Lloyd George, Keynsianism, Mosley and the Tory Privatisation of Government Job Creation

British Liberal Prime Minister Lloyd George, used government work creation schemes to combat unemployment.

A few weeks ago, Alittleecon on his blog suggested that unemployment could be combatted through a government programme of public works. The unemployed could be retrained as the workers and professionals the economy needs, and the scheme would itself stimulate further economic growth. The money spent by the government would thus pay for itself several times over. See his post, ‘If the Private Sector’s Not Doing It, Doesn’t Mean Its Not Worth Doing’ at http://alittleecon.wordpress.com/2014/04/10/if-the-private-sectors-not-doing-it-doesnt-mean-its-not-worth-doing/

Alittleecon is very definitely a person of the left, and governments across the political spectrum under the influence of Keynsian economic have adopted similar public works programmes to stimulate the economy. The Japanese government, for example, has embarked on a massive campaign of road construction, as well as building airports and other parts of the transport infrastructure in order to counter the massive depression their economy experienced in the late 1990s and noughties.

Oswald Mosley and Government Public Works for Creating Employment

The British would-be Fascist dictator, Oswald Mosley, also recommended using a programme of public works and employee retraining to tackle unemployment in his 1968 autobiography, My Life (London: Thomas Nelson). He wrote:

The other sphere in which the government must give a decisive lead is in the organisation of public works on a great scale. In an island or even a continental economy overheating, with the result of inflation, can occur in a condition of full employment. On the other hand, to maintain a large pool of unemployment is inhuman and disastrous to the general morale. The answer to this dilemma of the present system is to avoid overheating and inflation by the restraints of credit policy, while taking up the consequent slack of unemployment in public works. No man should be unemployed, and work should be available to all on a reasonable standard of life in a large public works programme, but there should be sufficient differential to provide incentive to return as soon as possible to normal employment; re-training and re-deployment of labour schemes should always accompany of public works system.

Public works should now be in active preparation in all Western countries to replace in due time the distortions of the economy of the Western world, which are initially caused by the semi-wartime basis of America. When peace finally breaks out, we should be ready with the constructive works of peace to replace the destructive works of America’s small wars and the concomitant arms race. The inflationary movement, resting largely on America’s deficit financing of its wars and arms, can at any time come abruptly to an end, either through peace of the objections of other nations to this financial process. So far, armament race and minor wars have taken up the slack of unemployment which would normally represent the difference between modern industrial potential and effective market demand. This has only been done by distorting the economy and aggravating the eventual problem of peace. To maintain full employment in a real period of peace only two methods are available – inflation, or public works on a great scale. We have already seen the results of inflation in an overheated economy leading to over-full employment, and wages chasing prices in a vicious spiral whose end must be a crash.

The only alternative is a stable price level maintained by a strong credit policy, with the resultant unemployment taken up in public works. The economic effect of public works in dealing with unemployment can be the same as the armament boom, without the disastrous exaggeration of deficit financing. Yet the difference in national, or I hope continental, well-being can be vital. The public works of peace can be integrated in general economic policy and can serve it rather than distort it. State action can prepare the way in works too large for private enterprise, and can thus assist rather than impede it. Such public works of peace in terms of unemployment policy can replace abnormal armament demand, can build rather than damage the economy, can benefit the nation and reduce the menace to mankind. (pp. 493-4).

He also recommended that the government public works programme should be used to replenish and upgrade the housing stock in a campaign of slum clearance and house building to provide homes for young people unable to get on the property ladder.

There is no such waste of wealth and the human spirit as unemployment. It is avoidable, and in a continental economy easily avoidable; it is simply a question of the mechanics of economics which mind and will can master. When demand flags, the market falters and unemployment follows, but we should remember there is no ‘natural’ limit to demand; the only limitation is the failure of our intelligence and will. It sounded fantastic long ago in the House of Commons when a wise Labour leader of clear mind and calm character, J.R. Clynes, said there is no limit to real demand until every street in our cities looks like the front of the Doge’s Palace at Venice; and not even then. He was quite right, there is no limit to demand, only to our power to produce, and then to organise distribution. Certainly, there is no limit to demand while the slums disgrace our main cities and young married couples have to live with their parents for lack of accommodation. for years I have urged a national housing programme like an operation of war; the phrase was picked up and used long after as what is called a gimmick in contemporary politics; yet nothing was done about it. I meant it, and it can be done. (p. 495).

There is nothing uniquely Fascist about this programme. Mosley was an early convert to Keynsianism, and took his idea of using public works to combat unemployment from Lloyd George. In the ‘Mosley Memorandum’ he issued in 1929 when he was a member of the Labour party, he recommended using a mixture of public works and purchasing credits issued to the population as a means of stimulating the economy. Economists looking at this policy since then have given their approval, and believed that it would have worked. This does not, of course, justify anything else Mosley advocated, such as the megalomania that saw him as the future British dictator, the hatred of democracy and liberal British institutions, the violence, the bizarre ideas of using evolution to create a new, higher human type, and the poisonous and vicious racism and anti-Semitism that would have led Mosley in power to create an apartheid state. Despite Mosley’s claims to the contrary, his biographer, Stephen Dorril, has stated that if he had come to power and allied with Nazi Germany, then he would have become an accomplice in Hitler’s genocide of the Jews.

Louis Blanc and 19th Century National Workshops in France

In fact, the use of public works as a means of lowering unemployment was used as early as 1848 in France. The pioneering French Socialist, Louis Blanc, had recommended setting up a system of ‘National Workshops’ to provide jobs for unemployed workers, who would be paid at the rate of two Francs a day. The profits made from these jobs would be used to purchase more workshops until the economy was completely socialised. This met with very strong opposition from the French government, including the minister charged with implementing the policy. Blanc was not included on the five-man Executive Commission which replaced the provisional government. the Comte de Falloux, the leading spokesman for the Conservative right, attacked the Workshops because he believed they constituted the threat of working class, Socialist revolution. The jobs created were thus pointless, miserably paid tasks like digging ditches, only to fill them in at the end of the day and the Workshops themselves were later closed down in June 1848.

A proper policy today of creating new jobs through public works and retraining, such as that recommended by Mosley, would almost certainly be strongly opposed by the current political class. It contradicts Neoliberal dogma that private enterprise is always better for the economy and society, and that state interference should be as limited as possible. Obama’s bail-out of the American banks and his policies designed to combat the recession that followed, have been strongly attacked by Libertarians. Following von Hayek and Mises, they see government policies as making the crisis worse and prolonging it. It would also be attacked for contradicting the government’s austerity programme, and the automatic assumption that the only fiscally responsible course of action to adopt in a recession is to cut public expenditure. I also have no doubt that some of the arguments used against such a policy would be that it was recommended and used by Fascist dictators and leaders like Mussolini, Hitler and Mosley.

Workfare Not Programme to Create Jobs, but Supply Cheap Labour to Industry

Nevertheless, there is the expectation that the government should act positively to combat unemployment, rather than leave the economy to correct itself automatically. The various job creation schemes like the Youth Opportunities Programme in the 1980s, and the Work Programme, as well as various internships and trainee schemes launched by private industry in partnership with the government are proof of this. So also are the various retraining schemes that have also been launched by successive administrations, like the computer courses Blair set up for the unemployed. The Coalition has, however, tried to avoid actually creating any real jobs directly through the use of private contractors. Instead of unemployment being created through the economy and the structure of society, the Tories and Tory Democrats instead have adopted the old Victorian view that it is caused by the idleness or moral weakness of the jobless themselves. Hence the bullying and humiliation by jobcentre staff and the system of sanctions, ostensibly intended to motivate the unemployed to look harder for work. Neoliberal economics recommends a constant unemployment rate of 6 per cent to keep wages low, and the Work Programme, internships and trainee schemes, as well as various apprenticeship programmes are structured not to create work, but to keep the contracting business supplied with cheap labour. They are intended to present the illusion that the government is seriously tackling the problem of unemployment, while really doing as little as possible to tackle it seriously.

These highly exploitative schemes should be discontinued, and the government instead should embark on a genuine programme of state job creation following the interventionist ideas of Louis Blanc, Lloyd George and Keynes. But I doubt this will ever occur. It would contradict decades-old Thatcherite notions of what constitutes government expenditure, as well as outrage the Conservatives and big business with the prospect of a revived, working class, which would not have to depend on private industry for the privilege of obtaining unpaid or low paid jobs.

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