Labour and the reform of capitalism (2004)

From the May 2004 issue of the Socialist Standard

The Labour Government of 1945-51 was the highwater mark of one strand of activity within capitalism, the triumph (much of it temporary, as we now know) of one school of thought on the question of how capitalism should be run. Its significance cannot be understood without knowing the background from which it sprang.

The population of each separate capitalist country is divided into two classes: the minority, who own the means of production, distribution, and exchange, and the majority, who operate all those means – factories, mines, offices, transport systems, banks, media and so on - but do not own them. This minority of owners constitutes the ruling class, and the rest of us constitute the working class.

The owners, however, are not a monolithic block, all having exactly the same opinions. Naturally, they all believe that the capitalist system is divinely ordained, and will last for ever. But they do not all have the same ideas as to the best way of running the system from day to day, or year to year. Many factors can cause disagreements within the ruling class. Some are internal, some are external.

Internally, there are always two main schools of thought. All capitalists want to get the most out of their workers, obviously. But what is the best way of doing that? Some think they should rule largely by fear. Toe the line, accept long hours, low wages, and poor conditions, they say to their workers, or out you go. And if you can’t get a job, you can join the unemployed – who, this school of thought believes, should be treated as harshly as possible.

Alongside the “treat-’em-rough” school is the “pretend-to-be-nice” school. One basic reason for this school is the desire to avoid the harmful consequences of the alternative - disease spreading across class boundaries, and decrepit recruits for industry or the armed services. But apart from that, some capitalists think that more humane methods are more profitable in the long run. Less primitive conditions in the workplace, a bit better treatment of families, somewhat less harsh handling of the unemployed, will all pay dividends, they think: be nice to your workers, and they will be nice to you, says this philosophy.

External factors also cause differences of view within the ruling class. When capitalism’s continuous conflicts lead to open warfare, with its clashing armies and bombing raids, its heartless slaughter of civilian populations and its massive destruction of towns and cities, the capitalists within each country often draw closer together, and feel they must strengthen their state as a bulwark against the threatening dangers from foreign capitalists which have now been made so obvious. For instance, when there is danger from abroad, and armies may have to be transported quickly round the country for the benefit of the country’s capitalists as a whole, then ruling class opinion tends to believe that the country’s transport systems should be in the hands of the state – the executive committee of the capitalist class.

The General Election of July 1945 came at a time when war, and its dangers, was in the forefront of public debate. There had of course been an enormously destructive war across Europe (and elsewhere) in 1914-18. When that ended, there was a huge feeling of relief: it must have been a fit of madness, people thought, and could never happen again. It was, in fact, “the war to end wars”. But then, only a score of years later, a second even more destructive global conflict erupted – so close to the first that some men actually had to fight in both, and certainly many families suffered in both. The electorate after the first war, in November 1918, returned the victorious wartime premier, Lloyd George, with a large majority committed to a return to the status quo; but in July 1945 the wartime premier, Winston Churchill, was defeated, and the Labour Party gained 393 MPs, compared with 213 Conservative and 12 Liberals. Labour formed a Government, and Clement Attlee became Prime Minister.

Stronger state

After two catastrophic world wars within only thirty-one years (1914-45), the preponderance of opinion within the capitalist class moved over to the support of a stronger state. The state had already been dictating much of the country’s economic activity during the war, under the direction of the Conservative-majority Coalition Government. A series of Acts of Parliament after 1945 took much fuel and transport into state ownership, and in many ways gave a formal framework to what had already been happening (owing to military necessity) throughout the six years of the Second World War. The Government took over what it regarded as essential services to support the other industries, which of course continued in private capitalist hands. It nationalized the Bank of England, coal, and civil aviation in 1946, electricity and transport in 1947, gas in 1948, and iron and steel in 1949.

Conscription into the armed forces, and compulsory direction into “essential industries”, e.g. munitions, during the war, had revealed that the working class were neither as well educated nor as healthy as they should ideally have been if they were going to supply the maximum of rent, interest, and profit to the owning class. A soldier who is not physically fit enough to join an attack on an “enemy” army, or skilled enough to read the instructions about how to operate a heavy machine gun or a tank, is not much use to the high command. The peace-time worker, too, has to be active and knowledgeable in order to operate modern machinery. So reforms were pushed through in health, creating the National Health Service, which (as the Labour Government boasted at the time) cut down the number of days lost to industry through illness. In education, the school-leaving age was raised to fifteen in 1947, and the Labour Government implemented Butler’s Education Act (passed by the Conservative Parliament in 1944), which created a tripartite system of grammar schools, technical schools, and secondary moderns, all of them free, with entry based on the so-called “eleven-plus” exam. These schools in effect aimed respectively at supplying office-workers, skilled manual workers, and the rank-and-file of the labouring population, to service capitalist industries. (The capitalists themselves continued to send their offspring to “public schools”, that is private schools outside the state system.)

Measures were taken to give a degree of social security to the whole population, “from the cradle to the grave”: a policy which put into effect the 1942 Beveridge Report, written by a Liberal. This social security, plus the free Health Service, meant that the great majority of the population, the workers, were kept in reasonably good condition, able to operate the industries of the country, and not likely to catch infectious diseases which could spread to the owning class. (Germs do not believe Mrs Thatcher’s assertion that there is no such thing as society.)

A very large part of Labour’s reforms was accepted by the Conservative governments which followed the Labour Government after 1951. This is not to say that all opinion within the ruling class supported nationalization; some voices still spoke out in opposition, and decades later nearly all of this carefully-constructed apparatus of state capitalism was dismantled and returned to the ownership of private capitalists. The capitalist organization of industry, of course, was undisturbed. The whole of the great nationalization debate had been simply about whether to have particular capitalist industries owned by the state, acting on behalf of the whole capitalist class, or by particular individual capitalists.

Much of the so-called Welfare State, however, has been preserved throughout the following half-century by Governments of whatever complexion. It has been recognized as benefiting the operation of British capitalism, and therefore it is still here.

The Labour Party claimed that their reforms were Socialist. The Labour Party fought the 1945 General Election on the programme outlined in its manifesto Let Us Face the Future, which declared that the Labour Party “is a Socialist Party, and proud of it. Its ultimate purpose at home is the establishment of the Socialist Commonwealth of Great Britain” and so on: hardly language which Labour’s leaders would use today. Though this was the “ultimate purpose”, the measures which it actually proposed (and, to do it justice, the measures which it actually carried out) were those described above. Its ringing declaration was one thing; its immediate objectives - the nationalizing of half a dozen fuel and transport industries, and health and education reforms - were another. Despite its fine-sounding claims about its “ultimate purpose”, the Labour Government of 1945-51, like every other Government, in practice merely tried its hand at running capitalism.

Why did that Government claim to be Socialist? The over-riding reason is that no ruling class can ever tell the truth about its own system. No owning class is ever going to say to the people at large, “You go on working and producing, and we’ll go on taking off you what you produce”. Instead, every ruling class seizes on whatever philosophy, or religion, or system of belief is currently popular or persuasive, and claims it for itself. When the British bourgeoisie made its first attempt to grab power, it claimed to be merely promoting Christianity (Cromwell called one battle “a crowning mercy” from Heaven). Many European countries, two or three centuries ago, proclaimed that Catholicism, or alternatively Protestantism, was their guiding light. When the French bourgeoisie took power, it claimed to be bringing in Liberty Equality, and Fraternity. The twentieth century saw a number of state-capitalist revolutions in Eastern Europe, Russia, and China, during which the revolutionaries claimed that they were introducing Communism, and Democracy (in some cases to the extent of putting Democratic in the official name of the country). In the Middle East, the ruling class of many countries claim that they are marching under the banner of Islam. In the same way, the Labour Government of 1945-51 claimed (as we saw) that they were going to introduce a “Socialist Commonwealth”.

Anyone who wishes to find out what is really happening in the world must first learn to distinguish between talk and action.

Alwyn Edgar