ABSTRACT
How has the world changed since the foundations for Labour’s social policies were laid in 1945?
Keynesianism and full employment In the 1920s and 1930s Labour relied on a mystical belief that something called socialism would solve the unemployment problem, but it had no practical substance (Skidelsky, 1967). Hence Keynesian theory came to fill a theoretical vacuum, to be embraced as the final justification for a mixed economy. This is best illustrated in the 1944 full employment White Paper (Cmd 6527), which the postwar Labour Government took as one of its articles of faith. It formed the premise for Crosland’s The Future of Socialism (1956). Rereading that book, one is amazed by the confidence of the first section. Indeed, most of the later chapters depended on this logical foundation. The problem of unemployment was permanently solved; Britain’s growth rate was high and assured; and inflation was barely mentioned until the end of the book, where the problem is seen entirely as one of demand management and the stimulation of an adequate supply of savings: ‘It simply means that under normal peacetime conditions, progress and efficiency require, amongst other things, the avoidance of periodic crises of serious excess demand (though it may be that a continuing mild inflation is inseparable from full employment)’ (Crosland, 1956, p. 401).
