The Pandemic Depression
The Global Economy Will Never Be the Same
SINCE the end of the war, a large part of European industry has been either nationalized or earmarked for nationalization. The process has not been uniform and the degree of nationalization varies from country to country, but there is no mistaking the trend.
In some countries -- Czechoslovakia, Jugoslavia, Poland, Bulgaria and Rumania, for instance -- practically all industries employing more than a few men are nationalized. Finance, insurance, mining and heavy industry have been nationalized in the Russian zone in Germany, and it is likely that a similar if more limited measure of socialization will be introduced in the British zone. The German coal owners of the Ruhr have already been expropriated and it is not likely that the mines will be returned to private control. The Governments of Austria and Hungary, after some hesitation, have decided to nationalize finance, insurance and heavy industry -- partly in the hope that this transfer of ownership will frustrate Russian demands for reparations. In western Europe the trend toward nationalization is more hesitant, but in France and Holland the central bank has been nationalized and the socialization of heavy industry is under discussion. In addition, the French Government has nationalized mining, public utilities, civil aviation and insurance. Finally, on the western fringe, in Great Britain, the Bank of England, civil aviation and the coal mines are already nationalized and the transfer of transport, public utilities and important sections of the iron and steel industry to public ownership may be completed within the lifetime of the present Parliament.
It is tempting to explain this European trend in a single formula. Since nationalization has gone much further in the lands bordering on Russia (with the exception of Finland), and appears to diminish as Russian occupation ceases and Russian influence declines, it is easy to argue that the Soviet Union has simply imposed its own economic pattern on Europe. But this explanation does not fit all the facts -- for example, that already before the war about 60 percent of the heavy industry in Poland, in spite of an anti-Socialist and anti-Russian Government, was already nationalized. In Turkey, too, an authoritarian and anti-Communist Government owned the country's entire metallurgical and mining industries, finance and transport. Indeed, it was an ideological paradox that dictatorial, not to say "Fascist," governments such as the Beck régime in Poland or the Attaturk dictatorship in Turkey pursued a much more vigorous policy of state intervention in economic matters than did the Socialist Governments of New Zealand or Sweden.
Again, to attribute Europe's trend toward nationalization solely to Russian influence gives no explanation of the fact that primarily conservative and fundamentally anti-Russian parties such as the Popular Republicans in France or the Catholic State Party in Holland have passed measures nationalizing the central banks of their countries and, in their party programs, have accepted further extensions of state ownership and opted for the principle of government planning. It is not Russian pressure that has led the British military authorities to expropriate the mine owners of the Ruhr; nor is the hand of Moscow anywhere discernible behind the program of the Labor Party in Britain. Russian influence is certainly one factor -- and a tremendously important one -- in Europe's contemporary economic development; but to allot it anything like sole responsibility would be to simplify and distort a complex historical process which has been at work in Europe and the world for a hundred years.
The beginnings of nationalization in Europe go back almost as far as the origins of capitalism. It was only in certain western communities that an independent merchant and artisan class had the wealth and the political elbowroom to begin the process of capital accumulation and industrial development without state aid. In 1846, when a vast railway boom was giving millions of British speculators the opportunity to help thousands of independent British entrepreneurs to cover the country with a network of railways, a large part of Europe's economy was still based on the least mobile and adaptable form of property -- serfdom. By the time feudalism had been undermined in central Europe by the revolutions of 1848, and in Russia and eastern Europe by the abolition of serfdom in the sixties, a new type of industrial society already existed fully fledged in western Europe -- wealthy, expansive and tremendously powerful.
No state with any pretensions to greatness could afford to risk the competition offered by the businessmen and industrialists of western Europe. Moreover, the late survival of the political and economic forms of feudalism put the countries of central and eastern Europe at a double disadvantage. Not only were they starting late in the industrial race. They were also starting very ill equipped. The middle classes, the backbone of western industrialism, were weak and diffident in central and eastern Europe. There had been no Reform Bill of 1832 to give the new groups a measure of direct political responsibility. Above all, the concentration of wealth in landed property was a brake on the development of mobile capital. In these circumstances, the state itself had to intervene. The classic example is the Germany of Bismarck. To fit the Germans for great powerhood -- and to unify the new Reich -- Bismarck saw that an intensive reorganization and modernization of transport were necessary. He also saw that private capital was insufficiently developed to carry the burden. Accordingly he introduced a complete system of nationalized state railways in the seventies and eighties. Nor is Germany the only example. Austria-Hungary's railway system was largely financed by the state. In Russia -- economically an even more backward community -- not only railways but sections of the mining and iron and steel industries were developed by the state as nationalized enterprises. This phase of "state capitalism" in Europe coincided with the renunciation of free trade. Protection -- another powerful instrument of state intervention in industry -- was introduced to shelter the weak beginnings of industry from the powerful and fully-developed industrial competiton of western Europe.
But the chief spur to state intervention was not fear of competition. It was fear of war. Ever since Peter the Great started ironworks in the Urals to supply him in his fighting, a government's need for weapons and equipment has been a powerful factor in bringing about state ownership and state control. The Hindenburg Plan for industry worked out by the German General Staff in the First World War was the model of Goering's Four-Year Plan; and one of the largest nationalized enterprises in Europe between the wars -- the Hermann Goering Werke -- began as a state enterprise to exploit, for the making of munitions, low-grade ores which could not be mined and worked profitably by private industry.
But perhaps the two most striking instances in this century when eastern states played the part taken in western Europe by private capitalists are found in Poland and Turkey after the First World War. There was virtually no middle class in either in 1919, and almost no reserve of private wealth apart from landed property. Yet the governments of both countries, led by vigorous dictators, Pilsudski and Attaturk, were determined to modernize and strengthen their communities. Only one way was open to them -- to entrust the development of heavy industry to the state. The textile industry could be left largely in private hands, but in Turkey the transport, the mines and the metallurgical industry were financed and owned by the state banks and operated as nationalized enterprises. In Poland, the extent of state ownership was not quite so complete, but 60 to 70 percent of mining and heavy industry was nationalized. Neither government sought to give any ideological or theoretical justification for this policy. They simply ascribed it to necessity in the shape of the poverty and technical backwardness of their countries.
Although the industrialization of western Europe began in private hands and in an atmosphere of strong hostility to any form of state intervention, later developments tended to contradict the promise of its untrammelled origins. As soon as industrial capitalist society became fully articulated, it began to suffer from the recurring crisis of the trade cycle; and the crises tended to grow more severe as industrial society grew in wealth and complexity. Explanations of this disturbing phenomenon -- no two agreeing -- filled more and more shelves in the economists' libraries, but between the two World Wars the theory of the trade cycle elaborated by Lord Keynes gradually received a growing volume of support and, chiefly in Britain but also in western Europe, became the new orthodoxy.
There is a very close connection between this theory of the trade cycle and the extension of state intervention and ownership. Lord Keynes attributed the recurring crises of capitalist society to an inherent instability which uncontrolled private enterprise could not remedy. Two tendencies are at work in an unplanned economy. One is a tendency for the investment of capital in heavy industry to be cyclical, broadly speaking, because the demand for the most important products of heavy industry -- capital goods in the shape of factories, plant and industrial installations generally -- is not continuously self-renewing as is the demand for consumers' goods. The other is the tendency of established industry to become increasingly rigid and stagnant, "enterprise" taking the form of protecting existing markets and building up monopolies rather than of experimenting in new demand and creating new capital. The consequences of these two tendencies are, on the one hand, to introduce a permanent element of instability into capital investment and, on the other, to slow down its pace until there is almost no new capital development. But the key of Lord Keynes's theory of the trade cycle is precisely that without a high and stable level of investment in heavy industry, in capital goods as opposed to consumption goods, industrial society is unable to avoid recurring crises of unemployment. These crises begin in the laying off of men in the capital goods industries; through the resulting falling off of demand they spread to the industries producing consumers' goods; and presently the whole economy is involved in a downward spiral of unemployment and declining demand. And since unregulated capitalist society produces no automatic corrective to these two tendencies, it must inevitably fall into recurring crises of depression and mass unemployment.
The facts upon which the Keynsian theory rests are incontrovertible. In the twenties and thirties industrial society was twice shaken by an appalling economic depression, originating in the iron and steel industries where the slackening of demand for capital goods first created unemployment. Nor can there be any doubt about the tendency toward economic stagnation in such old industrial communities as France or Great Britain. Throughout the thirties, expansive investment in France virtually ceased. When, last year, M. Monnet published the figures connected with his plan for the industrial modernization of France, they revealed that throughout the thirties, the French economy, far from renewing its capital equipment, was actually falling behind. Productivity in 1929 was 25 percent greater than productivity in 1938. In 1929, the total production of France stood at 565 billion francs. In 1938, the figure was only 430 billion. In Great Britain, although there was no actual decline in productivity, the amount of new capital investment, estimated at only 3 percent of the national income, was certainly far from that "high and stable level of investment" necessary, in the Keynsian view, for full employment and expanding productivity.
The figures for the British steel industry are particularly revealing. In the new plan for steel, recently published by the British Iron and Steel Federation, it is estimated that a thorough modernization of the industry (without much expansion) will demand an investment of £22,500,000 a year for seven and a half years. But in the late thirties, annual investment was running at the level of only some £6,000,000 and in the late twenties fell to a figure between £1,000,000 and £2,000,000. The coal mining industry in both Britain and France offers another example of enterprises which, starting early in the industrial race, have fallen behind their competitors through lack of sustained modernization and capital development. And the restrictive attitude of mind represented by this decline is not confined to one or two branches of industry. The tendency to replace competition by price fixing, trade associations and cartels is endemic in British economy and is at least part of the explanation for the very low level of capital renewal between the wars.
The recurring breakdown of industrial society in violent depressions and the slow paralysis of industrial society due to insufficient investment both tend to state intervention and to foster the introduction of nationalization in industry. The slump of 1929 was the signal all over Europe for a vastly greater intervention of the state in economic affairs. In their efforts to save central and commercial banks and keep some semblance of stability, governments found themselves taking up stock and becoming shareholders in all manner of financial undertakings. This process was particularly marked in Germany where the slump struck society with greatest force, but it was prevalent throughout the Continent.
The need for modernization, reëquipment and higher capital investment generally has also paved the way for the nationalization of industry. One of the most widely accepted arguments for the nationalization of the coal mines in Britain is the scale of investment necessary to bring their equipment up to date. The sum of £150,000,000 has been mentioned; clearly the industry, in its moribund state, could not raise so much new capital on its own private account. The state would thus have been compelled under any arrangement to become a majority shareholder. The same problem faces the steel industry. The figure named for re-equipment -- £168,000,000 in seven years -- can probably be raised by the industry itself, but there is much doubt whether it is sufficient to launch a really ambitious expansion scheme for British iron and steel. If greater investment is needed, public funds are the only source from which it can come and, once again, the government would become a major shareholder.
The state as a majority holder is a form of public control already practised in France -- in the state railways -- and the Monnet plan which aims to invest some $28 billion in reëquipping and modernizing French industry may lead to some extension of this principle. Even outside the sphere of French nationalized industry -- mining, civil aviation, public utilities and (possibly) iron and steel -- the new capital to be raised is so large that private investment may prove inadequate. In which case, the only alternative is to draw on public money with a corresponding increase in state intervention.
But technical arguments, academic theories, industrial necessities and rational solutions have not been sufficient to produce the present transformations in European economy. Nationalization is not simply a technical expedient. To many, it is the goal of the dreamer, the great panacea, the modern philosopher's stone. The development of European industry from its unfettered beginnings in the workshops of Britain to its latest manifestation in the leviathans of modern "monopoly capitalism" has not been only or even primarily a dry record of economic change. It has been the storm center of every political and religious passion in the last hundred years. The Marxist analysis of the capitalist system need not be repeated here; the essence of it is that private profit, based on "exploitation," is an insufficient regulator of economic development, since it cannot cope with the problem of the cyclical demand for capital goods, nor distribute to the working population a sufficient volume of purchasing power to permit demand to keep pace with increased productivity and output. But these dry bones of exposition are not the motive force behind Marxism. The power behind it springs from moral indignation on the one hand and the passions of the dispossessed on the other. For Marxists and Socialists, the capitalist system is not simply inefficiently inclined to slumps and booms and to the arteriosclerosis of monopoly. It is the root of all evil, the primal sin of exploitation, the final barrier to the brotherhood of man.
In this sense, it can be argued that the emotional force behind the demand for nationalization came in part from the breakdown of the traditional moral and religious synthesis of Europe. The old beliefs were discarded. In their place, a new heaven and the new earth were to be founded on the hither side of capitalism, and nationalization was the key to the good life. This moral and emotional approach to the problems of industrial society was not divorced from technical criticism of the defects of capitalism -- on the contrary, Marxist critics preceded the Keynsians in analyzing the inevitable tendency of industrial capital investment to fall into cyclical expansions and depressions -- but it put behind a rationalist analysis the full force of moral condemnation and, at the same time, of class hatred. For the sufferers from the irregularities of capitalism were the working poor, and the victors in the fight for nationalization and state planning would be the common people.
In the twentieth century, the issue of Marxism has come to dominate almost all others and any estimate of nationalization policies in Europe today is inseparable from the growth in strength -- and in contradiction -- of Marxism in the last three or four decades. Two factors more than any others have led to a steadily increasing conversion of European thinkers and workers to the Marxist critique of industrial capitalist society. The first was the evident crises in capitalist society itself. The two great depressions of the twenties and thirties were facts which could not be exorcised or dismissed. They left millions desperate and out of work. They led to a destruction of wealth only surpassed by war. They had appalling political consequences in the shape of the rise of Mussolini to power in Italy after the first crisis and the rise of Hitler to power in Germany after the second. Above all, they destroyed the liberal synthesis of the 19th century -- the belief in a self-regulating beneficent system of private enterprise. Something had to take the place of the old beliefs and, particularly with young people, Marxism had the advantage of being not only an economic solution but a philosophy of life.
The other great factor was, naturally, the Russian Revolution and the building in Russia of a planned and nationalized economy. But the Russian Revolution has been an equivocal factor. It has converted one group -- the Communists -- to an uncritical acceptance of all its methods and all its aims, and to an unwavering support of Russia as the "vanguard of world Socialism." It has converted others -- Socialists and progressive thinkers generally -- to the conviction that a planned society based upon nationalized industry can greatly increase a nation's industrial capacity without exposing it to the hazards of boom and slump. This group, however, is divided from the Communists on the issue of Russia's methods, condemning the Soviet dictatorship and claiming that Socialism can be achieved fully only in a free and democratic society. On the other hand, another great body of opinion dismisses even the technical achievements of the Russian system and claims that Socialism and nationalization are inseparable from regimentation, bureaucracy and the totalitarian state. Finally the extremists on the Right -- the Fascists, the National Socialists -- while rejecting every form of genuine social reform, have nevertheless adopted the Russian political formula of the single party, mass propaganda and police terror in order to fight the rising tide of Socialist criticism and the clamor for radical change which inevitably followed the two great economic slumps. With the rise of Fascism in 1922 and its reinforcement by National Socialism after 1932, the polarization of European politics between two political extremes was complete, with the issue of nationalization at the center of the resulting tension.
As in all political struggles, the issue was not clear cut. The Fascists did not reject "the organizing powers of the state." The Nazis in Germany created in such enterprises as the Hermann Goering Werke the largest nationalized undertakings in Europe. What the Fascists rejected was not so much the technical implications of Socialism as its political and moral content. They had no objection to planning, if it was planning for war; and no objection to nationalization, if it reinforced their war economy. But they rejected absolutely the vision of a reformed equalitarian society without classes and without privilege, which European liberals and Christians at least preferred to Fascism, which Socialists believed public ownership would bring about, and which, in the teeth of all the evidence, Communists asserted to exist in Russia.
Once the Nazis had achieved power this cleavage between themselves and progressive opinion in all its forms soon brought Catholic and Communist, Socialist and liberal together in the same concentration camp. And when the Nazi onslaught on Europe had transferred the struggle to the international plane, the pattern of opposition and resistance already prefigured in the camps emerged in the resistance movements of every invaded and occupied land. The war was in part a national war, fought by the Germans for aggrandizement and by the other nations in self-defense; but the ideological and social issue was inextricably bound up with the issue of national survival. At first, it was opposition to the Nazis that brought together men of every belief and social background in the concentration camps and later in the underground Resistance movements, but the character of the war made this merely negative alliance short lived. The Nazi Party had achieved power in Germany with the support of the "traditional forces" -- military circles, the landowners and industrialists -- and in extending their control over Europe and building their New Order, they looked for support among these same groups wherever their armies went. It would be an exaggeration to say that these social groups collaborated with the Nazis en bloc -- as a class. It is, for instance, obviously untrue of either Holland or Belgium. But the generalization comes nearer to the truth in eastern Europe, where the shadow of Russia fell more darkly; and whatever collaborators there were anywhere in Europe tended to be drawn from the wealthier and more propertied classes. As one writer put it: "If according to Proudhon, la propriété c'est le vol, according to the Resisters, la propriété, c'est la collaboration."
This fact naturally made a very deep impact on the resisters in the European underground. An intense feeling of disgust at the collaboration of their own old order with the Nazis' New Order united men of very different political belief and social outlook in a strong desire to sweep away the corrupt past and build a new society. The obvious model was Socialist; the Nazis had made Socialism the target of their bitterest attacks; many members of the class most strongly opposed to Socialism were now collaborating with the Nazis; and, within the resistance movements, the fruit of twenty years' slow growth in Socialist thinking in Europe was ready for harvest. By 1944 the men of the Resistance -- the future leaders of Europe -- were willing to accept a measure of Socialism and a measure of nationalization as the program or blueprint of a future in which the Nazis, the collaborators and the "decadent past" would all have been swept away.
Two of these programs -- the Kosice Program drawn up by the Czechoslovaks and the program of the French Conseil National de Libération -- are typical of this wartime mood which has had such a decisive influence on the development of nationalization in Europe since Hitler's defeat. Both these programs were drawn up and signed by all parties and every shade of opinion from the constitutional Right -- such as the Czech conservatives or the followers of M. Louis Marin in France -- to the Communists. They represent in the first place the protest of patriots against the betrayal of a class. But they represent much more than this. They represent the doctrinaire Socialism of the Marxists. They represent the conversion to the idea of State planning of the technicians and hitherto non-political sections of the middle class. They represent a general feeling that, so appalling is the destruction and dislocation caused by the war, only vigorous state intervention can restore the national economy. They represent the only solution the men of the Resistance saw to the problem of restoring the ownership of industrial enterprises which the Nazis had, with or without the consent of their owners, transferred to German management within the New Order. Incidentally, in the case of the Czechs, they also represent a mood of nationalist revenge. As President Beneš pointed out in the pages of this review:
. . . the question arises what should be done with the big industries and the banks which belonged to the "Sudeten" Germans who were guilty of treason against the Republic. (For instance, the paper and porcelain industry was in the hands of "Sudeten" Germans belonging to the Nazi Party.) There is no better solution than to take this property, the profits of which paved the way economically and financially for Munich, and transfer it to the state as the confiscated property of traitors.[i]
The Czech and French Charters are the clearest examples of the mood of the European underground, for they were formally drafted and signed. But less official similar agreements expressed the unity of purpose in the Belgian and Dutch Resistance and have left their mark on the conservative parties, the Catholic State Party in Holland and the Catholic (Christian Socialist) Party in Belgium. During the war both parties acquired a much more liberal left wing; in Holland this has made possible a hitherto unthinkable coalition of Catholics and Socialists in a Cabinet whose first act was to nationalize the Netherlands Bank.
In eastern Europe, the position is less clear. On the one hand, the fact that the countries were liberated by the Red Army gave an enormous stimulus to the Communists and to their program. The Russians' selection of Communism as their "chosen instrument" in the lands they occupied also made it inevitable that once the Red Army had driven the Nazis from eastern Europe, the Communist program of nationalization would be carried through. Equally, however, first the threat of Communism and then the predominance of the Communist Party alienated even the moderate Right and prevented the achievement of the broad coalitions that were built up in western Europe. In the case of Poland, the London Government and the Polish Home Army made promises of radical change and of land reform similar to those already published by the Lublin (later Warsaw) Government, but the attempt to fuse the two wings through the mediation of Mr. Mikolajczyk has so far failed. Similarly in Rumania, an attempt to form a joint bloc among Socialists and Communists and the "Historic Parties" (Liberals and Peasants) in 1944 failed and has not been renewed. In Hungary, all parties subscribed to nationalization and land reform as soon as the coalition government of General Miklos was set up in 1944, but the conservative Small Landholders after their electoral victory in November 1945 were reluctant to put the industrial side of the agreement into practice until Russian pressure and the fear of losing most of their industrial assets as reparations compelled them to introduce the necessary legislation. The Catholic People's Party in Austria showed a similar hesitation after their electoral victory but have now followed Hungary's example. Both countries illustrate a fact which is obvious all over western Europe, that the predominantly Catholic Right Wing of the anti-Fascist parties -- the Christian Democrats in Italy, the Bopular Republicans in France and the Catholic Parties in Belgium, Holland and Austria -- are rather lukewarm converts to the practice of nationalization and that the unity of program inherited from the Resistance has been dissipated in the first year of peace.
It is this quick dissipation of the measure of unity achieved against the Nazis that offers the most disquieting prospects for the future. It is not confined to particular countries or individual resistance movements. It splits the Big Three as radically as it splits the Polish peasants or the industrial workers of the Ruhr; and the fact that the Big Three are divided exasperates the divisions in Europe, each side looking to its powerful backer among the Great Powers. The issue of nationalization is, obviously, one of the central problems of the new ideological division of the world. The United States is the symbol of private enterprise and ownership, free trade and laissez-faire economics, Russia of nationalized industry, a planned economy and state regulated foreign trade. The political outlook of the two countries is no less polarized, the Americans believing that political freedom is inseparable from a free economy, the Russians arguing that in capitalist society only the property owners are free while the rest are "wage slaves." And the Russians, moreover, insist that it is only a matter of time before all unfettered economies, faced with economic depression, go the way of Germany and develop into Fascist dictatorships.
This great debate is echoed in every European land today. For instance, in Poland, the legal opposition of Mr. Mikolajczyk and the illegal terrorist opposition gathering, unhappily, behind him both look to British and American diplomatic support and regard the British and American decision to withhold loans and credits from Poland until elections have been held as a direct encouragement to their opposition to Mr. Beirut's Communist-dominated coalition. The disputes at the Paris Conference on free trade along the Danube have been generally accepted in eastern Europe as a struggle between the exponents of state control and the supporters of free capitalism. It is inevitable that in this debate the groups of the Right, both constitutional and extremist, should look westward, just as the Communists in western Europe look eastward. It is equally inevitable that both sides hope for foreign support, and that this should give an added bitterness and violence to the political cleavage between Right and Left. The instability and potential danger of such a situation are obvious. Civil wars today always invite and sometimes result in outside intervention, and an outbreak of civil strife might be the signal for an undercover struggle between the Great Powers. And even if this tragic extreme is avoided, the continuing state of tension and suspicion in Europe stands in the way of every effort at political pacification and economic revival.
Is the polarization complete? Does nothing point in the direction of compromise or at least of a modus vivendi between the predominantly state-controlled nationalized economies of eastern Europe and the free economy preferred by European conservatives and supported by America's prestige and great economic strength? The outlook is certainly not entirely dark. There are hopeful features of which the two most striking are, in the east, the potential impact on Russia of the Russian occupation of Europe, and in the west, the experiments in democratic Socialism on which several nations, chief among them Great Britain, have embarked. It is sometimes forgotten how different are many features of the new régimes in eastern Europe from conditions prevailing in Russia itself. In Poland, Finland, Czechoslovakia, Rumania and Russian-occupied Germany, and to a lesser extent in Bulgaria, there are opposition parties, the government itself is composed of a coalition of different political groups, there is limited freedom for an opposition press, and a certain amount of elbow room for free discussion and criticism. There is also a fringe of small independent business enterprises and, so far at least, no attempt has been made to collectivize agriculture. On the contrary, individual ownership and coöperative organization seem at present to be the more likely future pattern for agriculture. Now all this may be far from the unfettered political freedom of western Europe or the United States, but it is very great freedom compared with the total state monopoly of press, party, economy and agriculture that exists in Russia. It is, therefore, relevant to ask whether the Russian system itself may not be profoundly influenced by the existence of relatively freer versions of its own régime just beyond its frontiers. May not the Ukrainians look with envy at the measure of political freedom enjoyed in Poland? May not the Russians themselves, finding some liberty and some flexibility to be compatible with state ownership of industry, begin to fret at their own restraints? It was, after all, the impact of Europe on Russia after the Napoleonic Wars that set the spark -- in the Decembrist rising -- to the long train which led to the great explosion of 1917. Is it not possible that the influence of Europe should have some effect today?
The other factor -- the experiments in democratic Socialism in western Europe -- is best exemplified by Great Britain. The Labor victory in 1945 was due in part to the inevitable reaction from 25 years of almost unbroken Conservative rule, but this negative feature was less important than the fact that the Labor Party emerged at the election for the first time as a national rather than a class party. Its core was still the trade union movement -- the organized working classes -- but millions of its voters were drawn from the middle class and only one-third of its elected members were trade unionists. A surprisingly large number were young men of good education whose belief in Socialism tended to be of a very practical character and to stem much more from Keynsian economics than from Marxist faith. This fact gives some leading members of the Labor Party an empirical and undoctrinaire approach to the problems of nationalization and state control, and promises more flexibility and more compromise than did the rigid Socialist orthodoxy of 20 years ago.
The Party can also hope for the support of many non-Socialists who are disturbed by the technical backwardness and the sluggish state of many sections of British industry and are ready for nationalization provided it means rationalization, modernization and complete technical reëquipment. There is thus in Great Britain a certain amount of practical common ground in economic theory and practice which is divorced from ideology and can be the basis of agreed industrial experiment. It is too early to predict how far this promise will be fulfilled. The first board of the first nationalized industry -- coal -- is still advertising for staff. But the climate of opinion is not unfavorable, and if the grafting of new economic forms on to a traditionally free and constitutional community is successful in Britain a new pattern of society may emerge, to bridge the gulf between the partisans of laissez-faire and freedom and those of nationalization and control.
The danger in the present situation is the strength of the old ideological cleavage and the relative weakness of the new growing points in economic and political life. If Europe could be certain of 20 years' tranquil development, very likely the system emerging at the end of that time would represent a fruitful compromise between the rival principles of freedom and control, of personal initiative and public ownership. But the outlook for two peaceful decades is not promising. The "gale of the world," blowing from Moscow and London and Washington, sweeps strong and cold across Europe, embittering every dispute and shrivelling the beginnings of coöperation. The great debate has reached too high a level for local plans and compromises to influence its course. Thus the fate of social peace in every European country hangs upon the decisions and policies of the Big Three. No nations have ever carried so heavy and all-embracing a responsibility.
[i] Eduard Beneš, "Postwar Czechoslovakia," FOREIGN AFFAIRS, April 1946.