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Responsible Capitalism and “Industry and Society”

18 February 2012

This week saw John Nelson, the influential chairman of Lloyds of London, calling for a ‘re-calibration’ of City pay on Radio 4’s ‘The World at One’. And so the theme of ‘responsible’ capitalism continues… As promised in an earlier entry, this post will explore one aspect of the Labour Party’s history on this theme by looking in more detail at a 1957 policy statement called ‘Industry and Society’.

‘Industry and Society’ was one part of a broad series of policy statements published by the Labour Party between 1956 and 1958. This series – which also included ‘Personal Freedom’ (1956) and ‘Plan for Progress’ (1958) – was an explicit attempt to ‘rethink’ the party’s approach after the Conservatives’ 1955 General Election victory. According to Labour’s NEC, this was a  ‘serious, detailed and honest attempt’ to offer a constructive policy [LPA, GS, POLS/2].

Acknowledging the changing face of British industry and the importance of so-called ‘key firms’, the document sought to offer a coherent alternative to nationalisation [pp.11-6]. The detail was notably ambiguous – the result of attempts to avoid internal divisions and appeal to a wide audience. The document essentially called for greater control rather than simply for greater ownership. One method proposed was the appointment of government directors. Another, state ownership of shares [p.49]. As such, it could be seen as an interesting precursor to current calls for employee representation on remuneration panels and calls for social ‘control’ via share ownership.

Much of ‘Industry and Society’ is now forgotten. Labour’s post-1955 ‘rethinking’ was not enough to stop Harold Macmillan’s Conservatives winning another election victory in October 1959. But does the policy statement hold any lessons for today?

The main lesson is arguably one of politics rather than policy. Indeed, for all of the new ideas, ‘Industry and Society’ was something of a political failure. For sceptical party activists, it seemed to symbolise a ‘retreat’ from their party’s ideals. For a sceptical press,  its suggestions would have no real impact apart from instilling ‘interim uncertainty in every board room in the country’ [The Economist, 20 July 1957].  For a sceptical Herbert Morrison, it was simply ‘too clever by half’ [Labour Party, Report of the 1957 Annual Conference, p. 136].

In short, the ambiguity had actually increased the divisions and had failed to appease the party’s opponents. 

Whether today’s Labour policy-makers have learnt any lessons from this history remains to be seen.

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