By the time Labour had lost the 1970 election, the British state to which the party had always deferred was in need of major renovation, while the post-war social-democratic coalition was falling apart. Some voters simply abstained, reflected in a turnout of 72 per cent, the lowest since the war, while others – including many manufacturing workers – decamped to the Tories. Worse than electoral losses, however, was the fact that the economic basis for post-war social democracy was disappearing, and Labour had few means by which to adapt to new circumstances. The postwar corporatist system had confirmed the parliamentary, constitutional route to change as the major strategic orientation of the Left. In this system, governments would use the state to hammer out a compromise between, to borrow a turn of phrase, ‘the top floor of the Shell building … the top floor of the Treasury … the top floor of the BBC … [and] the top floor of the TUC’.43 For mainstream social democracy, the state was the critical actor, holding the ring between rival ‘interests’. The task, then, was to elect a Labour government to administer this compromise in a fair way and defend the poorest. But even those in Labour whose objectives were far more radical than the mainstream, tended, for much of the post-war period, to sign up to the essential predicates of this view. The purview of most actually existing socialists involved looking for different ways of using the state to curtail ‘the logic of the market’.44
This privileging of parliament as the key locus from which change was to be achieved compounded the demoralisation and confusion felt when the corporatist pact began to fall apart, and a New Right espousing a borrowed ‘anti-statism’ surged. As Britain’s underlying economic weaknesses – expressed in declining productivity and profitability – ran confluently into the seventies, leading to rising inflation and unemployment, and as the 1973 OPEC crisis sent the world economy hurtling into the red, the social democratic mainstream, along with a revived Liberal Party, sought to consolidate the role of the interventionist state in securing class compromise. The Labour Left, for its part, did not so much seek to abolish this consensus as effect a sharp shift in the balance of the compromise in favour of workers. Where the corporatist instruments of price and income controls, and the rhetoric of shared sacrifices still prevailed on the Right and centre, Labour’s left-wing sought extensive redistribution and nationalisation.
Yet many on the Labour Left and on its periphery also engaged in a thoroughgoing critique of the record of post-war social democracy. As constituency branches and unions moved leftward, members began to critique Harold Wilson’s failure to deliver on his manifesto commitments, a fiasco which they blamed for the Conservative’s 1970 election victory under Heath.45 The problem, it was argued, was that Labour had been too timid in confronting concentrated economic and political power. Even where it had nationalised industries, it had left the old guard in charge. In place of deference to parliament and the constitutional settlement, the Left began to advance a critique of the British state and demand democratisation. In addition to extensive nationalisation, and in place of its model of top-down management, they advocated forms of industrial democracy. Tony Benn, a former Gaitskellite who had moved sharply to the left in response to Labour’s defeat, played a key role in getting elements of this into Labour’s 1974 manifesto. As he argued, his experience as Minister for Technology had shown him the necessity of this as the best means of addressing rising union discontent:
The old idea of management from the top has got to be looked at again … the man who actually has to do a job of work on the factory floor, or in a foundry, or in a shop or office, is the best person to know how his or her work should be organised … One of the most horrifying experiences of my ministerial life was to walk round factories with management that obviously didn’t know what was going on, or who was doing what, and yet quite happily assumed that the right to manage on behalf of the shareholders included the right to tell everybody what to do … If we can trust the country to democracy, why on earth can’t we trust individual firms to the people who work in them? … And if nationalised industries were seen to be democratically run, and to be distributing incomes more fairly as well as being accountable to the public for the major decisions they make, we could take a massive step toward democratic socialism.46
Yet the crisis of social democracy would not yield to parliamentary socialism. Instead, as inflation soared, Labour fell back on traditional corporatist methods to control it. Working on the theory that excessive wages were driving up manufacturing costs, which were being passed on to customers, the Wilson Government elected in 1974 began negotiating a Social Contract with union leaders that would restrain wage growth to no more than 5 per cent a year, while inflation greatly exceeded that increase. While wage growth played a part, not least as organised labour tried to recoup real-term losses incurred during the Wilson-era ‘balance of payments’ crisis, the actual causes of inflation were considerably more complicated than the solution of wage-restraint implied. Among the major causes were soaring global food and energy prices, coupled with the liberalisation of banking rules under the Heath administration, which had resulted in a glut of cheap credit.
Nonetheless, there were more fundamental problems, above all a secular decline in profitability and productivity in the manufacturing sector. It was logical that business and their allies in the Bank of England and the Treasury would seek a reduction in wage costs by one means or another, as the first condition for freeing up funds for new investment. Heath had attempted to deal with these structural problems at first by chastening the unions, using the whip of market discipline to enforce competition, and steering Britain into Europe. When Heath’s solutions didn’t avail, only provoking crippling conflict with the unions, it fell to a Labour government to find a way of reducing the cost of labour with the consent of the labour movement. The problem for social-democratic governments therefore became one of how to achieve wage reductions while finding sufficient quid pro quo to secure union acquiescence – a problem that became intractable by 1978, as wildcat strikes signalled the withdrawal of labour’s consent to the bargain. Aside from wage restraint, the government also severely reduced public spending under an agreement with the IMF. Unemployment remained at approximately 1 million, a situation for which capital was grateful and – initially – inclined to reward with political support.47 Amid a frenetic anti-communist clamour in parts of the establishment, and with the Labour Right joining in right-wing press attacks on hate figures on the Left such as Tony Benn, civil servants also lobbied Labour leaders to kill off other radical proposals such as Benn’s policies for industrial democracy and nationalisation.48 The centre was falling apart, but the Left singularly lacked the means to take advantage in this hostile terrain.
The Wilderness Years
This is where the New Right found its entrée. As Stuart Hall anticipated in a much-celebrated essay, ‘The Great Moving Right Show’,49 the failed attempt to resuscitate the dying body of post-war social democracy merely compounded those aspects of popular discontent with the system that were already destabilising the consensus. The resentments generated by top-down, mandarin control of public industries, by incomes policies, by intrusive welfare bureaucracies and the increasingly authoritarian bent of state interventions may not have been enough by themselves to create a sufficient backlash. But the fact that they manifestly did not work, that public enterprises were ‘lame ducks’, that unemployment still soared, that the consensus had yielded to ‘stagflation’, and that the social contract broke down with the ‘winter of discontent’, showed the state to be not merely ‘nannying’, but also ineffectual. What is more, the leadership of social democracy was increasingly in agreement with the Rightist critique: it was Labour’s Denis Healey who effectively introduced the doctrine of ‘sado-monetarism’ before Thatcher was elected.
In the spaces where social democracy had decomposed, the ideology of Thatcherism began to lay roots. Discovering new energies first unleashed by Enoch Powell, the Conservatives found that a certain ‘free
market’ idiom could gain elements of popular support provided they were linked to the politics of racial backlash.50 The parlous state of British capitalism could be blamed on an assortment of troublemakers and enemies of order, the migrants, ‘muggers’ and militants cosseted by a ‘creeping socialism’: the solution being a dose of old-fashioned British authority, market discipline and, later, firepower. In place of incomes policies and subsidies for lame duck enterprises, Thatcher promised to let crack the whip of the markets. In the car industry, the Tories said, the uncompetitive practices of public ownership and union militancy had led to overmanning and over-priced labour, resulting in cars that could not be sold and rising unemployment. Unions were letting workers down, rather than advancing their interests, while the state supported inefficient industries. Instead, the state should get out of the way, let bad enterprises fail, and let the innovative and industrious succeed. What is more, since the strikes of the era were blamed for inflationary wage claims and had no connection to a wider, popular radical project, their repression could be justified on the grounds that they were narrow, ‘selfish’ acts harming industrious workers.
Thatcherite discourse struck at a key fault line in social democratic ideology. Social democracy, though emerging from organised labour, cleaved to the possibility of a transcendent national interest, achieved through class compromise and cooperation. This was always going to be difficult to square with the aspirations of its more radical constituents, above all for extensive public ownership of the commanding heights of the economy, in the interests of economic planning. The war state had made a degree of intervention possible, with business happy to cooperate for most of the immediate post-war era, but it was hardly going to persuade the owners of capital to surrender their major sources of profit without a battle. In practice, such aspirations were never on the brink of being realised, but there was at least the prospect that the practice of social democracy would ignite a battle from the other side of the bargain – that of organised labour. This is exactly what had happened in the late seventies, and the New Right seized on this in order to articulate the division in a distinctive way. It was not, they said, a war between classes. The struggle was between the productive and the non-productive. For a ‘nation’ to be able to afford a welfare system, its productive members had to be taxed, and they would be less inclined to accept this unless the unproductive state and its clients were weaned off the teat.51
Thus, the complacent consensus gave way to a belligerent offensive led by politicians, intellectuals and institutions largely loyal to the middle-class Right. The flavour of this attack was not to the tastes of the Tory establishment, which largely reacted with horror to Thatcher’s vulgar ‘retreat behind the privet hedge into the narrow world of class interests and selfish concerns’.52 Business was also divided over the usefulness of neoliberal nostrums, though a large and dynamic layer of capitalists, led by finance, organised in support of Thatcher’s remedies.53 There was also concern that the ambitious brutality of the government was contributing to an ideological revival of the Labour Left, exemplified by the fact that Tony Benn came within a whisker of defeating Denis Healey in the 1981 election for the deputy leadership. However, whatever excitement Benn was able to generate among constituency activists and a minority of union members, his real support was exaggerated in the election by a system of block voting. A raft of left-wing union leaders had emerged from the previous era of class confrontations, many of whom were inclined to support Benn. But the majority of union members – just like the majority of people – were moving to the right under the pull of Thatcherism. They didn’t become Thatcherites, but the gravitational pull was away from the Left. And in the unions that actually balloted all members, Benn was roundly defeated.54
The weakness of this Left revival was registered almost immediately when, in March 1981, a faction of the Labour Right organised a split. They had been considering their move for some time. Leading figures in this split, such as Roy Jenkins and David Owen, had been among the progovernment rebels when Heath sought to lead the UK into the European Community. They were infuriated by Wilson’s strategy of mediating between the left- and right-wings of Labour, which necessitated that he couldn’t campaign for entry on the government’s terms. The later calamities of the Wilson/Callaghan government had convinced them that the central problem for social-democratic governance was the power of the trade unions. They argued, just as the Liberals had in the same period, that no party could genuinely govern in the national interest if it was beholden to one class interest. As if this was the only real obstacle faced by the old social-democratic centre. They sought, by ending the Labourist coalition and launching a new party, the Social Democratic Party (SDP), to force an electoral realignment that would draw all the dominant political forces to the centre, and lock the militants and left-wing constituency activists out of power for good.55
While the SDP and its Liberal allies were hardly successful in the endeavour to anchor British politics in the centre, the project did build on certain long-term tendencies. The electoral degeneration of the two main post-war parties, the rise of the Liberals and the nationalist parties, and a certain amount of class dealignment in voting,56 meant that circumstances were ripe for a new electoral calculus. Unfortunately, the immediate beneficiaries were the Conservatives. The popular support for Thatcherism was real enough, however exaggerated by the electoral system.57 Thatcher had rebounded from the doldrums of 1981 on the basis of a global economic revival beginning in 1982, and in her case linked to martial triumph in the Falklands. But it was the Liberal/SDP alliance which decisively fractured Labour’s base, put it on the defensive, ensured that Labour’s 1983 vote was the lowest it had gained since 1918, and prevented any recovery until Blair had finally effected the coup de grâce. The ‘modernisation’ project initiated under Neil Kinnock almost as soon as he was elected leader in 1983, continued by John Smith and consummated by Tony Blair, may have been forced on Labour by other means and in other circumstances. The transformation of social democracy into what has been called ‘social liberalism’ – a hybrid of traditional social democratic organisation with neoliberal politics – is not peculiar to Britain. It is conceivable that a Left government could have been elected only to see its programme flounder in the face of economic turmoil and resistance from business, thus empowering business-minded ‘moderates’ to force through a more cautious ‘modernisation’ agenda. However, without the SDP split, it is difficult to imagine the sweeping scale of the Left’s rout in most of its extant quarters of strength, from the miners to municipal socialism. And without the SDP and the victorious Thatcher regime which it enabled, the orchestration of a national witch-hunt and purge of Labour Leftists (above all those said to be tainted by Trotskyism) was not possible.
In the afterglow of the epochal defeats inflicted by Thatcher, it fell to Labour’s leadership to detoxify the Labour brand for the liberal middle classes who had deserted it. This project was supported by a union leadership which had swerved sharply to the right, enjoining a ‘new realism’ according to which unions should seek harmonious relations with all governments, and take a more conciliatory line with employers. This doctrine, unavailing when it was initially unveiled in 1983, proved ideal for a union leadership desperate to avoid conflict after the mauling visited on the miners. And it sufficed for Neil Kinnock, as he and his allies executed an often shambolic, unconvincing retreat from anything which could be considered a left-wing policy, from full employment to unilateral nuclear disarmament.
In a sense, it is difficult to see what else Kinnock could have done. ‘Everyone agreed’ that these were the steps necessary to make Labour electable, the only worthwhile objective from his point of view. Of course, nothing is ever so simple or so innocent. There were many conceivable ways of being electable, and there was little evidence that the major problem was Labour’s core ideological commitments on redistribution, public ownership and welfare. The evidence is that the social attitudes of the ma
jority of people moved significantly to the left under Thatcher.58 Further, the route to electability chosen by the Labour leadership was one congruent with a long-standing strategic perspective on the party’s Right, extending back to Gaitskell and company. The problem was that it ultimately meant that Labour dedicated itself to preserving a settlement in which several of the bases of its potential power had been eviscerated. Whatever the ‘little caesars of social democracy’59 may have imagined, Labour’s entire basis was the organised working class whom Thatcher had weakened through her fanatical assaults on the industrial base and anti-union laws. Labour and the TUC, however, agreed to accept the majority of the changes wrought by the Tories in the realm of industrial relations. Further, as Labour continued to flounder, it looked for innovative new ways in which it could surrender the instruments of statecraft, ceding one policy area after another to the Thatcherites, such that – accepting the market and competition as the grundnorms of any governing politics – it was eventually clear that Labour was left to do little more than humanise what was left to them. Finally, Labour conceded the ideological terrain. In order to explain their electoral difficulties, they began to argue that workers were too comfortably off to support a left-wing programme, too affluent to buy into the language of class solidarity. Left-wing intellectuals who supported the Kinnock leadership fancied that workers had been undergoing a process of ‘embourgeoisement’. As Thatcher sought to exclude the very idea of class as a political reference, deriding it as a ‘communist concept’, Kinnock’s team offered a helping hand by replacing such concepts with the market-friendly language of consumers and communities.
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