viewimage.php?id=2eb2c234e0d12caf61b1&no=24b0d769e1d32ca73fed81fa11d0283146878605f8ff89cb706fdb048668f60c4229fa319cb6e81252bd560fb9f4c86a8380953d132d59ddc6ac3b09571df4701fefc8b5b459845c6b511b5466ff4d0da26787e487cf091141b6e4e5e9362aee1d1ba9ba85a77789d9fd6f

Churchill understood that, “rule[ing] over free people is nobler and accompanied to a greater extent by virtue than ruling in the spirit of a master.”1 Virtue by choice is greater than virtue by force. The Labour Party, founded in 1900, wished to rule Britain in the spirit of a Master through the introduction of socialist ideals and policies. Churchill fought to preserve liberty by giving his Liberal Party a platform of social reform competing with that of the Labour Party.
He did this through social policy. His reforms aimed to enhance the system under which Britons enjoyed freedom. They aimed to promote the humanity of the individual, as well as natural market mechanisms. The reform was “patient, the progress was steady,” and developed through existing political machinery.2 The socialist system, by contrast, required people to “be dehumanized in order to make one [group] their godlike [masters].”3 The fundamental difference between Churchill’s social reform and a centrally planned, socialist regime was the treatment of labor. Churchill sought to maintain the human element of human capital.
Churchill’s social reform aimed to govern free persons more effectively. The principles behind Liberal unemployment insurance, labor exchanges, and education reforms were individual choice and natural market functions.
Unemployment insurance
Speaking on the National Insurance Act to the House of Commons in 1911, Churchill laid out the rationale of the Liberal Party’s (and his) unemployment proposals. In economic downturns, cyclical market fluctuations—such as building trades, mechanical engineering, foundries, vehicle manufacturing, and sawmills—were “subject to an almost total cessation of orders.”4 This often stopped their production cold, resulting in rapid industry-wide unemployment.
The Liberal Party believed the pinch in these industries to be so acute and widespread that privately organized wage spreading devices such as unions could not arise. Unionization faced cost efficiencies that increased with the number of people helping to “supply” this organization. This means that as more and more workers join the organization, the costs and risks become sufficiently dispersed that individual benefit can be realized. In the cyclical industries targeted Churchill, the upfront cost is so high that workers never take advantage of these increasing cost efficiencies. As a solution, Churchill proposed government subsidization of mandatory collective action which reduced the upfront costs sufficiently to spur unionization and help individuals realize the added benefit of the collective action.


This involved “[t]ripartite contribution whereby workmen, employers and the State all pay to a central fund.”5 Encouraging saving within these industries, the Liberals hoped to protect against future periods of unpredictable cyclical lows. The three-way contribution incentivized both employers and the workmen to look after the fund’s “maintenance and thrifty administration.”6
Though the contributions would necessarily be mandatory, the Act tried to preserve both individual choice and private property. An individual’s contribution was, in theory, the money that individual took out in a later time of need. In effect, the government was acting as a bank. Since each withdrawal would deplete available capital, individuals would need to exercise prudence in their withdrawals.
There are certainly familiar elements today in Churchill’s now-century-old proposal. It arose in response to an increasingly interwoven global economy. In helping laborers guard against the bad years by saving for the good, Churchill hoped, government could alleviate the “wholly disproportionate”7 misfortunes of a changing era. Because of the increased urban demographic and the ever-expanding division of labor, individuals were increasingly dependent on wages for survival. The increasing dependence on wages of the commercial British economy correlated to a shrinking margin of error for even the most industrious working-class families. Everyone was at risk. By increasing this margin of error, the Liberal Party aimed to help, “prevent disaster to [the] thrifty.”8


Churchill and the Liberal Party also moved to create a national and modern market system for labor. This social reform did not try to create new labor; instead, it organized the existing labor supply. The Labour Exchanges Act of 1909 set up labor exchanges throughout the country. They served as a solution to the problems of imperfect information and immobility within the labor market.
The targeted demographic was the relatively immobile, low skilled laborer. On their own, workers needing to provide for their families tended not to seek positions better suited to their skills. The result was an immobile labor supply. Employment was dependent upon chance—the jobs available within a community. Few Britons then had the means to travel in search of work.
Churchill and his Party believed that increasing the quality or quantity of the nation’s resources increased its production potential. A mobile labor force contributes to labor quantity by employing more of the unemployed. It also increases the workforce’s quality, helping the population find jobs to which they are most aptly suited, without forcing them to choose between occupation and family. By boosting worker mobility, the productivity of the country grows, and the well-being of the worker increases


The targeted demographic was the relatively immobile, low skilled laborer. On their own, workers needing to provide for their families tended not to seek positions better suited to their skills. The result was an immobile labor supply. Employment was dependent upon chance—the jobs available within a community. Few Britons then had the means to travel in search of work.
Churchill and his Party believed that increasing the quality or quantity of the nation’s resources increased its production potential. A mobile labor force contributes to labor quantity by employing more of the unemployed. It also increases the workforce’s quality, helping the population find jobs to which they are most aptly suited, without forcing them to choose between occupation and family. By boosting worker mobility, the productivity of the country grows, and the well-being of the worker increases



Education  
Learning sat high on Churchill’s list of social reforms throughout his career. His 1908 speech, “Social Policy,” argues for raising the skills of the labor market through state subsidized education. A more educated workforce leads to a greater “productivity and healthy energy of the British labour.”9 Nearly thirty years later he was still preaching this: “Education, state propelled, offered its ladder to ability of all kinds, from the humblest cottage, from the most gloomy slum, to climb up by merit, if merit there were, to captaincy,” 10 resulting in a greater freedom of choice as to how British people lived their lives. 
To Churchill, improving education was not needed simply to increase the productivity of human capital. Education also enabled people to “handle the scientific apparatus necessary for pre-eminence in peace or survival in war.”11
Fifty Years Hence, Churchill’s 1931 essay, extrapolated, with surprising accuracy, what future scientific advancement would bring. He foresaw exponential advancement, but, without “an equal growth of Mercy, Pity, Peace and Love.” This science “may destroy all that makes human life majestic and tolerable.” After all, he continued, “this material progress in itself so splendid, does not meet any of the real needs of the human race.”