Decarbonise, Demilitarise, Democratise: Building a Resilient Economy in a post-Covid-19 World – 7

Is it possible to carry out such a profound transformation of an economy?

Comparisons are often made with World War Two and the need now for a similar, emergency mobilisation to prevent irreversible climate change. But war-time production could only be sustained for a short period, compared to the contemporary crisis that requires a programme of public investment at a similar annual scale but one lasting for at least a generation.

If there is one historical precedent, it is the period that straddles the middle of the Second World War from 1942-43 through to the end of the Labour government in 1951. The prospects for a decisive victory by the allies had become clear but, as today, there was widespread fear of a deep recession, since the post-war economy would have to absorb over 2.5 million members of the armed forces returning from overseas and 1.3 million civilians redeployed from work on armaments. Yet there was also an absolute determination and resolve not to return to the economic orthodoxies of the 1930s that had led to depression and mass unemployment.

Detailed research and planning was carried out during the war on public ownership and the modernisation of industry that would form the basis of post-war recovery.  Despite an unfavourable economic outlook and historically high levels of debt, the Attlee administration, with mass support from the labour movement, carried through a comprehensive programme of public investment, including nationalisation of coal, electricity, railways and steel industries, as well as council house building and the creation of the NHS and the welfare state. The feared recession never materialised, partly because the economy benefited from the release of pent-up savings accumulated during the war, but also from active public policies in favour of working people.

However, that sense of radical purpose was not sustained. Nationalised industries, rather than encouraging industrial democracy, became highly-centralised and managerial bureaucracies. Other detailed proposals, including those to make the country self-sufficient in agricultural production were never implemented. Tragically, the Labour leadership, with some notable exceptions, supported the United States’ policy of rearmament in the early years of the Cold War, when it could have played the leading role in European post-war reconstruction centred on assistance to a demilitarised and neutral Germany. Billions of pounds were diverted to armaments while other areas of public spending, including the NHS, were cut.

Instead of a demilitarised Europe, the continent was divided between the armed encampments of NATO and the Warsaw Pact.  Even Marshall Aid, which was originally provided by the United States to support civil reconstruction across the whole of Europe (as well as to restore the continent as a major market for American consumer goods), was diverted into Western-European rearmament.  The UK and the European economic post-war reconstruction would have looked very different if public funding had been focused on sustained, civil investment as opposed to what became a permanent, peace-time, military economy.

Nevertheless, over the post-war period, all the major utilities and strategically important industries, including the railways, steel, coal, electricity, gas, aerospace, docks, shipyards, and telecommunications have been, at some stage, under public ownership. Similarly, local authorities have owned public transport fleets and council housing stocks, constructed and maintained by direct labour forces. (Municipal ownership of water and energy utilities has an even longer pedigree, dating back to the early 20th century, as well as significant land ownership, including farms for local food production.) The UK also had a network of public research establishments that, despite the concentration on military R&D, extended across many civil sectors, in the physical sciences, engineering, health and agriculture.

As with the period from 1942-51, it is possible to put forward a transformative agenda that is implemented with urgency, and has a lasting impact on the economic and institutional structure of the country, given the political will and widespread popular support.

Contemporary conditions are very different to those in the 1940s. There has been a hollowing out of the UK manufacturing base, along with the privatisation of industry and of research institutions. The labour movement has been seriously weakened by the loss of membership and anti-trade union legislation. Rather than the reconversion of an existing industrial capacity, a resilience programme will require a fundamental rebuilding of production with new industries.

 

 

 

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