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Strange Recollections of Old Labour

Photo by Kevin Walsh | CC BY 2.0

We tend to think of Jeremy Corbyn in contrast to the slick public relations and glib charisma of New Labour politicians. This is true, but it’s not the only way in which Corbyn represents a break with Labour history. It’s not just the last 25 years that the Labour left has bucked – it’s the last century as well.

Yet an undeniable part of Corbyn’s appeal is made to nostalgia for ‘Old Labour’.He compared the party’s 2017 election manifesto to the achievements of the Labour governments of the 1960s and 70s. The comparison has often been made by the party’s enemies in the press, who claim Corbyn will take the UK back to the 1970s.

The mainstream media may have inadvertently given Corbyn a card to play with the electorate. It’s not like the Labour leadership can appeal to popular memory when it comes to the Blair government, but it can take up the best examples of British social democracy. This is why it is possible to reclaim Wilson.

“I’m pleased to be here in Bradford University where that great Labour Prime Minister Harold Wilson was the first Chancellor,” Corbyn said in his opening campaign speech. “Wilson had a vision for Britain and created the institutions to match, like the Open University.”

Likewise Shadow Chancellor John McDonnell has been more than happy to bring up the examples of the Wilson era, especially the emphasis on modernisation, technology, progress and social change. Indeed, McDonnell has been open to the ideas of accelerationists and high-tech anarchists – such as automation and the universal basic income. So the Wilson analogy has its convenience.

At the party conference McDonnell drew on the Wilson legacy in his speech: “In the 1960s, when the Tories governed this country from their gentlemen’s clubs on behalf of the privileged few and held this country back from facing the challenges of the modern era, it was the WilsonLabourGovernment that recognised the potential of a modern Britain, forged, as he said in ‘the white heat of the scientific revolution’.”

Of course, Wilson actually referred to ‘the white heat of the technological revolution’. But what this really meant in the 60s is worth examining with a critical eye. There are problems beyond misquotation.

What was Old Labour?

There is more than a little irony in Corbyn’s nostalgia for Wilson. Firstly, it was Wilson who stood against everything the left wanted to gain from changing the party, and, secondly, the Labour governments of the 1960s and 70s helped lay the foundations for the turn towards New Labour.

As Labour leader Harold Wilson presided over great social reforms, which decriminalised homosexuality and abortion, abolished the death penalty and established a modicum of anti-discrimination laws for women and ethnic minorities. But when it came to the economy, the Wilson government was eager to offset the battle to redistribute wealth and power.

The post-war consensus was approaching its terminal crisis when Wilson was first in power. The Labour government had adopted an inflationary model of economic growth in the hopes that this would ensure there would be plenty to go around, as the economy continued to expand and the system could remain intact.

Facing rising wages and inflation, the Wilson government instituted a wage freeze and tried to assert control over the economy. Failing to devalue the pound early on, the Labour government undermined the capacity of British industry to export and the country gradually became more dependent on imports (which is even worse today).

The workers’ share of GDP peaked in the late 1960s and early 70s, just as unemployment reached an all-time low. This was a part of a crisis of profitability for the capitalist system. It would lead to a political shift as the society opened up to neoliberal ideology. The frame of debate shifted ever rightwards to account for the crisis.

When rising wages began to eat into profits the companies began to lay-off more workers, or hiked prices and passed the cost on to the public. This is what pop economists named ‘stagflation’. It left orthodox Keynesian analysts baffled. It should have been impossible, but it wasn’t.

The monetarists were waiting in the wings. Free market economists like Milton Friedman and Friedrich Hayek had been hard at work building the case for tearing down the structures of the welfare state. It would become the ideological basis for a new kind of market liberal economy.

Hard right Conservatives like Keith Joseph took up monetarism as the opposition economic platform. It would become the key agenda of Margaret Thatcher following the fall of Ted Heath. Yet the social democrats capitulated to these arguments. This was the birth of Thatcherism and ultimately the rise of Tony Blair.

The Labour government signed up to the IMF bailout in December 1976 and its stringent austerity programme. It was Labour’s James Callaghan, who began talking up the analysis of money supply as the source of the economy’s inflation problem. He presented his argument to conference.

“We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending,” Callaghan said. “I tell you in all candour that that option no longer exists, and, insofar as it ever did exist, it only worked on each occasion since the War by injecting a bigger dose of inflation into the economy.”

Labour Chancellor Denis Healey would later admit that the public spending cuts were not necessary. It cost Labour its economic credibility and its hold on power for 18 years. Ironically this record of failure is still used as proof of the left’s inability to execute policy, when in actuality it was the breakdown of social democracy.

Once Thatcher came to power, the Conservative government would find a way to resolve the crisis of profitability. The process saw unions crushed, unemployment increased and wages suppressed. In theory this should have allowed demand to collapse, but it would be driven forward by credit cards, mortgages and loans instead of wages.

There was an alternative to Thatcherism laid out by the radical left in those days, but it could not be pursued with the Labour party as it was constituted at the time. No post-war Labour government had been willing to break with capital to democratise the state and the economy.

Towards New Labour

Although the 1979 defeat was a major blow to Labour, it was an opportunity for the party to ask fundamental questions about itself. It sprung open a space for contesting the fundamental questions of the party’s constitution.This was when the Labour left launched its campaign for mass party democracy.

Unlike many other politicians Tony Benn had been radicalised in government. He was convinced that the party had to be democratised in order for Labour to serve the interests of the majority of people in the UK. Benn became the central figure in the mission to change Labour.

Former Prime Minister Jim Callaghan resigned as party leader to throw the party into a leadership contest in 1981. The timing was intended to outmanoeuvre the left and the agenda to reform the party machinery. This was just before any gains won by the Bennites could be put into action.

In the end, Michael Foot and Denis Healey won the top tier positions. This leadership combined the so-called ‘soft left’ with the old centre-right. Tony Benn challenged Healey for the deputy leadership and lost by just 0.5% of the vote. One of Benn’s allies Neil Kinnock, officially a man of the left in those days, had abstained and helped swing the vote in Healey’s favour at the vital moment.

The Labour right would craft its own narrative around the Benn-Healey contest and portray the left’s campaign was a waste of time which needlessly divided the party. Yet it was liberals led by Roy Jenkins who broke with the party to establish a new centrist alternative: the Social Democratic Party (SDP). Eventually 10% of Labour MPs would join the SDP as part of a new experiment to build a liberal centrist party.

Even though the SDP splitters would help Thatcher win a second term, the Labour right pinned the blame on the left because it was Michael Foot who was in the driving seat. It was blamed on the manifesto damned as “the greatest suicide note in history”. Though the ideas of the manifesto were rejected, it was because there was a historic change underway.

The major factor in the 1983 election was the Falklands War. It constituted the first ideological victory for Thatcher, but it laid the basis for the second victory which would be even greater – namely the defeat of the National Union of Miners in 1985. These two great battles played a decisive role in the right’s project to dismantle the post-war settlement and consolidate a new economic consensus.

The Thatcher government may have been deeply unpopular in 1981, but the victory over the Argentinian junta was crucial for winning the election on the basis of imperial nostalgia. The war over the Malvinas came just as the US and China were driving a global economic recovery. This allowed the Conservatives to step back from the brink and alleviate the process of austerity.

It’s not simply that the left’s ideas were inviable, it’s that the world-historical situation no longer suited social democracy.The failures of the post-war settlement and the divisions of the opposition helped create the space for the right to triumph. Meanwhile the Labour Party, faced with the death of the centre-left, decided to capitulate to the right.

Overturning history

The truth is Old Labour only exists as a figment of the Blairite imagination. It’s only possible to talk about Old Labour in a world where New Labour has won. The struggle is not just how to win power and wield it, but how to reconstruct the narrative of Labourism. This is why Kinnock could never launch the project himself.

Once Kinnock took the reins, the Labour establishment was moving to reconsolidate its gains. He was on the left-wing of the party when he started out, but he saw the leadership as an opportunity to build a new strategy after the defeats of 1979 and 1983. But this strategy would not emerge under Kinnock.

In this transitional period, the left was smashed and the labour movement suffered a historic defeat. Contrary to popular myths, Kinnock was much more preoccupied with stamping out Militant and making concessions to the right than fighting Thatcher. There was no real strategy, just short-term tactics.

Fortunately, not everyone gave up what they believed in. Jeremy Corbyn, John McDonnell and Diane Abbott were side-lined in the 80s, but they did not give up their commitments to radical politics. Meanwhile the democratic gains within the party, such as mandatory reselection, were quickly rolled back and most of Benn’s grassroots supporters withdrew from politics.

What began in the Wilson years would be finished by Tony Blair. The Blairite turn disarmed the centre-left, taking up the market as the best means for organising the economy. Blair and his allies crafted the narrative that Old Labour was somehow inflexibly left-wing and failed to adjust to reality. This was the inversion of what really happened.

The Third Way was pitched as the centre ground between the extremes of free market capitalism and welfare state socialism, yet this just reveals how the centre is constituted. Moderation is supposedly the only way to get power and wield it for the common good. Anything more than this will lead to failure or tyranny.

The left has to change the party to transform the country. A part of that must mean tearing down the Blairite narrative of permanent moderation. Winning the battle for hegemony means Corbynism cannot just be an electoral vehicle – it must extend its reach into the past and rewrite history.

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