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Subject Area: Political Theory

Bureaucracy and British Regulation - Leonard P. Liggio, Literature of Liberty, October/December 1978, vol. 1, No. 4 [1978]

Edition used:

Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.

Part of: Literature of Liberty: A Review of Contemporary Liberal Thought, 20 vols. 19781-982

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


Bureaucracy and British Regulation

Rodney Lowe

  • Heriot-Watt University, England

“The Erosion of State Intervention in Britain, 1917–1924.” The Economic History Review (May 1978): 270–286.

Why did Britain delay until the years following World War I to introduce interventionist policies on a broad front? This question is prompted by several factors: the electorate trebled in 1918; the state established a number of “interventionist” ministries during the first World War; and interventionist views flourished. For example, in 1923 the Financial Secretary to the Treasury declared that it was inhuman to let the unemployed starve and that the State would have inflation if inflation was the only way to prevent starvation. All these factors seemed to have set the stage for a high degree of interventionism during the inter-war years.

To answer why massive state intervention was laggard, we need to examine wage regulation and the role of the new interventionist ministries. During the War the Haldane Committee on the Machinery of Government had warned that the projected centralization of the civil service required that the Treasury change its attitudes about public expenditure and long-term policy. The Treasury, however, did not change its attitude and, in fact, immediately after the War, Treasury control waxed stronger. In 1919 the Permanent Secretary became head of the civil service with the right to advise the Prime Minister on the appointment of senior officials in all departments. Moreover, beginning in 1920, the Treasury acquired the right to have all proposals of increased expenditure referred to it before being submitted to the Cabinet. Since the Treasury also controlled promotions, senior civil servants were reluctant to challenge its views.

The Cabinet itself was also reluctant to oppose the Treasury. This first became apparent in 1921 at the outset of the depression when Lloyd George's cabinet panicked and lost faith in its previous policies. Some ministries did attempt to involve themselves in long-term policy after the War, but the Treasury succeeded in contracting departments “staffed by thinkers and those who apply information and statistics to problems and indicate policy.” The officials in the interventionist ministries lacked the conviction and economic sophistication to challenge the Treasury successfully and their influence declined during the inter-war years. The fact that broadly-based interventionist policies did not emerge between the wars may therefore be attributed to Treasury control, political ambivalence, and the internal weakness of the interventionist ministries.