is just cant.’ Tawneythus seems to have acted to reinforce the distance between British socialismand economics at a time when, as Booth and Pack suggest, the developmentof promising programmes of economic reform was hindered in party circlesby the absence of trained economists in its ranks.42
Could British socialism at this time have evolved a more productiverelationship with the emerging field of academic economics? Over thirtyyears ago Donald Winch pointed out the large overlaps between theconcerns of Alfred Marshall and those early socialists like the Webbs,however much Marshall may have evinced a somewhat patronising attitudetowards socialists’ grasp of the ‘real world’ of business. A later survey byIan Steedman of the Economic Journal between 1890 and 1920 shows thatthere was extensive coverage of socialism, and that economists were verywilling to engage with emergent socialist ideas in the pages of their newflagship journal. The general tone was one of critical but often sympatheticengagement, rather than the kind of hostility evinced by Tawney in theopposite direction.43 The socialist parody of professors of economicsobsessed with algebraic abstractions seems highly inaccurate. Perhaps moststriking in the developments of this period is the apparent complete lack ofinterest in the work of Pigou, who in 1912 had published Wealth and
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Welfare (later the Economics of Welfare). In many ways this was thefoundation text of modern welfare economics, and with its concern with theweaknesses of markets understood through the notion of externalities,inaugurated a line of argument crucial to most social democratic critiques ofthe market.44 Without in any way regarding welfare economics as the‘obvious’ basis for a more constructive engagement by Labour with theeconomy, it was a sufficiently open-ended discourse to provide someanalytic tools which were otherwise absent. The lack of interest in suchwork was despite the fact that Pigou was not just an abstract theorist. Heinvolved himself in many of the public debates in the years just before andafter the First World War, and in ways which were by no means stronglyhostile to positions that Tawney himself endorsed. For example, Pigousupported the idea of trade boards to regulate wages in sweated industries,while opposing a national minimum wage, a position exactly parallel toTawney’s.45 Pigou supported the idea of public works both at the time of thedebates around the Royal Commission on the Poor Laws before the war andduring the inter-war depression. Pigou wrote a pamphlet stronglysupporting the capital levy in 1920.46 Even on the issue of nationalization,Pigou’s position was not far from that of Tawney, who was never a greatenthusiast for public ownership as a principle.47 Yet Tawney did not engageat all with Pigou’s line of thinking. For example, Pigou’s assessment of thearguments for and against nationalisation in front of the Sankey committeeseems to have aroused little interest in Tawney, who barely bothered toquestion him.48
The failure of Labour in the 1920s to engage seriously with the newwelfare economics of Pigou, and the role played by Tawney in obstructingsuch an engagement, seems to be a neglected topic. Most discussion of theLabour Party and economics in the inter-war period concentrates on theissue of Keynes and Keynesianism.49 While few would now endorseSkidelsky’s view that Labour, through Utopian thick-headedness, neglectedobviously viable Keynesian policies, the evident reluctance of Labour tolook more sympathetically at this development has not been entirelyexplained.50 No doubt part of the answer is simply that Keynes was not asocialist, and in this context, as Marquand argues, The Acquisitive Society’smessage that service, not profit, should be the motive force of society servedto emphasise the difference between Keynes and the Left.51 Yet the role ofanother aspect of ethical (as well as Fabian) socialism in blockingKeynesian-style proposals is worth exploring. As the discussion in the firstpart of this article made clear, a key (but not the only) aspect of both Fabianand ethical socialist hostility to the ILP Living Wage proposals wasgrounded in their distrust of consumption and the consumer. This point canbe generalised. The Left’s distrust of the consumer meant hostility to anyprogramme of reform which was ‘consumption led’.52
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Of course, if there were clear failings in Tawney’s account of the market,to put alongside those of Fabianism, these should be seen in the context ofbroader features of the decade of the 1920s. Most generally, it should benoted that, first the war, and then the subsequent crisis of unemployment inthe staple industries, provided a fertile environment for anti-consumeristand anti-market arguments, which went well beyond the Labour Party.53
Insofar as one can determine this, much popular feeling probably reflectedthe kind of ‘moral economy’ ideas that Tawney preached.54 Unfortunately,Labour acquired few new adherents who could provide an intellectualcounterweight to such moralism. Apart from Hobson, economists whoattached themselves to Labour were few and far between, and he, as notedabove, lost out in the battle of ideas with the Fabians. Mainstream LabourParty thinking was mired in a combination of the leadership’s attachment toGladstonian orthodoxies, qualified by protests, heartfelt but impotent,against the moral injustices of capitalism.55
ACKNOWLEDGEMENTS
I am grateful to Noel Thompson and Donald Winch for comments on drafts of this paper, and toparticipants at seminars at the Institute of Contemporary British History, Brunel’s Department ofGovernment, Pembroke College, Cambridge, the Economic History Society’s AnnualConference 2001 and the Political Studies Association Conference, 2001. In addition, thisjournal’s referees provided unusually insightful and constructive comments.
NOTES
1. The new Clause Four makes Labour’s goal: ‘A dynamic economy, serving the public interest,in which the enterprise of the market and the rigour of competition are joined with the forcesof partnership and cooperation.’
2. For this transition in the 1940s see J. Tomlinson, Democratic Socialism and EconomicPolicy: The Attlee Years (Cambridge: Cambridge University Press, 1997).
3. R. Middleton, Charlatans or Saviours? (Cheltenham: Edward Elgar, 1998), pp.253–68. Forthe genesis of Labour’s planning ideas in the 1960s see J. Tomlinson, Modernising theEconomy? The Economic Policies of the Wilson Government, 1964–70 (Manchester:Manchester University Press, forthcoming), ch.4.
4. R. Miliband, Parliamentary Socialism (London: Allen & Unwin, 1961).5. A. Oldfield, ‘The Labour Party and Planning – 1934, or 1918?’ Bulletin of the Society for the
Study of Labour History 25 (1972), pp.41–55; R. Toye ‘The Labour Party and the PlannedEconomy 1931–1951’, Unpublished PhD thesis, Cambridge 1999). On the generaldevelopment of Labour doctrine see D. Howell, British Social Democracy (London: CroomHelm, 2nd edn 1980), chs. 1–5.
6. N. Thompson, John Strachey: an Intellectual Biography (Basingstoke: Macmillan, 1993),ch.1. The broad doctrine/ethos distinction is made by H. Drucker, Doctrine and Ethos in theLabour Party (London: Allen & Unwin, 1979), though my use here is intended to distinguishdoctrine as elaborated sets of ideas from ethos as unspoken/implicit assumptions, withoutnecessarily linking the latter to the ‘experience’ of the working class as Drucker does. On theearly development of Labour’s economic ideas, see N. Thompson, Political Economy andthe Labour Party (London: UCL Press, 1996), especially ch.1.
7. N. Thompson, ‘Hobson and the Fabians: Two Roads to Socialism in the 1920s’ History of
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Political Economy 26 (1994), pp.203–20; Thompson, The Market and its Critics (London:Routledge, 1988), pp.262–6; E. Durbin, New Jerusalems (London: Routledge & Kegan Paul,1986), p.43. For more general treatments of Hobson see M. Freeden (ed.), J.A. Hobson: AReader (London: Unwin Hyman, 1988), and P. Clarke, Liberals and Social Democrats(Cambridge: Cambridge University Press, 1978), ch.7.
8. Ibid., pp.204–8. The Webbs were enthusiastic about consumer co-operation (as against theirstrong hostility to producer co-ops) in part because they saw such activities as providingmore ‘rational’ consumption, beyond the capacity of the reckless and ill-informed privateconsumer.
9. Ibid., pp.208–10. 10. Ibid., ‘Fabians’, pp.210–11.11. On Labour’s economic policies in the 1920 see, in addition to Thompson, A. Booth, ‘The
Labour Party and Economics between the Wars’, Bulletin of the Society for the Study ofLabour History 47(1983), pp.36–42; A. Booth and M. Pack, Employment, Capital andEconomic Policy (Oxford: Oxford University Press, 1985), ch.1. The Living Wage issuebecame inextricably entangled with the dispute about family allowances, which arousedgreat trade union hostility: L. Macnicol, The Movement for Family Allowances 1918–1945:A Study in Social Policy Development (London: Heinemann, 1980), pp.138–49.
12. Thompson, ‘Fabians’, p.218, which may be compared with Thompson, Political Economy,p.67; A. Booth, ‘How Long are Light Years in British Politics? The Labour Party’s EconomicIdeas in the 1930s’ Twentieth Century British History 7 (1996), pp.1–26.
13. N. Dennis and A. Halsey, English Ethical Socialism (Oxford: Oxford University Press,1988), p.2. Other sympathetic accounts of Tawney’s life and works are J. Winter, Socialismand the Challenge of War: Ideas and Politics in Britain 1912–1918 (Cambridge: CambridgeUniversity Press, 1974), chs.3 and 6, R. Terrill, R.H. Tawney and His Times: Socialism asFellowship (Cambridge MA: Harvard University Press, 1973) and A.W. Wright, Tawney(Manchester: Manchester University Press, 1987); more sceptical accounts can be found inW.H. Greenleaf, The British Political Tradition Vol. 2 The Ideological Heritage (London:Methuen, 1983), pp.439–63, and especially S. Collini, English Pasts: Essays in the Historyof Culture (Oxford: Oxford University Press, 1999), ch.9.
14. D. Ormrod, Fellowship, Freedom and Equality: Lectures in Memory of R.H. Tawney(London: Christian Socialist Movement, 1990), which has contributions ranging from FrankField to Tony Benn; H. Gaitskell ‘An Appreciation’ in R. Hinden (ed.) The Radical Tradition(London: Allen & Unwin, 1964) p.211–14.
15. Labour and the Nation, p.14; on Tawney’s role in the party see N. Riddell, Labour in Crisis(Manchester: Manchester University Press, 1999), pp.182–4.
16. M. Freeden, Liberalism Divided: a Study in British Political Thought 1914–1939 (Oxford,Clarendon, 1986), pp.313–15. Undoubtedly Tawney was closer to the decentralised forms ofsocialism, such as guild socialism, than to the more centralising ideas of the Webbs. Equally,Tawney had much in common with Hobson in their joint admiration for the ideas of Ruskin.Hobson is very explicit on this, publishing the highly favourable John Ruskin, SocialReformer (London: James Nisbet, 1898).
17. R.H. Tawney, The Acquisitive Society (London: G. Bell, 1921), p.171; see also D. RiesmanState and Welfare: Tawney, Galbraith and Adam Smith (London: Macmillan, 1982),pp.108–11.
18. Acquisitive Society, p.144.19. Dennis and Halsey, p.199; J. Winter and D. Joslin (eds.), R.H. Tawney’s Commonplace Book
(Cambridge: Cambridge University Press, 1972), p.18.20. Acquisitive Society, p.41.21. Hinden, Radical Tradition, p.150; A. Bevan, In Place of Fear (London: Heinemann, 1952)
ch.4; R. Samuel, Island Stories: Unravelling Britain’s Theatre of Memories Vol. II (London:Verso, 1998), p.249.
22. Acquisitive Society, pp.153–5.23. Ibid., pp.147–8, 151; Riesman, State and Welfare, pp.108–11.24. Acquisitive Society, p.23.25. Ibid.
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26. Ibid., p.70.27. Ibid., p.178; R.H. Tawney, Equality (London: Allen & Unwin, 5th edn., 1964), pp.161,
173–4; Labour and the Nation, p.23.28. Acquisitive Society, p.47.29. Riesman, State and Welfare, pp.114–17.30. Collini, English Pasts, p.189. 31. As Stuart MacIntyre, A Proletarian Science: Marxism in Britain 1917–1933 (Cambridge:
Cambridge University Press, 1980), p.147 notes, discussing this period, ‘the Marxist critiqueof capitalism had considerable impact on the rest of the Labour movement’ and this iscertainly true of Tawney. His discussion of monopoly (see below) is on the same lines as thatof Britain’s most important Marxist economist, Maurice Dobb, who in his CapitalistEnterprise and Social Progress (London: Routledge, 1925) argued that in modernmonopolistic conditions the capitalist entrepreneur no longer performed a useful functionwhich required private ownership of the means of production.
32. P. Snowden, House of Commons Debates 5th ser., cols. 2480–1, 20 March 1923.33. Thompson, The Market and its Critics, p.250–54.34. Acquisitive Society, p.178.35. J. Tomlinson, Government and the Enterprise Since 1900: The Changing Problem of
Efficiency (Oxford: Oxford University Press, 1994), pp.94–7.36. J. Tomlinson, The Unequal Struggle? British Socialism and the Capitalist Enterprise
(London: Methuen, 1982); L. Hannah, The Rise of The Corporate Economy (London:Methuen, 2nd edn. 1983), p.160.
37. J. Viner, ‘Adam Smith and laissez-faire’ in J.C. Wood (ed.) Adam Smith: CriticalAssessments Vol.1 (London: Routledge, 1984), pp.143–67; T. Wilson, ‘Sympathy and Self-Interest’ in T. Wilson and A. Skinner (eds.) The Market and the State: Essays in Honour ofAdam Smith (Oxford: Oxford University Press, 1876), pp.73–99.
38. Smith, Wealth of Nations cited in A.O. Hirschman, The Passions and the Interests: PoliticalArguments for Capitalism before its Triumph (Princeton NJ: Princeton University Press,1997), p.100.
39. Samuel, Island Stories, p.240. Note that Tawney’s Christian views did not allow the notionthat people should be paid their ‘worth’; worth was God’s business, and what people had theright to demand was only ‘enough to enable him to perform his work’. Dennis and Halsey,English, p.201.
40. B. Clift, A. Gamble and M. Harris, ‘The Labour Party and the Company’ in J. Parkinson, A.Gamble and G. Kelly (eds.), The Political Economy of the Company (Oxford: Hart, 2000).
41. Roger Middleton, Charlatans or Saviours? (Cheltenham: Edward Elgar, 1998), p.185, seesTawney’s (and Sidney Webb’s) role on the Sankey Committee (1919) as a sign of thegrowing official recognition of economists , but the basis for their involvement seems to havebeen their political affiliations. Susan Howson and Donald Winch, The Economic AdvisoryCouncil (Cambridge: Cambridge University Press, 1977) reflects a perhaps commonuncertainty about economic historians, when they refer to Tawney as both an economist(p.17) and a historian (p.24). The fact that Tawney was on the Economic Advisory Councilbut not on its committee of economists is perhaps indicative of economists’ views of his role.
42. Commonplace Book, p.72; Terrill, R.H. Tawney, p.227 notes his lack of ‘appetite forsystematic abstract thought’. Such attitudes were shared by Fabians such as Beatrice Webb,who described abstract economics as ‘a sheer waste of time’; see Durbin, New Jerusalems,p.34; Booth and Pack, Employment, p.26. A similarly disdainful attitude to economics isevident in the work of another important contemporary socialist, G.D.H. Cole. On the onehand he offered ‘no real discussion of the role of the market under capitalism, or ofalternatives to markets under socialism’ yet ‘in a very fundamental sense he did not likeeconomics’. A.W. Wright, G.D.H. Cole and Socialist Democracy (Oxford: Clarendon,1979), pp.176, 180–81. As an example of this failure of engagement we may cite Cole’sPrinciples of Economic Planning (London: Macmillan, 1934) where the only twoeconomists mentioned by name are Ricardo and Veblen, plus ‘an economist from Vienna’(Hayek). Chapter 4 of this book, though entitled ‘Critique of a Planless Economy’ drawsnothing at all from Pigou (or Marshall) who had long made similar criticism to Cole in a
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more rigorous fashion, albeit without drawing the same conclusions. For a much broader,cultural view of this failure of the Left to engage with economics, see D. Winch, ‘Mr.Gradgrind and Jerusalem’ in S. Collini, R. Whatmore and B. Young (eds.) Economy, Polityand Society: British Intellectual History 1750–1950 (Cambridge: Cambridge UniversityPress, 2000), pp.243–66.
43. Winch, Economics and Policy, pp.36–42; I. Steedman, ‘The Economic Journal andSocialism, 1890–1920’ in D. Hey and D. Winch (eds.) A Century of Economics (Oxford:Oxford University Press, 1990), pp.65–91.
44. Middleton, Charlatans, p.105. Hugh Dalton was Labour’s most senior academic economistin the 1920s, but his Principles of Public Finance (London: Routledge, 1923) and SomeAspects of the Inequality of Incomes in Modern Communities (London: Routledge, 1929)draw on only a small part of Pigou’s work, and do not use his arguments in the context ofgeneral discussions of the effects of markets. Compare Durbin, New Jerusalems which doesnot bring out how limited a part of Pigou’s work Dalton drew upon.
45. A. Pigou, ‘Trade Boards and the Cave Committee’ in Essays in Applied Economics (London:Frank Cass, 1965), pp.59–69, originally published in 1922. Sheila Blackbourn, ‘A VeryModerate Socialist Indeed? R.H. Tawney and Minimum Wages’, Twentieth Century BritishHistory 10 (1999), pp.107–36 has recently discussed Tawney’s approach to minimum wagesin great detail. However, her treatment raises serious problems. She is concerned to attackTawney’s socialist credentials, but does not make it clear what approach a true(‘immoderate’?) socialist should have taken to this issue at a time when a national minimumwage was politically implausible. In addition, her interpretation of the effects of the 1909 Actmight be challenged in the light of evidence in D. Sells, British Wage Boards: A Study inIndustrial Democracy (Washington: Brookings Institution, 1939), especially pp.271–7,which shows wages in the Trade Board industries much more resistant to cuts than wageselsewhere in the years after 1920. (Blackbourn cites this book but not this particularevidence.)
46. Winch, Economics and Policy, p.62–3; T.W. Hutchison, Economics and Economic Policy inBritain, 1946–1966 (London: Allen & Unwin, 1968), Appendix ‘Pigou and Keynes onEmployment Policy’. A. Pigou, A Capital Levy and a Levy on War Wealth (London: OxfordUniversity Press, 1920).
47. Acquisitive Society, pp.96–8; Equality (5th edn, 1964), pp.181–4.48. Before the Sankey Committee Pigou made a notably balanced assessment of the potential
costs and benefits of nationalisation, and was briefly questioned by Tawney. Coal IndustryCommission. Report and Evidence of the Second Stage of the Enquiry. Parl. Papers 1919, vol.xlii, Cmd. 360. Memorandum Evidence pp.416–18, Questions 10305–26. The Sankey debateis summarised in B. Supple, The History of the British Coal Industry Vol.4, 1913–1946: ThePolitical Economy of Decline (Oxford: Oxford University Press, 1987), pp.123–40.
49. Winch, Economics and Policy, Appendix ‘Keynes and the British Left in the Inter-WarPeriod’; contrast Booth and Pack, Employment, chs. 1 and 6. This focus is itself problematic.In many ways the greatest interaction between the Left and economics in the 1930s was inthe debate on socialist planning. For a brief summary of this see J. Tomlinson, ‘Planning:Debate and Policy in the 1940s’, Twentieth Century British History 3 (1992), pp.154–8.
50. R. Skidelsky, Politicians and the Slump (London: Macmillan, 1967); R. McKibbin, ‘TheEconomic Policy of the Second Labour Government’ Past and Present 68 (1975),pp.95–123.
51. D. Marquand, The Progressive Dilemma (London: Heinemann, 1992), p.62.52. Contrast the USA: M. Jacobs, ‘Democracy’s Third Estate: New Deal Politics and the
Construction of a Consuming Public’, International Labour and Working-Class History 55(1999) pp.27–51; A. Brinkley, The End of Reform: New Deal Liberalism in Depression andWar (New York: Alfred A. Knopf, 1995), especially ch.4.
53. J. Tomlinson, ‘Labour and the Economy’ in D. Tanner, P. Thane and N. Tiratsoo (eds.) ACentenary History of the Labour Party (Cambridge: Cambridge University Press, 2000),pp.46–79 ; Tomlinson, ‘Labour: the Party of Industrial Modernisation’, unpublished paper,September 1999. Even Keynes lost some of his belief in the efficacy of market forces,involving himself with schemes for state-encouraged ‘rationalisation’ of the staple
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industries. 54. R. McKibbin, Classes and Cultures England 1918–1951 (Oxford: Oxford University Press,
1998), p.139. He cites Brian Jackson’s Working Class Community (London: Routledge &Kegan Paul, 1968), ‘Many working men and women held to a kind of folk Marxism quiteindependent of party political allegiances. They believed that their own work was the sourceof all value; the only work that mattered. Without it society would not exist.’ But compareMcKibbin, Ideologies of Class (Oxford: Oxford University Press, 1991), pp.162–4 whichemphasises the competitive character of much working class culture, especially leisureactivities.
55. Booth, ‘The Labour Party’; Thompson, Political Economy, ch.5.
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