Political comment, Socialist Review 7, November 1978, pp. 5–6.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
“Forget about Ford, it’s the dustmen who matter” said the Economist on 14 October. In other words, in the view of this authoritative organ of ruling-class opinion, the five per cent across the board is a lost cause. What matters (to them) is that the Government keeps up a hard line against workers in the public sector. The private sector can be left to look after itself – and the spectacular boss class victory at Vauxhall’s seems to justify this strategy. But Vauxhall, known as “the cabbage patch” in the car industry, is not typical.
The real reason why the weight of right-wing opinion, most obviously represented by Madame Thatcher, is now in favour of “free collective bargaining” is its well-founded opinion that our “Labour” Government is more firmly than ever committed to deflationary economic policies.
It is committed to “cash limits” in the public sector, to a monetary squeeze (a little later on) in the private sector and has even been playing with the idea of entering a European Monetary System that would make Britain an economic satellite of West Germany and, more particularly, subject it to the consistently deflationary policies of the Bundesbank (see Economic Briefing).
It is unlikely that even the Callaghan/Healey/Treasury gang will, in reality, go as far as accepting this scheme for the accelerated de-industrialisation of Britain (for that would be its inevitable consequence) but the fact that it can be seriously discussed at all indicates how far down the monetarist road they have travelled.
“Mr Healey’s most outspoken speech in favour of monetarism was delivered at the traditional banquet for bankers and merchants at the Mansion House in the City” noted the Guardian. “The Chancellor described the present Government as perhaps the first in Britain in many years which has given monetary policy the importance it deserves.”
Let us be quite clear about what this means. It is a declaration of support for the most reactionary actions of big business and finance, a commitment to “market discipline” and “sound finance”. There is now a remarkable convergence between Labour and Tory policy on this issue too.
True, Callaghan and Healey have not abandoned “incomes policy”. Nor will they. It is, however, no longer the make or break issue at the heart of their policies. The wages question remains the central question of politics in Britain but deflationary polities are increasingly seen as the chosen weapon against organised workers.
Of course these are contradictions. The money supply is now probably rising quite fast. Although the official figure is only six per cent (“broad” definition M3) for the first five months of the 1978-79 financial year, notes and coins in circulation are up 20 per cent in the same period.
A squeeze is therefore indicated in the fairly near future. Otherwise, on monetarist assumptions, a marked rise in the inflation rate is inevitable from the middle of next year – and Healey now accepts the monetarist logic.
But a squeeze of any severity would put paid to whatever chances the Government may have of re-election. In the short run, therefore, threats like Callaghan’s at the Labour Party conference (“drastic financial measures if the five per cent is widely breached”) have a hollow ring.
In the longer term, come Callaghan, come Thatcher, the prospect is more deflation. And if, as now seems on the cards, the US economy (main source of growth in the “West” for the last three years) is squeezed into stagnation or decline, the prospect is a serious recession later next year.
The effect on the working-class movement? On the one hand support for wage controls by the majority of union leaden has melted away. On the other hand the right wing is more influential than it has been for years. The old alignments, defined by attitude for or against “incomes policy” are dissolving. The “broad lefts” are in disarray.
At the same time the rank-and-file based left is still weak. A long, hard struggle fought under changing and perhaps, more complicated, conditions lies ahead. Certainly there will be no automatic gains for the left but the potential is there.
And the Labour Party? “This week has seen the biggest shift to the left at Labour Party conference since 1973” proclaimed Militant (Marxist paper for Labour and Youth). Well, yes. The “resolutionary” left had a big success. The five per cent was thrown out. The entire Government economic strategy was thrown out.
The effect on the Government was effectively nil, of course, but the mood of the Conference shows how the Labour Party will move if Callaghan loses the election. Much quicker than after 1970, “socialist policies” will be the order of the day. A sharp struggle between left and right is likely in that case.
Incomparably more important is the outcome at Fords and its effects – especially in the public sector. We are passing through something of a watershed and the outlook on the other side is beginning to be clearer. It is one of increasingly right-wing government (whether Labour or Tory) and sharper class conflict.
Last updated on 4 February 2017