In truth, this was not just a problem with the Labour Party. Social democrats of various ideological hues and pallors had entered governments across Europe in the interwar period, and the record was with few exceptions abysmal. For example, as Adam Przeworski writes of this period, despite their ideological commitments to redistribution of wealth and socialisation of the economy, the riches of the upper classes were left largely untouched and not a single industry – barring the French arms manufacturers – was nationalised in this period.25
Labour in the ‘Golden Age’
How, then, was the Attlee government of 1945–51 so different? For the first time in its history, Labour had won a landslide with almost half of the total vote, and a parliamentary majority of 145 seats. Its manifesto committed it to policies far more radical and far-reaching than any previous Labour electoral programme: a cradle-to-grave welfare state, a national health service, Keynesian economic intervention, extensive public ownership, mass house-building and much more. What is more, its actual accomplishments in these respects – even setting aside the mythopoeic eulogies – can hardly be disdained as trivial. The reformist road to socialism had twice led, in the interwar period, to a sad diminuendo of hopes and a shift to the right. Now, Labour instituted a series of stunning, seemingly irreversible reforms that transferred some of the country’s wealth to workers in the form of an expansive social wage. Why?
It is commonly assumed that the war years had accelerated a long-brewing radicalisation in the British public, producing broad popular support for Labour’s agenda. Here, surely, was the long-awaited vindication of the Labourist strategy: popular support for socialism had reached the decisive tipping point, and Attlee’s team had only to present their agenda for it to receive broad popular endorsement; and only to win a plurality in order to see those plans realised. Certainly, after the resignation of the pro-appeasement Neville Chamberlain in 1940, there was an overwhelming mood against Conservatism which – given the prevailing electoral winds – would tend to favour a Labour government. This was concurrent with a broad, nebulous ‘antipolitical’ sentiment aimed at the old governing elites, and support for some substantial reforms.26 Tory opposition to proposed welfare reforms recommended in a 1942 report by the Liberal economist Lord Beveridge compounded the emerging mood against them. Yet, even if Labour’s manifesto declared the party to be ‘socialist, and proud of it’, it would be exaggerating to call this a ‘socialist’ consensus. And few anticipated at the time that it would result in a Labour government – sources on both left and right expected a comfortable Conservative majority headed by a popular wartime prime minister who was not personally tarnished by the policy of appeasement.
Just as important as popular disaffection with the Tories was the confidence that Labour had in its reform agenda. Here, Labour gained vital experience from its participation in the wartime coalition government, which used Keynesian stimulus and demand-management techniques to keep production at a pace necessary for the successful prosecution of the war. This shift in statecraft was driven, in part, by the more far-sighted elements of the civil service, who placed liberal reformers in key state apparatuses.27 The scarcity of labour during the war had raised the political power and bargaining leverage of organised labour, and encouraged the government to use collective bargaining to manage ongoing struggles over wages.28 In addition, the precarious state of British capitalism, like that of many of its European competitors, was such that a radical government had a unique window of opportunity to reform the system before the usual business opponents of such reforms had a chance to become sufficiently organised. It is arguable that many of these changes would have been imposed upon a Conservative administration, and something like this is suggested by the record of centre-Right governments across Europe in this era. Certainly, once they were in place, the Tories evinced no appetite for rolling them back, despite a brief, testerical campaign against ‘socialism’ in the elections of 1950 and 1951. No doubt this was in part because, despite exploiting real popular discontent with rationing and linking such policies to ‘socialism’, the Conservatives only gained office in 1951 due to the irregularities of the first-past-the-post system. Labour had in fact won slightly more votes than the Conservatives, and the Tories’ polling suggested to them that they needed to accept existing social democratic policies if they were to win support among skilled workers.29 As such, the Conservatives held on to governmental power, once obtained, by preserving rather than rolling back Labour’s reforms. However, whereas Labour took advantage of its strength to implement sweeping reforms, the Conservatives would have resisted them as far as possible, and it is difficult to believe that anything like the National Health Service could have emerged from a government led by Winston Churchill.
However, if we are not to buy into maudlin myth, it is also necessary to place these changes in a broader perspective. Labour, having equated the socialisation of industry with public ownership, nationalised important industries such as steel, coal, railways, cars, telecommunications and the Bank of England. A full fifth of industry was taken into public ownership. But most of these firms were incapable of surviving alone at any rate, and their sustenance was necessary for renewed capitalist development. The owners of the firms were generously compensated with public funds and borrowing, so that they could reinvest in the profitable parts of the private sector. Meanwhile, the public corporations were preserved on the model of private industry, with the usual worker–management hierarchies, and their production decisions made on the basis of what was good for private business – their management often drawn from the capitalist class. Once stabilised, the system also proved remarkably resistant to further such encroachments on private ownership.
At any rate, the architects of the nationalisation programme, such as Herbert Morrison, were reluctant to extend it, arguing that Labour had to ‘consolidate’ its gains before attempting further transformation. Even the Labour Left began to retreat and soften its positions, partially in view of the growing anti-communist climate of the Cold War. Later, post-war social democrats of the Labour Right, such as Anthony Crosland and Hugh Gaitskell, argued that with a ‘mixed economy’ and some degree of political liberalism, Labour had actually achieved socialism. Capitalism, if not in fact done away with, was grievously weakened by the encroachments on its power by organised labour and the social-democratic state. Since the Tories pledged to maintain the status quo, there remained only the consensus of ‘Butskellism’ (named after the Tory and Labour chancellors, Rab Butler and Hugh Gaitskell) to administer.30 In some respects, Labour became a prisoner of its own exaggerations, contributing to an intellectual consensus – obviously bearing little relation to reality – that Britain’s wealth was being so radically redistributed as to ultimately lead to what Lionel Robbins bemoaned as ‘propertyless uniformity’.31 One would hardly know, in the face of such fantastical assertions, that by the sixties, still some 75 per cent of personal property was owned by the top 5 per cent of the population.32 Even absent such extravagant claims, the tendency was to treat Britain as an ‘affluent society’ in which major social problems had been more or less solved and poverty had largely disappeared. Such was the mood music to a long period of Tory dominance – as Macmillan argued, ‘You’ve never had it so good.’
There is also an unsavoury side to the Attlee administration, inasmuch as such reforms as were achieved were coterminous with financial orthodoxy, the continuation of rationing alongside increased exports, a willingness to use troops to break strikes, and wage freezes. A forgotten aspect of the ‘golden age’ is indeed this pungently authoritarian side of Labour administrations. Labour was in some respects more avid than the Conservatives in prosecuting the war against organised labour and, later, social movements. Attlee’s government repeatedly deployed armed forces against striking workers, invoking wartime anti-strike legislation. Later, it was the Wilson administration of 1964–70 which first deployed the notorious Special Patrol Group in London, while developin
g legislation to severely curtail the unions’ right to strike. In the crisis-ridden 1974–79 Wilson–Callaghan era, Barbara Castle did not hesitate to use armed forces against striking firefighters. Even the famously liberal Home Secretary Roy Jenkins tilted the balance of criminal justice policy in an authoritarian direction with his contribution to Britain’s repertoire of ‘anti-terrorism’ laws, the 1974 Prevention of Terrorism Act authorising internment and jury-less trials in Northern Ireland, while the Criminal Law Act introduced further restrictions on organised labour.33 The authoritarianism of New Labour was of a different order, but hardly unthinkable in light of the record of social democracy in its heyday.
The post-war consensus was also bought in part with American dollars, which ensured Britain’s orientation in a new axis of power which demanded continuity in foreign policy justified by a staunch anti-communist line. Despite manifesto commitments and pre-election insinuations, Labour’s Ernest Bevin had promised on election day, 1945, that the new government’s foreign policy would not differ from the previous one. His first parliamentary speech as foreign minister made clear that he accepted the policy of his Conservative predecessor, Anthony Eden.34 He did not dissimulate. Labour had, in 1944, supported the policy of crushing the Greek partisans and supporting monarchist forces. And while it orchestrated the British withdrawal from India, it offered no such relief to Kenya or Malaysia, where brutal counterinsurgency was indicated.35 Similarly, it would go on to send troops to assist the French restoration in Vietnam, support Nato (despite noisy opposition from the Left), and develop nuclear weapons. Here, then, was the zenith of social democracy: Labour had achieved as much as it was ever likely to, finally establishing the long sought after compromise between the classes, and its commitment to ‘nation’ never wobbled.
The crucial delusion, common to Labour leaders of the era, was that a new economic formula had been reached for unprecedented, perpetual expansion, which would support an ongoing class compromise. As Stuart Hall wrote in a critical review of the post-war system, they believed that ‘the social democratic bandwagon could be hitched to the star of a reformed capitalism: and that the latter would prove capable of infinite expansion so that all the political constituencies could be “paid off” at once: the TUC and the CBI, labour and capital, public housing and the private landlord, the miners and the Bank of England’.36 To this effect, it is sometimes assumed that the economic controls implemented by Labour were Keynesian in drift. In fact, although the term ‘Keynesian’ may at times be a convenient marker for the kind of economic controls used in the postwar period, the counter-cyclical measures implemented by post-war Labour governments tended to involve ‘taking the economy off the boil’ rather than reflationary measures in the down-swing.37
The post-war boom had arguably little to do with a uniquely Keynesian policy mix and much more to do with the space for new investment created by the catastrophic destruction of capital during the war. And insofar as the new consensus depended on an unusual period of capitalist dynamism, with close to zero unemployment and growth rates stabilising at 3 or 4 per cent, the first green shoots of capitalist failure were destined to vitiate that consensus. Of course, it was precisely the condition of unprecedented economic growth underpinning Labour’s class compromise which began to absent itself toward the late 1960s – catching the Labour Government, then with a solid majority, totally unprepared.
The Collapse of the Consensus
The seeds of downfall were already partially visible when Harold Wilson, then something of a ‘bright young thing’ by Westminster standards, led Labour to victory in the 1964 election. Most signals were optimistic. Wilson, though he was from the centre, was reviled by the Gaitskellites and able to garner the support of the Left. Thanks to left-wing support, he was able to take the leadership after Gaitskell’s death in 1963. He was careful to avoid outright attacks on ‘fellow travellers’ in the fashion of his predecessor, and evinced an informality and comic turn that went with the grain of popular culture. Labour under his leadership was elected to government on an ambitious project for full employment and public investment, breaking thirteen years of uninterrupted Conservative rule.
At first, everything seemed to be going exceptionally well, despite the tiny parliamentary majority with which the government was formed. Labour began to implement its National Plan for industry, secured agreement with the CBI and TUC, and implemented many of its policies including pension increases, rent controls and the abolition of prescription charges. This may not have been the sweeping transformation of 1945, but with the Tory opposition scattered and in decline, there was reason to be optimistic. Further, despite the enduring influence of Gaitskellite revisionism and the talk of ‘affluence’, the limits of the post-1945 settlement were becoming visible – the existence of a wide swathe of impoverished people, especially pensioners, was recognised.38 Even the early attempts by Lord Cromer, the Governor of the Bank of England and a close ally of the City, to force a reverse in policy were seen off. Speculative attacks on the currency – which Cromer advised Wilson signified investors’ demands that the government row back from its policy of full employment, use incomes policy to stifle wages and raise interest rates – were not enough to force the government’s capitulation at this stage. In the end, Cromer was replaced and returned to the family merchant bank Barings. Labour was confident enough in 1966 to call a new election and extend its mandate, gaining some 48 per cent of the vote compared to the Tories 41.4 per cent. And despite the enduring influence of revisionism, this was clearly a class vote: despite the fact that the Labour leadership was predominantly middle class, it scored the highest share of manufacturing workers’ votes in its history, some 69 per cent.39
How, then, did the government end up implementing the bankers’ desiderata? The underlying problem for the government was that Britain was a declining global power, notwithstanding the efforts – largely supported by Labour – to preserve as much as possible of the colonial empire. As exports fell, Britain was faced with a balance of payments crisis, resulting in further speculative attacks and a choice between currency devaluation and import controls. The Treasury’s policy had always been that the currency should be defended at all costs, and Wilson certainly agreed that a strong pound was central to Britain’s global dominance. So while Wilson didn’t cave in to Cromer’s pressure, Labour was certainly determined not to alienate the City. Even the earliest budgets, which did pass some radical measures, tended to be deflationary in effect. Wilson’s cabinet therefore overwhelmingly opted for a policy of import controls and deflationary measures to manage the crisis. They did not know, however, that Wilson had negotiated a deal with the Johnson administration in which, for a bail-out of the pound, Britain pledged to deflate the economy and use an incomes policy to restrict wages, while at the same time preserving its East of Suez military commitments and backing the United States in its war in Vietnam. Then, as now, Britain’s global role was secured by latching onto the coat-tails of the White House. The National Plan was in effect dead by July 1966, as the government implemented a mandatory wage freeze across the board, the first since 1931, and cut public spending. The wage freeze necessitated one of the government’s first fights with organised labour, as seafarers went on strike for a modest pay-rise which, the government claimed, would ‘breach the dykes of the incomes policy’.40
Finally, in 1967, with the speculative attacks continuing, the government agreed to devalue the pound. The government quickly lost credibility, both among workers who resented growing unemployment and wage restraint, and among the affluent middle classes for whom the episode demolished Labour’s economic credibility. The IMF were brought in to manage this process, and it was they who argued for the introduction of prescription charges among other things: a reversal that was implemented, with great embarrassment, in 1968. Dick Crossman asked the Chancellor Jim Callaghan at the time if he might increase family allowances for the poor: ‘sorry, old boy, the IMF won’t allow it’. Unto which: ‘
so we’re back under the control of the bankers’.41
This was not just a case of government going awry. Certainly, Wilson could have devalued earlier and avoided some of the consequences of this protracted dance-off with the speculators. But the forces eating away at Labourism went deeper. The sixties had seen the emergence of two trends that would erode the Labour coalition. The first was the emergence of immigration as a major political issue after the 1962 Commonwealth Immigrants Act which, by enacting the first major restrictions on migration to the United Kingdom from the former colonies, exacerbated a simmering racist anti-immigrant backlash that was effectively harnessed by the Tory Right. The greatest successes for this strategy were enjoyed by the Tories in the West Midlands, where Labour had struggled most to rebuild its vote after a long period of Tory dominance amid relative regional prosperity. There, the right-wing in alliance with local press generated local panics about the arriving migrant populations. By winning the Smethwick seat in the 1964 general election on the slogan, ‘If you want a nigger for a neighbour, vote Labour,’ the Conservatives found that it was possible to gain working-class support without offering the usual class incentives. Indeed, Enoch Powell acted as a pathfinder for a New Right built on this discovery, that one could build a popular, right-wing coalition as long as racism was at the centre of it.42 The second development was the growth of Welsh and Scottish nationalisms, coupled with civil strife in Northern Ireland, where the Catholic population was organising against Britain’s own miniature version of Jim Crow. The gradual cession of the empire was raising questions about the purpose of the United Kingdom, while Westminster’s antiquated institutions alienated growing layers of the middle class in Scotland and Wales. Labour lost its Carmarthen seat to the Welsh nationalists in 1966, then lost its Hamilton seat to the Scottish nationalists in the following year. In 1969, the paramilitary wing of the Ulster constabulary was deployed against Catholic protesters, with bloody consequences.
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