When Labour Ruled? (4) (1992)

A Short Story from the February 1992 issue of the Socialist Standard

If Labour Wins . . .

When the Labour Party won the general election of June 1992 Neil Kinnock, who had something of a name as a crooner, might have burst out with the Frank Sinatra song High Hopes. A couple of years later, when he was locked in secret, desperate negotiations over an alliance with the Liberal Democrats, he might have tried Stanley Holloway’s Get Me To The Church On Time. And when the Labour Party, exasperated by Kinnock’s compulsive alliterations and wisecracks in face of yet another disastrous experience of power, got rid of him a fitting accompaniment might have been There Go My Dreams.

In fact Labour only just managed to scrape home in the election—an overall majority of seven seats was hardly a rich harvest from all those years of trimming and twisting, searching for the polices most likely to bring in the votes. Nevertheless there was a spring in Kinnock's step as he set out for Buckingham Palace, to kiss hands, bow and scrape, walk backwards, vow allegiance to the Crown and do anything provided it helped him to take up residence in Number Ten.

The new Prime Minister’s first job was to appear on television, making a speech which had been written some time before. There would, he guaranteed, be no truck with the past. He knew that previous Labour governments had not been without their faults (he had spent a lot of time, as an intensely ambitious politician in opposition, studying them) but he could give his personal assurance that the mistakes of the past would not be repeated. Without actually mentioning Harold Wilson, he declared that his would not be a government dominated by one person; to the accompaniment of grim smiles from his rivals he said that we would henceforward be governed by a team. It would be a caring government, cherishing the like of the National Health Service (which it had cut back during its last spell in power) and working tirelessly for a nuclear-free world (although in the past it had started up the British nuclear armoury and had supported every one of British capitalism’s wars). It would work in harmony with the trade unions to ensure a growth in prosperity so rational and controlled that it would benefit both sides of the negotiating table (he put from his mind Labour’s history of attempting to impose statutory wage restraint and the consequent warring with the unions). He almost repeated one of the sillier assertions of his deputy. Roy Hattersley. who once babbled that "a socialist incomes policy can protect, rather than diminish, real earnings . . . ” Why should he give Hattersely some free publicity?

Inheritance

Labour made its case plain, in its 1989 Policy Review, when it announced its intention. not to dismantle capitalism and its production of wealth for sale and profit, but to "make the market work" to maintain and strengthen the profitability of British industry. They were concerned not just with using their association with unions to keep wages in check; they had worked hard to cement a partnership with the employers as well to help them compete against foreign competition. This yearning for financial orthodoxy and economic competence was welcomed by the Investors Chronicle, which thought that "Labour's economic policy . . . contains nothing to which the City objects violently on principle”.

It was as well that Labour took these precautions because, far from introducing the revolution, they had merely taken on the running of British capitalism. As a Tory ex-minister put it: "The Labour Government have inherited our problems. They seem also to have inherited our solutions". While this was perfectly true Labour’s long spell in opposition had placed it under an obligation to produce "solutions" which seemed fresh and radically different from the Tories. The traditional way of doing this—which Labour followed—was to give the old “solutions” dazzlingly new names. Wage restraint became The Culture of Co-operation and measures to increase the capitalists' profits were called Positive in Partnership. Apart from that they could only hope for luck to run their way, for something to turn up so that they could claim the credit for a period of boom. If that didn't happen—well there was always the chance of the voters again being gullible enough to blame an economic crisis on to "unfair" foreign competition or sinister currency manipulators in distant capitals or Britain's notoriously greedy and lazy workers.

 

Cartoon by Peter Rigg.

Lectures

But luck did not run their way. During their first six months in office a yawning deficit in the balance of trade opened up. Ministers, still mindful of that alliance with the unions, began to make coded threats about the reluctance of workers in the British car and electronics industries to be exploited as intensely as their counterparts in Germany and Japan. In the money markets, where a lot can be made and lost simultaneously—but not by production-line workers—sterling came under pressure, which was worrying for anyone who was concerned about any threat to "our” currency and even more so for the ministers who were supposed to protect it.

The world economy slid deeper into the recession which did so much to undermine the support for John Major’s government, the effects of which Labour had promised to control. Investment and production declined while unemployment and bankruptcies zoomed upwards. Although it was not the best of times to press for higher wages, the unions were under pressure from their membership to try to catch up the ground lost under the Tories. Strikes, both official and unofficial, became headline news again and the gutter press could each choose a union leader as their current bogey.

Neil Kinnock had promised to be a prime minister of action, so he quickly sent John Smith to the TV studios to lecture the workers on why they should work harder, hold back their pay claims and stop buying imported goods. "We all agree," said Smith (as if “we all" had agreed), “that we cannot spend what we have not earned. There are no quick fixes. The government must be aware of the economic realities. If that means we have to postpone some of our social ambitions, then we have to do so”. This speech was a great disappointment to the people who were encouraged to believe that the Labour Party did have quick fixes which they could apply to control problems like recessions.

Losses

As the Labour government floundered about like a drunken soldier they began to lose crucial by-elections, even in places like South Wales where Tories had once been as rare as an endangered species. Kinnock’s last desperate bid to stem this tide was to try for an alliance with the Liberal Democrats. When this was frustrated by the Lib/Dems’ insistence that Labour was more right-wing than the Tories it was clear that Kinnock’s time was up. But who to replace him? John Smith’s stamina was suspect, especially after his banqueting forays into the City to win the confidence of the bankers and the merchants there. Roy Hattersley’s day was past and in any case he resembled himself on Spitting Image too closely. Tony Blair, having pushed his case as Labour's youthful future, thereby damned himself as a perpetual Peter Pan. Margaret Beckett was ambitious enough but she roused chilling memories of Thatcher. Gordon Brown was a poor TV performer, with his sepulchral denunciations of working class extravagances.

Labour felt they needed cheering up and that, as it turned out, was the crucial factor when the Men In Red Ties called on Kinnock to give him notice to quit Number Ten. In the election for the new leader, one of the candidates was Des Topper, a hardened left-winger from a Midlands mining constituency who was famous for his tireless harrying of ministers, employers and Tories and anyone else who he saw as obstructing his version of the workers’ paradise—which was actually little more than regular, reliable wage-slavery and cheap beer at the colliery club. Topper stood for the leadership as a gesture towards what he saw as Labour's forgotten principles. But to cheer themselves up the Labour Party elected him and when they had recovered from their surprise the PR and media experts closed in about him.

Changed man

True to his promise to give the workers the chance to vote for Labour's allegedly lost alleged principles Topper quickly called a general election (in fact he had little choice since their majority had disappeared in those by-elections). He then appeared on TV. to rally the nation to Labour’s banner. He was a changed man. On the advice of an expensive tailor his sports jacket and loud shirt—once his trade marks in the Commons—were replaced by a sober grey suit and discreetly striped shirt. His hair, which had once been long and aggressively floppy, was trimmed enough to satisfy a City banker. He put on some weight so that he no longer looked so agonisingly principled. His Midlands accent was tamed into a Home Counties drawl. And he learned to tell us that Labour’s anti-working class policies were socialism and to accuse anyone with any doubts about it of making it easy for the Tories to win back power.

His speech to the nation was most moving, even if it had been written by somebody else. "We recognise", he said, staring earnestly into the homes of his audience, "that this great party of ours had made some mistakes in the past. We shall not repeat those mistakes in the future. I give you my personal guarantee that we shall . . ."

Ivan

When Labour Ruled (3) (1992)

From the January 1992 issue of the Socialist Standard

In their wildest dreams—and some of them have been pretty wild—the Labour Party could not have hoped for more auspicious circumstances in which to contest a general election than they had in February 1974. Quite simply, the Heath government handed them victory on a plate, liberally garnished with enough propaganda material to satisfy the hungriest opposition. The Tories had won power in 1970, against most expectations, with what seemed a clearly-defined policy on unions, industrial disputes and state investment in industry. These were quickly modified, or abandoned. or applied with such purpose that the country was sunk into the misery of the Three Day Week—and that over Christmas.

In contrast to the Tories’ apparent yearning to return to the days of the Tolpuddle Martyrs, the Labour Party under Harold Wilson could offer the guarantee that their close relationships with the unions would get the factories and the power stations working again, the street lights and the television sets on. and the grateful workers co-operating by moderating their wage claims. What was surprising was that the Labour Party only just scraped back into office, as a minority government. Their eventual defeat five years later was not so surprising because by then they also were branded as a party of confusion and compromise and by the chaos of the so-called Winter of Discontent.

Familiar faces

But there was more to that defeat than the strikes and disruption of that winter. When Labour took over in March 1974 (a few days after the election were spent in Heath trying to survive in a coalition with the Liberals; as their leader then was Jeremy Thorpe it was probably just as well for them that the negotiations failed) they had a lot going for them.They were experienced and capable in the techniques of government; they knew how to run a ministry, deal with the higher-ranking civil servants, fight their battles in the Cabinet, persuade the working class that they were not doing what they actually were doing and so on. Such deceptions are always better received by the voters if they came from a familiar face and in people like Wilson. Callaghan, Healey and Jenkins Labour had some very familiar faces indeed. They had made themselves familiar during their previous spell in power, telling the working class that British capitalism was in crisis and they must tighten their belts to rescue it.

Cartoon by Peter Rigg.

Barbara Castle, who was another familiar face mainly because as Minister of Transport she had brought in the breathalyser, excitedly confided to her diary: "We could turn out to be the most successful Labour government in history”. Harold Wilson promised everyone that the mistakes of the 1964-70 Labour government would not be repeated; for one thing he would confine himself to a relaxed vigilance to ensure that Labour carried out the promises in its election manifesto. On one past "mistake" he was specific. "A wage freeze is totally unacceptable. It would destroy this government", he informed the Cabinet in December that year.

Within three days of the return the government had ended Heath’s state of emergency and Three Day Week, mainly by settling the coal strike. The Pay Board, set up by the Heath government to check on wage claims which were above the official limits, was abolished and in July statutory wage restraint was ended. Other titbits were thrown to a relieved and expectant electorate—a freeze on rents, a promise to increase pensions, control prices and subsidise food. Museum admission charges were abolished—who now remembers that they were ever free?

Social Contract

Labour’s alternative to the Heath governments statutory wage restraint was the Social Contract. This was the central plank of their wages policy which guaranteed an end to strikes and other industrial disruption. "It is”, Wilson assured us in their manifesto for the election in October 1974, "about economic justice between individuals and regions. It is about co-operation and conciliation, not conflict and confrontation". In fact there was nothing new about the Social Contract since it was wage restraint by another name, based on the hope that the unions would moderate their wage claims in return for something called the Social Wage which covered things like state benefits, subsidies and rent control.

In October 1974, hoping that the workers would agree with their own assessment of their brief time in office (according to Wilson "no post-war British Government has achieved more in six months”) Labour called another election. Their hopes were not reflected in the re-election results; although there were 42 more Labour MP’s than Tories their overall majority was only three. To make matters worse the government was confronted with economic problems which made the Social Contract and the other promises in their manifesto look decidedly fragile—at a time when they could no longer blame the Tories for the mess they inherited.

Except that there was a different Chancellor of the Exchequer, it was like 1966 all over again. Early in 1975 Denis Healey was telling the unions, the Cabinet and anyone else who would listen that British capitalism's big problem was "inflation", and to beat it he proposed to cut public expenditure by £1 billion, including £62 million from the National Health Service. This was a bit puzzling to those Labour Party supporters who had believed their own propaganda that economic problems could easily be dealt with by increasing public expenditure. Some of them may also have wondered about Healey’s orthodox insistence that "inflation" was caused by excessive wage claims and his pressing for rises to be limited to ten percent which he knew, with prices rising as they were, would mean an effective cut in living standards of 2.5 percent. Was this, they may have asked themselves, what was meant by the Social Contract?

Soaking the rich

In any case the Social Contract did not survive for very long. In July 1975 the government more or less admitted that the whole idea was a lot of vote-catching nonsense when they announced a policy of virtually statutory wage restraint under which rises would be limited to £6 a week. The responsibility for such exposure of Labour's electoral deceits was. of course, laid on greedy and irresponsible workers, who may have been taken in by Healey's promise to squeeze the rich "until the pips squeak" and were unimpressed in a different way when he revised this, in February 1978, to "there is no way of avoiding (public expenditure cuts) by soaking the rich". Labour’s desperate excuse for their assaults on workers' living standards had always been that the alternative was even worse— mass unemployment. But this argument began to lose its terrors for the workers as, apart from what else was happening, unemployment began to rise—in January 1975 to 700,000 and a year later to well over a million.

Serious doubts about whether the government was losing their nerve were stimulated when, in July 1978, they produced a White Paper, Winning the Hattie Against Inflation, which announced their intention to hold pay rises to five percent and to impose sanctions against companies which settled above this level. In the circles where the pips were not yet squeaking—the CBI and the City—the White Paper's promise of tighter controls on wages got a relieved welcome. In other circles, especially those where the lower paid no longer had any pips worth squeaking, it was regarded as the last straw. At the end of 1978 there was a flood of pay claims way above the White Papers limit. Local authority manual workers put in for 40 percent, road haulage and tanker drivers 25 percent to 30 percent and Ford settled a claim at 17 percent.

The media, where there was general agreement that workers were readier to live nearer the poverty line, illustrated their point with poignant pictures of streets obstructed with uncollected rubbish and stories of bodies lying unburied because of striking gravediggers. Among such workers. whose interests the Labour Party had promised to protect with special tenderness, the bitter realisation came that they had been conned.

By-elections

The Labour government’s excuse for all this was that they were fighting a battle which, provided we all obeyed orders, would result in a final solution to the economic problems of British capitalism and so unprecedented prosperity for us all. The extent to which this was believed can by gauged by the succession of by-election defeats in safe seats such as Walsall North, Stechford, Roy Jenkins’s old constituency (he had shrewdly removed himself to a remunerative and insulated job in Europe), and. greatest blow of all, the mining seat at Ashfield. Labour’s response to this was not to stand by their principles, go down fighting or any of the things mentioned in The Red Flag. Instead they compromised all they claimed to stand for, including that precious manifesto, by entering into a pact with the Liberals. This enabled them to carry on for a while; they were not embarrassed at the price they had to pay for their wretched survival.

By the end of their time in office the Labour Party had proved as conclusively as possible that capitalism was out of their control. Many of the promises they had made in opposition could not be fulfilled; many others, such as the Social Contract, had been tried only to be abandoned as failures. They had failed to do the one thing—eliminate unemployment, which Healey had described when in opposition in 1972 as “by far the biggest single cause of avoidable human misery and suffering”. When they lost power in 1979 there were 1.5 million people out of work. In 1974 they had promised that they could easily deal with such problems. Confronted with their failure to do so they resorted to hysterical attacks on the working class, such as their encouragement to cross picket lines and report over-forceful pickets to the police.

Labour's time in power had prepared the workers into an acceptance of the Thatcher policies of so-called monetarism, cuts in public expenditure, screwing down state benefit claimants, restricting trade union power, and so on. The Tories exploited this situation to the full. Just as Labour had had victory handed to them on a plate in 1974 so the Conservatives had it five years later. There is a lesson in this, about the impotence of capitalism’s political parties in face of the system’s problems and their cynical response to it. Labour’s hope now is that we shall forget those lamentable years when they were the government and trust them to have a new approach, fresh ideas and a reborn determination not to make the same mistakes again. Well, whoever and whatever may be on their side in this, history is not.

Ivan

When Labour Ruled (2) (1991)

From the December 1991 issue of the Socialist Standard

"As in all recent elections . . .  [the Labour Party] played down any claim to stand, as a socialist party, for a radically different form of society . . . it asked the voters to say that it could administer the mixed economy and welfare state better than the Conservatives".

No, this is not David Butler's comment on the next year's general election but on that of 1959. In the event, the voters judged that the Tories could run capitalism better than Labour. But after a further five years of Tory rule they changed their minds and in October 1964 a Labour government under Harold Wilson came into office.

The 1964 Wilson government was elected on a programme of ending the "stop-go" of what they called "Thirteen Years of Tory Misrule". This was a reference to what happened every four or five years during the 50s and 60s when a boom led to a balance of payments crisis by sucking in imports, to which the government responded by measures to damp down demand. Actually this was a reflection, at the level of government policy, of the minor cycles that capitalism continued to go through during the prolonged period of capitalist expansion that followed the war. In any event, Labour promised to replace "stop-go" by "planned and sustained economic growth".

A Labour government, George Brown had declared in January 1963, would cure unemployment "instantly" (Observer, 27 January 1963). James Callaghan explained how in more detail:

Our first priority will be to make British industry GO, and to make it efficient. We shall ask industrialists, trade unionists, and economists at all levels to help us create a National Industrial Development Plan. This plan will set expanding targets for industry; will collect and analyse information about costs, export possibilities, profit margins; and will reconcile production with demand . . . The plan will aim for a large increase in the output of our factories each year—produced more efficiently than before. (Daily Sketch, 11 February 1963).

After Labour's victory in October of the following year, Brown became Minister of Economic Affairs and Callaghan Chancellor of the Exchequer. Ray Gunther, a former leader of the railway clerks union, was appointed Minister of Labour, Brown's job was to draw up the promised National Plan; which he duly did, unveiling at a ceremony in September 1965. It provided for total output to rise by 25 percent by 1970, a growth rate twice as fast as the percent a year that had taken place under the Tories.

The plan never got off the ground. As early as November 1964 a balance of payments crisis developed with a run on sterling. By July 1965 this had become so serious that Callaghan was forced to curb government spending. After announcing cuts in existing expenditure, he went on "we shall also have to defer some of the desirable social reforms we had hoped to do in the immediate future" (Times, 28 July 1965). Although Labour won an increased majority in the election held in March 1966, in November 1967 they were forced to devalue the pound and impose even tougher austerity; prescription charges which they had abolished on coming to power were restored at a higher rate. And growth never did attain anything near the planned 4 percent. Contemporary newspaper headlines (see box) tell their own story:

• Mr Gunther Condemns Dock Move by Strikers (Times, 20 October 1964) 
• Wilson Warns of More Tough and Unpopular Measures Ahead (Sunday Times, 24 February 1965)
• Wilson's TV Attack on Clock-Watching (Telegraph, 25 February 1965)
• Britain's Attitudes Outdated—Premier. Country "cannot afford strikes" (Guardian, 25 February 1965)
• Profit Motive as Test of Efficiency. Mr Brown's Reply to Directors. "Government Not Anti-Business" (Times, 22 May 1965)
• Wilson Hits at Rail Go-Slow (Observer, 18 July 1965)
• Spending Cut to Suit Nation's Pocket. Chancellor Curbs Council Mortgages, HP, Building. £100m of Defence Next Year: Social Reforms Deferred (Times, 28 July 1965)
• "Squeeze" Delays School Building Six Months (Telegraph, 26 August 1965)
• Brown Wants Strong Powers to Back Incomes Policy (Financial Times, 21 December 1965)
• Wage Restraint Vital in 1966—Premier (Financial Times, 1 January 1966)
• Folly To Press For Big Wage Rises—Chancellor (Financial Times, 18 May 1966)
• Sackings Better Than Short-Time, Says Gunther (Sunday Telegraph, 18 September 1966)
• Ministers Hint At Permanent Pay Curb (Observer, 18 September 1966)
• Government Embraces Profitability (Guardian, 23 November 1966)
• Local Authority Spending Must be Cut—Greenwood (Financial Times, 21 December 1966)
• Government Justified in Demanding Sacrifices—PM (Financial Times, 1 May 1966)
• Hint of Change in Social Aid. Mr Gunther on "Means Test" (Times, 21 August 1967)
• Emergency Powers Ready (Financial Times, 21 October 1967)
• Prescription Charges Essential—Crossman (Financial Times, 29 January 1968)
• Standard of Living "Must Fall". Mr Gunther on Last Chance (Times, 29 March 1968)

By 1970 the working class had had enough and Labour was booted out. By its own standards the Wilson Labour government of 1964-70 was an utter failure. It didn't deliver sustained growth and social progress; instead it ended up restraining wages and cutting social services, and it left office with unemployment at its highest for thirty years.

Why do Labour governments fail way? The first thing to notice is that there is nothing special about Labour governments in this respect. Tory governments do the same. In fact all governments do. It is just that Labour's failures are more resounding in that the Labour Party was formed as a trade union party committed to trying to improve conditions for the working class while nobody expects the Tories, as the party of the ruling class and the rich, to behave any differently.

Dismal record

The basic reason for the failure of the Wilson government's attempt to plan a steady expansion of output, so as to keep unemployment down and provide expanding social services, was that his government was a government of capitalism, and capitalism is a profit-making system under which what and how much is produced is determined by considerations of relatively short-term profitability. Ministers and civil servants may draw up grandiose plans for a steady expansion of production, but those in charge of firms react to market conditions not paper plans. If, as happened under Wilson in the 60s, they judge that they will not be able to sell the extra output at a profit then they won't produce it.

Labour has only ever challenged capitalism verbally, and then only sparingly. In practice, when in power, it has always accepted capitalism and capitalism's economic priorities: that, since capitalism runs on profits, profits must be allowed tor be made, and must be maintained if necessary at the expense of wages and salaries

A number of Labour leaders have been quite open about this. Harold Lever, who then an MP (now he's a Lord) and chairman of the Labour Party's economic and financial committee and later a cabinet Minister, writing just after Labour had won the 1966 election, declared in terms which the present leaders of the Labour Party would wholeheartedly endorse:

'Labour's economic plans are not in any way geared to nationalisation; they are directed towards increased production on the basis of the continued existence of a large private sector. Within the terms of a profit system it is not possible, in the long run, to achieve sustained increases in output without an adequate flow of profit to promote and finance them. The Labour leadership knows as well as any businessman that an engine which runs on profit cannot be made to move faster without extra fuel. So, though profits may be squeezed temporarily by taxation and Government price policy, they must and will, over a longer period, increase significantly even if not proportionately to increased production' (Observer, 3 April 1966).

Since profits are needed to fuel the engine of capitalism, one of the tasks of any (and every) government of capitalism is to ensure that the flow of profits is not threatened by strikes and wage demands. In short, one of the jobs of managing capitalism is to try to ensure that the working class does not demand, and does not get, too much. This is why Labour governments, as managers of capitalism, always end up attacking the working class in the same way as the Tories do.

Whenever profits have been threatened, as by a failure of exports to sell well enough or by an economic downturn, Labour governments have reacted by restraining and freezing wages and by postponing and cutting back on social reforms. This is not because they are incompetent or dishonest or traitors but because that is what managing capitalism involves. Anybody who takes on this responsibility has to do this, just as Wilson had to and as Kinnock will if ever he gets the chance.

Adam Buick

Next month we look at the wage-restraining, union-bashing, strike-breaking, service-cutting record of the Labour governments, under Wilson and then Callaghan, that ruled between 1974 and 1979.

When Labour ruled (1) (1991)

From the November 1991 issue of the Socialist Standard

On 3 September, the Rt Hon Baroness Castle of Blackburn appeared on the Channel Four "Opinions" programme to urge us not to let that marvellous achievement, The Welfare State, be taken away from us. She reminisced for half-an-hour upon the setting up of the National Health Service and how the post-war Labour governments engaged experts to explain to them what poverty was, so that they could devise schemes like Family Allowances in an attempt to combat it.

While fondly remembering her own part as plain Barbara Castle in all the this, she seemed to forget her part in Labour's other record on poverty: its consistent and often vicious efforts to hold down wages—at the same time as inflating the currency to make them worth less.

The Welfare State was only ever a collection of schemes for regulating poverty. Full-scale war had brought out clearly again, as in 1914, what a sorry state the British working class was in. Armed forces medical staff found that a large proportion of the conscripts were undernourished and unhealthy—not the stuff of which efficient, ruthless fighting machines are made. The Liberal, Sir William (later Lord) Beveridge was commissioned by the wartime coalition government to produce a report suggesting practical means by which British capitalism could ensure that it had a healthy and efficient workforce for the economic war that would follow the bombing war.

The war was a crisis for British capitalism. No-one knew how it would end. Like the economist Keynes, some years before, many of the British capitalist class feared that a social system which could produce a slump like that of the 1930s and then a war like that of the 1940s might well be overthrown, particularly as Russia (which they thought of as socialist) was one of the main allies against Germany, Italy and Japan. Many politicians, particularly Labour and Liberal, felt that the state must intervene to ameliorate the worst effects of unemployment, dire poverty and the poor health that resulted from them. Keynes had assured them that it was possible for governments to prevent slumps and unemployment through applying appropriate fiscal controls.

Discussion about post-war society and what it should be like began quite early on in the war. Propaganda films and radio broadcasts for civilians as well as the armed forces placed considerable emphasis upon "what we were fighting for" as well as what the war was supposed to be against.

The wartime conditions in which this discussion took place was those of extensive state control. Political parties had been been largely submerged in the coalition government and almost every aspect of civilian life was controlled, as it was for soldiers, sailors and airmen. By the time the war ended, state control of the economy and of a great part of people's lives had come to seem normal and inevitable to the British working class.

Labour takes charge

The Second World War gave the Labour Party its greatest opportunity. But it also exposed its fundamental impotence as a party to represent the British working class. The editorial in the March 1943 Socialist Standard put it like this:

The latest tragi-comedy is the complete outmanoeuvring of the Labour Party on the Beveridge Report. They have demanded for years (as a stepping stone to something or other) a much improved system of unemployment and sickness benefits and old-age pensions. One familiar demand put forward at Labour Party (e.g., in 1923) was that unemployment pay should be at trade union rates. Along comes the capitalist politician Beveridge with a much less favourable scheme, and the Labour Party, fearful lest this second-best scheme should be endangered, gives it their qualified approval. Now the Government announces that it too approves of the scheme, but with modifications and postponements. The Labour Party, now fearful of "diehard" opposition, finds itself hesitant about endangering the modified scheme, which is, in itself, two steps backward from its own. But how can it deny its own doctrine that "anything is better than nothing"?

The Family Allowances  Act, as a first stage in a comprehensive social security scheme, was introduced by the coalition government in 1945. The Labour government, elected with an overwhelming majority in July of that year, seized upon the whole Beveridge scheme as its own and introduced the National Insurance Act in 1946.  

Austerity

A great deal of rationing and many wartime controls were continued under the post-war Labour government. Like a good, capitalist government, they were concerned in case workers should force up wages under conditions of expanding production and full employment, so reducing profits, and they imposed a wage freeze.

The level of optimism in the country was high and the Labour Party was able to plead for tolerance from the workers towards the austerity regime the government was maintaining, on the grounds that it would only be a temporary state of affairs until expanding industrial output brought full prosperity. The absolutely vital thing, they insisted, was for workers to work harder and produce more for export. However, in spite of assurances by the Deputy Prime Minister, Herbert Morrison, to a meeting of cotton workers in Manchester in April 1948, the British textile industry was already meeting intense competition and protectionism from the USA and Japan. The confident assurances of full employment  upon which the whole plan rested were already beginning to look unrealistic in the competitive post-war world.

In 1949, the Labour government suffered its first financial crisis and the pound fell sharply in value. The government devalued it by 30 percent, after denying that it would do so. In October, the government passed the National Health Service (Amendment) Act, taking the power to impose a charge on prescriptions, although they did not impose one. In 1951, a further Act did impose charges for false teeth and glasses. After two elections in that year a sufficient number of the British working class voted Conservative to throw Labour out.

It was not simply the long succession of increases in health charges that followed which eroded British workers' faith in the Welfare State: the state itself had repeatedly even under Labour revealed its true colours as the agent of the employing class. It used laws and the courts to hold down wages, and it used troops to break strikes. Above all, however, the lie that governments could control the economy was exposed so often that hardly anyone could go on believing it.

For socialists, the trouble has been that this hotch-potch of poor relief and incomes control, together with the nationalisation of major industries, was called "socialism" by the Labour Party themselves as well by other politicians such as Margaret Thatcher. The result has been that, as well as becoming rightly sceptical about politicians' promises, many of our fellow workers gave become completely cynical about all political action. We have a lot of work to do.

Ron Cook

Next month we look at the anti-working-class record of the Wilson government which managed the affairs of British capitalism between 1964 and 1970.