Austerity no more?

Photograph shows the engineering department of the London Rubber Company, Lydney, Gloucestershire November 1978. I am third from the right in the front row, aged 20. In 1981 as result of the Thatcher governments economic policies, the factory  was closed with the loss of 1000 jobs.

Looking at UK opinion polls showing Labour and Conservative parties neck and neck reminds me of  the two general elections held in 1974. Back then I  was a 15 year old pupil at Kirkcudbright Academy and George Thompson, who was my French teacher, was the SNP candidate for the Galloway constituency. I my lunch hours I helped with the SNP campaign but in the February general election George Thompson only got  9038 votes- not enough to beat the sitting Conservative MP John Brewis who got 13 316. In the second general election, held in October, George Thompson won by a wafer thin majority of 30. Then in 1979, George lost the seat by 2922 votes to Conservative Ian Lang, now Baron Lang of Monkland.

In 1979 I had just moved to London to take up a job working for the London Rubber Company. I had started working  in one of their factories in Gloucestershire in 1977. In 1981 that factory was closed thanks to Margaret Thatcher’s economic policies. In 1992 the London factory was also closed. By then I had moved on and in 1997 I returned to Scotland. But I sometimes wonder if  things had been different, would I still be living and working in London?

When I started working for London Rubber in 1977, the company was still expanding and growing. By the time I left at the end of 1983 it was contracting. Although I had  ‘It’s Scotland’s Oil’ plastered all over my schoolbag in 1974, it was not until I read an interview with Denis Healey in May 2013 that I made a connection with what happened to the London Rubber Company in the 1980s. This is what Healey said:

I think we did underplay the value of the oil to the country because of the threat of nationalism but that was mainly down to Thatcher. We didn’t actually see the rewards from oil in my period in office because we were investing in the infrastructure rather than getting the returns and really, Thatcher wouldn’t have been able to carry out any of her policies without that additional 5 per cent on GDP from oil. Incredible good luck she had from that.

The ‘underplaying’ of the value of the oil followed the suppression of the (in)famous McCrone Report in 1975. Digging a little deeper I found an interview from 1991 with Alan Budd, who had been an advisor to the Thatcher government in the 1980s.

Curtis: For some economists who were involved in this story, there is a further question: were their theories [ about monetarism] used to disguise political policies that would have otherwise been very difficult to implement in Britain?
Budd: The nightmare I sometimes have, about this whole experience, runs as follows. I was involved in making a number of proposals which were partly at least adopted by the government and put in play by the government. Now, my worry is . . . that there may have been people making the actual policy decisions . . . who never believed for a moment that this was the correct way to bring down inflation.
    They did, however, see that it would be a very, very good way to raise unemployment, and raising unemployment was an extremely desirable way of reducing the strength of the working classes — if you like, that what was engineered there in Marxist terms was a crisis of capitalism which re-created a reserve army of labour and has allowed the capitalists to make high profits ever since. Now again, I would not say I believe that story, but when I really worry about all this, I worry whether that indeed was really what was going on.

More recently, as support for the Labour party in Scotland has plummeted , I have wondered if the Labour party had been bolder back in 1975 and  published rather than suppressed the McCrone Report would it really have led to Scottish independence 40 years ago?

Realistically, it is an impossible question to answer since there are just too many ‘unknown, unknowns’ involved. On the other hand, researching the actual history of the 1974-79 Labour government has been an eye-opener. In particular, I have discovered just how difficult it is for left-radical policies to be put into practice in the UK. This is an important point for any attempt to understand the present (April 2015) situation where the Labour party in Scotland appears to be in meltdown. Is this due to a rise in Scottish nationalism, or is it down to a loss of faith in the Labour party’s left-radical credentials?

In the February 1974 general election the SNP gained 6 Scottish seats. This rose to eleven in the October election. However, nine of these eleven  SNP seats were in rural areas and at the expense of the Conservatives, not Labour. Looking at the results for the Galloway constituency, George Thompson’s win for the SNP in October 1974 seems to have been the result of anti-Conservative tactical voting by Liberal and Labour supporters rather than an increase in SNP support. More worrying for Labour were the 35 Labour held seats where the SNP came second.

At this point I was going to  suggest that the incoming Labour government elected in February 1974 kept quiet about the McCrone Report in case it boosted support for the SNP in the run up to an anticipated second general election. But according to wikipedia : ‘After discussions between St. Andrews House and the Cabinet Office in London, Prof. McCrone passed the report on to the new Labour government on 23 April 1975, along with a covering letter.’

If Labour were not aware of the McCrone Report until after the October election then its importance is  diminished. Unlike 2014 when the independence referendum brought into focus arguments about the economic viability of an independent Scotland, in 1974 when the SNP gained 30% of the vote in October, only 12% of Scots wanted independence. [Tom Devine, ‘The Scottish Nation 1707-2007’, Penguin 2006, p. 576] At general elections from 1979 to 2010, most Scottish voters remained loyal to the Labour party. Labour also managed to keep their vote up in Scottish parliament elections from 1999 to 2007 and only really lost out to the SNP in the 2011 election.

If the 1974-1979 Labour government did ‘downplay’ the value of North Sea oil as Denis Healey claimed in 2013, was that that entirely due to the nationalist threat? An alternative explanation is that the downplaying of oil wealth was also influenced by conflicts within the 1974-79 Labour government over economic policies. These conflicts arose because after Labour lost the 1970 election, a group on the left of the party reflected on the failure of the 1964-1970 Labour government to achieve radical change and came up with a series of proposals which they hoped a future Labour government would deliver on. These were set out in ‘Labour’s Programme 1973’ followed by ‘The Regeneration of British Industry’ which was a White paper published in August 1974.

Included in these radical proposals were the setting up of a National Enterprise Board and a National Oil Corporation. The aim was for the State in alliance with trade unions to take a leading strategic role  in pursuit of socialist economic policies as a way to counter the power of multi-national companies  to shift production across borders and avoid political control. ‘Regional regeneration’ was another aspect of these plans which aimed to ensure a redistribution of power and wealth. [John Medurst ‘That Option No Longer Exists-Britain 1974-76’, Zero books, 2014, pages 32-3].

Unfortunately, the proposals drew on theory developed by the Institute for Workers Control set up in 1968 following the almost revolution in France and the practice of the Upper Clyde Shipbuilders 1971-2 occupation. Although they would have only led to the radical reform rather than the  revolutionary supersession  of capitalism, the proposals were too bold for Harold Wilson and other Labour party leaders. They also outraged the Conservative party, the right-wing press and elements of the UK’s ‘secret state’ who believed that the Labour party, from Harold Wilson down, had been infiltrated by communists.

As it turned out, the global economic crisis which followed the 400% rise in the price of oil from $3 dollars/barrel in 1973 to $12/barrel by March 1974 intervened, allowing Labour to water-down the plans.

But at the same time, the rise in the price of oil helped the development of North Sea oil. Extracting oil from under the North Sea was more expensive than extracting oil from under the deserts of the Middle East. So the higher the price of oil, the more valuable the North Sea reserves became. This brings us back to Denis Healey’s claim that  the 1974-79 Labour government underplayed the value of the oil through fear of Scottish nationalism. This may be true, but it is also true that underplaying  the value of North Sea oil would have helped Healey and Wilson in their internal struggle against the radical left of the Labour party.

If the Labour government had talked up the future value of North Sea oil this would have encouraged the radical left to argue that the profits from North Sea oil should be used to help regenerate British industry. On a ‘more jam tomorrow’ basis, it might also have helped the Labour government avoid the conflict with public sector workers ovr wage rises which led to the 1978-79 ‘Winter of Discontent’ which helped Margaret Thatcher win the May 1979 election. If labour could have squeezed a victory in 1979, then they rather than the Conservatives would have had the benefit of the ‘additional 5% on GDP’  Healey mentioned.

From a Scottish perspective, the talking up of the potential of North Sea oil might have seen a stronger Yes vote in the 1979 devolution referendum. However, such an outcome would not necessarily have led to an increase in support for Scottish independence in the 1980s. The majority of Scottish voters remained loyal to the Labour party from 1979 to 2010. Even in the 2014 independence referendum, a significant part of  support for a Yes vote came from Labour supporters who wanted an alternative to neoliberal austerity. And, it would appear, they still do. The hope now is that if Scotland can elect enough SNP MPs  this will pull a potential Labour government to the left, steering  the UK away from the neoliberal path it has followed since 1975.

But as Richard Seymour noted back in 2010, the  programme of the 1974 Labour government

was a utopian programme in the strict sense that no thought had been given to the range of social forces it would be necessary to assemble and mobilise in order that its goals could be achieved, and its accomplishments protected. It was simply assumed that an elected government could bring these changes about, and that once implemented the ruling class would have no alternative but to accept them.  

[ http://www.leninology.co.uk/2010/08/collapse-of-consensus-myth-of-popular.html ]

Over the past 40 years the UK has undergone a radical shift to the right. This means that the prospect of even a minimal attempt to veer left is provoking a perfect storm of apocalyptic headlines. These are similar to the prophecies of plague and pestilence which Scotland was warned would follow independence, but now the volume has been turned up to 11 since it is the rest of the UK which is under threat. Bizarrely,  it would seem that simply by voting SNP, Scots now endanger the future of the UK as a ‘democracy’. In the 1970s, a similar level of apocalyptic frenzy was directed against the 1974-79 Labour government. The one thing missing in comparison to the 1970s is the claim that the SNP has been infiltrated by communists.

Harold Wilson was not and never had been a member of the Communist party and the leadership of the Labour party were opposed to radical-left policies. But in the fevered atmosphere of the time, elements of the right wing fringe of the UK establishment contemplated the need for some form of military coup to restore ‘order’ in case Wilson’s socialist policies led to a general strike/ communist revolution. These plans faded away once Margaret Thatcher replaced Ted Heath as leader of the Conservative party in 1975. The focus then shifted to ensuring Thatcher’s election. The right-wing press played their part in this by relentlessly pursuing a narrative of economic chaos and industrial crisis, of a ‘broken Britain’ which could only be mended by electing Margaret Thatcher as a strong leader.

What did the UK‘s right-wing ‘ruling class’ expect from a Thatcher victory in 1979? The title of a book by Keith Robbins published in 1983 sums it up -‘The Eclipse of a Great Power, Modern Britain 1870-1975’. The hope and expectation was that the UK’s power and prestige would be restored. That somehow a combination of liberals and socialists had allowed Great Britain’s imperial splendour to fade, reducing the UK to second-rate status. While a restoration of the empire was impossible, a restoration of the UK’s economic fortunes seemed achievable- if the power of organised labour as ‘the enemy within’ could be crushed. Along with this nostalgic objective, there was a second more practical and ‘neoliberal’ [not a term used at the time] objective- the ending of restrictions on the UK’s finance sector.

In January 1970, Ted Heath’s Shadow Cabinet met at the Selsdon Park hotel in south London. The outcome of this meeting was set of right-radical free market policies which influenced the Heath government after the Conservatives won the June 1970 election. However these met with strong opposition from trade unions and led to an increase in unemployment to 1 million in January 1972. This forced Heath to make a ‘U turn’ and abandon the Selsdon policies in favour of more Keynesian policies. This was opposed by the Selsdon Group [formed in 1973] of right-wing Tories who later became supporters of Margaret Thatcher. They were determined that the next time a Conservative government was elected there would be no ‘U turn’. Defeating the National Union of Miners, who had humbled the Heath government was another aim.

Without the help of North Sea oil, the first Thatcher government would probably have suffered the same fate as the Heath government, collapsing into economic chaos by 1981. But it didn’t and with the patriotic boost provided by the 1982 Falklands war, Thatcher won the 1983 election. Labour finally got back into power in 1997, but by then the British form of neoliberalism first sketched out at the Selsdon Park hotel in January 1970 had been adopted by Tony Blair’s ‘New’ Labour party. The 1997 general election also saw the SNP gain 6 seats, including Galloway and Upper Nithsdale won by Alasdair Morgan. The same election saw the Conservatives wiped out in Scotland.

Unlike 1974, in 1997 Labour won on a landslide with 418 seats, giving them majority of 179. With 45.6% of the vote in Scotland and 56 MPs, Labour were confident enough of their strength in Scotland to hold a second Scottish devolution referendum which led to the establishment of a devolved Scottish parliament in 1999.

And now? For the Labour party and the UK establishment, all that once seemed so solid is melting into air. Their victory on 18 September last year is turning into ashes. William Blake’s prophetic cry ‘Rejoice, Empire is no more’ will be heard across the land. The partial eclipse of a great power will have become total. In an anti-democratic coup, soon after 7 May a sealed train will carry  a small group of Scottish nationalists to London where they will seize power, holding the Mother of Parliaments to ransom until their
outrageous demands are met. They will then depart, leaving a chaos of Biblical proportions in their wake.

Looking for some kind of more realistic conclusion I am going to re-quote Richard Seymour on the left-radical programme of the Labour government elected in 1974 -

It was a utopian programme in the strict sense that no thought had been given to the range of social forces it would be necessary to assemble and mobilise in order that its goals could be achieved, and its accomplishments protected. It was simply assumed that an elected government could bring these changes about, and that once implemented the ruling class would have no alternative but to accept them.  

If an anti-austerity alliance is to prevail after 7 May,  a UK wide range of social forces will have to be rapidly assembled and mobilised if the goal is to be achieved and its accomplishment protected .