Post-war consensus

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The post-war consensus is a historian's model of political co-operation in post-war British political history, from the end of World War II in 1945 to the late-1970s, and its repudiation by Conservative Party leader Margaret Thatcher. Majorities in both parties agreed upon it. The consensus tolerated or encouraged nationalisation, strong trade unions, heavy regulation, high taxes, and a generous welfare state. [1]

Political history of the United Kingdom (1945–present)

When Britain emerged victorious from the Second World War, the Labour Party under Clement Attlee came to power and created a comprehensive welfare state, with the establishment of the National Health Service giving free healthcare to all British citizens, and other reforms to benefits. The Bank of England, railways, heavy industry, and coal mining were all nationalised. The most controversial issue was nationalisation of steel, which was profitable unlike the others. Economic recovery was slow, housing was in short supply, bread was rationed along with many necessities in short supply. It was an "age of austerity". American loans and Marshall Plan grants kept the economy afloat. India, Pakistan, Burma and Ceylon gained independence. Britain was a strong anti-Soviet factor in the Cold War and helped found NATO in 1949.

World War II 1939–1945 global war

World War II, also known as the Second World War, was a global war that lasted from 1939 to 1945. The vast majority of the world's countries—including all the great powers—eventually formed two opposing military alliances: the Allies and the Axis. A state of total war emerged, directly involving more than 100 million people from over 30 countries. The major participants threw their entire economic, industrial, and scientific capabilities behind the war effort, blurring the distinction between civilian and military resources. World War II was the deadliest conflict in human history, marked by 50 to 85 million fatalities, most of whom were civilians in the Soviet Union and China. It included massacres, the genocide of the Holocaust, strategic bombing, premeditated death from starvation and disease, and the only use of nuclear weapons in war.

Margaret Thatcher Prime Minister of the United Kingdom from 1979 to 1990

Margaret Hilda Thatcher, Baroness Thatcher, was a British stateswoman who served as Prime Minister of the United Kingdom from 1979 to 1990 and Leader of the Conservative Party from 1975 to 1990. She was the longest-serving British prime minister of the 20th century and the first woman to hold that office. A Soviet journalist dubbed her "The 'Iron Lady'", a nickname that became associated with her uncompromising politics and leadership style. As Prime Minister, she implemented policies known as Thatcherism.


The concept states that there was a widespread consensus that covered support for coherent package of policies that were developed in the 1930s and promised during the Second World War, focused on a mixed economy, Keynesianism, and a broad welfare state. [2] In recent years, the timing of the interpretation has been debated by historians, asking whether it had weakened and collapsed before Thatcherism arrived in 1979. [3] There has also been debate as to whether a "postwar consensus" ever really existed. [4]

A mixed economy is variously defined as an economic system blending elements of market economies with elements of planned economies, free markets with state interventionism, or private enterprise with public enterprise. There is no single definition of a mixed economy, but rather two major definitions. The first of these definitions refers to a mixture of markets with state interventionism, referring to capitalist market economies with strong regulatory oversight, interventionist policies and governmental provision of public services. The second definition is apolitical in nature and strictly refers to an economy containing a mixture of private enterprise with public enterprise.

The model

The historian's model of the post-war consensus was most fully developed by Paul Addison. [5] The basic argument is that in the 1930s Liberal intellectuals led by John Maynard Keynes and William Beveridge developed a series of plans that became especially attractive as the wartime government promised a much better post-war Britain and saw the need to engage every sector of society. The coalition government during the war, headed by Churchill and Attlee, signed off on a series of white papers that promised Britain a much improved welfare state after the war. The promises included the national health service, and expansion of education, housing, and a number of welfare programmes. It included the nationalisation of weak industries.

Paul Addison is a British author and historian, specializing in the British experience in the Second World War and its effects on post-war society. Addison read for an undergraduate degree at Pembroke College, Oxford, before moving to Nuffield College, Oxford for postgraduate study. In 1967 after leaving Nuffield College, and a brief stint Lecturing at Pembroke College, Addison became a Lecturer at Edinburgh University and subsequently a Reader, for 23 years. He became an Endowment Fellow in 1990, and Directed the Centre for Second World War Studies from 1996 to 2005.

John Maynard Keynes English economist

John Maynard Keynes, 1st Baron Keynes, was a British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. He built on and greatly refined earlier work on the causes of business cycles, and was one of the most influential economists of the 20th century. Widely considered the founder of modern macroeconomics, his ideas are the basis for the school of thought known as Keynesian economics, and its various offshoots.

William Beveridge Economist and social reformer

William Henry Beveridge, 1st Baron Beveridge, was a British economist who was a noted progressive and social reformer.

In education, the major legislation was the Education Act of 1944, written by Conservative Rab Butler, a moderate, with his deputy, Labour's James Chuter Ede, a former teacher who would become Home Secretary throughout the Attlee administration. It expanded and modernised the educational system and became part of the consensus. [6] [7] The Labour Party did not challenge the system of elite public schools – they became part of the consensus. It also called for building many new universities to dramatically broaden educational base of society. Conservatives did not challenge the socialised medicine of the National Health Service; indeed, they boasted they could do a better job of running it. [8]

Education Act 1944 education-related UK parliament act of 1944

The Education Act 1944 made numerous major changes in the provision and governance of secondary schools in England and Wales. It is also known as the "Butler Act" after the President of the Board of Education, R. A. Butler. Historians consider it a "triumph for progressive reform," and it became a core element of the post-war consensus supported by all major parties. The Act was repealed in steps with the last parts repealed in 1996.

Rab Butler British politician

Richard Austen Butler, Baron Butler of Saffron Walden,, generally known as R. A. Butler and familiarly known from his initials as Rab, was a prominent British Conservative politician. The Times obituary called him "the creator of the modern educational system, the key-figure in the revival of post-war Conservatism, arguably the most successful chancellor since the war and unquestionably a Home Secretary of reforming zeal." He was one of his party's leaders in promoting the post-war consensus through which the major parties largely agreed on the main points of domestic policy until the 1970s, sometimes known as "Butskellism" from an elision of his name with that of his Labour counterpart Hugh Gaitskell.

Home Secretary United Kingdom government cabinet minister

Her Majesty's Principal Secretary of State for the Home Department, normally referred to as the Home Secretary, is a senior official as one of the Great Offices of State within Her Majesty's Government and head of the Home Office. It is a British Cabinet level position.

In foreign policy, the consensus called for an anti-Communist Cold War policy, decolonisation, close ties to NATO and to the United States and the Commonwealth, and slowly emerging ties to the European Community. [9] [ page needed ]

Cold War Geopolitical tension after World War II between the Eastern and Western Bloc

The Cold War was a period of geopolitical tension between the Soviet Union with its satellite states, and the United States with its allies after World War II. A common historiography of the conflict begins between 1946, the year U.S. diplomat George F. Kennan's "Long Telegram" from Moscow cemented a U.S. foreign policy of containment of Soviet expansionism threatening strategically vital regions, and the Truman Doctrine of 1947, and ending between the Revolutions of 1989, which ended communism in Eastern Europe, and the 1991 collapse of the USSR, when nations of the Soviet Union abolished communism and restored their independence. The term "cold" is used because there was no large-scale fighting directly between the two sides, but they each supported major regional conflicts known as proxy wars. The conflict split the temporary wartime alliance against Nazi Germany and its allies, leaving the USSR and the US as two superpowers with profound economic and political differences.

The model states that from 1945 until the arrival of Margaret Thatcher in 1979, there was a broad multi-partisan national consensus on social and economic policy, especially regarding the welfare state, nationalised health services, educational reform, a mixed economy, government regulation, Keynesian macroeconomics, policies, and full employment. Apart from the question of nationalisation of some industries, these policies were broadly accepted by the three major parties, as well as by industry, the financial community and the labour movement. Until the 1980s, historians generally agreed on the existence and importance of the consensus. Some historians such as Ralph Miliband expressed disappointment that the consensus was a modest or even conservative package that blocked a fully socialised society. [10] Historian Angus Calder complained bitterly that the post-war reforms were an inadequate reward for the wartime sacrifices, and a cynical betrayal of the people's hope for a more just post-war society. [11] In recent years, there has been a historiographical debate on whether such a consensus ever existed.

Angus Lindsay Ritchie Calder was a Scottish academic, writer, historian, educator and literary editor with a background in English literature, politics and cultural studies. He was a man of the Left, and in his highly influential book on the home front in the Second World War he complained bitterly that the postwar reforms of the Labour government, such as universal health care and nationalization of some industries, were an inadequate reward for the wartime sacrifices, and a cynical betrayal of the people's hope for a more just postwar society.

Policies inside the consensus

The foundations of the post-war consensus can be traced to the reports of William Beveridge, a Liberal economist who in 1942 formulated the concept of a more comprehensive welfare state in Great Britain. [12] The first general election since 1935 was held in Britain in May 1945, giving a landslide victory for the Labour Party, whose leader was Clement Attlee. The policies undertaken and implemented by this Labour government laid the base of the consensus. The Conservative Party accepted many of these changes and promised not to reverse them in its 1947 Industrial Charter .

The post-war consensus included a belief in Keynesian economics, [12] a mixed economy with the nationalisation of major industries, the establishment of the National Health Service and the creation of the modern welfare state in Britain. The policies were instituted by all governments (both Labour and Conservative) in the post-war period. The consensus has been held to characterise British politics until the economic crises of the 1970s which led to the end of the post-war economic boom and the rise of monetarist economics.

Labour revisionism

The Future of Socialism by Anthony Crosland, published in 1956, was one of the most influential books in post-war British Labour Party thinking [13] It was the seminal work of the 'revisionist' school of Labour politics. [14] A central argument in the book is Crosland's distinction between 'means' and 'ends'. Crosland demonstrates the variety of socialist thought over time, and argues that a definition of socialism founded on nationalisation and public ownership is mistaken, since these are simply one possible means to an end. For Crosland, the defining goal of the left should be more social equality. Crosland argued that

In Britain, equality of opportunity and social mobility... are not enough. They need to be combined with measures... to equalise the distribution of rewards and privileges so as to diminish the degree of class stratification, the injustices of large inequalities and the collective discontents.

Crosland also argued that an attack on unjustified inequalities would give any left party a political project to make the definition of the end point of 'how much equality' a secondary and more academic question.

Crosland also developed his argument about the nature of capitalism (developing the argument in his contribution 'The Transition from Capitalism' in the 1952 New Fabian Essays volume). Asking, "is this still capitalism?", Crosland argued that post-war capitalism had fundamentally changed, meaning that the Marxist claim that it was not possible to pursue equality in a capitalist economy was no longer true. Crosland wrote that,

The most characteristic features of capitalism have disappeared – the absolute rule of private property, the subjection of all life to market influences, the domination of the profit motive, the neutrality of government, typical laissez-faire division of income and the ideology of individual rights.

Crosland argued that these features of a reformed managerial capitalism were irreversible. Others within the Labour Party argued that Margaret Thatcher and Ronald Reagan brought about its reversal.

A third important argument was Crosland's liberal vision of the 'good society'. Here his target was the dominance in Labour and Fabian thinking of Sidney Webb and Beatrice Webb, and a rather grey, top down bureaucratic vision of the socialist project. Following Tawney, Crosland stressed that equality would not mean uniformity:

We need not only higher exports and old-age pensions, but more open-air cafes, brighter and gayer streets at night, later closing hours for public houses, more local repertory theatres, better and more hospitable hoteliers and restaurateurs, brighter and cleaner eating houses, more riverside cafes, more pleasure gardens on the Battersea model, more murals and pictures in public places, better designs for furniture and pottery and women’s clothes, statues in the centre of new housing estates, better-designed new street lamps and telephone kiosks and so on ad infinitum.


"Butskellism" was a somewhat satirical term sometimes used in British politics to refer to this consensus, established in the 1950s and associated with the exercise of office as Chancellor of the Exchequer by Rab Butler of the Conservatives and Hugh Gaitskell of Labour. The term was inspired by a leading article in The Economist by Norman Macrae which dramatised the claimed convergence by referring to a fictitious "Mr. Butskell". [15] [16]

Debate about consensus

However, the concept of consensus has also been challenged as a myth. Labour Historian Ben Pimlott says this idea is a "mirage, an illusion which rapidly fades the closer one gets to it." [17] Pimlott sees much disputation and little harmony. [18] He notes the term "Butskellism" meant harmony of economic policy between the parties, but it was in practice a term of abuse, not celebration. [19] In 2002, Scott Kelly claimed that there was in fact a sustained argument over the use of physical controls, monetary policy and direct taxation. [20] Political scientists Dennis Kavanagh and Peter Morris defend the concept, arguing that clear, major continuities existed regarding policies toward the economy, full employment, trade unions, and welfare programs. There was agreement as well on the major issues of foreign policy. [21] British historian David Kynaston considers the period of post-war consensus a unique and distinct period in the history of twentieth century Britain and has undertaken to map the development of British society between 1945–79 in his ongoing series of books titled Tales of a New Jerusalem. So far, three volumes have been published, covering the years 1945–63. [22]

Collapse of consensus

Market-orientated conservatives gathered strength in the 1970s in the face of economic paralysis. They rediscovered Friedrich Hayek's the Road to Serfdom (1944) and brought in Milton Friedman, the leader of the Chicago school of economics. He preached Monetarism to discredit Keynesianism. Keith Joseph played a major role as an advisor to Thatcher. [23]

Keynesianism itself seemed no longer to be the magic bullet for economic crises of the 1970s. Mark Kesselman et al. argue:

Britain was suffering economically without growth and with growing political discontent ... the "winter of discontent" destroyed Britain's collectivist consensus and discredited the Keynesian welfare state. [24]

Global events such as the 1973 oil crisis put pressure on the post-war consensus; this pressure was intensified by domestic problems such as high inflation, the three-day week and industrial unrest (particularly in the declining coal-mining industry). In early 1976, expectations that inflation and the double deficit would get worse precipitated a Sterling crisis. By October, the pound had fallen by almost 25% against the dollar. At this point the Bank of England had exhausted its foreign reserves trying to prop up the currency, and as a result the Callaghan government felt forced to ask the International Monetary Fund for a £2.3 billion loan, then the largest that the IMF had ever made. In return the IMF demanded massive spending cuts and a tightening of the money supply. That marked a suspension of Keynesian economics in Britain. Callaghan reinforced this message in his speech to the Labour Party Conference at the height of the crisis, saying:

We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step. [25]

Thatcher reversed other elements of the post-war consensus, as when her Housing Act 1980 allowed the residents to buy their flats. Thatcher did keep key elements of the post-war consensus, such as nationalised health care. She promised Britons in 1982, the National Health Service is "safe in our hands." [26]

Economists Stephen Broadberry and Nicholas Crafts have argued that anticompetitive practices, enshrined in the post-war consensus, appear to have hindered the efficient working of the economy and, by implication, the reallocation of resources to their most profitable uses. [27] David Higgins says the statistical data support Broadberry and Crafts. [28]

The consensus was increasingly seen by those on the right as being the cause of Britain's relative economic decline. Believers in New Right political beliefs saw their ideology as the solution to Britain's economic dilemmas in the 1970s. When the Conservative Party won the 1979 general election in the wake of the 1978–79 Winter of discontent, they implemented New Right ideas and brought the post-war consensus to an end. A similar Thatcherite consensus would exist during John Major's premiership, with Neil Kinnock, John Smith and Tony Blair mostly accepting the policies advocated by the Conservatives at this time-this would continue until the 2008 Financial Crisis which convinced politicians to abandon New Right neo-liberal markets and deregulation in favour of Keynesian methodologies.[ citation needed ]

New Zealand

Outside Britain, the term "post-war consensus" is used for an era of New Zealand political history, from the first New Zealand Labour Party government of the 1930s until the election of a fundamentally changed Labour party in 1984, following years of mostly New Zealand National Party rule. As in the UK, it was built around a 'historic compromise' between the different classes in society: the rights, health and security of employment for all workers would be guaranteed, in return for co-operation between unions and employers. The key ideological tenets of governments of the period were Keynesian economic policy, heavy interventionism, economic regulation and a very powerful welfare state. [29]

See also

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  14. Crosland sought to revise the Labour Party's constitutional commitment to the nationalisation of the means of production, distribution and exchange, (Aims, Clause four, party four): "If Socialism is defined as the nationalisation of the means of production, distribution and exchange, we produce solutions which deny almost all the values that socialists have normally read into the word.” Quoted by Hattersley in Hattersley, Roy, To imagine Labour's future, rewind 50 years, The Times online, September 15, 2006, accessed 27 June 2007
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  28. David M. Higgins, "British Manufacturing Financial Performance, 1950–79: Implications for the Productivity Debate and the Post-War Consensus," Business History (2003) 45#3 pp. 52–71.
  29. Joel D. Aberbach and Tom Christensen, "Radical reform in New Zealand: crisis, windows of opportunity, and rational actors." Public Administration 79#2 (2001): 403–22.

Further reading