Ted Grant

Britain’s crisis and Labour’s left

Source: Spark, March, 1968
Transcription: Francesco 2010
Proofread: Fred 2010
Markup: Niklas 2010

The devaluation of the pound in November marked a new stage in the long drawn out crisis of British capitalism, which has existed since the end of the Second World War.

The first post-war crisis was eased by the nationalisation measures of the Attlee administration, which took over the ruined basic industries, coal, railways, gas, electricity, with lavish over-compensation. This served the needs of the “newer” and more profitable industries by supplying cheap power and transport. Thus the capitalist class offered only half-hearted opposition to these measures of nationalisation.

The first post-war Labour government carried out some radical reforms including the setting up of the National Health Service. But in its last years turned from reform to counter-reform. It was in this context that the “Bevanite” left-wing was formed with the resignation of Bevan and Wilson from the government, on the immediate issue of charges for spectacles and dentures. During the last few years of the Labour government the real standard of living of the working class actually dropped slightly.

With the failure of the Labour government to take radical and drastic measures against the capitalists, the ruling class gradually recovered their confidence. They then waged a demagogic and skilful campaign against “rationing” and “controls”. They mobilised the middle class and backward sections of the working class, and due to the bias in the electoral system with the re-drawing of constituencies by an “unbiased” commission, succeeded in turning out the Labour Government.

With “full employment” continuing under the Tories with the development of world trade and the worldwide economic upswing, relative standards of living increased, especially with overtime and women working. Consequently, the pressures on the Labour tops from capitalism were such as to render abortive the feeble Bevanite revolt. With the superceding of Attlee by Gaitskell as leader, a new generation of parliamentary leaders with Keynesianism as their solution to the problems of capitalism, and the “theory” of the “affluent society” came to the fore.

After the death of Bevan, who meanwhile had made his peace with the Gaitskell right-wing, and the death of Gaitskell himself, Wilson was elected leader. With biting sarcasm and witty epigrams the stop-go economy, the Rachman and Casino society of the Stock Exchange were mercilessly criticised. The unplanned and ruinous waste of resources was unequivocally indicted.

Meanwhile the decline of British capitalist power, in spite of the vain efforts to maintain herself as the third world power, after Russia and America, proceeded in a slow process of decay, with balance of payments crises every two years. Labour came to power when the bankruptcy of the Tories had been demonstrated. The left-wing tended to trail behind the Wilson leadership, as they had no other programme to offer at that stage.

The experience of three years of Labour government under conditions of decay and disease for British capitalism have resulted in a mass feeling of disgust and disillusionment with the government. The government capitulated to Big Business, presided over the collapse of the “National Plan”, out-Toried the Tories in their “orthodox” economic policies in the interests of Big Business; and in the “deflationary” attacks on the standards of living of the working class. This has been reflected in the more inert sections of Labour supporters abstaining at the polls. But no more than the previous policies of the Tories has it succeeded in solving the problems of British capitalism.

Role of the left

The “lefts” in the trade unions and in the parliamentary party have been cudgelling their brains to put forward a “practical alternative” policy. At the last Labour Party conference they came out with the economic policy of “devaluation” and “selective imports”. In other journals we have dealt with this problem. But Callaghan in answering the lefts showed that devaluation meant an attack on the real standards of the working class and that selective import quotas would simply provoke reprisals on the part of Britain’s competitors, and thus only worsen the situation.

Then came the “devaluation”. This was thought by the “lefts” in the parliamentary party to be their victory, a victory for “common sense”. For the last period they had been waging a campaign against “international gnomes” who had “Britain” by the throat financially and were imposing the policy of cuts, of attacks on the trade unions and working class standards, as a “plot” for “foreign bankers” against the British people. For a moment there was euphoria and unity in the parliamentary party. In an intoxication of relief Tribune of November 24th wrote in an editorial article on the front page:

“Not until the archives are open and the Ministers write their memoirs shall we know how close Labour came to another 1931, last week. For that is what the acceptance of another loan with all its conditions, and the refusal to devalue, would have meant. The government—it is certain—could not have survived the humiliation, or its betrayal of its followers… What devaluation does offer Britain is a chance, an opportunity. It represents the first real crack in the government’s wall of economic and financial orthodoxy.

“The three years in which Mr. Wilson and Mr. Callaghan have put sterling first are over. They are three wasted years, which must be added to the famous 13 which preceded them. The impossible policy of sacrificing everything to keep the pound at an exchange rate of $2.80 dollars has collapsed under pressure of events. But this collapse is also an opportunity… Devaluation marks the crumbling, too, of one kind of political strategy—the strategy of ‘consensus’. As we pointed out on our front page a fortnight ago, at the electoral level there was already every indication that Mr. Wilson’s bid to win erstwhile conservative support by pursuing conservative economic policies and attacking the unions was not succeeding. Now, by devaluation, he has, whether he likes it or not, effectively alienated a part of the community whose support he had worked so hard to win—finance and ‘the City’—Mr. Wilson and Mr. Callaghan should not be surprised if these people [directors of the bank of England] try to press reactionary policies on the government. The Labour government should sack the lot of them. That would be another way to show the British people that labour is really turning its back on conservative economic policies…

“It [devaluation] is an opportunity to rebuild the bridges which link labour, the unions and the working class… Whether the quite striking defence cuts announced by Mr. Healey on Wednesday will actually be enough to offset increased overseas costs produced by devaluation remains to be seen... As James Dickens, MP suggested to the chancellor earlier this week, the decision over devaluation must be ‘fully exploited by having physical controls over prices, mobilising private assets abroad, imposing further restrictions on the outflow of private capital, and making further heavy cuts in overseas defence expenditure.’ And again further on: ‘What really matters is not whether we are on our own, but whether we are in control of our own affairs—whether the government has the nerve and determination to restore economic home rule. It certainly has the opportunity.’ ”

This shows how little they have understood the realities of class rule, that during the last three years the government has been forced by the economic crisis to act even more harshly than the Tories did. They have been compelled to do the opposite of what they promised. The state’s role in the economy was to be increased. It is true that steel has been nationalised. But the really profitable 10 percent which made 33 percent of the profits of the steel industry has remained in private hands. Some reforms have been carried out. But the expense of these reforms has been borne by the working class. In the Tribune of the above quoted date there was an article which pointed out that,

“The public sector, which has played a crucial part in the relatively expansive and progressive phase of British neo-capitalism is being rapidly run down and out. In 1960 employment, for men in coal, on the railways, in gas, water and electricity undertakings and in the steel industry amounted to 11 percent of all male employment. By 1964 this had been reduced to just over 10 percent, and after 3 years of Labour government to less than 9 percent. By 1971, it may be expected to have fallen to 7 percent given the present proposals for reducing the mining industry and nationalising steel.

“Far from enlarging the public sector, the government has been contracting it with a haste which is as unprecedented as it is unmanageable…”

In Tribune’s issue of December 1st, in an article by Michael Foot, the main demand is a cut in defence expenditure, withdrawal from East of Suez and withdrawal from Germany. In the demand for a drastic review of defence commitments and cuts in defence expenditure Tribune would have the support of the serious journals of capitalist opinion. especially the Financial Times!

The situation is so serious that they are demanding that the government and the ruling class recognise the changed relationship of forces on a world scale and cut their losses.

At the same time Michael Foot calls for “major measures” in relation to pension and social services, as promised in the election programme… and “…the government should take and operate the full powers now to establish publicly-owned industries in the waiting factories or on the waiting sites.” Again he declares “…the pace of expansion need no longer accord with the tastes of the foreign bankers. But the lever of public ownership also is required to enable our full employment pledges to be fulfilled—to drown for ever the Governor O’Brien dirge about the need for unused capacity.”

The chauvinistic idea that “Britain” was in pawn to the foreign bankers, and that their “tastes” dictated the rate of expansion is so much illusion. What the bankers British and foreign are concerned about is profitability of the system. They do not extend loans, either at home or abroad, unless there is to be a profit made out of it. It is not a question of “taste”, British, Swiss or what have you, as if it is a question of choosing different kinds of cheeses, but the highest rate of expansion consistent with making profits. If the world bankers have assisted British capitalism—at a price and under stringent conditions—it is for fear of the effects of British economic collapse on world markets. If capitalism is continued, and that is the basic assumption—at the moment—of both right and left in the Labour Party, then the laws of capitalism will continue to operate especially with the “shrinkage” of public ownership referred to above.

The enthusiastic greeting of devaluation by the Labour lefts was not long lasting. 18 Labour MPs voted against the government and abstained on the terms of the loan from the International Monetary Fund which in effect demand “deflationary” measures by the government. Devaluation was intended as a desperate resort by British capitalism to increase profitability at the expense of the working people and the middle class. It is linked with measures to cut consumption of the working class. If the Labour lefts had a clear understanding that politics above all is a reflection of the class struggle, and that in turn reflects the economic conditions which the capitalists and the working class face, they would not make the naive mistakes to which they are subject. The capitalists can only invest the unpaid labour of the working class. Consequently, if they are to be cajoled into investing more, they must see extra profits as a result. Otherwise there is no point in investment from their point of view.

That is why Roy Jenkins operating within the confines of the capitalist system will carry out the opposite policy to that of “more equality” which he and other members of the Cabinet were advocating before they won the election. Tribune quotes Lloyds Bank Review of January this year for the fact that “the most striking change…has been the accelerating rate of growth of rent, dividends and interest after the war, emerging as the most rapidly growing sector of personal incomes since 1957.” Still Moloch demands more. The CBI, banks and insurance companies are demanding a higher rate of profit. That is the way the system functions. The change in the Chancellorship merely marks a change in faces, it does not mark a new departure in policy for the government. Roy Jenkins will eat his words as Wilson and Brown have done. The “hope” of Tribune that he has not lost his “passion for equality”… is just a meaningless hope. It has no relation to “passion” or reality. Jenkins will try to prove himself more zealous an advocate of “inequal” measures than even Callaghan.

Tribune quotes the TUC: “If a greater proportion of Britain’s output is to be exported, as it must be, a smaller proportion will be available for domestic consumption. Given the spare capacity in the economy at the present time there need not be a fall in absolute levels of domestic consumption, provided that output as a whole and productivity increase as rapidly as possible.”

That is to give a “rational” approach to the economy. The trouble is that the greater the share of the workers, the less the share of the capitalists. With “full employment” the workers are in a position to sell their labour power on a sellers’ market, consequently unused resources can be used as pressure on the workers. In any case the deflationary measures cut into the market, at least in the early stages and consequently into the resources employed. The idea of capitalist production is not to produce the maximum of goods possible, but only the amount that can be most profitably sold. To expect otherwise of a capitalist economy is like expecting a cow to produce champagne instead of milk.

The Labour lefts in common with the right as quoted above think that “reason” can be introduced into the economy, with some reforms, and only the “stupidity” or the “tastes” of the bankers and industrialists prevent the maximum use of resources. As if the capitalists wanted less than the maximum profit they could make. A little knowledge of the despised, and even elementary Marxist economics would have prevented the “lefts” from making such mistakes. But it is not only a question of economics. It is a question of the class structure of society and the irreconcilable interests of the classes.

The lefts in Parliament are poisoned by the atmosphere. They too are under the pressure of the society and of its development. The post-war period has left its toll here too. One has only to compare the statements of the left wing Labourites in the pre-war period and their statements today to understand this difference.

It is true it was only a verbal radicalism. But what only appears timidly and casually in the speeches and articles of the left today, that is references to the class struggle, appeared then as a theme for the speeches and articles of the left. So far has the movement been thrown back by the “prosperity” and the economic upswing.

The statement in the Tribune article called “The shadow of 1931” which says that “The TUC whose reaction to devaluation was so much more adult than that of the CBI…” could hardly be classed as “adult” itself. The reaction of the CBI was the class reaction of Big Business. They are not playing games or dealing with fancy formulas. They are hard-headed businessmen, and from their point of view were correct. The wagging of fingers at the Economist magazine, who, reflecting the interests of the ruling class, have suggested that the capitalists use the opportunity of devaluation to raise prices and make the maximum of profits, is hardly “adult”!

So far as the trade union movement is concerned the reaction of the left wing leaders, was not exactly the same. Being closer to and under the pressure of the workers, in the atmosphere of workers’ discontent, and reflecting the demand of the workers for the defence of their standards of living, Cousins and Scanlon, leaders of the T&GWU and the AEU, were more uncompromising at least in words. They stood for a defence of the workers’ standards and no freeze while prices rise, as they inevitably must.

At the same time there is a hint of an understanding in Tribune that it [is] class issues which dominate and not the best way of making the “economy work”. “By devaluing, the government has brought into the open all the class hostility of the Cromers and the Davieses”. As if the CBI and the bankers throughout the lifetime of the Labour government have not been exerting pressure—successfully—and only very partially counter-acted by the pressures of the working class and the labour movement on the government. Devaluating was just as much dictated by the interests of the ruling class, as the unsuccessful effort to maintain the parity of the pound. Wilson pointed out in Parliament that the Conservatives in 1964 had devaluation as one of their options to deal with the adverse balance of trade of £800 million.

The crisis of devaluation and the further attacks on living standards which it represents marks a stage in the beginning of a real differentiation of Labour’s left under the pressure of events. The interview with Hugh Scanlon [in] Tribune of December 8th shows the mood, which is crystallising in the trade union left. Scanlon refutes the idea that in a “mixed”, i.e. capitalist economy, the trade unions can “be an instrument of government”. “The real question is—can any government in a mixed [i.e. capitalist] economy control all these aspects of the economy? (prices, rents, profits and dividends).”

Dealing with the relations of the trade union movement to the government Scanlon criticises the Prices and Incomes policy and the attempt to unload the responsibility for the economic crisis on to the trade unions, in their fight for higher wages, to increase the share of the wealth produced by the workers and to compensate for the increase in prices. Finally he ends by putting forward the “original conceptions of the early pioneers…to so organise society that control and ownership of the means of production must be in the hands of those who produce, whether by hand or by brain. This objective, together with the necessity of improving recruitment and living standards, are the three main objectives during the coming years.”

Compared with the declarations of the “left” wing parliamentary leaders this seems clear. But of course there is a long way between words and deeds as bitter experience has evidenced. But the future struggles, within the trade unions and Labour Party are foreshadowed by the attitudes and declarations of Cousins and Scanlon on the one hand, and the beginning of open opposition by the parliamentary lefts on the other.

The growth of working class indignation will be echoed by even greater fury at non-socialist policies by the active rank and file in the trade unions and Labour Party. While the right wing will be drifting further and further towards coalition policies, in however confused and muddled a way the left wing within the Parliamentary Party and the trade union tops will be pushed further and further into collision with the right. Thus the Parliamentary Party will reflect the two basic forces in society, the pressure of Big Business to act in their interests and the pressure of the working class militants to change society.

How far and in what way the left will organise depends on the development of the world economy and of course whether British capitalism can succeed, in spite of the resistance of the working class, to [make] inroads on living standards in pushing forward the growth of the economy and re-equipping many sections of industry with the most modern machinery and techniques.

So far as the active sections of the labour movement are concerned, not to speak of the more inert sections, they will not view events with the critical eyes of the Marxists. The inconsistencies and contradictions of the “left” will not be particularly noted by them. But each step towards the left will provoke further enthusiasm and support within the ranks. A new “Bevanism” is inevitable. But this Bevanism on issues of home and foreign policy will be far to the left of the feeble policies put forward in the post-war period. The £15 minimum wage, the demand for more, and more radical nationalisation of the economy, for a real plan of production, for the full use of all resources will become more and more insistent. The masses will learn in the bitter struggle for these demands. While sections of the Parliamentary Party will be moving further to the right, the organised labour movement in the trade unions and constituency parties will be impelled to more left policies.

Thus events will tend to polarise the classes within the Labour Party, as they [line missing in original]. Despite their radical sounding phrases the lefts do not seem to realise the organic crisis of British capitalism, which cannot be assuaged by fine words.

The Marxist wing of the Labour Party will tirelessly explain the contradictory position of the lefts, their lack of foresight, their empirical reaction to events. At the same time they will support, critically, every step forward taken in the mobilisation of the workers in the trade unions and constituency parties. The need of the hour is to hammer home that only a principled Marxist position, nationally and internationally, can serve the interests of the workers and solve the crisis in the interests of the struggle for socialism and not those of the monopolies.

The lefts, supported by the equally muddled ideas of the Communist Party, will still continue to put forward half-measures as solutions to the problems facing British capitalism… but if the crisis deepens they will turn to more and more radical solutions. Even now the position of Scanlon is far to the left of the so-called Communist Party.

However, the militants within the labour movement must re-learn the lessons of the early twenties and thirties. The left of the trade unions, Cook, Purcell and Hicks were far to the left of the present generation of left wing trade unionists. The ILP, impelled by the crisis of 1929-33 and the then general world impasse of capitalism, moved beyond reformism to the position of centrism, that is standing between Marxism and reformism. But that was not sufficient. Cook, Purcell and Hicks were incapable of pushing the General Strike of 1926 to its conclusions in the taking of power. Consequently they led the working class, together with their right wing colleagues on the TUC General Council, under the most favourable circumstances to a terrible defeat. The ILP because of its inconsistencies and vacillations, its parliamentary cretinism, its inability to win over the Labour masses, its failure to develop a worked out logical position, its ultra-left reactions—opportunism and ultra-leftism manifest themselves together—could not present itself as a viable alternative and thus destroyed itself and a whole generation of self-sacrificing militants.

Every generation has to learn again the lessons of history. One aspect of Marxism can be defined as the historical summation of the experience of the class struggle. Marxists try and carry the instinctive reactions of social protest to a higher level. Their task consists in raising the level of consciousness of the militants, and through them, the masses as a whole to the understanding of the necessary tactics and strategy involved in the overthrow of capitalism.

However, because the Marxist wing of the labour movement has been reduced to a very small proportion, and with the discrediting of the right wing of the Labour Party, the working class in their tens and hundreds of thousands, will turn towards a coalition of the parliamentary and trade union lefts. The organisation of an organised left opposition within the labour movement, under conditions of struggle is inevitable. It is pitiful for all the quasi-Marxist grouplets to imagine that they can put themselves forward as a viable alternative, for the mass of advanced militants, let alone the broad masses.

For the Marxists in the labour movement the present period is one of preparation. In so far as their voice can be heard it is necessary to support, albeit critically, every left step taken by the trade union and parliamentary lefts, in struggle against the employers or the capitulation of the right wing leaders to the pressures and demands of Big Business. At the same time it is necessary to criticise the inconsistencies and vacillations of the nascent left wing.

The lefts do not realise the seriousness of the crisis of British capitalism, and the necessity of radical mobilisation of the workers to resist the attacks on standards of living and the social services. But the mass movement of resistance on the industrial field will have its political repercussions.

However, the lefts have neither a worked out policy, programme or tactics. They veer from day to day. Their policy is yesterday’s programme of the Labour leaders of today. Their programme of trying to work within the capitalist framework is just as utopian as was the programme of Wilson before coming to power.

It is inevitable that the organised mass movement will veer to the left. The masses will learn in the struggle, and in the first place the militants, if the Marxists fight side by side with them in the organisation of a strong left wing. In the process of the struggle, by patient explanation, by constructive criticism, Marxism will come into its own.

Under pressure of events the left reformists will tend to turn towards centrism. The outburst of Ian Mikardo about the “setting up of a corporate state” by the Labour government while showing a lack of understanding of what is a corporate state and how it is set up, is an indication of the process which will take place among the lefts inside and outside Parliament.

At the same time the lesson of Cripps who in the pre-war period was far to the left of the present day left wing and then was the pillar of “austerity” in the first post-war Labour government should always be borne in mind. The demand for Enabling Acts to deal with capitalism will become more and more insistent. The mere suggestion that the government was introducing an Enabling Act, to allow the state to invest up to £100 million in buying shares voluntarily in industry, was enough to set the Confederation of British Industry directors into a rage. A “cabal” to fight it was set up under Sir Paul Chambers, the director of ICI. Yet £100 million is a trifling sum in comparison with the astronomical amounts which the government has lavished in subsidies and grants in the last 3 years. It represents a very, very, tiny proportion of the huge capital of Big Business, especially the monopolies.

Either the Marxists will succeed in fructifying the future wave of left wing radicalism, or there will be a new abortion on the lines of the pre-war lefts. But the process of awakening of the workers to the need for Marxist solutions to their problems will be extended over a whole historical period. There will be wave upon wave of struggle and in the process, with correct tactics and strategy, the Marxists will win a dominating position in the left wing. There will be defeats and periods of reaction, but the new generation of workers is a hundred times stronger than was the pre-war working class. The whole social climate is entirely different. Despite its growth, capitalism—in Britain and the West—is rotting. The white-collar workers and middle class have an entirely different attitude to that of pre-war. Student youth is at the present time and for the immediate epoch ahead, not such a mass reservoir of reaction, as in the pre-war period, but a source of radicalism.

The basis has been laid for a series of social explosions in which the Marxists should be able to win a majority of the leftward moving workers to their programme.