Sadly — we were right (1994)

From the May 1994 issue of the Socialist Standard

With the acknowledged failure of state-capitalism world-wide, the futility of Labour's traditional policy of nationalization has been exposed. At another level, the policy of "demand management", on which rested Labour's claim to he able to control capitalism and deliver full employment has, also, been generally abandoned as capitalism has now clearly destroyed the illusion that it can he made a compassionate society. History has vindicated the socialist argument for the abolition of capitalism and the urgent establishment of a truly democratic system of production for use. As we look at the growing misery of the working class and, because we are workers, as we feel these miseries, we may confess that:

SADLY . . . WE WERE RIGHT!

The British Labour Party was born in 1906 — two years after the Socialist Party. The latter had a clearly-defined objective, the attainment of Socialism, and a distinctive, democratic strategy for achieving that objective.

The Labour Party, on the other hand, was, to use the words of some of those who delineated its changing strategies, a "broad church". Its membership was diverse in their aspirations: the trades unions, who provided the purse, saw it as a burgeoning political force that would represent their interests in parliament; a multiplicity of reform groups saw Labour as a potential promoter of their varying causes and there was even a minority political element, perhaps the most vociferous in the new party, that aspired to the eventual achievement of a "fairer" society. Some of the latter defined that fairer society as Socialism.

Agitational fodder

While the unions provided the day to day agitational fodder of the party, it was the most coherent strain within the political element, the Fabian group, that gave the organization its underlying philosophy. Whereas the Socialist Party argued that the achievement of Socialism necessitated a conscious democratic mandate, which, in turn, imposed the need to clearly define socialism and gain majority support for it, the Fabians took the view that capitalism could be transformed over time by a process of gradual reforms and, thus, made to function in the interest of the working class.

Effectively, the argument in support of gradualism was based on the belief that administrative changes, brought about by ongoing reforms, would allow capitalism to operate in the interest of society as a whole. Indeed that is probably overstating the case since the concept of real social equality would have been regarded by most Fabian thinkers as an impractical ideal. As opposed to this philosophy, the Socialist Party maintained that capitalism was a system structured on the systematic exploitation of the working class and could not, therefore, operate in the interest of the class it exploited. Today the question underlying that debate has been resolved by the history of the last seventy years but the events that made up that history should be recalled and remembered for, as we know now, the long flirtation of the working class with the Labour Party have been wasted years. They have been costly years in terms of disillusionment and frustration and. especially so for the legions of sincere workers who sacrificed so much for the Labour Party.

Between the two world wars the Labour Party gained power on two occasions. Both were minority governments and both proved dismally ineffective. Not only did Labour in government cause a general reduction in wages by reducing the pay of the civil service and the armed forces but it established the precedent followed by all future Labour governments of seeing unemployment rise during its term of office.

Beating the drum

The outbreak of World War Two saw Labour beating the recruitment drum for British capitalism while its leaders took places in government with the Tories and Liberals. As far as economic policy was concerned, Labour had never really promulgated anything more substantial than good intentions allied to a doctrinaire fixation with nationalization — which latter form of state capitalism its leaders misrepresented to the workers as common ownership and socialism.

In fact the real pioneers of what was to become the foundation stone of Labour’s economic policy came from outside the Labour Party. In the mid-Thirties, a group of banking theorists originated an economic philosophy that was to take its name from the most prominent of the group, John Maynard Keynes. The central theme of the new doctrine was that the cyclic nature of capitalist production, involving booms and slumps, identified by Marx and validated by the continuing history of capitalism, could be planned out of the system by a deliberate policy of "demand management".

It is not our purpose here to examine Keynes’s theory but, instead, to look at whether it proved effective in controlling the crises of capitalism. If the new formula did work, it would not, of course, resolve the problems of capitalism. Poverty, while it is aggravated by unemployment, is really a result of employment — the fact that the majority class in society has to sell its mental or physical ability to an employer. Many other of capitalism's endemic problems exist irrespective of whether there is a slump.

Nevertheless, the promise of being able to establish a means of controlling the economy would represent a tremendous step forward and would enable government to fashion its social policies on a foundation of full employment. It was this particular aspect of Keynesianism that appealed especially to the Labour Party. All the political parties of the Left, the Right and the Centre adopted Keynes and it was the apparent validity of that theory that made the subsequent provisions contained in the Beveridge Report for a post-war "Welfare State" appear realistic.

To all but the socialist the rise of welfare capitalism appeared to be a gargantuan leap forward. Looked at from the perspective of capitalist Britain in the ’90s, it might seem that the period following World War Two, when not only Labour but the Conservatives fought elections around promises of improved social welfare, were good days for the working class. Closer examination reveals otherwise. Both Labour and Tory governments struggled to keep public spending in check for, despite Keynes and the more important massive post-war rebuilding programme, capitalism limped along in a series of mini-slumps.

Industrial mayhem

These, then as now, led to increased public spending, as government (both Labour and Tory) tried the Keynesian formula of spending as a means of avoiding recession. This forced government into monetary policies that fed inflation and the net result was mayhem on the industrial front as workers fought to maintain the value of their wages against a background of rising prices and a multiplicity of legislative schemes for freezing pay.

It is arguable if the Keynesian strategy delayed the onslaught of slump but it failed to check unemployment nor could it disperse the storm clouds of capitalism’s crisis. In fact, it was Labour's last Chancellor of the Exchequer, Denis Healey, who was forced into making major assaults on public spending. In effect, though governments of both complexions had previously imposed welfare restrictions, it was Healey, at the behest of the International Monetary Fund, who inaugurated that phase of capitalism’s counter-attack on the entire concept of the welfare state that subsequently become known as "Thatcherism".

While socialists saw the post-war social security package as planning for the permanence of poverty, and while we pointed out that supporters of the Beveridge Plan in Parliament had argued their case largely on the basis of the benefits of the various parts of the Plan for British capitalism, nevertheless we accepted that a slice of bread was preferable to hunger. We oppose reformism not because we see all reforms as bad or undesirable but because they are promoted as a means of making capitalism secure and because even the mean reforms that the workers do win can, as we are all now well aware, be reduced or abolished.

Misrepresentation

Today, of course, the Labour Party doesn’t even pretend to champion nationalization or any of the other schemes which they lyingly misrepresented as socialism. They have made it clear that it is not their intention to revoke the anti-trade-union laws which the Tories introduced nor to undo the privatizations that this government has used to enrich its friends. Their principal preoccupation is to convince "business" — the visible face of capitalist parasitism — that they can help to improve profits and limit taxation.

Sometimes, of course, when we read the horror stories that attend on poverty, housing and sickness today, we are tempted to regret that we were right. That knowledge, however, must make us redouble our efforts to build a party offering a genuine socialist alternative to capitalism.

Richard Montague