Politics at the Turn of the Century

The increasing influence of organised labour within the changing economy also gave rise to a powerful new political force amid concerns that

The Nineteenth Century 25 the working class was not represented in Parliament. As it became apparent that this representation could not be fulfilled by the Liberals, the Independent Labour Party (ILP) was formed in 1893, resisting formally labelling itself as socialist, though it was heavily shaped by socialist intellectuals. This was followed by the Labour Representation Committee (LRC) in 1900, an organisation established to sponsor and support left wing, trade union and other working class political candidates. It was the LRC that then became the Labour Party in 1906, with the ILP affiliated to it and formed of those Members of Parliament within the earlier groups. As we will see in the next chapter, the Labour Party would quickly grow in support and influence, especially with universal male suffrage in 1918.

The beginning of the twentieth century also saw several political debates of relevance to small businesses, though often focused on particular sectors or in relation to specific issues rather than a wider concern with ‘small business’ or ‘enterprise’ as a political constituency or agenda. Debate continued between the free trade Liberals and the increasingly protectionist Conservatives, for example in relation to how to respond to international market forces in what was a highly globalised world of the early twentieth century. For example, debates around tariff reform that would potentially protect struggling small businesses. From 1905-1908 there were several minor acts to encourage smallholdings and, perhaps more significantly in terms of the creation of a political constituency, the exclusion of the self-employed from the 1911 National Insurance Act. However, the focus of central government, and its attitude towards state intervention, would become dominated by the experiences of the First World War.

The Great War

In 1914 the First World War (1914-1918), known as the Great War (reflecting the extent to which the magnitude and horror of the conflict was assumed to be something that could not be repeated), brought social, political and economic change. In the first half of the war, with restricted supply, there were significant profits for some businesses, including the self-employed, though these were limited to an extent by taxation and price controls (Tomlinson, 1994). As the war continued, its demands also necessitated a greater degree of coordination, state ownership and modernisation of mass production and technology. The coalition government imposed controls on factories and mines, including regulating prices and profits. Government negotiated with organised labour to facilitate women entering areas of the workforce affected by labour shortages with these negotiations also producing welfare reforms. This suggests the changing nature of how the state related to industry and specifically to labour.

The war ended with victory for the UK and its allies but at a cost of millions of casualties, military and civilian, including the deaths of 723 000 British and 200 000 Empire soldiers (Rubinstein, 2003). It also left the country with substantial debt and a significant set of changes for industry and politics that will be explored in the next chapter. The war saw the weakening of the UK position in international markets. This deepened calls for protectionist measures, especially in relation to those less developed industries that had filled the gap left by German imports. For industries that had benefited from government support and contracts during the war, there was a tendency to pursue similar support through tariffs and subsidies after the country returned to peace.

Conclusion

In the nineteenth century, the UK economy had been dominated by small (and often micro) enterprises, often without government support or subsidy but nonetheless as an object of government action. Interventions often sought to protect consumers or, in response to public outcry, to provide some measure of protection for workers. While small business owners could exert significant influence at a local level, this began to lessen in the last third of the century, and increasingly the political focus of these individuals became concentrated on demanding lower business rates.

As we will see later in this book, a particular sense of the individualist entrepreneur operating in a laissez-faire, free market system would be an important mythology for future enterprise policymakers. However, it is debateable whether this mythology was ever a reality and, in the later nineteenth century, it was already being utilised as a mythical past and as a form of political discourse to frame the position of small businesses struggling to compete against their emerging larger competitors. This approach to lobbying government and calling for public support was largely unsuccessful, however, and there was little that could be considered in terms of modern enterprise policy to support or to relieve the burdens on small businesses. The growing dominance of large businesses would reshape the economy and government approaches to industrial policy. For some commentators, this meant that the period at the start of our analysis marked the beginning of the decline of the age of entrepreneurship (Bennett et al., 2020).