A reader of this blog, whose opinions I respect, has requested that I offer my thoughts on this historical problem. This request was inspired by my blog, published not long ago, on Trump and the problem of third party politics in the United States. The conclusions which I drew from the evidence were that the electoral system in the United States is very unkind to third parties ; and that, despite this disadvantage, they exerted a powerful indirect influence on the two principal parties. I offer my preliminary thoughts on this subject, to which I may return in future blogposts.
A comparable process can be observed in British political history over the last hundred years. The principal third party in Britain during this period has been the Liberal Party, which, despite its changes of name (SDP/Liberal Alliance, Liberal Democrats), fractures (the Asquith/Lloyd George split, and the breakaway 'National Liberals', led by Sir John Simon, which joined the National Government in 1931) and changes in the composition of its membership, has displayed such a degree of institutional continuity that it can be deemed to have been the same political party throughout this period.
Any serious assessment of the influence of a political party much assess its ideological impact. A political party will espouse an ideology ; but there will be several variants within that ideology, because most ideologies have complex histories. Liberalism is no exception. I have explored the subject of liberalism's ideological development in my two blogposts, 'Why liberalism matters', published in July 2020. I do not intend to reprise my arguments here. However, I wish to emphasise that the Liberal Party bequeathed two sharply contrasting ideological variants to British political life. One was Gladstonian liberalism, with its emphasis on the minimal state, free trade, low taxation and administrative efficiency. The other was the 'New Liberalism', as espoused by Asquith and Lloyd George, which emphasised expanded welfare functions for the state, progressive taxation, increased freedom of action for trade unions, and increased spending on naval defence. The emphasis of New Liberalism was collectivist, in that it recognised that the State, as agent of society, would ensure that society engeged in certain common purposes ; this was in contrast to Gladstonian individualism, which sought to rationalise and modern the 18th century aristocratic state, with its mechanisms of patronage, nepotism and corruption, and to provide careers 'open to talents' in the civil service and the army.
It can be seen that both variants have exerted influence in British political life. Both John Maynard Keynes and William Beveridge were card carrying Liberals, and both have claims to be regarded as the two most distinguished and influential 'policy intellectuals' of 20th century Britain. Keynes' explorations of the instabilities of the capitalist economy, and of the role of finance in causing them, were motivated by a desire to save capitalism, not to destroy it. This desire is evident in his role in planning the 'Bretton Woods' institutions, the International Monetary Fund and the World Bank. Indeed, Keynes would have gone much further in granting the IMF extra powers to stabilise the global economy, had it not been for the resistance of the United States. (see Peter Clarke, 'Keynes' ; Robert Skidelsky, 'Keynes: a very short introduction'). Techniques of Keynesian demand management were used by American and British governments until the 1980s. Although Democrat rather than Republican administrations were more likely to deploy Keynesianism, both Labour and Conservative governments in Britain were avowedly Keynesian until the advent of Thatcherism.
As Beveridge's system of national insurance was introduced at the same time as the NHS, and both, in historical memory, are subsumed under the heading of 'welfare state', it is easy to overlook that these institutions had different sources. As the historian and political scientist David Marquand relates (in 'Britain since 1918: the strange career of British democracy' (2009) ), Aneurin Bevan's plans for a centralised NHS encountered stiff resistance not only from doctors' organisations, and from the Conservative Party, but also from his own colleagues, such as Herbert Morrison, who favoured a more localised and decentralised approach (see also Michael Foot, 'Aneurin Bevan', Vol. 2, (1973) ). The inspiration for the NHS was avowedly Socialist, and for that reason was controversial. Beveridge's plans for national insurance depended on two assumptions: the first was that Keynesian demand management would maintain the economy at a level whuch was near full employment ; the second was that entitlement to state benefits was clearly related to the individual's contributions and, therefore, willingness to work. As many commentators more expert than myself have pointed out, there are numerous shortcomings with Beveridgean social insurance, which the changing economic landscape of the past eighty years has exposed. However, my objective here is not to assess the merits of this particular system ; it is to trace its ideological sources. Beveridge's inspiration lay in the (rudimentary) social insurance system founded by the Asquith government before WW1 ; both were founded on one of the principles of 'New Liberalism' : that of the 'enabling state.' The State would stand ready to help individuals fulfill their responsibilities and to be independent and self-reliant citozens. Again, both major parties endorsed Beveridgean social insurance.
In conclusion : the post war settlement was largely the responsibility of two intellectuals who were card carrying Liberals. For a party which had become marginal to British political life by WWII, that is quite some schievement.
(To be continued).