Is Attlee relevant to our economic troubles?


10:54 am - July 28th 2009

by Carl Packman    


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noticed a letter in the Guardian this weekend written by Michael Bath of Rochester, Kent, which read:

Instead of interviewing four monetarist ex-chancellors [on the subject of public spending cuts], why don’t you explain how Attlee funded his programme of nationalisation, and founded the NHS, when the country had been virtually bankrupted by the second world war?


Michael Bath is not the only person who has had Attlee on his mind recently. Dominic Sandbrook writing for the Daily Mail recently spoke very highly about the former Prime Minister in a review of Frank Field MPs recent book.

So why the sudden interest? And how did Attlee manage to get all these excellent measures through whilst in the throes of financial instability? The long answer can be found in sterling books such as Andrew Thorpe’s A History of the British Labour Party but I will run through the short answer.

All parties at the time (Lab, Con and Libs) supported a major reform on the economy after the war. Radical measures needed to be taken because a quarter of Britain’s national wealth was spent during the war years, such proposals were met using insights provided by William Beveridge, and captured in the Beveridge Report.

Churchill, during the time of the coalition government, was the war expert, but when the war ended, the Tories could only use the image of Churchill as their political clout, when what was needed was full commitment to dealing with the economy.

Sandbrook’s article was good to call Attlee “an honest politician”, something for today’s politicians to look up to, but less was said about how Attlee managed to keep unemployment at bay, seldom exceeding 500,000, or 3%, of the workforce out of work. In 1946 the Bank of England and CAA (Civil Aviation Authority, anything not military aircraft) were nationalised.

In 1947 many other industries and utilities were put in public ownership including coal mines, railways and road haulage, followed a year later by electricity and gas. In Attlee’s final year as PM the steel industry was nationalised, putting 20% of the British economy in public hands.

It is no irony of history lost that Labour polled more votes than ever in 1951, but lost to the Tories on account of the first-past-the-post voting system, a hot potato at the moment with those on the left, not least for Neal Lawson of Compass.

Could Attlee’s method be a lesson for today? It depends on how history writes bank bailouts, but telling the government to keep their noses out how the banks should operate must not be met with lily-livered ambivalence. It is clear on observation of Attlee’s 6 years that a more hands-on approach towards the workings of the economy could help it survive its worst moments, and who knows it could advance stability in the long run too.

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About the author
Carl is a regular contributor. He is a policy and research analyst and he blogs at Though Cowards Flinch.
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Story Filed Under: Blog ,Economy ,Reform ,Westminster

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Reader comments


If you love flawed health systems and stagflation, by all means love Atlee.

Keynsianism is a load of bull.

Instead of interviewing four monetarist ex-chancellors [on the subject of public spending cuts], why don’t you explain how Attlee funded his programme of nationalisation, and founded the NHS, when the country had been virtually bankrupted by the second world war?

By devaluing the currency, borrowing immense amounts of money from the Americans and imposing severe restrictions on imports through rationing. And even with all that, the country remained teetering on the edge of bankruptcy throughout the latter forties and early fifties. Atlee’s government probably did as good a job as any would have done in exrtemely difficult circumstances, but I don’t think holding them up as a paragon of economic management really cuts it.

“If you love flawed health systems and stagflation, by all means love Atlee.

Keynsianism is a load of bull.”

Can I recommend a short book for you? It’s called “Both Sides of the Coin”, by Huhne and Forder. It’s about European Monetary Union, but that’s not what concerns us. Focus instead on Forder’s half of the book, and his explanation for why monetarism’s obsession with inflation above everything else is misguided (and in turn why EMU is a bad idea, but that’s for another day).

Pay particular attention to his treatment of Friedman’s hypothesis of a “natural rate of unemployment”. Then look at his empirical evaluation that monetarism post-1979 led to more recessions, which lasted longer, than in the 1945-79 period, and furthermore saw the unemployment rate grow considerably above the previously experienced maximums, repeatedly throughout the 1980s and early 90s.

Staglfation is a hard to explain phenomenon. It may well have had as much to do with oil shocks in 1973 as with anything else – and oil shocks can hardly be blamed on an economic management system. And it should be recalled that the “Keynesianism” practiced from 1945-79 would probably have been disowned by Keynes owing to perceived political manipulation.

Monetarism has hardly worked wonders either. Its attendant financial deregulation just lumped us with the biggest recession since…before the Keynesian experiments.

Nice soundbites you’re quick to offer…but maybe a tad more thought about economic history required?

I can’t think of much I would agree with the shade of Malcolm Muggeridge about, but he was right in saying that invocations of Clem Atlee by leftist are invariably both wrong and (unintentionally) comic.

This piece is pretty ignorant. The irony is that Attlee did not have a “hands on” approach, industries were nationalised and little modernisation was done. The result was economic decline.

Plus ca change. State control does not create the results we were looking for.

Still, if the man who rationed bread is an inspiration for the modern left then roll on the election.

6. Luis Enrique

If the question is how Attlee funded all that, I can’t see any sort of answer at all, in this post.

7. Margin4Error

There are some very odd views of the UK in the 20 years after WWII on here.

In particular people seem to have confused the shortlived and suddenly arrived period of stagflation with the whole of a thirty-five year period of history.

So it is hard to argue that policies enacted by Attlee caused stagflation – when there was no gradual simultaneous rise of inflation and unemployment during the 50s and 60s. Had the J-curve not worked for all that time, stagflation itself would not have been such a shock to policy makers.

Wow!

There are still raw monetarists around!

Despite everything?!

9. councilhousetory

6

Me neither.

I think Tim J @2 nailed it. Whilst as a socialist I’m all in favour of universal healthcare, on the other hand the Labour governments of 1945-51 also failed in many respects – not the least of which was their homes for heroes building programme, all while they were tinkering with the Bomb.

9

Nor me.

All we’ve been told here is “ATLEE WAS TEH NATIONALIZER”. We kinda already knew that. If you’re saying that the way to get down the budget is to nationalize stuff, then you must’ve confused this blog for “Socialist Conspiracy”.

“Pay particular attention to his treatment of Friedman’s hypothesis of a “natural rate of unemployment”. Then look at his empirical evaluation that monetarism post-1979 led to more recessions, which lasted longer, than in the 1945-79 period, and furthermore saw the unemployment rate grow considerably above the previously experienced maximums, repeatedly throughout the 1980s and early 90s.”

Not to mention that the 50s and 60s saw the UK (and the US) being more equal than at any other time in its history.

Atlee didn’t really have to fund anything. In the case of the NHS, it was just there for the taking: http://conservativehome.blogs.com/platform/2008/07/anthony-scholef.html

“Not to mention that the 50s and 60s saw the UK (and the US) being more equal than at any other time in its history.”

On what metric?

14. Richard (the original)

“There are still raw monetarists around!

Despite everything?!”

Some of us market fundamentalist are Austrians, unlike the monetarists we saw the crisis coming :P.

Many of you are talking rubbish. Actually look at the evidence: don’t cling to monetarist economics like a religion, particularly given that the evidence is against it.

The achievements of Atlee’s government are absolutely amazing when you look at the situation the UK was in after WW2: enormous amounts of debt, 30% of the national wealth spent on the war, and the Americans refusing to provide any health.

Quite apart from the NHS and welfare state; industry recovered fairly quickly and the country ended up back on the road to recovery whichever way you look at it.


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    […] Clement Atlee for today Although he is a little reformist and socialism-from-above for me, I have a soft spot for Clement Atlee, not least because he went to Spain in 1937 to support the Republican cause, and because he was involved in getting Picasso’s “Guernica” to the Whitechapel gallery. Here is Carl Packman on the relevance of Atlee in the economic crisis today (version 1, version 2). […]

  5. Is Attlee relevant to our economic troubles? « Carl Packman

    […] Michael Bath is not the only person who has had Attlee on his mind recently. Dominic Sandbrook writing for the Daily Mail recently spoke very highly about the former Prime Minister in a review of Frank Field MPs recent book. (Continue) […]





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