Left for Dead?: The Strange Death and Rebirth of the Labour Party. Lewis Goodall
As a result, the ideological superstructure of the country changed. It was a unique moment and one that couldn’t last.
The new consensus Attlee and his ministers bequeathed held for the next thirty years or so, with both Labour and Conservative governments managing Attlee’s inheritance. But by the late 1970s Labour (and Conservative) governments had found it increasingly difficult to manage that settlement, which was by then decaying. As Britain struggled economically and the rest of the world fell into economic malaise, the traditional Keynesian methods of reflating the economy through public spending were in trouble across the globe. Jim Callaghan, who endured a pretty unsuccessful stint as chancellor and was now prime minister, sounded its death knell. He told the Labour Party conference in 1976: ‘We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step.’
The cosy Keynesian postwar balloon was slowly leaking air. As it did so, the social ideas that underpinned it were also dissolving. As we’ve seen, the party’s grip on the working class was never entirely firm but by the 1970s it appeared almost loose. One of the central problems was the idea of greater public spending and, in a portent of things to come, a dissatisfaction with newer streams of more liberal leftist thought focusing on minorities and individual rights. As Denis Healey was to relay to his cabinet colleagues in 1975:
At the Labour clubs, you’ll find there’s an awful lot of support for this policy of cutting public expenditure. They will tell you all about Paddy Murphy up the street who’s got eighteen children, has not worked for years, lives on unemployment benefit, has a colour television and goes to Majorca for his holidays.4
In other words, as the years of postwar plenty gave way to a harsher economic climate, so the social solidarity that had paved the road to 1945 diminished. At the same time, globalisation, membership of the European Economic Community and increasing integration of global markets continued to lessen the power of social democratic governments to enact the policies that they might like: the idea that socialism or social democracy in one country was possible seemed less and less likely. Globalisation, the end of dollar convertability and the development of a truly international capital market had disrupted the cosy world of 1940s Britain, where socialist or social democratic governments could pursue their dreams of a new Jerusalem without much regard to the rest of the world. The experience of the 1968 devaluation crisis under Wilson and the 1977 IMF crisis under Callaghan was searing to the Labour movement, but also illustrated how powerful international capital flows and financiers had become and how weak national governments now paled when set against them. Blair showed himself alive to these forces early in his leadership. In a university lecture in 1995 he said:
Governments can no longer adopt stimulative policies that boost demand without risk of being punished by markets and higher interest rates. We must recognise that the UK is situated in the middle of the global market for capital, a market which is less subject to regulation today than for many decades. An expansionary fiscal or monetary policy that is at odds with other economies in Europe will not be sustained for very long … to that extent the room for manoeuvre of any government in Britain is already extremely circumscribed.5
Blair and Brown were obsessed with this idea; from their earliest days in office it’s clear now that they were genuinely quite scared of the market reaction against their government. Harriet Harman, in her memoir, recounts a story that is revealing of her bosses’ mindset. As the new Labour government’s social security secretary, she had been tasked with finding several billion pounds’ worth of cuts, so the government could stick to its election pledge of matching Conservative spending plans (something the man who drew them up, Ken Clarke as chancellor, later said he wouldn’t even have done had the Tories been re-elected). This entailed cutting child benefit for new claimants by £6 a week, a move deeply unpopular within the wider Labour Party. She recalls that she went to see Brown to spell out the problems and find a remedy:
But he said it was a manifesto commitment and that it would have to be carried out. If we didn’t, it would send a signal that we weren’t going to be financially prudent in the way we’d promised, it would cause instability in the money markets, there would be a loss of confidence, the government would fall, and I would be responsible for bringing down the first Labour government for eighteen years … Our government still felt fragile to me, I couldn’t do anything to threaten it.6
In retrospect, this seems quite incredible. The Labour administration was only a year old, elected with a stonking majority, the economy was booming, the markets were sanguine, the world economy was enjoying stability and growth, but a Labour chancellor and cabinet minister were worried that a £6 a week cut in benefits for lone parents might be the issue on which the government’s fortunes turned and which risked sending money markets into a spin. Perhaps Brown was over-egging the pudding to get his way, but what is striking reading the accounts of the time is just how commonplace fears like this were.
So in every direction by the 1990s, whether it was economic, social or ideological, the world seemed to have given way beneath social democracy’s feet. The postwar social democratic settlement seemed to be increasingly unobtainable because the pillars on which it had been constructed were vanishing. Callaghan could see what was happening better than anyone. When polls indicated he might be doing a bit better in the run-up to the 1979 election than he might have hoped, his aide, Bernard Donoghue, ventured to suggest he might win after all. ‘Bernard,’ the old warhorse replied, ‘I’m afraid to say I think there’s been a sea change and it is for Mrs Thatcher.’
It is sometimes spoken of as if Blair and Brown ‘abandoned’ socialism all on their own. That’s putting the cart before the horse. By the time New Labour came along the process of abandoning the trappings of the old Attlee settlement (which many people then took, and today continue to take, as the quintessential socialism) was already well underway. Because New Labour was not only an attempt to broaden the party’s sociological appeal: it was also an attempt to respond to a world where traditional methods of social democracy and socialism had been deemed bankrupt, in a metaphorical and a real sense; and many of the people who declared them so were – guess what – the social democratic politicians of the day.
And while the old leftist ways withered the right wasn’t sitting idly by, it was seizing the moment. The next decade and a half after the 1979 election transformed the political and social landscape in Britain, a more economically liberal, individualistic and enterprising culture was born and much of the time Labour was nowhere to be seen. Thatcher clocked up three general election victories and her successor, John Major, secured an unprecedented fourth in 1992.
In the meantime, a betrayal myth developed across some parts of the Labour Party that not only had Blair and Brown sold out but that Wilson and Callaghan had done so before them, that they had given in to international capital, and that if they had taken a properly left-wing approach to managing the economy, things might have been different and Thatcherism might have been resisted. We will never know for certain, but there are two important indicators that might suggest such revisionism is without much basis. The first is that the idea of betrayal might be more credible if similar phenomena were not taking place all across the West. Britain might have led the way, but the entire world was heading in a more ‘neoliberal’ direction. Whether it was Reaganomics in the United States or Rogernomics in New Zealand,‡‡ the picture was much the same everywhere. Even governments that were ostensibly left wing, like François Mitterrand’s in France, implemented more economically liberal policies once in office. The same phenomena that were running the left ragged in Britain were much the same elsewhere; the malaise and stagflation of the 1970s gripped the world; the corresponding decline in social democracy took hold partly as a result of changing technology and work patterns, and partly simply as a result of the final dissipation of some