Unemployment and the Labour Party

The Quarterly Economic Review of the National Institute of Economic and Social Research, published on 14th March, is like a doctor’s report on a hopeless case. Summarized, it says that inflation ought to diminish as unemployment rises; but this shows no sign of happening, and instead both appear to be continuing. Measures against unemployment will cause inflation to rise, and it will fall only when unemployment reaches the level of pre-war depressions.


It must be said at once that all this is a prediction based on an attempt to state a “law” of relationship between inflation and unemployment (and to enable the Institute to urge the Government to adopt a tougher wages policy). Of course no such “law” exists. What we are offered is a shot-in-the dark prediction as scientific as Old Moore’s for the current month, that turtle farms will prosper. But its fearfulness (“Bleakest Warning Yet”—The Guardian) is in the word “unemployment”, and that raises an interesting question. Why is unemployment such a frightful prospect?


No member of the working class would have any difficulty in answering. It means life reduced to the barest minimum. It means being treated contemptuously by clerks and officials of so-called “social services”. It means a loss of self-respect: having skills and the urge to work, and being condemned not to use them. However, one of the great promises of the Labour Party for most of its existence has been that it would remove these stings and make unemployment tolerable. As we are under a Labour government, it is worth looking at what they have said on this subject in the past.


Will Take Care of You
In 1921 a special Labour conference adopted “work or maintenance” as the party’s policy. In The Book of the Labour Party (Vol. 2: Economic Policy) published about 1925, W. Milne-Bailey wrote:

“Work or maintenance”, then, has been the Labour slogan . . . Therefore whether we consider the individual’s own well-being and happiness, or his responsibilities to a family, or his position in and value to the community, we reach the conclusion that either work or maintenance must be guaranteed.


While there was a “frequent demand” among Labourites for unemployment pay to be the same as wages (“work or full maintenance”):


. . .  It is usually held that there must be a difference between benefits and normal wages in order to supply an incentive to the individual to make every effort to find work. At any rate, there can be no quarrel with the Labour principle that maintenance must be adequate.


Similar arguments were put forward in America. In 1921 Professor E. R. A. Seligman, in a debate in New York “that capitalism has more to offer to the workers of the United States than has Socialism”, described the insecurity of wage-earners as “that very great evil” and went on to say:


[It is] entirely susceptible of being eradicated by the same principle that we have applied to accidents, that we have applied to many other evils, namely, the Insurance principle . . . We have already today in the unemployment insurance law of England the faint beginnings of a movement which I am convinced will spread within the next three or four decades like wildfire throughout the world.

(Debate published in “Little Blue Books” series, Haldeman-Julius, Kansas)


Another advocate, Bernard Shaw, stated the case thus:


And when the business of insurance is taken on by the State, and lumped into the general taxation account, every citizen will be born with an unwritten policy of insurance against all the common risks . . . Our minds will no longer be crammed and our time wasted by uncertainty as to whether there will be any dinners for the family next week or any money left to pay for our funerals when we die.

(Everybody’s Political What’s What, 1944)


The boldest claim for what “work or maintenance” and “the insurance principle” would mean in practice was made in a 1938 Labour Party pamphlet called An Easy Outline of Modern Socialism. The author was Herbert (later Sir Herbert) Morrison. Under “socialism” —that is, the Labour regime—when workers had to be laid off, these periods would “frankly be regarded as holidays, or as opportunities for education”. The worker would have “security, he would get sufficiency”.


With such plans made on the workers’ behalf, why should they fear unemployment in 1975?


Of course these promises were made against a background in which partial insurance schemes were combined with Poor Law legislation; they were part of the campaign for state-controlled “social security”. It is important to realise that there were practical purposes for capitalism behind the apparent humanitarian concern. Milne-Bailey stressed Labour’s belief that better maintenance in unemployment would “result in an immense stimulus to production” and also be a safeguard against revolt. To some extent the latter has been true; the teeth drawn are not those of unemployed workers as such, but of left-wing organizations which exist on “militancy”.


Now we have been living under the Welfare State for nearly thirty years, and the fear of unemployment remains. There is something bizarre in trying to imagine Wilson and Healey in the present crisis telling the working class they might be given “holidays or opportunities for education”; or Labour-supporting trade-union leaders assuring their members it was all O.K. because they would get security and sufficiency if unemployed.


The conclusion should be plain. Reform simply cannot remove a problem which is in-built in capitalism. All that the administrators and economists have to show from their plans is an acute dilemma. Shaw’s “common risks” remain because they are not accidents but characteristics of the society in which we live. Security and sufficiency are realizable—on the condition that capitalism is replaced by Socialism.


Robert Barltrop