Nationalism and internationalism in radical British political economy in the 1930s

Abstract

Liberal political economy has been a strong ideological tradition in Britain especially within government, having become established with the movement to free trade in the 1840s (Gamble, 1981,133). Its strength can be measured by the grip of two powerful doctrines, of ‘economic internationalism’ and ‘the minimal state’, on the British establishment (Skidelsky, 1975a, 97). Both doctrines were in part an economic theory based on the efficiency of market forces, in part the political value of individual liberty, and in part the self-serving ideology of key groups who believed their interests to be challenged by state intervention. Legitimation came from a belief that the long Victorian boom was caused by the new era of free trade and laissez-faire. The result was a strong tendency for the British state to view British economic life much less in national terms than as a subordinate part of a system of world markets. Strong as liberal internationalism appeared, it had been under growing threat from more nationalistic perspectives, which tend to see capitalism less as a series of markets and more as a system of organised production. The aim of nationalistic political economy is to build up and safeguard productive capacity and secure collaboration between the major classes and interests involved in industry (Gamble, 198 1, 168). Awareness of Britain’s relative economic decline and the immense productive potential of both Germany and the U.S.A. led parts of British industry to retreat from economic internationalism before the war. The war itself helped to foster more nationalistic perspectives within industry. But the biggest threat to liberal internationalism came from mass unemployment. Like many countries, Britain experienced a severe slump in the early 1920s but recovery was much slower and much less complete than in other parts of Europe. Mass unemployment first appeared in 1921 and persisted for the rest of the interwar period, with never less than one million insured workers out of work until 1940. The most obvious cause of this problem in the mind of the liberal internationalists was that British costs were too high and this meant a reduction in the real wage. There were two basic objections to such a strategy. The first derived from a sense of distributive justice. Depression was unevenly spread, affecting most severely the old staple export sector. But these export industries would also have to bear the brunt of any attempt to reduce British costs to the prevailing world average. The second objection arose after steps had been taken to force down miners’ wages in 1925 and 1926. The costs were enormous: an expensive subsidy followed by class polarisation and the long coal dispute. If so much production had to be lost to lower the wages of one group of workers, the