by Angela Eagle
THE LESSONS OF THE ALTERNATIVE ECONOMIC STRATEGY
The 1970s was a time of great upheaval in British politics, with the crumbling of the post-war consensus and the first emergence in the mainstream of the hard-right libertarian ideology which has been at the centre of the Conservative Party’s political and economic approach ever since. As high unemployment was accompanied by high inflation, it became clear that, in the absence of suppressed demand (a feature of persistent mass unemployment and slump), Keynesian ideas were failing to manage the economy effectively. The commodity price shocks in the middle of the decade, especially the huge increases in oil prices after the Yom Kippur War in 1973 and the emergence of OPEC6 as a more assertive cartel during these years, sent inflation soaring, which in turn provoked ever-increasing wage demands and industrial unrest. Unemployment had soared above the million mark by 1972 – a level which was then regarded as socially unsustainable by the generation of politicians who had lived through the mass unemployment of the inter-war years and seen the rise of fascism as a result of it. The system of fixed international exchange rates against the dollar, which had endured since the end of the Second World War, had also broken down and the pound was floated in 1972, allowing Heath to avoid the stigma of devaluation which had so dogged the Wilson government of the 1960s. The UK joined what was then known as the Common Market in January 1973 after Parliament approved the terms that had been negotiated on a free vote. Everything was changing. This realisation that the post-war consensus was crumbling led to a reassessment in sections of the Labour Party too. As the Wilson and Callaghan governments struggled with public expenditure cuts and incomes policies, others developed what became known as the Alternative Economic Strategy.
The decade had begun with the shock defeat of Wilson’s Labour government in the 1970 general election, which the Conservatives won with a majority of thirty seats. They fought the election on a proto-Thatcherite agenda which had been formulated by Ted Heath and his shadow Cabinet during an away day at the Selsdon Park Hotel in Croydon. It was a radical free-market agenda designed explicitly to take the government out of the marketplace. It advocated corporate and individual tax cuts, legislation to restrict the power of trade unions, tough law-and-order policies and immigration control. In the event it was quickly abandoned by Ted Heath, who found he could not keep the government out of the marketplace even if he had ever really wanted to. Under pressure, he rescued Rolls-Royce from bankruptcy in January 1971 and found himself doing the same for the Upper Clyde Shipbuilders five months later. His attempts to curb trade union rights ran into fierce resistance from the unions who simply ignored the requirements of the new Industrial Relations Act. Their defiance was successful, at least in the short term. The government effectively abandoned its own legislation and struggled to cope with waves of strikes for higher pay as rising inflation squeezed living standards. Heath invoked emergency powers when the dockers and the power workers went on strike and, during the two miners’ strikes he had to contend with, introduced the three-day week and a system of rolling power cuts, causing a run on candles which Angela still remembers. Mrs Thatcher never forgot Heath’s ‘betrayal’ of the ‘Selsdon Park programme’ and she subsequently became the lady not for turning, regarding compromise as surrender. She ruthlessly pursued the right-wing market fundamentalist agenda that Heath had abandoned.
While the libertarian right were on the intellectual ascendency in the Conservative Party, the Labour Party was searching for a radical programme that would replace the failing postwar consensus on progressive principles. What emerged was to become known as the Alternative Economic Strategy (AES). It was partly forged during Tony Benn’s period as Secretary of State for Industry and by the academic work of the Cambridge Economic Policy Group of Wynne Godley and Francis Cripps. It was supported by the syndicalist revival of the Militant Shop Stewards’ Movement, which was playing a prominent role in the outbreak of industrial unrest in the trade unions. The Institute for Workers’ Control, which focused on developing new forms of industrial democracy, was also influential as these new approaches were being developed.
The AES was designed as a conscious break with the consensus ‘corporate socialism’ of Attlee’s Labour government. It involved proposals to reflate the economy to increase both output and employment. To ensure that the money spent on stimulating demand would not leak out and simply benefit foreign producers, the AES advocated import controls to protect UK industries as well as controls on foreign outflows of capital from the country. It suggested the creation of a national enterprise board, which would co-ordinate price controls and compulsory planning agreements with all the top companies operating inside the UK, mandating levels of employment and investment. There were proposals to nationalise key industries and bring major banks and financial institutions under state control. There were also to be selective subsidies to industry to help modernisation and investment. There would be new powers for trade unions to bargain and for workers to have democratic control in their workplaces, as well as policies to encourage work-sharing and employment subsidies. The UK would be withdrawn from the Common Market and there would be major cuts in defence spending, including the end of the UK’s independent nuclear deterrent, which then consisted of Trident’s predecessor: the Polaris system. Income and wealth would be redistributed and there would be an expansion of social services. It was not until after Labour’s two narrow general election victories in 1974 that the AES was to be fully developed and campaigned for throughout the structures of the party. But, perhaps sensing its otherworldly nature, the Wilson and Callaghan governments rejected this approach. Crosland was scathing and described the AES as having been written by people who didn’t live in the real world.
It was certainly very utopian and reads more like a hopeful shopping list of idealistic policies than a serious programme for government. While it consisted of an academic economic theory that may have looked plausible in a classroom, it was unconnected to political reality and simply impracticable. When challenged about the likelihood that its retreat from open trade into protectionism would provoke retaliation from those countries whose imports were to be restricted, the Cambridge Economic Policy Group’s dubious response was that this would not happen if the import controls were applied correctly. However, the UK has always been an open and trading economy, and was likely to suffer badly in a trade war. Moreover, returning to capital controls just as others were abandoning theirs gave too much of a sense of backward-looking yearning for an era long gone. There were certainly some good elements included in the AES, but it is hard to take seriously as a practical programme of measures which could have been implemented or which would have worked. It had too much of a ‘stop the world we want to get off’ feel about it. It advocated strict protectionism for one of the most open trading nations in the world. It seemed to have no coherent plan about how to deal with retaliation from our trading partners if they did not approve of us preventing their goods coming into the UK but expecting our exports to be unaffected.
When it was finally incorporated wholesale into Labour’s 1983 election manifesto, Labour collapsed as a viable alternative to Mrs Thatcher’s Conservatives, winning only 27.6 per cent of the vote and failing to capture a majority of the votes of trade unionists for the first time in its history. Undoubtedly the SDP breakaway accounted for some of this catastrophe, but so did the unrealistic manifesto plan for the institution of an economic autarky and rationing of foreign exchange in a rapidly globalising world. Angela can remember forlornly canvassing for Labour with the manifesto in hand in Oxford East, which was then the most marginal constituency in the country. She still remembers the looks of pity on the faces of some of the voters she spoke to when she dared to brandish this document. And she remembers Conservative candidate Steven Norris, who imported cars into a constituency which contained the Cowley car manufacturing plant, beating Labour’s Andrew Smith in what should have been a Labour constituency. So catastrophically did the manifesto go do
wn with voters that Gerald Kaufman famously described it as ‘the longest suicide note in history’. The Conservatives obviously agreed, because they bought 1,000 copies of it solely to hand out to and frighten voters.
With the defeat of the Callaghan government and the election of Margaret Thatcher in 1979, the long intellectual and political domination of market fundamentalism had begun. In 1983, the British electorate chose a hard-right free-market programme rather than an otherworldly option for a siege economy that turned its back on the world. It took many more years for the disadvantages of the institution of a hard-right market fundamentalist economic plan to be appreciated more fully by the British electorate. The lack of a practical, forward-looking, progressive response to the challenges facing Britain in the 1970s meant that ideologically the field was vacated to the forces of market fundamentalism. Labour were to be out of power for eighteen long years. And the battle to end the economic and political domination of hard-right ideas is still to be completed.
THE LESSONS OF NEW LABOUR AND THE THIRD WAY
The Third Way was an attempt to reconcile traditional social democratic concerns for social justice with what sociologist Anthony Giddens regarded as the unchallengeable constraints imposed on national governments by the phenomenon of globalisation. Giddens was a critic of postmodernism who believed in a more holistic view of how societies worked and interacted. He also believed that the phenomenon of rapid globalisation had changed the meaning of national sovereignty and limited the scope that governments had to act effectively in the domestic sphere. The rising tide of individualism had also weakened the bonds of ‘solidarity’ and switched the focus much more onto the pursuit of personal, rather than communal, fulfilment. This was the very thing that R. H. Tawney had criticised when he observed it in the 1920s. Giddens, however, felt these increases in individual self-determination and empowerment were to be encouraged, and there was a welcome commitment to broaden out inclusion and increase diversity in his writings. There were responsibilities as well as rights for individuals implicit in this new settlement. A decline in deference and tribalism was weakening traditional political affiliations, which would continue to loosen the hold the major parties could command over the loyalty of voters.
Giddens asserted that while governments still had a role (defending the country and making the law), globalisation and the rise of transnational corporations had made politicians less influential and civil society was correspondingly more powerful. As a result, the traditional ‘right’ and ‘left’ conceptions of politics were increasingly anachronistic and needed to be superseded by the creation of a ‘radical centre’. Economic prosperity had to be achieved in an open, globalised marketplace. This meant that social justice could only be advanced with the proceeds of growth rather than funded by tax increases: redistribution, not ‘predistribution’. There could be no useful attempt to intervene in market distribution prior to the initial outcome, he held. If there was no growth, then there could be no progress towards a more just society. Government needed to reform social security to increase individual reliance and public services could benefit from an increase in private sector know-how to make them more responsive to those who relied on them.
In reality, the Third Way was an essentially pessimistic interpretation of the prospects that democratic socialist governments faced when they were elected to office in the latter part of the twentieth century. It contained no challenge to the economic status quo, instead requiring that a new centre-left government should accommodate the market fundamentalist assumptions which had established themselves globally in the Thatcher/Reagan era. Indeed, the Third Way contained no economic analysis about what was wrong with this system. Instead, it was accepted as an unchangeable fait accompli. Imagine how little the Attlee government would have achieved if it had thus constrained itself upon coming to office in 1945?
All too often, the Third Way appeared to consist of a ‘triangulation’ between left and right, which had the effect of alienating party activists and traditional Labour voters who felt it ‘wasn’t Labour enough’. It did triumphantly win the support of the country, however, who were sick of the Conservatives and reassured by the absence of the very things Labour activists wanted to see. And that was no mean feat. Labour was elected for an unprecedented three successive terms in office, but on reducing turnouts as apathy appeared to be making the largest gains among voters who were now coming to believe that voting never changed very much.
Those New Labour governments had a long and impressive list of achievements to their credit. There was huge investment in social housing, in modernising schools and transforming the NHS, in abolishing pensioner poverty and reviving our cities after decades of neglect. Discrimination against LGBT people was wiped off the statute book and the Climate Change Act created the foundations needed to tackle the existential threat of global warming. Much was achieved to hold inequality at bay and invest in Britain’s people and its social infrastructure. Unfortunately, New Labour’s undoubted achievements were snuffed out in George Osborne’s first ludicrously named ‘emergency’ austerity Budget in 2010, which simply cut public expenditure and, with it, Labour’s legacy of advancing social justice. We have all now experienced how fleeting social advance can be if it relies solely on redistributing the proceeds of growth and fails to create institutions that can reflect and project Labour’s democratic socialist values far into the future. With the exception of the National Minimum Wage, no institution, such as the NHS or the Open University, introduced by the Attlee and Wilson governments respectively, was created that projected Labour values into the future. That is what is needed to be a truly transformative government – and transformation is what is needed when we next have a Labour government.
THE FUTURE
Following the fall of the Berlin Wall in 1989, American political economist Francis Fukuyama wrote a hubristic essay entitled ‘The End of History?’, which he later turned into a bestselling book. In it, he claimed that the fall of Soviet Communism had ushered in the end of history, because Western liberal democracy had won the Cold War and was therefore the pinnacle of human sociocultural evolution. In its triumphalism, the book failed to acknowledge the problems that market fundamentalism itself had created or exacerbated in the remaining, now-dominant global economic system. Persistent poverty, inequality, unsustainable use of finite resources, the existential challenge of climate change, the tendency to concentrate wealth and power in the hands of fewer people: all of these flaws were overlooked. Following the global financial crisis of 2008 and the rise of political instability and unrest which has followed, we suspect that few people would be so sanguine about the perfection of the rampaging market fundamentalist version of ‘Western liberal democracy’ that has predominated since the fall of the Berlin Wall.
Democracy and liberalism do not have to be accompanied by market fundamentalist beliefs. The economic liberalism of market fundamentalism is not the same as social liberalism. In fact, the two are in contradiction, because the social solidarity necessary to support an open, tolerant society needs greater economic equality if it is to be sustained. We suspect that such a society, which seeks to alleviate poverty, injustice and war – in other words, Western liberal democracy without market fundamentalism – might just catch on. For some political thinkers, the search for a new, non-socialist alternative to capitalism has resumed.
Before we explain over the coming chapters how we would approach applying the democratic socialist values we hold to the problems of tomorrow, we wish to address a few of the new theoretical approaches that are en vogue on the left and in the wider labour movement today: accelerationism in its left-wing iteration, post-capitalism and ‘fully automated luxury communism’. We also examine the ‘Blue Labour’ approach which emphasises the importance of family, faith and flag, and consider the case for introducing a universal basic income which springs from the view that the march of the robots will mean we are entering a post-work society.
ACCELERATI
ONISM
Capitalist transformation and the global marketplace has prompted wildly different responses from different groups. For example, it has given rise to the slow movement which strives for a more holistic and local integration of production, be it of food or clothes. The slow movement has recently manifested itself culturally, too, bringing us the unexpected pleasures of slow TV and the 168-hour epic reindeer migration from Lapland, filmed and broadcast in real time by Norwegian national broadcaster NRK. Others, however, have responded very differently to what they call the transformations of late capitalism. Instead of appreciating slow things, they glory in speed.
Accelerationists make a virtue of not trying to reform or resist the evolution of capitalism; they welcome it with open arms, especially the more aggressive, neoliberal, globalised variety that has been enabled by rapid developments in computer technology and processing speed. Accelerationists believe that this evolution should be actively speeded up, either because there is no alternative or because they wish to see the collapse of the entire system under the strain. Collapse will lead to chaos and then to the transformation they seek. They do not believe that capitalism and its development can be controlled or mitigated in any way, which eerily aligns them with basic tenets of market fundamentalism itself. Tellingly, the ‘there is no alternative’ mantra was first coined by Margaret Thatcher. You can’t buck the market, they say, and if you can’t beat it, you might as well join it. And yet the labour and trade union movement came into existence precisely to transform the system, by pursuing the patient and determined demands for change aimed at improving the lives of all. The unambiguous celebration of capitalism’s instability and the complacent belief that its collapse will automatically lead to something better ignores the agency of those who work for collective social improvement as well as the lessons of history.
