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International Socialism, February 1977


Notes of the Month


From International Socialism (1st series), No.95, February 1977, pp.3-4.
Transcribed & marked up by Einde O’Callaghan for ETOL.


Britain: The Political Crisis


From International Socialism (1st series), No.95, February 1977, pp.??.
Transcribed & marked up by Einde O’Callaghan for ETOL.


THE British ruling class entered 1977 in a mood of gloom and uncertainty. For the first time since 1974 the basic assumption of ruling-class strategy is being questioned: is the present Labour government still the best possible capitalist government for the time being because it alone can win the support of the trade union bureaucracy for the policy of mass unemployment and wage restraint essential to bail out British capitalism?

Labour’s Lowest Point

Certainly no one can accuse Wilson, Callaghan and Healey of not having kept their side of the bargain. Thanks to the Social Contract the employers have enjoyed two rounds of wage restraint. In 1976 alone Healey introduced four packages cutting public spending by a total of £4½ billion. Unemployment is at the highest level since the 1930s and is still rising. By any standards the present Labour government is the most right-wing government since the days of Stanley Baldwin in the 1920s and 1930s.

Yet at its low point (so far) at the end of last year, with the pound swooping down and by-election defeats whittling down its majority, the government faced very heavy pressure from the right. The House of Lords threw out the Shipbuilding Nationalisation Bill. A couple of right-wing Labour backbenchers were responsible for the castration of the Dockwork Bill. The Tory opposition, emboldened by its by-election victories, bayed for the government’s blood.

In part, the massacre of Labour candidates in recent by-elections reflects the continued decay of the party’s working-class base. Mass disenchantment with falling living standards and Labour corruption is reflected in growing electoral support, in England for the Tories and the fascist parties, in Scotland and Wales for the Nationalists. The next round of local elections in May is likely to see this process taken even further with Labour candidates going down to defeat in many working-class areas.

Tribune in Disarray

A major reason for the growing lack of confidence of the ruling class in the Labour government is the crisis within the Labour leadership.

This crisis is only partly a result of the activities of the Labour lefts. Healey’s December mini-budget was bitterly attacked by the Tribune group. But, when it came to the vote in the House of Commons, only 26 Labour MPs were prepared to vote against the cuts, although the Tories were abstaining and so the government was not in danger. When we remember that the Tribune group claims a membership of 70 to 80 MPs and that the Labour MPs voting against the cuts included a number of right-wingers, this is a pathetic showing.

Nor have the lefts much impact outside Parliament. Despite the highly publicised rows on the Labour Party National Executive, its support for the anti-cuts demonstration last November was not reflected in any mobilisation by local Labour parties.

At the same time Michael Foot moves continually to the right. He not only champions the Social Contract, but now increasingly supports the right-wing within the Party. For example, Foot came to the defence of Nevile Sandelson, the ‘moderate’ MP for Hayes and Harlington in trouble with his constituency party, and opposed the appointment of Andy Bevan of the Militant as national youth officer.

The left have been unable to dent the coalition of right-wing parliamentary leaders and trade union leaders that runs the Labour Party. Instead, they find themselves in Parliament and in government under increasing pressure not to rock the boat

The Rats Leave the Sinking Ship

But the deep-seated ideological crisis that Labour is suffering affects all wings of the party. The December mini-budget was only agreed after bitter opposition to further cuts from right-wing Cabinet Ministers like Anthony Crosland and Shirley Williams.

This does not mean that they have been suddenly converted to Marxism. After all, Crosland is the author of The Future of Socialism and ideological mentor of the right-wing within the Labour Party, led since the war by Hugh Gaitskell and then Roy Jenkins.

But the right’s strategy has been destroyed by the crisis. For Crosland and the rest socialism meant, not the nationalisations beloved of the left, let alone workers’ power, but full employment plus the welfare state. In the years of the long boom of the 1950s and 1960s they argued that, thanks to Keynes, capitalism had solved all its problems, and an enlightened social policy could offer the working class all the benefits of socialism without any messy, unpleasant class struggle.

Today that strategy is in ruins. Full employment is just a memory. To solve the crisis Crosland, Williams and the like have found themselves forced to slash to pieces the social programmes in which they placed so much faith. The result is widespread cynicism and demoralisation on the right-wing of the Parliamentary Labour Party, with Roy Jenkins preferring to preside over a decaying EEC, and the ablest of the younger MPs, like Brian Walden, shunning office (Walden prefers to stay on the backbenches and enjoy the huge consultancy fees paid him by the Bookmakers’ Association).

Benn’s Star Rises

In a sense, the Tribunites have been left holding the baby. Today they are identified, not with the traditional causes of the Labour left – support for further nationalisation, opposition to British imperialism and to NATO – but with the old policies of the right – full employment and the welfare state. It is in this guise that they oppose the cuts, advocate Keynesian policies of reflation and campaign for import controls. There is nothing particularly socialist about any of these demands.

But, as we have seen, the lefts have been unable to mount any significant challenge to the government inside or outside Parliament. Tony Benn, who had always kept the Tribunites at arm’s length and skilfully managed to disassociate himself (discretely) from government policies while remaining a Minister, is likely to be the main beneficiary of the ideological crisis within the Labour Party. He will be a formidable candidate for the party leadership if (or when) Labour loses the next election.

The Tory Alternative

The result of Labour’s internal disarray is drastically to reduce its credibility in the eyes of big business. But the alternative is hardly more inviting. Under Margaret Thatcher’s leadership the Tory party has moved sharply rightwards. Today the Conservatives stand for an end to the Social Contract and huge cuts in public spending as part of a general reduction in the economic role of the state.

This programme represents a marked shift in Tory strategy. Since the war Conservative governments as much as Labour ones have developed close links with the trade union bureaucracy, increased public spending, rescued lame-duck firms and expanded the welfare state – all the things that Thatcher and her colleagues reject today. In the 1960s the convergence of the two parties’ policies was dubbed Butskellism after the main Tory and Labour proponents of these policies – R.A. Butler and Hugh Gaitskell respectively.

The Heath government in the early 1970s took the first steps away from Butskellism. The Selsdon document that formed the basis of the Tory manifesto in the 1970 election promised to use the whip of unemployment, rather than deals with the TUC, to curb wages, and to let unprofitable firms go bankrupt. However, once in office, Heath retreated under the impact of mass working-class opposition, rescuing Rolls Royce and UCS when they were in trouble, trying to win TUC support for wage restraint, and so on. This U-turn did not save Heath from defeat at the hands of the miners in 1974.

Thatcher and Monetarism

The Thatcher team represents a much greater break with the past. Many of its members, like John Biffen and Angus Maude, were bitter opponents of Heath’s policies. Others, like Keith Joseph and Thatcher herself, are now highly critical of the ‘Barber boom’ of 1972-3, when Heath’s Chancellor of the Exchequer boosted the economy by expanding the money supply on a massive scale, thus stoking up the inflationary fires that helped to bring the government down. Many of the remnants of the old Butskellite days like Maudling, as well as Heath men like Peter Walker, have been cleared out of the Tory leadership. The economic panacea advocated by Joseph, Biffen and other Tory ideologues is monetarism. This theory (fathered by, among others, Milton Friedman, the right-wing American economist) holds that inflation is caused by government policies that increase the money supply faster than the real rate of growth and so force up the general price level. The solution, monetarists argue, is to hold the increase in the money supply steady and let the economy find its own level through bankruptcies that will get rid of the inefficient firms and allow rising unemployment to discipline workers.

Monetarism may be attractive to many British capitalists because it corresponds to their sense that the central role of the state in Western capitalism today builds inflation into the system (see Notes of the Month, International Socialism 94). But they still need the state, with all the difficulties it creates for them, to protect them against their foreign competitors and provide them with subsidies and investment grants and easy loans. So the British Friedmanites have far from won the day.

Back to Confrontation?

Moreover, a Thatcher government would create a problem of political management for big business. Her team is largely composed of untried and not strikingly competent men and women united much more by ideology than is normal in a Tory party whose tradition is one of pragmatism and flexibility in the pursuit of ruling-class goals. Such a government would be neither able nor willing to work effectively with the trade union bureaucracy.

Yet although big business may jib at the price of the Social Contract – concessions like the Employment Protection Act – and the reduced room for manoeuvre it involves, it still needs the support of the TUC as much as ever. The experience of the Heath government taught the employers that wage restraint and attacks on shopfloor organisation cannot be enforced against the opposition of the trade union bureaucracy without the danger of massive social confrontations.

So, despite its growing disgruntlement with Labour, big business is likely to stick with it for the time being. The opposition to Thatcher’s devolution policy mounted by Heath and Tory grandees like Home, the conciliatory attitudes towards the Labour government and the TUC struck by Heath and Maudling, reflect a trend in ruling-class thinking that is far from satisfied with the present Tory leadership. We can expect to see further pressure on Thatcher from big business to mend her ways and adopt more conciliatory policies.

A Socialist Alternative to Labour

In the meantime, the Labour government is likely to stagger on as the only government able to win the TUC’s agreement to the cuts in living standards demanded by the employing class. But it will survive as a government bereft of all policies of its own. The Devolution Bill fits this situation perfectly, since it completely fills the parliamentary timetable and causes as much confusion within the Tory party as within Labour, confusion compounded by Thatcher’s inept handling of the business.

Both the main capitalist parties have been thrown into disarray by the crisis. The situation is one that offers great opportunities to the Socialist Workers’ Party. In order to seize these opportunities, we must continue our policy of contesting parliamentary elections in working-class areas. However, success will depend on our ability to win support on the shopfloor. It is to the struggle in the factories that we must now turn.

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