ABSTRACT
Economic policy and the fate of the Labour party were inexorably enmeshed even before the catastrophic summer of 1931. The two central issues of economic policy during the 1920s revolved around Britain’s exchange rate and domestic unemployment. The seeds of J. M. Keynes’s mounting attack upon orthodox economic policy were sown in his experiences at the Versailles conference and can be detected as early as his diatribe, The Economic Consequences of the Peace. After the 1931 crisis the Labour party reacted violently against MacDonald and Snowden and their perceived betrayal of the socialist cause. To appreciate both MacDonald’s position and the reaction against him, one must distinguish between the national failure to regain Britain’s prewar position or to find jobs for its returning heroes and the Labour party’s failure to design an effective programme for socialist action. The Labour party had been strengthened by its wartime experiences.
