Labour Lessons

Obituaries of the economic historian Robert Skidelsky, who died in April, have praised his monumental three-volume life of John Maynard Keynes. But none paid much attention to a rather more original and important book that Skidelsky wrote as a struggling graduate at Nuffield College, Oxford.

Politicians and the Slump, published in 1967, has haunted me ever since I read it as a schoolboy. The book provided a cogent explanation for the failure of the 1929-31 Ramsay MacDonald Government, and is viscerally relevant today.

Just a few months after MacDonald entered Downing Street, the Wall Street Crash prompted a global economic depression. The Labour Prime Minister found himself facing mass unemployment, collapsing public finances, and the imperative to make savage spending cuts.

An obvious solution was available: deficit financing, public works, and demand management as prescribed by Keynes. The orthodoxy of the era, enforced by the Bank of England Governor Montagu Norman, ruled out all these remedies as reckless.