1990s >> 1998 >> no-1127-july-1998

The rise and fall of Labour reformism

What’s Left? Labour Britain and the Socialist Tradition. By David Powell. Peter Owen. £22.50.

Socialists should know their history of the Labour Party, if only to be able to refute the claim that it was ever a socialist party and to demonstrate its failure to gradually transform capitalism into something better.

Powell’s book can serve as well as any as a source of the basic facts, especially as it is largely descriptive and devoid of any ideological perspective beyond “they’ve always been divided and that’s a bad thing” and perhaps a hint that the answer to the question “what’s left (of the original Labour Party)?” is “not a lot”.

Towards the end of the last century many trade unionists felt that the trade union movement, or “Labour”, should have its own party in parliament separate from both the Tories and the Liberals which represented different sections of the ruling class. Despite the election of Keir Hardie as an independent Labour MP in the 1892 election and the formation the following year of the Independent Labour Party (ILP), they didn’t make must headway (Hardie lost his seat at the 1895 election) until the House of Lords handed down their judgement in the Taff Vale case that a union could be sued for damages for loss of trade caused by a strike of its members.

This threat to their funds goaded the largely still Liberal leaders of the TUC to move and in February 1900 a conference of trade unions and various political groups (the ILP, the Fabians and Hyndman’s Social Democratic Federation) voted to set up a Labour Representation Committee. The founding resolution, which had no socialist content whatsoever, read:

“That this Conference is in favour of establishing a distinct Labour Group in Parliament who shall have their own Whips and agree upon their policy, which must embrace a readiness to co-operate with any party which, for the time being, may be engaged in promoting legislation in the direct interest of labour, and be equally ready to associate themselves with any party in opposing measures which have the opposite tendency”.

The name Labour Party did not come into use until after the 1906 election when 29 MPs were elected (nearly all of them as a result of a secret, but obvious, deal with the Liberals). It was not until after the First World Slaughter, with the adoption in 1919 of a new constitution including the famous Clause IV, that individuals could join the Labour Party. Even then, Labour still didn’t officially talk about “socialism” but only about “the new social order”. This, in fact, was state capitalism rather than socialism, but was seen only as a very long-term goal which the leadership never took seriously then or since.

In so far as Labour did have a theory it was taken from the Fabians, an elitist group of intellectuals (including George Bernard Shaw, H. G. Wells and Beatrice and Sidney Webb), who preached the “inevitability of gradualness”: the goal of state capitalism was to be reached by a series of reform measures adopted by successive Labour governments. The first two Labour governments, both minority ones under Ramsay MacDonald, merely showed the capitalist class that Labour was “fit to govern” capitalism on their behalf. The second ended in complete disaster in 1931 when, faced with the slump, MacDonald, his Chancellor Snowden and some others in effect went over to the Tories.

Powell records the various attempts by those who took the state capitalist goal seriously to get Labour to be more than a party out to try to govern private capitalism a little less harshly than the Tories or the Liberals: from the ILP under Maxton in the 1920s (which disaffiliated from Labour in 1932), the Socialist League under Sir Stafford Cripps (later known as Sir Stifford Crapps for his role of Iron Chancellor imposing austerity on the workers in the post-war Attlee government) in the 1930s, the Bevanites in the 1950s and the Bennites in the 1970s and early 80s. They never got very far and only succeeded in ruining Labour’s electoral chances since most people wanted a humanised private capitalism rather than state capitalism.

The lesson the Labour left failed to learn was that you cannot have socialism without a majority who want and understand it. In a situation where most people still want capitalism—a situation which unfortunately has prevailed throughout the Labour Party’s existence, and still does—then what Socialists must do is not to try to get into government on a programme of reforms, but to campaign for socialism, to “make Socialists” as William Morris put it and what we’ve been trying to do since 1904 (yes, the working class could have made a different choice in the 1900s).

We might not be much nearer our goal of socialism than then, but the Labour Party has now abandoned its goal of those days of legislation favourable to trade unions and workers generally and has become Tweedledee to the Tories’ Tweedledum—which is what the Liberal Party was in 1900. They are not even an independent trade union pressure group in Parliament, but an openly pro-capitalist party.

Incidentally, we get a couple of mentions as, along with the British Socialist Party and the Socialist Labour Party (De Leon’s not Scargill’s) , one of “the warring fragments of Hyndman’s SDF” that opposed the First World War (true) and of “the congeries of Marxist factions” that were “in bullish mood following the events of October 1917” (not true).

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Prawn Cocktail Party by Robin Ramsay. Vision. £9.99

The Prawn Cocktail Party is of course the Labour Party which when in opposition under John Smith and then Tony Blair organised a series of lunches and receptions in order to convince business and the City that they had nothing to fear from a Labour government. According to Ramsay, the City welcomed this as they had already begun to write off, for the time being at least, the Tory Party as a reliable instrument of their political will because of the large inward-looking Eurosceptic element within it.

Ramsay starts from the premise that “there are essentially two economies in the UK. One is the domestic, manufacturing economy and its allied services; the other consists of the City of London, its support services in the ring of shires round the capital, and some multinationals with bases and plant in the UK. Traditionally, he says (and he writes as a Labour Party member), Labour has defended manufacturing industry while the Tories have represented the City. But now:

“British politics has been stood on its head. The Conservative Party, traditionally the party of financial and overseas interests, has been replaced in that role by Labour. Instructed by its new friends in the City, Labour has become the party of financial, pre-Keynesian orthodoxy. Gordon Brown looks determined to re-enact the role of Philip Snowden in 1931—the perfect Labour Party front man for the interests of the overseas lobby”.

This explains, says Ramsay, why one of the first acts of the Labour government last year was to give the Bank of England the freedom to fix interest rates and why Gordon Brown and other Labour ministers defend the policy of allowing the pound to rise in value even though this harms exporting industries. Instead of defending the interest of manufacturing industry as it used to, Labour is now promoting the interests of the City.

To Ramsay the City is the villain of the piece. Certainly they are villainous enough, but he exaggerates when he describes a policy of high interest rates as a “racket” and a “fraud” on the grounds that banks make more profits when interest rates are high than when they are low. If, like Ramsay, you think that banks have the power to create credit out of nothing this would be true. In fact, however, banks are financial intermediaries which make their profits from lending money out at a higher rate than they pay those they borrow it from. This means that what is important for their profits is not the absolute level of interest rates but the difference between the rate charged to borrowers and the rate paid to lenders; if interest rates are high banks don’t necessarily make bigger profits since they have to pay higher rates to their depositors—in fact high bank profits are not at all incompatible with low interest rates.

So there is no basis for Ramsay’s supposition that the banks are somehow worse than manufacturing businesses and that we should therefore support the latter against the former. Since both derive their profits from the surplus value produced by the workers and since it is the capitalist system as a whole that is the cause of our problems, why should we support the manufacturing capitalists against the financial capitalists?

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May Day Manifesto

The May Day Manifesto. Part One. Defending the Welfare State by Michael Barratt Brown. Spokesman. £6.99.

Last year two Labour MEPs, Hugh Kerr and Ken Coates, were expelled from the Labour Party. They have formed an Independent Labour Network which (with money from the European Parliament) has published this pamphlet.

It is unashamedly Old Labour, proposing to extend the welfare state, restore full employment by Keynesian techniques of increased government spending, and to tax the rich so as to create a more equal society. It’s all pie-in-the-sky of course since such policies, which imply that capitalism can be reformed so as to work in the interest of the majority, have been tried and failed, most recently under the Callaghan Labour government in the late 1970s and under Mitterrand in France in the early 80s.

New Labour, Kerr and Coates complain in the introduction, has abandoned what Labour used to stand for:

“Redistributive policies, and planned public intervention to create jobs and uphold higher social standards have now gone. Instead, the new Government defends an economic strategy based on ‘the enterprise of the market and the rigour of competition’, a philosophy of deregulation, and ‘a partnership with business . . . that puts industry first’. It seeks ‘to enhance the dynamism of the market economy, not to undermine it’. It is determined ‘to extend the flexible labour markets to the rest of Europe, not to import Euro-sclerosis’. These engagements are linked with a policy of less direct taxation, and refusal to ‘impose burdens on business’ . . .”

All this is very true, but in the argument between them and Blair as to what is possible within capitalism today—and this is where this particular argument is situated—Blair is right: capitalism is incapable of offering the reforms Kerr and Coates are campaigning for. The alternative to New Labourism (the management of capitalism on its terms and according to its rules) is not reformism but socialism.

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How Solidarity Can Change the World. Workers Liberty. £3.95.

Believe it or not, but there are still some Trotskyists in the Labour Party. One such group has published this pamphlet, which is a collection of contradictory articles by Engels, Kautsky, Rosa Luxemburg and Trotsky introduced by their leader, Sean Matgamma.

The leader’s view—as expressed in the title, to be understood as “How Solidarity (in the Struggle for Reforms) Can Change the World”—is that “the struggle for reforms and transitional demands is now the indicated way the British working class—but not only the British—and the labour movement can revive”. This is the old argument, advanced by Trotsky in his founding manifesto for the “Fourth International” in 1938 (included here), that socialist consciousness will develop out of the struggle for reforms within capitalism: when workers realise that they can’t get the reforms they have been campaigning for they will, Trotsky pontificated, turn to the “cadres” of the Fourth International for leadership.

Quite apart from the fact that this has (fortunately) never happened, this argument has always been more of a rationalisation of their reformist practice by shamefaced reformists who want to imagine that they are revolutionaries. Since it is reforms they want there is some logic in being in a party that has a chance of exercising political power. So perhaps after all it is not really surprising that there are Trotskyists in the Labour Party, licking envelopes and knocking on doors for Blair and his crew.

ALB