How Churchill Built the Welfare State in Britain
Tossed by the tides of faddish opinion, with no principles of his own and hungry for power, Churchill soon became an adherent of the “New Liberalism,” an updated version of his father’s “Tory Democracy.” The “new” liberalism differed from the “old” only in the small matter of substituting incessant state activism for laissez-faire.
Although his conservative idolaters seem blithely unaware of the fact—for them it is always 1940—Churchill was one of the chief architects of the welfare state in Britain. The modern welfare state, successor to the welfare state of 18th-century absolutism, began in the 1880s in Germany, under Bismarck. In England, the legislative turning point came when Asquith succeeded Campbell-Bannerman as Prime Minister in 1908; his reorganized cabinet included David Lloyd George at the Exchequer and Churchill at the Board of Trade.
Of course, “the electoral dimension of social policy was well to the fore in Churchill’s thinking,” writes a sympathetic historian—meaning that Churchill understood it as the way to win votes. He wrote to a friend:
No legislation at present in view interests the democracy. All their minds are turning more and more to the social and economic issue. This revolution is irresistible. They will not tolerate the existing system by which wealth is acquired, shared and employed…. They will set their faces like flint against the money power—heir of all other powers and tyrannies overthrown—and its obvious injustices. And this theoretical repulsion will ultimately extend to any party associated in maintaining the status quo…. Minimum standards of wages and comfort, insurance in some effective form or other against sickness, unemployment, old age, these are the questions and the only questions by which parties are going to live in the future. Woe to Liberalism, if they slip through its fingers.
Churchill “had already announced his conversion to a collectivist social policy” before his move to the Board of Trade. His constant theme became “the just precedence” of public over private interests. He took up the fashionable social-engineering clichés of the time, asserting that: “Science, physical and political alike, revolts at the disorganisation which glares at us in so many aspects of modern life,” and that “the nation demands the application of drastic corrective and curative processes.” The state was to acquire canals and railroads, develop certain national industries, provide vastly augmented education, introduce the eight-hour work day, levy progressive taxes, and guarantee a national minimum living standard. It is no wonder that Beatrice Webb noted that Churchill was “definitely casting in his lot with the constructive state action.”
Following a visit to Germany, Lloyd George and Churchill were both converted to the Bismarckian model of social insurance schemes. As Churchill told his constituents: “My heart was filled with admiration of the patient genius which had added these social bulwarks to the many glories of the German race.” He set out, in his words, to “thrust a big slice of Bismarckianism over the whole underside of our industrial system.” In 1908, Churchill announced in a speech in Dundee: “I am on the side of those who think that a greater collective sentiment should be introduced into the State and the municipalities. I should like to see the State undertaking new functions.” Still, individualism must be respected: “No man can be a collectivist alone or an individualist alone. He must be both an individualist and a collectivist. The nature of man is a dual nature. The character of the organisation of human society is dual.” This, by the way, is a good sample of Churchill as political philosopher: it never gets much better.
But while both “collective organisation” and “individual incentive” must be given their due, Churchill was certain which had gained the upper hand:
The whole tendency of civilisation is, however, towards the multiplication of the collective functions of society. The ever-growing complications of civilisation create for us new services which have to be undertaken by the State, and create for us an expansion of existing services…. There is a pretty steady determination … to intercept all future unearned increment which may arise from the increase in the speculative value of the land. There will be an ever-widening area of municipal enterprise.
The statist trend met with Churchill’s complete approval. As he added:
I go farther; I should like to see the State embark on various novel and adventurous experiments…. I am very sorry we have not got the railways of this country in our hands. We may do something better with the canals.
This grandson of a duke and glorifier of his ancestor, the arch-corruptionist Marlborough, was not above pandering to lower-class resentments. Churchill claimed that “the cause of the Liberal Party is the cause of the left-out millions,” while he attacked the Conservatives as “the Party of the rich against the poor, the classes and their dependents against the masses, of the lucky, the wealthy, the happy, and the strong, against the left-out and the shut-out millions of the weak and poor.” Churchill became the perfect hustling political entrepreneur, eager to politicize one area of social life after the other. He berated the Conservatives for lacking even a “single plan of social reform or reconstruction,” while boasting that he and his associates intended to propose “a wide, comprehensive, interdependent scheme of social organisation,” incorporated in “a massive series of legislative proposals and administrative acts.”
At this time, Churchill fell under the influence of Beatrice and Sidney Webb, the leaders of the Fabian Society. At one of her famous strategic dinner parties, Beatrice Webb introduced Churchill to a young protégé, William—later Lord—Beveridge. Churchill brought Beveridge into the Board of Trade as his advisor on social questions, thus starting him on his illustrious career. Besides pushing for a variety of social insurance schemes, Churchill created the system of national labor exchanges: he wrote to Prime Minister Asquith of the need to “spread … a sort of Germanized network of state intervention and regulation” over the British labor market. But Churchill entertained much more ambitious goals for the Board of Trade. He proposed a plan whereby:
The Board of Trade was to act as the “intelligence department” of the Government, forecasting trade and employment in the regions so that the Government could allocate contracts to the most deserving areas. At the summit … would be a Committee of National Organisation, chaired by the Chancellor of the Exchequer to supervise the economy.
Finally, well aware of the electoral potential of organized labor, Churchill became a champion of the labor unions. He was a leading supporter, for instance, of the Trades Disputes Act of 1906. This Act reversed the Taff Vale and other judicial decisions, which had held unions responsible for torts and wrongs committed on their behalf by their agents. The Act outraged the great liberal legal historian and theorist of the rule of law, A.V. Dicey, who charged that it
confers upon a trade union a freedom from civil liability for the commission of even the most heinous wrong by the union or its servants, and in short confers upon every trade union a privilege and protection not possessed by any other person or body of persons, whether corporate or unincorporate, throughout the United Kingdom…. It makes a trade union a privileged body exempted from the ordinary law of the land. No such privileged body has ever before been deliberately created by an English Parliament.
It is ironic that the immense power of the British labor unions, the bête noire of Margaret Thatcher, was brought into being with the enthusiastic help of her great hero, Winston Churchill.