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Alex Callinicos

The respectable renegade

(September 1985)

From Socialist Worker Review, No. 79, September 1985.
Transcribed by Christian Høgsbjerg.
Marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Hugh Dalton
Ben Pimlott
Jonathan Cape £25.00

HUGH DALTON is now chiefly remembered as one of Labour’s ‘Big Five’ in the 1945–51 government (the others were Clement Attlee, Ernest Bevin, Herbert Morrison, and Stafford Cripps). As Chancellor of the Exchequer Dalton played a pivotal role in the years 1945–7, when most of the Attlee administrations’s major reforms were pushed through.

Ben Pimlott, himself a Fabian intellectual, has written an absorbing and justly praised biography of this unpleasant man, who fawned on those who had power and patronised those who didn’t. ‘Keep that man away from me,’ Winston Churchill said of Dalton, when the latter was one of his ministers in the wartime coalition. ‘I can’t stand his booming voice and shifting eyes.’

Tories generally hated Dalton as they did Aneurin Bevan. But while Bevan was that rare figure – a working class MP who tried to bring the class war into the House of Commons – Dalton was one of their own, a renegade.

Dalton’s father was a canon of St George’s chapel, Windsor, and was very close to George V as both prince and king. His son went to Eton and King’s College Cambridge. Dalton was at Cambridge in the years before the First World War. He was exposed there to the culture of the Bloomsbury group and the politics of the Fabian Society. Together these influences encouraged Dalton to rebel against the Anglican Toryism from which he had sprung.

Pragmatic and paternalist

In later life Dalton paraded his contempt for the values of his class – for example, selling or giving away royal gifts to his father. The Windsor family loathed him. ‘Don’t ever bring that anarchist son of yours to see me again,’ George V told Canon Dalton.

Pimlott even suggests that George VI intervened when Labour came to power in July 1945 to persuade Attlee to appoint Bevin rather than Dalton as Foreign Secretary. This was even though the new Prime Minister had already told Dalton to accompany him to the Potsdam peace conference in that capacity.

Only to British royalty could Dalton seem an anarchist. A professional economist, he devoted his attention to the unequal distribution of income. The aim of socialism was to remedy that, through death duties and what we would now call a wealth tax.

The idea that the distribution of income was a consequence of a more fundamental distribution, that of the ownership and control of the means of production, did not occur to Dalton. Nor did he see the change as something working people could only make for themselves. Pimlott calls him ‘a child of the Webbs: pragmatic, paternalist, collectivist, a pre-war critic of property rights’.

Dalton’s socialism differed from Marxism also in its nationalism. His experience of the First World War – in which many of his closest Cambridge friends died (above all the poet Rupert Brooke, whom he worshipped) – left Dalton hating, not capitalism, but the Germans. His racism went a lot further. He was horrified when Attlee offered him the Colonial Office in 1950:

‘I had a horrid vision of pullulating, poverty stricken, diseased nigger communities, for whom one could do nothing in the short run and who, the more one tries to help them, are querulous and ungrateful.’

The fact that a leading member of the only seriously reforming Labour government could express such attitudes is itself revealing. Why, then, take any interest in Dalton? There are at least three reasons for doing so.

First, Dalton was a key figure in Labour’s right wing in the 1930s and 1940s. As a member of the National Executive he helped pick the party up after the debacle of 1931. In an alliance with Bevin and other trade union leaders, Dalton successfully resisted pressure from Cripps and the Socialist League to take Labour far to the left. He also encouraged a group of young right wing intellectuals (Hugh Gaitskell, Evan Durbin, Douglas Jay and others) to conduct the policy discussions, associated with such bodies as the XYZ Club, which created the framework of postwar Labour economic thinking.

Of critical importance here was the thought of Maynard Keynes, and his demonstration that higher public spending could increase employment. Dalton himself wasn’t particularly sympathetic to Keynes as a person (he had been Dalton’s tutor at King’s) or as an economist. He did not side with Oswald Mosley and others when they demanded that the 1929–31 Labour government use spending to combat the effects of the Great Depression. But he lent his backing to those who did take Keynes seriously, thus helping to provide the Labour right with an answer to the Marxist claim that capitalism couldn’t be reformed.

This was an instance of Dalton’s most lasting role as a patron of bright young men, usually – though not always – on the right wing of the party. His most important protégés were those two lost leaders of the Labour right, Attlee’s successor Hugh Gaitskell, and Tony Crosland, author of the revisionist bible, The Future of Socialism. Dalton manoeuvred Gaitskell into the position where he was the main candidate to succeed the dying Cripps as Chancellor of the Exchequer in 1950 and helped to precipitate his election as party leader in 1955.

The second reason for looking at Dalton now is that he is a good exemplar of a certain breed of Labour politician. The Labour Party has been well described as an alliance of the trade union bureaucracy with a section of the professional middle class. Those of the latter who form the labour right wing represent a number of things – most importantly pure undiluted careerism. But there are two more distinctly political strands.

One is left Liberalism – well represented in the 1920s as many bourgeois parliamentarians abandoned the shipwrecked hulk of the Liberal Party for the fast rising Labour Party. Most of these recruits never abandoned their Liberalism, and never cared especially for the trade unions. The modern representative of this strand is Roy Jenkins – and, as mention of him suggests, much of it has now passed back into the SDP/Liberal Alliance.

The other strand is distinct and might be called right wing Labourism. This involves a genuine political commitment to the organised working class movement, identified with the trade union bureaucracy (and especially, of course, with its right wing). Modern examples are Tony Crosland, who broke with the Jenkinsites in the early 1970s, Denis Healey and Roy Hattersley, who refused to follow the Gang of Four into the SDP.

Dalton fits well into this category. Pimlott says: ‘He disliked the rich, and had no difficulty in identifying whole-heartedly with the trade union movement.’ (The difference between the two types of right winger isn’t absolute of course: a good deal of calculation enters into the second sort’s commitment to the labour movement – Dalton toyed with the Liberals before it became clear that they were on the way out.)

The third reason why Dalton is important has to do with his time at the Treasury in 1945–7. There was nothing socialist about his Chancellorship. Dalton was committed to planning, which he saw as the state exercising physical control over production and distribution. Predictably he was impressed by Stalin’s First Five Year Plan when he visited Russia in 1932; a few months later he was equally impressed with Mussolini’s ‘Corporate State’ (and indeed by the Duce himself: ‘There is no other living man it would have thrilled me more to meet,’ he wrote after an audience with the fascist ruler).

Pimlott writes:

‘In the 1930s, Labour had imagined coming to office in prevailing conditions of laissez faire, and establishing the machinery of socialist planning from scratch. Instead, the incoming government inherited a wide range of controls and a powerful administrative machine geared to an economy mobilised for total war ... Encouraged by a belief that existing government arrangements were ideally suited to their purposes, Labour ministers slipped into the position, and took over the powers, of their predecessors.’

Dalton proceeded to use this machinery to maintain the full employment created during the war and to generate the income needed to fund Labour’s reforms. This effort eventually broke him. The British economy could only continue working in 1945 with American financial aid. The price of the loan which Keynes concluded in Washington in December 1945 was that the pound sterling should become convertible on world currency markets by July 1947. The result was an enormous external constraint on British industry: industries had to be made competitive with their foreign, mainly American, counterparts to prevent a financial crash when sterling became convertible.

The loan was inseparable from the Labour government’s commitment to defending British imperialism and to remaining a close ally of the US. Keynes wrote afterwards: ‘It comes out in the wash that the American loan is primarily required to meet the political and military expenditure overseas. If it were not for that, we could scrape through without excessive interruption of our domestic programme.’ The burden of military expenditure insisted on by Bevin, the government’s most powerful figure, helped to doom Labour’s economic policy, and with it Dalton.

The Chancellor found himself under increasing pressure to abandon a domestic programme which the City and his own economic advisers denounced as inflationary. Sir Edward Bridges, the Permanent Secretary of the Treasury, accused him of using the American loan to finance ‘an artificially high standard of living’ for the British working class. The crunch finally came with convertibility in July 1947. The result was a huge outflow of gold and dollars, reflecting a balance of payments deficit, and foreign suspicion of Britain’s ‘socialist’ government.

Dalton was forced to change course. He introduced an emergency budget on 12 November 1947 which amounted to surrender to the City’s demands for whole-sale deflation, raising taxation and cutting spending. Shortly afterwards he was forced to resign from the government for having disclosed details of the budget to a journalist minutes before presenting it to the House of Commons.

Dalton’s career never recovered. Stafford Cripps, who succeeded him at the Treasury made a policy of Dalton’s retreat – austerity. The third postwar Labour Chance Gaitskell, completed the process in April 1951 when he made the first cut in government’s greatest reform, the National Health Service, in order to finance enormous rearmament programme demanded by Washington.

Pimlott suggests that Dalton was a broken man before his fall, pondering resignation as his policy collapsed around his ears. His colleagues were happy to throw him to the wolves. Pimlott concludes:

‘Dalton was the only Chancellor who had ever attempted to perform his duties in a distinctively socialist way. The experiment ended with the convertibility crisis; it was never tried again.’

‘Socialist’ needs to be taken with a pinch of salt. Still, the point remains. The 1945 Labour government, with enormous popular support and a planning machine inherited from the wartime coalition, could not use the existing state apparatus to plan the economy in defiance of world capitalism: Do we have any reason to believe that a Kinnock government, in far less favourable circumstances, could succeed when Dalton and his colleagues failed?

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