Notes of the Month


[Labour Government]

(April 1974)

From International Socialism (1st series), No.68, April 1974, pp.3-6.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

LABOUR’S first month in office has followed a fairly predictable pattern. A general lull in political interest has replaced the period of heightened tension that culminated in the miners’ strike and the election. The opposition parties have avoided any action which might lead to a new election. Relations between union leaders and governmental ministers seem friendlier than at any time since the row over In Place of Strife in 1969. And local industrial disputes of any size continue to be few and far between.

Yet beneath the surface of political life, all the elements of crisis which were evident in the run-up to the election remain. British capitalism has made no progress at all towards solving its three-fold economic problem: the combination of a very low level of investment, a massive balance of payments deficit and escalating inflation.

The ‘experts’ who advise government and business are extremely confused as to exactly what the economic prospects for the next few months are. Their predictions as to inflation vary from a rate of inflation of 15 per cent to one of 25 per cent; some believe that economic stagnation can solve the balance of payments deficit within a year, others see little or no improvement taking place; and prophesies as to the scale of unemployment next winter range from 700,000 to one and a half million.

But some things are accepted by all their differing prognoses: unemployment will rise sharply, the upsurge in prices will continue unchecked, and the only way to restore investment is to hold wages at around the Phase Three level.

This leaves the government with very little room at all for manoeuvre. How little room has already been shown by its retention ‘temporarily’ of the statutory powers of the pay board. It will be shown again as the budget begins to take effect.

In opposition, Dennis Healey was one of the few Labour leaders prepared to engage in vote-catching, populist demagogy, claiming at the Party conference that Labour would ‘squeeze the rich’ until the ‘pips squeaked’. Yet his first budget is going to do very little indeed either to hurt the rich or to protect the lower paid against inflation. The Economist calculated that ‘the married manager with an earned income of £15,000 a year ... will pay only an extra £400 on top of his present £6,600 in tax’. It is the better paid factory workers ‘who will find that they are having to bear the broadest national burden of the income redistribution attempted in this budget.’

The Sunday Times Business News has quite correctly pointed out that

‘It is hard in all this to see any clear transfer of cash from the rich to the poor, or even from the better off to the worse off. Some may be lucky and come out as winners at the end of the tax-benefit-subsidy equation, but the chances seem to be almost wholly random – and very little related to measures like income-level.’

The food subsidies may slow down the rise in food prices slightly, particularly in the spring and early summer. But their impact will soon be more than compensated for by the rise in electricity charges and the tax increases on drink and tobacco.

The Financial Times has concluded that ‘the budget will tend, on balance, to increase retail prices rather than reduce them’. Moreover, by leaving intact the Tories’ cutbacks on government expenditure – particularly expenditure on schools and hospital construction – Healey has ensured a rise in unemployment in the next few months. But ‘a rise in unemployment, like the main effect of rising prices on real consumers’ living standards is unlikely to become apparent until the autumn.’

In the meantime the government hopes that its rhetoric about a ‘social contract’ will persuade unions to surrender their negotiating rights voluntarily and that circumstances will enable it to get a working majority at a snap election.

The Union Response

THE UNION leaders are certainly doing their best to help Labour out – if only until the Industrial Relations Act and its threat of further massive fines is removed In this respect, however, their behaviour does not differ all that much from that in the closing months of Tory rule. Their stance then was to refuse any formal agreement with the government, while tacitly accepting Phase Three.

They want to avoid an all-out conflict of any sort. Yet at the same time, they want to avoid the sort of rigid commitment to Phase Three norms which would leave them without room for manoeuvre if militancy did develop in particular industries. They prefer the role of Joe Gormley in the miners’ dispute – making the necessary noises to seem to back his members – to that of Frank Smith, the Leicestershire miners’ secretary who spoke out against industrial action and earned the complete contempt of the members.

In practice this means doing everything possible to gain acceptance of deals within the norm, maintaining apparently friendly discussions with the government, but leaving room for a let-out if rank and file pressure really builds up. As the TUC leaders (including Jack Jones and Hugh Scanlon) put it at the March monthly meeting of the National Economic Development Council, ‘claims which raised a group’s standard of living over and above increases in the cost of living would have to be kept “to particular groups, notably the lower paid”.’

While the miners were waging their long overtime ban, prior to smashing through Phase Three with their strike, other union leaders were successful in persuading their members to settle within its limits. These claims come up for renewal in the autumn, by which time inflation will be really biting and bitter struggles are likely.

Revolutionaries have to be preparing now to take advantage of any such development by putting the argument against wage restraint at the shop floor level and in the unions. Often we will find ourselves isolated. The attitude of the union leaders can find an echo in many sections of the ‘official’ leadership in the factories – among older convenors and stewards who are integrated into the union machine and have loyalties to Labour. The Communist Party will make the occasional denunciation of wage restraint – but will not want to embarrass its friends in the trade union leadership by organising to turn its words into deeds. The difficulty of organising militant action will be increased by changes that have resulted from 18 months of statutory wage restraint: stewards are much more inclined to rely on union officials when it comes to local disputes than they used to be.

But there are still many militants on the factory floor who reject the idea of wage restraint. The success of the conference called in Birmingham at the end of last month by several rank and file papers was one indication of this: the return of the Labour government did not diminish the number of delegates which were sent Such militants can be drawn closer to IS in the period ahead, even if there are no major disputes, by systematically putting across the arguments against incomes policy and by insisting that unofficial action is possible without waiting for the union leaders.

It is worth recalling that the major breakthroughs against the last Labour government’s wage restraint took place in 1969-70 in industries which were not traditionally militant, in a series of more or less spontaneous strikes led by a new layer of militants. The union leaderships were only able to regain control of the movement by a rapid reversal of attitude. This time the breakthrough is going to come much more quickly and the rate of inflation can make it very explosive. The attempts of the union leaders and their supporters to restrain the movement can leave the field open for the development of a real rank and file movement.


BUT EVEN if the government does have plain sailing on the wages front for a short period, bitter industrial struggles can develop in many localities over a different issue – that of redundancies. The cut-backs in government expenditure, introduced by the Tories before Christmas and left intact by Labour, are going to begin to take effect in the next few months, leading to a rise in unemployment in the building and construction industries especially. And some other industries are already preparing for the sort of ‘rationalisation’ that closed dozens of factories and led to tens of thousands of redundancies in the last period of economic ‘stop’ in 1971-72.

The 1,700 redundancies at the Scottish Daily Express in Glasgow and the threat to thousands of jobs on the Concorde in Bristol point to a growing trend.

These particular threats to jobs have quite naturally, caused confusion among some socialists. There seems a contradiction in denouncing the reactionary ideas propagated by the Daily Express and the waste involved in Concorde, while protesting at the loss of jobs when the closures take place. Certainly, it would be a grave mistake for socialists to raise the slogan ‘Defend the Express‘ or, like the French Communist Party, to become ardent defenders of an aircraft designed to carry first class passengers.

But that does not prevent us opposing the redundancies. The Express’ Scottish office was not closed because the paper pumps racialist ideas into the minds of Scottish workers, but to make pumping in of such ideas from the Manchester office more profitable. Concorde is not being threatened as part of a programme for replacing waste production by production to satisfy working class needs, but rather because it is not providing British capitalism with the competitive edge in profit making that was hoped for.

What is actually happening is that workers are being asked to pay the cost of making capitalism more efficient in both cases. We have to argue that capitalism was responsible for the waste of resources involved in producing the Scottish Daily Express and Concorde in the first place, and that it must bear the cost of ensuring that workers do not suffer as a result of the ending of such ventures.

Reformists will try to pose such problems in terms of the options that are available for preserving jobs within the system. They will demand an answer as to whether the jobs should be axed or the Concorde and the Daily Express continue. We have to reject the question itself. Capitalism has led to the present impasse in Bristol and Glasgow, and it is up to capitalism to find a way out of the impasse. What we have to do, is to organise workers to prevent themselves suffering in the process, demanding work or full pay.

The experience of 1971-72 showed that redundancies and factory closures can be resisted – providing the correct tactics are adopted. Some sections of the ruling class are already looking to high unemployment as the best way to cut real wages: Samuel Brittan of the Financial Times, for instance, has expressed the view that if the government is not prepared to launch a frontal attack on the unions, ‘the only weapon against a really runaway inflation is a severe shake-up of the labour market’. Resistance to factory closures and redundancy is going to be even more essential this time round than last time.

The tactics have to operate at two levels. Firstly, they have to mean a fight against redundancy within the particular firm. Employers have to be prevented from distributing redundancy notices and forced to guarantee work or full pay by a variety of tactics, ranging from overtime bans and the blacking of jobs to occupying works so as to stop any movement of machines, materials or finished work.

But some struggles will inevitably demand that action goes beyond the confines of particular firms. Demands of a political character then have to be raised, and these demands are of necessity posed in relation to the government (whether it be a Labour government or a Tory government). If a firm goes bankrupt, then the question becomes one of forcing the government to intervene to preserve all the jobs without reduction in wage rates. This is the real meaning of the slogan ‘nationalisation under workers’ control’ in such a context. It cannot mean establishing an island of socialism within capitalism, as if somehow a firm under workers’ control would be more competitive than one that wasn’t (for, even if workers’ control in that sense was more efficient, the effect would merely be to drive other, capitalist controlled firms out of business and their workers on to the dole queue). What it should mean is workers forcing the capitalist state to preserve their wage rates and their jobs.

Such struggles are still struggles within the capitalist system. But they prptect workers against the attacks which the ruling class would like to make and build up the confidence for further advances. If, for example, the government had accepted the demand of some Express workers that it provide them with money to produce a newspaper from the premises as a co-operative venture, that would not have even ensured that the paper produced was a socialist paper. It may well have accepted capitalism as fully as the Express itself. But the forcing of the government to save jobs would have represented a defence of working class interests within the system and would have been crucial in raising the fighting spirit of other workers faced with redundancy later in the year.

Exposing Labour

AMONG some sections of workers there is still the feeling ‘give Labour a chance’. Revolutionaries have to find ways to break down this attitude in practice in the period ahead.

One approach, found within the Communist Party and among some revolutionaries, is to raise demands of a very general kind of the Labour Party, relating in particular to the question of nationalisation. The International Socialists have taken a very different approach to this. While Labour was in opposition we did not raise the slogan ‘Labour to power on a socialist programme’, and we are not raising similar slogans now. Our argument is not, of course, based upon opposition to socialism or on any belief that reforms to the system can deal with the symptoms of crisis. It flows from quite different considerations.

Firstly, Labour could not possibly carry through a socialist programme, since it is committed to attempting to run capitalism more efficiently than the Tories. The only difference in this respect between the left and the right is that the left believes that it can slowly transform capitalism through reforms while operating it on a day-to-day basis. Revolutionaries reject any such view and can have nothing to do with propagating it. To do otherwise would be to spread illusions about what is possible on the basis of Labour’s reformist methods. In this our position differs fundamentally from the Communist Party, which speaks of ‘pushing Labour to the left’.

But that is not the end of the matter. For there still remains the question of how to break workers’ illusions in Labour’s reformism. If there were a mass movement, involving hundreds of thousands of workers with a very high level of commitment to the Labour Party, who expected Labour to carry through a programme of transforming society, then we would certainly organise alongside these workers to insist that Labour implement such a programme – even though we knew it could not. We would effectively say to other workers, ‘You think Labour can transform the system. We do not. Let us work together to put the matter to the test and see which of us is right.’ We would expect Labour’s failure to implement socialist measures to then push these workers towards us.

However, the situation we face at present is not like that. There are not large numbers of workers who expect radical social change from Labour. The Labour Party’s own local organisations remain denuded of working class activists. Most militants do not expect massive nationalisation from Labour, but marginal reforms and a dropping of various repressive measures introduced by the Tories. It is Labour’s failure to deliver in this respect which will make them break finally with Labour.

There are a number of issues with which large numbers of workers are concerned and over which Labour in opposition promised changes. These are the issues which will determine their attitude to Labour in the period ahead: questions like the Industrial Relations Act, picketing laws and the imprisoned Shrewsbury building workers, the statutory wage freeze and rising prices, the Housing Finance Act and the case of the Clay Cross councillors, and, for black people in particular, the 1971 Immigration Act and the House of Lords’ decision on ‘illegal’ immigration. Labour may be able to make the occasional concession in relation to one or other of these questions, but given the present crisis prone state of the system, it cannot act on all of them. We have to push demands so as to hammer the point home.

However, it is not good enough merely to make demands on Labour and then wait for it not to deliver the goods. The key point about working-class consciousness in Britain in 1974 is not that workers expect a great deal from Labour or from reformism in general. They do not – they remember that all the parties in the recent election spoke of ‘austerity’ ahead. What is true, is that workers do not yet have faith in their own ability to transform society by collective action. Their loyalty to Labour is residual, continuing to exist because they do not see an alternative.

The job is to begin to build up faith in collective action, by showing workers that they can gain victories, even in small battles. Partial demands in relation to the Labour government should both expose Labour in practice and form the basis on which movements of sections of the class independently of Labour can be built. This, for us, must be the main task.

In our propaganda and agitation we have to emphasise that the crisis itself can only be solved by socialist measures. But not in a way that gives the impression that Labour could implement such a solution. Instead, we have to be absolutely honest with people and argue, that within the framework of the system as accepted by Labour, there is no solution to the problems that cause rising prices, redundancies, and so on. All that workers can do is to maintain their independence from whichever government is in power and defend themselves against the symptoms of crisis, by a continual struggle.

The crisis itself could be solved by wholesale nationalisation, by workers’ control to prevent managerial sabotage, and by reorganising production so that it was for need, not profit. But such a process cannot be commenced by waiting on the Labour government. It demands the active intervention of a revolutionary working class movement. And that movement can only be built out of the fight to defend workers’ conditions against the effects of the crisis and to maintain the independence of the organisations of the class.

Last updated on 18 November 2009