Who Shall Pay for the War?

Abstract

I HE economics of how to pay for the war,' and (what is more important) of who is to pay for it, niay be discussed from two distinct points of view. The first treats the war as a gigantic extra burden which has to be carried by the existing economic machine in such a way as to cause as little dislocation as possible. The second sees in the stresses of war conditions an opporturky to make changes which are desirable in themselves, which ought to have been made anyhow, and which it is intended should either themselves be permanent, or should at Beast contain the germ of permanent change. In this artkle I propose to discuss the subject quite shamelessly from thc second point of view.It is necessary first to get some idea of the magnitude of the problem. All the estimates are guesswork; but there seems to be a fairly general agreement that we should calcdate in terms of an overall cut in private civil consumption of the order of 40 per cent.2 Now the question whether the war is to be paid for by taxation, by loans (voluntary or compulsory) or by inflation, is wholly secondary to the primary issue : How are you going to share this 40 per cent cut as between the rich and the poor? Of all our various authors Mr. Clarke tackles this question most directly, with a suggestion that the burden might be distributed on the basis of a 60 per cent reduction for those in the over E2j0 per annuni class, and 25 per cent for those below this figure. Tbr Political Economy of War. By A. C. Pigou. (Maanillan. 5s.) Tk Economic Effwt of Wm. By R. W. B. Clarke. (Allen & Unwin. 7s. 6d.) Hmv to Pay w tbc Wm. By E. F. M. Durbm. (Routledge. 3s. 6d.) Ppring for tL War. By Geoffrey Crowther. (Oxford Pamphlet. 3d.) H m to Pay fw tbc Way. By J. M. Keynes. (M-. IS.) ' Mr. Keynes works on much lower figures ; but he budgets for one year only.

When economic theory meets policy: Barbara Wootton and the creation of the British welfare state

“…A closer investigation into some of Wootton's published and unpublished papers between 1940 and 1985 confirms this view, also revealing useful interpretations of the mechanics and implementation of a welfare system in Britain. Wootton saw the welfare state not simply as social and biological necessity for the people in the sense of providing minimum living standards (Wootton 1940b), but also as an opportunity to reconsider economic theorising and the policies that emerge from such, particularly those that go against the common good. Specifically, when discussing the dangers of dualisms in politics (Capitalism vs. Socialism), Wootton clearly stated how this actually distracts individuals from real discussions, namely, how to ensure collective wellbeing, human freedoms and minimum provisions (Wootton 1942).…”

“…She criticised the reluctance of British policymakers to implement a more generous allowance (benefits) system financed by taxation: "why not make up our minds that we will guarantee a physically necessary minimum to everybody and put a limit to our inequalities?" (Wootton 1940b).…”

“…She sees in Keynes's "heterodox" approach at the time (Wootton 1963, 182) an opportunity for change; more specifically, his theories of investment and employment, as well as his active support for the affordability of a more generous welfare system (Wootton 1940b(Wootton , 1943b(Wootton , 1946c. In the aftermath of the Second World War, Wootton (1943b) sees Keynes's "spend-for-employment policy" and his acceptance of unbalanced budgets as key elements to show the necessity of planning that followed postwar reconstruction.…”

Keynes, inflation and the public debt: How to Pay for the War as a policy prescription for financial repression?

“…When Keynes presented his plan to union members, he received sceptical reactions; they suggested ‘that the value of the deferred pay was likely to be eradicated by future inflation’ (Toye 1999, p. 17). Barbara Wootton, a lecturer in Economics at Cambridge and Research Officer of the Trade Union Congress, praised Keynes's proposal for a capital levy in a lengthy review, arguing that this might ‘diminish the very real danger that if our deferred pay ever is paid up, this will be done by inflation’ (Wootton 1940, p. 149).…”