by skilled craftsmen, confident in each other’s goodwill and sincerity, the temple will rise and rise until at last it is complete, and the genius of humanity will find within it an appropriate resting place.
With tumultuous applause ringing in his ears, MacDonald hurried back to London, anxious to get to Victoria station in time to greet the flag-draped coffins of the victims of the R101 disaster as they arrived back from France, leaving others at the Welsh seaside resort to puzzle over how these stirring sentiments (or ‘MacDonaldite slush and floral phrases. Meaning nothing definite’) could be translated to the matter at hand: unemployment, which had stood at 1.1 million when Labour came to power in May 1929, had risen by the time of MacDonald’s speech in October 1930 to more than double that. How could the task of realising the ‘temple’ of socialism accord with alleviating the immediate sufferings of the present crisis of the capitalist one? Or, put more epigrammatically, how could a new Jerusalem be built during the ‘economic blizzard’, as MacDonald characterised it, that engulfed Britain (and much of the rest of the world) in 1930?
The Labour Party had been founded to give the working classes a voice in Parliament, and it was committed to a parliamentary democratic route to achieving its aims. Now in its second term in office, but still without an outright majority, Labour might — at the outside — have five years in which to effect the transformation from capitalism to socialism, as was outlined in its first detailed programme, Labour and the New Social Order, adopted by the party in 1918. As Sidney Webb, the programme’s main author, had put it, ‘The Labour Party refuses absolutely to believe that the British people will permanently tolerate any reconstruction or perpetuation of the dis-organisation, waste and inefficiency involved in the abandonment of British industry to a jostling around of separate private employers … What the Labour Party looks to is a genuinely scientific re-organisation of the nation’s industry no longer deflected by individual profiteering on the basis of Common Ownership of the Means of Production.’ But the radical changes this transformation required would be quite impossible to achieve within a single Parliament: Labour would need at least one further term in office to complete the process. That would mean tailoring policies to win electoral support, while at the same time advancing from a society where explicit government intervention was exercised with a light touch, towards a socialist state with a great deal of public control. It was to be the unfulfilled task of the 1930s for the Labour Party to articulate a practical strategy for accomplishing this goal by democratic means.
Moreover, Ramsay MacDonald, his Ministers and the majority of the Labour Party were committed to this gradualist approach, believing that socialism would be achieved not as a result of the collapse of capitalism, but rather on the back of its success, since it was this that would generate the money needed for wide-ranging community social services and redistributive taxation.
‘The election of 1929 seemed to us at the time a wonderful, almost miraculous victory,’ wrote the twenty-three-year-old Hugh Gaitskell, at the time a lecturer in political economy at University College, London. ‘We had done so much better than I (perhaps because most of my speaking had been in Marylebone!) had thought possible. We paid little, no doubt far too little, attention to the absence of a clear majority. It was enough for us that Labour was in power again, and for the first time held the largest number of seats. Our hopes for peace could be high, we would clear the slums — and, above all, tackle the unemployment.’ In fact 1929 was a disastrous time for Labour to come to power, especially with a hung Parliament. As the government struggled to drain the pool of structural unemployment that had been filling up throughout the 1920s, it was knocked sideways by the flood of cyclical unemployment caused by the worldwide Depression. No country was able to cope satisfactorily with the ‘economic blizzard’ and find an answer to the rising unemployment that resulted. In fact Britain was less hard hit than many other countries, particularly Germany and the United States. Nevertheless, the fate of the Labour government would be in thrall to an unprecedented degree to the performance of the economy. At a time when capitalism, if not in the throes of its final crisis, was certainly being severely tested, socialists were in no doubt that the government should take charge of the management of the economy, and that under a socialist state poverty and unemployment would fade away. But that was a long-term aim (and one without a blueprint for how it would be achieved), and while MacDonald and his colleagues spoke of themselves as socialists they were also members of the labour movement, committed to the defence of working-class living standards, which were under attack as a result of the economic crisis.
The conundrum of whether, in times of crisis, capitalism should be repaired (if made more equitable) or replaced would haunt the left in various degrees throughout the thirties, and contribute to its sense of impotence. ‘The capitalist system is ossified, restrictionist and unjust; but it is expanding and stable,’ wrote the economist and political theorist Evan Durbin in a book published in 1940 that explored the socialist dilemmas of the 1930s. ‘The society based upon the capitalist economy is unequal and restless; but it is democratic, middle class and conservative. What then ought to be done?’ However, the immediate problem was that more and more people were being thrown out of work. How could their distress be alleviated without ‘propping up’ the inefficiencies of the capitalist system any longer than necessary?
Not that there was any lack of ideas about how this should be done. The trouble was that most were contradictory, and several cut across party lines, which is not surprising, since there was no agreed analysis of the causes of the slump among politicians of any of the major parties — although all three had made reducing unemployment the main plank of their election appeal. It was hard to find a solution when what was causing the problem was so perplexing.
The Labour Chancellor of the Exchequer, Philip Snowden, was an exemplar of ‘orthodox economics’ — ‘a High Priest’, thought Winston Churchill: ‘The Treasury mind and the Snowden mind embraced each other with the fervour of two long-separated lizards,’ he wrote. Snowden was adamant that Britain’s recovery would only take place as part of a stable international economy based on the Gold Standard. Thus there was an absolute imperative to maintain international confidence by keeping the economy balanced and avoiding a budget deficit at all costs.
This meant that Snowden was implacably opposed to those who saw the solution in expanding the economy through lower interest rates and a programme of public works projects. The Chancellor had made his views clear during the first Labour government in July 1924, and had not budged since: ‘It is no part of my job as Chancellor of the Exchequer to put before the House of Commons proposals for the expenditure of public money. The function of the Chancellor of the Exchequer, as I understand it, is to resist all demands for expenditure made by his colleagues and, when he can no longer resist, to limit the concession to the barest point of acceptance.’ For Snowden, public works projects had to be strictly evaluated like any other form of investment. Unemployment was a long-term problem that would only be solved if production costs could be brought down — particularly in the export industries. Public works might redistribute unemployment; they would not end it. This was largely the view of the Conservatives too, as well as the City.
As for MacDonald, he had few firm convictions as to what was causing the slump, little confidence in his understanding of the economy (which Labour ‘shall have to put under a gyroscope’, he once wrote) and few ideas about how Britain was going to get out of it. But, as he made clear in his speech to Conference, he recognised that, along with peace, unemployment was the central issue the Labour government had to tackle — and would be judged by. He started the process as soon as Labour took power. ‘Since our return to Whitehall,’ wrote Secretary to the Cabinet Thomas Jones (always known as ‘TJ’), ‘the pace has been furious. The slogan is not “Socialism in our time” but “Socialism before Xmas”. Big bills are being drafted on Unemployment, Roads, Factories, Pension, Coal …’
The ex-railway union leader J.H. (Jimmy) Thomas had been MacDonald’s first choice as Foreign Secretary, but since Arthur Henderson ‘would not return to H.O. [Home Office] but put in plea for F.O.’, instead agreed to accept the post of Lord Privy Seal with responsibility for coordinating government unemployment policies. In the debate on the King’s Speech he reported on his progress less than a month after taking office. Already he had tramped the country talking to industrialists about the supposed panacea of ‘rationalisation’ to cut costs and improve