The post-war consensus, sometimes called the post-war compromise, was the economic order and social model of which the major political parties in post-war Britain shared a consensus supporting view, from the end of World War II in Europe in 1945 to the late-1970s. It ended during the governance of Conservative Party leader Margaret Thatcher. The consensus tolerated or encouraged nationalisation, strong trade unions, heavy regulation, high taxes, and an extensive welfare state.Dutton, David (1997). British Politics Since 1945: The Rise, Fall and Rebirth of Consensus (2nd ed. Blackwell).
The notion of a post-war consensus covered support for a coherent package of policies that was developed in the 1930s and promised during the Second World War, focused on a mixed economy, Keynesianism, and a broad welfare state.Kavanagh, Dennis (1992). "The Postwar Consensus," Twentieth Century British History. 3#2 pp. 175–90. Historians have debated the timing of the weakening and collapse of the consensus, including whether it ended before Thatcherism arrived with the 1979 general election.Toye, Richard (2013). "From 'Consensus' to 'Common Ground': The Rhetoric of the Postwar Settlement and its Collapse," Journal of Contemporary History. 48#1 pp. 3–23. They also suggest that the notion might not have been as widely supported as some claim, and that the word consensus might be inaccurate to describe the period. Embedded liberalism has been applied to describe the post-war consensus on a global stage, around the same period from World War II to the crisis of the 1970s, and contrast it with the paradigm shift led by neoliberalism that followed.
Origins of post-war consensus The thesis of post-war consensus was most fully developed by Paul Addison.Paul Addison, The road to 1945: British politics and the Second World War (1975). 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 foundations of the post-war consensus can be traced to the Beveridge Report. This was a report by William Beveridge, a Liberal economist who in 1942 formulated the concept of a more comprehensive welfare state in Great Britain.Kenneth O. Morgan, Britain Since 1945: The People's Peace (2001), pp. 4, 6 The report, in shortened terms, aimed to bring widespread reform to the United Kingdom and did so by identifying the "five giants on the road of reconstruction": "Want… Disease, Ignorance, Squalor and Idleness". In the report were labelled a number of recommendations: the appointment of a minister to control all the insurance schemes; a standard weekly payment by people in work as a contribution to the insurance fund; old age pensions, maternity grants, funeral grants, pensions for widows and for people injured at work; a new national health service to be established.
The post-war consensus included a belief in Keynesian economics, 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 (see Secondary banking crisis of 1973–1975) which led to the end of the post-war economic boom and a brief and failed experiment with monetarist economics as championed by Milton Friedman. The roots of Keynes's economics, however, stem from critique of the economics of the interwar period depression. Keynes's style of economics encouraged a more active role of the government in order to "manage overall demand so that there was a balance between demand and output".Kavanagh, Dennis, Peter Morris, and Dennis Kavanagh. Consensus Politics from Attlee to Major. Oxford, UK: Blackwell, 1994. Print. pg 37 It was claimed that in the period between 1945–1970 (consensus years) that unemployment averaged less than 3%, although the legitimacy of whether this was solely down to Keynes remains unclear.
The first general election since 1935 was held in Britain in July 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. Attlee, using the Beveridge Report and Keynesian economics, laid out his plans for what became known as "The Attlee Settlement".Kavanagh, Dennis, Peter Morris, and Dennis Kavanagh. Consensus Politics from Attlee to Major. Oxford, UK: Blackwell, 1994. Print. pg 4–6
The main areas he would tackle: The mixed economy Full employment Conciliation of the trade unions Welfare Retreat from empire
Policy areas of consensus
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.
In education, the major legislation was the Education Act 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.Kevin Jeffereys, "R. A. Butler, the Board of Education and the 1944 Education Act," History (1984) 69#227 pp. 415–31.Brian Simon, "The 1944 Education Act: A Conservative Measure?," History of Education (1986) 15#1 pp. 31–43. 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.Rudolf Klein, "Why Britain's conservatives support a socialist health care system." Health Affairs 4#1 (1985): 41–58. online
In terms of foreign policy, there is much evidence to suggest that there was a shared set of views that were rooted in role of the recent history. Dennis Kavanagh and Peter Morris emphasise the importance of the Second World War, and war time cabinet, in yielding a set of values that were shared amongst the major parties rooted in the events leading up to the war: "Atlanticism, the development of an independent nuclear deterrent, the process of imperial disengagement and reluctant Europeanism: all originated in the 1945 Labour Government and were subsequently continued...by its successors".Kavanagh, Dennis, Peter Morris, and Dennis Kavanagh. Consensus Politics from Attlee to Major. Oxford, UK: Blackwell, 1994. Print. pg 92 However, there were some disagreement on areas of foreign policy, such as the introduction of the Commonwealth where "Labour opposed the conservative 'imperial rhetoric' with the idealism of multicultural Commonwealth" or, in the same vein, decolonization, which became "an important theme of partisan conflict" in which Conservatives showed a reluctance to give back colonial possessions as well as the gradual process of independence.Kavanagh, Dennis, Peter Morris, and Dennis Kavanagh. Consensus Politics from Attlee to Major. Oxford, UK: Blackwell, 1994. Print. Pg 99
It is argued 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 macroeconomic 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.Ralph Miliband, Parliamentary socialism: A study in the politics of labour. (1972). 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.Angus Campbell, The Peoples War: Britain, 1939–1945 (1969).
However, it is still important to note that there was not total agreement between the two major parties and there were still policies which the Conservatives did not support, such as how the National Health Service would be implemented. Henry Willink, who was the Conservative minister of health from 1943–1945, opposed the nationalisation of hospitals. This could indicate that the post-war consensus may have been exaggerated, as many historians have argued.
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. It was the seminal work of the 'revisionist' school of Labour politics.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 , The Times online, 15 September 2006, accessed 27 June 2007 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 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:
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.
Butskellism