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Thompson, Noel
1993.
John Strachey.
p.
10.
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The Discussion of Public Works Programmes, 1917–1935: Some Remarks on the Labour Movement's Contribution
Published online by Cambridge University Press: 18 December 2008
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One of the by-products of the Keynesian Revolution has been a painstaking search for precursors of Keynes. Diligent academics have compiled an impressive array of “proto-Keynesians”, although some have only slender claims to the title. There has been a preoccupation with those writers whose contributions were exclusively theoretical. This bias is surprising in view of the nature of Keynes' own approach which was to progress from policy prescription to theory. The “proto-Keynesians” in general failed to proceed to Keynesian policy prescriptions, being unable to withstand the attacks of orthodox theorists; yet some commentators, ignorant of theoretical niceties, intuitively arrived at policy programmes which Keynes later endorsed. This latter group placed particular emphasis on public works programmes as a method of combating unemployment. Economists have credited the Liberal Party, J. M. Keynes and H. D. Henderson with being the first, in the inter-war years, to emphasise public works as one solution to the problem of chronic unemployment. Klein, examining Keynes' and Henderson's arguments in support of the Liberal Party's 1929 General Election commitment to a public works programme, states that “no one was thinking seriously along these lines at the time of the Great Depression.” Most other commentators have stressed the original nature of the Liberal programme of 1929, notably Harrod, Macgregor and Dillard. The purpose of this paper is to indicate the contribution of the Labour movement to the inter-war discussion of public works. It is contended that there has been undue emphasis on the Liberal Party's literature of the 1920S and early 1030s. In fact, the Liberal programme was in many respects similar to that which had been expounded by trade unionists and the Labour Party since 1917. To establish this argument it is necessary, first, to outline the historical background against which the inter-war discussion of public works took place.
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References
page 8 note 1 Even Keynes was inclined to force the writing of earlier economists into his own mould. Cf. Harrod, R. F., The Life of John Maynard Keynes (1951), p. 460Google Scholar, and Robinson, Joan, Economic Philosophy (1962), p. 20.Google Scholar
page 8 note 2 For example, in collaboration with H. D. Henderson, Keynes, in 1929 supported a policy of public works clearly implying that this would lead to secondary employment (cf. Can Lloyd George Do It? An Examination of the Liberal Pledge). The rigorous formulation of the “multiplier theory” by Kahn (Economic Journal, June 1931) followed two years later.
page 8 note 3 Can Lloyd George Do It? (The Nation and Athenaeum, 1929).
page 8 note 4 The Liberal programme was outlined in Britain's Industrial Future (1928) and We Can Conquer Unemployment (1929).
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page 9 note 2 The multiplier principle is merely a statement that in a situation where productive resources are idle an increase in government expenditure will give employment not only to those directly involved but will also have secondary effects. The importance of this is that the Exchequer does not have to carry the cost of the total increase in employment but merely that fraction of employment directly given by government projects. Financing such expenditure by taxation could mean that this increase in government spending might be offset by a decline in private spending. Hence, the principle of deficit financing where the government expenditure is met by printing more money or by borrowing from the public.
page 9 note 3 Hence the public works instituted during the Irish potato famine and the “Cotton Famine” in Lancashire.
page 10 note 1 Davison, R. C., The Unemployed (1929), p. 7.Google Scholar
page 10 note 2 Poor Law Commission, 1909, Majority Report, p. 578.Google Scholar
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page 10 note 4 R. C. Davison, op. cit., p. 12.
page 10 note 5 Beveridge, op. cit., p. 193. For a glimpse of the idea that public works may be varied contra-cyclically see p. 231.
page 11 note 1 Hobson, J. A., The Industrial System (1909), pp. 300–501.Google Scholar
page 11 note 2 Pigou, A. C., Unemployment (1913), p. 172Google Scholar. By a different route Hawtrey arrives at a similar conclusion.
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page 12 note 1 Checkland, S. G., The Rise of Industrial Society in England, 1815–1885 (1964), pp. 424–5, 428 and 450.Google Scholar
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page 12 note 3 Each side had thirty-one representatives. The Chairman and Secretary were appointed by the Government. Amongst the trade union representatives were Arthur Henderson, J. N. Clynes and G. D. H. Cole.
page 12 note 4 Cmd. 501, Report of Provisional Joint Committee, April 4, 1919 (1920).
page 12 note 5 “On the causes of and the remedies for labour unrest”, App. I.
page 13 note 1 Cmd. 501, App. 1, p.v.
page 13 note 2 Ibid., p. 10, para 3.
page 13 note 3 Ibid., App. 1, p. ix.
page 13 note 4 Ibid., p. 11, para 5.
page 13 note 5 Cmd. 501, App. 1, p. iv.
page 13 note 6 Ibid., App. 1, p. viii.
page 13 note 7 Cmd. 501, p. 11, para 5.
page 14 note 1 Ibid., App. I, p. v.
page 14 note 2 Ibid., App. I, p. viii.
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page 14 note 4 The Times, 28 Feb. 1919.
page 14 note 5 Hansard, , 19 Nov. 1919, pp. 975–6Google Scholar. Home is nevertheless able to approve the Government's housing scheme. This speech is also an interesting example of another confusion between the relative roles of supply and demand, a confusion for which Home is subsequently taken to task (see pp. 975–6 and p. 1041).
page 15 note 1 T.U.C. and Labour Party, Unemployment Relief (1922), p. 2.Google Scholar
page 15 note 2 Unemployment: A Labour Policy (Report of the Joint Committee on Unemployment Appointed by the Parliamentary Committee of the Trades Union Congress and the Labour Party Executive), January 1921, p. 32.Google Scholar
page 15 note 3 Ibid. p. 8.
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page 15 note 6 The Nation, 12 April 1924.
page 15 note 7 Lloyd George's address to Liberal candidates 1 March 1929. Quoted in Can Lloyd George Do It?
page 16 note 1 We Can Conquer Unemployment (1929), p. 52. That the idea is confused is shown in Can Lloyd George Do It? where the multiplier process outlined is merely one whose secondary effects are restricted to related sectors (see p. 24).
page 16 note 2 Henderson, H. D., The Inter-War Years (1955), p. 161 and p. 322.Google Scholar
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page 17 note 2 Committee on Finance and Industry, Cmd. 3897, (1931), Add. I.
page 17 note 3 The Times 13, 14, 15, 16 March 1933. These articles, somewhat expanded, were subsequently reprinted in The Means to Prosperity (1933).
page 17 note 4 The balanced budget orthodoxy was widely accepted within the Labour Party. Thus Dalton's argument that, “it is, of course, an elementary maxim that States should balance their Budgets”. Hansard, , 15 Sept. 1931, p. 786Google Scholar. There were a few notable exceptions. See ibid.McShane, , pp. 386–395Google Scholar and Baker, Noel, pp. 764–774.Google Scholar
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page 17 note 6 Committee on National Expenditure, Cmd. 3920 (1931).Google Scholar
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