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2024 | OriginalPaper | Buchkapitel

8. The Welfare State in the Making: W. Beveridge and Keynes

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Abstract

The social system of the post-war UK is often referred to as “Keynes = Beveridge System” after Keynes, who brought on the “Keynesian Revolution” in the field of economic theory and policy with his General Theory, and Beveridge, who laid the foundations of the social security system with the Beveridge Report. As will be seen, Keynes and Beveridge endeavored in close collaboration to see their ideas implemented in the 1940s, earning the whole-hearted support of young economists and officials.

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Fußnoten
1
It is also referred to as the “Post-war Consensus” or “Butskellism”, after Butler (the Conservative Party) and Gaitskell (the Labor Party) who made great efforts to implement the “Keynes = Beveridge System”. See Kavanagh, D. and Morris, P. (1994).
 
2
Before this period, however, they were hostile on three points: an overpopulation debate; a tariff problem; and the General Theory. See Dimand (1999).
 
3
As Keynes’s New Liberalism is examined in detail in Chap. 11, the explanation here is made only in relation with Beveridge.
 
4
On Keynes’s New Liberalism, see Clarke (1988, pp.13–14, 78–80) who takes Keynes as a New Liberalist succeeding the New Liberalism of the Edwardian period; Freeden (1986) and Cranston (in Thirlwall ed. 1978) both of whom see Keynes as a “Centrist Liberalist” who, differing from a New (or Left) Liberalist as placing no great faith in the state as the disinterested agent of the community, emphasizes the ideological difference between liberalism socialist/trade-unionist Labor party, and has less reflective, philosophical, and synthetic mind (see Freeden 1986, pp.12–14, 128–129, and 171–172); and Skidelsky (1992, Chapter 7) who supports Freeden and Cranston subject to several qualifications. See also Fitzgibbons (1988, Chapter 9). Moggridge (1992, Chapter 18) maintains that Keynes’s political thought evolved from the New Liberalism in the 1920s to “Liberal Socialism” in the 1930s and later. Peacock (in Crabtree and Thirlwall eds., 1993) describes Keynes as an “end-state” liberalist, in contrast with the “contractarian” (or “procedural”) liberal. Peacock seems to take Keynes in the context of classical liberalism rather than that of the “New Liberalism”. See also Maloney (1985, pp.159–161) concerning Freeden’s (1978) evaluation of Hobson as the leader of the new liberal movement. Concerning the New Liberalists of the Edwardian Period such as Hobson and Hobhouse, see Hobson (1938) and Mouri (1990, Chapter 2).
 
5
For Robertson, see Chap. 13, and for Pigou, see Chap. 12, and for Hawtrey, see Chap. 15 in this book. It should be noted that Robertson and Henderson, both of whom took part in the Liberal Summer School and the writing of Britain’s Industrial Future (1928). For this, see Freeden (1986, pp.172–173).
 
6
Part I, “Keynes as an Economist” of the present book extensively deals with this problem.
 
7
See Hirai (2008b, Ch. 2 “Wicksell’s influences on Keynes and his contemporaries”).
 
8
Before Beveridge (1944), he regarded unemployment as a frictional and structural problem. He was recognized as an authority on it in pre-Keynesian British academic, popular, and policy thinking. See Dimand (1999, p.236).
 
9
V. George refers to Keynes and Beveridge as “reluctant collectivists”. See Mouri (1990, p.219).
 
10
Robbins’ criticism of Beveridge (1944) has something to do with this point. Interestingly enough, Robbins worked as a research assistant for Beveridge (1909) and was later one of several supervisors and examiners of Beveridge’s thesis (1930).
In terms of the political spectrum, we can array Beveridge, Keynes, and Robbins from the left to the right. It should be noted that Robbins, too, was no traditional liberalist. See Robbins (1954). See also Dimand (Pasinetti and Schefold 1999, p.232): “Where Beveridge chiefly differed from the Webbs was in his belief that full employment could be maintained without massive coercion; where he differed from [G.D.H.] Cole was in his rejection of the view that it would require no coercion at all”.
Although “the maintenance of employment” was a point Beveridge held to for many years, he expressed his allegiance to Keynes’s theory in Beveridge (1944)—which was greatly assisted by Kaldor. It is acknowledged that his conversion to Keynesianism can be found in the memorandum dated 8 September 1943, which was minuted by E. Schumacher (see Mouri 1990, p.279). This should be a sudden change, judging from the fact that Beveridge (1909, 1930, 1937a) had maintained that unemployment is, for the most part, frictional, seasonal, and structural.
Incidentally, Hayek (1994) said that Beveridge was an amateur economist, always asking Robins and Hayek for advice on economic problems.
 
11
For the related description of the inter-war period, see Ohsawa (1990, the final chapter).
 
12
In passing, the “Contributory Pension Act” was enacted in 1925.
 
13
This section is based on the material in JMK.27, Chapter 4, “The Beveridge Report”.
 
14
It was set up in December 1939. The “Stamp Survey” (the principal members were Stamp, Henderson, and Clay), which was organized in July 1939, split up into two institutions: the Economic Section and the “Central Statistical Office”. Both belonged to the War-time Cabinet Office. Concerning the Economic Section, the first director was Jukes (1939–1941), the second Robbins (1941–1945), and the third Meade (1946–1947). For details, see Cairncross = Watts (1989).
 
15
Robbins described his duty in the Economic Section as showing a diplomatic presentation to the public, ministers, and bureaucrats and as expiating his wrong recommendations which he had made [this might indicate Robbins (1934)]. See Robbins (1971, pp.186–188).
 
16
To mention a few examples, Meade’s plan for employment policy was to occupy a central place in the White Paper on Employment Policy (1944a), for which see Chap. 9, Sect. 5; his plan for the commercial policy was to be adopted as an official plan of the Board of Trade in the fall of 1941. Meade was, moreover, a leading promoter of the “World Trade Organization”.
 
17
For the two memoranda, see Mouri (1990, pp.202–203) and Moggridge (1992, p.706).
 
18
As will be seen from the argument in “How to Pay for the War” (Keynes 1940), Keynes was beginning to think of this point in time as a good opportunity for social reform (improvement in social justice). His proposal, under the principle of the “maintenance of sufficient minimum standard”, was the provision of “family allowances” (5 shillings per week per child) and “a rationing of necessaries”. This consideration was shared by Beveridge.
A similar view can be recognized in “Prof. Keynes’s Memorandum on War Purpose” (dated 13 January 1941), in which social security is mentioned as a top priority, and “Note on the Budget” (JMK.27, pp.355–367) written in November 1941, in which Keynes expressed the view that the 1942 Budget should be compiled so that it could be termed the “Social Policy Budget”.
 
19
In this letter Keynes said that industrial insurance should be owned by the state (Beveridge, in contrast, maintained that it should be voluntary insurance).
 
20
Contributions charged to an employer who fired an employee. See JMK.27, p.205.
 
21
See Meade, “Variations in the Rate of Social Security Contributions as a Means of Stabilising the Demand for Labour” (Howson = Moggridge eds., 1988, pp.184–192) and “The Effect on Employment of a Change in the Employer’s Social Security Contribution” (op. cit., pp.193–198).
 
22
Beveridge valued the White Paper on Employment Policy highly, describing it as an epoch-making event in economic and political history. He showed some dissatisfaction, however, complaining that it underrated the pathology of unemployment caused by the “unplanned market economy”. This underestimation, says Beveridge, is derived from an erroneous value judgment, regarding private firms as saintly, and adhering to a balanced budget.
 
23
Although we see no reply from Keynes concerning this, he is surely critical of it. He recognized the significance of trusts and cartels but opposed nationalization per se. See Hirai (2003a, pp.181–183).
 
24
For these estimates, see JMK.27, pp.280–298. Thereafter Keynes made an even more optimistic estimate. See JMK.27, pp.334–345.
 
25
This is an idea similar to the “deferred payments” in Keynes (1940).
 
26
Social Security together with the transport system and the Central Electricity Agency and so forth are considered among the experiments for the “socialization of the economy”. Keynes had cherished the “socialization of the economy” and the necessity of its promotion since, at the latest, the 1920s.
 
27
The above correspondence between Hopkins and Keynes is also described in Cairncross = Watts (1989, p.90).
 
28
See Mouri (1990, p.206).
 
29
This is the rule to the effect that if a person who reaches the age eligible for pensions retires, half of the pension which will increase thereafter should be deducted, while if he postpones retirement, he will get the amount in full.
 
30
The following is shown in Keynes’s letter, “Sir William Beveridge’s Proposals”, to Hopkins, dated 13 October (JMK.27, pp.246–253).
 
31
The Beveridge Report mentions 23 items in Section 2, “Principal Points of Change Proposed and Their Reasons”.
 
32
As is evident from the argument in the previous section, this is where Keynes was most involved.
 
33
This is just one way to overcome the “five giants” mentioned above. There are four others, two of which (“dirty” and “inaction”) are considered to require “state planning” to overcome. See Sect. 1 of this chapter.
 
34
The manuscript of this speech concludes by pointing out “the deep moral and social problem of how we should organize the material affluence for yielding the fruits of good life” (my italics).
 
35
On this, see Chap. 9 of the present book.
 
36
The policy of varying social security contributions is approved there. Incidentally, the former camp is on the Labour Party side, the latter on that of the Conservative Party.
 
37
Henderson argued against an imbalance of the “Social Security Fund”.
 
38
This description is based on the statement by Harris.
 
39
This is pointed out in Mouri (1990, p.248).
 
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Metadaten
Titel
The Welfare State in the Making: W. Beveridge and Keynes
verfasst von
Toshiaki Hirai
Copyright-Jahr
2024
DOI
https://doi.org/10.1007/978-3-031-40135-0_8