From Socialist Worker Review, No.132, June 1990, pp.17-19.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
It’s a great joy to see the Tories crumbling in the opinion polls. But what would a Labour government be like? Here we print a talk given by Duncan Hallas at the Skegness Easter rally on the 1974-9 Labour government.
IN DECEMBER 1973 John Davies, the then Minister of Industry in the Tory government said: ‘We must enjoy this Christmas, it may be the last one we have.’
John Davies had a nervous breakdown a few months later, but nevertheless this gives some notion of the general state of panic in ruling class circles in late 1973, shortly before the Labour government came to office.
This was the year of the Pinochet coup in Chile. The Times, which then represented mainstream establishment thinking, ran an editorial which said it was a great pity they murdered Allende and it didn’t approve of people being rounded up in football stadiums and tortured. But who could say patriotic British officers placed in similar circumstances would not behave similarly, and who could blame them?
Towards the end of the Heath government everything appeared to the ruling class to be falling apart.
It had been a government committed to change. It looked back at the performance of British capitalism in the 1960s and the beginnings of the 1970s and could see the signs of decline compared with its major competitors.
The key question was control of the workforce and control of wages. The reason for this had nothing to do with wages in Britain. In 1969 and 1971-2 prices internationally rose very fast for reasons which have a great deal to do with the way the US government dealt with the Vietnam war and very little to do directly with wages.
The Heath government introduced a statutory wage policy. By law you could only have an amount decided by the government. Unions were considered far too strong, therefore Heath introduced the Industrial Relations Act, which was an attempt to do in one go what Thatcher has done through successive installments of anti-union legislation.
The crisis for the Tories arose from the coincidence of this attempt to enforce legalised wage restraint plus anti union legislation at a tune when inflation was rapidly increasing, reaching 24.5 percent at one point. The combination of these pressures produced a series of conflicts and made it impossible to enforce the Industrial Relations Act in a series of key cases.
Neither could the government effectively impose the laws on statutory wage restraint. The second miners’ strike at the beginning of 1974 was entirely illegal as it was for a claim nearly double the government norm, which was the law.
The Heath government imposed a lock out – the three day week – to save electricity. Finally it committed the ultimate folly from its own point of view by calling an election.
That’s one side of the background to the last Labour government. The other is the working class movement.
The leadership of the TUC very reluctantly promoted some struggles. They did this as a result of the pressure from below and also, to some extent, pressure from the trade union leaders. Consequently, the TUC acquired a leftist image and an aura of importance.
The Labour Party had also been pushed to the left, in words at least, as a result of the general radicalisation. Its famous 1973 programme contained the immortal phrase, ‘The next Labour government will bring about a massive and irreversible shift of both wealth and power in the interests of working people and their families.’
Labour won the election at a time when there was both a high level of class struggle and when it had been hung with a set a of promises which it never had any intention of carrying out.
The defeat of Heath was applauded in some curious quarters. Both the Financial Times and the Economist calculated that a Labour government would be able to control the level of struggle. Above all it would be able to persuade the trade union leaders to operate Heath-type policies under different names.
As soon as the government came in it immediately carried out one of its promises, repealing the Industrial Relations Act outright. It did so because it knew it had no alternative. It also scrapped statutory wage restraint.
Then, between February and October 1974, it produced the Social Contract. The essence of the Social Contract was that trade union leaders would collectively agree to some kind of norm with the government which would keep down wage settlements at a time of high inflation.
The key feature which made this a realistic proposition was the weight and prestige of the trade union leadership.
A number of important unions had fallen under the influence of the Broad Left. In particular there were a number of important Broad Left union leaders at the top. The most important were the so-called Terrible Twins, Hugh Scanlon of the engineers and Jack Jones of the TGWU.
These people were essential to selling the social contract.
At the TUG conference in 1974 the right wing leader of the EETPU, Frank Chapple, expected to speak as a right but they wouldn’t call him. They called Jones first and then called Lawrence Daly. Daly had been a longstanding militant in the coalfields who was elected as general secretary of the NUM on a platform of support for guerrilla strikes.
He made a most effective speech which said there can be no social justice when workers like the nurses got paid a pittance. Other workers had managed to get substantially higher wages. Therefore, he said, there has to be a planned growth of real wages. Moreover we had to take seriously the question of the social wage, expanding and increasing expenditure on housing and education and so on.
No one from the right wing of the TUC was allowed to speak, even though they were in a majority. It was all staged managed by the general secretary Vic Feather, with the agreement of many of the right wingers.
The left face had to be put forward in order to get a decisive majority for the Social Contract, and they got it.
The Labour government did not at first use that to turn the screw on wages. The initial pay norms were actually rather generous for many workers. Postal workers, for example, considered their 1975 rise to be the best ever in the industry. The government had to pay out because the level of the class struggle.
A ‘fundamental and irreversible’ shift of power of course implies changed institutions. Therefore there were to be planning agreements with all the major companies.
These planning agreements were to be supervised by the government and coordinated not in terms of the short term profits, but in terms of what was called the ‘national need.’ It also said that real government control without the participation of the workforce was not a solution so the new industry minister, Tony Benn, said the crisis inherited by Labour would require fundamental social changes.
In the short run these policies were highly successful. In 1974 there were 14.8 million strike days. The following year it went down to 5.9 million and by 1976 it was 3.5 million.
There is no question that the combined efforts of the union leadership, led by the left, and the fact that the government started out with quite generous norms was effective in reducing industrial struggle.
The National Enterprise Board was supposed to be the instrument whereby the government financed investment which it approved of and refused to finance investments of which it didn’t approve. But it never played any significant role.
The planning agreements were an even more spectacular debacle. The Labour left had been under the impression that planning agreements were to be compulsory. But when it came to the legislation they were not.
For example, Chrysler found itself in dead trouble and its British enterprise was having difficulties of all kinds. In return for a large government handout, Chrysler signed a planning agreement committing it in effect to government direction of investment. Actually, the agreement was not worth the paper it was written on.
A few years later Chrysler decided that such was the pressure on the company that it had to sacrifice its British operation and would sell it off. This was excluded by the agreement, but Chrysler proceeded to do it anyway. What did the government do? Nothing, the agreement came to pieces, because of the realities of capitalist power.
Another part of the industrial strategy, and one which was supposed to increase workers’ democracy, was sponsorship of workers’ co-ops, such as at Triumph, Fisher Bendix and the Scottish Daily Express.
These were unprofitable firms which their owners wanted to close, but they realised the government would pay them some money if they handed them over to the workforce.
The central idea of these workers’ coops was that the whole workforce would run the operation and a vast amount of propaganda was put out by the Labour left and the left wingers in the unions. But the whole point is that these companies were operating in a capitalist environment, competing with others, and they failed one after another even though they got significant amounts of government grants.
Now we come to what is the decisive turning point, not simply in the history of the Labour government, but actually of the whole period since 1970, the beginnings of the slide to the right.
It occurred in 1975, on an issue which at first sight seems rather unimportant. The Heath government had entered the European Community in 1973. The Labour Party was pledged by conference decision to come out.
This created problems as certain decisive sections of British capitalism wanted to be in. But having stood on this platform of coming out, Labour had to arrange a retreat. Tony Benn was foolish enough to say that on constitutional grounds the subject required a referendum.
This provided a decisive test of the relationship of political forces. On the one hand there were the Tories, the CBI, the whole of the media, the right wing of the Labour Party and the right wing of the TUC. You had practically everyone except the Labour left, the Communist Party and the far left.
The vote was two to one for remaining in and renegotiating the terms of membership.
This enabled the right wing in the Labour Party to test the real political support of the left. The first thing that happened was that Benn got the push from the Department of Industry. The whole atmosphere shifted sharply to the right. The wage norms went down rapidly and the following year came the ‘proto-Thatcherite’ period of the Labour government.
In 1976 there was a balance of payments deficit. By today’s standards it was trivial, about one tenth of the current deficit. This didn’t matter, as what was important was that the right of the Labour Party, now really in control, called in the International Monetary Fund.
The IMF introduced cuts in social services and cash limits which Thatcher has since exploited to the full. It was used as a justification for saying that wages had to be cut much more.
Denis Healy said that no British government has ever paid as much careful attention to the control of the money supply. He followed a deflationary economic policy in the same style as Thatcher.
Between 1976 and 1978 average real earnings were reduced for the first time since the middle 1920s. This is something which Margaret Thatcher has never succeeded in doing.
It was a viciously right wing government in terms of economic policy. Equally importantly, it was a right wing government in terms of the arguments used to justify the policies. All the arguments which the Thatcherites have used ever since originated not with the Tory government, but with the Labour government in office, particularly from 1976.
This had consequences, of course. Resistance rose, with 10.3 million strike days in 1977. This culminated in the winter of 1978-9, the Winter of Discontent, as a result of simultaneous cuts in wages and services.
Merely looking at strike days tells us something, but it’s not enough. We have to look at the circumstances in which they take place.
The great strike wave of 1969-74, the biggest since 1910-1914, took place under conditions of rising working class confidence and a belief that the Tories were on the ropes. In general terms it was rather apolitical, but nevertheless, there was a leftish attitude in a certain sense.
The strikes in the late 1970s took place under conditions of bitterness, cynicism and distrust of the institutions of the workers’ movement. The union leaders, left as well as right, repeatedly sold out struggles such as the firefighters’ strike.
This apolitical militancy was entirely compatible with a shift to the right in popular attitudes. That shift had occurred before Margaret Thatcher entered Downing Street. In 1974, 56 percent of trade unionists voted Labour and 21 percent voted for the Tories. By 1979 slightly less than half of all trade unionists voted Labour but 32 percent voted Tory. The right wing Labour government alienated a substantial section of the working class.
Let’s look at the situation today. It looks as if an election now would give us a Labour government, although we don’t know what the situation will be in two years time.
Firstly, an election today would not take place against a background of ruling class panic, which is not the same thing as a crisis in the Tory Party.
It will take place with an anti-Tory mood, but with a relatively low, and certainly containable, level of class struggle. This could change, but for the moment that is one difference.
Secondly, the 1974 Labour government took nearly two years to move from a great deal of verbal rhetoric and some real concessions to an outright attack on working people.
Today it will not start with fulfilling any promises, if for no other reason that it is promising nothing. It won’t even promise to repeal the Tory anti-union laws, never mind whether it will actually do so. Labour is not promising to reintroduce exchange control or to increase the taxation of the rich. Indeed it has specifically ruled out any question of returning to the tax levels of 1979 for the rich and the super rich.
So it starts much further to the right. It also starts with an economy which is significantly shakier than last time.
Therefore we can say with complete confidence that a future Labour government, unless there is a very big upturn in the class struggle in the next couple of years, will make attacks from the beginning.
Nevertheless, we are absolutely in favour of a Labour victory at the next general election.
Since we are not in a position to displace the Labour Party as a serious alternative in the medium term we have no choice but to argue hard against the Labour Party, but for Labour against the Tories.
We have one advantage which we did not have in the early 1970s: the gradual disintegration of the old Broad Lefts, the crisis of Stalinism and the reduction of the British Communist Party to a joke organisation.
The CP was not a joke organisation in 1974. At that tune, in spite of the fact that the CP union leaders were involved up to their elbows in reality in supporting the social contract, they always maintained a verbal opposition. Arid because it was massively bigger than the revolutionary left at that time, it was much more difficult for us to pose an alternative. Now that obstacle does not exist in an organised fashion.
It’s not a question that a Labour government won’t bring socialism, you have to be pretty daft to believe that. But Labour will act as the agent of capital. And, paradoxically enough, because it is not in the same sense part of the system, it may be worse as it has to prove itself to the bankers and big business.
The only thing which can offset that is a rise in the level of the class struggle.
Finally, the only decisive test is the test in practice therefore we are for another Labour government. It will be a set back for us if Labour loses the next election. We are for everything which weakens the present government and forces the Labour Party into a position where its policies and practice can be tested in the eyes of millions of people.
It’s a long struggle inside the working class against the right, but there is no way to short circuit it.
Last updated on 29 May 2010