Pseudo-
BRIAN GRIFFITHS
British Budgets in Peace and War 1932-1945 B. E. V. Sabine (Allen and Unwin 75s) What was the Keynesian revolution? Was it a decisive break with the past in our understanding of how the economy works, its prescription of deficit spending the last straw, which capitalism eagerly and successfully grasped at? Or will history view it as a pseudo-revolution, the most overrated non-event of the twentieth century, something which resulted in nothing more than a minor change in the presentation of the national accounts by the Central Statistical Office?
The author of this book clearly feels that throughout this period we witnessed a successful and far-reaching revolution. As he describes each successive budget from 1932 to 1945, we move from the intellectual wilderness of the early 'thirties, characterised by the Treasury's barren orthodoxy and the austere necessity to balance the budget, to the lush pastures of the early 'forties when Keynes's influence on Kingsley Wood's budget was so obvious. For the first time, the Budget arithmetic was explicitly set out so that the inflationary potential of any level of income, taxation and government expenditure could be calculated.
And yet the assumption that this was a revolution is seriously open to question. In particular, the author does not try to evaluate the contribution of Keynesian thinking to the process of economic recovery or to try to sort out the relative contributions of monetary and - budgetary policy respectively to that recovery. It is by no means obvious that the recovery was the result of deficit expenditure rather than the policy of easy money. One of the interesting results of recent work on the depression in the us has been to suggest that by far the most powerful factor in both causing the depression and in leading to the recovery was the behaviour of the monetary authorities in controlling the money supply. In my view, we simply do not have enough evidence to date in the ux to assume that the recovery from the severe conditions of the 'thirties was one of the.products of Keynesian thought.
The second main issue raised by this book is the purpose of the budget. As fiscal policy has been such an important instrument for managing the ux economy in the postwar period, the budget has been severely criticised in that it produces sharp changes in taxes and expenditures, which in turn have caused the `stop-go' cycle. However, as less emphasis is placed on fiscal policy and monetary policy is given a greater role in controlling the economy, so the force of this criticism becomes less. More importantly, and as this book very well shows, there will • always be need for some type of annual review of government economic policy, whether called a budget or not, which will determine the size of the public sector, the distribution of taxation between direct and Indirect, the extent to which income is to be redistributed and which can be criticised and debated by Parliament. In this sense,- the budget is indispensable and will always remain, as the last few days have so clearly shown, at the centre of a political debate
between those who stand to lose and those who stand to gain as a result of it.
Lastly, the book, which is well written, is not without its amusing side. There is Lady Astor's predictable attack on the increased evils of beer drinking as a result of Id a pint reduction; Aneurin Bevan in the -early 'thirties arguing that reduced taxation and public works were no panaceas to the problem of unemployment and Churchill's alliterative comment on one of Chamberlain's budgets, 'one long dreary drip of disparaging declamation!'
This book, written from a painstaking scrutiny of the debates on the successive Finance Bills, is essential reading for anyone who wishes to understand the debate on economic policy throughout the 'thirties and the second world war.
Previous page
