Beatrice Webb

● Social democrats therefore argued that capitalism should be reformed and not replaced, which was a significant break with democratic socialism, which envisaged a fully socialist state.

● Social democracy attempted to utilise the wealth created by the free market by using state intervention to ensure that the proceeds were more fairly distributed across society. This would be done by:

supporting a mixed economy of both nationalised state industry and privately owned companies, which Attlee’s Labour governments delivered between 1945 and 1951 economic state intervention, via Keynesian regulation of the economy, to ensure permanent full employment and growth the welfare state, used to redistribute wealth and challenge poverty and social inequality.

● Following these reforms, Anthony Crosland argued that capitalism was no longer a system of oppression and that social justice was more important than common ownership.

● Crosland argued that social democracy must manage and maintain economic growth to pay for welfare spending, balancing economic efficiency and egalitarianism. 

● Webb argued that the working class would vote for socialist parties, which would begin to instigate social, economic and political reform, resulting in a socialist society.

● The expansion of the state was vital to deliver socialism as it would ‘silently change its character…from police power to housekeeping on a national scale’. The state would develop a highly trained elite of administrators and specialists to organise the socialist society.

● Equality of ownership, described in Clause 4 of the Labour Party constitution, would equate to extensive state nationalisation and not the workers taking direct control.

● Equality of ownership would involve high taxation of the wealthy so that the state could redistribute resources to the less well-off via an extensive welfare state.

The cooperative Movement

Webb  made several important contributions to the political and economic theory of the Co-operative movement. It was, for example, Webb who coined the terms Co-operative Federalism and Co-operative Individualism in her 1891 book "Cooperative Movement in Great Britain." Out of these two categories, Webb identified herself as a Co-operative Federalist; a school of thought which advocates Consumer Co-operative societies.  

Cooperative federalism is the school of thought favouring consumers' cooperative societies. The cooperative federalists have argued that consumers' cooperatives should form cooperative wholesale societies (by forming cooperatives in which all members are cooperatives, the best historical example being the English CWS) and that these federal cooperatives should undertake purchasing farms or factories. They argued that profits (or surpluses) from these CWSes should be paid as dividends to the member cooperatives, rather than to their workers Cooperative federalists (whom Webb supported) argued that

Consumers should establish cooperatives where all members are cooperators. These cooperative wholesale societies should acquire farms or factories for purchasing. Profits or surpluses generated by these societies should be distributed as dividends to the member cooperators, not to the workers. This method, known as 'cooperative individualism,' implies that workers, not consumers, create the cooperative and have more influence on its management.

A major historical debate in co-operative economics has been between co-operative federalism and co-operative individualism. In a commune, the residents would be both the producers and consumers of its products. However, for a co-operative, the producers and consumers of its products become two different groups of people, and thus, there are two different sets of people who could be defined as its 'users'. As a result there are two different modes of co-operative organisation: consumers' cooperative, in which the consumers of a co-operative's goods and services are defined as its users (including food co-operatives, credit unions, etc.), producer co-operatives, in which the producers of a co-operatives goods and services are defined as its users. (Some consider worker co-operatives, which are owned and run exclusively by their worker owners as a third class, others view this as part of the producer category.) .

This in turn led to a debate between those who support Consumers' Co-operatives (known as the Co-operative Federalists) and those who favor Producers Co-operatives (pejoratively labelled ‘Individualist' co-operativists by the Federalists.