This assuming, by the British state, of the role of industrial employer in depressing the level of real wages is natural enough, since the state has always been identical with agriculture, banking, and mercantile and industrial interests. The idea that the British establishment predates materialism somehow (so much for Croesus), and is rendered free of mercenary considerations by sheer antiquity, is the sort of hokum that ought to make anyone feel for his wallet.
Without going into the details of arrangements that vary from case to case, I want to suggest that the nationalization of industries has also functioned as a refined form of expropriation. The National Health Service, for example, buys drugs from the major British drug companies, all of them private, on terms highly favorable to them. Its budget includes the cost of training all doctors, even those who go on to practice in the numerous private hospitals, which are run by private health insurance companies. So the state in effect subsidizes major private industries with money supposedly spent on public health care — health care, first among all those killing instances of largesse which are the boast and lament of contemporary Britain, just as the Poor Laws were their boast and lament in the centuries preceding.
As it happens, almost no one in the West spends as little on health care as the British,9 despite the fact that they lead the world in death rates from heart disease and lung cancer, costly diseases, if they are cared for. All the noise is simply an especially dramatic manifestation of the princess-and-the-pea paradigm, where the British establishment takes a horrible bruising from an irritant no one else would feel. But there is a wisdom in these tribal rituals. All the lamenting over the burden of public expenditure gives the government a fine reputation for public service, at home and abroad, while it creates an atmosphere congenial to hospital closings — tolerant of, for example, twelve-month waiting lists for spinal injury patients.
One need not look too deeply into the economics of socialized medicine to account for the state of the National Health Service. The government has simply exercised control over consumption by pegging costs at 5 percent of gross domestic product and squeezing services to fit the budget. With an aging population, living at close quarters in deteriorating cities, and with a declining domestic economy — the base against which the budget is figured — there is a rise in need and a corresponding contraction in the resources for responding to it.
Mrs. Thatcher shuts down industries in the service of economic reform. I admit to finding her wisdom unsearchable. But the antecedents of her policies can be clearly seen in British history, when with bold strokes, implacable governors (call them lords or ministers or manufacturers) have swept away the livelihoods of great numbers of British people, in the service of some high object, like putting the Great back into Britain, which always involves enthusiastic obedience to economics’ brazen law, the subsistence theory of wages. Supposedly, dead regions of modern Britain will regenerate themselves. These disused populations will go forth and strive and innovate — a feat all the more glorious since it will be done without resources or training. I think it is more probable that they will become poorer and poorer, that the British economy will concentrate itself even more intensely on white-collar, middle-class service industries such as banking and insurance, in foreign investment, in toxic and radioactive waste disposal, in the chemical and drug industries, the weapons trade, and “invisibles.” The old industries which labor seized upon as its domain are taken away as the commons were from its ancestors. The dole, by preventing, in theory and in general, the worst consequences of these revolutions from the top, makes such high-handedness possible. Poverty as a norm of working-class life has made them acceptable.
Welfare may be seen to be a matter of definition, having to do with values and expectations. We in America have not yet learned to congratulate ourselves for maintaining millions of unemployed people at the level of subsistence, and paying millions more who are employed, at wages that must be topped up to reach the standard of subsistence. One third of the British population is in poverty as the British define it.
Beveridge’s plan, a national compulsory insurance system which assumed — more precisely, was contingent upon — full employment, incorporated union and “voluntary” schemes for covering births, deaths, injuries, illnesses, and temporary unemployment. It adopted also the long-debated system of family allowances, which added to family after-tax income with each child after the first.
The insurance element of the plan simply appropriated the shifts workers had made, to pool a part of their income to fend off the bleakest eventualities, appropriating at the same time the income of workers to cover the costs of the burden the state had assumed. Family allowance was distinctly less popular in its origins than national insurance. It was an attempt to nuance levels of income to conform to need. William Beveridge actually made a case for it first in 1919, when it was his responsibility to attempt to solve problems that beset the coal industry. The solution he hit upon was, I need hardly say, to lower wages.
He proposed to minimize hardship by lowering most the wages of those with fewest dependents. The union protested violently against the entire proposal. In those days there was talk of establishing a minimum wage in Britain. The family allowance system, by allotting pay on the basis of need, was contrary in principle to the idea that the laborer might unconditionally deserve a specified rate of pay. There is no minimum wage in Britain now; the family allowance system has prevailed. Workers, who are heavily taxed, have their money eked back to them — the payment is in fact made to wives — as a very modest subsidy calculated by the number of children, excluding the first child, for whom it is believed best that his parents be “responsible.” Another among these grinding benefits is a mechanism whereby one may apply for some unreachable necessity, a pot or a blanket. In these frugal days, costs are to be “clawed back” (truly one of the great phrases) through withholding from pay or benefit. This extraordinary system is designed to keep real wages at the lowest possible level. And what are the limits of the possible in this situation? When Eleanor Rathbone plumped for family allowances early in the century, she was encouraged by the discovery of recruiters for the Boer War that starveling men make unsatisfactory soldiers. Malnutrition was a threat to national security. Her view was that workers failed to maintain themselves at the level of “physical efficiency,” not because they were poor, but because they made a bad job of being poor. Family allowance was to guide the expenditure of income, not add to it.
It is the distinctive achievement of British socialism to have attracted the energies of the clever to sorting out the details of the lives of the poor. It makes perfect sense, given the assumptions of the culture, that the solving of difficult social and economic problems should be the work of those with heads for that sort of thing.
From the beginning, however, the object was not to eliminate poverty but to make of poverty a less injurious condition — more precisely, to allow the commonwealth the economic advantages of poverty without its economic disadvantages. Alleviation of the conditions of the poor would create a more productive work force, in theory, though in fact British industry had thriven for more than a century on the labor of hungry and exhausted people, largely women and children, and had found little use for vigorous adult men, except in mining and shipbuilding. Industrialists had made a spectacular demonstration of the economic viability of existing conditions. Indeed, the decline in Britain’s dominance of the world economy was usually laid to the rise in the living standards of the working class, even though the greatest emerging competitor, the United States, had the world’s highest wages. World opinion might seem to set a lower limit to the standard of life a wealthy power can establish for the mass of its people and still enjoy a good name, but British experience continues to prove otherwise. So the floating downward of real wages has no obstacle or limit. This is truer now that weapons have evolved which make armies redundant.