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The Liberal Party and the Economy, 1929-1964


Peter Sloman


Oxford Historical Monographs

Oxford: University Press, 2015

Hardcover. ix+281 p. ISBN 978-0198723509. £65.00


Reviewed by Ian Packer

University of Lincoln


Much that has been written about the British Liberal Party in the twentieth century has focused on the question of why the party went into precipitate decline after 1914; after all, it is the only example in the last two hundred years of one of the main parties in Britain’s binary political system losing its dominant role. However, as this interesting study of the party’s economic policy between 1929 and 1964 points out, the Liberals’ resilience, and then their revival from the late 1950s, is just as intriguing as their fall in the early twentieth century. The Liberal Party has refused to disappear, despite many crises and false dawns, and near-extinction in the early 1950s. Peter Sloman’s book makes a welcome contribution to understanding how the party survived and then started to grow again, as well as providing some fascinating glimpses of the inter-relationship between political parties and economists and economic journalists in the mid-twentieth century.

Sloman insists on the need to look beyond simplistic ideas that the Liberals were continually torn between a devotion to laissez-faire ideas and more activist approaches to the economy, and aims to uncover what the party’s policies actually were and how they were debated and arrived at by the party’s leaders. As a result, the book examines Liberal policy-making in the economic sphere in exhaustive detail, making excellent use of private papers, party publications and newspapers. The story that emerges is intriguing – and one that is unlikely to need a further sustained treatment, as Sloman’s analysis provides a much richer and more nuanced account than has hitherto been available.

Essentially, the Liberals’ economic policies followed a series of waves. Under the pressure of the Great Depression, they retreated from Lloyd George’s great scheme to ‘Conquer Unemployment’ that he had outlined in the 1929 General Election; and by 1931 they were concentrating on the need to cut government expenditure, save the gold standard and protect Free Trade. These events set the tone of the party’s approach down to 1939 – Liberals remained cautious about planning (which they saw as Protectionist) and intent on defending free markets and low prices. It was the Second World War (and Beveridge’s commitment to the party) that reversed these trends and swung the Liberals behind Keynesian demand management, planning and even some nationalisation, notably of the railways. After 1945 this enthusiasm for the State’s role in the economy evaporated in the face of continuing wartime controls and the scale of the post-war Labour government’s programme. The party settled on a cautiously Keynesian approach that combined Free Trade with opposition to monopolies and government regulation (including, for example, rent controls).

In the 1955 and 1959 general elections the Liberals criticised the Conservative government for failing to tackle inflation; but by 1960, under their dynamic leader, Jo Grimond, the party moved away from these more traditional approaches to emphasise the need to use indicative planning (especially in regional policy) to promote economic growth and began to make demands for new public investment in the infrastructure, education and housing. This placed the party (rhetorically anyway) fairly close to Labour under Harold Wilson. Sloman emphasises the crucial importance of these developments in the early-mid 1960s in moving the Liberals away from economic positions that were close to Conservatism and setting the Liberals on their subsequent trajectory as a progressive, centrist party. This story is lucidly explained and Sloman also gives due weight to a number of internal party debates, outlining the Liberals’ interest, from the 1930s onwards, in policies to spread property ownership; and the ultimately unsuccessful campaign in the 1940s and 1950s by groups of economic libertarians to align the Liberal Party with their beliefs.

Sloman readily admits that the context for these general shifts in policy was shaped by wider developments that Liberals could not control. But the party retained the agency to shape its response in a wide variety of ways, as the fluctuations in its policies in 1929-1964 indicate. Indeed, perhaps the only economic policy that was central to the party’s identity, and was non-negotiable, was Free Trade. Almost everything else could be jettisoned or re-worked, as the party found its pre-1914 ideas and language taken over by other parties and its declining support left it to increasingly float free from specific economic interest groups. This gave the party’s leaders enormous leeway and it is conceivable that if, for instance, Grimond had decided to embrace a libertarian economic position (an approach that was not far removed from many of his private instincts) then the Liberal Party might today be much more like the German Free Democratic Party than its current progressive incarnation.

This book contributes new perspectives to understanding how and why Grimond rejected this option and instead embraced the concept which has continued to intrigue his successors: a ‘re-alignment of the left’, which would either replace Labour, or ally with elements in the Labour Party. This is probably the book’s most innovative section. But Sloman also admits some of the limitations of concentrating just on economic policy to explain the Liberals’ identity and the party’s fortunes – the economy was only ever part of the picture. The party’s position was defined in the late 1950s and early 1960s as much by its attitude to foreign and imperial policy and a vague embrace of ‘modernity’ (and contemporary political campaigning) as by economics. Similarly, Liberal identity was shaped by other, non-economic, policies throughout 1929-1964. In the 1930s, for instance, its support for the means test for claimants of unemployment benefits cut it off from most working-class support and any claim to be ‘left-wing’. Finally, this book necessarily concentrates on national politics rather than voting behaviour. But the Liberal revival in the 1950s began in local government before Grimond re-orientated the party’s national policies; and it depended for most of its later parliamentary successes on a strengthening of the Liberals’ traditional appeal in rural Scotland, Wales and the West Country. Why the Liberals became more successful in the later 1950s was a complex matter, in which national political programmes were only one element.


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