PUBLIC EXPENDITURE IN SOCIALIST THOUGHT

...This was how the Webbs' policies joined with the aspirations of the labor movement, with emphases that remain at the core of its politics...

...Alternatively, there has been "over-full" employment and an inflationary level of public spending...

...see note 22...

...This will be vital in 356 the years ahead...

...A British example is the subsidy on school meals...

...This happens in two ways: through the growth of the multinational corporations, and the rising importance of international monetary organizations...

...In contrast, a system of vouchers is likely to lead to panic removals from schools in response to rumors and misunderstandings...

...their analysis was similar to the monetarist account of the "natural rate" of unemployment...

...Why should it be assumed that governments are vulnerable to popular pressures for public spending and low taxes but not to these other pressures—some of them also being democratic forces...

...This is indeed something to which social democratic parties have failed to respond, to the advantage of their opponents...

...The policy rested on the identification of different degrees of profitability in different sectors of the economy...

...There is a further argument...

...However, there are two points to be set against it...

...One can regard the issue as being between bureaucracy and community...

...C. A. R. Crosland, Socialism Now and Other Essays (London: Jonathan Cape, 1974), p. 67...

...paper, New York: New American Library, 1978...

...This is best achieved by planned, calculable interventions in a market process that is otherwise left to do its work...

...Or take a chance and send us your article...

...The early welfarestate plans assumed that there were no difficulties in implementing measures through the existing apparatus of the bourgeois state and its civil service...

...This last point does not, as some Marxists would have it, automatically discredit this brand of socialism.' There is an alternative view of the matter...

...Also, while constituting a challenge to the earlier form of capitalist economy, Keynesianism in other ways furthered the aims of capitalism...

...There is a good deal of evidence to suggest that several public services embody built-in advantages for the better off...

...This ambiguity helps explain the contradictory attitudes toward full employment and Keynesianism among business interests...

...For example, one may take the argument that industry needs a work force with certain levels and types of educational skills—from ordinary workers it needs basic literacy and numeracy, from others specialized technical skills, from others again more advanced scientific and intellectual abilities...

...Second, even if the distortions of underprovision and gross inequality that the market produces are efficient, it remains in the last analysis a question of value, over which reasonable men can disagree, whether one prefers the narrow efficiency of the market or is willing to compromise some of this in order to secure some goals that the market will not achieve at all...

...Any surrender now of an item in that program seems a concession to the enemy, even if the overall system has become ridden with imperfections and vulnerable to attack...

...Included among them have been essentially socialist pressures for educational opportunities to be opened to all and not just to those who could afford to pay for them...

...It is far easier to make cuts in capital spending, though in the long run this does far more damage to the service in question...

...It will probably be universally conceded that high levels of inflation are undesirable, but it is by no means 349 clear that the evils consequent on a low or moderate level of inflation—setting aside certain unresolved technical debates on how long inflation can be contained at moderate levels— are greater than those of trying to eliminate it from the system altogether...

...351 And all within a fiscal policy becoming more restrictive and less inflationary because of the degree and type of government intervention involved and because of the integration between union and government policy that could be expected...

...88 p. 90...

...But in other aspects of economic policy, the Swedish labor movement has in the past been able to achieve things not possible in Britain...

...In stopping short of this point, government economic policy has not changed to the extent perceived necessary by Keynes himself as a consequence of the adoption of his demand management techniques...

...By "internal" rationality I mean the clarity, objectiv357 ity, and rule-governed nature of the process, and recognize implicitly that the substantive outcomes of the market are often irrational...

...Published by Jonathan Cape Ltd...

...but this is largely a technical question not immediately related to political principle...

...When government assistance to industry is taken into account, private enterprises in Britain have in fact been net gainers from the balance between taxation and public spending for many years...

...The unions were prepared to propose such a policy, which obviously threatened higher unemployment, because they were confident that a Social Democratic government would maintain a policy of overall expansion for the economy, constantly creating new job opportunities, while also vastly expanding selective manpower policy, including information, retraining, and financial support during the process of transition from old to new jobs...

...His hope was that institutions like the voluntary blood transfusion service would reinforce the ties of community loyalty that in turn produce further examples of altruism...

...However, in the above quotation, Crossman reminds us of earlier labormovement traditions that were also expunged...

...and G. Smith, R. Lees, and P. Topping, "Participation and the Home Office Community Development Project," both in Colin Crouch, ed., British Political Sociology Yearbook, Vol...

...capital is highly mobile and there is no democratic international polity...

...Further, complaints that the welfare state removes responsibility from people for their own lives is often a concealed conservative demand that the less able and less wealthy be left to drift by themselves...

...In many cases, only publicly financed provision can provide this kind of access...

...But the rightist argument here is not quite as strong as it seems...

...Against this, socialists argue that many basic services are not marketable, and they emphasize the arbitrariness introduced by the ultimately indefensible inequalities of income and wealth distribution that determine our ability to secure goods and services in the market...

...also S. Brittan, "The Economic Contradictions of Democracy," British Journal of Political Science 5 (1975...

...348 Perhaps the philosophy was too well tailored to the period of easy economic growth, since the ending of that period has robbed it of some of its initial assumptions...

...Second is the need for socialists to be prepared to criticize aspects of public spending...

...Once a service has been established, other aspirations that do not necessarily have anything to do with industry's needs make themselves felt in policy making...

...84 Stemming from the work of A. 0. Hirschman, in his study of problems of state-owned enterprises in Latin America, there has recently been considerable interest among political scientists in the difference between the alternative modes of "exit" (the market and analogous processes, where one expresses preference by "taking or leaving" an offered service) and "voice" (where one participates in decision-making within a service that one is incapable of "leaving...

...Frequently, however, this isn't the case, yet socialists often seem unwilling to accept a reexamination of the system we have inherited...

...Several areas of public spending—including one of the biggest single items, defense—are in no way distinctively socialist...

...A further question that tended to be ignored by socialists in those years of capitalism's acceptable face in the 1950s was the possibility of companies avoiding those countries that imposed either heavy taxes to finance public spending or restrictions on industrial activity in pursuit of social goals...

...So much is this so now that when Norman Dennis protests against these emerging tyrannies with the authentic voice of a deeply rooted English socialism, he is heard with approval by Keith Joseph, and dismissed as a nuisance by the Labour establishment...

...To take an example familiar from the debates of the early 1960s, the free market produces plenty of slot machines but leaves schools poorly equipped...

...Conversely, the more socialist and far-reaching the system, the less will it be vulnerable to corruption...

...25 H. Halsey, Change in British Society: Based on the Reith Lectures (Oxford University Press, 1978...

...9 J. Harris, William Beveridge: A Biography (Oxford University Press, 1977...

...This is because the strength of the labor movement and the welfare of those it represents depend on full employment...

...To draw attention to Swedish experience is not to argue that British should or could simply have adopted the same policies...

...Class differentials in political effectiveness existed long before increasing public participation came on the scene...

...In times of prosperity, a labor movement with power in the area of public spending and a capital with power over investment lead to a reasonably happy compromise, but in times of difficulty they will lead to a stalemate, and inflation is the main consequence...

...in the form of J. K. Galbraith's book The Affluent Society...

...However, participation, if it can work, is likely to lead to more balanced improvements...

...Notes ' A sophisticated version of this argument can be derived from Fred Hirsch's thesis of positional goods, The Social Limits of Growth (Cambridge, Mass.: Harvard University Press, 1976...

...for some time to come the general internationalization of economic affairs will work against using public spending as an instrument of socialist policy...

...In an admittedly brief and ambiguous passage at the end of the General Theory, Keynes spoke of the probable need for a "comprehensive socialization of investment" if full-employment demand management policies were to be sustained.' In the absence of this, British governments have had to manage the economy through the infamous process of "stop-go," hindering both investment and public spending...

...through the state a form of collectivism could limit the disorder and avarice of individualism...

...This is a sound and reasonable argument, though it is remarkable how often the labor movement has, especially recently, allowed itself to be maneuvered into a position where it is willing to support any spending, provided it emanates from the state...

...and individual capitalists would be likely to oppose both the taxation and the extension of state activity involved...

...Through this pincer movement, firms would be forced to become more efficient or to close down...

...Asserted but unargued "medical" or "educational" reasons may be an excuse to enable professionals to do what suits them...

...At this point one wants to be able to claim that socialism can create a new, egalitarian base for altruistic, community-concerned behavior...

...Most of the practitioners of these occupations work according to an ethic of devotion to the task in hand, to the achievement of substantive results within their service...

...First, the substantive outcome of the free market may well be inefficient if (a) it makes inadequate provision for infrastructural goods and services that are not fully marketable but on which economic activity depends, for example, if it fails to provide an educated work force...

...M. Stewart, Keynes and After (Harmondsworth: Penguin, 1967...

...With the international economic crisis, the basic consensus over public spending and Keynesian economic policy has burst asunder...

...2) Please don't write to ask whether we're interested in such and such an article—it makes for useless correspondence...

...For present purposes, comment will be restricted to a small number of critical observations, some of which are directed to the moral, others to the technical, versions of the doctrine...

...It is impossible to envisage an egalitarian politics, concerned with a man's collective and unmarketable needs, that will not have to divert resources from the unequal, individualized market process so that they can be put to communal use by popularly responsive public agencies...

...The Labour party's power has been concentrated at the point of making effective demands for spending, with little leverage at the level of investment and production decisions...

...One consequence of this lack of integration is that investment has been the casualty of the system, being sacrificed both to public spending needs and to the defense of the currency...

...on behalf of the Fabian Society...

...But the ambiguities of the earlier period were carried forward in the postwar policies...

...As a result the pattern of existing spending becomes impossible to justify as an expression of socialist priorities, and highly vulnerable to political attack because it is seen as irrational...

...The Webbs believed that the state could be developed further to counter some of the gross irrationalities produced by the theoretically entirely rational system of the free market economy...

...Penetrating this cover, and doing so in a way that achieves a proper balance between the rights of lay participation and the proper knowledge of the professional, is not easy...

...Halsey, Change in British Society, p. 85...

...This remains the high water mark of the impact of socialist thought on public spending and related questions...

...Check all your figures, dates, names, etc.— they're the author's responsibility...

...though probably more important have been pressures from within the educational profession itself...

...the need, in desperate situations, to use whatever resources are at hand to gain some results...

...This is not entirely true: the extent to which demand is boosted will depend on the marginal propensity to consume of the initial recipients of the spending...

...He argues that there are many goods that can by their nature be enjoyed only by a minority, and that no improvements in the general standard of living can do anything to change this...

...For example, much town-planning legislation operates to protect the environmental amenity of wealthier areas far more than it does that of the poor...

...Along with others at that time, the early Fabians were concerned about popular health and welfare for reasons other than the interests of the people concerned...

...See A. O. Hirschman, Exit, Voice and Loyalty (Cambridge, Mass.: Harvard University Press, 1970...

...And they do have forms of knowledge that limit the challenge the layman can make to their authority...

...III: Participation in Politics (London: Croom Helm, 1977...

...Given their dissociation from the interests of capital and their long-standing belief in intervening in market processes in the interests of equality, socialists are more likely than supporters of bourgeois parties to be sympathetic to appeals that there should not be complete reliance on market mechanisms for the provision of people's needs...

...Some of these situations are incapable of any remedy—no amount of educational reform will lead to everyone's child being top of the class—but others can be alleviated if there is communal provision of some of the goods in question, rather than private ownership...

...but another formulation, taking the debate back to an earlier period, is that between statutory and voluntary action...

...the more a system becomes permeated by actions of this kind, the more of an inchoate jumble public spending becomes, and the more remote from the public...

...First, participatory exercises can be introduced by authorities as meaningless tokens, within which a few self-appointed local worthies serve simply to give increased legitimacy to the bureaucracy...

...If pressure is to be applied to a nationalized industry to keep open an uneconomic plant in 352 the interests of reducing unemployment, then some attempt should be made to assess the cost of that decision, and the industry given specific grants in compensation...

...This is a theme to which we shall return...

...26 H. S. Crossman, "The Role of the Volunteer in a Modern Social Service," in A. H. Halsey, ed., Traditions of Social Policy (Oxford: Blackwell, 1976...

...T. H. Marshall, Citizenship and Social Class (Cambridge University Press, 1950...

...He want participation by the community itself in the running of its services, making democracy more real than is possible through existing statutory authorities, and tapping the wellsprings of commitment to community responsibility...

...several exclusive American housing estates employ private police forces...

...The Keynesian and Beveridge revolutions did little to alter the basic mold in which British socialism's approach to public spending had been set: services provided for the people by the state and its bureaucracies, with a continuing remoteness from the people themselves...

...They will, for example, ensure that their children's schools attract the best teachers and have the best facilities...

...B. Semmel, Imperialism and Social Reform: English Social-Imperial Thought 1895-1914 (London: Allen & Unwin, and Cambridge, Mass.: Harvard University Press, 1960...

...However 346 much it might be in the overall interests of capital for certain unprofitable public services to be developed, the task of provision would have to be carried out by the state, with finance raised from taxation...

...For all his refinements of and improvements on early socialist theory, Karl Marx did not really differ from this ultimate ideal, nor did he improve on the hopeless vagueness of its formulation...

...D. E. Moggridge, Keynes (London: Macmillan and Fontana, 1976...

...Fiscal policy would be more restrictive than in the initial stages of Swedish Keynesianism, keeping demand high enough to ensure full employment in most of the economy, but not in the least productive sectors...

...To try to refute such arguments by claiming that the market is the sole guide to efficiency is to reify an indicator and to make an argument true by definition...

...At this point, the right uses its second "moral" argument against public spending...

...it certainly cannot create it...

...This kind of paternalism is often attributed to the policy-makers' belief that they know better than the people themselves what is good for them...

...certain specific structural characteristics of Swedish political economy were important to its acceptance...

...Important here has been the dominant role of the City of London, which, being primarily an international institution, has been almost immune from domestic political pressure...

...Conservatives have recently suggested a method of easing the problem of transfer, at least within the school system, with the idea of educational vouchers parents may use to "buy" education at a school of their choice...

...In the late 1940s an unusually favorable political conjuncture enabled a whole range of ambitious social services and spending items to be introduced...

...5) We're usually quick in giving editorial decisions...

...Labor's place in the market was weak and by definition subordinate, while workers were excluded from political citizenship...

...It was necessary to ensure that all the nation's resources, including the physical welfare of its people, were deployed as efficiently as possible...

...Finally, there is the problem of remoteness and public alienation from public services...

...medical practice has helped to drive out voluntary effort...

...They should be, and are, heavily committed to the tradition of public-service broadcasting, exemplified by the BBC, because that makes available to a mass audience a richer variety of cultural experience than would result from radio and television services governed by commercial criteria alone...

...It is when spending is carried out in an ad hoc way, with few guiding principles, as a small item within a system primarily governed by market processes, that politicians have the kind of discretion deliberately to target their spending on electorally sensitive groups...

...Unless we are prepared to seek the abolition of virtually all markets— which would be impracticable as well as undesirable— we need to pay special attention to what happens at the interface between public and private, to those aspects of public spending that cover items very similar to those that people normally buy in the market...

...In Sweden, too, investment has been left to private capital, largely beyond the reach of labor's powerful political forces, and in the past few years this has become an issue of controversy linked with problems of inflation control, much as in Britain...

...And as Richard Titmuss used to remark in a slightly different context, one argument for universal public services is that if the middle classes have to make use of them rather than escape from them into the private sector, they will deploy their energies and resources to improve them, and from that everyone will gain...

...Movements of this kind have begun: there are occasional instances of transnational trade unionism...

...The very public spending that leads to high taxes often provides industry with the infrastructure it needs, while there may be advantages of natural resources or the location of work-force skills that lead a company to remain in a particular country whatever its policies...

...But it illustrates the advantages of having public spending incorporated into a policy of overall economic regulation...

...If there is public resistance to higher taxes, then governments can go on spending by the simple expedient of printing more money...

...A final gain from increased participation in the government of welfare-state institutions is the creation of a powerful lobby for the continuous improvement and strengthening of the social services and the maintenance of a high level of public spending...

...One aspect of this, emerging clearly in the thinking of the Webbs and becoming firmly entrenched in Labour party policy, was the strategy of concentrating the administration of welfare activity in the hands of employees of the state and local authorities, rejecting the system of voluntary action that had been developing since the later 19th century, and that increasingly found its political supporters on the right...

...A different problem concerns the relationship between voluntary participation and the professions whose skill is necessary in several services: medical practitioners, social workers, schoolteachers, planners, housing managers, municipal engineers, and so on...

...In many ways public spending was developed on capitalism's terms, but not entirely so...

...Against the directness of this form of "voting with one's feet," participation can be a difficult process, requiring organization, constant commitment to working for other people's as well as one's own children, and an attempt at improving an existing institution rather than moving from it to a known success...

...It has always been socialism's claim that it improves, not fudges and botches, the efficiency of the market...

...The ability to operate internationally is almost entirely a monopoly of the interests of capital...

...In this his argument is similar to the more rigorous formulations of Fred Hirsch: a market society depends for social stability on certain bases of trust and on the willingness of people not to pursue their own interests to the extent that the free-market model implies...

...Contemporary Challenges: Charges from the Right FIRST, THERE IS the battery of charges from the right, asserting the essential profligacy of high levels of public spending...

...While individuals make a distinct contribution to financing public services through taxation, their return in the form of enjoyment of services is indistinct and uncertain...

...Seen as the choice of a universal, systematic welfare service available to all as a right of citizenship, the ultimate victory of the approach of the Webbs over that of the advocates of voluntary charity was almost entirely a worthy victory for socialism over liberalism and conservatism...

...Public expenditure becomes a particular concern of socialists if it falls into one or more of three categories...

...or (b) it leads to arbitrary concentrations of wealth, whose owners are so rich that they have no incentive to act efficiently...

...As Crosland put it: "There are times when only the despised local councillors and bureaucrats stand guard on behalf of the majority...

...People from the educated, wealthy, professional, and managerial classes have more time, more resources, and the appropriate skills to devote to voluntary action in the interests of their communities...

...But the task remains extraordinarily difficult...

...J. M. Keynes, The General Theory of Employment, Interest and Money (London: Macmillan, and New York: Harcourt, Brace, 1936...

...We know too much about the obstacles to mass participation in formal politics, about the techniques whereby politicians and bureaucrats deflect and fob off attempts at finding out what they are up to, about the sheer difficulties experienced even by men of probity and good will in rendering any large-scale organization transparent and open to influence...

...4; F. Longstreth, "The City, Industry and Economic Planning," in Colin Crouch, ed., State and Economy in Contemporary Capitalism (London: Croom Helm, 1979...

...There is, of course, some truth in this, and only the most obtuse among socialists will argue that in no circumstances should public expenditure be contained in relation to national income—though it is relevant to notice that the major historical case cited of a government being unwilling or unable to raise taxation to meet its expenditure is the Johnson administration's deficit financing of the Vietnam War, hardly an instance of socialist public spending...

...The basic cast of socialist thinking on public spending had been set by the early decades of this century, but the two major developments that firmly established a high level of public spending on social services as part of British national life took place during the Second World War: the adoption of an ambitious and systematic set of social policies (on health, education, and social insurance) and the acceptance by the government of Keynesian economic policies, which provided a means for the financing of public spending and a clear philosophy for the use of public expenditure to maintain full employment...

...Dennis (a former Labour councillor in Sunderland), in dealing with urban planning in the northeast of England, was confronting a political process that we now know from the revelations of certain legal cases to have been riddled with corruption, by no means unrelated to problems of large-scale public expenditure by remote and unscrutinized authorities...

...This is seen most clearly in those aspects of public spending that simply redistribute resources among the working and lower-middle classes, requiring them to consume services that they might not choose in the market...

...Thus Hirsch described capitalism as living on a "depleting moral legacy" of codes of restraint and deference inherited from precapitalist institutions...

...An indication of how the compromise can turn out differently, and in some ways more constructively, emerges from comparisons of British and Swedish experience...

...Meanwhile the unions would pursue a "solidaristic wage policy," insisting through centralized bargaining on equal increases for equal work regardless of an employer's ability to pay...

...This would be achieved by means leading as far as possible to allocative results similar to those produced by the market, but with results that would be better in terms of a level of unemployment consistent with a constant rate of inflation, preferably close to zero...

...Having quoted that passage, Halsey continues: So the movement which had invented the social forms of modern participatory democracy and practiced them in union branch and co-op meeting, thereby laying a Tocquevillian foundation for democracy, was ironically fated to develop through its political party the threat of a bureaucratic state...

...Such ambivalence is part and parcel of the compromise embodied in public spending policies as they have developed...

...In a great many, if not most, instances even the clearest cases of public goods can actually 344 be provided through market mechanisms for a small minority...

...As we're not an academic journal, we prefer that they, wherever possible, be dropped altogether or worked into the text...

...Politicians often find it convenient that responsibility for a given item of expenditure be shuffled around and diffused, in the hope that, at the end of the day, it might be lost altogether...

...In order to tackle these problems and their relation to developments in socialist thinking, let us now consider the range of problems confronting the commitment to public spending...

...I am now convinced that the Labour party's opposition to philanthropy and altruism and its determined belief in economic self-interest as the driving dynamic of society has done it grievous harm...

...It is not always clear whether the central concern of recent conservative writers is with individual freedom and natural rights—an essentially moral commitment —or with the technical criterion of efficiency...

...This is often as true of its approach to elected representatives as it is to voluntary helpers...

...Thus a socialist concern for public spending has been able to entrench itself in the politics of the society because it coincided with certain interests of capitalism, which the latter found great difficulty in realizing by itself...

...At the same time, bourgeois parties adjusting themselves to universal suffrage had to accept social spending...

...see also Stephen Hatch and Howard Glennerster, eds., Positive Discrimination and Inequality (London: Fabian Society, 1974), especially G. Green's chapter, "Towards Community Power...

...A further important contribution to this line of thought came from the U.S...

...4) Notes and footnotes should also be typed double-spaced, on a separate sheet...

...This essay does this, first by a brief historical review of how public spending came to occupy its prominent place in British socialist thought, and second by an examination of some of the inadequacies that have been revealed in the labor movement's approach to the question...

...Indeed, the more remote the services and the less interest people took in them, the more readily could their development be subsumed under policies of demand management...

...the effect on a poor school of a sudden removal of children can be salutary, and fear of this occurring could be a pressure on teachers to keep up their standards...

...It provides one of the very few points of consensus linking parties as far apart as the French Communists and the West German Social Democrats, and extends to the progressive wing of the United States Democratic party...

...They like the stability and expanding markets that it provides but resent both the freedom afforded to their workers by full employment and the constraint imposed on themselves by a large public sector and high levels of taxation...

...the number of secondary schools within reasonable distance of a great many children's homes is no more than one...

...6) Please bear with us—we have accumulated quite a backlog of material, and you may have to wait for a few issues before you see your article in print...

...If one's aim is simply to boost demand, then it does not matter much whether the expenditure goes on the salaries of top-level bureaucrats, the production of kidney machines, or the manufacture of hydrogen bombs.' Indeed, before 1945 it was often argued that the only way in which a capitalist economy would be able to sustain full employment would be through maintenance of a permanent war economy—a reasonable argument at a time when the only available examples of full employment had been Fascist Italy, Nazi Germany, and the combatant countries of the Second World War.' Most socialists would reject the idea of indiscriminate support for public spending on the grounds that there are sufficient unmet needs under the first two categories, and that it is inconsistent with socialism's stress on the conscious choice of priorities to show unconcern about the objects of state expenditure...

...This is simply not true...

...But it is not just that...

...Ibid., p. 105...

...Socialist economic policies have had nothing like this success in becoming indelibly implanted in the practice of government...

...3 It is significant that a wartime coalition government introduced the policies, and that the two men most closely associated with them, Lord Beveridge and Lord Keynes, were Liberals.' The welfare state and the use of public spending to provide a wide range of nonmarketable services probably remain the most important practical contributions made by democratic socialism...

...J. Buchanan and R. Wagner, Democracy in Deficit: The Political Legacy of Lord Keynes (New York: Academic Press, 1977...

...Against this, control vested tightly in the hands of bureaucracy will ensure an even-handed distribution based on formal criteria of need...

...Economic pricing, whether directly or through analogues, remains an invaluable means of weighing the relative costs of alternative courses of action...

...Important though the process is, it has not yet been subjected to any detailed study, and in our characterizations of the political balance of any particular society we usually 350 make some overall assessment, ignoring differences between sectors...

...The existing bourgeois state, responding to an enfranchised and increasingly organized working class, could be pushed into making reforms that changed the unequal distribution of resources through regulations, public ownership, and public spending...

...Remoteness and Bureaucratization OUR UNWILLINGNESS to reexamine the existing network of subsidies and services may be partly both consequence and cause of a final problem: the continuing and possibly growing remoteness of public services, including even the social services, from ordinary people...

...Closely related to this argument, though more sophisticated, is the recently popular thesis of the political trade cycle...

...Furthermore, it is a demand that has survived the radical changes in social circumstances from 19th-century poverty, through two world wars, the interwar depression, postwar affluence, and on to the recent return of global recession...

...From this a compromise has emerged...

...This problem is not limited to the area of public spending...

...See, for example, Colin Crouch's "The Conditions for Trade Union Wage Restraint," in L. N. Lindberg and C. S. Maier, eds., The Politics and Sociology of Global Inflation and Recession (Washington, D.C.: Brookings Institution, forthcoming...

...The most important power for change therefore had to come from outside capital's own political organizations.' This was provided by the labor movement, which wanted an extension of state spending primarily for purposes of its own...

...Some Prescriptions from the Left VERY SIMILAR was the vision of the welfare state promulgated by its greatest exponent: Richard Titmuss...

...In criticizing public bureaucracy and extolling voluntary action, Halsey is not in fact favoring Victorian charity...

...In Britain, it was the Webbs and their associates, working from rather different sources, who represented the most fully worked-out philosophy of reformist socialism...

...Beyond that, the undoubted superior capacity of the better off to take advantage of participatory opportunities has to be counted as a cost of the reforms, to be set against their many merits...

...For a good discussion of these lines, see B.Barry, "The Inflation of Political Economy: A Study of the Political Theory of Some Economists," in Lindberg and Maier, eds., Politics and Sociology of Global Inflation and Recession...

...the social services dispensed by Victorian charity were at least equally remote from the recipient community as the institutions of the welfare state—distributed at the whim of upper-class patrons with a keen desire for receiving gratitude and deference from the recipients, and with a constant tendency to apply their own smug criteria of desert to the supplicants...

...As a result, public spending of various kinds was possible at an early stage...

...Indeed, the commitment of the left to public expenditure is so much a part of our accustomed political life that we take it entirely for granted...

...D. Howell, British Social Democracy (London: Croom Helm, 1976...

...Instead, the idea of a marketless, stateless society largely survived as an unworldly utopia while labor movements, growing in strength, took as their practical goal amending the way the state and market operated...

...q To Our Contributors: A few suggestions: (1) Be sure to keep a copy of your ms—the mails aren't always reliable...

...Recently this has become a major issue, as capital has shifted to a number of newly industrializing Third World countries with weak or nonexistent labor movements...

...Left virtually untouched by socialism has been the question of investment and indeed, apart from fitful short-lived experiments, the whole area of economic planning...

...In his analysis of the contrast between the private affluence and public squalor, which developed in a rich society that neglected to provide for services the market itself did not generate, Galbraith provided a clear perspective for those who, while accepting the main contours of existing economic and social arrangements, remained sharply critical of several of their aspects from the standpoint of the Webbian tradition, showing concern for the neglect of collective needs in an individualistic society...

...For, ironically enough, the party, trade unions, and the co-operative were all a hundred years ago inspired by a profound and passionate altruism—a belief in a new Jerusalem— linked with an urgent sense of duty—a conviction that it was an essential part of socialism to practice what one preached by volunteering to help comrades in distress...

...2 Not all public spending has this effect: for example, taking an industry into public ownership involves public (capital) spending, but does not necessarily have any effect on demand...

...Some years ago, the American political scientist Anthony Downs tried to demonstrate why it was that public services would always be either underprovided or underfinanced...

...Only too often public services eliminate the chances of "exit" without providing scope for "voice...

...As a result, several areas of glaring underprovision in the social services have been rectified, new areas of policy opened up, and public-service staffs have become an important lobby for expansion of their numbers and salaries...

...They built on the existing tradition of British domestic and imperial government: a strong sense of the "public interest" and of public service, an efficient tax-collecting system, an increasingly professional bureaucracy, even some development of public enterprise, particularly in the imperial civil service in India...

...People can sometimes change schools, less easily their general medical practitioner, never their housing manager...

...In France, Scandinavia, and countries within the German political tradition, the state was more active in industrial development from the outset...

...Of course, there is no way that we can avoid the need for a large state bureaucracy and fiscal machinery for the efficient operation of social services...

...As pointed out in note 7, other political traditions have experienced less difficulty in achieving high levels of public expenditure— and have found it easier to levy the taxation to pay for them...

...First and most straightforward, state spending may be used to offset the inequalities that exist in the operation of the market by enabling citizens to enjoy certain goods and services as their right (or for token payment) regardless of their ability to buy them at the market price...

...Defects in the System ONE WAY of beating off the challenge from the right is to ensure that the pattern of public services we have deserves wholehearted support...

...Is this an alternative to participation...

...In 1948 the Swedish unions propounded what has become known as the "active manpower policy," and by the late 1950s important elements of the program were adopted by the Social Democratic government...

...they were committed to a search for national efficiency.' The competitiveness of the economy, the need to maintain the Empire and to be prepared for war were becoming important preoccupations of a Britain that could no longer take world domination for granted...

...A. Heath, "Sociology and Community Work: The Problem of Participation," in P. Evans, ed., Community Work (London: Arc Publications, 1971...

...Many of our problems here are the result of the inevitable coexistence of public spending with private markets...

...But recently the right has developed some moral arguments of its own, regarding a high level of public spending as evidence of moral decadence on two grounds: that governments do not subject themselves to the discipline of spending within their means, and that public spending is a form of electoral bribery...

...At the same time, manpower policy would assure that the costs of structural change would be shifted from the workers involved to the society as a whole...

...For some studies of the possibilities and limitations, see: C. Clarke, "Community Councils: Power to the People...

...A significant legacy of this approach to public spending was the absence of any theory of widespread participation in the control of the new public services, apart from Parliament and various systems of token representation...

...But all that granted, I am still driven to the conclusion that the welfare state now needs a major shift toward community-level bases controlled by volunteers assisted by small teams of locally based professionals, wherever this is practicable...

...also A. Martin, "The Dynamics of Change in a Keynesian Political Economy: The Swedish Case and Its Implications," in Crouch, ed., State and Economy...

...And please remember that we can't return articles unless they're accompanied by a stamped, self-addressed envelope...

...By solving the problems of underconsumption and unemployment, it actually increased the scope of the market economy, bringing idle resources into use and giving to capitalism a stability that it had never known...

...if there are few unpolluted rivers, it will be the rich who will monopolize access to those that remain...

...The public visibility of such a subsidy means that any reduction is likely to cause a major price increase and tends to be avoided...

...In the countries of Western Europe, the reason for it has not been the success of revolutionary captures of the state but the advance of universal suffrage: the state was becoming responsive to a wider electorate than before, and this might be expected to force changes in the interests served by that state...

...The internationalization of the world economy is among the most significant political facts of our time, and it is experienced doubly by Britain...

...Full employment has gone, so has the constantly expanding economy that Crosland had felt able to take for granted in 1956 as the background to politics...

...Politicians, it is argued, increase public spending before an election and reduce it (or raise taxes) afterward, thereby distorting the rhythm of the true economic trade cycle in an inflationary way...

...It is only by a verbal conceit that the "public" arena can be regarded as a genuine communal property in any sense of the term...

...Closely related is spending on job creation through special schemes, subsidies, and investment incentives...

...12 C. A. R. Crosland, The Future of Socialism (London: Jonathan Cape, 1956...

...The author is grateful to both for permission to reproduce the essay...

...In Britain, the attack has been given an added point by the violent ideological hostility to all public spending apart from the police and the armed forces expressed by the current Conservative government...

...However, during the past few years, policies of high public spending have come under new and heavy attack—intellectually from a school of conservative economists and social commentators, and in practice through the policies of right-of-center governments and international economic agencies...

...But this leaves much educational activity unexplained...

...They seem committed to defending any public spending apart from armaments, almost regardless of whether in its existing form it continues to serve a useful purpose...

...A wide variety of goods comes into this category, ranging from clean rivers to the police force, to grand opera...

...And "bribery" will be most manifest when the spending policy departs from egalitarianism and is directed at groups already privileged in market relations...

...Anthony Downs, An Economic Theory of Democracy (New York: Harper & Row, 1957...

...Those of us who became socialists grew up with the conviction that we must in this point ally ourselves with the professionals and the trade unions and discourage voluntary effort particularly since it was bound to reduce the number of jobs available to those in need...

...The two are not necessarily compatible...

...This introduces the whole monetarist argument about the causes of inflation...

...Contemporary Challenges: Reexamination on the Left A FURTHER and distinct aspect of the new attack on public spending concerns its alleged negative consequences for the level of investment...

...Working people have more control over the money they spend in the private market than over the public spending compulsorily levied on them through taxation and dispensed by bureaucrats and politicians...

...Thus, A. H. Halsey, pondering these problems in his 1977 Reith Lectures," quoted what he called "a lament" by R. H. S. Crossman, writing in 1973, "for the eclipse of voluntarism by bureaucratic organization": 353 From the 1920s on, the normal left-wing attitude has been opposed to middle-class philanthropy, charity and everything else connected with do-gooding...

...However, unlike the monetarists, they recommended measures to reduce the actual and the "natural" rate...

...I. Gough, The Political Economy of the Welfare State (London: Macmillan, and Atlantic Highlands, N.J.: Humanities, 1979...

...However, they do tend to wield that knowledge as a mystique to shield them from criticism...

...While subsequent Labour governments have been responsible for an extraordinary number of institutional innovations, there has been nothing to compare with the contribution to social philosophy and practical politics of the actions of the 1945 government in implementing the policies that had emerged from the war period...

...However, electoral bribery will be the more an element in public spending the less comprehensive the general welfare system of the country (or the party's policy) and the less it is oriented to the goal of reducing inequality...

...it is inherent in any relationship between professional and client...

...THE EDITORS q 358...

...If we want socialism to reproduce the moral base of community life, we have to look beyond the existing mold of social policy administration...

...Neither should we assume that professional employees are incapable of providing a genuine dedication to the purposes of the services they administer...

...Copyright e by David Lipsey and Dick Leonard...

...In a private-sector relationship the client pays the professional a fee, and if he is dissatisfied with the service he goes elsewhere...

...The viability of a system for increasing choice depends very much on the choice that a given geographical area can provide...

...examine some of its paradoxes...

...Also, initiatives developed in enterprising communities may spread to become general practice...

...R. H. Titmuss, The Gift Relationship: From Human Blood to Social Policy (London: Allen & Unwin, 1970, and New York: Pantheon, 1971...

...Further, participation can do something to remedy the problem of inadequate knowledge already referred to...

...This is preferable to the industry making do as best it can and reporting at the end of the year a variously attributable overall deficit that has to be met by an even larger, unexpected subsidy...

...This is not an argument one can dismiss out of hand...

...Is Downs's arguments apply most clearly to economies in the Anglo-American tradition...

...J. K. Galbraith, The Affluent Society (Boston: Houghton Mifflin, 1958...

...Titmuss did show convincingly how the capitalist element 354 in U.S...

...But the ambiguities of this compromise left their mark on the development of public spending policies...

...S. Strange, Sterling and British Policy (Oxford University Press, 1971...

...There would be, for example, increased indirect taxation through a sales tax, diminishing the extent to which firms could pass on increased wage costs in price rises...

...The role of the Boer War and the First World War in encouraging concern for the physical conditions of the working class is well known, and the Webbs shared fully in that aspect of welfare policy—motives similar to those that had led the highly conservative government of Bismarck to equip Germany with the world's first, if rudimentary, welfare state...

...The aspiration of the early socialists was therefore to transcend both these conditions by social regulation based on cooperation and community...

...This new sense of the opportunities presented by a changing capitalism was grasped by the revisionist wing of the socialist movement in Germany—a movement with objectives far more radical than present-day social democracy, but which saw scope for achieving them through the transformation rather than the destruction of existing institutions...

...No one needs reminding that the Bolshevik revolution failed in its avowed intent of smashing and subsequently transcending the powerful, autocratic Russian state...

...Thus if Downs was right in his argument about popular unwillingness to support an adequate level of public spending, it may well be that it is only through a certain amount of inflation that public spending can be kept high enough to fulfill important social purposes...

...Whatever its deficiencies, this was a powerful and coherent philosophy, well tailored to the needs of that particular stage of capitalist development and serving as a useful guideline for the main reforms introduced by Britain's Labour governments of the 1960s and '70s...

...also Public Participation and Planners' Blight (Faber & Faber, 1972...

...Crossman was, of course, giving onlyihalf the story...

...Thus it is far more intolerable for those of us without houses overlooking the sea if the whole coast is preempted by private building plots, and much better if stretches of it are left open to public access...

...In his last work, The Gift Relationship, he contrasted such a vision with the practice of a capitalist market-oriented society by contrasting American commercial blood banks with the British voluntary blood transfusion service...

...By increasing public spending, governments are able to ensure that widely recognized social needs are met, perhaps at the expense of the more effete frills of the private market system...

...M. Kalecki, "Political Aspects of Full Employment," Political Quarterly 14 (1943...

...They do not present the same problems as the blind forces of the market or the obtuseness of formal bureaucracy...

...This aspect of the way public expenditure is organized and dispensed is becoming increasingly important as large numbers of people experience the welfare state as a tax "burden," and as the bureaucracy needed to administer services becomes more impenetrable...

...However, the policies also took their place in the overall national consensus, becoming, in T. H. Marshall's important phrase, "as347 pects of citizenship...

...It was all very well for the early socialist visionaries to regard the democratic welfare state, or an individual local authority, in these terms, but it will not do for our generation...

...The basic concerns of those policies had been brought to political life by the socialist movement: security for working people and entitlement to certain services as of right, irrespective of capacity to pay in the market...

...A Historical Perspective EARLY WORKING-CLASS MOVEMENTS were confronted by a world in which the two principal sources of power and the allocation of resources— the market and the state—operated in ways largely hostile to their interests...

...And the needs of macroeconomic policy rather than the emergent needs of the services or political decisions about their desirability would determine whether spending would rise or fall—though in practice it has never been as simple as that...

...For Titmuss, the welfare state did not mean a system of impersonal expenditures by public bureaucracies and employed professionals but the conscious, altruistic dedication of the members of a society to ensuring that all its citizens enjoyed the basic means to health and happiness...

...Needs that the market system neglected, such as those of working-class health and security, could be met through public spending, financed by redistributive taxation...

...Whereas I have here assumed that public spending is directed at certain widely recognized needs, the new right sees it as a set of bribes: governments spend money in order to win electoral support from specific sections of the population...

...but the danger is real enough...

...A further problem concerns the inequalities that develop if matters are left to voluntary initiative...

...It is largely in the adequacy of our existing institutions to match up to the challenge of responsiveness that improvement is so badly needed...

...and, not least, for finding for public spending the constituency of support that it will desperately need in the current climate of monetarist economic policy, international recession, and threatened "tax revolts...

...teachers and parents can work together to discuss educational problems...

...the legacy of this can still be seen in the high spending levels of governments in these countries, irrespective of contemporary political complexion...

...instead it consolidated its position by using the resources of that state and by devel345 oping them even further—a process that continues today...

...The aim then was to encourage workers to move from the less productive to the more productive sectors...

...21 See S. Blank, "Britain: The Politics of Foreign Economic Policy, the Domestic Economy and the Problem of Pluralist Stagnation," International Organization 31 (1977), no...

...The response of many local councillors when told that they ought to open up channels for community participation is to say, with righteous indignation, that they are themselves the embodiment of it...

...3) Type your ms double-spaced with wide margins...

...Norman Dennis, People and Planning: The Sociology of Housing in Sunderland (London: Faber & Faber, 1970...

...This issue really needs sustained philosophical analysis...

...But it is also necessary to consider other elements in the Webbian program...

...Much, but not all, of this argument has to be conceded...

...The scope for companies doing this is not infinite...

...The Swedish economists knew that the stablemoney policy would lead to unemployment if nothing were done about it...

...As for efficiency, the right's view that the internal rationality of the market is superior to that of the political process has far more to commend it than socialists are usually prepared to acknowledge...

...They claim that politicians will initiate spending projects to "buy" votes, while governments, unlike private persons, do not have to ensure that their spending is balanced by income...

...20 W. D. Nordhaus, "The Political Business Cycle," Review of Economic Studies 42 (1975...

...It is therefore an appropriate time to reconsider the taken-for-granted commitment and to This is an amended version of an essay first published in The Socialist Agenda: Crosland's Legacy, edited by David Lipsey and Dick Leonard, a volume of essays dedicated to the memory of C. A. R. Crosland, the British Labour politician who died in 1976...

...While defects remain in our existing pattern of public services, there can be no doubt that the essence of the socialist commitment to social expenditure remains valid...

...In other respects, the extensions of public services advocated by the early Fabians, several Liberals, and "social Toryism" were aimed at providing capitalist industry with infrastructural facilities that could not be produced by the normal market process but that industry needed: good roads, a work force with basic educational skills, publicly owned utilities...

...for realizing Titmuss's vision of a welfare society rather than an administrator's welfare state...

...One may therefore regard those aspects of educational spending that provide for these skills as being at least in part explained by industry's needs...

...Dennis has written, for example, a completely convincing demolition of British planning practices, from the standpoint of democratic socialism in the English tradition which I have described...

...The assertion that existing bureaucratic procedures are egalitarian can be con355 tested...

...They argued that without an efficient administrative and legal apparatus for that purpose, governments would be tempted or driven by political pressures to apply distortionary measures of an awkward kind...

...Anthony Crosland and others in the Gaitskellite movement considered that the capitalist economy no longer needed structural transformation, but that existing weapons of economic regulation could, through taxation and public spending, be devoted more consistently to the overriding priority of social equality...

...By the mid-1950s, the new stability imparted to Western capitalism by these measures and by the postwar economic recovery led the reformist wing of the Labour party to align itself more closely with the compromise as such, rather than to remain, as did the party's left wing, unreconciled to an economy that was still primarily capitalist...

...Look at our last few issues to see if your idea fits in...

...But to the extent that socialism has meant the establishment of centralized professional administrations, much of the evidence points the opposite way...

...But how characteristic of the welfare state is the blood transfusion service...

...As well as being designed to provide certain services, public spending was part of overall demand management...

...28 "The Dynamics of Change...

...The international organization of various essentially left-wing lobbies and pressures therefore is becoming crucial to the interests of socialists within individual nationstates...

...If there's a delay, it's because a few editors are reading your article...

...They will therefore lobby and work hard to ensure that funds come their way...

...The new right has accentuated part of this argument to claim that public services will always be overprovided and underfinanced...

...Nearly all Western societies have effected some kind of compromise between the capitalist economy and the thrust of socialism, and part of the compromise consists in the uneven penetration by social reforms of different areas of the society...

...Centralized bureaucracy depends on, but drives out, a depleting moral base just as does capitalism, forcing voluntary participation to the margin and treating it with arrogance...

...In the United Kingdom the main achievements of socialist reform have been in the scope of the welfare state and (until recently) in the general consensus over full employment...

...There are several reasons for this crucial change: the failure to develop, intellectually or practically, alternatives...

...Once the issue has been posed this way, it ceases to be an economic one and becomes one of basic values, and the right is forced back into its ultimate, long-standing position of claiming that all private spending is inherently superior to public spending...

...But it is exacerbated by the nature of a public service...

...Vouchers have certain distinct advantages...

...Hirsch, Social Limits of Growth...

...In debates on public spending, socialists are used to defending principle against expediency...

...As A. Martin comments: In this way, a process of structural change in industry would be encouraged, increasing the proportion of efficient, low cost activities capable of paying standard rates without putting increased pressure on prices...

...The policy has its dangers and problems...

...What of Voluntarism & Participation...

...This category differs from the previous two in that it may involve indiscriminate support for any public expenditure that increases demand,' something that the definitions of the two previous categories have deliberately tried to avoid...

...it is also a question of doing to people what is good for the system as a whole (empire, nation, capitalism, whatever) rather than for the people themselves...

...And the association between uncontrolled public spending and inflation has been used by international finance and the Conservatives to launch a wholesale roll-back of public expenditure...

...These problems are linked, and can all be interpreted against the pattern of historical development discussed above...

...This was as true of revolutionary as of reformist movements...

...For our purposes, the most important point is that the consistent pressure of the working-class left in politics— the movement most alienated from the authorities of the state—has led to a situation where the state looms larger and larger within social life rather than, as originally envisaged, "withering away...

...Capitalism is an inherently divisive and competitive system, incapable of providing some of its own needs...

...The dividing line is difficult to specify clearly, and there will be interesting and continuing debates over where it falls, but the rule of thumb given here will serve for present purposes...

...Moves of this kind constitute the best available means for making the notion of a "public" service more than a verbal ploy...

...Let us assume that the basic distinctive commitment of socialists is to those elements of public spending covered by categories one and two, plus items of demand stimulation and job creation that accord with some plan of economic and social development...

...An important cause of difficulty is the use of hidden, unquantified and sometimes unacknowledged subsidies that arise through various services being allowed to run at a deficit...

...As the economic situation has worsened, its unsatisfactory consequences have become more marked...

...Second, there are several goods citizens quite rationally seek but that cannot be provided by the market, or can only be provided at a cost so high that they would be available to very few people...

...As a result, community effort declines further, and even more tasks have to be undertaken by the public authority...

...Parents are required simply to make a decision about their own child...

...In general, one can argue that where provision by public expenditure will potentially put within reach of everyone a good that would otherwise be accessible only to a wealthy minority, socialists will be prominent among advocates of that provision.' There is no particular reason why socialists should be particularly committed to the annual subsidy to the Covent Garden Opera, because even as subsidized it remains accessible only to very few...

...Within the public service it is far more difficult because a government or local authority department is paying the fee or salary, and a transfer will need to be negotiated through its administration...

...The attraction of this reasoning is deceptive...

...The measures were essentially de haut en bas, the people being the passive and sometimes obligatory recipients of what was considered good for them...

...they make that decision themselves and can act on it immediately...

...This serves as a useful antidote to the more frequently voiced claim that the welfare state has eroded a voluntary commitment that would exist in a society without government social policy...

...There are, however, good reasons why they tend to embrace a wide range of causes within it...

...As the result of loss of Empire and of economic decline, Britain is more vulnerable than it once was to international forces, at a time when those forces are becoming generally more powerful...

...Reformers may be able to ensure basic minimum standards in the structure of the institutions that become established, but for the most part the effectiveness of participation will depend on the energy and vigilance of those concerned, and on the opportunities and constraints presented by the social and economic structure of society at any particular time.' As Crosland pointed out, the dangers of new channels of participation being meaningless are reduced if they exist at the genuinely local level, where people have a direct identity with institutions...

...Therefore, while electors may be willing to vote for public services, they will be unwilling to give adequate financial support to them and will prefer to keep more of their money for private consumption, over which they have individual control...

...It may be argued that by covert subsidies a minister can "do good by stealth," funding good causes for which he could not get direct support...

...Elsewhere the socialist and communist objective of challenging the state in order to transcend it has become in effect a policy of trying to adapt it and make use of it...

...A high level of inflation is itself a source of pressure on governments to act, through public concern about rising prices, the threat to investment levels, balance-of-payment crises, and difficulties in raising credit...

...However, businessmen may still claim to respond to the effect of taxation on their personal incomes...

...In many ways this reluctance to accept a large state role was peculiar to countries industrializing in the Anglo-Saxon pattern, with a long period of economic liberalism...

...Defining this broadly, there is no a priori reason why socialists should have any global commitment to this category...

...They have constitutional law on their side, but not social reality...

...To give just one example, not everyone can have a house overlooking the sea...

...But the tendency of a society organized on increasingly capitalist lines is to drive out such restrained or other-regarding behavior...

...Third, socialists are interested in the use of public expenditure as a means of maintaining demand in the economy in order to secure full employment—in short, in Keynesian economic policy...

...First, it is assumed that governments can go on indefinitely with deficit spending, even if associated with increasing inflation...

...the naivete of the Marxist concept of political power, which sees it as something generated solely by the class nature of society and not as an inherent process of social organization...