Daniel Sargent / History 186 / Lecture 9 – Letting Go of Empire, or Not

William Beveridge, British economist.

This lecture is available on iTunes. The topic is the transformation of capitalism after WW2, in the 1950s and 1960s. Context is the rise of Keynesianism and the New Deal. Today we will discuss postwar Europe, Western Europe in particular. The social democrat moment. Center left and center right converged on the social democrat solution.

RECAP of last time: Change in liberal economic theory from Adam Smith, to 1930s Keynes. Key difference is invisible hand and self-correcting market versus markets don’t always correct. Reform socialist movement, first arose 1890s, those who accept legitimacy of parliamentary democracy.

TODAY, we will discuss what happens, and where.

1. Swedish model. What is it? High tax, high spend. Benefits, redistribution. Capitalism, means of production privately owned. Eugenics, 1930s-1970s, with 60,000 people force sterilized. Important that government did not just redistribute, but intervened with eugenics.

2. British social democracy, postwar. 1942 Beveridge Report, key document. Context: efficiency and planning. Beverage Report was blueprint for postwar British welfare state. Previously, few benefits. From this social democratic context emerges the phrase, government “supports from cradle to grave.” June 1945, Labor party wins election. Politically feasible to adopt Beverage report. Defeated Churchill Conservative party supported it too. The war changed the relationship of government to society. The war changed the expectations for peace, that peace will be better than the peace before the war. War has been fought not just to defeat Nazis, but to build a better England. 1946, National Insurance Act, nation-wide unemployment insurance. 1948, National Health Service Act, universal, no fees, central government revenue funded health care, lasts til today. Coal, gas, electric industries nationalized. Labor is doing what Marx recommended [hunter/gatherer->slave society->feudalism->capitalism/merchant class owns means of production->workers use state to seize means of production/socialism->state withers away/communism]. This differs from Swedish model, where means of production remain privately owned. Unlike Soviet model, here, nationalized industries still maintain pay differentials, etc. Transfer of industries to the state justified on grounds of efficiency, not Marxism or revolutionary agenda. Nationalizes Bank of England (had been private). Enables government to control monetary policy (later, Blair will make it independent, in 1997, to de-politicize monetary policy). Note, there is extensive breadth of support for these changes, across both parties. In 1951, Conservative party takes power, but doesn’t roll back social democrat changes. Furthermore, it nationalizes steel.

3. French postwar social democracy? Dominated by political center. More concerned with growth than equality.

4. Germany. Very committed to liberalism. Not willing to do eugenics. Individual rights vis a vis the State. Center right dominates, and from 1949-1966 Christian democrats rule. Doctrine of social market economy.

CUI BONO? Who wins? In general, the middle class, NOT the poor. Example, Britain. Top 10% pay in. Major beneficiaries are next 40%. Entitlements to higher education, etc., benefit middle class most. Produces social stability, which is valuable after fascism. Growth? Hard to say.

RESULTS of ALL THESE TRANSFORMATIONS? The death of the radical left. Working class won over to liberalism/social democracy by social democratic moment. Death of economic radicalism as viable political force. Most socialists abandon Marxism. Example, 1959, German socialist party, out of power, meets to form new agenda. Produces new manifesto, Godesberg Manifesto, formally renounces Marxism, class struggle, and commits the party to pursuing middle class votes, not just worker votes.

TRANSFORMATIONS’ RELATIONSHIP to COLD WAR? U.S. encourages Europe’s postwar transformation, and doesn’t see European welfare state as threat to West. U.S. sees it as against Communism. Does not see it as a step on the road to socialism.

NEXT TOPIC: European integration [see lecture].

RESULT? Possibility for international order. Change from warfare state to welfare state. No European wars since 1945. Primary responsibility of nation changes from maintaining standing army to maintaining welfare of citizens. Does U.S. participate in social democrat moment? New Deal, Fair Deal, social security, minimum wage. So, U.S. parallels European experience.

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