Keynes, the Labour Movement, and "How to Pay for the War"

Abstract

This article considers the evolution of John Maynard Keynes's wartime plan for compulsory saving in 1939-40, and the ways in which this was influenced by Keynes's desire to solicit the support of the Labour movement for the scheme. It is argued that he saw such support as the prerequisite of the plan's acceptance, and not only actively courted Labour and trade union leaders, but was willing to substantially amend his ideas in a 'socialist' direction in order to make them, as he hoped, 'outrageously attractive' to the Labour Party. Keynes's campaign to woo Labour, and the movement's broadly hostile reaction to the plan, are examined accordingly. It is argued that Labour's rejection of the scheme was largely the result of its genuine preference for physical controls on consumption, as opposed to the strategy of overall demand management favoured by Keynes; although other factors, such as the perceived likely political unpopularity of compulsory saving, played a part. It is finally suggested that, before the accession of the Chuchill coalition, which enabled a partial enactment of the scheme, the political conditions for the plan's acceptance did not exist.