Not Just Another Recession
Why the Global Economy May Never Be the Same
TO THE British, as to others, this war has been a spiritual as well as a physical experience. For the first time since the turn of the century a creative spirit stirs the national consciousness. Something new is coming to birth: a new spirit of comradeship and national unity, a new conception of society, a new sense of political mission, a renewed belief in our power to master difficulties, a new confidence in one another.
Such confidence implies no facile optimism. We in Britain know that bitter suffering lies ahead. We know that the big battles of the war have yet to be fought and that a dark and difficult time will come when victory has been won. But we have learned faith and courage and unity from our early disasters, and we have the confidence that faith and unity and courage bring. This attitude is common to all British folk, and the Conservatives of whom I write are no less sensitive to it than others.
On March 21, 1943, the leader of the Conservative Party, Mr. Winston Churchill, celebrated his recovery from illness by delivering one of the longest broadcast talks ever heard by the British people. His broadcast was given in his personal capacity, and its value as a forecast of Conservative policy must be read in the light of the fact that both the Party and the Government would be free, if either so desired, to disregard every word that Mr. Churchill said. But as a general indication of the Conservative and the national mind the broadcast must be treated as authoritative.
Conservative policy is always based on a current situation rather than on a fixed political creed. The Conservative Party has a political tradition extending over three hundred years and during these centuries of electoral victory and defeat it has learned to attach itself to political institutions and principles rather than abstract theories of government. Experience has taught us that there is no political theory, including our own, which does not look crude and ridiculous in the light of a succeeding age, and that society is incapable of absolute perfection and certain to change. We are therefore apt to approach a difficult problem without fixed prepossessions, and we sometimes apply the favorite nostrums of our opponents with complete freedom from prejudice.
The first principle of the Conservative statesman is to try and think himself ahead into the concrete situation with which he is likely to be faced. "It is our duty," said Mr. Churchill, "to try our utmost to be prepared by ceaseless effort and forethought for the kind of situations which are likely to occur." The main contrast between this and the left wing approach to the problem is that the Conservative attitude will probably be dictated largely by the "situation that is likely to occur" rather than by any preconceived political formula.
But what is the situation likely to be? This war is not going to end like the last. To appropriate a line from Mr. T. S. Eliot, it will end "not with a bang but a whimper." There will not be an Armistice. There will be no last shots fired at 11.05 A.M. There will not be a certain moment at which we are at war and a subsequent moment at which we are at peace and free to reconstruct the world. There will be a confused period in which the problems of peace and the problems of war are inextricably intertwined -- the only "period of reconstruction" we are likely to get. After that it will be too late to reconstruct.
The two immediate factors of the situation in Europe after the defeat of Hitler will be the necessity of military occupation and European relief. We -- and I mean the United States, the U.S.S.R. and the British Commonwealth -- will not be driven to these acts by vindictiveness or sentimentality but by the sheer logic of events. Some will not like the policy they entail. All will have to accept it.
I think that this was what Mr. Churchill had in mind in his somewhat guarded reference: "It would be our hope that the United Nations, headed by the three great victorious Powers, the British Commonwealth of Nations, the United States and Soviet Russia, should immediately begin to confer upon the future world organization, which is to be our safeguard against further wars by effectually disarming and keeping disarmed the guilty states. . . . We shall also have a heavy task in trying to avert widespread famine in some, at least, of the ruined regions."
The first purpose will involve the maintenance of a large military force in Germany. The Nazi régime has destroyed every organization that might conceivably have formed the basis for an opposition. Other political parties, trade unions, even fishing clubs, literary societies, Boy Scouts, Rotaries, Elks, Protestant Churches and women's institutes -- all have been gleichgestaltet. When the Nazis fall there will be a void. Pockets of isolated Nazi fanatics will hold out, will be suppressed and from time to time will break out again in fits of hysterical resistance. Droves of expatriated workers will roam far and wide without the means of livelihood. Towns will have been battered. Food supplies will have been disorganized. Epidemic disease will probably appear on an enormous scale.
All Europe, as well as Germany, will be in confusion. Peoples will rise against the remnants of the Nazi occupying power but will not thereby achieve unity. The Giraud-de Gaulle controversy is only a foretaste of factional disputes to come. Some of the Quislings will rat. Others will continue their treachery in varying degrees. Always there will be an insistent cry for food. Homeless people will demand houses. War prisoners and foreign workers from German industries will ask care and lodging on their way home in places which cannot accommodate them. Factories will be closed. Chaos will reign everywhere. The one unifying force will be the armies of the United Nations. The one sure source of food will be the United Nations Relief Organization. The one instrument of political security will be the authority of the victorious Powers.
It is idle to pretend that this period of chaos will prove short. Houses are not built in a day. It will take time to repatriate Hitler's slave labor and years to reorganize industrial production. The agriculture of Europe is not going to recover for fifteen years or more. The cattle have been slaughtered. The fields are partly unfertilized. The farmers and their laborers have been scattered. And in Germany itself the disease of Nazism will take at least a generation to eradicate.
Europe as we knew it has disappeared. Possibly it has ceased forever to be the economic or political center of the world. Ruined Europe will have to choose between Balkanization and some form of unity. Our policy will insist on unity with local freedom.
Federation is probably too strong a word for the political instruments which will be forged. We have had enough of covenants and written constitutions. It is clear, however, that in practice, if not in theory, means will be found to limit local sovereignty. Mr. Churchill's own suggestion need not be taken too literally, but it is certainly the most enlightening forecast: "We must try . . . to make the Council of Europe, or whatever it may be called, into a really effective league, with all the strongest forces concerned woven into its texture, with a high court to adjust disputes, and with forces, armed forces, national or international or both, held ready to enforce decisions." The position of the small nations would be safeguarded, but only within this framework.
It should be stated with special emphasis that although Conservatives outline the steps toward international coöperation in terms of regional groupings they see the primary objective as world peace. There is no sympathy with the type of thought that sees in regionalization merely a new escape into isolationism. World peace is an American interest. World peace is an interest of the British Commonwealth. It is a life-and-death interest for which a heavy insurance premium will have to be paid. Neither a Council of Europe nor a Council of Asia would function if either the British Commonwealth or the United States disavowed concern with its activities. Though the premium that each country may have to pay will be heavy, the price of a world system of peace and order is far cheaper than the cost of another Pearl Harbor or another European war. The fundamental requirements for the success of a world system are these: that the British Commonwealth and the United States offer assistance in plans for reconstruction with the same wholeheartedness and generosity that they have shown in coöperating with one another and with other nations in the prosecution of the war; and that the British and American Governments, with those of Russia and China, declare publicly that the maintenance of world peace is a part of British, American, Russian and Chinese policy. Such a declaration would include the plain statement that the forces of these associated Powers will assist the forces of law and order anywhere to repress any major breach of world peace.
Such a statement would have prevented the present war. It could not have involved either Great Britain or the United States more deeply than they have since become involved.
This is only one half of the picture as it will appear when Germany is defeated. We shall still be at war. We shall be at war with Japan -- perhaps for years after the conflict in Europe has died down. In the Far East, in Burma, Malaya and China, in the Pacific Islands and Japan itself the picture of Europe drawn above will in some measure be reproduced.
For the British people the war with Japan is at once a national interest and a solemn obligation. We shall fight it together with the United States to the end. Mr. Churchill said: "We shall immediately proceed to transport all the necessary additional forces and apparatus to the other side of the world to punish the greedy, cruel empire of Japan. . . . That will be our first and supreme task and nothing must lure us from it."
The result will be a period of peace and war. Part of our industry will be switching to the reconstruction of Europe and Great Britain. Part will still be supplying the armed forces. Part of the armed forces will be transferred to the Far East; part to the European Army of Occupation. But some will return to industry. To quote Mr. Churchill again: "There will certainly be large numbers of men, not only abroad but at home, who will have to be brought back to their families and to their jobs . . . . However vigorously the war against Japan is prosecuted, there will certainly be a partial demobilization following on the defeat of Hitler."
This will raise intricate problems within the armed forces. Who is going back first to get civilian jobs? Veterans of Tunis and Burma will strain to come back to England, only to be told that they are wanted in the European Army of Occupation, or to fight the Japanese. Boys will be sent out from this country to take the places of demobilized men just as they come to think the war is over. Demobilization will become a thorny political problem.
The end of the war with Germany will set up a new series of shortages. It is estimated that bombing, lack of repairs and shifts in population, added to existing slums and overcrowding, will give Britain a shortage of 4,000,000 dwelling houses in 1944 -- more than ten years' output at maximum prewar rates. Our clothes are wearing out. Everything is getting shabby and out of repair. We shall be short of timber, short of ships, short of food, short of oil and, above all, short of men.
Certain political conclusions follow from this. Mr. Churchill is one of the few who have had the courage to draw them. If government is not to break down it will have to be strong government. The mere demand for demobilization from within the services will ensure the continuance of conscription to replace those who are demobilized. There will still be rationing, because there will still be shortages; a system of priorities will still govern new production. Some requisitioning of housing accommodation is probable. Rent restriction is certain to continue so long as there is a shortage of houses; and there may be a continuation of billeting and of compulsory labor service. Will these become party issues?
Now the party fight is not a sham fight, and British Parliamentary institutions are so adjusted as to give it full sway. No party in opposition can afford to ignore grievances, and no government can withstand grievances on the scale which will exist, if they are given organized expression by a powerful Parliamentary opposition. Neither party wants to continue the present coalition. The Labor Party is particularly hostile to it because it regards itself as under-represented in the present Parliament. But the national interest demands a temporary continuance of Coalition Government.
In Mr. Churchill's words: "When this [four years' plan] has been shaped, it will have to be presented to the country, either by a national government formally representative of the three parties in the state or by a national government comprising the best men in all parties who are willing to serve." Anybody who opposes Mr. Churchill's plea for national unity after victory will, I believe, be simply swept off the map. The only chance that I can see of this not happening lies in the possibility of Mr. Churchill's personality being removed by death or resignation. Whatever talk there may be about the desirability of a return to party strife in Great Britain, I feel convinced that the full party quarrel must and will be postponed.
But in the midst of these disturbances it will not be possible to ignore the long-term trends of national policy. For the truth is that this war is neither an interlude, as some suppose, nor, as others claim, a turning point. It is part of a process -- a process which began years before we were born, and will continue years after we cease to exist. Some features in the process may have been distorted by the war; other changes may have been accelerated. But the process continues and cannot be checked, and the war itself is part of it.
What are the general trends? First, in international affairs, the most obvious is the change in the political and economic center of gravity of the world away from Europe and toward the other continents. Next, the trend away from the small, self-contained, independent sovereign nation state which was the standard political institution of the last century, toward a larger grouping in continents, areas and groups of states. The third trend is toward increased economic interdependence of the different areas.
We live in the age of the machine. But we are at the beginning and not at the end of the age. In Britain we have not yet even industrialized ourselves. A great number of our people still live in slums. Our school children still mostly leave school at the age of fourteen. Our houses in the country have no piped water or electricity. In the town we all do not as yet have refrigerators, machines for washing clothes and dishes, radios or telephones. Civil aviation is still in its infancy. We suffer from periods of industrial depression. Our methods of production often are still primitive.
In many areas of the world industrialization has scarcely begun. In Palestine men live as men lived in the days of Our Lord. In Africa, in Asia, and in South America, men live as they lived before the days of the Pyramids. The machine has scarcely touched their lives. They do not always have enough to eat. The age of the machine is in its infancy, and it will continue to develop until it has revolutionized all life on the planet.
The British were the pioneers of the machine age and enjoyed corresponding advantages. In the nineteenth century Great Britain lived by her supremacy on the sea and in the factory. British naval ascendancy was effective partly because of the absence of a rival navy after Trafalgar, but partly also because of the absence of any first class military force outside Europe and the existence within Europe of a nicely balanced system of land Powers -- Russia, Prussia, Austria-Hungary, France, Turkey and a host of smaller states. The continued independence of these states made it impossible for a single Power to dominate the whole land mass. While Europe enjoyed a central position in the world economically and politically the British fleet was able to insulate Europe strategically, and limit European wars in extent, by an adroit combination of diplomacy and sea power. At this time the British fleet was the real instrument enforcing the Monroe Doctrine.
Today these conditions have disappeared. There are several first class Powers outside Europe, including the greatest and richest Power of them all. The British Navy alone makes no pretense to dominate the sea, although it is probably still the most effective naval force. Europe has step by step fallen under the domination of a single Power, and although the nation states of Europe may recover their freedom they will never completely recover the political isolation which they knew before.
Similarly our industrial ascendancy has disappeared. Financially and economically the United States is incomparably the greatest Power in the world. Other centers of industrial production have arisen and have multiplied in Canada, Australia, India and South Africa since the beginning of this war. Europe has long been industrially independent of ourselves.
The deductions are: first, that we are moving into a world in which the Nation State is no longer the standard political institution. The United States is not just a large-sized Denmark. The U.S.S.R. is not the same thing as Paraguay, only bigger. The British Commonwealth is not just a series of nations like Turkey, Argentina and Czechoslovakia, even if it is not a single unit like the United States. Great Britain is more important as a part than as an independent unit. New political institutions are arising out of the ashes of the old. The Far East is a world area. So is Pan America and so is the U.S.S.R. The British Commonwealth is a world area, based on the sea. Europe is another. Africa has not yet emerged into independence.
Second, economic institutions are inextricably intertwined. What are the economics of lend-lease? Can the United States afford to allow Europe to starve after the war? Can we? But can we feed Europe without American aid? Can we live without our African possessions? Can we develop our African possessions without European manpower or American capital? Can American trade function in Africa and Asia without British political assistance? Can China develop without Russian or American aid? Can Russia recover without assistance from Britain or America? Can Britain or America continue to prosper, or can they reconstruct Western Europe, without Russian coöperation?
The Conservative conclusion to all this was stated by Mr. Eden, the Conservative Foreign Secretary, in a speech on July 1 of this year: "The lesson of the twentieth century . . . is the utter interdependence of nations. We cannot escape it if we would. It has been a hard lesson to learn, both for the people of the British Commonwealth and for the people of the United States. . . . The truth is that we are all now one small world, a world which gets still smaller every day." In the meantime, the Nutrition Conference, the Refugee Conference, the Middle East Supply Center, the committees on food, oil and shipping, and last but not least the Allied Armies under joint command in Tunisia and Sicily and the Far East indicate the shape of things to come.
Before estimating the full effect of this on Conservative policy we might do well to look for a moment at our national politics. The domestic picture is as exciting as the international one. Here, too, a revolution is going on; we believe that you in the United States are yourselves involved in the same revolutionary process. But that is your affair. Let me stick to our own case. The revolution in Britain has had four characteristics. The first is the movement in industry toward larger units in production and distribution. The second is the growing need to eliminate the chaos created by competition between national centers of industrial production. The third is a tendency in the Government to impose its financial policy on banking and industry. The fourth is the tendency within industrial society toward a more even distribution of wealth and culture. The war is a phase in all these processes; the tendencies themselves will continue long after its cessation.
Each process is deserving of separate study. Take the first. The economy of the nineteenth century was built upon the small firm, and this meant free competition. No one who has seen a modern production plant can ever believe that the small firm can compete with it in its own sphere. It used to be said that precision work could not be done on mass production lines. Experience before and during this war shows that this is wrong; and it seems that the limit to the variety of things which can be made by mass production has not yet been reached.
But the increase in the size of units has not been limited to production. It has extended to all branches of distribution, transport and finance. Look at the chain store. As a rival to this we have in Britain the coöperative society; both are rivals to the small storekeeper. Even where the little man survives, the wares he sells are not the result of old-time higgling in the market, but standardized products packed and sold by the manufacturer or wholesaler at a fixed price and in identical wrappings. In England there are only five banks of consequence, apart from the Bank of England, which is now a Central Bank and little else. Insurance is almost entirely in the hands of a few big companies; smaller companies still struggle on but are in the course of being eliminated. The limit to this centralizing tendency has not yet been reached.
Attempts to reverse these trends by legislation, boycott or industrial means have, on the whole, failed. But the change has brought major problems. The decision of a small board of directors may affect the policy of the nation. It may precipitate a slump. It may influence foreign policy. It may grant prosperity or deal out distress to vast areas. A board of directors is responsible to no one except the amorphous body of holders of the common shares, whose whole individual stake in the enterprise may be limited to a few hundred pounds, and who do not bother to exercise their power but simply sell their shares if they think something is going wrong.
The tendency in this country has been more and more to place these giant monopolies under control, and although there have been protests in the name of private enterprise, a general control of policy has been demanded more and more insistently by the community. Banking policy is now completely controlled through the hold of the Treasury on the Bank of England, which in turn controls the joint stock banks. Policy can only be determined by the directors within the general assumptions which the Government permits. The broadcasting monopoly is a public utility. Transport in the London area is another, distribution of electricity a third. Even where private enterprise is almost undisturbed, as in the farming industry, semi-public bodies like the Marketing Boards tend to impose compulsory conditions on the industry and the public.
Control of production has become more marked in war. We have found that price limitation is the only cure for labor troubles, and the one safeguard against inflation. What may be produced is a matter of government policy. The supply of materials of which there is a deficiency is rationed in accordance with a system of priorities; of consumption goods in accordance with a system of points. These controls will disappear to some extent when the absence of shortages makes rationing no longer necessary. But price control, and some general policy of production, have probably come to stay.
The tendency toward monopoly does not imply that the Conservative Party, or, we think, the British people, have abandoned the theory of private enterprise. What it does mean is that the theory of private enterprise is undergoing modification, and that the Conservative Party is slowly coming to realize that there is room for both private enterprise and state control in the new society. To quote again from the Churchill radio talk: "There is a broadening field for state ownership and enterprise, especially in relation to monopolies of all kinds. The modern state will increasingly concern itself with the economic well-being of the nation, but it is all the more vital to revive at the earliest moment widespread, healthy and vigorous enterprise . . ."
We Conservatives think that these ancient enemies -- private enterprise and state control -- are on the verge of reconciliation, and even possibly of becoming partners in a happy marriage. The goods may be ordered by the state. They are produced at a profit -- even in war -- by private enterprise. Much has been said to indicate the unwisdom of allowing public policy to be governed by pure reference to private profit. Nothing has been said to contradict our view that industry on the whole manages its own concerns better without political interference below the level of national policy, or that where there is a risk of a loss it is just that there should also be a chance of a profit.
The next problem of our day has been the growth of competition from other national centers of industrial production than our own. We have travelled far from our unchallenged industrial supremacy of the nineteenth century. Since Conservatives lost the 1906 election the party has striven hard and with some success to educate the public to the importance of this issue. It is vital for us. We have 47 million mouths to feed. Our people have become used and entitled to a high standard of life. We do not produce more than a major part even of the essential foods -- wheat, raw milk, meat and sugar. But we also want butter, cheese, eggs, bananas, oranges, tea, cocoa, coffee. We must import wood, oil, ore, wool and tobacco. We must trade in order to live. Unless we can use our own industrial capacity to the full and dispose of our products we shall starve.
No national party in Great Britain can afford to ignore this question. Mr. Churchill's words were: "Abundant food has brought our 47 million Britons into the world. Here they are and they must find their living . . ." Partly this was to be found by home production. But "our own effort must be supported by international arrangements and agreements more neighborlike and more sensible than before. We must strive to secure our fair share of augmented world trade . . ."
On the other hand, experience has taught us the dangers of economic nationalism. Neither tariffs, trading agreements nor home production have produced a satisfactory solution in the past. These have been tried, and in whole or in part have failed. The Conservative solution will undoubtedly lie in the realm of international coöperation, but international coöperation viewed not as a division of existing markets but as a means of increasing the total absorptive capacity of the world. Our own contribution is likely to consist in the construction of goods for the relief of Europe in the years of chaos and in the development of our Colonial Empire in the years which follow.
There will be no unemployment in the first years after the war; there will be vast shortages of labor and materials. We shall expect to put our contribution into the common pool, military and economic. We shall provide armies, and air and sea fleets against Japan and for the occupation of Europe. We shall build locomotives, cars, ships and other necessary products to replace the broken stock of Europe. In return we shall expect to receive our fair share of what food and raw materials are going.
But the period of reconstruction and shortages will come to an end. The old trade rivalries will reappear, and, unless a satisfactory solution is found, the old vicious circle will begin again -- competition, price wars, slump, unemployment, and eventually bloodshed.
There is only one answer. We must get away from the idea that the world's markets are limited and restricted things to be squabbled over. In our lifetime the world's markets are unlimited. We have barely scratched the surface of the world's absorptive capacity as a market. But markets must be opened to be developed. Railways, telegraphs, landing grounds, ports and roads must be built. Agriculture must be stepped up. These bring trade, and if we build them trade will come and the world will be richer.
Such a policy will require both faith and courage. While we are building we can expect no return. We shall be like the Russians during their five-year plans. In this period we shall look for sympathy and help from the great producers of raw materials in the Dominions and elsewhere. When we have finished we shall have created huge new industrial markets for the benefit not of ourselves alone but for all who have helped us and for the world.
In the meantime both internal and foreign experience has been teaching us some weak spots in our time-honored financial economics. As I have said, Conservatives do not attack the "profit motive." But we recognize that individual profit is not always the true test of public advantage, even from the economic point of view. The provision of houses offers an instance. A good system of planning in blocks may save a community thousands of pounds in water and electric mains, in accident prevention, in the cost of distribution. But there is more profit for the private constructor if he builds along existing roads without a plan. Good housing may save thousands of pounds in reduced doctors' bills and hospital expenses, or in the prevention of industrial or social unrest; but these factors cannot be estimated exactly in any budget. As a rule they are not estimated at all in considering the actual cost of slum clearance. Education is a cost which has to be borne at the public expense. Yet the financial return on a properly educated population is probably very great. The expansion of our industrial plant in the nineteenth century was largely due to the profit from private foreign loans, although the individuals who loaned abroad often lost their money. Our failure to expand industrially in the twentieth century was in part due to foreign loans made by individuals, on far better security than in the old days, but at a time when the public advantage recommended spending at home and in the Empire.
The Conservative Party will leave to others the theory that money does not matter or that "pounds, shillings and pence are meaningless symbols" -- to quote a Labor leader. But it will be foolish not to recognize that we have much to learn in the technique and study of finance. The orthodoxy of the nineteenth century has proved plain wrong in the twentieth. The new orthodoxy will be based on experience, and even experiment.
The Conservative Party will most probably support the Keynes Plan for currency control. It is not equally attracted by the White Plan, which it regards as somewhat backward-looking and insufficiently expansionist to meet postwar needs. But there is no doubt that some agreement between Britain and the United States is necessary and will be supported.
The most important change in Britain is the one that has taken place in the structure of our society. Our former social distinctions are breaking down. We are developing a common culture. We are moving, said Mr. Churchill, "steadily and steadfastly from a class to a national foundation in the politics and economics of our society and civilization."
A modern Englishman is always puzzled by references in the United States to our monarchial and aristocratic constitution as if it still existed in the form in which it was known in the days of King George III. But we are apt to forget that little more than a generation ago, in the days of the novelist Anthony Trollope, this structure did in fact persist, if not unaltered, at least recognizably the same, with the single exception that the Crown no longer intervened directly in politics in such a way as to disturb the working of the Parliamentary franchise. The huge estates remained and the hereditary aristocracy was still on the land. That was little more than 40 years ago; but the revolution which has taken place since then has been so immense that it is almost impossible to recognize the society of Trollope's novels as our own.
A few figures illustrate this change. Income tax, which had been at less than 1 percent in 1874, was about a shilling in the pound (5 percent) by the turn of the century; the standard rate of today is 10/ -- or 50 percent. But that is by no means the whole of the story. There are today only 80 people in the United Kingdom whose incomes after taxation amount to more than £6,000 sterling, and this figure includes the Royal Family. There are only 1,170 with incomes of between £4,000 and £6,000. Out of a total of private incomes of some £7,264,000,000 only some £530,000,000 gross is attributable to payers of super tax, and of this less than £214,000,000 is retained in the hands of the 105,000 odd super-tax payers. The combined rate of income and super tax at the top end of the scale amounts to 19/6d. in the pound, or more than 95 percent.
At the other end, wages have not remained stationary. In war factories figures like £15 or £20 a week are probably out of the ordinary but are by no means unheard of. A skilled worker can now earn not much less than some doctors and dons earned before the war. Even the social prejudice against manual labor is rapidly disappearing with the improvement in the laborer's economic position; and the agricultural laborer's wages have come close to those of a skilled workman.
At the same time death duties have prevented the succession to big estates. In cases where these estates are of any considerable size more than 50 percent goes to the Exchequer as the price of succession, and where two or more deaths occur in rapid succession, as unfortunately happens constantly in time of war, a large estate is split up and practically annihilated in the course of two or three years. Parallel with these fiscal changes -- which have, in fact, been used as the instrument of a vast social revolution -- has been a large body of legislative reforms. Changes in the law, which were unheard of in America before the New Deal and were even then criticized as being slightly socialistic, have been coming into force in England at more or less regular intervals over the past 40 or 50 years. In 1897 the principle was established that where a person was injured at work his employer was bound to compensate him to the extent of half his earnings, irrespective of whether the employer was to blame and irrespective of contributory negligence on the part of the workman. This law of workmen's compensation, under which more than half a million cases are dealt with every year, now extends to all manner of workers, including domestic servants, up to a maximum income limit of £420 a year.
In 1909 the principle was established that elderly people were entitled to a regular income from the state independent of means and independent of any contribution they may have made. This state pension is extremely small (10/ -- a week), but it was followed by a series of measures for the insurance of the working classes, partly at their own, partly at their employers' and partly at state expense, which has largely supplemented the original provision. In 1911 sickness benefit became payable under the National Health Insurance Act, and no worker now goes penniless simply because he is ill. The rate of this benefit is still fairly low, but the principle is one which will obviously be extended. After the last war a series of Unemployment Insurance Acts insured all those who came within their scope for the first 26 weeks of unemployment, and here the level of benefit has never aimed at being far below subsistence. In 1925 a contributory pension scheme was introduced, to give earlier pensions to the elderly and to insure married women in case of widowhood above a certain age.
All these reforms were criticized at the time as being advances towards Socialism. It was said that we were spoonfeeding the people and depriving them of enterprise and thrift. It should be observed, however, that the greater portion of these measures were passed in the first place by Conservative governments and that they have been continually extended by Conservative administrations ever since their inception.
The fact is that what was attempted in America by means of a high wage level has been largely achieved in England by means of a state insurance system, maintained in part by contributions by the workers themselves, in part by a charge on industry in the shape of the employers' contribution, and partly by a redistribution of wealth, which is the effect of the state contribution.
The most enterprising and thrifty class in Great Britain is by common consent the middle class. For years it has attempted successfully to give its own children the benefits of the forms of security offered by the insurance system. It has succeeded in doing so without impairing their vigor. The real effect of the legislation of the past 40 years has been to raise the working class toward the level of the middle class.
In estimating the future of the Conservative Party in Great Britain we must note that these tendencies have not reached their conclusion. "The time is now ripe for another great advance," said Mr. Churchill. And he added: "You must rank me and my colleagues as strong partisans of national compulsory insurance for all classes for all purposes from the cradle to the grave . . . Here is a real opportunity for bringing the magic of averages to the rescue of millions." The logical expression of all this was the Beveridge Report, essentially a proposal to bring the state system of insurance up to the level of subsistence in every case, and to unify the different incomes under which such insurance was available into one single system. Whatever may be the steps by which this goal is reached, it is quite clear that the Conservative Party is too far committed to the principles involved ever to reject the Report on principle, and it is quite obvious that if the Party should remain in power it must be the vehicle by which the proposals of the Report are put into operation.
Simultaneously with this great growth of social legislation the standard of education has gradually risen during the last 50 years. It takes more than one generation in which to educate children, since only part of their education is received at school; but it is fair to say now that the graduates of the secondary schools of Great Britain reach an academic level nearly equal to that of the graduates of the average public school and that there is, therefore, no difference in education, though there may be one in outlook, between the products of the two educational systems. It is quite obvious that, committed as we are to democracy, we have to educate our citizens up to a sufficiently high general level to enable them to discharge their responsibilities.
The Conservative Party may boggle at the cost, but it will be unable to resist the inference. And industry is now demanding both a higher level of education and a greater quantity of technically educated children than is at present produced by the state educational system. The terms of Conservative Minister R. A. Butler's new Bill are not yet known, but it is plain that they will provide for the progressive raising of the general school-leaving age from 14 to 15 and even to 16, that thereafter at least part-time education will probably be compulsory, and that secondary and technical education in the Central and Technical Schools will be free for those who are capable of taking it. "The future of the world," said Mr. Churchill, "is left to highly educated races who alone can handle the scientific apparatus necessary for preëminence in peace or survival in war." These developments will obviously take time. It is estimated that we shall have a shortage of at least 60,000 teachers, and these cannot be provided in a moment; but it is perfectly plain that the Conservative Party no less than the Labor Party is irrevocably committed to this line of development.
The above reasoning leads to the conclusion that Conservative policy in the postwar years is likely to pursue the following lines:
(1) Since mere nationalism no longer provides national security, we shall seek to bring about international security through the agreement of the four main Powers -- the United States, the U.S.S.R., the British Commonwealth and China. On the other hand, we are not likely to press for the adoption of some formal written constitution such as was rejected by the United States last time.
(2) We shall seek to bring about regional systems of security by proposals like Mr. Churchill's for the Council of Europe.
(3) We favor the joint action of armed forces of Great Britain, the United States, Russia and China in assisting the forces of law and order anywhere in the world to repress any major breach of world peace.
(4) We shall regard the United Kingdom more and more as part of the British Commonwealth and less and less as an old-time mother country. We shall regard ourselves as the largest and the most important of the self-governing Dominions. The British Colonial Empire will continue to develop toward self-government, but during this process will be regarded more as the possession of the Commonwealth and less as that of the United Kingdom.
(5) We shall welcome and extend the development of the new society in process of creation by the redistribution of wealth and the development of social legislation.
(6) We believe we can reconcile public control and private enterprise, and that each has its appropriate sphere.
(7) We support the principle that private profit is not the best or the only test of public advantage but insist that the public advantage cannot be secured where there is no private profit.
(8) The sheet anchor of our foreign policy will be coöperation with the United States, the Dominions and the other Powers. That of our colonial policy will be the creation of new markets and the continuance of the development of self-government. That of our home policy will be the levelling up of the standard of life, and the development of a common democratic culture -- in other words, social democracy as expressed in the British tradition.