Editorial
The escalating conflict in the Middle East following the attack on Iran threatens to return Britain to the kind of economic stress it last encountered in the 1970s — rising energy prices, squeezed living standards, and a working class searching for political leadership that speaks directly to its situation. In this context, Clive Lewis’s recent article in the Guardian on the implications of the Gorton and Denton by-election deserves careful consideration — both for what it gets right and for what it leaves unanswered.
In the article, Lewis emphasises the dramatic change in British politics that followed the election of Margaret Thatcher as Prime Minister in 1979. Thatcher had a vision of a society in which the role of the state was small. Over the next 18 years, Thatcher and her Tory successors completed a huge denationalisation programme: energy, water, transport, telecommunications and manufacturing. Manufacturing privatisations included British Aerospace (1981), Jaguar (1984), Rolls-Royce (1987), British Steel (1988), and the Rover Group (1988).
But perhaps Thatcher’s greatest privatisation programme was housing. Although not technically a denationalisation programme, a strong case can be made that the Thatcher government effectively denationalised council house building, not through direct privatisation, but through a deliberate two-pronged strategy. This involved selling off the existing public housing stock via the Right to Buy scheme while simultaneously imposing strict financial controls that prevented local authorities from using the proceeds to build new homes to replace them.
She also initiated the transfer of economic activity from industry to finance. That was her solution to the problem of loss of competitivity of British manufacturing.
That transfer combined with anti-union legislation enormously weakened the trade union movement. Trade union membership as a percentage of the nation’s workforce was some 54 % in 1979. Today it is around 22%. We are in a completely transformed social and economic landscape, one in which the population has fewer outlets in which to organise into groups that have any sort of power. The economic sectors (services, retail) that replaced industry need to get more unionised.
Lewis laments that the Blair Labour government that eventually came to power in 1997 did little to reverse Thatcher’s legacy. In his article, Lewis calls for a complete break with the Thatcherite legacy. “Nothing short of a decisive break with Thatcherism will suffice. Not managerial tweaks. Not rhetorical resets. A break.”
But Lewis’s article is far from clear on the form that break should take. There is much talk about democracy, empowering communities and moving power downwards. But it is all somewhat vague and unclear. One suspects that those working-class people of Gorton and Denton, who abandoned Labour to vote for Reform, would not find it very convincing.
Lewis is, of course, right that Thatcher’s rise to power in 1979 marked a decisive shift in British politics away from the social democratic consensus that had existed since the Second World War. But he makes no attempt to explain why that old social democratic consensus ended. Can one really talk about breaking with the Thatcherite legacy without some understanding of why Thatcher ever came to power in the first place? After all, if the conditions that led to her rise to power still persist, then it may not be possible to break with her legacy.
Lewis says “Until control over the foundations of everyday life is democratised, no government will fully resolve the cost of living or cost of doing business crises. Economic renewal requires a decisive downward transfer of power to people and communities.”
But did that not exist in the post-war social democratic consensus? If so, why did Thatcher ever come to power?
The view of this magazine is that Thatcher came to power because the main institutions of working-class power, the trade unions, were unable to deal with the economic stress under which Britain was put after the huge increase in oil and gas prices in the 1970s, caused by Israel’s attempts to dominate the Middle East.
The unions should have addressed the macroeconomic issue of how the effect on the cost of living should be distributed throughout society. Instead, each union opted to largely consider only the interests of its own members.
The post-war consensus, which Thatcher ended, had effectively adopted a policy of full employment. Beveridge had understood better than most the problems inherent in such a policy when he wrote in his 1943 1944 book Full Employment in a Free Society:
“The problem of how wages should be determined under conditions of full employment is more important and more difficult … Irresponsible sectional wage bargaining may lead to inflationary developments which bestow no benefits upon the working class; which spell expropriation for the old-age pensioner and the small rentier; and which endanger the very policy of full employment whose maintenance is a vital common interest of all wage-earners. How real is this possibility cannot be decided on theoretical grounds…” (paragraph 283)
“…But the fact remains that there is no inherent mechanism in our present system, which can with certainty prevent competitive sectional bargaining for wages from setting up a vicious spiral of rising prices under full employment.” (paragraph 285)
It was the vicious spiral of rising prices that would lead to the rise of Thatcher.
Are the unions any wiser today as we face another round of huge increases in energy prices after the attack on Iran?
The unions will again, as in the 1970s, have to address the macroeconomic issue of how the effect of the impending energy price explosion should be distributed throughout society. Will each just focus on its own members? Or, will they demand a national discussion on how the increase in the cost of living should be distributed throughout society? That remains to be seen. But a political party which calls for such a national discussion will increase its chances of winning in the next general election.
The electorate of Denton and Gorton will understand the relevance of such a discussion better that vague claims that “fiscal and administrative devolution would allow communities to shape their own priorities”.
Labour Affairs 