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Articles
Social Reform and Churchill’s Alternative to Socialism: A Discussion
- By JULIA WACKER and CHARLES STEELE
- | October 31, 2021
- Category: Understanding Churchill
In “Social Reform in a Changing World” (May 2020), Julia Wacker argued that Churchill saw social reform as his Liberal Party’s reply to socialism. He favored strengthening the individual, making a virtue of thrift, and curbing uncontrollable misfortune. The following is a debate and discussion of that article between a reader (italics) and the author. We thought this worthy of a separate post rather than a reader comment. We also append the observations of Hillsdale Economics Professor Dr. Charles Steele. Readers may wish to consult Ms. Wacker’s original article.
1) The Labor Theory of Value
“With respect, it’s awfully mischievous to associate the LTV [Labor Theory of Value] with Karl Marx alone. He neither produced it, nor did he use the term. He adopted it from the works of both Adam Smith and David Ricardo, classical political economists for whom he had considerable respect. And his rationale for doing so was opposite to what is posited here; driven by so-called commodity fetishism, social relations in industrial societies were now mediated by inanimate things, a standard that obscured the real, living, breathing humans that produced such things. Right or wrong, he was concerned that industrial societies tended to abstract humanity, and individual humans, too much.”
Julia Wacker: Smith and Ricardo did espouse similar theories but that is because they were not to a point where they could define what value was (they were in the process). For all that they contributed, they weren’t right either. Marx, however, used the theory to defend the argument that the capitalist adds nothing to the value of an object. Only the laborer does, ergo capitalism must end. Marx is prominent in the socialist movement because his writings have been one of the primary reasons socialism has been implemented in certain countries. I believe it is fair to refer to him as a jumping off point.
2) Subjectivism and Individualism
“On the other hand, the putative subjectivism of the marginal revolution is not in any way synonymous with individualism, or even subjectivity per se.”
J.W.: I disagree. The neoclassicals take it in a different direction entirely, but the Austrians developed a very strong tradition of individualism. I am referring to the Austrians, not the neoclassicals. I think I have made this clear through my discussion of Mises.
3) Microeconomics
“The marginal revolution—the advent of microeconomics—is, in fact, the ‘moment’ at which economics started drifting away from real, breathing humans, and towards impossibly complicated calculi for expressing behavior.”
J.W.: That depends on who you look at after the marginal revolution. Neoclassicals, yes. They are trying to form economics into a science resembling physics. Austrians, definitely not. See socialist calculation debate. Read Hayek or Mises, Menger, Buchanan, or Alchian. Even go back to Böhm-Bawerk. (See also Dr. Steele’s comment below)
4) Churchill in Context
“Better, it seems, to look at Churchill’s words, rather than shoehorn him into text written decades later in the hopes of aligning him, coincidentally, as a poster child of today’s conservative politics (von Mises).”
J.W.: It is not shoehorning to look at Churchill and his ideas as they relate to concepts of economics. My discussion is based on Churchill’s explicit framework of social reform principles, laid out through the years. He keeps nothing secret. His thought just happens to align fairly well with the theories behind Austrian Economics—which is why the discussion of Mises is relevant…
5) Social Reform in Germany
“Churchill was delighted by the growth of German government to effect social reform. The labor exchanges were imported from Germany, and required additional bureaucracy to operate. He looked forward to the ‘universal establishment of minimum standards of life and labour, and their progressive elevation…’”1
J.W.: This in no way implies that socialism was Churchill’s preferred way effecting reform. Look at his writings on free markets.
6) Roles of the State
“Churchill wanted to see the state embark on ‘various novel and adventurous experiments…. I am of the opinion that the state should increasingly be the reserve employer of labour.’2 His own party, he stressed, needed to be defended in whatever way was the ‘most advantageous to the general interest of the Progressive cause.’3 His original text used an uppercase ‘P.’ He was a Progressive, I dare say.”
Response: Of course he was a “Progressive,” in the vernacular of the day; the Liberal Party prided itself on its social progressivism. His correct position—a “middle way,” as he sometimes called it—may be understood if we read him precisely:
It is not possible to draw a hard-and-fast line between individualism and collectivism. You cannot draw it either in theory or in practice. That is where the Socialist makes a mistake. Let us not imitate that mistake. No man can be a collectivist alone or an individualist alone. He must be both an individualist and a collectivist. The nature of man is a dual nature. The character of the organisation of human society is dual. Man is at once a unique being and a gregarious animal. For some purposes he must be collectivist, for others he is, and he will for all time remain, an individualist.4
* * *
Churchill’s “novel and adventurous experiments” should be considered with the surrounding context, because Churchill carefully delineates them:
The ever-growing complications of civilisation create for us new services which have to be undertaken by the State, and create for us an expansion of the existing services. There is a growing feeling, which I entirely share, against allowing those services which are in the nature of monopolies to pass into private hands…. I go farther; I should like to see the State embark on various novel and adventurous experiments…. and we are all agreed, every one in this hall who belongs to the Progressive Party, that the State must increasingly and earnestly concern itself with the care of the sick and the aged, and, above all, of the children.5
Distinguishing his position from Marxian thought, Churchill defines his proposals as a social safety net:
I do not want to impair the vigour of competition, but we can do much to mitigate the consequences of failure. We want to draw a line below which we will not allow persons to live and labour yet above which they may compete with all the strength of their manhood. We do not want to pull down the structure of science and civilisation but to spread a net over the abyss….6
Taken in their full context, this is certainly a clear and precise view of Churchill’s thought, which leaves considerable leeway between the strictly Marxist and Capitalist “scarecrow extremes” (his words on another occasion).
7) Bulwark against Socialism
“Nor, at this stage, did Churchill style his views as offering a bulwark against socialism.”
J.W.: Quite the contrary, as he explained in 1908:
Liberalism has its own history and its own tradition. Socialism has its own formulas and aims. Socialism seeks to pull down wealth, Liberalism seeks to raise up poverty. Socialism would destroy private interests; Liberalism would preserve private interests in the only way they can be safely and justly preserved, namely, by reconciling them with public right. Socialism would kill enterprise. Liberalism would rescue enterprise from the trammels of privilege and preference. Socialism assails the pre-eminence of the individual; Liberalism seeks…to build up a minimum standard for the mass. Socialism exalts the rule; Liberalism exalts the man. Socialism attacks capital; Liberalism attacks monopoly.7
It is difficult to formulate a better set of distinctions than that.
8) State Expansion
“As we know, Churchill never uttered the famous line about being liberal when young and conservative when old. He did not greatly change his early views. He lauded the New Deal, spoke enthusiastically about the Beveridge Report urging expanded social services. Certainly he was a diehard supporter of the UN’s Declaration of Human Rights. He had no issue with government expansion, period.”
J.W.: I never argued that Churchill didn’t expand government, or was against doing so. My essay addresses his beliefs in government’s proper roles, and what he did accordingly. On the contrary, however, his essay “While the World Watches” (Colliers, 29 December 1934) was a thoroughgoing critique of the New Deal. It later appeared in Great Contemporaries (“Roosevelt from Afar,” 1938 extended edition). Evidently Churchill thought it sufficiently contentious to delete it from wartime editions. It was reinserted after FDR’s death.
9) “Careless Binarism”
“Churchill was, in fact, a key architect of the modern welfare state: not to preserve the vision of lazy-minded people that it would wreck everything for all time, but as he himself said, to fend off all but the most militant socialism and the most reactionary Toryism. He’d not have brooked such careless binarism.”
J.W.: But there is a bit of a binary here whether he liked it or not. We are trying to answer particular questions: Should a group control factors of production, or should the individual? What did Churchill believe? It is very clear that Churchill did not think the group should be in control—but that the group, when prudent, should aid the unfortunate. Even Hayek, the staunchest of Classical Liberals, would defend that. Granted, we could dive deeper and write books about these things. But in the end, this was a short article.
10) Man of his Time?
“Churchill was living the challenges of his contingent present. He didn’t enjoy the luxury of suspending that reality to devise categories that could only be airtight in the minds of certain people, serving certain political purposes, a century later.”
J.W.: Agreed, and my essay doesn’t do that. Personally, I don’t think all Churchill’s implementations were good ideas in the long run. I do not think some of them are government’s place, then or now. This essay was an intellectual exercise for me to understand the rationale behind the implementation of Churchill’s policies, based on his beliefs; and what I understand to be the differences between socialism and capitalism. My aim was to look at why Churchill espoused what he did—not how effective were his policies. That would have to be an entire article.
The author
Julia Wacker graduated from Hillsdale College in May 2020 with a degree in Economics. From 2017 to 2020, she contributed extensively to the work of the Hillsdale College Churchill Project through her involvement with the Winston Churchill Fellowship Program. After graduation, her involvement with understanding Churchill’s legacy continued with the opportunity to work as a research assistant, specifically involving the period leading up to and following Churchill’s years as Chancellor of the Exchequer. She is currently pursuing her Master’s degree in International Trade, Finance, and Development at the Barcelona School of Economics.
Observations
I largely agree with Julia Wacker on the history of economic thought. I don’t think I’ve ever heard anyone attribute the Labor Theory of Value to Marx. Everyone who studies classical economics knows the idea was around a very long time.
Regarding individualism, it’s important to distinguish between methodological individualism and political individualism. The case is stronger on Ms. Wacker’s side when this is done.
Without question, the marginal revolution elevates methodological individualism as a primary methodological principle. All economic phenomena originate in choices and actions of individuals, and are to be understood by seeing how individual actions interact to generate social phenomena. It’s impossible to understand, for example, mainstream welfare economics if one doesn’t get this. The Pareto criterion is built on this.
* * *
Regarding point (3): It is incorrect to say: “The marginal revolution—the advent of microeconomics—is, in fact, the ‘moment’ at which economics started drifting away from real, breathing humans, and towards impossibly complicated calculi for expressing behavior.”
To the contrary, the modeling of choice has tended to be too simple. That’s a claim of the Austrians—and of behavioral economists, although I think they have no better answers than the Austrians. Actually, the marginal revolution expands the treatment of human beings by recognizing them as pursuing personal values. I believe it was John Ruskin who (unfairly) castigated the economics of Smith, Ricardo, and Senior as “pig science.” He claimed it pretended that all humans care about is material wealth, since economics focused on reproducible goods (manufacturing and agriculture) almost exclusively. But there’s no way coherently to make such a charge against the marginal revolution.
It is true that political individualism isn’t a tenet of the marginal revolution (or even Austrians, e.g. Friedrich von Wieser). But mainstream economists still have tended to favor such. Alfred Marshall promoted John Stuart Mill, including Millian political principles, which favored the rights of the individual (while claiming a utilitarian basis for them). Or again, consider the implications of the Pareto criterion in welfare economics. It is not a statement of political individualism, but it places each individual as equal and refuses to judge a change of circumstances if even one person objects to it. It also seems objectively correct. Mainstream positive economic science cannot justify sacrificing an individual to a collective or a common good.
Dr. Charles N. Steele
Herman and Suzanne Dettwiler Chair in Economics
Associate Professor
Chairman, Dept. of Economics, Business, and Accounting
Hillsdale College
Endnotes
1 Winston S. Churchill (hereinafter WSC), The People’s Rights (1910, reprinted London: Jonathan Cape, 1970), 154.
2 WSC, St. Andrew’s Hall, Glasgow, 11 October 1906, in Martin Gilbert, Churchill: Great Lives Observed (Englewood Cliffs, N.J.: Prentice-Hall, 1967), 31.
3 WSC, Birmingham, 13 January 1909, in Liberalism and the Social Problem (London: Hodder & Stoughton, 1909), 214.
4 WSC, Glasgow, 1906 in Gilbert, Churchill, 30-31.
5 Ibid., 31.
6 Ibid., 32.
7 WSC, Dundee, 14 December 1908, in Liberalism, 155.
I’m listening to my wife, who has encouraged me to answer in the spirit of healthy debate. I’ll strive for brevity.
For Ms. Wacker:
#1: Smith and Ricardo were very much to a point that they could define value, and so they did, as an expression of the quantity of labor required to produce a good. Marx never said (or believed) that capitalists add nothing to the value of objects. He shared, with Smith and Ricardo, the prevailing view of the era that the value of any good in exchange is best understood through labor. Like him or not, Marx’s project was to keep inanimate, often meaningless goods from becoming fetishized to the point that they obscured the actual humans (and humanity) underlying their production. He extended the LVT further by distinguishing labor quality from quantity, but in the end, they were all in for revision (by marginalists) over the question of use vs exchange value.
#2 Sorry, you cited the marginal revolution by name, but not Austrian or Neoclassical Economics. I didn’t assume you invoked Mises (or Hayek) as singularly representative of the Austrians without saying as much, given the extremely heterodox nature of the school. At any rate, I’m with Mises, Hayek, et al, who rightly pointed out that the prevailing push for complex math stood no chance of capturing individual human experience. Alas, there is no gainsaying that math came to dominate the work of the far greater proportion of 20th century economists working in the long shadow cast by the marginal revolution, including most Austrians after, say, 1970.
#3 See above.
#4 I didn’t say it’s a problem to discuss Churchill’s ideas in relation to economics. I’d expect nothing less, which is precisely why it seems to make better sense to discuss the economists on which the man actually acknowledged relying. It is patently false to say that Churchill “drew” on Mises—it’s wildly anachronistic for the first half of his political career, and false for the second. He openly acknowledged, and employed, others. He copped a plea for much expanded government intervention of the sort Mises didn’t countenance. And yes, some of his statements about the integrity of the individual align nominally with those of Mises, but I can find you many socialists saying the same kinds of things.
Churchill wasn’t a socialist, of course, but do you know who reproached him for taking Britain in exactly that direction? Mises. Churchill stated many times that his resistance was to “militant socialism.” It seems his plan for the welfare state met Mises’ definition of just plain old socialism.
#5-8 Churchill certainly drew rhetorical distinctions between socialism and liberalism. He had little choice, being a politician above all else. My feeling is this: were any of the Churchill quotes I’ve entered on these themes, along with countless others like them, uttered by the likes of, say, Dewey or Wilson, they’d be used in Hillsdale’s online courses as first-order evidence of progressives’ “rejection” of the DoC and The Constitution. No, you’re not being asked to explain your piece in that context, it’s my own mind wandering a bit.
#9 Indeed, books—entire libraries—can be written on the matter. They have been, and though I don’t know that literature, I imagine there aren’t many about Churchill’s affinity, elective or otherwise, with Mises.
Dr. Steele:
Thank you kindly for taking the time to reply. True, nobody, including Ms. Wacker, has attributed the LTV to Marx. Yes, the marginal revolution largely entailed the advent and adoption of methodological individualism. I do get that, and I didn’t claim otherwise, because that’s the easy part: consumption had come to dominate, and it made sense to ‘read’ small differences at the margins of individuals’ consumption patterns. Something similar prevailed in other sciences, physical and social. However, despite its felicitous title, M.I. was not, as you know, a celebration or devotion to individualism in the political, philosophical, or even ontological sense. It was an epistemological quandary for its official “founder”: Weber couldn’t imagine contemplating institutions “thinking,” so he, followed by others, chose to contemplate groups of individual humans thinking, which is fair enough. Individuals making choices is what gives shape to social phenomena, by the rationale of the day.
Equally true, though, is the fact that these preferences are aggregated and expressed in increasingly complicated calculi by the majority of economists in the 20th century. Austrians and Marxists alike have criticized this as mindlessly distant from real human affairs. In this, they’re on the same song sheet, so to speak. If Smith and Ricardo gave us “pig philosophy,” imagine Ruskin’s thoughts on the preponderant trend in economics of the 20th century.
Anyway, the point is that, for better or worse, the marginal revolution was the opening chapter of abstract math in economic theory, and is broadly recognized by many, except some Austrians, Behavioralists and Marxists (in this they agree) as the period during which this particular social science got a touch too abstracted from human stuff.
Again, thank you for your time. This discussion has been a matter of personal interest in the nature of conservative education, particularly that of Hillsdale. I am an academic writing a piece about Hillsdale online courses. Nobody gets quoted, this was merely driven by my own honest search for information.