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INTRODUCTION
Ideas and Policy

MORE YEARS have passed since 1945 than from the beginning of the century to that date. The major issues and questions in British history from 1900–45 are now fairly well established and there have been authoritative responses in many areas. In contrast, the historiography of the last fifty years is still in flux. A mass of scholarly literature has been written on particular policy areas, institutions and individuals. But the pattern and contours of post-war British history have been strangely hard to define. This is particularly true of the complex relationship between the world of ideas and the world of action. Some of the published literature refers in passing to the role of ideas, but for most authors it is very much a secondary concern.

Yet it is clear that the fifty years since the end of the Second World War have seen dramatic changes in the intellectual and cultural framework within which policy is made and implemented. The details of policy change, as well as the fluctuating fortunes of the political parties, reflect these broad changes in the subconscious of the nation and cannot be understood in isolation from them. The object of this book is to tease out the relationships between these dimensions of change. It explores the impact of transformations in the intellectual and cultural climate on the thinking and assumptions of policy makers, seeks to explain why ideas (such as privatisation or monetarism) which seemed beyond the pale in one period became the orthodoxy of another, and analyses the relationship between changing policy approaches and changes in the content of policy.

In doing so, The Ideas that Shaped Post-War Britain aspires to throw new light on the alleged shift from the collectivism of the post-war era to the individualism of the last decade and a half, and to place the Thatcher revolution and its aftermath, as well as the preceding thirty years, in a new and richer context.

Ideas, and the complex relationship between thought and action, provide the connecting theme of the book. However, our authors have approached the subject from very different angles. In the first chapter, David Marquand examines the rise and fall of Keynesian social democracy from the late 1940s until the mid-1970s, explores the New Right paradigm which dominated the following twenty years and speculates on the possible emergence of a third paradigm (which is itself the subject of the final chapter in the book). Marquand’s distinctive approach is to provide a subtler separation than that between individualism and collectivism, and to suggest that within each dominant phase were powerful cross-cutting political languages, at one time active and moralistic, at another passive and hedonistic.

Albert Hirschman, the seminal American political economist, next measures the British post-war experience against the propositions of two of his recent books, Shifting Involvements (1981) and The Rhetoric of Reaction (1992). Hirschman’s work is well known to social scientists in Britain, but historians have paid too little attention to it. His oeuvre provides the inspiration for several chapters that follow.

Chapters three and four provide the opportunity for two of our leading historians of economic thought to examine the impact of the ideas of Keynes, the single most powerful and influential thinker of the period, on post-war British history. Robert Skidelsky finds that Keynesian economics lost out in the 1970s to Friedmanism because the former failed to renew itself intellectually when it still held sway. A different perspective is provided by Peter Clarke in his chapter on the argument over macroeconomic policy in Britain since 1945. Robert Taylor in chapter five explores another aspect of economic policy in his story of the uneven abandonment of the voluntarist tradition in British industrial relations.

The book then moves on to consider social policy. Jose Harris, the biographer of William Beveridge, the other main influence on post-war British history, examines the theoretical underpinning of the British welfare state as it emerged in the 1940s. Chris Pierson brings the story up to the present day in his chapter on the post-war welfare state. Social policy, he finds, by the 1990s was profoundly different to how it was conceived by Beveridge fifty years before. Raymond Plant examines the social-democratic tradition in British politics, grounding his analysis in the work of C. A. R. Crosland, before moving on to consider the neo-liberal reaction to it.

The book broadens out beyond economic and social policy at this point. Geoff Mulgan considers in chapter nine British culture and its relation with society since 1945, while Jim Bulpitt explores the tortuous but central question of the motives for Britain’s changing stance on Europe in chapter ten. In chapter eleven, Anthony Seldon brings together the strands of the book in his analysis of the key turning points in post-war policy across a broad area, and weighs the relative influence of ideas, individuals, interests and circumstances in bringing about change. In the final chapter, Will Hutton explores some of the ideas behind ‘New Labour’. The book does not aim to be comprehensive. We are painfully aware that several key areas, such as environmentalism and feminism, have been neglected. The book is sponsored by the two organisations to which the editors belong, the Political Economy Research Centre and the Institute of Contemporary British History. The editors wish to thank colleagues at these bodies, especially Andrew Gamble and Sylvia McColm at the former, and Peter Catterall and Virginia Preston at the latter. They also wish to thank Annemarie Weitzel for her secretarial skills in bringing the book together, and Philip Gwyn Jones and Toby Mundy at HarperCollins for their enthusiasm and support.

David Marquand and Anthony Seldon, October 1996

CHAPTER 1
Moralists and Hedonists¹

David Marquand

[T]he ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back … [S]oon or late, it is ideas, not vested interests, which are dangerous for good or evil.

J. M. Keynes.2

[T]he supremacy of a social group manifests itself in two ways, as ‘domination’ and as ‘intellectual and moral leadership’ … A social group can, and indeed must, already exercise ‘leadership’ before winning governmental power.

Antonio Gramsci.3

KEYNES’S heroic intellectualism dazzles more than it persuades. The notion that ideas rule the world, or shape societies, implies a platonic philosopher king, legislating for society from the outside. No such creature appears in this book. It is based on the assumption that, if thought influences action, action also influences thought. Madmen in authority may distil the frenzy of academic scribblers, but academic scribblers respond to the pressures of the society around them, and their scribbles resonate only when they speak to social forces. If practical men are apt to be enslaved by defunct economists, living economists inhabit a world managed by practical men. As Gramsci knew, intellectual leadership precedes domination, but as he also knew, successful intellectual leaders tailor their appeals to inherited traditions. Belief and behaviour, ideas and policies, visions of the future and legacies of the past, form a seamless web; attempts to unpick it, to give primacy to thought over action, or to action over thought, confuse more than they illuminate.

This web provides the subject matter of the chapters that follow. In different ways, they all explore different facets of the complex and fluctuating relationship between thought and action in post-war Britain. The remaining chapters examine particular aspects of that relationship. In this chapter, I try to pull some of the threads together. I trace the rise and fall of two clusters of ideas and assumptions, through which two sets of claimants for power have sought Gramsci’s ‘intellectual and moral leadership’, and I speculate about the possible emergence of a third cluster, as yet only half-formed. I begin by describing the varied fates of these clusters and discussing the ideas they contained. I then offer an interpretation of the courses they have followed.

It is a story that falls into three broad phases. From the late 1940s to the mid-1970s, governments of right and left alike adhered to a form of liberal collectivism, sometimes known as ‘Keynesian social democracy’.⁴ As that formulation implies, liberal collectivism or Keynesian social democracy was not the preserve of any single political party. Nor was it the product of any single ideological tendency. Its intellectual ancestry was too rich and diverse to fit the pigeon-holes of left and right; and it owed more to the crises, contingencies and compromises of the early post-war period than to the doctrines championed by either major party at the beginning of the period. The Attlee Government, under which its essentials were embodied in legislation and (much more importantly) in administrative practice, set out in 1945 with quite different intentions. So did the Conservative opposition under Churchill. Yet by the early 1950s at the latest, it had become the lodestar of the two front benches in the House of Commons, of the Whitehall mandarinate, of the leaders of organised capital and organised labour and of the academic and journalistic apologists and interpreters of this nexus of interests. Dissenters – Aneurin Bevan and his followers in the Labour Party; Peter Thorneycroft, Enoch Powell and Nigel Birch in the Conservative Party – were either marginalised or obliged to recant.

For Labour, the Keynesian social-democratic moment came gradually. In the two years from 1947 to 1949, ministers slowly abandoned their original vision of a socially-controlled economy – in which resources would be allocated by political decisions rather than market-place haggling – in favour of a mixed economy centred upon Keynesian demand management. The fact that the retreat from social control was headed by Sir Stafford Cripps, the arch-visionary of 1945, only made it all the more poignant. The equivalent Conservative moment was more compressed. It came in 1952, when the Cabinet rejected the Treasury’s so-called ‘Robot’ plan for a floating pound, sterling convertibility and a return to market disciplines, on the grounds that it would lead to higher unemployment and, as Lord Cherwell argued, ‘put the Conservative Party out for a generation. Even a Government with a large majority could not survive such a sudden, complete reversal of policy’.⁵ Thereafter, on both sides of the party divide, the heirs of the practical men whom Keynes had teased took it for granted that they could exercise power only within Keynesian social-democratic parameters, and lead successfully only by showing that they were better Keynesian social democrats than their rivals.

The Keynesian social-democratic phase terminated amid the confusion and crises of the 1970s. In classic Gramscian fashion, it ended in the realm of ideas well before corresponding changes took place in the realm of governmental power. By the middle of the decade, at the latest, the authoritarian individualists of the New Right, with their emphasis on market freedom, social and monetary discipline and a tightly concentrated state, were making the ideological running. Keynesian social democrats still controlled the commanding heights of Whitehall, but the intellectual system on which they based their claim to power was patently crumbling. In a profound sense, they no longer knew what to do. Ministers waited in vain for coherent official advice; officials waited in vain for firm ministerial decisions.⁶ It was as though a sleek ocean liner had suddenly become a rudderless raft. The New Right offered an alternative craft, and for the best part of twenty years this was the only vessel following a confident course. To be sure, New Right politicians never won a majority of the popular vote. They did not need to. With dazzling political skill, they constructed a new social coalition, distributed in such a way as to procure them decisive parliamentary majorities in spite of their comparatively low levels of popular support. More important still, the New Right paradigm shaped the political agenda and controlled the intellectual weather.

How far it still does is a moot question. Little remains of the confident and decisive Conservative regime of the 1980s. Since Britain’s forced departure from the European Exchange Rate Mechanism, the Major Government has been as rudderless as were the Wilson and Callaghan Governments of the 1970s. By the early months of 1996, the Conservative Party was riven by internal disputes as savage as those which tore the Labour Party apart in the early 1980s, and most observers took it for granted that a Labour Government was only a matter of time. But this does not necessarily betoken the end of the New Right paradigm, any more than the sad diminuendo of the second Attlee Government between February 1950 and October 1951 betokened the end of its Keynesian social-democratic predecessor. New Right ideology and Conservative statecraft have been symbiotically connected for nearly two decades, but they are not the same thing, and the disarray of the latter proves nothing about the former. On the structure of the British state and its place in an increasingly proto-federal European Union, Tony Blair’s ‘New Labour’ Party offers a decisive break, not just with Conservative policy, but with the governing assumptions of New Right politics. Yet on the only slightly less crucial issue of taxation and public expenditure it whistles an essentially New Right tune. It seems to be groping for a vision of the political economy as distinct from authoritarian individualism as authoritarian individualism was from Keynesian social democracy. It would be rash to assume that it will find what it is groping for.

Yet intimations of a possible new intellectual and policy paradigm are not difficult to detect – on the political right as well as on the left. The fall of communism has taken the zest out of the old battles of state against market, and socialism against capitalism. The simplistic universalities of the Cold War no longer resonate; the focus now is on complexity and difference. Persistent divergencies in the fortunes of market economies have focused attention on the varieties of capitalism, and on their moral and cultural dimensions.⁷ Endemic unemployment in Europe, the rise of the working poor in the United States, the transformation of labour markets everywhere and the associated threat of fragmentation and anomie have fostered a new concern with the dangers of social exclusion and the a priori necessity for social cohesion.⁸ Classic themes from the eighteenth and nineteenth centuries – the role of trust in a market economy; the prerequisites of civil society; the meaning of citizenship; the relationship between duties and rights; the need for and scope of a public domain; the threats to and demands of community – have been rediscovered.⁹ On the right there is talk of a new ‘civic conservatism’; on the left, of a ‘stakeholder economy’.¹⁰ The differences between them are real and important, but they spring from a shared experience and a common fear. As John Gray, one of the most passionate and original exponents of the new mood, puts it in an anguished pamphlet,

Communities are scattered to the winds by the gale of creative destruction. Endless ‘downsizing’ and ‘flattening’ of enterprises fosters ubiquitous insecurity and makes loyalty to the company a cruel joke. The celebration of consumer choice, as the only undisputed value in market societies, devalues commitment and stability in personal relationships and encourages the view of marriage and the family as vehicles of self-realisation. The dynamism of market processes dissolves social hierarchies and overturns established expectations. Status is ephemeral, trust frail and contract sovereign. The dissolution of communities promoted by market-driven labour mobility weakens, where it does not entirely destroy, the informal social monitoring of behaviour which is the most effective preventive measure against crime.¹¹

These intimations are still tentative and inchoate (not to say confused). Only time will tell if they can provide the basis for the kind of intellectual and moral leadership I have been discussing. Through the fog, however, it is possible to discern the outlines of a third phase and a new political divide. This new divide cuts across the divides of the last fifty or even one hundred years, and the political vocabulary of the twentieth century does not capture it. On one side are those, of left and right alike, who believe that institutions are the guarantors of freedom, and collectivities the schools of individuality. On the other are those, also of left and right, who see institutional pressures as harbingers of tyranny, and who put their faith in the spontaneous mutual adjustment of unconstrained individuals. As Robert Skidelsky has suggested, it may perhaps be a divide between political and economic liberals, or on a deeper level between pessimists and optimists.¹² Be that as it may, it is clear that, just as the final act of a play can give unforeseen meaning to the earlier acts, the tentative emergence of this new divide puts those that have preceded it in a new and unexpected light.

So far, perhaps, so obvious. The final chapter of this story may be unfamiliar, but the first two are well-known. The inner meaning, however, is not obvious at all. Three sets of arguments underpinned post-war Keynesian social democracy, each with a long pedigree. The first was economic. As Keynes put it in his famous essay, ‘The End of Laissez-Faire’,

The world is not so governed from above that private and social interests always coincide. It is not so managed here below that in practice they coincide. It is not a correct deduction from the Principles of Economics that enlightened self-interest always operates in the public interest. Nor is it true that self-interest generally is enlightened; more often individuals acting separately to promote their own ends are too ignorant or too weak to attain even these. Experience does not show that individuals, when they make up a social unit, are always less clear-sighted than when they act separately.¹³

In short, markets fail. Their failures are systemic, not accidental. They fail because market actors cannot know enough to maximise their interests in the way that market economics postulates. They fail because they cannot, by themselves, ensure that social costs are borne by those who incur them. And, as Adam Smith knew, they fail because they cannot secure the production of public goods. Because they fail, they have to be both regulated and supplemented; and it is the state that has to regulate and supplement them. The Keynesian social-democratic paradigm left plenty of room for debate about the extent and form of state intervention, but on two points all Keynesian social democrats were agreed. They were for extensive state intervention in the market, and against state suppression of the market. In James Meade’s language, they were ‘Liberal Socialists’;¹⁴ in Andrew Shonfield’s, they wanted a ‘mixed economy’, in which ‘supplies of goods and services are largely determined by market processes’, but in which the state and its agencies ‘have a large capacity for economic intervention’.¹⁵

The second set of arguments was moral and political. To make a reality of civil and political rights, Keynesian social democrats insisted, social rights had to be guaranteed as well; indeed, social rights were the emblems of social progress. In his seminal 1949 essay, ‘Citizenship and Social Class’, T. H. Marshall offered a classic summary of the argument.¹⁶ Citizenship, said Marshall, had three dimensions – civil, political and social. Over the preceding three centuries, the struggle for citizenship rights had shifted from the first to the second, and then from the second to the third. Civil citizenship, manifested in equal civil rights, had been established in the eighteenth century, or at any rate in the 150 years between the Glorious Revolution and the first Reform Act. Political citizenship – equality of political rights – was largely the work of the nineteenth century. In the twentieth century, the focus had shifted to social citizenship – the struggle for equal social rights. The post-war welfare state had now enshrined the principle of equal social rights in legislation.

The implications went wider than appears at first sight. The essence of citizenship lies in its autonomy: the fact that citizenship rights are held independently of market power or social status. If the domain of citizenship expands, the domain of the market-place contracts. In celebrating the extension of citizenship, Marshall was also celebrating the growth of the public domain at the expense of the market domain. In writing the history of the preceding 250 years as a history of growing citizenship, he was saying that successive aspects of social life had been ring-fenced from the operations of the market-place. In presenting that process as evidence of social progress, he was also saying that it had been right to ring-fence them: if the democratic promise of equal citizenship were to be honoured, the market domain should not be allowed to invade other domains.

Buttressing the arguments from market failure and democratic principle was an argument from historical necessity. As Albert Hirschman has suggested, one of the stock themes of ‘progressive’ rhetoric is an appeal to irrevocable laws of motion, carrying society, willy-nilly, in the desired direction.¹⁷ In the eighteenth and nineteenth centuries, the founding fathers of market economics had employed that trope to devastating effect. The invisible hand of free competition, and the accompanying switch from status to contract, produced opulence; opulence produced civility; with civility came felicity; with both came progress. Not the least of the achievements of the intellectual progenitors of Keynesian social democracy – and not the least of the reasons why Keynesian social-democratic governments exercised leadership as well as power – is that they turned this historiography on its head. The irrevocable laws of motion, as depicted by them, pointed in very nearly the opposite direction – from the disorganised to the organised, from the dispersed to the concentrated, from the individual to the collective. The visible hand of oligopoly had gradually, but inexorably, replaced the invisible hand of free competition. Big firms, big unions and big government were the inescapable hallmarks of the modern age. So the maverick Conservative Harold Macmillan saw existing forms of economic organisation as ‘a temporary phase in the onward march of developing social history’,¹⁸ which would, sooner or later, terminate in a planned economy. And so the Labour economist, Evan Durbin, dismissed the ‘liberal’ economics of Mises, Hayek and Robbins with a kind of mocking determinism. It was not, he wrote,

wholly inconceivable that the politician of the future, inspired by these economists, should persuade the trade unions voluntarily to disband, and the people to accept a permanent reduction of the social services with the enthusiasm that greeted the sharp deflationary budget of 1931. It is not impossible that the British working class could be persuaded, by the compelling force of ideas, to abandon with cheerful courage the social hopes that they have entertained for generations; and thus to acquiesce in a mournful return to a world that they had left behind them for ever. It is not impossible to conceive this; but such a change is, surely, in the highest degree improbable. Social systems have rarely developed backwards.¹⁹

The counter-arguments which gave the New Right its victory in the struggle for intellectual and moral leadership in the late 1970s and early 1980s must be seen against this background. Their most striking feature is that they were not new at all: they consisted of more or less ingenious re-statements of very old arguments, which the rising liberal collectivists of the late nineteenth and early twentieth centuries thought they had refuted. Inequality, said the New Right, is desirable; social justice is a chimera. So are the positive freedoms embodied in social-citizenship rights and the notion of a public domain, separate from the market domain. So far from erecting boundaries between the market and other domains, market relations should be given as free a rein as possible. The invisible hand of free competition does produce opulence, state intervention in the market-place does misallocate resources and the principles that govern the finances of a private household do apply to the public finances. From this, it followed that Keynesian pump priming was inherently inflationary and state planning, even of the modest kind attempted by the governments of the 1960s and 1970s, inherently wasteful. The role of the state was to enforce contracts, to supply sound money and to ensure that market forces were not distorted. To attempt more than this was to embark on a slippery slope to inflationary crisis and collectivist oppression.

To be sure, that was only the beginning of the story. If the New Right had confined itself to a re-statement of nineteenth-century economics, no one would have listened. The originality and power of its critique of the Keynesian social-democratic system came from its politics, not from its economics. Above all, they came from its answer to the Keynesian social-democratic argument from market failure. The New Right did not, on the whole, deny that markets can fail. But it added that market failure was balanced – and more – by government failure. It followed that attempts to correct market failure through government action did more harm than good.

One reason, derived from the pessimistic Austrian anti-rationalism of Hayek, was epistemological.²⁰ No government or planning board, the argument ran, not even one equipped with the most sophisticated technology, can know enough to second-guess the ‘spontaneous order’ of the market-place. If it tries, it will fail; if it tries to compensate for its failure with further interventions (as it is inherently likely to do), it will make matters even worse. That leads on to the second reason, derived from the public-choice theorists of the so-called Virginia School. Excessive government intervention, according to this argument, is not the product of intellectual hubris alone. It springs from the inescapable pressures of party competition in conditions of mass democracy, and from the equally inescapable pressures of bureaucratic empire-building in the conditions created by an extended modern state. Behind all this lies the simple, not to say simplistic, premise that political processes can be reduced to economic ones: voters are like shoppers without a personal budget constraint; politicians seeking votes are like salesmen competing for custom; bureaucrats strive to maximise their bureaux as entrepreneurs strive to maximise their profits. On that key assumption rest the conclusions that politicians will always promise more than they can perform, voters will always vote for exaggerated promises, officials will ceaselessly seek to extend the scope of their activities and the extended democratic state is therefore, of necessity, a prey to self-stultifying overload.²¹

Yet even these arguments were not as new as they were sometimes thought to be. They were the latest manifestations of a long line of speculation and rhetoric, going back to the earliest apologists of the capitalist market economy and of the unconditional rights of private property.²² The notion that markets are, in some mysterious sense, more ‘spontaneous’ than governments goes back to Adam Smith’s famous claim that a propensity to ‘truck, barter and exchange’ is fundamental to human nature. The proposition that deliberate government planning cannot out-perform market spontaneity goes back to his doctrine of the invisible hand, and perhaps even to Mandeville’s Fable of the Bees, with its sardonic claim that ‘private vices’ unintentionally produce ‘publick benefits’. The claim that democratic party competition is bound to engender inflationary overload is a modern version of the fears that disturbed the sleep of a long line of nineteenth-century economic liberals, alarmed by the thought that a democratic suffrage would endanger the market order. On a deeper level, the assumptions behind it can be traced back to the rhetoric of the eighteenth-century Court whigs who dismissed the ideal of civic activism on the grounds that, as J. G. A. Pocock puts it, men were ‘interested beings’, to be policed ‘by a strong central executive’.²³

This does not prove that the arguments concerned are false, of course: old arguments may well be better than new ones. But it does raise an obvious question. Why should a set of arguments, which had seemed intellectually discredited and politically irrelevant for the first three decades after the Second World War, suddenly experience a miraculous rebirth in the fourth and fifth? Granted that the history of social thought provides plenty of examples of recycled ideas masquerading as new ones, what was it about these particular theories that made it possible to recycle them to such effect?

For many New Right sympathisers, the answer lies in a kind of inverted historicism, as deterministic as the historicism of the Keynesian social democrats and their precursors in the first part of the century. The inexorable tides of economic and social change which the Keynesian social democrats once rode, the argument runs, have changed direction. They are still there, and they are still inexorable; but they no longer run from the small to the big, from the disorganised to the organised, or from the individual to the collective. Now they run in the opposite direction. Like a de-coagulant dissolving a blood clot, the micro-electronic revolution has dissolved the great power blocks that impeded the free flow of market forces. Large organisations have broken up and social classes have merged. As a result, the state has been disempowered. For in the fluid, dynamic, rapidly-changing economy created by modern technology, the techniques of Keynesian social-democratic regulation have no purchase. Planning, corporatism, even demand management have become unnecessary, and in any case impossible. As David Howell put it during the high noon of the New Right,

The unplanners have defeated the planners completely. There has to be less government because more government is becoming unnecessary and unworkable. The corporatists, who rested their thinking on big unionism, big government, big finance and big industry, are seeing their edifice collapse not because they have lost some temporary political power struggle (or because some other clique has won it) but because this degree of centralism has simply become outdated. The computer and micro-electronic communications disperse power and knowledge, and therefore traditional political formations, just as they disperse and alter industrial and commercial activity. So a new business landscape has emerged, and therefore a new political landscape as well.²⁴

Unfortunately, there are at least two weaknesses in this answer. In the first place, its claims are too universal. The information revolution and its accompanying economic fluidity have affected the entire globe. The moral and intellectual victory of the British New Right was peculiar to Britain, or at most to the English-speaking world. If the demise of Keynesian social democracy and the rise of the New Right were the products of some inexorable technological imperative, continental Europe and Japan would have seen something similar. But although the forms of economic regulation and the rhetoric of political and intellectual leaders have changed in both, neither has experienced anything remotely comparable to the New Right ascendancy in Britain. Technological imperatives that manage to produce Margaret Thatcher in Britain, but François Mitterrand in France and Helmut Kohl in Germany, cannot be as imperious as all that.

Much the same applies to the suggestion that inexorable tides of change have disempowered the state. No one can dispute that the British state is less effective, less respected and, in important ways, less powerful today than it was in 1945. This is scarcely surprising. In 1945, it had just emerged triumphant from the most terrible test in its entire history. It had nowhere to go but down. The same is true, in varying degrees, of the other victor states of the Second World War. The Soviet Union has disappeared altogether, while the United States has suffered a decline almost as marked as that of the British state. But it is not true of the defeated states of the Second World War or, for that matter, of the other major states of western Europe. As Alan Milward has argued, the post-war history of western Europe is a history of the revival and reconstruction of the nation-state, not of its decline.²⁵ The German, French, Spanish and even Italian states are, by any reasonable definition, more powerful, more efficacious and more respected in the 1990s than they were in the 1940s. Indeed, most modern states have far more power over their citizens than Napoleon, Louis XIV or, for that matter, Bismarck or Nicholas II could have dreamed of. Of course, there is much that they cannot do. In capitalist market economies, they cannot force up the long-term rate of growth by expanding demand, successfully defy the world’s currency markets or make much difference to pre-tax income differentials. But they never could.

That leads on to the second weakness inherent in the New-Right world view. It purports to explain the second phase in the post-war struggle for hegemony, but it ignores the third. If it were true, there would be no cracks in the New Right’s ascendancy, and no intimations of a new policy paradigm or a new ideological divide. The 1990s would be a continuation of the 1980s; the social and economic imperatives that gave the New Right hegemony in the 1970s could be relied upon to perpetuate its position into the next millennium. But, as we have seen, there are striking differences between the ideological climate of the late 1990s and that of ten years ago; that is, between Act Two of the drama and Act Three. And the transition from Act Two to Act Three is as important to the play as that from Act One to Act Two.

The key to these transitions, I shall argue, lies in a dimension which the political language of the last one hundred years does not capture. Since the late nineteenth century, it has been customary to distinguish between ‘individualism’ and ‘collectivism’ and to think in terms of transitions from one to the other. The Victorian jurist, A. V. Dicey, famously thought that the age in which he lived was dominated by a swing to collectivism, and away from the individualism of the early part of the century. More recently, W. H. Greenleaf has found the key to the British political tradition in a continuing dialectic between ‘collectivism’ and what he calls ‘libertarianism’ – essentially another word for individualism. More recently still, Robert Skidelsky has written the history of the twentieth century as a history of the rise and fall of collectivism on the one hand, and of the fall and rise of individualism on the other. Albert Hirschman’s now-classic suggestion that ‘involvement’ swings back and forth from the public to the private sphere belongs to the same genre.²⁶

However, despite its distinguished lineage, the distinction between individualism and collectivism is too crude to catch the full meaning of the story I have been discussing. Individualism, but for what kind of individuals? Collectivism, but for which collective goals? The abstinent, energetic, self-improving, God-fearing puritans whom Max Weber pictured as the ancestors of modern capitalism were individualists. So were (and are) the rationally-calculating utility-maximisers of Jeremy Bentham, of neo-classical economics and of the public-choice theorists of the Virginia School. But the moral and emotional meanings of these two kinds of individualism are far apart: so far, in fact, that it hinders understanding to use the same term for both. The same is true of ‘collectivism’. Joseph Stalin and R. H. Tawney both held ‘collectivist’ values, but their conceptions of the purposes and modalities of collective action were diametrically opposed.

Plainly, no simple classification can do justice to all these nuances. Yet this does not mean that there is nothing more to be said. Cutting across the familiar distinction between collectivism and individualism is a more subtle distinction between two conceptions of the Self, of the good life and of human possibilities and purposes. On one side of the divide are those who see the Self as a static bundle of preferences, and the good life as one in which individuals pursue their own preferences without interference from others. On the other are those for whom the Self is a growing and developing moral entity, and the good life one in which individuals learn to adopt higher preferences in place of lower ones. On one side of the divide, stress is laid on satisfaction; on the other, on effort, engagement and activity. The first group is uneasy with the suggestion that some satisfactions may be morally superior to others. The second believes that it is better to be Socrates unsatisfied than a pig satisfied.

It is not easy to find labels for these two conceptions. They might be termed ‘hedonist’ and ‘moralist’, or perhaps ‘passive’ and ‘active’. This yields a fourfold classification, in place of the simple dichotomy of individualism and collectivism. Individualism can be passive and hedonist, or active and moralist. So can collectivism. Individual liberty can be valued, in other words, because it allows individuals to satisfy freely-chosen desires, to live as they please so long as they do not prevent others from doing the same. Or it can be valued because it enables them to lead purposeful, self-reliant and strenuous lives, because it encourages them to take responsibility for their actions and, in doing so, to develop their moral potential to the full. By the same token, collective action and collective provision may be seen as instruments for maximising morally-neutral satisfaction, or as the underpinnings of personal and cultural growth, of engagement in the common life of the society and so of self-development and self-fulfilment. Anthony Crosland’s collectivism was essentially passive-hedonistic. So was Nigel Lawson’s individualism. Gladstone’s individualism was moralist-activist, as was R. H. Tawney’s collectivism.

From this perspective, the ebbs and flows in the struggle for moral and intellectual hegemony in post-war Britain acquire a much more complex significance. A stylised account of them might run like this. Instead of three Acts, the drama now contains five. In Act One, lasting from the mid-1940s to the mid-1950s, the post-war generation of Keynesian social democrats exercised moral and intellectual leadership. Their collectivism was active and moralistic. For them, rights went hand-in-hand with duties, security with activity. A just society would be a moral society – not only because its resources would be distributed fairly, but because its members would be free to lead active and fulfilling lives. Collective action and resource redistribution would rescue their beneficiaries from dependence, indignity and passivity. It would also enable them – perhaps even oblige them – to repay society for the help it had given them. An enlarged public domain held no terrors: the public domain was a place of engagement, governed by an ethic of service and commitment. Beveridge was the emblematic figure and, as Jose Harris shows in her chapter in this book, Beveridge’s vision of social citizenship was quintessentially activist, drawing on a notion of civic virtue that went back to classical Greece. Social citizenship was a status, but a status that had to be earned. Its entitlements were not charitable doles granted to passive dependants, who had done nothing to help themselves. Benefits were paid out because contributions had been paid in; and Beveridge devised his system in this way because, in his own words, ‘Management of one’s income is an essential element of a citizen’s freedom’.²⁷ And active citizenship was a means as well as an end. Social security had to be ‘won by a democracy; it cannot be forced on a democracy or given to a democracy’.²⁸ The same values ran through the participatory productivism of the wartime shop stewards’ movement, and inspired Stafford Cripps’s conception of democratic planning as a system of moral suasion, in which ‘the Government, both sides of industry and the people’ worked together to achieve a common end.²⁹ They also underpinned Attlee’s robust defence of peacetime conscription as a legitimate quid pro quo for the welfare state.³⁰

Eventually, however, Act One gave way to Act Two. Gradually in the 1950s, and with gathering speed in the 1960s, Keynesian social democrats abandoned the austere moral activism of Attlee, Beveridge and Cripps. Keynes himself had never really shared it; though he killed himself overworking for his country, his moral vision was always suffused with the hedonistic relativism he had absorbed in the Cambridge and Bloomsbury of his youth. Later Keynesian economists saw themselves as technicians rather than moralists, or even citizens. In their eyes, their professional task was to understand the working of the economic system and to advise policy makers how to translate their preferences into action. As private individuals they might or might not make moral judgements of their own, but the realm of moral judgement and the realm of economic science were to be kept rigidly apart. What was true of post-Keynesian economic collectivism was also true, albeit for different reasons, of post-Beveridgean welfare collectivism. The notions that rights should be balanced by duties, that activity was better than dependence and the point of collective provision was to foster self-reliance and civic activism came to be seen as patronising, or elitist, or (horror of horrors) ‘judgemental’. Meanwhile, the service ethic of the professional mandarinate – the twentieth-century equivalent of the ‘clerisy’ of the nineteenth century and, as such, the chief guardians of the moral-activist tradition – came to be seen as camouflage for illegitimate privilege.³¹ On a deeper level, as Geoff Mulgan’s chapter suggests, the moral and cultural presuppositions of that ethic were undermined by a loss of confidence on the part of the mandarinate itself, exacerbated by an insistent demotic relativism on the part of its critics. Among left-of-centre Keynesian social democrats, equality came to be seen as a good in itself, irrespective of the uses to which the fruits of egalitarian policies were put. Among their right-of-centre counterparts, a technocratic managerialism, in which the good life was equated with rising living standards and political leadership with the promotion of economic growth, increasingly prevailed.³²

If the mentality of the first group was epitomised in Hugh Gaitskell’s ‘socialism is about equality’, that of the second was summed up in Harold Macmillan’s 1957 boast that the British people had ‘never had it so good’. If the emblematic Keynesian social democrat of the 1940s was William Beveridge, that of the 1960s and 1970s was Anthony Crosland, with his ringing plea for an ethic of private pleasure in place of the Fabian ethic of public duty:

We need not only higher exports and old age pensions, but more open-air cafes, brighter and gayer streets at night, later closing-hours for public houses, more local repertory theatres, better and more hospitable hoteliers and restaurateurs, brighter and cleaner eating-houses, more riverside cafes, more pleasure gardens on the Battersea model, more murals and pictures in public places, better designs for furniture and pottery and women’s clothes, statues in the centre of new housing estates, better-designed street lamps and telephone kiosks, and so on ad infinitum …

… To-day we are all incipient bureaucrats and practical administrators. We have all, so to speak, been trained at the L.S.E., are familiar with Blue Books and White Papers, and know our way around Whitehall … Now the time has come for a reaction: for a greater emphasis on private life, on freedom and dissent, on culture, beauty, leisure, and even frivolity. Total abstinence and a good filing system are not now the right sign-posts to the socialist Utopia: or, at least, if they are, some of us will fall by the wayside.³³

Alas for riverside cafes. As Raymond Plant suggests in a later chapter, hedonistic collectivism contains a built-in flaw. By definition, the redistribution it demands makes some people better off and others worse off. Also by definition, it can offer no convincing moral argument for doing so. If rights are not balanced by duties, why should the rich make sacrifices for the poor? If collective provision is not a means to moral improvement, why should those who do not need it pay taxes to pay for it? If the public domain is not a place of engagement, governed by a service ethic, what is to prevent it from becoming a battleground for predatory vested interests? Hedonistic collectivists could not answer these questions. By the mid-1970s, Act Two was ending. It was clear that there was a moral and rhetorical vacuum at the heart of the Keynesian social-democratic system. The beginning of Act Three saw the New Right rushing in to fill it.

For the New Right attack on the Keynesian social-democratic system was moral as well as economic and political: in the last analysis, moral rather than economic or political. Market forces were better than state intervention, not just because they were more efficient, but because the market-place was quintessentially the realm of freedom, and because only free people can be moral agents. Thrift, enterprise and self-reliance were, of course, the building blocks of a prosperous economy. But that was not the chief reason for valuing them. They were also the stigmata of the ‘vigorous virtues’ – of virtues whose possessors were, above all, ‘upright, self-sufficient, energetic, adventurous, independent-minded, loyal to friends and robust against enemies’.³⁴ The ‘dependency culture’ allegedly created by the hedonistic collectivists of the Crosland generation was condemned, not just because it ate into the public purse, but because it turned those it entrapped into ‘moral cripples’.³⁵ ‘Victorian values’ were extolled, not just because they had prevailed in the days of Britain’s glory, but because they were morally right. Collective action and collective provision were not only sources of inflationary overload. They were sources of moral escapism, encouraging those who took part in them to shelter from the consequences of their own actions, and so engendering a corrosive culture of guilt.³⁶

But Act Three did not – could not – last. The moralistic individualism of the late 1970s and early 1980s turned out to be as fragile as the hedonistic collectivism which had preceded it. Moralistic individualists sought to resurrect the moral economy of the nineteenth century by returning to its political economy. They saw that the ‘vigorous virtues’ had flourished in a market economy, and they assumed that the way to reinstate them was to give freer reign to market forces. They forgot that the ‘vigorous virtues’ of nineteenth-century Britain had been nurtured by, and embodied in, a much older network of institutions and practices, whose origins lay far back in the pre-market past. The market economy of the nineteenth-century lived off a stock of moral capital, accumulated over long generations to which the norms of the marketplace were at best alien and at worst anathema. Its apologists did not fully recognise the significance of this moral legacy. It was part of the air they breathed, and they simply took it for granted. Matters are quite different today. Today, as Mrs Thatcher and Hayek both half-recognised, a moral order capable of sustaining the vigorous virtues can no longer be taken for granted; it has to be created. But market forces cannot create it. The market is inherently amoral, antinomian, subversive of all values except the values of free exchange. In the market-place, the customer is king; and customers sooner or later get what they are prepared to pay for, irrespective of its moral quality. The New Right’s moral vision was, in short, at odds with its economic vision. Act Three came to an end in the mid-1980s, with the victory of the latter over the former.

Act Four lasted from the mid-1980s until the mid-1990s. Its central theme lay in a strange mutation of policy and rhetoric, uncannily reminiscent of the mutation which had transformed the moral collectivism of the post-war period into the hedonistic collectivism of the 1960s and early 1970s. Mrs Thatcher herself continued to bang the moral-activist drum; when they remembered to, so did her ministers. But the drum-beats sounded ever-more faintly. Where early Thatcherism offered fiscal austerity, ‘painful medicine’ and patriotic self-sacrifice, later Thatcherism relied on easy credit, paper profits, profligate tax cuts and a consumption boom. Despite lip-service to the contrary, Alderman Roberts, with his Methodist austerities and his Grantham corner shop, ceased to be the iconic Thatcherite. He was replaced by Essex Man. Moral individualism gave way to hedonistic individualism: the vigorous virtues to the easy-going vices.

In a further twist, however, Act Four is now giving way to Act Five. Just as the hedonist-collectivist ascendancy of the 1960s and early 1970s was challenged by the moral-activist individualism of early Thatcherism, so the hedonist-individualism of late Thatcherism is now under attack from what looks suspiciously like a new kind of moral collectivism. Moral-activist drum-beats are sounding once again, but the drummers are collectivists, not individualists.

What are we to make of all this? An obvious caveat should be made at the outset. Ideological reductionism is as dangerous as any other variety. My stylised account is, by definition, incomplete and over-simplified. The ideological ups and downs on which I have focused provide only part of the explanation for the political ups and downs which have accompanied them; and even the ideological ups and downs cannot be explained solely in ideological terms. Ideology is an indispensable weapon in the struggle for power, but it is not the only weapon; and even the most accomplished ideologist will not get far if the structural and institutional cards are stacked against him. The arguments advanced, first by the rising liberal collectivists of the early-twentieth century, then by the rising New Right of the 1970s and now by the reborn civic activists of the 1990s have struck chords only because they have seemed to their listeners to correspond with, and to make sense of, structural changes. By the same token, the relationship between those arguments and the policies followed by their proponents has been as problematic, fluctuating and confused as such relationships usually are.

That said, the arguments concerned repay study. They show, I believe, that the political culture of this country is both more complex, and less plastic, than is often imagined. The debate between what I have called ‘moralists’ and ‘hedonists’ – between activity and satisfaction, moral growth and utility maximisation – goes back to the dawn of the market economy, and has continued, in varying guises, ever since. To be sure, the ontological foundations of the moral-activist case have varied through time. In our day, fear of the wrath of God has been largely replaced by fear of global warming and the declining sperm count. But the continuities are as striking as the differences. Despite appearances to the contrary – the decline of religion, the threat to the family, the spread of moral relativism, the de-legitimation of traditional elites – there is still a strong moral-activist strand in Britain’s political culture. The stubborn longevity of that strand helps to explain both the triumph of Keynesian social democracy in the early post-war period, and the rise of the New Right in the late 1970s and early 1980s. It also helps to explain the disarray of the New Right today, and the tentative emergence of the new political divide I discussed earlier. For the moral activism of early Thatcherism had more in common with the moral activism of the post-war generation of Keynesian social democrats than ideologues of left or right could bring themselves to admit. In her memoirs Mrs Thatcher wrote of her upbringing: ‘My “Bloomsbury” was Grantham – Methodism, the grocer’s shop, Rotary and all the serious, sober virtues cultivated and esteemed in that environment’.³⁷ The same ‘serious, sober virtues’ animated the early Labour movement, haunted the pages of the Beveridge Report and shaped the culture of much of the working class. Not the least of the reasons for Mrs Thatcher’s electoral success was that they gave her rhetoric a popular resonance that the hedonistic collectivists of the 1960s and 1970s could not emulate. And, to complete the story, the moral activism of the Blair generation of collectivists draws on essentially the same reservoir of virtues and traditions.

The moral activist strand in British political culture can perhaps be traced back, through the liberal collectivists of the early twentieth century, the popular radicals of the nineteenth and the Country Party of the eighteenth to the puritans of the seventeenth. But the details of its lineage need not concern us here. What matters is that the roots of the moral-activist sensibility lie deep in the history of western civilisation, in the legacy of Athens on the one hand and of Jerusalem on the other. The most striking feature of the story I have tried to tell is that in a secular, heterogeneous, supposedly multi-cultural late twentieth century society, faced with challenges almost inconceivably different from those that faced classical Greece or ancient Israel, those roots can still put forth fruit.

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