From International Socialism (1st series), No.13, Summer 1963, pp.7-14.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
Nigel Harris (see IS7) is now 27; has received his PhD from the London School of Economics and is currently motoring to India.
The British Conservative Party has been historically a sensitive and reliable index of the balance of power within the British ruling-class: the views of Conservatives as a group are not distinguished in any significant way from broad opinion within that class. Over time. Party attitudes reflect the changing structure of the British economy and its place in the world; only relatively rarely, has a declining section of the ruling class monopolized power in the Party, so prompting open political conflict. The reasons for this historical flexibility by the Party, the ease with which it absorbs rising sections of the class, are fundamental to the history of Britain – the much-lauded ‘continuity’ of the Constitution is only one of the most obvious results of this flexibility.
Since the eighteenth century, the British rulers have absorbed without disastrous conflict two major groups-entrepreneurs and managers. Each time there was considerable strain culminating in a period of radical Government (the 1906 Liberal and 1945 Labour Governments) that to many seemed to widen the conflict to include non-ruling class pressures. Each time, the incoming group clearly shifted the emphasis of ruling-class attitudes, but was also itself very much changed by accession to power. The mutual changes resulted in a new public ethos.
British Parliamentary history since 1800 has covered the fortunes of three major ruling groups: the class of 1800, while including elements such as bankers and merchants, was solidly built around the owners of land; to them were added through the nineteenth century. Victorian entrepreneurs; and finally, after the first World War, managers increasingly sought to combine with the ruling-class existing at that time. The first group, landed aristocrats and squires, had complete monopoly of political, and initially economic, power, was rooted in a relatively static agriculture and refined an ideology that sought to cover the entirety of national life and make it dependent on landowners as a class; the second group, entrepreneurs, in opposition to the existing power-holders, founded their claims on their individual abilities and, correlatively, on what they owned as individuals – industrial property – and stressed competition, progress, conflict and change; finally, the third group sought to marry stability and security to the progress ethic of the entrepreneurs, to create a changing society that did not generate conflict. Each group created around these central attitudes ideological emphases to defend themselves or attack their opponents. Whig-Toryism, the creed of 1800, was threatened by entrepreneurial Liberalism; the resulting marriage, Liberal-Conservatism, was threatened in the present century by corporatism.
This piece of wildly over-simplified history is not intended to do more than give historical depth to what follows. Each of these three ideological tendencies, themselves representative of social and economic changes in Britain (and, in their turn, the cause of further changes), incorporated an attitude towards working-class organization, which, it is hoped, will be discussed in a later article. The first two tendencies were at different times violently opposed to any form of working-class organization. The Whig-Tory view affirmed the correctness of the ruling-class on all issues: the lower classes were capable only of evil unless controlled by the rulers, and ruling-class supremacy must be ensured through the use of physical force. This attitude was possible only where the ruling-class had a complete monopoly of all social, political and economic power, was not bound by traditional legal norms, did not have to face the revolutionary impact of violent economic change (a necessary concomitant of economic progress under capitalism), and where workers were not organized by employers in large and disciplined aggregates and did not have outlets for challenge (viz. universal suffrage). Under later capitalism, such a ruling-class attitude could be no more than an open incitement to civil war. The heyday of this attitude, in conflict with developing capitalism, produced ruthless counter-measures to root out attempts by workers to defend themselves – the Combination Acts, the Spa Field Riots, Peterloo and the Six Acts are only the most notorious landmarks of that period. Later Governments occasionally resorted to force, but decreasingly. and with much more clearly limited intentions since the real struggle had become one of ideology.
The second tendency, Liberalism, was pitted against Whig-Toryism and the status quo until the middle of the nineteenth century. The Tory Party, the representatives of landed power, through Peel and Disraeli, slowly adopted itself to an industrial society – shedding its most reactionary elements, and seeking to merge landed and industrial power. The Liberals’ monopoly of the entrepreneurial vote, however, seriously threatened the survival of the Tories if the landed interest was in decay. For a brief time, the Tories looked to the lower middle and upper-working class for an alternative social basis, and offered as inducements a Reform Bill which increased the suffrage, various welfare measures to improve working-class conditions, and reforms to remove the disabilities preventing trade union developments. Such was the volume of legislation that one of the first ‘working-men MPs’, Alexander Macdonald, was prompted to say that the Tories had done more for the working-class in their period of office up to 1874 than the Liberal Party had done in a quarter of a century.
However, Tory initiative in this field was only part of a downward auction – both parties racing to capture the vote. Even while the Tories were beginning to become reformers, businessmen, growing more critical in the face of foreign competition of the Liberal centre-piece – Free-Trade and competition – were moving out of the Liberal Party into the Conservative. The social basis of the Liberal Party drained away, and just as the Tories earlier had been forced by this phenomenon to bid for working-class support, so the Liberals were impelled in the same direction. The details of the final collapse of the Liberal Party cannot concern us here: suffice it to note that by 1925, ruling-class opinion was virtually unanimous in supporting the Conservative Party, and the traditional two-party system was at an end. Henceforth, conflicts within the ruling-class had, perforce, to be fought out within the Conservative Party rather than between two ruling-class parties.. Whether the Labour Party will in the future succeed in becoming a representative of a section of ruling-class opinion .is not clear, but even if it does, this does not detract from the verdict on’the period from 1925 to 1962 when, apart from six years, the Conservatives were in office.
The period up to 1925 saw the reconciliation of the ruling-class to the existence of trade unions. This was partly because, as we have seen, of the need to assimilate sections of the working-class into governing political loyalties. It was stressed that the unions were purely industrial organizations, necessary to strengthen the weak position of labour vis-a-vis capital, and, after 1925, to increase the efficiency of management in saving labour. The Conservative response to the 1926 General Strike, the 1927 Trade Disputes Act. illustrated this approach. The State, it was emphasized, did not oppose the unions, only their political interests. That the unions and the Labour Party were already too strong was demonstrated by the fact that the Government did not positively forbid political affiliation, but merely made it slightly more difficult. At the same time, some sections of opinion were developing a different approach, namely, one which positively supported trade unions as a useful adjunct to managerial organization of the factory. The unions, it was urged, should be invited to take over more responsibilities for labour, provided that the unions accepted more willingly managerial determination of broad policy. Collaboration should be not just on the factory-floor, but nationally in some form of ‘Industrial Parliament’ where employers and trade union leaders would meet continuously and help to shape State policy.  In the final corporatist doctrine, such a body, incorporating all major economic corporations – labour, managers and capital – with State representatives would supersede Parliament and itself become the State.
The sections of society, measured in existing power rather than by heads, merge so that, theoretically, class conflict is impossible. At this point, the trade unions become merely one of the State institutions for controlling the working-class, rather than defending it.
In the Liberal view, unions were instruments of the market, representing the relative strength of labour as a commodity. Economic ‘law’ should be supreme, and political intervention nothing. The corporatist view, by contrast, stressed the possibility of shaping the economy, planning and directing it in particular directions. While Liberals saw economic conflict as necessary and beneficial, corporatists sought consistently to eliminate such conflict and to subordinate all interests to those of the State.
Between the first World War and the Second, British capitalism was divided by the struggle between what has earlier been called the Liberal-Conservative ruling-class and a rising group called here ‘managers’. To call the aspirant group ‘managers’ is not particularly accurate, since while it did stress managerialism, it had other characteristics of greater interest. The ‘managers’ represented a new highly-technological, capital-intensive section of industry, composed of firms of very great size, controlled rather more by functionaries than by Victorian entrepreneurs, and devoted to the creation of planned monopolies rather than competition in open markets. As in each industry, they sought supremacy for one firm (nationalized or private), so they were eager to close the entire domestic economy and end free trade and the free movement of capital – a necessary means of focussing domestic finance upon British capital-intensive industry. Since managers were seen as the impartial authority which welded together capital and labour in the factory, so the State was seen as the impartial authority which would weld together the old bourgeoisie and .the working-class; just as the individual monopoly planned an entire industry, so the State would plan the entire economy. Equilibrium between competing producers would give way to co-ordinated and functional production by single producers, bargaining would give way to ‘co-operation’. Alongside this new conception of an industrial economy, old traditional industry continued to stress the attitudes which had built British industrial supremacy in the nineteenth century and which opposed State intervention as the last indignity. It required the great slump to qualify those attitudes, and introduce ‘protection’ of British markets from foreign competition. This included State control of capital exports, but it did not allow the State to plan so that all domestic industry was focussed in a single onslaught on foreign markets. Numerous efforts were made to force the old basic industries to amalgamate and reconstruct themselves, but most of these efforts were blocked by the stout opposition of the industries concerned. It required a Labour Government with an overwhelming majority as well as a world war to force through the crucial changes needed to establish corporate monopolies in .the major traditional industries and break the power of the old Liberals. The .crucial stimulant of this internal struggle within capitalism was slump and long-term secular change in the economy. Liberalism had been the expression of an expanding capitalism, optimistic and aggressive. Corporatism, both the development and the contradiction of Liberalism, was a much more restricted, defensive and relatively pessimistic response to a crowded world market. Corporatism itself spanned different shades of emphasis – the pluralist varieties were positively content if economic stagnation was the price of stability; the étatiste versions were less concerned with stability, and more with forced progress through State direction.
These trends were reflected within the Conservative Party between the Wars. It was a Conservative Government which sought to force the coal industry into amalgamations and nationalize the land on which pits stood; it was Conservative radicals like Harold Macmillan  who urged it on to nationalize, for example, basic industry, finance and food industries; it was Conservative MPs who blocked attempts to force amalgamations and begin introducing planning devices. The War ended abruptly the ideological flux, and established a planned and State directed economy. After the War, the tempo of the economy was quite different. – After 1947, indefinite expansion seemed possible, and ‘freeing the economy’ became more necessary to business than reorganizing it. As a result, despite the corporatists in power within the Conservative Party, the ideological emphasis shifted decisively to Liberalism once more, and stayed there until-the stresses of the mid-fifties and the intensification of international competition produced a reversion to étatiste corporatist attitudes.
These changes produced parallel shifts in the Tory attitude to the trade unions. The Liberals attacked all attempts at State intervention in industrial relations, ridiculed exhortations to wage restraint and opposed any move towards a wages policy. The only action permitted to the State was through means that did not redistribute power between different sections of society – through broad credit influence, deflationary and stimulatory, through monetary and fiscal policy. By contrast, the corporatists urged the State to intervene even more, to prepare a general plan, the centrepiece of which should be a clear wages policy. As reward for accepting this, the unions should be incorporated in the Constitution .given sole responsibility for labour, including the ‘closed shop’, and consulted as of right on all industrial issues. Some Tories, however, were fully aware that the more the unions were absorbed into the status quo, the more they would become discredited amongst their membership – the need to support union leadership and keep it powerful was always a vital moderating influence upon the pure corporatist aspirations.
With expansion, then, State intervention and heavily regulating restrictive unions became a burden on industry which needed a flexible wage structure and high labour mobility. Competition, the opportunity to seize a larger part of an expanding market, swept away the carefully assembled fortifications of the depression period – as much in State welfare provisions as ‘restrictive practices’ on the factory-floor. Conflict and struggle .instability and change, became suddenly vital for that expansion, whereas before they had been anathema, the stimulants of revolution.
Up to 1947, the Conservatives, clearly in Opposition for at least five years for the first time since 1915, were concerned with internal Party struggles. The Election had overwhelmingly rejected the interwar record, and removed (with retirements) some sixty per cent of the pre-Election Parliamentary Party. This decisively broke the power within the Party of the old interwar ‘Liberal’ elements. The distribution of power within the Party conformed more closely to the actual distribution of power within the ruling-class. The corporatist radicals, representatives of large-scale technological industry and led by Butler and Macmillan, took over major influence. At the same time, however, the Party was flooded with new recruits, fresh from five years’ war service. They initially supported the radicals, but as the economic climate of the country changed they had less compunction than the corporatists about greeting the ideological companion of that change: a revival of Liberalism clearer and more principled than at any time since the first World War. Paradoxically, after major Party reforms (symbolized in the 1947 Industrial Charter and Woolton reorganization), the Conservatives seemed more, not less, ‘diehard’ in 1950 than they had been in 1945. The Party which had been very lukewarm about State planning in 1945, had accepted it wholeheartedly and enthusiastically in 1947, by 1950 had developed a principled and consistent opposition to planning.
What did these changes represent for the trade unions? First, the Party was concerned to try and recruit working-class support – both through setting-up a Party organization for trade unionists (the primary function of which was to encourage ‘contracting out’ of the political levy), and through angling its propaganda at workers, warning them of the dangers of the boss (the State), and the union leaders conniving to exploit the rank-and-file of the unions. This line of attack, fundamentally Liberal and anti-corporatist, was used extensively, but at the same time the Party stressed the importance of trade union leadership and attacked both State and rank-and-file interference in that leadership. As a consequence of this last tactic, the leadership played down Conservative criticism of particular union practices lest these embarrass the unions and make collaboration more difficult.
On the more fundamental problem, the reconciliation of free wage bargaining with full employment and a stable currency, the continuing split between corporatists and Liberals came out sharply – with the first increasingly dominant up to 1947, and the second up to 1950. The Tory radicals attacked Labour for not planning, and for not having a full wages policy, the key element, they said, in any attempt to plan and needed to strengthen the union leadership when facing the rank-and-file. By contrast, the arch-Liberal Hudson (a Shadow Minister) announced firmly:
’We believe in the system of private enterprise. Under such a system an individual trade union is free to negotiate with the employer concerned, and reach such a settlement as their respective strengths allow them to reach ... Under such a system of private enterprise no Government wages policy is essential’. 
The corporatists scoffed at the possibility of entirely free trade unionism with full employment – unions, employers and State must create a ‘partnership’. The Industrial Charter (1947), was mainly concerned with this notion of ‘partnership’.
The victory was short-lived. Shortly after the Charter, Churchill asserted unequivocally: ‘We believe in collective bargaining and the right to strike. We believe in the independence of the Trade Union Movement from Government policy’  If the economy were ‘freed’, it was argued, expansion would be so fast that any union claims could be accommodated within the rate of growth without inflation or unemployment.  Thereafter, the Tories posed as Liberal champions of free trade unionism. They attacked wage restraint and freeze, and urged that wages be allowed to rise ‘naturally’ both to increase incentives and so output, and stimulate the domestic market. The relationship of the Labour Government to the unions was attacked for eroding the defences of the working-class, as the dangerous first step to State Company-Unionism and totalitarianism on the Russian model.
Power posed different problems for the Tories. While their general economic case seemed confirmed by the expansion of the economy up to 1955 (prompting an even more extreme development of neo-Liberalism), they never risked pushing the Liberal case too far in the field of organized labour. In general, however, they favoured the Liberal view of the economy as the crucial determinant of wage-levels, while stressing the need for collaboration – ‘restraint’ was always stressed as desirable, and ‘responsibility’ by the unions as its precondition.
Corporatist theory necessarily assumes society is harmonious. The vast majority accept the existing leadership, its definition of problems and proposed solutions. Thus if the leadership is criticised or unpopular this must be the result of ‘failures of communication’ between leaders and led. Lost by-elections lead to an improvement by the Government of its public relations. Strikes are regarded as a criticism of the management’s propaganda. If Government or management explained itself properly, showed how basically just and right they were, the problem would disappear and the basic loyalty of all reassert itself. The Industrial Parliament notion was an attempt, by implicating trade union leaders in the formation of policy, to convince workers of the justice of that policy (as well as to detach the leaders of the unions from their rank-and-file). However, the union leaders were well aware that workers were less innocent than portrayed in Tory mythology, and would not follow union leadership anywhere. Their resistance to formal collaboration at national level compelled the Tories to set up a series of independent public relations bodies to explain Government policy, to represent the ‘national will’ ‘impartially’ and define industrial problems for everybody. Successive Courts of Industry, the Cohen Council, the ‘Three Wise Men’, and, finally, the National Incomes Commission (NIC), were all such attempts to institutionalize a ‘national will’ independent of the Government, but one which always accepted the Government’s point of view. If the unions defied ‘restraint’ as recommended by these worthies, they defied the ‘national will’. The failure of the earlier of these institutions, along with inflationary and payments crises, twice compelled the Government to intervene to enforce its own policy – in 1957 and in 1961.
The Government, then, rode both horses – a general deflationary policy on Liberal lines, along with less effective attempts to defeat the implications of free collective bargaining by persuading the unions to carry out Government policy themselves through ‘restraint’. Both elements of policy were attacked by supporters of the opposite view. The Liberals attacked ‘restraint’ as economically inefficient (since it distorted the labour market), as eroding the authority of trade union leadership, and as, above all, ineffective against inflation. Maurice Macmillan, for example, declared: ‘It is no good appealing for wage restraint... Employers will continue to pay higher wages so long as they are able to sell their goods successfully and at a profit, and the unions and employees will rightly continue to press for a higher share of these profits. The function of the Chancellor is to create a situation in which it is impossible for private persons to achieve either a higher profit margin or a higher wage rate than can be tolerated by the national economy’  On the other side, corporatists stressed the disastrous effects of deflationary policies on the investment level. Wages were, they argued, the key element in causing inflation, and must be dealt with directly: ‘It is not possible’, Horobin maintained, ‘in 1957 with the Government so much in it as employer, paymaster, and controlled, for them not to have a wages policy’.  Since direct wage control was politically and administratively impossible, the unions must be persuaded to refrain from using collective bargaining fully, guided by a broad State wages policy. In other words, the working-class must bear an increasing share of the cost of expansion or of world fluctuations as foreign competition intensified. Since unemployment, the traditional way of paying that cost, was no longer possible, wages must take the strain. Various measures were suggested at different times to sugar this pill. The creation of ‘impartial authorities’ has already been noted.  A capital gains tax was frequently suggested from Tory benches as a means of persuading the unions that the rich were paying too,  and in 1952, Butler introduced an Excess Profits Levy with the same purpose of buying goodwill. (Business was sufficiently irritated by the measure for the Government to give it substantial compensatory concessions in the 1953 budget). Welfare measures to regulate working conditions were also seen as an inducement to ‘cooperation’, but to a declining extent since larger firms preferred to be responsible for factory welfare themselves. Allowing payment of wages by cheque, the long discussed ‘contract of service’ (originally proposed in the twenties, suggested again in the Industrial Charter, and a favourite formula for tired backbenchers throughout the fifties) which was finally produced in late 1962, and to some extent, the creation of the National Economic Development Council (NEDC), were all part of the campaign to persuade the unions that they should control global wage levels in accordance with economic policy.
None of these rather trivial inducements produced the desired effect, and at various times, the State was compelled to intervene more forcefully. The 1951 crisis prompted the Minister of Labour to refer back two lots of Wage Council recommendations, but this was only a gesture, since he ratified them when submitted again unchanged. The Government as a whole, eager to gain union goodwill, refrained from provocation, and firmly repudiated as the worst sin possible any aspiration to a wages policy. In 1954, just before the Liberal tide began to break, Ministers began to grope towards some more positive suggestions. One said that much more information was needed to help wage negotiators frame their proposals in the national interest, but firmly repudiated a wages policy; the Chancellor suggested that a tripartite body (unions, employers, State) should be created to survey global wage levels, but union opposition killed the idea. At the same time, the Government restricted its direct action to avoiding trouble by being relatively generous where called upon to intervene (the steady expansion of the economy permitted a wider margin of manoeuvre than later), or appointing impartial Courts of Inquiry. Two of these in 1954 suggested that an impartial body should be created to survey the economy and specify clear criteria for wage increases.
These were, however, little more than straws in the wind. While the enonomy boomed, labour problems were subsidiary to production at almost any cost. At the end of 1954, the signs of inflationary strain began to appear and broke the spell that Liberalism had seemed to create. However, through the first waves of inflation, the Government held fast to its approach, mainly relying on general financial controls although the tone of its warnings and threats to the unions grew rather more harsh. However, through 1955 and 1956, the use of general financial controls grew more selective and discriminatory, and, as a consequence, less Liberal. In the spring of 1956, the Government, using the nationalized industries as price leaders, sought to enforce a ‘price plateau’, a commitment by employers to hold their prices stable ,so ensuring among other things that the maintenance of constant profit margins would force employers to fight labour rather than compete for a scarce labour supply. While employers were prepared, with explicit Government support, to put up slightly tougher resistance than earlier, they were not prepared to pay the cost of Government policy alone. The cheapening of the products of nationalized industry was a partial inducement to them. When Cousins in the autumn of 1956 led the TUC to an unequivocal stand against Government policy, employers were warned of how high the cost might be. General and disriminatory financial measures were a safer weapon for the Government, but the tone of Ministerial statements grew very much harsher as well in the autumn of 1957. ‘Although no-one welcomes strikes’, MacLeod said, ‘we must not be afraid of them’ ; to which the Chancellor added: ‘A stable pound is the prerequisite of full employment. We must therefore put it first’.  This counterposing of the currency and employment was an echo of 1931, and at times Ministers argued that their job was not to maintain full employment, but guard the pound, leaving it to the ‘responsibility’ of the unions to decide by their restraint what the level of domestic employment was to be. TUC national work-sharing at lower pay would keep employment high, but pressing individual wage claims to the limit would ensure unemployment ‘self-imposed’ by the unions.
The improvement of the economy allowed the Government to withdraw from this politically disastrous limb, but that it had been driven so far is significant. In late 1957 the public sector was again used as ‘wage-leader’ for the whole economy but this required the centralization of wage negotiations in the public sector on the State. The State accordingly instructed all negotiators in public employment that no pay increases should be granted without commensurate economies in the service concerned. The use of public industry to keep prices down entailed the State intervening to depress the prices of nationalized industry ‘artificially’, so making those industries dependent upon the State to meet the consequent deficits incurred or the increased capital requirements no longer met from earnings. With the kitty not so much empty, as under the immediate control of the State, wage negotiations in the public sector became subject to State, not managerial decision. Moreover the public sector was dominated by old and declining industries where wage rates were constantly tending to fall behind national ones. All these factors combined to make the public sector the crucial area for conflict. Workers in public employment were asked to take the strain for the entire economy. The whole carefully constructed facade of Liberalism was in ruins. The public sector, the largest employer in the economy, was abandoning the traditional negotiating structure and centralizing wage negotiations directly upon the State. Henceforth, all disputes were a conflict between workers and State, a political dispute, not, as Liberals had wished to see, merely the expression of economic forces derived from the market.
The first casualty was one of the weakest participants – the Government refused the recommendation of the Whitley Council governing pay for National Health Service employees – a case identical in essentials to that of the teachers’ Burnham Committee in 1962. Somewhat crudely, the Minister explained why, for the first time, the State had repudiated the decision of one of its accredited negotiating authorities – the managers on the Council were not footing the bill: the unions were merely pipers to the State tune. Other claims (notably, those of the Civil Service and BBC) were rejected in the same way.
The first fruits of the policy were seen in the following year (1958) when claims in three major public sectors coincided – the miners, railwaymen and London busmen. The improving economic situation allowed more room for manoeuvre than earlier, but the Government was still determined to prove its political supremacy with the minimum political losses. Accordingly, the different treatment of these three claims is of particular interest. If all three groups had struck, the kernel of a General Strike would have been created. Economically the impact on fuel supplies and commucations would have been decisive. The busmen, economically the least important industrial group involved, were, as will be remembered, part of the Transport and General Workers’ Union, led by Cousins, the most notorious opponent of Government policy. Thus all the factors were favourable to making an example of the busmen, and the Government concentrated on settling the two major claims with minimum losses to itself, and daring the busmen to strike alone. The course of the railway claim was not smooth, and, indeed, in late April a national rail stoppage seemed possible; but suddenly the Prime Minister invited railway union leaders to private talks which ultimately resulted in a three percent increase. Admittedly this was qualified by the pious assurance that the railways would make commensurate economies, but thre was no way of checking that this was done: The Economist was quite sure that the settlement was ‘for the country, a partial economic defeat’.  Meanwhile, the miners’ claim filtered through negotiation, and in May achieved an arbitration award of two of the three main demands with the proviso of an autumn review. In September, the miners were given a straight four per cent increase, ‘another large hole in the principle’ of no wage increases without matching economies. 
In this way, the two major sections in the opposition were detached, and the busmen isolated. The details of this long and bitter strike are too well-known to be repeated here, but for our purposes, the skill of the Government should be noted in dividing its opponents, and its shrewdness in assessing both the lack of solidarity between the unions involved and within the TUC, when it was realised that the busmen had been selected as scapegoats for the entire trade union movement. Sadly, the unions did not learn by the experience, nor attempt to take the initiative instead reacting passively to Government initiative. The only other Government innovation during this crisis was the creation of the long-promised impartial authority: the Cohen Council. By the time of its first report, it was already redundant as a public relations body, because the economy and the Government attitude had changed. However, it reiterated the main slogans. By the time of the busmen’s strike, the signs of an improved payments situation were already clearly visible, and. with an election already visible, the Goevrnment devoted itself to spreading more light and joy. Suggestions of more profit-sharing, co-partnership schemes, even a capital gains tax, were made from Tory benches, and the Government, as if nothing had happened, reverted to a Liberal defense of trade union independence and the sanctity of the existing negotiation machinery.
The breathing space was short-lived. This time, however, when balance of payments strain became apparent, the pressure for direct State intervention in industrial relations was much greater than before. The 1961 Budget introduced a payroll tax to stiffen employers’ resistance to retaining under-employed labour as well as to new wage claims (without corresponding restrictions to prevent employers from passing the tax on in price increases). Pressure was such, however, that by early summer, it was clear that stronger measures were needed. At the same time, there were sharp business criticisms of fluctuations in Government policy which made it impossible for big firms to plan ahead and restricted investment (to the loss of future competitive ability abroad). Government policy changes, it was alleged, were responsible for the stagnation in the British economy and ils decline relative to its nearest foreign rivals. Direct pressure from the FBI was brought upon the Government to impel it towards a more consistent application of a policy which did not affect business.
The problem was the same as it had always been at the point where international competition became sharpest. Business was not amenable, however, as things had previously been, to the orthodox solutions which curtailed its future prospects. The main height of the attack on inflation fell necessarily on labour. To make this shift of emphasis more acceptable to the unions and lessen its electoral impact, some major change of policy was required to demonstrate to the unions that the ‘national interest’ really was at stake. This demand for an attractive packaging coincided with business pressure for much greater control over total State expenditure and investment, and for more co-ordination between the different elements of national expenditure and between State and business policy – in a word, for planning. As a result, the National Economic Development Council was created, and with it came the ‘pause’ – an explicit instruction to all those concerned with wage negotiations to prevent wage increases rising above two and a half per cent. Henceforth, not the market for labour, but the State would determine the share of the national income accruing to the working class. Adherence to full employment, the ending of unemployment as the ‘natural’ discipline of wage negotiations, had at long last achieved its logical result.
The policy was admittedly only temporary, a stop-gap while the Government worked out ‘a sensible long-term relationship between increases in incomes of all sorts and increases in productivity"  means whereby the State could shine a ‘guiding light’ in the faces of wage negotiators so that, in effect, they would execute Government policy rather than reflect the market or even be sincere proponents of the ‘fair wage’.
This was, clearly, a wages policy (or an ‘incomes policy’ as the Government euphemistically preferred to call it), but the crucial problems of a wages policy were unsolved. First, there was no way of establishing differentials between wage levels, and the problem of leap-frogging between different sections of workers remained unsolved. Second, the TUC was not unanimously inclined, nor even equipped, to translate the global limits into detailed negotiations. It could not guarantee the behaviour of its sections. Third, in a boom with relatively scarce labour, employers needed flexible payment methods to maintain output, not the rigidity resulting from Government intervention. Finally, and most important ,the Government had no means of enforcing its will. Verbally, it might press on into the marsh of a wages policy, abandon its own Liberal propaganda, and even suggest the desirability of a system where the unions represented less the workers to the employer than the State to the workers (where unions became departments of State), but ultimately the political obstacles prevented the Government taking powers commensurate with its aim.
Government reliance merely on propaganda had predictable results. Its defeat only further discredited its policy and made it less likely that union leaders would take it seriously. In November, an award to electricity workers was double that permitted under the Pause; in February the following year, the railwaymen received a half a per cent increase above the Pause; and in May, dockers were given an increase several times above that permitted by their ‘increase in productivity’. The Chairman of the Port Employers, justifiying this last award, said dock employers refused to pay the costs of Government policy on their own.  A little later, The Times published a list of seventy-seven industries awarded an increase above that permitted by the ‘guiding light’.  However, the attempt by the State to impose certain wage levels had led, as in 1957, to the scrapping of the existing negotiating machinery. As the Chancellor innocently put it: ‘The Government... as employer intends the normal machinery to work to the greatest possible extent consistent with the pause’, going on to add that ‘It is not the powers (of the existing machinery) but the use to be made of them which I believe is really important.’  He suggested that the negotiating machinery for teachers’ pay needed radical revision to prevent the Burnham Committee from reaching decisions the Government did not like. However, the failure of the long-term policy was clearly exhibited. In July, 1962, the Government’s solution was announced – a second Cohen Council, the National Incomes Commission, along with a series of trivial demonstrations of Government good-will (measures for consumer protection, a contract of service, reforms in the apprenticeship system, and in monopolies and restrictive practices legislation). The new body was not to cover the public sector, it needed Government initiative to set it going and it was merely retrospective. Indeed, it was so hedged about with qualifications that it was clear the Government felt itself on dangerous ground. ‘A Government which establishes a Royal Commission is usually uncertain of itself; a Government which establishes a body like NIC is weak.’ 
Emphasis was rather more firmly placed upon NEDC. Its expert bureaucracy, it was assumed, would make clear recommendations to which the trade unionists on the Council would be morally bound, and it would thus effectively enforce union ‘restraint’. However, the key problems in the entire approach remained – including the problem of the maintenance of the authority of union leadership.
The problems involved in a wages policy make full control of wages impossible, except where impelled by some major national crisis. However, in the interim, the slow shift from bargaining to collaboration continues. The stalemate in relations between the State and the unions since 1926 has concealed the changes that have gone on: the unions cannot win except by a continuous forward advance. Where that advance is checked, the trade union leadership necessarily becomes increasingly assimilated into the structure of social authority. Yet, despite itself, it cannot go very far, for the changes in the economy periodically reawaken powerful rank and file movements to use unions for their original function. In the meantime, unofficial strikes are the warning that check the sense of ‘responsibility’ of trade union leadership. These generalizations, of course, are not meant to apply to those trade union leaders who seek to go against the prevailing trends. That trend is the reflection of the general decline in the labour movement which no longer provides a clear and coherent alternative to collaboration.
On the Government side, the trends are concealed by the twists and turns of policy in relation to the balance of payments situation, itself a partial reflection of British successs in foreign markets. After 1955, the golden age of British capital, the resurgence of European competition increasingly limited British aspirations. That foreign threat, plus the irritation of British business at Government solutions which restricted investment, pushed the Tories out of their Liberal pose, back into the corporatist and State capitalist tradition. The State was to centralize and discipline the economy as the market was supposed to do. The division between Liberals and corporatists within the Tories continued to reflect the division of British capital – a division of declining importance, since the opposition to corporatsm was far less powerful than it had been before.
The conclusions from this account are wide, but it will suffice to pinpoint a few. First, the danger to the trade union movement in Britain is less from defeat (although this is a danger too) than from the assimilation of its leadership into the bourgeoisie. Second, the fluctuations in Tory policy are likely to continue as international pressures change, but increasingly attempts will be made to dismantle the existing negotiating machinery (which strives for a ‘fair wage’) and substitute a centralized system of State controlled global wage levels (to achieve an ‘economic wage’). In the short-term, adopting a Liberal attitude might seem progressive – to defend the existing machinery of negotiation. But it is certainly not enough, for the present structure increasingly conflicts with the difficulties British capitalism faces in the world, this conflict is only part of a similar situation in all major industrial countries where labour costs are becoming the crucial target, the variable which can be used to lower home prices abroad. Those who defend the existing system alone have to say how Britain can survive economically in such a situation, how can prices be lowered to ensure the continued expansion of the economy? When the metaphysics of ‘co-operation’ are wiped away, there is no answer.
The only real answer lies in a world system where expansion can be accommodated without the working-class being coerced into supporting the cost – in a system without classes. That is the alternative which the Labour Movement should be offering. This account has stressed the intelligence and shrewdness of the Tories, simply because too many Socialists try to escape problems by assuming the stupidity or irrationality of their opponents. The alternative must be posed, around which workers in all major industrial countries can strive – to counter the present trends – an alternative which goes beyond the ‘fair wage’ to challenge the wage system, which goes beyond defending the traditional machinery and challenges directly the entire distribution of income and power in class society.
1. The history of collaboration attempts at a national level ii long. Only a few examples are cited here – in 1911, the Government set up the Industrial Council, twenty-six members drawn equally from employers and unions. The Whitley Reports (1916) strongly urged collaboration at all levels of industry, and in 1919 the Government set up the National Industrial Council. In 1927, one year after the General Strike, Sir Alfred Mond, founder and head of ICI and a Tory MP, invited the TUC to joint discussions with employers for the formation of a similar body. When the FBI was founded in 1917, it was hoped that the TUC would affiliate to it. and when il did not, a short-lived joint Employer-Employee organization was set up by tht FBI. The Second World War produced the National Joint Advisory Council, and, our own times, the National Economic Development Council. Expositions of the Industrial Parliament idea are numerous, but cf. Churchill’s Parliamentary Government and the Economic Problem, 1930, or Hollis, C., Can Parliament Survive? 1949. From the Left, cf Webb. S.&B., A Constitution for the Socialist Commonwealth of Great Britain, 1920. The Council of Corporations, of course, formed a centrepiece of pure corporatist theory.
2. Macmillan played a crucial role in the thirties as an eccentric rebel who exhibited quite clearly what was later to become respectable under the Labour Government; he had close contacts with new technological industry and wrote widely – cf. in particular, The Middle Way, 1938, and Reconstruction, 1933.
3. Hansard Debates. 27 February 1946. 419/2195
4. 23 July, 1949, a repetition of a speech made in August 1947, reported in Trade Union Bulletin, 29 September 1949.
5. cf. the policy statements, and in particular a 1951 Conservative document, introduced by a Shadow Cabinet Minister: A New Approach, by Ted Leather and Harold Watkinson.
6. Hansard Debates. 644/1146, cf. also Denzil Freeth, ibid., 18 April 1956. 551/1087.
7. Hansard Debates, 575/92-9.
8. Compare this trend in Tory thinking to Berle’s Lord Spiritual, in, for example, Economic Power and the Free Society, 1957, or Power Without Property, 1960. For a superb analysis of the socialist roots of corporatist theory and its contemporary manifestations, cf. Draper, Hal. Neo-Corporatists and Neo-Reformers, New Politics, 1/1, Fall 1961.
9. Put forward most persistently by Charles Curran MP, but cf. also Ovens, D., p.14, Crossbow, New Year 1958.
10. Speech, Felixstowe, 4 Oct. 1957.
11. Hansard Debates, 575/58.
12. May 17, 1958
13. p.1008. The Economist, Sept. 27, 1958
14. Hansard Debates. 645/223 passim
15. The Times correspondence, p,6. May 22, 1962
17. Hansard Debates. 23 Oct. 1961. 646/623-5.
18. The Observer, Jul. 29, 1962.
Last updated: 8.8.2007