CHAPTER FIVE
‘From the 1970 onwards, the left began their slow inexorable assault. Labour’s long death march had begun. The centre of gravity inside the Party was shifting decisively to the left.’
Philip Gould, New Labour strategist
The election of the new Labour government in 1964, headed by the relatively youthful Harold Wilson, finally ended 13 years in opposition. The bitter factional fighting of that time seemed to have receded into the background as minds were now sharply focused on questions of government and power. Labour faced quite a challenge concerning the economy. The virtuous circle of full employment, high wages, rising living standards and strong unions was unravelling. The Tories had been ousted precisely on the basis of people’s fears about the slowing down of the economy. Now Labour had their chance to impose their own vision of political economy, led by a key ally of Bevan. While Wilson promised big things, on the key issues of the economy, jobs and wages, his government failed to deliver.
The ascendency of the revisionists ushered in a period of party unity behind a technocratic managerialism. This process was already well under way before Wilson entered 10 Downing Street – the 1961 manifesto Signpost to the Sixties had outlined the self-imposed limits of the incoming government, a unity deal struck between the right and the left to ensure their joint electability. it was drafted by Gaitskell and George Brown for the ‘modernisers’, alongside Crossman and Wilson representing the remains of the Bevanite movement which had once so terrified the press barons at Wapping.
The battleground was not ideological any more, it was no longer a question of socialism versus capitalism. The new thrust was an attack on the Tories for their lack of competence in managing capitalism. The Conservatives were depicted as stale and incompetent, whereas Labour would bring in new technicians, younger managers, more socially aware executives. It was clear that the Signpost’s authors had made peace with modern British capitalism. There were some socialist-sounding intentions however, in the form of plans to create a new Department of Economic Affairs and launch a National Plan for the economy.
The only mention of nationalisation was steel and iron, the old battle ground that Attlee had failed to secure a generation earlier. But this was couched in the context of declining industries, unable to match the export capacity of other, more sprightly and dynamic economies in Japan or Germany. Unlike in the 1940s, this time the capitalists were more sympathetic to public ownership of these by now unprofitable industries; what limited ‘socialistic’ change did occur again only happened with the consent of the ruling elite.1 This was the background to Wilson’s call to use the entrepreneurial capitalist state to harness the power of science and new technology. Labour fought the 1964 election on a popular programme to appeal to the new middle classes, explicitly rejecting much of its socialism and trade union history – a step on the road to what eventually became New Labour. Clearly, such a direction required a restriction on the rogue members and entryists who were causing problems, ushering in a period of strict centralist control by the party apparatus.
What was the state of the Labour left at this point? At a grassroots level it was reeling from a series of expulsions and reorganisations, particularly in London. The party apparatus often targeted those on the left they deemed to be Trotskyists, but it also expelled other socialists. They were dealt with using the constitutional equivalent of extreme prejudice: expulsions and entire CLP reorganisations. A journalist at the time described how Labour’s national agent Sara Barker held the party by a firm hand: ‘A hint of heresy, a whiff of recalcitrance, and Sara’s tanks would emerge from the dead of night from the garages under Transport House and move unstoppably towards the offending parts of the country.’2 Although the number of Trotskyists who had much influence was limited, they were seen as a clear and present danger by the party machine and the right. The Bevanite movement may have receded into the background, but the social democratic, integrationist controllers of the party were in no mood to allow any alternative oppositional voices.3
Wilson’s Regime
Wilson had won the leadership in 1963, backed by the left who remembered him from his Bevanite days and assumed his views had not changed. Not a surprise, as having a naive faith in certain leaders was always a historic weakness of the left. But when Wilson became Prime Minister in 1964 promising to ‘re-kindle an authentic patriotic faith in our future’, it was with a razor thin majority of only four MPs. This had a profoundly dampening effect on the ardour of the left. MPs were whipped into line to support the government and recalcitrant CLPs were advised to keep their criticisms private so as not to destabilise the government. Once again it was the left that had to make sacrifices for the sake of party unity and the preservation of the government, never a burden that fell on the right.
Wilson quickly proved to be a disappointment. Talk of peace was replaced by supporting the US invasion of Vietnam. Labour supported immigration controls for the Commonwealth for the first time, and deflationary measures were introduced that cut living standards for working families.4 The government’s partisan handling of the seamen’s strike in 1966 further disillusioned members. Although prescription charges were abolished in 1965, they were reintroduced at an even higher rate in 1968.
Of course, there were also significant social changes during this time as well. The Cabinet supported backbench MPs in bills to relax or decriminalise a whole host of repressive legislation, including on divorce, abortion, homosexuality and capital punishment. But it was the right-wing of the party, people like Crosland, Shirley Williams and Roy Jenkins who took the lead in implementing these policies, not the left.5 Tony Benn served in Wilson’s Cabinet but was not a particularly left figure at this time, becoming famous for his campaign to shut down pirate radio stations operating off the coast.
With a thin majority, Wilson called another election in 1966 and successfully consolidated a much healthier majority in Parliament. He found he could do even less with it. The economy was spiralling out of control, and the Tories had removed many of the economic controls established during the Second World War. Michael Foot argued at the time that Labour ‘should have re-established this apparatus, in particular the exchange controls’ – instead capitalism was freer of restraint and harder to regulate.6 The much vaunted National Plan, launched in 1965, aimed for an annual growth rate of 3.8 per cent and a 25 per cent increase in output by 1970. But the plan was toothless, indicative only, encouraging private enterprise to cooperate with the unions to increase productivity but with no means to compel recalcitrant businesses. The jobs and economic growth simply failed to materialise as the pound suffered from currency speculation and international pressure grew on Labour to make cuts to spending. Faced with a weakening economy and a historically high balance-of-payments deficit, Wilson, unwilling to take socialist measures, fell back on the old economic orthodoxies of wage restraint and public sector cuts – James Callaghan slashed £500 million from the 1966 budget. The National Plan was, in the words of one economist who worked for the government, ‘conceived October 1964, born September 1965, died (possibly murdered) July 1966’.7 The Department for Economic Affairs was similarly put out of its misery in 1969 after failing to achieve very much at all.
In such turbulent times, Wilson had to keep his party together and defuse any potential left insurgency so as to avoid a repeat of the ‘civil war’ of the 1950s. He was canny in his manipulation of the Labour left, and knew how to play them to get the result he wanted. A number of methods were used.
Ambiguity: Wilson hoped to maintain the balance of power by rolling back some of the arguments from the right about the essence of the party programme. Between the left’s commitment to symbols like Clause IV that entailed nothing practical, and the right’s insistence on their commitment to a capitalist mixed economy, Wilson never showed ‘any great wish to remove the ambiguities, confusions and evasions which have surrounded so much of Labour policy’.8 It would have been far more honest for Gaitskell to have got his way and abandon Clause IV, since nationalisation meant nothing of any real value to the Wilson government.
Incorporation: Wilson sought to stifle critical voices in the PLP, utilising the usual tactic of offering ministerial seats to MPs who might otherwise cause problems. Crossman was offered Housing, which precipitated his resignation from the leadership of CND. Two other left-wing MPs also announced that they would not be standing for re-election to the CND steering committee. Castle was given Overseas Development, then Transport and finally Employment. Jennie Lee took Minister for the Arts, establishing the Open University in 1969.
Personal relations: Wilson’s approach was often like a friend or a friendly uncle. As one Times journalist reported: ‘I am constantly astonished by the number of left-wing parliamentary critics who claim they have just had a heart to heart private exchange with Mr. Wilson.’ To them the Prime Minister displayed ‘a sensitive understanding of their point of view’ and was ‘always ready to get them on the first rung of the ministerial ladder’.9 To the left he was conciliatory while in practice he implemented the political agenda of the right.
The cuts Wilson introduced were opposed both in the wider party and on the backbenches. Between 1966 and 1970 there were six significant backbench rebellions of around 25–40 MPs. But with a majority of 97, they did not threaten the government, especially as the MPs mostly abstained rather than vote alongside the Tories. As such the PLP regime was generally liberal, despite regular calls from the right to punish transgressors. The avuncular Wilson was himself not averse to giving a tongue lashing and issuing threats. When 62 MPs abstained on a Defence White Paper in 1966, in protest at Wilson’s refusal to introduce cuts to the military budget while social welfare was being slashed, Wilson famously chided the rebels: ‘All I say is watch it. Every dog is allowed one bite, but a different view is taken of a dog that goes on biting all the time. If there are doubts that the dog is biting not because of dictates of conscience but because he is considered vicious, then things happen to that dog. He may not get his licence renewed when it falls due.’10 Further rebellions did occur, but Wilson’s Chief Whip, John Silkin, preferred a more relaxed approach that discouraged intransigence and ameliorated divisions in the PLP.
Lacking an alternative strategy and with no clear leaders, the left were sluggish to act. MPs like Eric Heffer and Barbara Castle were well regarded for their principled stands on certain matters but this never cohered into a serious challenge across the wider party. In Castle’s case her most left-wing days were already behind her. But what dogged the parliamentary left more than anything was their loyalty to keeping Wilson as Prime Minister. Any accusations or claims that he was being conspired against or that he should be removed were met with thunderous denunciations in the pages of Tribune. If crucial votes came up in the Commons, the left would grumble but ultimately fell into line. They were faced with the unpalatable truth, that Parliament is based on an instrumental, pragmatic logic of numbers – not on principles. They did not want to be seen to bring the government down. It was painfully clear by this stage that the nature of the first-past-the-post system forced divergent political forces into one party to have any chance of winning elections. As Foot described at the time: ‘The Management Committee of my [CLP] have wanted us to do everything in our power to persuade or urge the Labour Party to take a different course, but they have never wanted us to tear the Labour Party to pieces. This is the perpetual dilemma of people on the Left of the party – Aneurin Bevan experienced it in the fullest measure.’11 Foot did however concede that the left would vote against a government even to the point of bringing it down on some issues, for instance the sending of British troops into Vietnam, but he was unendingly grateful it never came to that.12
The Archetype of Disillusionment
As the PLP continued to disappoint so many activists the gulf between them and the MPs grew increasingly wide. The Labour left could have focused its energies on activities outside of the stifling Westminster bubble, building links and seeking to renew itself through involvement in the growing social movements of the 1960s that came to be known as the New Left, but there was precious little evidence of this either.
Malcolm Caldwell, a dedicated Labour campaigner, voiced a feeling of disillusionment in a letter to Tribune on 20 August 1965:
Socialist principles have been tossed aside with almost indecent cynicism and casualness. Racial discrimination in Britain has been condoned and strengthened. American butchery in Vietnam has been actively supported and encouraged. Social welfare and economic development in Britain have been sacrificed to carry out a reactionary economic programme at the behest of international finance capital. What of the Left leaders in Parliament? Tell them off on your fingers, comrades, and think of their words and deeds in recent months while the Labour movement has been sold down the river. It is a sad picture and I can personally neither see nor offer any excuses. Are we finished, we of the Labour Left?13
A young John Prescott, at that time a union official in the seamen’s union, spoke out from the grassroots: ‘There is a wealth of evidence we could produce to show that behind the government, in its resistance to our just demands, stand the international banks, the financial powers which really direct the government’s anti-wages policy.’14 Many thought the conclusion was obvious. Writing from a New Left perspective in 1967, John Saville confidently concluded that ‘Labourism has nothing to do with socialism … the Labour Party has never been, nor is it capable of becoming, a vehicle for socialist advance, and … the destruction of the illusions of Labourism is a necessary step before the emergence of a socialist movement of any size and influence becomes practicable.’15 The New Left published a May Day Manifesto the same year which excoriated the Labour Party and in particular its left-wing. They had no illusions that the Labour left would mount an anti-capitalist challenge, no matter their good intentions.
There were occasional flourishes from the leadership where a backbone appeared to form, but these were mere episodes against a backdrop of political depletion. At one point, in an act of desperation that outwardly looked like bravery, Wilson stood up to the financiers and threatened the Governor of the Bank of England that he would dissolve Parliament and run an election under the slogan of ‘the people versus the bankers’, promising to float the pound. The bankocracy backed down in that instance, but as the economy continued to falter Wilson was forced to borrow more money at the cost of implementing ‘deflationary measures’. The growing realisation for many on the left was that Labour had transformed from being a party that was an inadequate vehicle for socialism to one that now sustained and defended capitalism against its own mass working-class base. The much talked about start of a series of socialist governments starting in 1945 was clearly off the agenda, and the National Plan had been killed by the global markets and money lenders.
More problems arose on the international arena, including one that was to become an ongoing issue for decades: Northern Ireland. There was a unanimous view among the Tories and Labour that a bipartisan approach was needed to support the UK loyalists in the Protestant community. Ken Livingstone, then a young new Labour member, described his view on the party’s failures in the six counties: ‘Did the Labour government intervene to ensure that Catholics got decent housing and decent jobs or to stop gerrymandering? No. Labour politicians … sat silently and ignored the discriminations they knew existed.’16 The sectarian discrimination festered until the mid-1960s when unrest exploded as the oppressed Catholic minority fought back against the majority Protestant unionists in the partitioned north. A mass social movement emerged demanding reforms and social justice, leading to regular clashes with the Unionists as the tensions and divisions spilled out onto the streets. A police attack on a peaceful Northern Ireland Civil Rights Association demonstration in 1968 was followed by an ambush in January 1969 by loyalists and off-duty RUC officers on the People’s Democracy Long March. This ratcheting up of the conflict came to a head in 1969 when a provocative march by up to 15,000 Orange Order Apprentice Boys led to three days of rioting and resistance from the embattled Catholic community. This ‘Battle of the Bogside’ was the start of the euphemistically named ‘troubles’. In response, Wilson made the fateful decision to deploy the British army, until that point stationed in their barracks, to a policing role in the northern state.
The Labour left in the CLPs and Parliament began to develop an almost anti-imperialist attitude to the Northern Irish situation. As the occupation spiralled out of control, with the Bloody Sunday massacre in 1972 and the arrival of punitive ‘anti-terrorist’ measures during the 1970s, the left position hardened – it was one of those rare occasions where there was a general convergence of views on a profoundly divisive question between the reformist and revolutionary left.17 Organisations like the Troops Out Movement became a mobilising force that united activists from the Republican movement with the Labour left and revolutionary socialists. The reason for this was not hard to find. There were thousands of Irish people in the Labour Party, many workers from an Irish background were fiercely Republican and they had a wide base of support in cities like Liverpool and Glasgow with large Catholic populations. When the young Republican militant Bernadette Devlin was elected to Westminster at the age of 21 – the youngest ever MP to sit in the Parliament – her abrasive and staunch views on ‘the troubles’ contrasted sharply with the opinions of mainstream Labour MPs, but she received loud and boisterous support from many of the Labour backbenchers during her speeches. Tribune was notably lukewarm on the Irish question and Tony Benn kept a steadfast public silence on the question – though admitting in his diary on numerous occasions that he favoured withdrawal of the troops.
It is worth considering here the rise of a dangerous new factor in domestic British politics – racism.18 The Windrush generation who arrived in 1947 had grown up and new immigrants were arriving to seek jobs and build communities. Although immigration usually coincided with economic upswings when there were plenty of jobs to go around, nevertheless some right-wing politicians and newspaper editors whipped up a sense of unease, and there emerged a new mantra surrounding immigration: that it was a competition for jobs and houses. Race riots in Notting Hill and Nottingham in 1958 had reflected a growing anti-immigrant racism, and in 1964 Labour had lost a safe seat in Smethwick in the Midlands to a Tory running on the infamous slogan ‘If you want a nigger for a neighbour, vote Labour’. In 1968, Tory MP Enoch Powell delivered his infamous ‘rivers of blood’ speech in which he predicted race riots and a fall-of-Rome style scenario unless immigration was checked. The violent, fascist National Front was launched to agitate and (literally) fight against immigrants and the ‘traitors’ on the left who supported them.
Labour had initially opposed immigration controls on Commonwealth citizens and had fought Tory legislation on this issue in the early 1960s. But their electoralist instincts began to overwhelm them in the late 1960s. Crossman, always with a nose for opportunistic lurches, concluded that ‘immigration could be the biggest vote loser for the Labour Party’.19 This kind of thinking sparked an increasingly desperate lurch to the right by Labour, to accommodate to the growing racist populism rather than to challenge it. Callaghan denied entry to Kenyan Asians trying to flee to Britain in 1968, even though they had British passports. Cabinet member George Thomas argued that ‘to pass such legislation would be wrong in principle, clearly discrimination on the grounds of colour, and contrary to everything we stand for’, but he was in a tiny minority. Resistance to anti-immigrant racism did not come from Labour, or even primarily the Labour left, but from new campaigning charities like the Joint Council for the Welfare of Immigrants.20
Strife in Place of Unity
After offering limited resistance in Parliament, the left reacted more strongly to the industrial strategy developed by Barbara Castle in the White Paper In Place of Strife, designed to deal with shop-floor militancy. With over 2 million days lost every year through strike action since 1964, Wilson had to prove he could tame wild trade unionists, in particular their unofficial wildcat strikes. Over 50 per cent of the strikes took place in just a handful of industries – car factories, shipyards, the mines and docks21 – and most of these were organised through shop-floor militancy. Many years of full employment and the closed shop gave workers an industrial strength they had rarely possessed before, allowing shop stewards to act independently of any official sanction from their union. While the union chiefs fought to try and keep the wage limits intact, the grassroots of the union had other ideas.
The solution developed by Wilson and Castle was a corporatist one, to further integrate the unions into the affairs of state, and giving them power as bureaucratic institutions rather than workers’ movements. Castle believed this was a socialist response to the constant wage claims, but as one contemporary noted ‘the trouble with Barbara is that she thinks anything she does is socialism’.22 The proposals involved requiring official ballots and a ‘cooling-off’ period for strikes. The hope was that the cooling-off period would give union officials time to step in and placate the workforce or for a deal to be worked out without the need for a strike. In this way, In Place of Strife acted as the blueprint for all future anti-strike legislation as it undermined militancy by making the union bureaucracies more responsible for workers’ actions, thus allowing them to act as brakes on rank-and-file activity.
At this time, however, the trade union leaders were willing to take action against such legislation. The intensification of the class struggle across industry had produced a leftward shift in the unions. A new vanguard formed around the TGWU and AEU (led by left-wingers Jack Jones and Hugh Scanlon) were furious at the intervention of Wilson and his Cabinet into the movement in such a way. At Labour conference level, this meant millions of affiliated member’s votes were now in alliance with the left – the stranglehold of the right over conference was finally ended. Jones and Scanlon were not consistently on the left, reflecting their trade union interests and positions in the bureaucracy, but they were certainly an awkward ally for the Labour Party and hostile to swathes of integrationist policies.
Foot led the opposition in Parliament, attacking Wilson and Castle for having ‘been persuaded that the way to establish themselves as big, brave men and women capable of government; the way to prove they have hair on their chest; the way to show they don’t give a damn for anybody, except of course the New Mirror or the Daily Statesman [sic] and, last but by no means least, the public opinion polls, is to declare war on the trade unions’.23 The Tribune group in Parliament proposed an amendment to safeguard the ‘fundamental rights of a free trade union movement’. Favouring a more active approach than the negotiation strategy of the TUC, the CPGB-led Liaison Committee for the Defence of Trade Unions organised a series of work stoppages and a strike on May Day 1968 involving 250,000 workers. As negotiations with the TUC stalled, Castle and the Cabinet looked for a way out. Scanlon and Jones offered them one: abandon In Place of Strife in exchange for a ‘binding and solemn’ pledge that the unions would self-police and prevent wildcat strikes through their own internal mechanisms. But for many workers the damage was done: Labour had proposed introducing regulations into the trade union movement that even the Tories hadn’t attempted since the war. For a lot of shop stewards on the factory floors that was unforgivable, but it meant a fragile alliance had been forged with the Labour left who had clearly sided with the workers’ movement. This alliance was essential to the subsequent developments of the 1970s.
The political turmoil hit Labour hard. The flagging end of the first Wilson government revealed a revisionist party, wholly reliant on Keynesian demand-management, trapped in an economic straitjacket that provoked working-class resistance while undermining its own ability to implement more progressive social-economic policies. Around 200,000 members left the party during this period. Ken Livingstone described the experience of joining in 1968 as being like ‘a rat who was boarding a sinking ship’. Wilson still hoped to win in 1970 – in some polls he was even 7 points ahead on the eve of the election – but he was defeated by Ted Heath who won the election with a 30-seat majority. As Crossman commented in his diary about the collapse in support from the Labour electorate: ‘We have given them three years of hell and high taxes. They’ve seen the failure of devaluation and felt the soaring cost of living.’24 Labour had alienated its own voting base.
The Realignment of Forces
The experience of the Labour government of 1964–70 had a profound effect on Ralph Miliband. He saw that too many of the left MPs had been bought off with opaque phrases or vague promises of socialism and peace. They confused the rhetoric with the reality and grasped at each left nod from the party leadership as a new principled turn. By the time the second edition of Miliband’s Parliamentary Socialism came out in 1972 his conclusion was clear enough: Labour was finished as a vehicle for any kind of socialism. Even its Fabian perspective of gradual, incremental moves towards socialism had been abandoned by the party leaders.25 Now it was a mere shill, a prop for the ruling class, and the Labour left was a busted flush, made up of isolated ‘pathetic figures’ able to mount ‘episodic revolts’ but nothing more. Miliband proposed ‘moving on’ from Labour, building something new. Nevertheless, the years following the publication of the second edition of Parliamentary Socialism heralded a renaissance for the left of the party, which went on to achieve breakthroughs in both politics and constitutional arrangements that changed the future of Labour.
The context for the revival of the Labour left from its late 1960s nadir was the huge industrial struggle that took place during the Heath interregnum. In 1972 there were 22 million days lost to strike action – a symptom of the combative spirit of many rank-and-file working-class militants. Even the shop-workers union USDAW passed a motion at its 1973 conference calling for the elimination of the capitalist system. Newly converted left-winger Tony Benn (having been a Wilsonian minister in the 1960s) took up the demands of some of the most radical parts of the trade union movement, and critiqued his own recent past: ‘I was part of the policy which is now presented as being so brand new by the Social Democrats, who are really resuscitating a policy that I worked harder on than anyone else, and I can tell you, from experience [that it] fails, it’s undemocratic and widens the gap between rich and poor.’26 This sense was echoed by conference delegates. CLP delegate Gay Walton summed up this view at the 1970 conference:
When in opposition, the leadership of the Party said, ‘When faced with an economic crisis we shall nationalise the banks and the building societies,’ but when in power and faced by an economic crisis they adopted orthodox and capitalistic methods to combat the crisis, and once again the ordinary people of this country were called upon to make the sacrifice, while the rich people suffered no hardship.27
The repercussions of Labour’s ousting from government and the scale and strength of working-class struggles at the time had a profound impact on the development of both the left and the wider Labour Party in three areas:
Industrial militancy: The left was bolstered by the militancy displayed by the almost general strike of 1972, thousands of workers taking unofficial strike action in protest at the imprisoning of striking dock workers under Heath’s new anti-union laws. The immense surge of anger and action from the trade union movement forced the government to back down and blew a hole in Heath’s industrial relations reforms. How the militancy of the trade unions was to be factored into a largely parliamentary perspective became a key part of the debate among the Labour left for the rest of the decade.
Economic strategy: Related to the battles going on in workplaces up and down the country, the workers’ occupation at the Upper Clyde Shipbuilders in 1971 proved a turning point for left strategists – here was a ‘work-in’ and production under workers’ control. The workers’ campaign forced the Tories to keep the shipyard open, saving 4,000 of the 6,000 jobs. The UCS occupation inspired 200 similar incidents across the country, usually small enterprises facing bankruptcy that were taken over by the workforce. UCS provided a working model for a new way of putting some of the vague promises of Clause IV into action, and forced Parliament to act as a result of a workforce taking matters into its own hands. Benn visited the occupying workers and advocated their cause in Parliament,28 a moment that established him as the principled leader of the parliamentary left. This was also the time when the Institute for Workers’ Control, headed by Ken Coates, became much more prominent within left discussions in the party, advocating more radical concepts of socialist industrial organisation than Labour had historically entertained. The Labour conference in 1973 agreed by a wide margin to support calls for workers’ control through 50 per cent of the boards of nationalised industries being made up of trade unionists, and union reps at every level of management having joint powers alongside the managers.29
Local government: The third front was the surcharging and barring from office of Labour councillors in Clay Cross in 1972–3 after they refused to implement the Heath government’s Housing Finance Act which took control of rents out of the hands of local authorities and put them in the hands of Westminster. Their cause was celebrated throughout the labour movement, as that of principled comrades willing to stand up to the Tories.
Labour was lifted and shifted left by the mass movement outside Parliament which seeped into it. Clearly the post-war order was fragmenting: now was the time for a bolder, more ambitious left with a transformative strategy that could establish a new consensus for future generations.
The Rise of Militant
One organisation that hoped to provide that strategy was gathering its forces. Understandably, in a period of such seismic class struggle, with a working class that was brash, confident and willing to bring down governments, all revolutionary socialist groups were growing quite significantly. One organisation – Militant – had a particular angle that marked them out from the rest: they were wedded to the strategy of working in and through the Labour Party to achieve socialism.
Their goal was to transform Labour into a Marxist party – or at least to have a majority of Marxist MPs in the PLP – where they would use an Enabling Act to swiftly nationalise the top companies across the country, introducing workers’ control and ensuring production for need not profit. Militant’s leader was Ted Grant, who, alongside Peter Taaffe, recruited a number of serious and dedicated activists to the organisation. Between 1970 and 1974 Militant grew rapidly from 100 to 400 members, rising to a thousand shortly afterwards.
Militant grew primarily because it stuck with the Labour Party Youth Section after every other Trotskyist group had abandoned it. They methodically organised LPYS branches, recruited to the Militant Tendency, and integrated the branches into their own organisational work. LPYS gave them funds, influence and positions within the party – each LPYS branch could send two delegates to their CLP meetings, giving Militant a voice on local leaderships. In 1972 the LPYS was also given a seat on the NEC, which Militant seized with both hands.
Militant enjoyed support in a handful of CLPs around the country, but the jewel in the crown was Liverpool. Early success in the city in the 1950s had been achieved in a struggle with the old guard leadership, led by Bessie and Jack Braddock, who ran Liverpool as their own fiefdom. Initial opposition by networks of left activists consolidated into an organisation that went on to become the lodestone of Militant in the 1960s.
Though they were a small current compared to the membership of the wider party, Militant were well organised and punched well above their weight. They scored a victory at the Labour Party conference in 1972, getting a motion passed by delegates that called for an Enabling Act to nationalise the largest monopolies in the country. The motion also included a direct criticism of the old integrationist, Fabian approach, calling for Labour to ‘formulate a socialist plan of production based on public ownership, with minimum compensation, of the commanding heights of the economy ... This is an answer to those who argue for a slow, gradual, almost imperceptible progress towards nationalisation.’ This embodied the core of the Militant perspective and strategy, which remained largely unchanged throughout their time in the party.
How did Militant escape the purges that had fallen on earlier socialist currents? Their growth occurred at a period of quite serious liberalisation in the party structures; its internal culture and level of tolerance was markedly different to ten years earlier. The proscribed list had fallen into disuse and was abolished in 1973. Militant had learned from the previous witch-hunts against the left. Ostensibly they had been part of an organisation called the Revolutionary Socialist League, but that was left to wither away, replaced by a network of sellers of the Militant newspaper. Whenever accusations emerged of a ‘party within a party’ the response was usually ‘it’s just a newspaper’, and the idea of persecuting someone for selling a socialist newspaper was simply not very popular among lay members. Additionally, the NEC adopted a much more hands-off approach to the Labour youth organisation than they had between 1960 and 1964. Militant were at least a loyal opposition: they did work getting the vote out in marginal seats and they were very active in promoting the Labour Party.
Interestingly, considering they were to become such a target for the right’s hatred, most of Militant’s politics were not particularly radical. They were pretty standard – for the time – labour movement policies: a 35 hour week, a better minimum wage, more workers’ control over hiring and firing, opposition to arms spending and to Tory anti-union laws. On some issues Militant were quite conservative, reflecting a workerist30 view of class consciousness; they weren’t very enamoured with the women’s movement, gay liberation or black self-organisation. Their view was that these weren’t working-class issues and were divisive for class unity. On Ireland their position was against the initial occupation, but they were only in favour of the withdrawal of British soldiers if a trade union defence force was created to replace them, arguing that this was essential to stop sectarian violence. Most of the rest of the left opposed the presence of British troops in the country on principle, and were in favour of their immediate withdrawal and a united Ireland.
The Alternative Economic Strategy
In their critical analysis of the failures of Wilsonian politics, the Labour left drew quite radical conclusions in the early 1970s. Michael Barratt Brown was active in the Institute for Workers’ Control. He in particular developed a criticism of the corporatist policies that fed into a lot of the Labour left thinking of the following decade.31 Barratt Brown argued for workers being able to encroach on the control of managers, through challenging their ‘right to manage’, and eventually demanding a say in investment and wider economic concerns. He also warned of the parliamentary fixation – it was inevitable in a system that favoured capitalists over workers (and Tories over Labour) that integrationist tendencies would lead to a co-option of Labour into attacking workers’ living conditions. Furthermore he pointed to the prevalence of transnational companies as the key source of competition: it was the centralisation of capital not the rivalry of nation states per se that was the problem. As such, his solution to the national crisis posed by the 1960s was a class alliance between working people and national capital against the predatory machinations of international businesses and against the Common Market in Europe. This was the new paradigm for the emerging left to examine Britain’s economic problems.
These kind of ideas circulated more widely after the 1970 election. A new analysis formed, becoming for a time the official economic orthodoxy of the party, expressed in the conference motions and programmes passed between 1972 and 1983. It came to be known as the Alternative Economic Strategy (AES). Stuart Holland’s book The Socialist Challenge (1975) was considered the bible of the AES. It called for workplace democracy, ‘opening the books’ on private firms to allow for public scrutiny over their finances, and public control of the 25 most profitable companies in the UK.
These policies marked a sharp change in strategy. A commitment to the mixed economy was no longer enough; there was now outright criticism that ‘even the most comprehensive measures of social and fiscal reform can only succeed in masking the unacceptable and unpleasant face of a capitalist economy’.32 The key part of this strategy for the left was the commitment to the nationalisation of the top 25 manufacturing companies in the UK through the mechanism of a National Enterprise Board (NEB) that would buy controlling shares.33 Under these proposals the NEB would be responsible for job creation, investment promotion, technological development, growth of exports, spreading industrial democracy and several other areas of Labour left concern. It represented probably the clearest commitment to a reformist socialism since 1945, and the hope of recapturing some of the post-war state control and regulation of larger parts of the economy.34 In the words of the editor of Tribune, Richard Clements, writing in 1973: ‘for the first time Labour has a comprehensive answer to the ills of our society ... it provides a real basis for challenging society’.35 The integrative techno-corporatism of Wilson had failed; now a transformative attack on wealth and power in Britain was replacing it.
The AES formed the philosophical core of Labour strategy, culminating in the 1973 Programme, which stands as a crowning moment of Labourite anti-capitalist thought. Unlike 1945 this was not the politics of consent, it was a declaration of struggle against capitalism. Based on the programme, the 1974 election manifesto outlined the intention to ‘bring about a fundamental and irreversible shift in the balance of power and wealth in favour of working people and their families’. It specifically called for more economic powers for working people over wages and production decisions. It was a clear high point for both the radical agenda and the necessary policy consequences of a socialist plan for a Labour government.
Despite the enthusiastic energy of Holland in advocating and propagating the ideas of the AES in the policy forums and among trade union policy and political officers, it earned only lukewarm support in the PLP. Wilson himself was clearly not a fan. Therein lay the inevitable problem: if the MPs did not want to implement the manifesto then party members were largely powerless to act. The left was not ignorant of this political bottleneck in Labour. In order to make the AES a reality they relied on a powerful left movement from below: workers, their unions and the grassroots of the party applying pressure on a Labour government to go further and use state power as a weapon against the capitalists. As Holland explained:
In practice, a Labour government is only likely to introduce such a major transformation of British capitalism if it is pressured both by the current economic crisis and by its own supporters in the unions and the party. But, to realise such pressure, workers ... must ensure that they can secure more than a British variant on either state capitalism or state socialism. They must be directly involved in the process of transformation, or the transformation itself is unlikely to occur.36
Holland’s answer to the Marxist criticism of the state as a defender of capitalism was that the post-war state increasingly went through ‘Bonapartist’ phases37 – meaning that the class struggle rose to such a level that the state ended up balancing between the class forces and could at times be prised free of the grip of the capitalists and turned against them. His hope then was that the class struggle would force such a change.
Holland’s strategy was, however, flawed in a number of ways. At root the crisis of capitalism had to be resolved either in favour of the working class through socialism or through restoring profitability. Holland recognised that the crisis affecting British capitalism – inflation and lack of growth – were not home-grown: it was a result of the stagnant world economy, greater concentration of capital (monopolisation), and the intensification of competition internationally.38 But the AES posited that Britain’s lack of competitiveness could be fixed by more vibrant state intervention. The poor competitiveness was caused by a lack of investment which was itself a result of low profitability – capitalists won’t invest where there is no money to be made. The AES called for planning agreements, but just as with the National Plan these were indicative, drawn up by businesses themselves and then ‘scrutinised’ by the government.
Holland and his allies focused on the institutional make-up of corporate ownership as a solution. True, public ownership would help the situation by avoiding excessive profits and curtailing speculation, but changing the corporate structures through nationalisation or having more workers on the board of directors doesn’t alter the fundamental problem that in a capitalist market economy the primary way to compete is through increasing the exploitation of the workforce, inevitably reducing working conditions and pay. The left advocated protecting British business interests through state ownership and not – in reality – genuine workers’ control, only workers’ participation in management decisions. This ran the risk of making trade unionists complicit in managing wage cuts and speed ups to keep capitalism profitable.
This pointed to an existential problem for the left’s strategy – it relied on promoting private sector growth (through the NEB, investment, etc.) to create jobs, with nationalisation as a way of prompting the rest of the private sector to do better. Yet the left also promoted workers’ rights and greater social equality – the very factors that disincentivise private sector investment.39 No wonder capitalists were more interested in exporting capital abroad, where there were fewer labour laws and weaker trade unions. Additionally, the reliance on import controls would only have the effect of exporting unemployment and poverty abroad, and – ludicrously – the Labour left argued that they did not think Britain putting up import controls would encourage other countries to do so.
There were also social questions raised over Holland’s reliance on the massed ranks of a militant workers’ movement to deliver a half-way-house socialist transformation of British society. Why would a powerful, well-organised working-class movement, presumably seizing control of their own industries and guided by their own class interests against the bosses, limit themselves to the nationalisation of the top 20 companies and some import controls?
These criticisms were brought into sharp relief by events in South America. The rise of the AES coincided with the crushing of the left-wing Salvador Allende government in Chile, when CIA-backed sections of the military launched a coup that killed thousands and installed a dictatorship. Allende’s popular left-wing policies (nationalisation of the copper mines, land reform, etc.) were cited as the reason for the right-wing coup,40 but it was the rising workers’ movement that was the most worrying threat.41 A transformative left government can be destabilised through the usual mechanisms (international economic sabotage, undermining the currency), but the transformative movement from below was what terrified the ruling elites and the US state department. The workers and peasants themselves took over factories and businesses if they suspected the owners of engaging in sabotage. They organised and took over planning and rationing committees. A first aborted coup earlier in 1973 had been met with a massive occupation of factories and a huge march of over one million people. In this context there was an urgent need to think about how extra-parliamentary movements could resist the inevitable violent reaction that would erupt in the event of a strong socialist challenge through parliamentary institutions. A left government backed up by a mass movement had still been defeated by a military takeover, so where did that leave the AES? Despite the events in Chile, Holland still assumed a relatively neutral state with a loyal police force and an army that would not overthrow a radical left government and could be used to enforce any legislative inroads into capitalist power. This was a very big assumption, considering the subsequent testimony of many during the mid 1970s that they were concerned about a possible coup against the Wilson government.42
Wilson Redux, Labourism Comes Apart
However, any threat of a British coup there may have been receded rapidly into the background when it became clear that Wilson was intent on ignoring his own party democracy when he took power in 1974. Led by an ailing man still shaken and demoralised from his last time in Downing Street, Labour was not particularly looking to form a government. But when the powerful National Union of Mineworkers (NUM) went to war against Heath, resulting in a three-day working week as coal supplies ran low, Heath called – and lost – an early election and Labour was thrust back into power. After the initial February election, Labour was the largest party but lacked a majority, so they ruled in a voting agreement with the Ulster Unionists. Wilson called a second election in October and scraped in with a margin of only three MPs. Labour was back in government, but not necessarily back in power.
Upon election, Wilson refused to implement the more radical parts of the manifesto. The truth of the matter was that – as David Marquand explained years later – the programme was more of a document in an internal faction fight than a programme for government.43 The left had no way to force Wilson to implement the election pledges. For his part, Wilson adopted a policy of containment and marginalisation of the left. The routine of putting leading lights of the left in the Cabinet was once again deployed: Foot was made Minister for Employment, which was seen as a concession to the unions; Benn was given the Ministry of Industry with Eric Heffer as his under-secretary.
Although the left commanded the Ministry for Industry they were a minority in the Cabinet. Benn was told in no uncertain terms that he had to make do with a tight budget. Additionally the left found themselves constantly frustrated by the civil service, some of whom threw up any obstacle they could to hinder the more radical ministers. Benn’s first meeting with Sir Anthony Part, the senior civil servant charged with industry, saw the urbane Part coolly enquire: ‘I presume, Secretary of State, that you do not intend to implement the industrial strategy in Labour’s programme?’ When the Industry Act finally wound its way through Parliament it was a shadow of the ambitious plan developed in opposition: the NEB was introduced but it had a budget of only £1bn and was initially chaired by Sir Don Ryder, a distinctly non-socialist figure. He was followed by a merchant banker, a clear sign that the new institution would not be used as a weapon in the interests of workers. Despite the original lofty ambitions, the NEB was only ever allowed to prop up failing businesses. Just as the National Plan in 1965 had been voluntary, the NEB also couldn’t produce planning agreements, only voluntary codes that businesses were free to ignore at their whim – which they did.
The only significant deal the NEB made was with Chrysler, after workers occupied their factory in Scotland demanding nationalisation. Chrysler was given £40 million to stop its UK business collapsing, then two years later the factory was sold to Peugeot-Citroen without government being consulted. Although the 1974 manifesto had promised that Labour ‘shall not confine the extension of the public sector to the loss-making and subsidised industries’, any nationalisations were mostly a repeat of the historic practice of only bailing out industries facing imminent bankruptcy: docks, ship building and aerospace were nationalised, as well as British Leyland, which was in dire straits.
Compare the Chrysler fiasco to the Lucas Aerospace shop stewards’ proposals in 1976: faced with a cut of 5,000 jobs, after meeting with Benn the union activists put forward an alternative corporate plan, based on workers’ democracy and an environmental agenda. The Lucas Plan would be for need, not profit, and phase out weapons production to replace it with ‘socially useful’ goods, like medical equipment and hybrid batteries.44 The Lucas Plan became a cornerstone in the thinking of the left desperate to escape corporatism and develop new economic models.
The labour movement establishment still sought a reinvigorated corporatist model. Proving the old maxim that committees are where ideas go to die, the calls for workers’ participation in production was put to a committee of inquiry, headed by Oxford academic Alan Bullock. Staffed by union leaders like Jack Jones and representatives of big business, the committee proposed a system of Works Councils – similar to the West German model – with workers representatives co-managing decisions in the company. But this recommendation was torpedoed in part by the trade union leaders themselves, and the discussion was moved to a Cabinet Committee which didn’t report until 1978. As Jones noted sadly: ‘what was left of the Bullock report sank in the disaster of the winter of discontent’.45 The corporatist notion of a tripartite system of Labour government, unions and management working together rested on the notion that the unions and Labour were cooperating – an unsustainable proposition by the late 1970s.
Unable to influence the Confederation of British Industry or tackle the conservative mandarins in the Treasury, Labour focused its energies where it had the most power, attempting to win the trade unions over to a Social Contract that would limit wage increases. In this regard they were totally successful. Year on year wages deals with the unions saw pay increasing well below inflation. And despite the popular image of the 1970s, the number of official strikes dropped dramatically. Benn worried about this in his diaries, especially as the newly elected Tory leader Margaret Thatcher was gleefully exposing Labour’s role in managing working-class resistance in the interest of business:
we talked about how to deal with Thatcher’s argument, which is that the Labour Government are doing to the trade union movement what the Tories could never do; that in doing it the Labour Government are getting profits up and holding prices down and therefore restoring vitality to the capitalist mechanism; and that by doing so they will disillusion their own supporters and make it possible for the Tories to return.
Benn worried that the outcome of the Labour Party in power in the 1970s would leave the movement ‘broken and divided and demoralised’.46 His fears were prescient, as was Thatcher’s argument, though his diary does not broach the issue of how the future might have been rewritten.
Despite their initial focus on industrial policy and questions of economic democracy, the turning point for the left was the referendum on membership of the European Economic Community in 1975. Callaghan had gone to Dublin to negotiate the terms of Britain’s continued involvement in the EEC. But when he returned the deal he had struck was far removed from the party policy that the left had secured at conferences and the NEC. The PLP forced a vote on it but Callaghan secured his position with the help of the Conservatives; a referendum was called on terms deeply unpopular with the left and against party policy. Adamant that a reforming left government was still possible, the left was deeply concerned that the EEC would act to block socialist measures. Tony Benn and his allies rejected the pro-EEC arguments, convinced it was a regime only intended for capital accumulation and ensuring profit. They led the charge to get the UK out of the EEC. But the focus on national sovereignty and economic rights failed to convince the electorate, who saw in Europe a chance for more trade and better jobs. The campaign was a failure; only 32 per cent voted to leave the EEC. This defeat left Benn isolated – portrayed as a zealot for a lost cause – and Wilson took the opportunity to demote him to the much less influential Department of Energy.47
Rebellions From Behind and Below
The disappointment inevitably provoked a response from a party that still had a mass base and was still largely committed to socialism. Labour was rocked by a large number of backbench revolts in Parliament and a determined campaign from below in the CLPs. This was helped largely by the evolving make-up of the party. One historian identifies the new middle class, professional, left-leaning trade unionist and women members as ‘a more assertive rank and file … less deferential to parliamentarians (Right and Left!), more determined and persistent in its desire to achieve radical change’.48 One result of this was the willingness of CLPs to deselect MPs and introduce mandatory reselection for every MP – something that left intellectuals like Richard Crossman had dismissed in the 1950s as ‘insanely dangerous’.49
From 1973 there was a considerable thawing of the proscriptive, anti-radical politics that had characterised the witch-hunts of the 1960s. Now much more under the influence of the left thanks to the trade unions’ leftward drift since 1967, the 1973 NEC saw a more liberal regime introduced in the party. The proscribed list was abolished and the threats of purges of left-wing activists came to an end.50 These decisions proved to be quite momentous in relation to the grassroots struggles that gripped the party during the turbulent times of the 1970s and ’80s. They meant that left-wing groups like Militant could operate without persecution, despite some on the NEC arguing that they were behaving unconstitutionally. Orientated to the youth organisations of the party, Militant was making significant ground in recruiting the more radical and politically ambitious younger generation who were critical of Wilson’s prevarications.
At the same time the left’s influence in government came under sustained attack. Wilson abruptly resigned in 1976. Both Foot and Benn ran for the leadership and Foot came second with 137 votes, losing to Callaghan. Wilson left Downing Street saying to Callaghan ‘sorry about the mess’: a forewarning of the problems that lay ahead. Callaghan had once been a trade unionist, a man of the left who signed the Keep Left statement in 1947, but now he was Prime Minister the responsibility of isolating irksome left voices became paramount. The détente with the left MPs was over. Castle was out and Benn was demoted. This did not strengthen his government; the road Labour had embarked upon was a doomed one. In the face of the growing crisis of British capitalism the government was weak, struggling to tackle the economic forces ravaging the country.
Despite the set-backs, the left was often in open rebellion from above and below. The 1974–9 government suffered more parliamentary defeats than any before – many from the bullish and well-organised Tribune group. Tribune became the bane of the Labour leadership. In 1974 there were 80 MPs associated with the magazine, a strong showing in Parliament for an organisation that appeared determined to carry through the more radical aspects of the manifesto. But the actual strength of Tribune was limited. They were noisy and pressed their points often, but only on six occasions could they defeat government legislation. The most important victory was against the Expenditure White Paper in March 1976, which necessitated a vote of confidence in the government the following day. The left hailed the blow as a sign that the government was susceptible to sustained attack and was increasingly reliant on the Tories to maintain itself in power, something that would not be tolerated by the rank-and-file activists from below. What was lacking, however, was the capacity to channel that grassroots anger into a responsive mechanism that allowed them to hold their MPs to account or pressure them. Essentially the left could make no further progress in the current constitutional set up. The guerrilla war in some CLPs to deselect unpopular MPs was the consequence.
A Right to Rule?
The campaign to democratise the party was fought on a number of fronts: removing the leaders’ veto over the manifesto (which had seen key left policies exorcised in 1973); empowering the NEC to decide on the manifesto; the mandatory reselection of MPs; and an Electoral College system to decide the leader. Central was the question of accountability of MPs to their local CLPs. The organisation that took this on most effectively was the Campaign for Labour Party Democracy. The CLPD was formed in 1973 with one simple aim: to ensure that the Labour manifesto was actually implemented by a Labour government. It’s leading lights were Vladimir and Vera Derer and later Jon Lansman. Vladimir Derer’s view was that the left didn’t take the reality of the hegemony of parliamentary democracy seriously, constantly counter-posing it to much-hoped-for ‘spontaneous’ working-class movements while neglecting the living fact that Parliament is where power resides.51 Fresh from the battles over the first Wilson government and keen to see the more radical demands of the 1974 programme implemented, they proposed the reasonable demand that politicians should act on their manifesto commitments. But such a position was considered scandalous because it cut right though the highly cherished autonomy of the PLP, who believed politicians should act on their own ‘good judgement’. This Burkeian52 reflex was entirely at odds with the principles of democratic accountability in the labour movement – you take a vote and you act on the result. Labour MPs repeated the same philosophy as their Tory counterparts, claiming they were accountable only to the electorate who got them to the Commons at election time. The ultimate test of credibility was the general election. As such, what right did a handful of party activists have to put demands on men and women who had won tens of thousands of votes from ‘ordinary people’? Compounding this view was the more prosaic point that becoming an MP in a safe Labour seat was effectively a well-paid job for life. MPs did not want to be threatened with losing their jobs just because of how they voted in Parliament.
This translated into the struggle for the mandatory reselection for MPs. In order to ensure it was fair, and that deselection would not be used as a weapon by the right or the left, the process had to be applied universally. Every MP, right or left, would have to win the nomination of their own CLP at each election before they would be put before the electorate. The idea was popular with lay party activists, frustrated with the privileged elite that made up the right-wing of the PLP. Mandatory reselection first appeared on the conference agenda in 1974, and although it was defeated (by 3.5 to 2 million votes) it returned every year, backed by more and more CLPs, at first only 12 but by 1977 it had the backing of 79 local parties. The CLPD was supported in these endeavours by three left-wing unions, NUPE, the TGWU and Association of Scientific, Technical and Managerial Staffs (ASTMS), who all backed the most radical demands, giving the left an influence beyond the CLPs.53
Unsurprisingly, the Labour establishment reacted furiously to attempts to remove MPs who had lost the confidence of their CLPs but were seen as loyal to the PLP hierarchy. Battles in the mid 1970s to deselect Eddie Griffiths in Sheffield Brightside and Reg Prentis in Newham North East were long and bitter, with the media publicising them to show a divided party. Prentis’ de-selection made headlines as he had been a Cabinet Member under Wilson. This motivated 179 MPs to publish a public letter supporting him and condemning the local members trying to unseat him. The press joined in the fight to save the right-wing Labour MP, blasting local Labour activists as ‘hard left’, ‘members of the Trotskyist Militant Tendency’ (they were not), ‘extremists’ and, most damningly, ‘bed-sit revolutionaries’.54 Embarrassingly, Prentis proved his critics right when he quit and joined the Tories, fulminating against his CLP. But in 1978 resolutions to conference on mandatory reselection were lost because Hugh Scanlon abstained, against the wishes of his own union delegation.55 He warned Labour to focus on industrial policies and dismissed the moves to improve party democracy as ‘chicken shit’.
What Rough Beast?
In 1975 Labour negotiated with Jack Jones a new Social Contract which would cap wage increases. Such negotiated compromises were largely based on the goodwill of the unions to prop up the Labour government, but there had to be a quid pro quo. As a reward for wage limitations, the Social Contract promised to create space for investment in the ‘social wage’ – for example rent controls and pensions.56 But the deal was ultimately one-sided. There was no sugar to go with the bitter pill of making the workers’ pay for the wider malaise of the economy. As such the Contract was living on borrowed time.57 The agreement to secure an International Monetary Fund (IMF) loan was the battering ram the capitalists needed to smash through Labour’s social programme. Britain was hit by multiple crises at once: stagflation, a run on the pound and capital flight. Investors were selling sterling hand over fist, despite constant protestations from Healey that the pound was undervalued.58 One journalist described the concerted efforts of the Treasury and the Bank of England to let the pound slide as a way of forcing policy changes as an attempted ‘civilian coup against the government’.59 Capital controls that would have stemmed the losses were rejected. Afraid to confront the power of the City of London and given advice by the Treasury that he had no choice, Healey went cap in hand to the IMF for a loan to the tune of £2.3 billion. The conditions of the loan required eye-watering cuts to public expenditure. Regular visits by teams of IMF inspectors followed in 1977 to ensure the austerity measures were proceeding according to plan. But to implement the economic restructuring demanded by the IMF meant abandoning Labour’s life-long pledge to full employment, and allowing the private sector to be free of restrictions. Once again the law grinds the poor but rich men grind the law.
In contrast the left argued against accepting the IMF loan, calling instead for investment in the NEB, nationalisation of the banks, (controversial) import controls and planning agreements imposed on multinational corporations. Benn argued at Cabinet that ‘it would be inexplicable to our movement that we had never even tried our alternative strategy with the IMF and yet more inexplicable that in order to get the loan we have promised not to undertake that alternative strategy’.60
But the left’s arguments were ignored. There was a final showdown at the conference in 1976 when the left attempted to set out a clear alternative to the proto-monetarist agenda of the Cabinet. Conference re-endorsed a form of the AES and rejected outright any deal with the IMF. Healey spoke passionately against the left’s ‘siege economy’ proposal, arguing that only through bowing to the dictates of the IMF could Britain survive. Tony Benn later mocked this argument: ‘their policy was a siege economy, only they had the bankers inside the castle with all our supporters left outside’.61 Conference rejected Healey’s argument and voted overwhelmingly to nationalise four of the largest banks and the majority of the insurance industry. Callaghan contemptuously dismissed the vote, making it clear that it would have no effect on the government. Six weeks later the deal was signed and the AES – at least at national level – was history.
...Towards Bethlehem to be Born
Labour has always faced problems handling economic downturns. Promising prosperity when the economy is booming is not a problem, but promising full employment in periods of severe economic crisis requires serious anti-capitalist measures that restructure the economy away from profit and towards planning for need. This is the rock upon which Labour has been dashed more than once. As the post-war order unravelled, forces in both Labour and the Conservatives developed new ideological responses; in Labour it was the AES, from the Tories Thatcherism. The crucial difference was that Thatcherism became hegemonic in her own party whereas the AES – popular among members and many unions – remained a minority view in the PLP. As outlined above, the AES was not a perfect solution to the problems facing Britain, but at least it was an attempt to resolve the contradictions of British capitalism more favourably to workers and the poor. In rejecting this, Labour in Parliament relied on forcing down wages to buy them more time for the economy to recover of its own volition. The voluntary wage policies agreed in 1976 unravelled in 1978. Like a bucking horse throwing its rider, trade unionists – led by the firefighters (FBU) demanding a 30 per cent pay increase – began to reject the incomes policy. It had been intended to prevent inflation, but as inflation skyrocketed it just led to wages being reduced. Contrary to the enduring myth that it was the ‘reckless’ trade unions in the Winter of Discontent who brought down Labour by having the audacity to defend their members pay and conditions in the face of inflation, it was actually the austerity demands of the IMF that were the turning point. Just as MacDonald chose to surrender to the Bank of England in 1931, so too did Callaghan and Healey capitulate to the demands of international finance. The deliberate abandoning of the promise of full employment was a retreat from even the revisionists’ promises in the 1950s.62 It set the Labour right on a course to accepting the subsequent Thatcherite orthodoxy. Public sector unions striking for higher wages in 1978–9 were the consequence of both Labour’s inability to transform the economy in the interests of the majority and the collapse of its historic programme.
But the IMF loan was also a deliberate weapon used against social democracy and against the trade unions. Healey later confided that he believed the advice he had been given by Treasury officials had been totally inaccurate, that figures were inflated to provide evidence that the IMF loan was inescapable. The actual figure for government borrowing in the crucial year 1976–7 was £2 billion less than the projected total, which was the same amount as the cuts that Labour made.63 It was a decisive victory for the right in forcing the Labour Party to abandon both its left-wing programme and the revisionism of the 1950s, to make it bend the knee before the power of capital and accept the ‘new realism’. It was the attempt to manage British capitalism in a time of crisis that eventually consolidated the right-wing of the Labour Party around the new realities of economic orthodoxy. In the words of one historian:
In 1974, Tony Benn had said the crisis should not be used to prop up an ailing capitalist system but should be the basis for a forward march into socialism. ‘We should all be socialists now’, he said. But after the 1974–9 Labour government, the Party could not again come into power for another 18 years, when it succeeded in convincing the electorate, under Tony Blair, that none of us are socialists now. That, I would argue, is the fundamental significance of the IMF crisis in 1976.64
After being ousted from government in 1979, Labour embarked on the by now familiar approach of moving left to attempt to recapture the base and reinvigorate the party activists. The problem was that although many understood the vicious cycle, there was no way to break it. Labour had moved left when in opposition before only for the Cabinet to rapidly abandon their promises when in power. It was this, as much as any particular ideological strength of Thatcherism, that in 1979 repelled so many voters who had previously looked to Labour as their party.
Despite the strength of the Labour left, when repeated conference decisions were ignored and Callaghan and the Cabinet pursued their own course towards oblivion, there were no mechanisms whatsoever to reverse course. The left did not have a fall-back plan after the AES was publicly crucified by the IMF in 1976. All that could be done was to criticise the leadership and force the issue at conferences, but to no avail. Labour had given in to the power of big capital and international finance once again, unwilling to mobilise the social forces required to defend their programme in power, and was led by politicians who saw appeasing the City of London as more important than guaranteeing workers’ wages. It was clear that the party had to be made more accountable if there was to be any hope of avoiding this tragic fate again.