Post-war Britain: from social democracy to neoliberalism?

Speakers: Aled Davies, Ben Jackson, Peter Sloman

Chair: Hugh Pemberton

The first Modern British Studies working paper notes ‘the difficulties of identifying organising narratives for understanding modern Britain’. This is an acute problem for ‘histories of Britain since the mid-twentieth century [as] older and triumphant narratives of democratisation and welfarism, and more pessimistic studies of economic and Imperial decline, have been displaced, but left little in their wake.’

One organising narrative which has found favour in recent years is that of the decomposition of the social democratic post-war settlement and the emergence of ‘neoliberalism’ in its place. James Vernon, for instance, has written that ‘the central historical problem in twentieth-century Britain was… the brief life of its social democracy’, forged through two world wars but undermined by globalization, decolonization, and a ‘transformation of the political’ during the 1960s, 1970s, and 1980s. In this panel we will consider whether the transition from social democracy to neoliberalism is a useful frame through which to understand the transformation of British politics and society over the last half-century. In many ways, it is an attractive organising concept because it allows historians to set Britain’s experience in a transnational context and to engage with a burgeoning literature in political science, sociology, and economics. Yet there are also potential problems which need to be confronted. Can ‘neoliberalism’ be defined satisfactorily? Does the supposed novelty of neoliberalism obscure significant continuities in post-war Britain? And might a focus on neoliberalism prioritise political and economic history over the study of culture, gender, and ethnicity?

Our three panellists will each discuss their own historical research, and in the light of this will then reflect on the validity of the ‘social democracy to neoliberalism’ framing of post-war Britain.

Paper 1 Abstract: Currents of neo-liberalism: British political ideologies and the New Right.

Ben Jackson

The pervasive ideological influence of neo-liberalism has been a fertile theme in the study of post-1970s Britain. Historians, political scientists and cultural theorists have all detected a set of common liberal markets ideas that have deeply influenced Conservative, Labour and now Conservative-Liberal Democratic governments. The assumption that usually underpins this diagnosis is that neo-liberalism spread, like a virus, from the Conservatives to Labour and the Liberal Democrats as a result of the electoral success of Margaret Thatcher.

This paper turns the spotlight on a more obscure aspect of the making of British neo-liberalism. It argues that neo-liberalism was so influential on British political argument in part because it enjoyed an affinity with long-standing traditions within British conservatism, liberalism, and even socialism. It was for this reason easier than we might expect for politicians and intellectuals of varying partisan stripes to imbibe the lessons of neo-liberalism and produce policy discourses that presented neo-liberal ideas as an authentic expression of their own ideological traditions.

The periodisation that emerges from this analysis therefore suggests that some of this absorption of neo-liberalism into the blood-stream of the British left pre-dated the electoral success of Margaret Thatcher. These pre-Thatcher currents of neo-liberalism gained a hearing on the centre and left of British politics because they articulated anxieties about the character of the post-war British state that resonated with similar concerns among a vocal minority of liberals and socialists, in particular those who were sceptical about corporatist economic management and the growing reach of the universal welfare state. The paper concludes that neo-liberalism, although frequently characterised as rigid and dogmatic, has in fact proved itself to be a flexible body of ideas, capable of mutating into a variety of ideological forms.

Paper 2 Abstract: Transfer state: neoliberalism, social democracy, and the rise of income support, 1964-2010

Peter Sloman

Over the past half-century, the British welfare state has undergone a radical transformation, as the social insurance model devised by William Beveridge has given way towards a complex system of income-related support for the poor. During the 1950s and 1960s, means-tested benefits accounted for less than one-quarter of social security payments to working-age adults and children; by 2010 they made up almost two-thirds. This shift has often been understood in terms of the residualization of out-of-work benefits, leading to a ‘return to the Poor Law’ for the sick, unemployed, and disabled. Just as important, however, has been the expansion of income support for low-paid workers in the form of tax credits and housing benefit, which now form the second and third largest elements in the social security budget after the state pension.

This paper will examine how historians and social scientists have conceptualized the growth of income support since the 1960s and 1970s, and will consider how far this shift can be seen as part of a wider transition from social democracy to neoliberalism. It will suggest that the expansion of transfer payments in the late twentieth century stemmed not so much from the displacement of social democratic concerns about poverty and inequality as from the way they came to be refracted through neoclassical ideas about economic efficiency, market pricing, and consumer choice. This distinctive combination of ideas came to the fore in the era of Wilson and Heath but reached its apogee under Blair and Brown. As governments of all stripes turned away from the dirigisme of the post-war settlement, income support became the dominant element in both the Thatcher government’s social safety net and New Labour’s egalitarian strategy.

Paper 3 Abstract: The City of London: from Social Democracy to Neoliberalism

Aled Davies

This paper considers the role of the ‘City of London’ in the transition from social democracy to neoliberalism in post-war Britain. It contends that in the two decades prior to the election of Margaret Thatcher the social democratic economic settlement was challenged by substantial changes to the financial system. The emergence of institutional investment, and new pressures on the banking system, undermined the social democratic methods for managing and controlling credit and investment. Furthermore, structural changes to the international financial system imposed new limits on government freedom to undertake domestic-focused macroeconomic management. Inventive attempts by social democrats to adapt their economic strategy to these changes were jointly-resisted by financial and industrial interests. Against this backdrop representatives of the City campaigned against the social democratic ideal of building an advanced industrial economy through State coordination. The source of future national prosperity, according to the influential City-dominated ‘Committee on Invisible Exports’, lay in Britain’s ability to provide financial services to the global economy.

This paper asserts four key points concerning the transition from social democracy to neoliberalism:

i.      The adoption of neoliberal economic policy norms cannot be isolated from the structural changes to the domestic and international economy which took place during the post-war period.

ii.     The social democratic project was not moribund in the 1970s. Historians should try to understand how its proponents attempted to adapt to the new material conditions they faced in this tumultuous period.

iii.    Despite their normally fractious relationship, industrialists and financial interests were united in their pursuit of proto-Thatcherite policies after 1974. However, their engagement with neoliberal ‘thought’ was ambiguous.

iv.     The transition to neoliberalism was rooted in a long-standing cultural contest over the character and purpose of the national economy. This drew on historic tensions between industry and services; production and trade; and over Britain’s engagement with the world economy.

 

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