The Labour Party and the Economics of Rearmament, 1935-39

Abstract

This article examines the Labour Party’s attitude to the finance of the British rearmament programme in the later 1930s, principally with reference to debates in the House of Commons. It is suggested that the party’s opposition to the National Government’s borrowing for rearmament was strongly influenced by continuing bitterness over the political crisis of 1931; and that focussing criticism on the economic aspects of the rearmament programme helped Labour to mask its divisions over the validity of rearmament itself. Labour politicians’ varying reactions to John Maynard Keynes’s arguments in favour of defence borrowing are explored; as is the party’s attitude to, and impact upon, Neville Chamberlain’s 1937 proposals for a ‘National Defence Contribution’. Moreover, it is argued that, as the political situation in Europe deteriorated, Labour’s policies were influenced further in the direction of central planning and ‘conscription of wealth’, as an alternative to borrowing, which was alleged to be inflationary. Finally, it is suggested the party’s attitude to these questions is illustrative of the way in which economic ideas in the public sphere are inevitably conditioned by the political interests of the politicians who promote them.