The Lost Victory: British Dreams, British Realities, 1945-50 
by Correlli Barnett.
Macmillan, 514 pp., £20, July 1995, 0 333 48045 7
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The historiography of modern Britain is dominated by one issue – ‘decline’. The usual starting-point for discussion is the fact that Britain’s share of the world’s manufactured exports has fallen from about 25 per cent before the Great War to around 8 per cent today, although much of this has nothing at all to do with Britain. At their most extreme ‘declinists’ argue that Britain has been a second or third-rate nation since the 1870s. They maintain that this could have been prevented and indeed that it is not too late now to effect a change in Britain’s position. ‘Declinism’ is in many ways the last refuge of Great Power delusions.

In fact, declinism has been an element in political discussion since the late 19th century, but it moved centre-stage in the late Fifties and early Sixties, when C.P. Snow’s Two Cultures and Arthur Koestler’s collection of essays, Suicide of a Nation?, inaugurated a spate of books. (Snow’s essay has remained in print, and the Koestler collection has recently been reissued.) In the Eighties there were several studies of decline, of which the most notable was Martin Wiener’s English Culture and the Decline of the Industrial Spirit, which traced Britain’s economic malaise back to the 19th century. The authors of these books found in the national past not the origins of success, but the sources of failure. Where an older, Whiggish historiography celebrated the rise of the welfare state, the moderation shown by trade unions and the mysterious but efficient workings of the Constitution, declinist historiography highlights only the bad side of these supposed assets: public schools, once the glory of Britain, are now its undoing; the celebrated practical skills of British engineers are seen as a dangerous aversion to theoretical knowledge; the fair-mindedness of the British state becomes the featherbedding of archaic institutions, empire the symbol of a pathetic nostalgia; the love of gardens and the countryside becomes a condemnation of industrial values. Whiggish theses have been inverted into declinist antitheses – two sides of a much debased coin.

The most influential exponent of the new declinism is Correlli Barnett. The Audit of War (1986), a sequel to The Collapse of British Power (1972), argued that British industry during the Second World War was scandalously inefficient, a situation Barnett blamed on an establishment more concerned with welfare than with industry, technology or the capacity of the nation to fight a war. The book had an extraordinary impact. Alan Clark records approvingly that Mrs Thatcher herself read it, and many of her ministers made public reference to it – which is surprising since Barnett is not a Thatcherite historian, but an economic nationalist. He believes that Britain’s problem was that the élite did not understand that it was in deadly competition with other nation-states. This competition was essentially industrial and technological, but also military. To be truly competitive Britain needed not only strong industry and technology but also a commitment to fight where it mattered – on land, against European powers. Instead, Barnett argues, it deluded itself into relying on the Navy and Air Force while continuing, wastefully, to support a far-flung empire.

The Audit of War became notorious in academic circles for its argument that the post-1945 Labour Government spent too much on welfare. In fact, however, it was a travesty of the history of the welfare state, as Jose Harris, the historian and biographer of Beveridge, pointed out: even in the early Fifties our European competitors were spending about the same on welfare as Britain, or more. It was a travesty also as a history of Britain’s élite, technical education and industrial development. Even as military history, Barnett’s account is open to challenge – not that he has ever shown any interest in what his academic critics say. He prefers to be read in boardrooms and in government rather than university libraries. The fact that he was wrong about so much has not stopped the Economic and Social Research Council from commissioning a sequel to The Audit of War, covering the years 1945-50. The ESRC, as the country’s main funder of social science research, doubtless sees this as an example of its new policy of supporting research of practical relevance to ‘wealth creation’ and ‘innovation’. Barnett himself describes his new book as ‘an operational study – its purpose to illuminate Britain’s present and future by the light of her history’.

The Lost Victory is based almost entirely on research in the files of the Labour Cabinet and cabinet committees. It is written as if Barnett were the first person ever to have noticed the British decline, and the first to expose its causes. It is powerfully polemical, tough-minded and categorical in its judgments. For example, James Griffiths and Aneurin Bevan’s commitment to building a welfare state is reduced to the fact that they were ‘both of them products, although individually very different, of Victorian romantic idealism as transmitted down the generations by the Nonconformist chapel; both of them Welsh, a race itself notoriously romantic, not to say emotional; both of them born into a miner’s family’. Such judgments – if they can be called that – permeate the whole book.

The Labour Cabinet, Barnett argues, was a microcosm of the old élite and infused with the ‘romantic idealism’ of public schools and the ancient (English) universities. These men, he alleges, wanted to create a ‘New Jerusalem’, to be nice to the workers and to retain a faded empire. They were both welfarist and imperialist beyond the means of the economy they controlled, which they were incapable of modernising because they were ignorant of science, technology and industry. Barnett notes that, except for trade unionists, only one member of the Labour Cabinet of 1945 had had any experience of industry – the Chancellor Stafford Cripps (during the Great War). Cripps is described as the Cabinet’s ‘single technocrat’; Barnett does not tell us that Cripps had a chemistry degree, implying that, like the others, he had ‘never studied anything so rudely vocational as, say, engineering’. Nor are we told that Dalton was an economist. This Cabinet of ‘mentally unprepared amateurs’ didn’t even have a staff of technocrats to back them up, as their civil servants came from the same backgrounds as themselves.

This now hackneyed picture of the élite is an essential element in Barnett’s explanation of what he sees as the failure of the Labour Government to use the breathing space it had from European competition to rebuild Britain’s industrial base. It did not invest enough in industry and it wasted Marshall Aid. He cannot, however, make up his mind about the state of British industry in 1945, confusing the country’s precarious financial position with its productive capacity – a conflation he accuses the Labour Government of. Total investment, he claims, was (slightly) lower in 1948 than in 1938 as a percentage of GNP (not slightly higher, as has been previously argued), but whether industrial investment was lower is not at all clear. Furthermore, Barnett’s own figures show that absolute levels of investment after the war were about the same in Britain, Germany and France, although because the latter countries were poorer, investment represented as a proportion of GDP was higher. In short, Barnett doesn’t provide the comparative economic data to make his case; there isn’t a single table in the book.

While blaming this supposed lack of investment on the ‘New Jerusalem’, he makes the elementary mistake of confusing the shift from private to public provision with a drain on the productive economy in estimating the impact of the welfare state, arguing that 11 per cent of GDP was taken up by welfare in 1948-9, over and above the level of welfare spending in the Thirties. To get this figure he adds together the new post-war health and social security spending and the money spent on house-building and food subsidies. Yet most of this expenditure simply redistributed such resources within the economy. Food subsidies, for example, did not lead to overconsumption of food (not least because of rationing). Other figures, not quoted by Barnett, suggest that on a broader measure of government spending on social services (excluding food subsidies), the relevant proportion of GDP grew from 10 per cent before the war to around 16 per cent in the late Forties. Another estimate, again not taken into account, is that spending on health, education, housing, pensions and benefits increased from £1.5bn pre-war to £1,5bn in 1950, in constant prices, with most of that increase arising from transfers.

Barnett is also grossly misleading about the costs of the National Health Service. His argument is that Bevan didn’t calculate the likely costs of free health care: his estimate of around £l00m per annum turned into actual expenditure of around £400m per annum. What is astonishing, however, is not this rise in expenditure, but the fact that Bevan’s £l00m would have paid for only about one-third of pre-war health spending. In the mid-Thirties total public and private health spending amounted to some £160m (about 3 percent of GNP), which in post-war prices was around £300m. An increase in health expenditure of around 25 per cent over a decade is hardly huge. Both the Right and the Left, each for their own purposes, have grossly exaggerated the rise in welfare spending under the 1945 Government and this has had a disproportionate influence on historians.

Barnett is on stronger ground when he deals with housing investment. Although this was considerably lower than it had been before the war (as he fails to tell us), it was much higher than elsewhere in Europe, or this at least is what currently available figures suggest. For Barnett Labour’s housing programme took investment away from industry, but the main restraint on investment and production at the time was the (lack of) availability of steel, which was not used in housing. Similar arguments apply to other sorts of consumption: food imports, for example, could have been cut in order to give British workers the same calorific intake as German ones, and the dollars so saved used to reduce exports, allowing more for investment. That would perhaps be too crude an answer even for Barnett though he does wish that there had been fewer jobs available for British workers. He doesn’t like full employment because of its inflationary effects, and the strength it gives to the trade unions. He much prefers the way things were in post-war Germany, where unions, and the old élite, had been smashed and where the economy benefited from the legacy of what he calls ‘Nazi egalitarianism’.

On the imperialism of the élite Barnett echoes what has become the Left’s own account of British decline. Noting that military expenditure after the war was much higher than it had been before, he suggests that Britain could easily have spent only 3 per cent of GDP on defence (which is what it spent in the Twenties and early Thirties and what he feels was necessary for post-war defence purposes in Europe): instead it spent about 7.7 per cent. What he fails to notice is that while total welfare spending rose some 50 per cent compared with the mid-Thirties, defence expenditure doubled. Perhaps he is reluctant to take this into account because of the damage it would do to his case, since he might then have to conclude that after 1945 the British élite became more militaristic, more tough-minded and, relatively speaking, less concerned with welfare.

The increase in defence spending is attributable in Barnett’s view to a desire to hold onto Empire. The Chiefs of Staff, Ernest Bevin and a ‘world-power lobby’ are castigated on this score but we aren’t told what this mysterious lobby was – although we can infer that it consisted of the same sort of people who were also arguing for welfare spending. This is dubious, not least because, as Barnett himself observes, Keynes, Attlee, Morrison and Dalton all argued for large cuts in the defence budgets. But the imperial hangover thesis is itself misleading since it can’t explain why defence expenditure was so much higher than it had normally been in peacetime. There is a more obvious explanation for this: the Cold War, in which the British Establishment was deeply implicated. The general re-armament of the Fifties, which decisively increased post-war defence expenditure, was not driven by ‘imperialism’.

Britain had been converted into a highly protected war economy, with massive state-directed investment in armaments production. After the war, the economy remained highly controlled and protected, though increasingly directed to civilian ends. Subsidies for industrial development were much higher than before the war and the instruments of industrial policy much more powerful. The results were impressive. Even in the mid-Fifties Britain was richer than France or Germany. In 1950 it had 25 per cent of the world export market in manufactures, and the proportion of its workforce in manufacturing was the highest of all the industrial nations. One would hardly guess this from Barnett’s account. Nor would one guess that Britain was without any doubt Europe’s leading centre of scientific and technological innovation, or that exports were much more high-tech than they had been before 1939.

Barnett gives us no sense of Britain’s Research and Development effort after the war, except where defence is concerned. He remarks that the Board of Trade ‘put in a modest bid of £1m for industrial research in 1949’, but doesn’t tell us that this covered only a fraction of civilian R&D spending; nor does he record industry’s own research spending, which was probably around £15m. He grudgingly recognises that in the fields of defence and nuclear power the state did intervene; elsewhere, he says, ‘no state-sponsored programmes were contemplated to develop new ... 20th-century technologies such as electronics and office systems’. This is simply not true. Computer development was funded by the Ministry of Supply and behind tariff and other import barriers massive investments were made in new industries: there were new oil refineries, chemical plants, factories making watches and clocks, cameras, and much else besides. Barnett is forced to acknowledge in a fine chapter on civil aircraft policy that the Government’s ‘Fly British’ campaign involved spending vast sums on the aircraft industry. But in this case the very technological investment that he wishes had been more widespread produced inadequate aircraft, which he describes as ‘turkeys’.

In important respects Barnett’s ideal Britain was Attlee’s actual Britain, one committed to industrial development and to science and technology. The files of ministers and civil servants that Barnett relies on themselves indicate the level of government concern. It is central to his case, however, that the authors and readers of these papers were ‘mentally unprepared amateurs’. Only those with degrees in science or engineering, and with experience of industrial management, he implies, could understand industry. The Labour Cabinet and the senior civil service are condemned for having had a liberal arts education at public school and Oxbridge, and for their ‘profoundly literary’ culture – Barnett’s own technological qualification appears to be the time he spent as a graduate trainee with North Thames Gas.

The Lost Victory is itself a classic amateur’s account when it comes to dealing with industry, science and technology. It is studded with references to the archives, but a great deal is left out and a great deal of ex-cathedra comment put in. Where, one might ask, are the people who at the time were demanding a tougher industrial policy? Where are the disagreements about what policies to pursue? What were the industrialists, the scientists, the Conservative Party thinking?

The essence of Barnett’s message to the élite remains: get real, get tough. Things have changed, however: in today’s politics everyone wants to play hardball and kick ass and for that Barnett must take some of the credit. His technocratic version of declinism has been influential, even if the economic and industrial policies it implied were decisively rejected in the Eighties and early Nineties. Indeed, it is striking that a book which explicitly sets out to help us deal with the present has no sense of the profound changes that have taken place, and this is, in part, because Barnett’s account of the past is fatally flawed. Like many others, he cannot believe that the post-war years were in fact a time when nationalistic-technocratic assumptions held sway, even – perhaps especially – in Britain.

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Vol. 18 No. 6 · 21 March 1996

In his review of my book The Lost Victory (LRB, 7 March), David Edgerton writes that I don’t ‘like’ full employment ‘because of its inflationary effect, and the strength it gives to the trade unions’. Yet my chapter on full employment cites as a key text an analysis by Hugh Gaitskell as Chancellor of the Exchequer in December 1950 in which he specifically makes these two points. It is therefore absurd and irrelevant for Edgerton to accuse me of not ‘liking’ full employment.

This is only one example of David Edgerton’s wholesale misrepresentation – misunderstanding perhaps – of my book. He acknowledges that it is based ‘almost entirely on research in the files of the Labour Cabinet and cabinet committees’ and yet fails to acknowledge that my judgments are tightly anchored to the content of these files. For instance, if, as he contends, the new welfare state (including the National Health Service) did not constitute a grievous burden on the Exchequer, why do we find a Labour Chancellor striving to cap expenditure on it?

He cites Jose Harris’s comment that in 1950 other European countries (specifically, though Edgerton does not say so, Germany, Austria and Belgium) were spending a higher proportion of GNP on welfare than Britain. But Dr Harris took no note of the fact that Britain was also spending some 7 per cent of GNP on defence (rising to more than 12 per cent after the outbreak of the Korean War), and therefore carrying a double burden, whereas neither Germany nor Austria were spending a penny on defence. Moreover, Germany’s major postwar reform of welfare schemes inherited from Bismarck and the Weimar Republic dates from 1957, when her ‘economic miracle’ was complete. Which other country chose, like Britain, to award itself a new welfare state at a time of national bankruptcy and when living off foreign tick?

Dr Edgerton reckons that I should have emphasised that, in comparison with the prewar era, British expenditure on defence rose far more than on welfare in 1945-50. But this is doubly irrelevant. In the first place, I argue that postwar defence expenditure up to June 1950 would have been limited to about 3.5 per cent of GNP (more or less the figure for the mid-Thirties) if Britain had restricted itself to the essential defence of Western Europe against the threat of direct Soviet attack. As it was, something like half the defence budget in 1945-50 related to Britain’s nostalgic attempt to go on playing the world and Commonwealth power, with expensive armed forces spread all the way through the Middle East and Far East. Second, it does not matter whether or not expenditure on defence rose more than on welfare in relation to before the war. What matters is that the combined demands of the ‘world-power’ role and ‘New Jerusalem’ squeezed back much-needed investment in modernising Britain’s industries and infrastructure, and indeed determined British use (or waste) of Marshall Aid. If this is not the case, why do the files of the Cabinet Economic Policy, Production and Investment Programmes committees record a continuing agonised debate about competing pressures on national resources, and, year by year, a consequent strict rationing of investment in industry (especially nationalised industry) and infrastructure?

In the light of the evidence in the Whitehall files, I find completely incredible, and indeed perverse, Edgerton’s contention that ‘the instruments of industrial policy [were] much more powerful’ than before the war, and that ‘the results were impressive’. What the records cited in my book reveal is that in 1946-50 the Labour Government’s attempts to improve productive efficiency were feeble both in concept and effect; and that meanwhile Britain was for the most part shovelling out ill-designed, ill-made, unsuitable, often old-fashioned and certainly over-priced goods to markets that had never been properly researched, with the result that just as soon as our European rivals began to pick themselves up again (i.e. as soon as Britain lost her monopoly position), the foreign buyer began to switch his custom.

When Edgerton chides me for failing to provide equally detailed data about German or French investment as about British, I would remind him that a book is like a battle: it must be delivered at a required date with the material then available. Since 1983 I have researched, written and published three major books, all largely based on primary sources, and all generally well-received. By contrast, Edgerton has written a single book, Britain and the Aeroplane, apparently NOT based on the Whitehall records, plus a few articles in the academic trade press. I therefore do not regard him as qualified to indict me for failing to write a comparative history of European industrial, defence and foreign policies in the immediate postwar era.

Am I mistaken in detecting a hint of professional resentment in Edgerton’s comment that ‘the fact that [I] was wrong about so much’ in The Audit of War ‘has not stopped the Economic and Social Research Council from commissioning a sequel’, as also in his further comment that I have never shown ‘any interest in what [my] academic critics say’? As he must know, the ESRC only awards a research contract after the most rigorous ‘peer-group’ scrutiny of the tender.

Dr Edgerton knows that what the ESRC usually gets from historians for its money is a ‘report’, or shelf-fodder, of 5000 words, and possibly an article or two in The Historiographers’ Intelligencer and Foot-Noters’ Gazette or similar trade journals. If a book does emerge, it will be from a publisher’s ‘academic’ list, which means a print order of probably less than a thousand copies, some of which will probably be later remaindered. By contrast, my own tender for an ESRC contract to carry out research for The Lost Victory made clear my intention that the book should be widely read in Whitehall, Westminster and industry, and therefore have an impact in the real world. This undertaking has been successfully fulfilled in the event.

Correlli Barnett
Churchill College, Cambridge

Vol. 18 No. 7 · 4 April 1996

Correlli Barnett and I disagree on the ‘British Decline’ (Letters, 21 March), as was evident from my review of The Lost Victory in the previous issue. Barnett seems to think that disagreement with him amounts to ‘wholesale misrepresentation’, or at best to a ‘misunderstanding’. It is clear that one cannot argue with him, and I don’t propose to. Most of his points were met in my review. The remaining self-contradictions and misleading implications arise from the core problem I identified: for all his supposed anchorage in the archives, Barnett implicitly denies that into the Fifties and beyond, Britain was richer than Germany and other major Continental nations, innovated more, spent less on welfare, and exported more manufactures. Only in one sense does his letter add something to my review. It gives, in a way no commentary adequately could, the measure of the historian and his methods, personal abuse included.

David Edgerton
Imperial College

Vol. 18 No. 8 · 18 April 1996

Correlli Barnett is eager to reassure David Edgerton that The Lost Victory is ‘tightly anchored’ to the records of cabinet committees (Letters, 21 March). Nonetheless, Barnett’s prescriptive approach is disturbing. As Edgerton noted, Barnett’s express purpose in writing the book was ‘to illuminate Britain’s present and future’; Barnett himself makes clear his ambition ‘to have an impact on the real world’. While it would, of course, be naive to assume that historical writing could ever be free from present concerns, I fail to see how an explicitly presentist (and judgmental) attitude could produce an explanation of events fully sensitive to the aspirations of, and constraints operating on, historical actors (for example, those responsible for establishing the welfare state after the Second World War). Why doesn’t Barnett write a book telling us directly what future policies in Britain should be? He could then be even more appreciatively read ‘in Whitehall, Westminster and industry’.

Philip Smout
London SW1

Vol. 18 No. 9 · 9 May 1996

The key to David Edgerton’s method of critical attack lies in his use of the weasel word ‘implicitly’ (Letters, 4 April). For, as he well knows, The Lost Victory neither specifically nor generally contends that in the late Forties Britain was poorer than Germany and other major Continental nations, innovated less, spent more on welfare, or exported fewer manufactures. And since the narrative of The Lost Victory ends in June 1950, it certainly makes no such contentions in regard to ‘the Fifties and beyond’. Hence his cunning employment of ‘implicitly’ in order to accuse me of believing absurdities which I do not believe. What The Lost Victory does argue is that in 1945-50 Britain muffed a unique opportunity to modernise herself as an industrial economy (thanks to American dollars) while her trade rivals were still on their backs or convalescent; and muffed it for reasons evident from the contemporary Whitehall records.

Correlli Barnett
Churchill College, Cambridge

Vol. 18 No. 10 · 23 May 1996

I am delighted to find Correlli Barnett stating in print (Letters, 9 May) that it is an ‘absurdity’ to believe that in ‘the late Forties Britain was poorer than Germany and other major Continental nations, innovated less, spent more on welfare, or exported fewer manufactures.’ Nor does he deny that such a claim would be equally absurd for the Fifties. He suggests that it was merely my ‘cunning’ use of the ‘weasel word “implicitly" ’ which would make anyone think he believed in any such thing. There was nothing weasely about my argument. These absurdities (and others) are implicit – in the strong and obvious sense – in his book; without them it collapses. Since Barnett does not think so, perhaps he would be so kind as to add the relevant comparative data, or even make his position clear, in future printings of The Lost Victory. It would then be, if not the first, then one of the most spectacular self-deconstructing books in history.

David Edgerton
Imperial College

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