Why Did the Post-war Consensus Breakdown?
Why Did the Post-war Consensus Breakdown?
The term 'post-war consensus' is used because there was substantial agreement between the Labour and Conservative parties over the direction which foreign and domestic policy should follow after WWII.
The post-war Labour government stayed in power until 1951. The foundations of the welfare state had been laid out and the Conservative government that took power in 1951 did not choose to dismantle them, which suggests the acceptance of the principles of the post-war consensus by both the public and the political elite. However, that does not mean there was no conflict. The main parties had agreed on the aims and principles, but differed in emphasis and style.
There is some disagreement as to why it was that the post-war consensus came about. Middlemass (1979) and others have argued that it had its origins in the 1920's and 1930's. Writers on the left such as Milband (1961) have maintained that members of the Labour Party were committed to the existing system and sought to contain working-class ambitions within it.
Although the post-war Labour government was responsible for setting up the welfare state, the principles which underlay it were laid down by a liberal, William Beveridge. In 1941, he was commissioned by the Prime Minister, Winston Churchill, to write a report examining existing welfare schemes and suggesting ways of improving them. The Beveridge Report was published in 1942 and became a bestseller. He argued that social problems could be treated in isolation. He identified five key social problems which any social welfare system must tackle. These were; want, disease, ignorance, squalor and idleness. They became known as the 'five giants'. As a result the ground was cleared for the state to set up institutions designed to help all, regardless of their ability to pay.
The programme carried out by the post-war Labour government was an ambitious attempt to conquer Beveridge's 'five giants'. To defeat 'ignorance', the Labour government did not make further reforms to the 1944 Education Act in which the school leaving age was raised to 15 in 1947. However, the other 'four giants' were tackled with considerable effort.
Two important steps were taken to defeat 'squalor' and they were, The New Towns Act 1946 and the increase in council houses. The New Towns Act of 1946 helped to solve overcrowding in cities. People were encouraged to move to ...
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The programme carried out by the post-war Labour government was an ambitious attempt to conquer Beveridge's 'five giants'. To defeat 'ignorance', the Labour government did not make further reforms to the 1944 Education Act in which the school leaving age was raised to 15 in 1947. However, the other 'four giants' were tackled with considerable effort.
Two important steps were taken to defeat 'squalor' and they were, The New Towns Act 1946 and the increase in council houses. The New Towns Act of 1946 helped to solve overcrowding in cities. People were encouraged to move to 12 new towns, eight of which were designed to absorb excess population in London. Council house building was encouraged and subsidised. Despite a shortage of materials, 800,000 had been built by 1950. To tackle 'idleness', economic policies were introduced, reducing unemployment and raising living standards. After the war there was plenty of work. Between 1945 and 1950, less than 2% of the workforce was unemployed. The National Health Service Act 1946 was introduced to reduce disease. It meant that for the first time, every British citizen would be able to get free medical treatment. This meant the existing system needed to be changed. All hospitals were brought under state control (nationalised). The changes took over two years to complete. The NHS came into operation on 5 July 1948. For the final 'giant', 'want', the Family Allowances Act of 1945 along with the National Assistance Act of 1948, set out to solve the problem. The Family Allowances Act meant that a weekly payment was to be made to all mothers who had more than one child. The National Insurance Board was set up to help those who had financial difficulties. The Board interviewed people and then decided whether to give them a grant or not. The Act also laid down that the local authorities should provide housing for the aged, disabled and the homeless.
It could be argued that the breakdown of the post-war consensus was inevitable, as there were a number of inherent problems with the idea. Firstly, and probably most importantly were the huge expenses needed to begin and maintain the welfare state. These were paid for by the US initially. However, the costs of maintaining the functions of the Welfare State, such as the National Health Service, are ever increasing. Also, there has been demographic change due to the welfare state. People now live longer. This means further expense because there are more illnesses and a huge increase in care for the elderly. The elderly expect a pension until they die, and because they are living much longer nowadays, this has become a huge expense. Also, people now work for less of their lives, so there is less money coming into the welfare state.
A second inherent problem can be attributed to the high expectations of people due to the initial success of the post-war consensus and the welfare state. Perhaps people took it for granted and never believed that there was the possibility of it being destroyed. Therefore there is a substantial amount of discontent amongst the population, who feel that the government is failing to maintain the welfare state and therefore reducing their living standards. However, these people are failing to recognise the problems that the post-war consensus and the welfare state has had to deal with throughout the years.
Cracks in the post-war consensus began to appear from 1968 onwards. Britain's economic performance was falling far behind that of its major competitors and the government found itself increasingly unable to manage the problems of unemployment, inflation and the balance of payments.
Some political commentators and politicians felt new ideas were required. Amongst these was the Conservatives Leader, Edward Heath. He argued that a policy of encouraging enterprise and free markets was necessary if Britain's economic prospects were to be improved. Although the Conservatives won the 1970 election, Heath was forced to abandon his free market ideas in 1972 and return to more orthodox post-war policies. When a series of strikes paralysed the country and led to a three-day week, Heath called an election.
The Conservatives lost the election to Labour. The 1974 election can be seen as a turning point. First, the Conservative defeat resulted in a serious reconsideration of policy which eventually resulted in Margaret Thatcher's New Right social market strategy. And second, Labour came to power just as a series of domestic and world economic crises were about to break out. The Labour government probed incapable of managing these crises and this provided the contact in which a (New Right) alternative to the post-war consensus could begin to appear attractive to the electorate.
The so-called 'winter of discontent' in 1979 was used to justify Thatcher's attacks on the post-war consensus. By pointing to the mistakes made in the past, the Thatcher governments were able to present their policies as fresh and necessary, The Thatcherite view of the 1970s, therefore, highlights themes that set the agenda in the 1980's.
The first of these themes was that the management of the economy under the terms of the post-war consensus led directly to high inflation. According to this view, the Labour government of 1974-79 had been unable to control inflation and this was a major cause of Britain's economic decline. In fact the Labour government had been relatively effective in dealing with inflation. The idea that inflation spiralled out of control in the 70's is an exaggeration. Those on the New Right believed that defeating inflation should be the government's priority rather than maintaining full employment.
The second theme was that public spending in the 1970's led to a balance of payments crisis which also hastened Britain's economic decline. The Thatcherite's blamed the inefficient if the nationalised industries for the balance of payments problems and this paved the way for their programme of privatisation and tighter controls on public spending.
Thatcher's economic theory, 'monetarism', completely rejected the aims and techniques of economic management proposed by Keynes. Whilst the primary goal of Keynesianism is to maintain full employment, the primary goal of monetarism is to keep inflation under control even if it means high unemployment. Whereas Keynesian economists argue that the government's only role should be to control the money supply (the money supply is the total amount of money circulating in the economy). By adopting monetarism, the first Thatcher government took an important step in breaking with the post-war consensus.
A further reason for the breakdown of the post-war consensus is the fact that Britain was losing her empire and the French empire was also collapsing. The new independent countries wanted prosperity and so they sold assets at prices which suited them e.g. oil. In 1973 Britain could hardly cope with these high oil prices. We were also beginning to import more than export. So there were a series of economic problems facing Britain, which meant that keeping up the welfare state and the post war consensus was becoming harder and harder. With a mixture of bad treatment form the likes of the Thatcherites, and the inevitable increase in expenses mixed with a suffering economy, Britain saw the gradual breakdown of the post-war consensus.
Darius Kabbani
U6
Crawfurd
