What’s wrong with Britain

Thirty years ago, as Keith Middlemas reminds us in his messy, but important and sometimes brilliant new book,* Britain served as the model for the reconstruction of European democracy. Not only the British themselves, but their Continental neighbours, took it for granted that the secret of ordered freedom had been learned more successfully here than anywhere else, and that that secret had been encapsulated in the British version of parliamentary government. Today, it is clear to all but a handful of law lords, political columnists and past, actual or would-be Cabinet ministers that the version of parliamentary government which we thought we had thirty years ago no longer exists, if it ever did, and that the doctrines with which it was explained and justified no longer offer any guidance to the way in which our polity is organised.

Bagehot’s notion of Cabinet government is an obstacle rather than an aid to understanding the relationship between a modern prime minister and the rest of the Treasury bench, and an even greater obstacle to understanding the relationship between the Treasury bench as a whole and the Civil Service, on the one hand, and the House of Commons, on the other. Dicey’s notion of absolute parliamentary sovereignty is meaningless or mischievous in an age when most important legislation emerges out of private negotiations between the Whitehall departments and interest groups concerned, and when elected governments can be defeated, or even overthrown, by extra-parliamentary producer groups. John Stuart Mill’s conception of representative government has not lost its inspirational force, but the participatory, libertarian values underlying it run counter to the ethos of the modern centralist state, and the questions it raises are subversive, not supportive, of our existing political arrangements.

But no modern theorist has done for the late 20th century what Bagehot, Dicey or Mill did for the late 19th. Where our late Victorian ancestors knew, or thought they knew, both how they were governed and how it was right to be governed, we flounder in a pragmatic bog, uncertain of what is and hardly daring to ask what ought to be. We know that we no longer have Cabinet government, but we do not know what has replaced it. We know that parliamentary sovereignty is now a myth, but we do not know how to define the new reality. We are no longer convinced by the old, Victorian answers to the question, ‘Why should I obey the state?’, but we do not know what answers to give instead.

This might not matter if our existing arrangements were working well. In any settled society, there is bound to be a gap between legal form and political content. Even thirty years ago, the constitution as operated in the whips’ offices of the House of Commons or the research departments of the TUC and FBI bore little resemblance to the constitution as depicted in the pages of Bagehot and Dicey, while the assumptions on which it was operated were not merely different from, but antithetical to, the assumptions that inspired Mill. Yet thirty years ago, the gap between Victorian theory and 20th-century practice did no damage. Ministers, civil servants, lawyers, journalists, back-bench MPs, even trade-unionists and business leaders continued to celebrate the Victorian constitution they had been taught to revere in their youth, oblivious of the fact that, in their daily lives, they adhered to a quite different constitution, which had grown up imperceptibly inside the skin of the old one. But the system worked: and the fact that it did not work as the textbooks said was of academic interest only.

Now it has stopped working; and the gap between theory and practice – or, to put it more precisely, the absence of a theory to make sense of the last half-century’s changes in practice – matters a great deal. Everyone knows that we govern ourselves badly. The evidence is all around us, in our steady economic decline, in our botched relationship with the rest of Western Europe, in our denials of minority rights, in our sycophantic judiciary and our overburdened executive. But we do not know why; and because we do not know why, we lurch from expedient to expedient, palliating symptoms instead of curing the disease.

The last fifteen years have seen, to mention only the most obvious examples, ‘reform’ of the Civil Service, ‘reform’ of local government, a whole succession of ‘reforms’ of central government, three mutually incompatible attempts to ‘reform’ Parliament, two abortive measures of devolution and two referendums. All of these sprang from a muddled, but justified, suspicion that popular confidence in the system was draining away, and that changes of some sort were needed to stop this drain. But there was no coherent theory behind them, no attempt was made to relate them to each other or to the rest of the system, and, in consequence, none of them went anywhere near the heart of the problems with which it was supposed to deal. Meanwhile our really damaging political ills – our inability to overcome the social forces which have made for economic decline, to devise a satisfactory basis on which power might be divided between the centre and the periphery, or to strike a proper balance between individual rights and social purposes – remain untreated.

It is this that gives Mr Middlemas’s book its importance. He has tried to do for our enormously more complex polity what Bagehot did for our ancestors’: to tear away the veil of constitutional propriety which conceals the realities of power, to decipher, as he puts it, the ‘hidden code’ which explains the ‘behaviour of political parties, other [political] institutions and government’. It is an ambitious undertaking, and it is not surprising that Mr Middlemas has not been completely successful. He has none of Bagehot’s didactic skill, and although his analysis is original and compelling, it is hard work to dig it out. He has coined a few arresting phrases, but his writing is generally slack and heavy, and sometimes pretentious as well. As any contemporary historian is bound to do, he has borrowed heavily from neighbouring disciplines, particularly from sociology and political science. But his borrowings are not always happy. He relies much too heavily on the windy metaphysics of the Frankfurt School, and has made far too little use of the American economists of public choice, whose findings, if he only realised it, would powerfully illuminate his own concerns.

But his faults are venial compared to his virtues. He has come closer to the heart of our system than any other recent writer has done; and in doing so he has at any rate laid the basis for a thoroughgoing diagnosis of what is wrong with it. Its hallmark, he argues, is what he calls ‘corporate bias’. It is dominated, that is to say, by an informal, fluctuating and only half-acknowledged form of power-sharing between the state, on the one hand, and organised labour and the organised employers, on the other. None of the partners in this triangle of power can get its way without the acquiescence of the other two. But although each depends on the others, each also depends on its own constituents. Thus the system is one of mutual accommodation, not of subordination or control. The unions and employers’ organisations are not government agencies, as they would be in a fully-fledged corporate state. They are ‘governing institutions’, neither wholly independent of the state, nor wholly enmeshed in it. The state recognises them as partners, and they in turn discharge functions devolved on them by the state. But their consent to state policy cannot be taken for granted. Though they are not completely representative of their members, they are not completely unrepresentative either. If the pressure from below is strong enough, they can and do withdraw their consent; and the state then has to change course.

This part of Mr Middlemas’s analysis is not as original as he seems to think. Indeed, it is not very different from that put forward by Samuel Beer 15 years ago. In at least three critically important respects, however, Mr Middlemas goes well beyond Beer. In the first place, he links his theory of ‘corporate bias’ to a subtle, penetrating and, at any rate in essentials, highly persuasive reinterpretation of British history in the first four decades of this century. ‘Corporate bias’, he suggests, developed in response to a crisis of the system similar in scale to and not fundamentally different in character from the crises which destroyed the systems of Imperial Germany and pre-Fascist Italy, and which crippled that of the French Third Republic.

As in Germany, Italy and France, the crisis began to make itself felt before the First World War. As in Germany, Italy and France, it was caused by the rise of an aggressive and self-confident working class, whose demands could not be satisfied within the terms of the old, 19th-century polity. In contrast to those of Germany, Italy and France, however, it was overcome; and it was overcome by buying the working class off. The forms of the old, 19th-century polity were retained, but the reality was changed out of all recognition. Technically, Parliament remained sovereign. In fact, ‘corporate bias’ pushed it aside. The TUC became a ‘governing institution’, above all because trade-union consent was essential for victory in the First World War. It remained one through all the upheavals of the subsequent peace, because the British political class had the wit to see that this was the only way to keep the system afloat. As early as 1919, in spite of all the industrial strife of the period,

a new form of political activity was growing up, as yet only half understood, but radically different from the pre-war system ... There now existed formal, powerful, employers’ institutions, a fully-fledged Ministry of Labour, and a TUC increasingly accustomed to dealing in the political arena ... Lloyd George himself, searching always for a middle way in politics, had shifted away from Liberal radicalism towards a corporatism best described as the creation in Parliamentary politics of a staatspartei, composed of Liberals and mainstream Conservatives (leaving a fringe Right wing and a much larger, but powerless, Labour Left); complemented in industrial politics by a triangular collaboration in which employers’ organisations and TUC should make themselves representative of their members and in return receive recognition as estates by government.

It was through that ‘new form of political activity’ that Britain was to be governed for the next 60 years. For although Lloyd George’s staatspartei did not take root, his fall made little difference. The party leaders who brought him down sought the middle way as anxiously as he had done, and the Conservative Right and Labour Left were as powerless under their rule as they had been under his. ‘Corporate bias’ re-emerged, even before the General Strike. It increased after 1926, and after 1931, reached its apogee. Organised labour, as Mr Middlemas puts it, ‘settled down to live with organised management, both clinging to the state in a hostile environment, assisting it, willingly or not, in its aim of avoiding internal crisis, and pushing the political extremes, Right or Left, beyond the boundary of parliamentary politics’.

That last point is the second on which Mr Middlemas goes beyond previous writers. Though it is not to be confused with a fully-fledged corporate state, ‘corporate bias’, as he depicts it, shares some of the uglier features of more obviously corporatist regimes. It is not totalitarian, but it is deeply illiberal. One of the crucial postulates of liberal democracy is that the sovereign people should be free to choose between competing policies. ‘Corporate bias’ denies them that freedom. Instead of the public deciding what policies the state should follow, the state imposes policies on the public. Party, the mechanism by which alternative policies are evolved, and through which they are presented to the public, has been pushed out of decision-making along with Parliament, and has survived only as a vote-winning machine. At the same time, dissent has been ‘marginalised’ by an increasingly sophisticated form of opinion management. From Lloyd George on,

continually improving agencies transmitted to central government an ever-widening range of information about public opinion. At the same time, a series of filters was evolved to reduce this torrent to a form manageable by, and palatable to, Ministers ...

    Awareness of the need to take public opinion into consideration did not lead politicians and civil servants on to an acceptance of popular democracy, but rather the reverse, as the political élite superimposed on the traditional cycle of general elections and party warfare something which can be called continuous contract. Continuous contract means, simply, the fine measurement of opinion and its careful management by propaganda, together with the creation of a degree of mystification about the political process, in the interests of harmonious government.

Mr Middlemas’s third new insight is less developed than the other two, but in some ways it is even more valuable. The state which manipulates public opinion in this way is not itself a free agent. It is as much part of the triangle of corporate power as are the ‘governing institutions’, and as subject to pressures from them as they are to pressures from it. Thus the policies which it imposes on the public are not its policies alone. They are the policies of the ‘governing institutions’ as well.

As a result, ‘continuous contract’ has damaging economic consequences as well as illiberal political ones. All too often, it ensures that the particular interests represented by the ‘governing institutions’ override the general interest – as, for example, in the late Thirties when the pace of aircraft construction was determined by the particular interests of the two sides of the aircraft industry, rather than by the Government as the custodian of the general interest. But the ‘governing institutions’ are almost always conservative in their economic behaviour, however radical their rhetoric. Their instinct is to resist change, not to promote it: to raise profits and wages by conspiring together against the consumer, not by providing better goods or services; to keep men in employment and firms in business by protecting old industries, not by developing new ones. The result is that, although the system has succeeded in its primary aim of avoiding crisis, it has done so only at the cost of ‘political compromise, industrial feather-bedding and low overall growth’.

Though Mr Middlemas does not say so explicitly, the obvious conclusion is that there is a built-in contradiction at its heart. The economic stagnation which our rulers ineffectively bewail is not fortuitous. It is a necessary, inevitable by-product of the political arrangements by which they have been thrown up.

A still harsher conclusion follows. The more the political parties degenerate into vote-winning machines, the more general elections turn into auctions in which rival teams of politicians bid for votes with promises of higher living standards. But in the stagnant economy produced by ‘corporate bias’, no government can deliver significantly higher living standards. Thus the system condemns the political class to whip up public expectations in general elections, and then prevents it from satisfying them. The result is that public confidence in government is still further eroded, and that government has to depend still more heavily on the governing institutions whose power had held the economy back.

Mr Middlemas’s thesis should not be swallowed whole. His account of the aborted crisis of 1911 to 1918, and of the growth of the corporate system which aborted it, seems to me masterly. His insight into the economic consequences of corporate bias, particularly when fleshed out with the insights of public-choice economics, goes a long way to explain Britain’s long-standing economic decline and current de-industrialisation. I am less convinced by his theory of continuous contract. There is no doubt that Parliament has been pushed out of decision-making – though this happened at a much earlier stage than he seems to think – but, in the light of the last ten years of British history, it is nonsense to claim that Party has been pushed out as well.

It is true that in the Thirties, and again in the Fifties and Sixties, the ideologies of the reigning parties had only a marginal influence on government policy. But the Forties can be made to fit the model only by distorting the evidence, and the Seventies cannot be made to fit it at all. So far from being pushed out, Party has jumped back with a vengeance. Though no government has been able to adhere to the ideology it proclaimed in opposition – hardly a surprising phenomenon, since the ideologies of the two main parties are both 19th-century constructs which offer no solutions to the problems of a modern industrial society – all governments have made strenuous efforts to do so, and all governments have inflicted enormous damage on the economy in the course of their efforts. By the same token, it is perverse to pretend that dissent has somehow been suppressed in an age when the neo-liberal heresies of ten years ago are now the reigning orthodoxy on the Right, and when neo-Marxism is making all the running on the Left.

But this only qualifies the central thesis: it does not invalidate it. Indeed, the revival of Party, and the concurrent revival of the old, 19th-century ideologies within the parties, can best be understood as further symptoms of the syndrome which Mr Middlemas has so painstakingly diagnosed. Because corporate bias has produced stagnation while promising growth, and because there is no coherent and generally accepted theory to explain the ills by which our polity is more and more obviously afflicted, we have turned for consolation to the dogmas of the past, like a reformed alcoholic going back to the bottle when he loses his job. The parties offer only pseudo-solutions, not real ones, and secretly we know this. But, in our present condition, even pseudo-solutions seem better than no solutions at all.

Mr Middlemas does not pretend to offer solutions, real or pseudo, but he has at least defined the terms within which alternative solutions will have to be debated in future, and, in doing so, he has made it more difficult for the peddlars of pseudo-solutions to sell their wares. He shows that there is no point in institutional tinkering which leaves corporate bias unaffected, of the sort that was fashionable in the era of Wilson and Heath; that the current government’s notion that our ills can be cured merely by narrowing the scope of state intervention, and pretending that corporate bias does not exist, is equally barren; and that the alternative notion that the cure lies in even more state intervention, and therefore in even more corporate bias, is not merely barren but destructive. More generally, he shows that diagnoses which take insufficient account of the weight of corporate power, and purported cures which leave the corporatist embrace unbroken, are not worth the paper on which they are written. These are negative lessons, no doubt, but they are the beginning of wisdom.