THE CONSEQUENCES OF MR KEYNES.pdf - Institute of Economic ...

The cohesion and functioning of the British igth-century
fiscal constitution
Discussions of British constitutional history have tended to give
insufficient attention to the interaction of the foregoing fiscalconstitutional
conventions. 1 In particular, it has been insufficiently
recognised that, alone, the first six conventions
(above) were a very weak reed against the predictable tendencies
of a system of party-organised competitive (democratic)
politics towards persistent deficit finance and government
spending growth. The balanced-budget convention (rule
(7)) was absolutely crucial to the complex of fiscal conventions in
providing a constitutional check against these tendencies, and
in the task of allowing the whole system of fiscal-constitutional
rules to function together effectively.
This role needs to be seen against the background of a
changed relationship between Crown and Government in the
19th century, and the rise of political parties in the 18th and
19th centuries. Parties (in the sense of alliances of MPs aimed at
securing and retaining the spoils of office) existed in the early
18th century. These were often temporary and shifting, however,
and not politically permanent alliances organised into
strict voting blocs in the Commons. However, after being
turned out of office by the King in 1770, the Whigs began to
organise themselves into a political party in a more contemporary
form. The age of party politics had emerged—at
least in embryonic form. 2 Edmund Burke, in his Observations . . .
on the Present State ofthe Nation (1770) noted that 'party divisions
. . . are [now] inseparable from Government'. Furthermore, by
the time ofthe Reform Act of 1832, the Crown had to accept
the leadership of the majority party in the Commons as the
Government of the country.
Thus, in the 19th century, as the result of these two developments,
the Government was no longer responsible to the Crown
(except in a symbolic sense) for its conduct, but rather to the
House of Commons—theoretically, at least. As the Government
had a working majority in the House organised in a permanent
voting coahtion, it exercised control over the House, rather than
the other way about.
1 For example, Sir Ivor Jennings, op. cit., and K. Lowenstein, op. cit.
a Up to 1867 parties were still loose and shifting coalitions. Modern political
parties are a 20th-century phenomenon (the first was the Labour Party).
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