The Fourth Revolution – Beatrice and Sidney Webb Laid Foundations for the Welfare State

Last week, we reviewed the book: The Fourth Revolution: The Global Race to Reinvent the State, by former Economist Editor in Chief John Micklethwait and Management Editor Adrian Wooldridge. This week, we summarize how two individuals: Beatrice and Sidney Webb, laid sure foundations for the third revolution: the welfare state.

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Prelude

The world lurched leftward in second half of the nineteenth century. The British elite recognized their poor needed support to escape crushing poverty. More insidiously, they realized hands off politics had left them unable to, as Lloyd George would later phrase it in the early twentieth century, “…maintain an A1 Empire with a C3 population.” They were falling behind Germany with its successful government intervention in business and social welfare. In response, Britain embraced state activism.

Around the same time period, Abraham Lincoln said: “The legitimate object of government is to do for a community of people whatever they need to have done, but cannot do, at all, or cannot, so well do, for themselves, in their separate and individual capacities.” Some would claim him as progressive, others as aspirational .

Marx formulated his communist ideology over the same half century. He theorized that government was merely the way one class controlled another. Once classes were abolished, the government would wither, reduced to the administration of things. The form of government did not much matter to Marx.

By ignoring Thomas Hobbes’s statement [not original to him, of course] that a state is necessary for the peaceful conduct of human affairs, Marx prepared the way for dictatorships that treated people as nothing more than things to be administered. The next century would put Marx’s theories into practice.

The Webbs

Living on her Victorian father’s fortune, Beatrice Potter (b. 1858 – d. 1943) was characterized as: “the cleverest member of one of the cleverest families in the cleverest class of the cleverest nation in the world.”

Beatrice met the tireless, brilliant, and homely Sidney Webb in 1890. She was swept off her feet by his vision for expanding government: “collective ownership wherever practicable; collective regulation everywhere else; collective provision according to need for all the impotent and sufferers; and collective taxation in proportion to wealth, especially surplus wealth.”

Beatrice Webb’s vision—the state as the epitome of reason and truth—enabled her to develop the ideology adopted by pro-statists worldwide. The state stood for: planning versus confusion, merit versus privilege, and science versus prejudice.

Her modus operandi to spread this ideology was one of progressive suffusion. Why cause revolution when the same change could be brought about more lastingly through subversion of society using propaganda and recognized committees of experts.

The Webbs founded the Fabian Society as guardians of this socialist transformation. They established the London School of Economics to train a global cohort of social engineers. The Webbs also founded the New Statesman, a weekly review of politics and literature, as the clarion of their revolution.

Since people are the constituents of the socialist state they wished to build, it made sense, the Webbs said, for Leviathan to regulate society’s reproductive practice. They embraced eugenics as eagerly as they did town planning. The Webbs trusted the judgment of professional experts over the “average sensual man” when it came to bettering the life of commoners.

They ingeniously formed the inchoate anxieties and idealism of their age into political action of all three major British parties. The Webbs pushed collectivism using Labour’s penchant for social justice, Liberal’s national efficiency, and Conservatism’s desire to preserve the Empire. Within a generation, they converted educated opinion to the view that the state must provide “a national minimum” of education and social welfare.

In the period 1905-1915, sympathetic British governments passed legislation that provided: free meals for needy school children (1906), old-age pensions (1908), anti-poverty budget provisions (1909), national sickness and unemployment insurance (1911), and sterilization for the unfit (1913).The Webbs helped enact redistributive taxation to pay for these programs and lessened the stigma of “Poor Laws.” The poor became “victims,” not layabouts.

The Webbs, through their vast influence, helped redefine classical liberal principles. Freedom, which used to mean freedom from external control, became “freedom from want” and equality before the law became “equality of opportunity” and, to a lesser extent, equality of respect. This shift required activist government intervention. The government now provided social services and primary and, to the talented poor, secondary education.

Propagation

The Webbs were not alone in this socialist revolution. A prominent liberal ally, John Maynard Keynes, advocated for government intervention to aid Adam Smith’s hidden hand of the market. Although he spelled out caveats to his philosophy, these were conveniently forgotten over the years. His philosophy, Keynesianism, still powers big government.

The British Statist model was adopted by Hitler, Stalin, Mussolini, Franco, and Peron. They all blended Hegelian state worship into their dictatorships and used the state to control their economies. America, however, took a different turn under the Roosevelts.

Theodore Roosevelt (US president 1901-1909) acknowledged that the Webbs were right when they said that laissez-faire capitalism was over. He established regulatory bodies to constrain the power of corporations over the American people: “The Corporation is the creature of the people, and must not be allowed to become the ruler of the people.”

He was not a socialist. He saw capitalism for the wealth creator it was. However, he used state power to make it work better by suppressing “crony capitalism” which arose from the collusion of “corrupt politics” with “corrupt business.”

TR’s goal was to use the state to provide a “square deal,” a safety net in rough times, and to improve the quality of America’s workforce. By not embracing European style statism, with its comprehensive welfare state, he squared-the-circle through his progressive republicanism and saved the US from Europe’s excesses.

Franklin Delano Roosevelt, for his part, imposed tighter regulation instead of nationalizing broad sectors of the economy in the face of economic collapse and world war.

Establishment

World War II demonstrated big government’s ability to marshal all of industry to the service of war through detailed planning, financial incentives, and coercion. The same occurred on both sides of the Atlantic and the Pacific.

In post-war Britain, the Education Act, the National Insurance Act, and the National Health Service Act were formulated by a Conservative (Butler), a Liberal (Beveridge), and a socialist (Bevan), respectively. The Webb’s cross-politics approach was further validated when the Conservative Party, under Winston Churchill, returned to power in October 1951 and did nothing to roll back the welfare state.

On the continent, the state ran companies, universities, research institutes, libraries, and broadcasting corporations. In the closing days of World War II, international supervisory organizations like the International Monetary Fund and the World Bank were created under Keynes influence as a result of the Bretton Woods international agreements.

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As counterpoint, Philip Hamburger writes in his book about US executive branch agencies that administer regulations, Is Administrative Law Unlawful:

“There is a jarring disconnect between what is taught and celebrated in constitutional law and what is accepted in administrative law…” and “…[Only] the shell of [the American] republican experiment remains. Within it, however, another government has arisen, in which new masters once again assert themselves, issuing commands as if they were members of a ruling class, and as if the people were merely their servants. Self-government has given way to a system of submission.” [Emphasis mine]

Hamburger reasons that judicial pushback at the Appellate and Supreme Court levels is necessary to head off a more Lockean approach. Read more about Hamburger’s book in Myron Magnet’s City Journal book review.

Finally, here is another lecture and Q&A by Micklethwait and Wooldridge:

John Micklethwait & Adrian Wooldridge, “The Fourth Revolution

It’s Not Your Founding Fathers’ Republic Any More – Review and Commentary — Bernhardt Writer

This week, I’d like to recommend Myron Magnet’s book review: ‘It’s Not Your Founding Fathers’ Republic Any More.’ According to Magnet we abandoned the original intent of the U.S. Constitution long ago. The books he reviews suggest many remedies including automatic sunsetting of laws and regulations in the U.S. Code (USC) and Code of Federal Regulations (CFR), respectively.

Magnet says President Wilson established in the WWI era the doctrine of the “Living Constitution” administered by the Supreme Court thereby codifying judicial activism that undid civil liberty victories in the aftermath of the Civil War. Secondly, President Roosevelt established prior to and during the WWII era unelected extra-governmental commissions (aka agencies) that have independent legislative, administrative, and judicial powers within themselves. Agencies are created as a matter of course now by legislative action. FDR also strengthened the power of the judiciary to act as a permanent constitutional convention amending the document through their decisions.

Signing the U.S. Constitution

Scene at the Signing of the Constitution of the United States, Howard Chandler Christy (January 10, 1873 – March 3, 1952), Public Domain in the US

Magnet states that the Founders original intent was to limit governmental authority through the division and limited enumeration of powers. Only nineteen federal government powers were enumerated. Principle among these were: raising taxes, coining money, keeping the country safe, building post offices and post roads, regulating the armed forces, and making laws for carrying out limited governmental responsibilities. All other powers devolved to the states or the people.

Flawed through compromise (in the bad sense), the Constitution was amended from 1865 and 1870 via the Thirteenth Amendment which freed the slaves, the Fourteenth assuring black Americans citizenship and civil rights, and the Fifteenth that prohibited states from denying black citizens the right to vote.

However, a series of Supreme Court decisions undid the power of those amendments won through Civil War bloodshed. In 1873, the Supreme Court subverted the Fourteenth Amendment through the Slaughter-House Cases, stating that the amendment did not include the rights: to own property; to court access; to equal taxation; to vote; to live, work, and travel where you want; and to have the protection of the Bill of Rights against state and federal violation. The Court held the amendment only granted the right to travel on interstate waterways and to petition the federal government for redress of grievances

In 1876, the Supreme Court, in their United States v. Cruikshank decision, threw out a federal indictment of Louisiana murderers for conspiracy to deprive more than 100 freedmen of their constitutional rights, on the grounds that the killers had violated no federal rights that extended to the states, citing the Slaughter-House Cases. This decision led Southern Democrats to enact Jim Crow laws. Cruikshank smoothed the way for Plessy v. Ferguson, in 1896, which enabled Southern states to segregate transportation and schools and outlaw interracial marriage.

In 1908, Wilson wrote:

No doubt a great deal of nonsense has been talked about the inalienable rights of the individual, and a great deal that was mere vague sentiment and pleasing speculation has been put forward as fundamental principle…Living political constitutions must be Darwinian in structure and practice…The chief instrumentality by which the law of the Constitution has been extended to cover the facts of national development has of course been judicial interpretations—the decisions of courts. The process of formal amendment of the Constitution was made so difficult by the…Constitution itself that it has seldom been feasible to use it; and the difficulty of formal amendment has undoubtedly made the courts more liberal, not to say more lax, in their interpretation than they would otherwise have been.

Wilson went on to advocate that the judicial system adapt the Constitution to the times through their decisions. In other words, the courts were to “make the law for their own day.”

Although the Supreme Court deflected attempts to control the national economy, executive pressure during the New Deal swayed the Court’s 1942 Wickard v. Filburn decision. Filburn, a dairy farmer, was fined for not limiting his wheat crop in accordance with the Agricultural Adjustment Act. The act was meant to curb a perceived deflationary overproduction crisis (held, at the time, to be a cause of the Depression). Congress established the act based on the Interstate Commerce Clause. The act established a crop quota system by state. These quotas were then allocated to individual farms by the states. Filburn used his wheat locally to feed his cows. But the Court decided that his wheat competed with wheat in commerce (he could have purchased it instead of growing it) so, therefore, it was subject to the Commerce clause and the act’s quotas.

In the same period, FDR noted, “The practice of creating independent regulatory commissions, who perform administrative work in addition to judicial work, threatens to develop a ‘fourth branch’ of Government for which there is no sanction in the Constitution.” He was responsible for numerous legislative Acts and their associated bureaucratic agencies.

So much for the intent of Lincoln’s Gettysburg Address:

FOUR SCORE AND SEVEN YEARS AGO OUR FATHERS BROUGHT FORTH ON THIS CONTINENT A NEW NATION CONCEIVED IN LIBERTY AND DEDICATED TO THE PROPOSITION THAT ALL MEN ARE CREATED EQUAL…

IT IS RATHER FOR US TO BE HERE DEDICATED TO THE GREAT TASK REMAINING BEFORE US

THAT FROM THESE HONORED DEAD WE TAKE INCREASED DEVOTION TO THAT CAUSE FOR WHICH THEY GAVE THE LAST FULL MEASURE OF DEVOTION

THAT WE HERE HIGHLY RESOLVE THAT THESE DEAD SHALL NOT HAVE DIED IN VAIN

THAT THIS NATION UNDER GOD SHALL HAVE A NEW BIRTH OF FREEDOM~AND

THAT GOVERNMENT OF THE PEOPLE BY THE PEOPLE FOR THE PEOPLE SHALL NOT PERISH FROM THE EARTH

I must admit, with everything going on lately, I became overwhelmed. I’m sure it’s happened to you too. Please forgive the hiatus. We’ll cover two special topics from Professor Siegel’s book Revolt Against the Masses in the future.