Bill Schwarz

Conservatives and Corporatism

In the course of her closing speech at the Conservative Party Conference in 1984 Mrs Thatcher held high a copy of the 1944 White Paper on employment policy and triumphantly revealed that it carried on its cover the name of Margaret H. Roberts.1 While it may be intriguing to speculate if the eighteenyear-old future Prime Minister was indeed one of the few who had purchased a copy or whether the entire episode was fabricated by an inventive, brighteyed party underling, there was a supposedly philosophic purpose to this exercise. Her argument, based on the unlikely premise Of course we care, was that the counter-inflationary priority of her government established her as the true inheritor of Keynesianism and the principles of the White Paper. This tawdry theatrical deception did little to impress, though at the time commentators failed to see the significance of this new extension of Thatcherspeak punctually making its appearance in 1984. Yet the argument itself was not new. It had first been aired some ten years earlier by Sir Keith Joseph in a highly dramatic speech entitled Inflation Is Caused by Governments.2
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It was the waywardness of this intervention that first prompted colleagues to question Sir Keiths judgement and the stability of his character; the second instalment delivered the following month at Edgbaston speedily eliminated him from the leadership struggle. Thus it is ironic that the views which robbed Joseph of command of the Conservative Party should have become so forcefully espoused by the contender who was to take his place, Mrs Thatcher, and when reproduced a decade later with her full authority as party leader were barely noticed, causing no more than a resigned ennui from those long inured to such banal mendacity. If little else this episode reveals the potential in contemporary times for reinventing the White Paper, however specious the grounds, and for hawking whatever may emerge in the political market. As the first public, state document to give expression to the objective of full employment, and to outline the associated techniques for economic management, it became a central symbol within political discourse for what has retrospectively been termed the postwar settlement, representing the expanded range of social rights institutionalized in British society in the 1940s. Like many such publicly acclaimed, forward-looking documents it is in fact a timid, conservative affair. Few on the Left at the time could have imagined that more than forty years later it would still be an object of political dispute, as the response of Nye Bevan, for one, made clear. The reason is simply that in their determination to force back the ratchet of socialism the Thatcherites have projected a golden age which predates even 1914 and writes out the 1940s as a catastrophic deviation, the ultimate cause of the present crisis. These explicitly strategic readings of the 1940s with which we have been long familiar have now begun to register in the historiography, a continuation by other means of the endeavour by the Right to establish intellectual legitimation for current strategies. The most notable example to date has been Correlli Barnetts The Audit of War, a spirited denunciation of British economic policy during the Second World War.3 This is a book which has been paraded through the pages of the literary reviews to great acclaim (inciting just the right degree of controversy to make it a touch risqu) and little wonder, for it argues with a wealth of empirical backing the fashionable thesis that the entire programme of forties social reformism was a catastrophic, gross error which terminated for at least a generation any possibility of reversing the decline in Britains economic fortunes. Barnett elaborates the orthodox Right view that the whole postwar welfare system was constructed on too weak an economic basis, resulting in a welfare state which (as we now hear incessantly) the nation could not afford, and chides the intellectual compromises made by those who claim that the critical effects of this arose only in the late 1960s or 1970sciting in this instance Bacon and Eltis, polemicists who hitherto had appeared far from
1 2

Employment Policy, Cmd 6527, 1944. Delivered at Preston, 5 September 1974, and published in Sir Keith Joseph, Reversing the Trend, London 1975. 3 Correlli Barnett, The Audit of War. The Illusion and Reality of Britain as a Great Nation, London 1986.

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timid.4 His thesis is not new, for it merely rewrites more trenchantly and with greater clarity of focus the arguments of his much earlier work, The Collapse of British Power, which concluded that in the Second World War Britain was transformed into an American satellite warrior-state dependent for its existence on the flow of supplies across the Atlantic.5 However, the interest of this argument is that it establishes the causes of the nations current economic crises less in the adoption of collectivism and heightened state intervention (as the down-the-line Thatcherites like to think) than in the almost complete absence of a coherent, macroindustrial strategy of any sort at all.6 As Colin Leys indicated in his discussion of The Audit of War in NLR 160, the politics which derive from this analysis oscillate between admiration for the shock tactics of instant decontrols, on the Erhard model, and a centralized command strategy which would enforce modernization of the industrial base. (As a historian trained in military affairs, Barnett is particularly fond of military metaphors: doubtless, too, he would find attractive the idea which once occurred to Gaitskell that Mountbatten or Montgomery could take control of the National Coal Board.) But analytically the emphasis he gives to the historic weakness of the industrial bourgeoisie in the nations representative political institutions, the dominance of the stateCity matrices and Britains long experience in the nineteenth and early twentieth centuries as a maritime colonial power excessively dependent on the world economy are all themes which, over a number of years, have received forceful expression in these pages.7 Correlli Barnett is currently riding high in the limelight. Despite the rather calculated irreverence of the book, however, it is a serious intervention in the historiography of contemporary politics and is no mere modish contrivance got up by the literary editors of the weeklies. It will be necessary to return to his arguments in a moment. But my central concern here is with the work of another conservative historian of the contemporary period, Keith Middlemas, whose current project involves a full-scale inquiry into the forms of economic management dominant in Britain since 1940.
Keith Middlemas

Middlemas is a Conservative in the way that leading Italian film directors of the late sixties and early seventies were Communists, imbibing a national political philosophy within an impeccably conventional intellectual tradition, gaining in the process a party card which somehow gets lost in the jumble of daily lifethus preventing affiliation at any moment from being fixed with certaintyand then at a later date acquiring a dazzling, eclectic range of competing philosophies which all but conceal the initial stance.
4 5

Ibid., p. 8; R. Bacon and W. Eltis, Britains Economic Problems: Too Few Producers, London 1976. Correlli Barnett, The Collapse of British Power, London 1972, p. 592. 6 Nonetheless Sir Keith Joseph described Barnetts thesis as horrendously justified. Interview with the author, 4 March 1987. In actual fact it would appear that the closest political expression is to be found in Michael Heseltines Where Theres A Will, London 1987. 7 See also Kees van der Pijl, The Making of an Atlantic Ruling Class, Verso, London 1984, p. 36.

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In early adult life he worked as a functionary in the House of Commons (his years coinciding with Robert Rhodes James, currently Conservative MP, historian and foremost apologist for Eden), but he has little time for the mindless constitutionalist ideologies of parliamentary sovereignty which beguile those both in his profession and in political life. As a historian of the Right, he shares with Correlli Barnett the capacity to remain rational in his assessment of the limits of British power and has written incisively of the inhibitions encountered by the English dominant classes in their imperial and post-imperial quest for cultural renewal. He has authored books on an astonishingly wide range of subjects, refusing the petty provincialism of his peers and on occasion eliciting in response a measure of prickly distrust from a profession eager to take issue with matters of detail in blithe disregard of any more challenging thesis. But most of all, without adapting historical scholarship to the contingent fluctuations of strategic requirement, Middlemas is an unusually serious-minded political historian. His practice is distinct from that impelled by the ethos of the Senior Common Room (or its correlate, the clubland culture of the Palace of Westminster) which organizes the prevailing conceptual world of the Conservative historian, yet none the less the content of his historiography claims an undeniable, if particular, conservative provenance. For a brief period he took up work as an unofficial adviser to James Prior when the latter was Secretary of State for Employment.8 On occasion his denunciations of Thatcher were fierce.9 Throughout the early years of the first Thatcher government Middlemas was urging Conservatives to adopt a line of unqualified class compromise, at the same moment when Thatcher herself was embarking upon the struggle to vanquish her enemies in the Cabinet which, in September 1981, culminated in the purge of the Wets and Priors removal to the Northern Ireland Office. Any hopes which Middlemas might possibly have entertained for political influence were cut short. He was deeply fearful of the political and social consequences of a Thatcherite war of manoeuvre conducted against the labour movement and this became the defining element in his politics, although similar sentiments had earlier appeared in the historiography.10 The most forceful expression of this desire for political accommodation occurred in his study of Eurocommunism, a weighty book published in 1980 based on scores of interviews with representatives of the European Communist Parties and of the far left groups (including in Portugal the clandestine PRP Brigadas Revolucionarias). His conclusion was in character and, although in no way odd in a continental context, it did look eccentric coming from a member of the Conservative and Unionist Party: To suggest that changes in the Communist Parties over the last ten years may stimulate both social democrats and conservatives to put their own
8 Keith Middlemas, What Tebbit Should Tell the Tories Today, The Times, 15 October 1981, and The Strong Case for Bringing the Tories and the TUC Closer Together, The Times, 15 February 1980. 9 Keith Middlemas, Unemployment: the Past and Future of a Political Problem, The Political Quarterly, vol. 51 no. 4, 1980. 10 Keith Middlemas, The Clydesiders, London 1965. This was unsparingly attacked in NLR 37 by James Hinton (then in the early stages of constructing his own powerful interpretation of the transformation of proletarian socialism in Britain during the First World War), whose insistence on the significance of factory politics was at odds with Middlemass more conventional labour-history approach.

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houses in order is not a recipe for renewing the political civil war of the 1900s. With the working class long enfranchised, democracys contradictions occur on more complex lines like the conflict between parties and institutions. Commanding as they do the allegiance of some of the most powerful trade union confederations, appealing still, albeit in competition with the far left, to the marginal people in society, Communist Parties in Western Europe offer possibilities of choice which democratic states might welcome, in their own interest, as an antidote to the bland centre and the fanatic fringe.11 The familiar articulating principle which establishes the divide between constitutional and nonconstitutional, favoured in a genre of Conservative historiography whose roots lie deep in the reaction to Jacobinism and which carries, too, powerful political effects in current times, is reconstructed here on a more orthodox social-democratic axis, centrist and pluralist, but with the promise that the political centre will be able to break inherited practices and constitute itself as an active force, sufficiently coherent both in composition and objective to engineer a new era of economic management. Until the mid-seventies Middlemass historiographical work, although wide-ranging and alert, displayed no great internal coherence. Up to this point his most substantial work had been a mighty biography of Baldwin, co-authored with John Barnes. The purpose of the book was to rescue Baldwin from the calumnies and injustices inflicted upon him by an unwilling, unsympathetic official biographer, and although at times it tips into unwarranted acclaim it is no hagiography, in the tradition of many such biographical excursions, but rightfully establishes Baldwin as one of the central, pivotal figures in the development of the restructured constitutionalism which emerged in the period of universal suffrage.12 So far as it is possible to ascertain, the decline of the institutions of social democracy in the seventies and the attendant political crises radically transformed the direction of his research. The first indication of this shift was the publication in 1979 of Politics in Industrial Society which coincided with Thatchers first electoral victory. This conjunction of events must partly explain its enthusiastic reception amongst a disheartened progressive intelligentsiaThe New Statesman, in its Bruce Page incarnation, virtually adopting the book as editorial policy. There was much about Politics in Industrial Society which was attractive and it is understandable why it caused such a stir. It was innovative and obviously the product of a historian possessing both intelligence and political passion. It was formidably well researched. But most challenging of all it took the state as its explicit object of study, not only repudiating the quaint swingometer episteme of mainstream political studies (and thus converging with the proliferation of Marxist theories of the state which appeared at this moment) but also bringing to this analysis a welcome commitment to historical and
Keith Middlemas, Power and the Party. Changing Faces of Communism in Western Europe, London 1980, p. 337. In a discussion with Middlemas in November 1984 I asked him about this passage and his views more generally on Marxism; he replied that he held in high regard a living Marxism and cited Frelimo as an exemplar. 12 Keith Middlemas and John Barnes, Baldwin. A Biography, London 1969. At the same time he edited the diaries of Thomas Jones, assistant-secretary to the Cabinet in the 1920s and a man of supreme influence in the political life of the period: Thomas Jones. Whitehall Diary, 3 vols., London 196971.
11

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concrete explanation (and in this respect diverging from the unmediated abstraction which characterized the greater proportion of this oeuvre). A respected British historian intent on theorizing the state in order to clarify strategic possibilities for the present is not what one can usually expect from the native historical profession, still less when this carries a commitment to the Conservative Party: any such endeavour as this deserves to be observed closely evenor especiallyby those to whom the resultant political conclusions are far distant from their own. Since 1979 Middlemas has written a history of the National Economic Development Council, a dutiful official history, useful, but neither conceptually nor politically of the first significance.13 He founded and edited Catalyst. A Journal of Policy Debate (boasting the most distinguished editorial board) whose objective was one of permeation, on the old Fabian model, amongst the current practitioners and advocates of corporatism, drawing on an authorship ranging from James Prior (now Chairman of GEC) to David Blunkett (a foremost exponent of current experiments in municipal socialism). And he has commenced a threevolume sequel to Politics in Industrial Societythe latter as it now turns out appearing only to have been a preliminary essay for the work in hand. The trilogy carries the title Power, Competition and the State, the first volume of which, Britain in Search of Balance, 194061, has recently appeared.
Economic Management

The core of this first volume is an examination of the ideas and policies of 1944, their development in the institutions of the state in the late 1940s and 1950s, and the culminating impasse in the politics of economic management at the end of this periodwhich in turn was to give rise to the reconstruction of the old practices on the model of 1964. The organization of this account is predominantly narrational and chronological, and Middlemas issues a warning at the beginning against plundering the past for ahistorical ends. Serious though this injunction is, he appreciates too how past historical timesthe idyll of a free-trade economy which is projected back to 1914, the caesura marked by the White Paper of 1944, the nascent corporatism of 1964combine in the present and thus the political import of the chronological reconstruction is never far distant.14 The book is densely empirical and the prose sparse, reminiscent of the later historical writings of E. H. Carr. Evidence for this volume and its sequels has been drawn from the archives, where this has been possible, and once again from a huge quantity of interviews. Volume Two promises to extend the historical study to the present while the closing volume will offer a conceptual analysis of the state in Britain. The absence of these two later volumes, especially the final one, compels a commentator to be tentative, for what is alluded to in passing in the opening volume may be developed at length at the end.
13 14

Keith Middlemas, Industry, Unions and Government. Twenty-one Years of NEDC, London 1983. For an analysis of the tendencies in current Conservatism which correspond to these particular historical moments, see Middlemas, The Crisis of the Tory Party, New Society, 6 October 1983.

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Politics in Industrial Society introduced the concept of corporate bias to describe the evolving forms of representation in Britain between employers organizations and trade unions, brokered by central government. The purpose of this approach was first to convey the conjunctural forms of corporate representation, thus breaking with the predominantly sociological theories (or models) of corporatism then current, and second to demonstrate how corporate institutions themselves came to be absorbed within the field of state power, assuming a new role as governing institutions. To put it simply, what had previously been merely interest groups crossed the political threshold and became part of the extended state.15 His thesis suggested that while government in the narrow sense was weak, the extended state built on the dual basis of corporate and constitutional representation exhibited a particularly flexibleif not always expansivesystem of political and ideological authority. Although Middlemas was at pains to emphasize the inherent instability of this arrangement, he argued that it first emerged in the early 1920s, with Lloyd George as a central architect of the system, and collapsed midway through the Wilson period at the end of the sixties a continuum almost without precedents in post-Reformation history.16 The emergence of this new state coincided with the rise and consequent defeat of the early Communist movements in Western Europe in the 191723 conjuncture: the pluralistic, compromise-seeking structure of the British political arrangement, drawing in the leading representatives of the fundamental classes, can be understood both in terms of the relative weakness of socialist organization in Britain and also, in its developed institutional form, as gone of the key and distinctive determinants of the peculiarities of the state in the British social formation. The most notable methodological revision of the new work is the integration into the analysis of the complex of institutions and interests which constitute the financial sector and, secondly, of the main instrument for the management of governmental brokerage, the civil service.17 The significance of this modification is not articulated conceptually but is manifest in the detail of the empirical reconstruction. Indeed the weight of the empirical evidence makes a summary of even the major themes unusually difficult: in the rsum which follows for the sake of clarity muchoften very revealingmaterial will have to be left aside. The account of the wartime state is straightforward, its conclusions differing little from the established historiography. The emphasis provided by Middlemas is on the political contract struck between the representatives of capital and labour symbolized by Bevins appointment to the Ministry of labour, the reversal of the economici.e. financial priorities of the 1930s (hence too, as a rapid response to this new situation, the emergence of the Sterling Area) and the steady marginalization of those Conservatives fearful of organized labour. From the reconstruction of the state in 194041 there developed the commitment
15 Keith Middlemas, Politics in Industrial Society. The Experience of the British System since 1911, London 1979, p. 373. 16 Ibid., p. 15. 17 The absence from Middlemass investigations of financial and overseas institutions was noted by Anthony Barnett in his magisterial polemic, Iron Britannia, NLR 134, 1982, p. 43.

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to a coherent, planned process of postwar reconstruction with full employment at its very core, a commitment which, Middlemas suggests, owed very little to political parties, and not much more to Keynes or Beveridge. He argues that the prime mover in the emergence of the blueprints for social reform were the various interestsbanking and manufacturing capital, and labourrepresented through the committee structure in the machinery of state, presided over by the civil servants. He documents an intense, prolonged process of bargaining between the interests, concluding that each strove hard to further its own particular objectives, and that frequently the most crucial and contentious issues were fudged, buried out of sight for the sake of a modicum of consensus. The White Paper on employment policy exemplified this process, for it proposed the continuation of the wartime political contract into the postwar period but nowhere did it indicate the political means by which this might be achieved. Its origins lay in a paper drafted for the War Cabinet Economic Section in early 1941 by James Meade, and in effect it spent three years incubating in the various corporatist committees which were staffed by the heterogeneous body of Whitehall mandarins and recruits drawn from outside, mainly from the universities. These intellectuals and functionaries organic to the wartime state (Robbins, Franks, Crowther, Cairncross, Chester, to cite only the most renowned) assume great prominence in this account: formed as young men in the intellectual milieu of New Liberalism and Fabianism which bred devotion to a humanistic rational expertise, they filled the crucial intermediate levels of the state bureaucracy translating the middle opinion of the 1930s into one blueprint after another. By far the youngest of this generation who fully shared this historical experience was Harold Wilson, recruited to the Central Economic Information Service in 1940. Middlemas himself is evidently enthusiastic about their role. It was from these groups that there eventually emerged sufficient intellectual and bargaining power to overcome Treasury resistance to the objectives of full employment in postwar planning: yet the outcome codified in the White Paper was one of the greatest compromises of all, representing what Middlemas calls a masterly combination of orthodoxy and Keynesian technique which, he believes, in practice left it wide open as a hostage to fortune in the future. The Treasury was working from a definition of full employment comprising a figure of approximately 8.5 per cent unemployed, the TUC and Beveridge contemplating no more than 3 per cent.18 The white Paper made clear the fact that in the view of its authors high and stable employment depended upon an export-led programme of economic recovery sufficient to keep control of the balance of payments, and the longterm stability of prices and wages. For this first condition to be met, the strategic postwar position of Sterling had to be decided andalthough challengedthe interests of the traditional guardian of Sterling as an international medium of
18 Keith Middlemas, Power, Competition and the State. Volume I. Britain in Search of Balance, 194061, London 1986, p. 91; cf. Correlli Barnett, It was also owing to Beveridge more than any other (including J. M. Keynes) that the wartime coalition committed future governments to full employment as the key factor in economic policy; a commitment which, by handing over power from the employer to the workforce, led to Britains appalling postwar record on productivity and the adoption of new technology. Decline and Fall of Beveridges New Jerusalem, Daily Telegraph, 1 December 1986; and his correspondence to The Times, 27 August 1986.

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currency, the Treasury, still prevailed on this issue. This sharp reemergence of overseas and financial interests, although widely accepted by the full range of experts, occurred at a crucial moment in postwar planning and indeed was constitutive of its central forms. The conclusions which Middlemas draws from this analysis are not easily excavated although it would seem that the stress falls on the contradictory foundation of the plans for economic management, suggesting that almost from the outset the system was formed by a series of inter-related objectives which in their totality were impossible to achieve. It is the workings of this dynamic, at the core of the postwar system, that come to occupy the central narrative strand of the book. Middlemas demonstrates, as many others have done before him, how the financial vicissitudes of the immediate postwar period overwhelmed the economic objectives of the Attlee administrations. US hostility and the drive to enforce on Britain early convertibility, combined with the UKs weak bargaining position inside the Sterling area (a weakness proved in the negotiations in 1946 with Egypt and Argentinatwo former subject nations which in the future were to suffer the murderous consequences of post-imperial retribution) fast rendered subordinate Britains overseas power. Nor was there any attempt to reconstruct the administration of the state with a view even to a minimal redistribution of authority. The Attlee government only partially fulfilled the 1944 White Papers aims. The Sterling area as the 1944 authors conceived it and the pounds level of $4.03 could not have been held beyond 1949 by a Britain which was a full member of GATT and NATO . . . it attempted to maintain economic growth and living standards at home while governing a third of Germany, sharing with the US an interest in Europe, the Middle East and South-East Asia, and in the foundation of NATO, and in undertaking a level of rearmament in 1951 with which neither the machine-tools industry nor the exporting industrys earnings could cope. As it had inherited them, so it left a legacy of worldwide commitments which the nation, on any rational commercial calculation, could not afford and from which its immediate competitors did not sufferand which indeed its successors at once tried to shuffle off. The limits of the 1944 accord were, quite simply, that it was grounded in a rationality whose landmarks had, by 1951, ceased to exist.19 In these conditions Labour, attempting against the odds to continue wartime exhortations for a high degree of civic obligation and sacrifice, held back consumer demand beyond the limits of political expediency; the Conservatives did not.
A Political Contract

The picture which emerges is one which depicts the postwar bargain not only breaking with the past but becoming an organic part of the state.20 Yet the upshot of Middlemass analysis would suggest that it was a political contract (the White Paper, the welfare institutions, etc.) built on an unsustainable economic basis, requiring the pursuit of impossible economic objectives, an instability constitutive of the post19 20

Britain in Search of Balance, pp. 21011. Ibid., p. 342.

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war settlement itself. Given the initial agreement for reconstructing the economy with such a high degree of dependence on Sterling as a world currency (and it is not entirely clear to what extent Middlemas either shares or repudiates the judgements on which these decisions were made), attention became focused on the domestic economy, the gravitational pull of inflation, the exploitation of the scarcity of labour by the unions and thusby this stage of reasoning, inevitablyon the very possibility of sustaining full employment at all. This was the dynamic on which the settlement was based, triggering time and again that irregular but long reaction to the settlement itself which was to culminate in what we now call Thatcherism.21 As Middlemas sees it, the only realists who were prepared in the 1950s to acknowledge and face up to this fundamental instability were the mandarins, the generation of civil servants formed by the wartime state (a clerisy as he actually puts it): after the Cripps/Attlee era the politicians succumbed to political expediency. The unpleasant paradox that the longer the fat years lasted, the wider the gap grew between contemporary gratification and future competitiveness, was one that only the officials fully appreciated.22 The strength of the volume consists in the documentation of the conflicts which broke out inside the higher institutions of the state when it came to be recognizedgiven once again the all-important, continuing commitment to Sterlingthat at least some of the features of the White Paper strategy would have to be jettisoned, and of the consequent attempts to square this with the political, contractual commitment to full employment. Thus at the beginning of 1951 Wilson at the Board of Trade put forward a programme to galvanize industry and the export trade, while Gaitskellwhose transition to the point of view later associated with Anthony Crosland and the social-democratic revisionists took place at the Treasury in the short space before the 1951 election23in his plan for a National Wages Board achieved a first in the long search for a neutral arbiter with the charge of driving wages down.24 However, the greater part of Middlemass analysis is devoted to the recommendations emanating from the Treasury and the Bank of England, in particular the memorandum entitled The Sterling Area which was drafted early in 1952 by Sir Leslie Rowan, Sir George Bolton and Sir Otto Clarke (and known as Robot). This drew attention to the threat of a serious crisis in the Sterling area and in the UKs capacity to compete with the USA; and to the fact that as the UK could not maintain responsibility as the centre of the Sterling area, nor opt out, it could only continue to borrow short-term from balance holders and remain perpetually vulnerable to devaluation any time there was a downturn in the world economy. This was put to Butler who consulted Gaitskell (as an old friend: Gaitskell agreed with the diagnosis but refused party support). Robot proposed floating the pound, making it convertible to non-Sterling balance holders and renouncing commitment to full employment as the cardinal principle of economic management. As Middlemas convincingly argues, it was a deliberate attempt to place
21 22

Ibid., p. 13. Ibid., p. 342. 23 Ibid., p. 184. 24 Ibid., p. 189.

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a permanent constraint on the politicians. R. A. Butler, delicately, in veiled form, put this in great secrecy to the Cabinet, he by this point accepting the Bank of Englands argument that the Sterling area no longer served Britains interests and that tougher credit controls should be imposed, hence accepting the effect of rising unemployment. The Cabinet split (MaxwellFyfe, who opposed Robots recommendations, predicting an unemployment figure of some ten million if the plan were adopted) and on this basis, by default as it were, the Cabinet chose instead to resort to cuts in public expenditure as an immediate way out. Although Robot failed in its immediate objectives it did, according to Middlemas, inflict a lasting wound on the postwar settlement.25 There is plenty more in this vein, of great interest, but not necessary to recapitulate here. His account of the Thorneycroft resignation (formally delivered in January 1958, although the critical lead-up took place in the closing months of 1957) is relevant, however, as it marks the first moment when anxieties which were clearly prevalent in the top echelons of the Treasury and the Bank of England were voiced in a most uncompromising manner by a senior politician. Peter Thorneycroft, as Chancellor, attempted to break through the stop-go impasse by restraining wages and consumption until industrial efficiency would rise sufficiently to compete in the international market. This turn to systematic deflation, in the Robot tradition, was beaten by force, not reason by Macmillan and the Cabinet at the cost of losing the entire Treasury team: Thorneycroft, Powell and Nigel Birch.26 With Thorneycrofts resignation behind him Macmillan pursued a policy of expansion, prepared to live with moderate inflation: each correction of stopgo policy exaggerated the swing of the pendulum, at length leading Macmillan to the conclusion that a wages policy would prove his only way out. Macmillan . . . steered a divided party alternately by blandishments and force through four years of gradual relative economic decline which it would have been hard, by any means then in favour, to reverse.27 Middlemas rejects the belief (the myth) that Thorneycroft was an early
25 Ibid., pp. 20014. On 8 February 1952 the Treasury tried to meet Cabinet anxiety about the Robot proposals: The economy is not working in a manner which enables us to pay our way or to maintain our external objectives. Without major change, these objectives, which are fundamental to our existence as a great power, will be swept away in a major crisis. . . The size of the problem is so great, and the consequences for the future so devastating to the national life, that the whole of national resources must be thrown into it. Quoted in ibid., p. 201. 26 Ibid., p. 294. Or as this becomes rearticulated by eighties tabloid journalism, the occasion the death of Macmillan: Supermac . . . launched Britain on the slippery slope of spend today, pay tomorrow. He sacked one Chancellor, Peter Thorneycroft, for presuming to suggest that the country should live within its income. Later Britain paid a bitter price for the locust years. . . To the end of his life, Supermac was still preaching that we could buy success and full employment with other peoples money. The reality is that every 100 jobs created in the public sector involves the loss of 140 free enterprise jobs (sic). The Sun mourns Supermac the man. But we delight that his policies have been totally rejected by the Tory Party of Margaret Thatcher. Sun, 31 December 1986. For the record Macmillans speech of 20 July 1957, delivered at Bedford football ground, began Lets be frank about it; most of our people have never had it so good, only to point out the dangers of accelerating inflationThis is the problem of our time. Harold Macmillan, Riding the Storm, Memoirs, vol. 4, 195659, London 1971, pp. 3501. 27 Britain in Search of Balance, p. 289.

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monetarist, although elsewhere he has been a touch less categorical.28 He prefers to view Thorneycroft as an exponent of that version of the national interest envisaged by the Treasury and the Bank of England (and indeed by The Economist, scolding Mr Butskell for his flaccidity29): not as an advocate of the principles of 1914, nor an antagonist to those of 1944, but as a man of reason and realism who took it upon himself to demonstrate to the country the true costs of the postwar settlement, who thought it both expedient and just to modify the definition of full employment to allow a higher percentage of unemployed, and who was defeated by the inexorable exigencies of the historic contract which then dominated political life. The great significance of the fact that it was Thorneycroft who led the revolt was due to his reputation as an indefatigable Tory reformer of the 1940s. He was, alongside Victor Gollancz and Kingsley Martin, a member of the 1941 Committee, a reforming pressure group composed of leading publicists and politicians; moreover he was, with Lord Hinchingbrooke, Quintin Hogg and Hugh Molson, co-founder of the Tory Reform Committee, the key channel through which the impulse for social-democratic reconstruction reached mainstream Conservativism.30 Few Tories embodied the spirit of 1944 more fully than Thorneycroft.31 It is worth noting that even much later in his career, in the purge of September 1981 in which Prior was demoted, he was sacked from the position of Chairman of the Conservative Party by Mrs Thatcher, and replaced by the more loyal figure of Cecil Parkinson.32 That dissatisfaction
He has referred to the remote antecedents of Thatcherism in the ThorneycroftPowell alternative economic policy of 195657. (Middlemas, The Supremacy of Party, The New Statesman, 10 June 1983.) To the degree that Thorneycroft never espoused monetarism as a simple technical objective, it would be wrong to class him with the Conservative monetarists of the late seventies. But undoubtedly his criticisms of the monetary system were unambiguously recruited by the intellectual precursors of Thatcherism: see Thorneycrofts opening chapter in the Institute of Economic Affairs volume edited by Arthur Seldon, Not Unanimous. A Rival Verdict to Radcliffes on Money, London 1960. 29 It should be noted that The Economist, initially displaying great enthusiasm for the White Paper, was by the early fifties fearful that Labour extremism would destroy the basis on which the postwar settlement was founded. Its famed invention of the term Butskellism was originally prescriptive and not descriptive, urging the Labour leadership to defeat its hotheads so as not to throw the opportunity for constructive Butskellism away. Mr Brutskells Dilemma, The Economist, 13 February 1954. 30 Peter Thorneycroft and Hugh Molson, Bulletin Number 2 of the Tory Reform Committee: Employment Policy, London, 16 June 1944; and Peter Thorneycroft, Tory Reform: What We Are After, Picture Post, 29 April 1944. The former publication describes the White Paper as a revolutionary departure and the outstanding political document of the century. 31 Britain in Search of Balance, p. 294. Thus in his 1957 budget speech Thorneycroft emphatically distanced himself from the economic principles of 1914: There are some who say that the answer lies in savage deflationary policies, resulting in high levels of unemployment. They say that we should depress demand to a point at which employers cannot afford to pay and workers are in no position to ask for higher wages. If this be the only way to contain the wage/price spiral, it is indeed a sorry reflection upon our modern society. To slash production, to drive down investment, to push up unemployment to a level at which, despite high world demand, we have manufactured our own depression is, to say the least, a high price to pay for price stability. Hansard, House of Commons, 9 April 1957, cols., 96970. But six months later Thorneycroft had moved much closer to an ultratough money approach: see his speech to the Annual IMF Meeting in Washington, 24 September 1957, quoted in Samuel Brittan, Steering the Economy, New York 1971, pp. 20910. Brittan explains the shift from Thorneycroft I to Thorneycroft II as being caused by the sudden traumatic run on the gold reserves in the intervening months. 32 For Thorneycrofts current distancing from the Thatcherites and his reflections on the destruction of the old regime to which he is still committed (I lived in the days when it was smart to compromise with socialism) see Hansard, House of Lords, 11 March 1987, cols. 106467.
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with the practical workings of the 1944 programme should accumulate to such a degree in the fifties to force Thorneycroft, of all Conservatives, to resign was clearly a fateful indictment.
Moving Right

Yet Middlemass account shows how it was possible for radical Tory reformers of the 1940s, from the Macmillan era on, to slide to the Right of the Partyin defence of the pound, desperate somehow to break through the impasse imposed by the settlement, and to win back an initiative which they perceived as having been lost to the unions and in some cases (Hinchingbrooke, Rippon) to affiliate to that most underrated Conservative organization, the Monday Club. It is a process which inaugurated that common reflex in contemporary British politics by which men and women in the name of reason and goodwill, saviours of all that was best about the 1940s, go about their task of proving their commitment by systematically circumscribing, paring down and destroying those very social rights, including the right to a job, which were won in the 1940s. It is this capacity to play catch-as-catch-can with the principle of universal provision which leads directly to the gruesome spectacle of Thatcher waving the White Paper for todays TV audiences. To be sure, Middlemas is careful to stress the pragmatism and lack of coherence of Thorneycrofts position at the time of his resignation, and though he concedes that the working party Thorneycroft set up to prepare evidence for the Radcliffe Committee on the monetary system was more openly monetarist in its opinions than Thorneycroft himself and that Thorneycroft at the time was under the considerable influence of Powell (and Sir Leslie Rowan), this still does not establish a single, unilinear monetarist link between the Thorneycroft of the mid fifties and Thatcher in her high monetarist moment. But in a deeper sense it does register a critical moment in the decay of the postwar settlement, the moment when prominent Conservative politicians first began publicly to disengage from the existing terms of the contract and the beginnings of a new configuration on the Right of the party. This coincided with the resignation of Lord Salisbury and the regrouping of the old Suez rebels. One Nation Conservativism at this point fragmented, with Powell, in the future the most influential philosopher of the New Right inside the party, one of the first to break loose, retrieving the doctrines of economic liberalism and making his own a reconstructed English nationalismthe first steps in a long march which would eventually take him to the Midland Hotel, Birmingham on 20 April 1968.33 Middlemas offers a more hesitant version of the Thorneycroft affair than this, keen not to short-circuit scholarly conclusion by retrospective political judgement; but he does at the same time imply that Thorneycroft is rather more deserving of vindication by posterity than hitherto accepted. One can disagree sharply with this assessment, but see at the
33

Middlemas quotes from a speech Powell delivered four months after Suez: The Tory Party must be cured of the British Empire, of the pitiful yearning to cling to the relics of the bygone system. . . The Tory Party has to find its patriotism again, and to find it, as of old, in this England. Ibid., p. 286. Powells odyssey in search of English nationalism has been recounted with great insight by Tom Nairn, The Break-Up of Britain, Verso, London 1977.

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same time that Middlemass broad analysis confirms that the coalition of Conservative forces painstakingly built up by Butler around the Industrial Charter in 1947 first began to draw apart and disintegrate in the 195758 period. This suggests that the initial phase of Conservative commitment to the postwar settlement, so far as assent was secured from the vast majority of the parliamentary party, was relatively shortlived.

Nevertheless Macmillan determined to continue the stop-go cycle, with its tendency to inflation, as the price to be paid for staying within the political structures imposed by the corporate contract of 1944.34 At the same time he was forced to search for new policies which would allow the political contract to be continued by placing constraints on the economic interests involved, above all elseindeed almost to the exclusion of all elseon the unions. So began, as Macmillan forlornly relates in his memoirs, the experiments with incomes policies.35 This opened a new period in which the strategy of 1944 was reconstituted on the basis of a qualitatively higher degree of planning, the expected integration with the EEC and the extension of corporate representation through the institutions of the NEDC. The model to hand, occasioning an envious enthusiasm, was the French miracle. In the conclusion to this first volume Middlemas only anticipates these later developments, noting that the shift which took place towards the end of Macmillans administration differed from 1944 in that demands for reform came from outside the government, that the reformers own degree of commitment was less strong and than the resultant package of economic policies was weakened by the fact that it came at the end, not the start, of a government. The name which came to be associated with the Conservative articulation of this programme was Heath. In the 1960s Heath was able slowly to reconstruct the original Butler alliance on the basis of this new programme and thereby continue his partys commitment more or less intact to the fast-receding principles of the forties contract. But he was never able to create a broad alliance within the party which could compare with Butlers of 1947: there now existed a significant minority on the Right of the partyPowell, the Monday Club, old Rightists suspicious of the new Heathite managerialismwho not only refused to endorse Heaths version of the old contract but were also in the process of developing their own distinctive and alternative Tory future.

Within the theoretical field Keynesian categories were at this time readjusted (the Phillips curve) to take account of these shifts; see A. W. Phillips, The Relation between Unemployment and the Rate of Change in Money Wage Rates in the UK, Economica vol. 25, 1958. This paper was read in draft by James Meade, one of the theoreticians of the White Paper whose work is currently being rediscovered by the SDP. See too A. W. Phillips, Employment, Inflation and Growth, London 1961. 35 I have been trying to work on Incomes Policy: a New Approach. There is a mass of paper and a large number of suggestions (mostly self-contradictory). . . We have got through quite a lot of preliminary work. But I am still at a loss. There doesnt seem to be a way through the tangle. Harold Macmillan, At The End of the Day, Memoirs, vol. 6, 196163, London 1973, p. 85, quoting his diary of 11 June 1962.

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The New Clerisy

As an empirical study of the core economic apparatuses of the British state Middlemass analysis is quite breathtaking. His grasp of the internal workings of the financial institutions, the corporate bodies and the civil service is unrivalled. Nevertheless it is not immediately clear how the power of the trilogys title is located in the social formation, nor how it is manifest. Nor is it apparent what mechanisms allow the state the capacity to harmonize antagonistic corporate interests. What is it about the matrix of governmental and governing institutions which enables equilibrium to be established? Middlemas, at this stage in his investigation, does not address these theoretical issues. But he does provide a practical resolution by introducing an ulterior collective agent which in pursuing its own interest also acts on behalf of the state as a whole: the experts and officials. They were, he argues, not only guardians of the settlement but guardians of the states interest in its continued existence.36 The assumption which must lie behind this is that, as a result of the protracted bargaining between the representatives of the fundamental classes during the war, the interests of the state were (more or less) expressive of a general will.37 Thus for Middlemas not only in this period did the civil servants interests coincide with the long-term interests of the state; they also coincided with the generalized plurality of class interests. It is possible to trace the strongest philosophical provenance of this general theoretical approach to the New Liberalism of the first decade of the century. The recognition of class and social conflict as pervasive, the idea of the state as the embodiment of reason and as the field in which collective interests compete, the emphasis on the ethical functions of the state, and a belief tempered by realism in the possibility of achieving an adequate degree of harmony between competing interests in order to allow both a measure of democracy in political and civil society and the reproduction of a modified division of labourall these notions were cast in the transformation of liberalism in the opening years of the imperialist epoch. The stress by Middlemas on the need to regulate the destructive capacities of specific interests for the greater good, to curb the greed of both capital and labour through an ordered but legitimate system of disinterested brokerage comes straight from Hobhouse or Hobson. And this makes sense, for so far as it is possible to discern any positive force in Middlemass reconstruction it is precisely the forties clerisy which had been reared in the traditions of an aspiringly democratic New Liberalism and an unashamedly undemocratic Fabianismthe particular mix depending in the case of any one individual on quite contingent determinations.38 These were civil servants of a highly particular collective disposition, whose formation had initially been in the universities and research groups rather than in Whitehall. As described in this first volume it was they who first appreciated the appalling consequences which were accumulating,
36 37

Britain in Search of Balance, p. 352. Ibid., p. 74. 38 For a formidable historical assessment of the civil service clerisy, see Peter Gowan, The Origins of the Administrative Elite, NLR 162, 1987.

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unseen to the public eye, as a result of the new forms of economic management, but they were unable (in Middlemass view) either to alert the public or to persuade the politicians to sacrifice short-term electoral advantage for longer-term investment in the national interest. The essential rationality of these bureaucrats composes a powerful undercurrent in Middlemass history of the postwar period. They were the brain and the collective memory of the state. The esteem they acquire in this study is reminiscent of the rational, reasonable and tempered world of Whitehall in Conrads The Secret Agent, pitted against the forces of chaotic nihilism and destructive self-interest. While the officials receive these plaudits the politicians are shown to have been unimaginative, nerveless and cynical, sticking to an outmoded system which they hoped would see them through the next election. It might be expected that behind such an analysis lies a logic of coalitionism in which expertise and rational, centralized planning would be deemed of greater importance than the impoverished democratic potential of a polity inexorably given to electoral opportunism and expediency. The historical precedents are strong. Through most of this century coalition government has been the usual means by which the state has been reconstructed; and for Middlemas coalition claims a particular significance, giving rise during the Lloyd George administration to the corporatist arrangement and creating the conditions for the postwar settlement during Churchills government. Commitment to the mixed economy and the middle way has often been accompanied by the belief that the appropriate political institution to secure these ends would be a coalition of the centre, about which much has been heard of late. Middlemas provides no hint about his views on such matters. However, there is reason to suppose from his earlier work that he is thinking in terms of a more expansive solution, drawing in a wider range of social forces than was ever contemplated in 1944. If this is so then the New Liberal or Fabian model, premised on the existence of a cadre of expert state intellectuals and the baronial representatives of the major corporate interests, could not prove very appropriate, curtailing rather than expanding the means and channels of representation. But if Middlemas repudiates a narrow coalitionist solution imposed from above, the structure of the state itself would need radically to be transformed as the only possible alternative to a future of political expediency. No doubt this will be discussed in the final volume.
Politics and Economics

There exists too a closely related issue of the first importance. So far as it has proved possible to read through the density of empirical material and unearth the general arguments, one of Middlemass principal themes concerns the relationship between the political dimension of the 1944 contract and its evolving economic strategies. And he suggests, as I read it, that the latter were never able to be realized for any length of time in a form which could sustain the desired political objectives or (and here I think there is an ambiguity in the presentation) in a form which did not depend upon the immiseration of future generations. From this belief derives his critique of those in his own party who owe allegiance to what Middlemas perceives as the outmoded models of
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1944 and 1964. And in this respect his argument is at its most sure when he demonstrates how quickly conditions changed in the postwar years, fast making the premises of the White Paper look as if they were the product of another era. For this reason his project differs from the one voiced by todays pragmatic, piecemeal, reflationist politicians, for Middlemas does possess a strong sense of the need for expanding the economy in such a way asand in orderto construct and reproduce an entire new political contract. It is in this vein that he has talked of the need for a new Keynes. Thus even if, as he sees it, 1944 marks the high point of a desirable, pluralistic institutionalization of political authority, any future strategy which might attempt to reproduce this corporatist consensus will, so Middlemas seems to suggest, inevitably require fundamentally new economic solutions. But there is little sign of a new Keynesianism, and even less that the inherited techniques of fine tuning will do much to prevent future reflationary strategies from becoming highly vulnerable to the effects of a new sequence of balance of payments crises. Moreoverand this I see as the central issue given the Treasury and mandarin perspective which sustains Middlemass account, any discussion of the social principles which articulated the historic compromise of the forties, and which lay at the foundations of the social-democratic ideal, is effectively excluded. Just as senior representatives of the state bureaucracy have put on record their abhorrence of Thatcherite Conservatism, so too Middlemas is able to voice his own critique.39 But while one could legitimately argue that the denunciations by the mandarins express their frustrations and fears that the old regime which they largely brought into being is fast slipping away, and one could equally note that Middlemas has few if any illusions about the desirability or possibility of reconstructing the economic basis of the old order, it is nonetheless the case that he shares with the mandarins an incapacity to comprehend the social principles which were at stake in the founding moments of the old corporate bargain. He nowhere assesses how the social reforms which were institutionalized in the 1940s were conceptualized as social rights: rights to a job, home, education and rudimentary welfarenot much, when all is said and done, in a nation still prosperous and with relatively highly developed productive forces. As it was succinctly expressed in The Times at the very beginning of the forties: If we speak of democracy we do not mean a democracy which maintains the right to vote but forgets the right to work and the right to live.40 For those on one side of the contract the idea of these minimum social rights was all that gave meaning to the pact struck in the wartime state. Yet as Middlemas and others have shown, the universal provision of these rights consistently ran up against other economic and financial imperatives: protection of the Sterling area, overseas investment, the rate of exchange. This indeed was the context in which the White Paper was produced and all concerned assumed that an active export trade would be essential to the realization of its objectives. However, it is
For a recent example, see the letter to the Financial Times, 16 March 1987, signed by the Chief Economic Advisers to successive governments from 1947 to 1979. 40 This comes from a Times editorial, 1 July 1940, written by E. H. Carr; quoted by Barnett, Audit of War, p. 18.
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clear that despite the succession of balance of payments crises, the balance of trade remained favourable until as late as 1973, suggesting that the structural bias in the British economy towards the financial sectors was prominent throughout this whole period, bringing with it catastrophic effects.41 Middlemas does not deny that the British state was overextended in its late-imperial and subordinated special-relationship roles. But in his diligent pursuit of the vicissitudes of economic management, the initial social objectives on which the pact was premised simply pass him by. This is odd it one so apparently committed to casting a new political contract for the 1990s, and throws considerable doubt on its potential efficacyunless of course the Hayekian conviction that the concept of social rights is no more than a mirage bred by delusion has surreptitiously taken hold of Middlemass mind?
Conclusion

This wholesale demotion of the issue of social rights, even as a matter for debate or discussion, marks equally Correlli Barnetts The Audit of War (although Barnett also urges his readers to drop excessively sentimentalist views which cloud received interpretations of the industrial revolution as an unduly brutal affair: from this we can perhaps gain some idea of what his programme for a future dirigiste economy would be like). Read in conjunction, the Middlemas and Barnett audits of the forties indicate the degree to which the historiography has finally swung away from an earlier social-democratic orthodoxy. Both hold to the thesis that the pressure of popular demand for a universal system of social security (including full employment) created insurmountable long-term deficiencies in the economy which lie at the root of our present troubles. Empirically there is an argument here, or half an argument, precisely because this situation was inevitable so long as the commitment to maintaining Sterling as an international currency determined domestic policy. Yet once a broad hypothesis is established exclusively in terms of the domestic dimensions, it becomes possible to short-circuit the historical complexities, writing out the overseas drain on the internal economy, ignoring the essential productivity of the public sector in enhancing the value of capital in private markets, and to formulate a suitably tabloid conclusion which conforms to the imperatives of current political truths. Neither Middlemas nor Barnett goes this far: each has sufficient intellectual integrity to prevent such a tumble; and while Correlli Barnett must find it difficult to summon enthusiasm for the industrial strategy of the Thatcherites, Keith Middlemas is, from within his idiosyncratic niche in contemporary Conservatism, an uncompromising critic. But the differences between them need also to be noted. Middlemas ultimately is concerned more with the state and the political system, Barnett with the structural retardation of British manufacturing. Of the two Barnett is the more radical in his denunciations, regarding the Lend-lease solution of the war as the coup de grce, the moment which finally ensured the impossibility of the British economy ever reviving its former position. And where Middlemas is demonstrably enamoured
41

The case has been cogently put by Andrew Gamble, Britain in Decline, London 1981, pp. 1145.

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of the progressive state administrators who entered Whitehall in 1940 41, Barnett is at his most active in insisting that they and their type were representative of an outmoded stratum of traditional intellectuals, their well-meaning, liberal, evangelical humanism hopelessly inadequate for the task of rebuilding the economy on a scientific and technological basis. They were, in Barnetts eyes, the culprits of the story, the New Jerusalemists as he calls them, responsible for all the errors of the period. Much of this can raise a smile, for Barnett is at his most racy at such moments. In its essentials his case is also strong, reviewing once more the distinctive intellectual requirements of the patrician, Oxbridge, upper-class Englishmanalthough whether Barnetts projected Gaullist future would be preferable is at least a moot point. But there is evidence to suppose that Barnett becomes intoxicated by his own rhetoric. He argues, correctly, that in the closing months of 1942 and early 1943when the military tide turnedthe ideas of social democracy, nurtured for a decade or more in the various research groups dedicated to middle opinion, first came to dominance in the institutions of the state. But acceptance of these ideas, for some enthusiastically as a matter of principle, for others pragmatically and defensively, did not as he implies eradicate party political difference. A single entity, conveniently labelled New Jerusalemist, does not make historical sense. For what this eliminates is the process by which a distinctively Conservative version of this reforming impulse gained ground, and arguably, from 1947 or thereabouts, predominated intellectually. Moreover, in reviving older traditions of Conservative collectivism, the policies which developed in the Conservative camp accord more with Correlli Barnetts prescriptions for the renovation of Britains industrial base than one could ever suppose from his monograph. Commitment to full employment and welfare wasfor all Conservatives of the timesecondary and conditional on the resurgence of productivity in the manufacturing sector. For example, mention has already been made of the Tory Reform Committee, which started out life at exactly the key moment in early 1943 which Barnett describes. Its president, chosen by the young tyro reformers as a symbolic reference, was Earl Winterton. Winterton himself head stood as a Unionist candidate in 1904, while still an undergraduate, on the ticket of the Tariff Reform League, the first candidate to do so, embracing fully Chamberlains version of collectivism, industrial renewal and the advancement of a specifically bourgeois politics. He won the seat and went on to assume the role of Chamberlains young lieutenant in parliament. That such a man as this should be the figurehead for the Tory reformers of the 1940s suggests the need to make much sharper political distinctions amongst the so-called New Jerusalemists, for Tory reformism in the 1940s was inextricably bound up with the commitment to create a highly competitive private manufacturing sector. If these distinctions are conflated or lost it becomes impossible to see how the principal party which was to manage the settlement in the fifties evolved. It becomes impossible to comprehend the nature of Butlers alliance in the Conservative Party built around the Industrial Charter in 1947, the characteristically Conservative articulation of welfare politics organized on the idea of selectivity in the 1950s, and ultimately the stresses and strains which accumulated in the Conservative Party as a result of
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maintaining the principles of 1944, and which eventually drove the most prominent of them (like Thorneycroft) to do battle against their former selves, against the very concept of social rights and the regime in which those rights were institutionalized. Middlemass more abrupt but undeniable conclusion bears precisely on this matter: Although it is axiomatic that a system in which corporate bias is prevalent will tend deliberately to avoid primary conflict in favour of a continual series of compromises, conditions can occur in which one or other of the participants reverts to the fundamental level of conflict in order to try to neutralize or even eliminate what it sees as its principal competitor by excluding it.42 This option comprised the joker in the pack. What may prove in the future to be the most surprising feature of these years is the fact that the representatives of the major interests held out for so long, rejecting the temptation to eliminate opposing forces, doing their utmost instead to retrieve a system which in conception was fraught with potential and real fissures and was decomposing with some rapidity even before the end of the 1950s. For of course the Thatcherites, who finally decided to unleash the joker, also have their roots deep in this dynamic. From the perspective of the longue dure it can be understood as the culmination of this irregular but long resistance to the pact of 1944although its specifics could not have been predicted, nor the fact that the final assault would come from the Right. The combined objectives of uprooting the inherited regime of accumulation on which the postwar system rested,43 the wilful destruction of social rights and the installation of a new authoritarian statehowever uneven their realizationhave eliminated the principal antagonist from the corporatist councils and shredded the political contract of 1944. To this extent Thatcherism has institutionalized an unambivalent resolution to the dilemmas of the previous decades; flagrant recourse to a selectively targeted electioneering Keynsianism in 198687 has produced a third Thatcher victory and the disarray of the moderates of the centre.44 The virtue of Middlemass history is that it uncovers the anxieties, prevalent from the very earliest moments, about the economic basis of the postwar system amongst those charged to manage it. Initially, anxiety about economic objectives was combined with a commitment to the political requirements of the contract; yet by the end of the 1950s commitment both to the political contract and to a renewal of the economic objectives was proving increasingly hard for Conservatives to uphold. As Middlemas explains, it was from this impasse that the
Britain in Search of Balance, p. 11. See Bob Jessop, Thatcherisms Mid-life Crisis, New Socialist, March 1986 in which he discusses the productive, Fordist basis to the settlement. 44 Yet Middlemass optimism has not collapsed. For he perceives emerging through the ruins of Thatcherism a revived corporate spirit, evident in Lord Youngs interventionism in employment policy, the keen sense of national interest now displayed by the Bank of England, and in the influence of Norman Williss realism at the TUC which he likens to the initiatives of a previous incumbent, Walter Citrine. See Middlemas, The Life and Death of the Corporate State, New Statesman, 26 June 1987; and Will She Have to Listen This Time?, New Statesman, 3 July 1987.
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policies of 1964 were elaborated. He does not discuss, however, the fact that there emerged simultaneously the critique of Keynesianism as such, a critique which led implacably to the conclusion that it was necessary to ditch altogether the incubus of 1944.45 The adherents to the principles of 1964 and those who aspired after a resurrected 1914 were born in the same conjuncture. The convergence between an emergent neo-liberalism and an authentic strand of radical Right Toryism did not generally occur, however, until later. The disintegration of the forties pact, anticipated most dramatically during Suez, was first effectively articulated not principally by anxieties about economic management but by political divisions caused by Britains post-imperial isolation, fought out in the sixties on the issues of immigration and Rhodesia. Thus a significant minority of the Conservative Party effectively withdrew its attachment to the contract of 1944, and saw no reason why either it or its front bench should be bound by its conventions and objectives. These factions initiated a protracted struggle inside the party, organizationally and philosophically, in order to discredit and destroy the policies which condemned Conservatism to inhabit the miasma of the middle ground, aiming gradually to prise apart Butlers alliance of 1947. If the position of the neo-liberals, recuperating the golden age of 1914, is relatively straightforward to understand, the evolution of the personalities of 1964 is more complex and any adequate explanation will require a much more detailed empirical knowledge than as yet we possess. The elaborate plans For Heaths so-called quiet revolution which were incessantly drafted in the years of opposition in the 1960s were devised in order to create the means for remaining within the recognized political arena defined by the pact of 1944, while renovating the economic strategies in order to make this possible. Yet even by the 1960s the initial economic imperatives codified in 1944 led inexorably to a political strategy in which the unions had to be disciplined and bridled, forcing them back into a role which would constrain labour to serve simply as another corporate interest with no special claims or privileges. Few such constraints could be seen curbing the freedom of capital, certainly not in the City. The Wilson government displayed its incapacity to overcome these dilemmas, drawn into ever riskier confrontations with the unions as the only solution it could comprehend, caught within the dynamic of 1944 but unable to transcend it. In 1970 72 Heath found himself in the business of overturning the system to which he himself was committed; his bold attempt to tackle its deleterious effects had threatened to undo the system itself, and impose a radically new set of political goals. Heath drew back, his efforts to prolong the settlement a spectacular disaster. Nineteen seventy-four, a traumatic year for the Conservatives, provides the key moment. The adherents to the politics of 1964 were discredited and dispersed in different factions inside the Conservative Party, with disillusioned Heathites (Lawson, Howell) stumbling in the chaos into
45

For an impressively clear-headed defence of this position, T. E. Utley, The Great Soft Centre, Crossbow, vol. 1 no. 1, 1957; the same issue carried an article by Lionel Robbins arguing, significantly, that economic redistribution had gone far enough and should be reversed.

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the revelatory truths of monetarism, exhibiting at the same time a deft appreciation of what was required for self-advancement. Even those who still remained committed to retrieving the political obligations of the old contract now insisted that inflationand the unionswere the primary impediments to its recovery, conceding in a stroke all political initiatives to the neo-liberal wing of the party.46 It was at this moment, in Josephs Preston speech in September, that the first attempt was made by the neo-liberals to move into a position of command in the party. Joseph himself failed, but the ideological reconstruction of Conservatism was well advanced. After Thatchers election to the leadership in 1975 and the internal struggles of 198081, commitment from the Conservative Party to the wartime settlement was either all but non-existent, or from the defeated Wetsby force of circumstances slender indeed. The Conservatives were the last to enter the bargain and the first to break out.
46 Thus the October 1974 Conservative Manifesto (drafted by Sir Ian Gilmour) claimed: Everything else is secondary to the battle against inflation and to helping those who have been wounded by it.

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