Fri Mar 29, 2024
March 29, 2024

How the Labour Party supported capitalism in the post war years

Public sector debt, economic turmoil, rising unemployment, inflation, a programme of cuts, agreement with the IMF, agreement with the Liberals. Is this 2011? No, this was 1976 to 1979 under the James Callaghan Labour government. Attacking the working class to pay for the crises of capitalism was developed long before Thatcher, Blair and Cameron unleashed their offensives.

Due to Britain’s balance of payment crisis in 1976 Prime Minister Callaghan implored the IMF for a loan, at the time it was the largest in the history of the IMF, as international speculator were attacking sterling and depleting the UK’s financial reserve.

The conditions of the loan stipulated the implementation of large public spending cuts. Before the terms of the IMF loan were announced, Callaghan shocked the annual party conference saying, “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.” It no longer existed because he was bowing to the demands of the international financial markets for draconian attacks against the working class and welfare state, and the re-organisation of capitalism.

Prior to this, when Callaghan was Chancellor of the Exchequer in 1967, he rejected the post-war commitment to full employment and embraced monetarist policies, marking the end of the post war boom. This led to the ending of the Bretton Woods agreement which had tied the dollar to the gold standard and maintained relatively stable exchange rates. This was forced upon imperialism due to the cost of the Vietnam War, the quadrupling of oil prices which created more instability in the world markets, the falling rate of profit and the strength of the working class internationally.

Labour leadership dedicated servants of capitalism

During the sterling crisis of August 1965 the Callaghan budget removed what remained of Labour’s election promises. “The [U.S.] Administration has in fact been deeply impressed by the willingness of a Labour government to throw away or defer cherished social measures in defence of the pound.” (Financial Times quoted in The Newsletter, August 1965, paper of the Socialist Labour League). The SLL issued a warning that the Wilson government (1964-1970) was committed to serving big business and that because of the financial crisis they would be forced to make an all-out attack on the living standards of the working class, standards that had developed since the second world war and were taken for granted. So in 1966 the Labour government put the Royal Navy on standby to break the Seaman’s strike by moving the ships that had blockaded the ports.

Then in 1969 Barbara Castle, Secretary of State for Employment and Productivity and former left winger, drafted an anti trade union White Paper, In Place of Strife. It was the first of its type in the postwar period. Bill Hunter wrote, “The Labour government of 1964-1970, therefore, began the attack on legal rights of union struggle which the later Tory governments carried on. The re-organisation of industry and concentration of capital went ahead under the Labour government.” (They Knew Why They Fought).

This attempt to break the union movements was defeated because of mass and unofficial strikes, “The powerful reaction of the rank and file of the unions to this attack eventually split the cabinet and forced the defeat of the government’s plans.” (ibid) Labour governments from Wilson onwards developed into dedicated servants to the needs of capitalism.

Callaghan played an important role in the restructuring of the world financial system during the crisis years which ended the post-war expansion of capitalism and became one of the supporters of new IMF system. At the same time employers were planning ways to curb the power of workers, such as the dock workers, with the assistance of the government and the trade union bureaucracy.

At that time the gap between the poorest and the richest 10 per cent was the closest it had been since the industrial revolution 150 years earlier. Between 1976 to 1978 there was a two year strike for trade union recognition by workers the Grunwick Film Processing laboratories in North London, by mainly East African Asian women, which received mass support from the whole labour movement.

In 1977 fire-fighters began a dispute for better wages and conditions which the Labour government crushed by bringing in the army.

At the time a minority Labour government maintained power in what was known as the Lib/Lab pact (1977 to 1978) with the Liberals, Ulster Unionists and Scottish National Party. A wage freeze had been agreed, but at a time of high inflation the working class opposed these plans and widespread strike action began. It was the Lib-Lab pact that prepared the way for the eventual formation of ‘new’ Labour, thus fundamentally there is an organic connection between ‘new’ Labour and ‘old’ Labour, one emerged from the other. They shared a commitment to maintaining a national capitalist economy and defending the historic interests of the British ruling class by opposing and trying to curb the struggle for socialism by the working class. The Labour Party was not merely defeated by Thatcher, it was defeated because of the attacks on the working class.

Trade union membership in 1979 was the highest in the world, outside of the Stalinist countries, that is 55 % of all workers. The number of trade unionists on strike in 1979 rose to its highest point compared to any time since the 1926 General Strike and the government’s plan to force a wage freeze was defeated as they were unable to crush workers’ demands for wage increases above the planned 5% ceiling. Ford workers gained a 17% rise following a two-month strike, an ‘unofficial’ strike that was eventually supported by the Transport and General Workers Union because they feared losing control of the rank and file membership.

The lorry drivers followed and TGWU drivers struck on January 3, 1979. Thousands of petrol stations were closed and drivers picketed ports and refineries across the country. Supplies transported by road came to a virtual standstill. In the weeks during and after the lorry drivers strike there was a series of strike action taken by public sector workers and on January 22 there was a “Day of Action” by public sector unions, following a number of strikes by railway workers. That day marked the largest general stoppage of work in the UK since the 1926 General Strike with 1.5 million workers striking. Mass demonstrations were held in many cities and 140,000 people took part in one demonstration in London. Schools and airports were closed and ambulance drivers struck. Following January 22 many workers continued to strike and even the Royal College of Nursing demanded a 25% pay increase. There was an ambulance drivers strike in mid-January and 1,100 NHS hospitals were only treating emergencies.

In late January there was a strike of grave-diggers, who were members of the GMWU (now GMB), in Liverpool and Tameside and following two weeks of strike action the grave diggers accepted a 14% increase and returned to work. Towards the end of the winter Refuse workers were on strike, which ended on February 21, with a 11% pay increase plus an extra £1 a week. The lowest paid workers such as the refuse collectors and grave-diggers had been working in conditions akin to those described by Charles Dickens more than 100 years earlier.

Officially strikes ended on February 14, however many strikes were continued by rank and file workers. By the end of February a total of 29,474,000 working days had been lost due to strike action which helped stem the tide of inflation and pay cuts and led to a significant improvement in conditions for tens of thousands of workers. Callaghan had opposed the strikes and called on workers to scab, saying, “I would not hesitate myself to cross a picket line if I believed it right to do so.” Echoing those sentiments in June 2011 the Labour leader, Ed Miliband, condemned the public sector strikes over pensions as wrong saying that, “negotiations are ongoing. So it is a mistake to go on strike …”

For socialism not sectionalism

It has gone down in political bourgeois history that an excess of trade union power and widespread strike action led to the victory Margaret Thatcher, but the truth is, it was the anti-working class policies of the Callaghan government that led to their defeat. A Labour government had led attacks on the class, rising unemployment and the closure of nationalised industries such as Standard Triumph in Liverpool.

Today the Cameron government is implementing in full the attacks that were intended against the working class from Wilson onwards through every subsequent government Tory, Labour and coalitions.

An important conclusion from this history is that the militancy and combativity of workers going into struggle cannot be confined within a trade union framework, that is fighting solely for sectional interests. That is the great lesson we have from the militancy and powerful struggles of the late 1960s and 1970s.

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