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Britain is in danger of repeating its post-war mistakes

What we can learn from Britain’s rationing mistakes

17 April 2021

9:00 AM

17 April 2021

9:00 AM

In search of wisdom about how an officious government reluctantly relaxes its grip after an emergency, I stumbled on a 1948 newsreel clip of Harold Wilson when he was president of the Board of Trade. It’s a glimpse of long-forgotten and brain-boggling complexity in the rationing system. ‘We have taken some clothing off the ration altogether,’ he boasts, posing as a munificent liberator. ‘From shoes to bathing costumes, and from oilskins to body belts and children’s raincoats. Then we’ve reduced the points on such things as women’s coats and woollen garments generally and… on men’s suits.’

Does this remind you of anything? One day in November, George Eustice, the environment secretary, uttered the immortal words that a Scotch egg ‘probably would count as a substantial meal if there were table service’, only for Michael Gove to say the next day that ‘a couple of Scotch eggs is a starter, as far as I’m concerned’, later correcting himself to concede that ‘a Scotch egg is a substantial meal’. This is the sort of tangled descent into detail that central planning always causes. We have seen it again and again over the past year. What is essential travel? Is a picnic exercise? Can you go inside a pub to get to its outside space? Ask the man from the ministry.

Three years after the second world war ended, the government was still micromanaging the decisions of consumers. Incredibly, it was nine years of peace before rationing ceased altogether. Bread was rationed for the first time in 1946, potatoes in 1947. Only then did the slow liberalisation of shopping begin. Flour was derationed in 1948, clothes in 1949, petrol, soap, dried fruit, chocolate biscuits, treacle, syrup, jellies and mincemeat in 1950, tea in 1952, sweets in 1953, cheese and meat in 1954. The black market thrived.

The reluctant withdrawal of the state from rationing (and the even longer persistence of price controls, wage controls, exchange controls and central planning generally) infuriated at least some of the British people, though much of the anger was, as now, directed at cheating rather than the rules. The Ealing comedies of the time are suffused with dreams of liberation and rebellion against the tyrannical inspectors that plagued people’s lives. In Passport to Pimlico (1949), a self-governing micro-state abolishes rationing and a pub crowd tear up their ration books in the face of a furious policeman.

Conventional wisdom has it that Britain’s slow return to normality was inevitable, given the country’s need to earn foreign exchange to pay for imports. But across the North Sea a very different experiment was tried. Ludwig Erhard was the effective finance minister of West Germany under allied military control. A keen follower of Friedrich Hayek, he believed that central planning was a disaster (‘the more the state plans, the more difficult planning becomes for the individual’) and that rationing was the cause, not the effect, of shortages. Erhard announced, a month after Wilson’s complicated speech, that he was abolishing almost all rationing and price and wage controls with immediate effect. He introduced a new currency the same day. He told Germans: ‘Now your only ration coupon is the mark.’


Erhard chose a Sunday, 20 June, to make his announcement, knowing his military masters would be off duty. The British, Americans and French were aghast. One US colonel complained that he had no right to alter a system of price controls imposed by the allies. ‘I have not relaxed rationing; I have abolished it!’ came the reply. General Lucius Clay, the US commander, telephoned him to say: ‘Herr Erhard, my advisers tell me you’re making a terrible mistake.’ Erhard: ‘My advisers tell me the same thing.’

The result was felt immediately. The next day the shops were brimming with food and clothing, as retailers realised there would be ample demand and that money was now worth earning. Economic output began to shoot up, absenteeism to plummet and shortages soon vanished. The German economic miracle was born. Only, Erhard insisted it was no miracle. ‘What has taken place in Germany,’ he later wrote, ‘is anything but a miracle. It is the result of the honest efforts of a whole people who, in keeping with the principles of liberty, were given the opportunity of using personal initiative and human energy.’

Meanwhile across the North Sea, under Butskellite planning, Britain ignored the lesson. ‘A British government spokesman said that there was no prospect of ending rationing in Britain for some years,’ read a newspaper report reacting to the German decision. As Britain fretted under miserable controls, its economic performance fell ever further behind, its complacent masters refusing to acknowledge the obvious lesson from Germany: that freedom works.

We are doing the same again now, as one of the most socially restricted major countries in Europe but the one with the lowest death rate. We risk allowing officials to cling on to their beloved levers of control too long, and to squander the advantage won by our vaccine taskforce. If a new variant of the virus threatens a third wave, permanent lockdown is very unlikely to stop it anyway. And if the new variant is vaccine-resistant, then vaccine passports will be useless.

When things are controlled by bureaucrats, it takes a real effort of imagination to envisage them not being so. We assume that in the absence of direction, chaos must ensue, forgetting the lessons of economics. ‘How does Paris get fed?’ asked Frédéric Bastiat in 1845, and answered: not through the efforts of brilliant and omniscient food commissioners — that way lies inevitable disaster — but through a market that blindly matches demand with supply and thereby summons up the collective genius of millions of ordinary people.

With few exceptions, the tribe of academic scientists and hospital doctors which now controls our government has literally never heard such arguments. Their worldview is a top-down one: they assume things happen because somebody ordains that things happen. Spontaneous order is a foreign concept to them. This is surprising, given that it is the essence of evolution, but when it comes to society they are in thrall to intelligent-design theories. They are political creationists.

So of course the scientists will hesitate to recommend liberation. The politicians must bear this in mind. Erhard’s motto, said one later economist, could have been ‘Don’t just sit there, undo something’. This year, by happy coincidence, 20 June is also a Sunday and is the day before the date on which we were promised the abolition of all restrictions — before the backtracking began.

Erhard’s lesson is that the best way to bring in reforms is fast. The best way to get rid of rules is all at once. The best time to liberalise an economy is far sooner than the experts think you should. Who will make a new version of Passport to Pimlico, with a gleeful crowd in a pub tearing up vaccine passports in the face of a bossy policeman?

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