Tag Archives: Thatcher

Brexit and the Miners Strike, Part Three: The Disorientation of the Left


As the consequences of the Brexit vote begin to sink in, the British political class are reeling in shock. Most commentators and even some politicians have realized that the vote reflects a catastrophic failure of government over many years to satisfy basic social and economic needs in former industrial areas – housing, jobs, decent wages, hope for future improvement – that has been distorted through the campaign rhetoric of immigration control.

The Guardian’s John Harris writes: “Brexit is the consequence of the economic bargain struck in the early 1980s, whereby we waved goodbye to the security and certainties of the postwar settlement, and were given instead an economic model that has just about served the most populous parts of the country, while leaving too much of the rest to anxiously decline.” But Harris’s memory is faulty. There was no bargain struck with the public: it was imposed on the country by the Thatcher government acting as an agent for international corporate and financial elites. It is important therefore to reassess the historically defining moment of the establishment of a neoliberal economy in Britain – the defeat of the miners’ strike in 1984-85.

The miners and their leaders had not expected the kind of all-out political fight Thatcher was waging, but once the strike began, it generated an intense loyalty to the union, involving communities in a fight for their survival. Although mining was a completely male-dominated industry, women from mining areas mobilized to take the struggle into other sections of the working and middle class while the government cut benefits for strikers’ families. The miners’ moral economy expanded to include collaboration with other communities defending themselves against state attacks.

The Tories’ 1980 Coal Act mandated an end to subsidies by 1984 and this empowered NCB management to aggressively confront miners, provoking a large number of separate pit-level disputes that came together after the announcement of the closure of Cortonwood, when, despite the pleas of Yorkshire area officials, rank-and-file miners streamed into Lancashire and Nottinghamshire to picket out those areas. The strike had not been officially called by the NUM national leadership, who in fact merely recognized a struggle that had already started, driven by the militancy and anger among younger miners. [Richards, 100]

They were the first in the industrial world, after PATCO, to experience the assault of international capital against the concessions they had fought for and won from a national capitalist class over many years. However, the left had not grasped the nature of the changes that had taken place during the 1970s. Its theoretical outlook was guided by Leninist categories that were premised on the national state conceived as a monolithic entity, a “body of armed men” arrayed against a homogeneous working class. The picket-line battles between miners and police appeared to fall into that schema.

The left fails to acknowledge the international dimension of the strike

After the start of the strike, the sloganizing of left groups for better organized picketing, for a one-day general strike, even for an all-out general strike called by the TUC, embodied the assumption that the miners were battling a nationally-based capitalist class with which there was the possibility of a political compromise after a change of government. To acknowledge that the strike had connotations that stretched outside of a nationally-based economy would have meant breaking from the illusion that the miners could have won a victory like that of 1972.

A general strike, even if one could have been achieved in the circumstances, posed the same question that it did in 1926: who would rule? The miners and the left assumed that it would be a Bennite government that would restore the social consensus and, like the 1970s Wilberforce inquiry, consider the miners to be a “special case” whose jobs should be protected. However, the Labour party was in disarray and its leadership had already capitulated to the pressure for austerity. While left MPs headed by Benn supported the miners, party leader Neil Kinnock vehemently condemned picket-line violence, and, like Callaghan, attacked Scargill for not calling a strike ballot. When New Labour gained power in the 1990s they signally refused to return to a policy of state subsidies to industry.

While the left in general had little influence within the NUM, the British Communist party had a close historical connection with the union, but by the 1980s the party was divided between a faction that based itself on the tradition of industrial militancy and support for the Soviet Union, grouped around the daily Morning Star, and a “eurocommunist” tendency that advocated a “new realism” of adapting to the changes that were taking place within capitalism. The strike and its outcome destabilized their uneasy alliance, leading to a split and the party’s eventual dissolution.

The failures of the Communist party during the 1970s in relation to mass student protests and the women’s movement, together with opposition to the Soviet military response to demands for Czechoslovak autonomy, had encouraged the eurocommunists’ criticism of the lack of internal party democracy and a focus on the industrial working class. Influenced by postmodernism, they perceived class based politics as obsolete because of the transition from manufacturing in large factories employing thousands of workers to a “post-Fordist” form of production based on small, flexible units of capital. The rise of Thatcher was analyzed by this tendency in the party’s theoretical journal, Marxism Today, as a new and powerful form of populism, conceptualizing her government as the authoritarianism of a national capitalist class which needed to be countered by a popular front alliance of progressive forces.

Scargill was close to the “traditionalist” faction, although not a member of the party, but he represented the thinking of the young, militant activists who had mythologized the 1970s strikes and the mass picket of Saltley coke depot. What united them was a syndicalist and industry-centric orientation that thought the miners could defeat the government on their own, as they believed they had in 1972.

NUM officials influenced by the eurocommunists advocated a cautious and moderate response to pit closures, which brought them into conflict with the miners’ growing militancy. In Scotland, calls for strike action against the especially provocative NCB management team there “originated from the rank-and-file in comparatively democratic forums, including mass meetings and area delegate conferences. These calls were never opposed by the two foremost national NUM leaders, Arthur Scargill and National Secretary, Peter Heathfield, but they brought those who made them into collision with bureaucratic structures in the NUM, in particular with the NUM Scottish Executive led by Mick McGahey and George Bolton” who were both associated with the eurocommunist trend. [Brotherstone, 106]

Even today, over 30 years later, the left clings to the conception that a wider strike struggle could have won a victory. Its analysis selectively omits the impact of the global recession that had shut down much of the country’s industrial base. However, Thatcher had mobilized a much-publicized ideological attack, middle class support for her anti-union plans, control of government committees, interest rates, union leaders in key industries, as well as the physical stockpiling of coal, in support of her strategic aims.

Seumas Milne’s book, The Enemy Within, is a devastating exposé of Thatcher’s use of the deep state to spy on the NUM leadership and target Scargill individually as an instigator of the miners’ militant resistance to the restructuring of the industry. In the introduction to the fourth edition, he writes: “Success for the miners in 1984-5 could not, of course, have turned the neoliberal tide by itself. That was a global phenomenon … But it would have at least seriously weakened Thatcher, reined in her government’s worst excess and put a brake on Labour’s headlong rush for the ‘third way’ – which would eventually turn into New Labour and its embrace of the core Thatcher settlement.” [xi]

Although Milne refers in passing to the global nature of neoliberalism, he explains the motive for the covert operations he uncovered as the Tory party’s determination to avenge its humiliation in 1972, an explanation that confines his account within a national context. Thatcher’s monetarist budgets had already crashed manufacturing and boosted the City of London’s international financial role. What her government did in order to usher in the neoliberal model was to build on this induced recession with a political assault on the miners’ union to break organized resistance to privatization. Thatcher couldn’t have done this so effectively if the Callaghan government had not already initiated monetarist controls on the nationalized industries; moreover, political pressure from the City and the US Treasury makes it clear that neoliberalism was not Thatcher’s personal legacy but that she acted in line with an international reorientation of capital circulation.

The Mitterand government in France, for example, quickly followed the UK and US in restructuring its economy on neoliberal lines: “what above all determined the French Socialist government’s U-turn on economic policy was the severe market pressure on the franc in the context of the high-interest-rate and austerity policies being pursued by the US, the UK, and particularly Germany. … in June 1982 … the franc was devalued alongside the revaluation of the mark, in an agreement with the Germans that was conditional on the French Socialist government’s promise … to bring its fiscal deficit below 3 percent of GDP. … It did not take long before the French Socialist Party leaders even supported the privatization of the firms they had earlier nationalized.” [Panitch, 197]

After the strike the “traditionalist” faction in the Communist party was expelled as the leadership moved closer to the eurocommunist wing.  “The strike, and its eventual defeat were to accelerate the push towards the modernisers’ agenda within the party. Although many Communists from both wings of the party were pulled into the organisation of a solidarity which mushroomed from the late summer of 1984, attitudes to the strike and to the tactics of NUM president Arthur Scargill, were to lead to further bitter divisions. … The criticisms of ‘Scargillism’, which had been relatively muted and coded during the dispute, came out into the open in 1985 as the party, by now rid of the Chater [Morning Star] group carried out a post mortem. The lessons drawn from the defeat of the miners appeared to reinforce all of the key assumptions of Eurocommunism; the economism and narrowness of the trade unions epitomised by Scargill, the authoritarianism of the state shown in the hostile press coverage and the harsh policing tactics and hence the need for ‘broad democratic alliances’ rather than class politics.” [Eaden, 176]

The CP’s political disorientation after the 1970s was also reflected in the left generally. “The way in which the miners’ strike intensified the crisis in the CP was part of the more general theoretical crisis, and, in some cases, practical implosion on the left. The heroic militancy of the miners’ strike exposed, in a most necessary way, the inability of the then dominant leftwing thinking as a whole (notwithstanding the disputatious variety within it) to meet the theoretical needs of labour. In the new situation, the pressure of militant trade unionism to secure, from capital and its servant state, measures of reform and progressive change, was no longer an historically viable strategy.” [Brotherstone, 120]

Conclusion

The miners’ moral economy considered the blood, sweat, and lives expended down the pits to have given them a form of ownership, and that nationalization had made the mines a community resource that the government was wilfully breaking up with unnecessary closures. “We are protecting the people’s coal,” wrote Mick McGahey in April 1984.  “They are weak because they are nothing but industrial vandals and bully boys.” [qutd Phillips, 110]

Although the miners’ defeat was not inevitable – there were moments when the government could have been forced to retreat – its Thatcherite leadership had been quick to respond to the industrial crisis and the increased specific weight of the City of London in the economy. It did not act merely as the agent of Tory revenge, but also as the personification of the drive of international capital to break up national accommodations with the working class and to bring nationalized industries back into the orbit of circulation through the dispossession of public capital. “The deliberate destabilization of industrial employment and occupational communities was, to be blunt, a consciously constructed and carefully executed assault on the collective culture and material position of the working class.” [Phillips, 175]

Despite the way nationalization was carried out after 1945, creating state-owned enterprises with no change in management, it still embodied meaningful egalitarian and collectivist principles. For the mining industry, starved of capital when in private hands, “Nationalization was as much about workers’ rights [as economic efficiency] in the land fit for heroes returning from the war. The bitter industrial relations battles of the 1930s in the mines were to be solved by internalizing them within the new industrial structures.” [Helm, 30]

While enabling the government’s Keynesian economic planning, nationalization also had a great social significance. Capacity in the nationalized electricity supply industry, for example, was substantially increased through the creation of a national grid that allowed technical improvements like higher voltages, but it also facilitated social integration in a way that a market-based industry could not. “A cohesive society provided the basic social primary goods not only regardless of the ability to pay, but also regardless of location. To the extent that rural customers were too expensive to justify connection, they were to be paid for by the urban masses. Connecting up the Scottish Highlands, rural Wales and other upland areas was subsidized by revenues from central locations, and, perhaps more significantly, transmission and distribution charges tended to be averaged.” [Helm, 31]

The dissolution of nationalized industries and subsequent privatizations by the Thatcher government and its successors has led to the breaking down of essential services and intensive rent extraction by capital. It is not surprising, then, that there is popular support today for the re-nationalization of certain industries, like the railways, where privatization has brought chaos. After the economic meltdown of 2008, political opposition to neoliberalism has begun to strengthen.

But with an economy dominated by international finance, how can austerity be resisted? Global capital still needs nation-states to maintain the social discipline necessary for its circulation. The orientation of the state is an important factor: even a small country like Malaysia was able to resist the IMF and US government and impose capital controls after the Asian financial crisis of 1997. “The more important effect of globalization has been on the political will to undertake state regulation, rather than on the technical feasibility of doing so.” [Kotz]

The left has to re-think the nature of the many partial movements against austerity and the relation of international capital to state power. The class struggle is fought out on many levels, inside and outside of political parties, within state institutions and regulatory bodies as well as on picket lines. If state power was not important, then the plutocracy would not spend so much effort on gaining control of it. What should the left be doing to guide the fight back?

Works cited

Terry Brotherstone & Simon Pirani, “Were There Alternatives? Movements From Below In The Scottish Coalfield, The Communist Party, And Thatcherism, 1981–1985,” Critique, 33:1, 99-124 (2005)

James Eaden and David Renton, The Communist Party of Great Britain since 1920, Palgrave, 2002

Dieter Helm, Energy, the State, and the Market: British Energy Policy since 1979, Oxford, 2003.

David M. Kotz, “Globalization and Neoliberalism”, Rethinking Marxism vol 12 #2, Summer 2002:64-79

Seumas Milne, The Enemy Within, Verso, Fourth edition, 2014

Kenneth O. Morgan, The People’s Peace: British History 1945-1990, Oxford, 1992 (rev. ed.)

Andrew J. Richards, Miners on Strike: Class Solidarity and Division in Britain, Berg, Oxford, 1996

Leon Panitch and Sam Gindin, The Making of Global Capitalism: The Political Economy of American Empire, Verso, 2012

Jim Phillips, Collieries, communities and the miners’ strike in Scotland, 1984-85, Manchester UP, 2012

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Filed under Arthur Scargill, Brexit, British Labour party, deindustrialization, finance capital, Jeremy Corbyn, militarized police, Miners Strike, Neoliberalism, NUM, police violence, Thatcher, Trotskyism, Uncategorized

Brexit and the Miners’ Strike, Part Two: Thatcher’s political war for neoliberalism


As the consequences of the Brexit vote begin to sink in, the British political class are reeling in shock. Most commentators and even some politicians have realized that the vote reflects a catastrophic failure of government over many years to satisfy basic social and economic needs in former industrial areas – housing, jobs, decent wages, hope for future improvement – that has been distorted through the campaign rhetoric of immigration control.

The Guardian’s John Harris writes: “Brexit is the consequence of the economic bargain struck in the early 1980s, whereby we waved goodbye to the security and certainties of the postwar settlement, and were given instead an economic model that has just about served the most populous parts of the country, while leaving too much of the rest to anxiously decline.” But Harris’s memory is faulty. There was no bargain struck with the public: it was imposed on the country by the Thatcher government acting as an agent for international corporate and financial elites. It is important therefore to reassess the historically defining moment of the establishment of a neoliberal economy in Britain – the defeat of the miners’ strike in 1984-85.

The miners’ victory in 1974 had won them the promise of an assured future for the industry, formalized in Labour’s “Plan for Coal.” It had also won them the enmity of the new Tory party leadership, Margaret Thatcher and Keith Joseph, who were determined to prevent the recurrence of a government defeat.

Their rise to power in the Tory party had come out of a revolt of the grassroots against patriarchal leaders like Heath and Macmillan who were identified with a Keynesian corporatist approach to government. Thatcher’s small-minded hatred of organized labour would have ended in political isolation if it had not aligned with the interests of US big business and the US Treasury. While it was relentless US pressure that forced Callaghan to embark on austerity measures, Thatcher was a willing accomplice, whose outlook merged the mentality of small business anti-union and anti-social democratic attitudes with monetarist ideologies geared to “liberating” national economies from restrictions on the circulation of international capital.

Although Thatcher cultivated her “iron lady” image, she hardly stood alone. Her determination to take on the unions was shored up not only by monetarist economists like Milton Friedman and Friedrich Hayek, but also by the entrenched resistance to social democratic policies from the financiers of the City of London. Like the banks, Thatcher accepted that “Keynesianism had to be abandoned and that monetarist ‘supply-side’ solutions were essential to cure the stagflation that had characterized the British economy during the 1970s. She recognized that this meant nothing short of a revolution in fiscal and social policies, and immediately signalled a fierce determination to have done with the institutions and political ways of the social democratic state that had been consolidated in Britain after 1945.” [Harvey, 22] Thatcher’s determination to defeat the miners didn’t just stem from her visceral hatred of unions but also from her ideological commitment to destroy obstacles to capital accumulation.

The international sources of Thatcher’s resolve

What monetarist economics meant in practice became clear when the US Federal Reserve under Paul Volcker raised interest rates sharply in June 1981. Over the next three years, unemployment soared, the construction and auto industries plunged into depression, and the American Midwest became known as the “rust belt” with much of the steel industry shut down; internationally, whole countries, like Mexico, that had borrowed from US banks to overcome the 1970s recession were bankrupted. The US government had abandoned Roosevelt’s New Deal promise of full employment and promoted the reduction of inflation to save confidence in the dollar. Soon after, newly-elected president Reagan faced off the PATCO air traffic controllers’ union in a long and bitter strike and fired them all when they refused to return to work. [Harvey, 23-5]

After winning power in 1979, Thatcher’s first actions were to remove constraints on capital circulation. The government’s 1981 budget, like the “Volcker shock,” focused on deflating the economy and had the effect of accelerating the decline of manufacturing. “For the nation as a whole, the visible effect was a huge rise in unemployment and a vast drop in the gross domestic product, with factories, mills, and pits closing down all over the country. In 1979-81, while other nations saw their GDP rise by 5.3 per cent, Britain’s fell by 2.5 per cent. Unemployment rose to 13.3 per cent, the highest in Western Europe.” [Morgan, 446]

Deindustrialization was a feature, not a bug. It was driven by the government’s need to enforce discipline on the working class; high interest rates attracted capital that the City diverted into low-wage economies in third world countries, shifting manufacturing offshore. “The Prime Minister, urged on by her newest economic adviser, Professor Alan Walters, forced through the most resolutely anti-Keynesian budget of modern times. It imposed Britain’s biggest-ever tax increases … A total of £3,500 million was taken out of the public sector borrowing requirement. Never before had there been so savage a fiscal squeeze; not since the thirties had there been a comparable increase in unemployment, now approaching 3 million.” [Morgan, 446-7]

But this was just the first step in imposing a neoliberal agenda on Britain. The other necessary condition was to defeat the most militant and organized section of the working class. As part of the fiscal squeeze, the external financial limits (EFLs) on the National Coal Board inherited from the Callaghan government were constricted, abandoning the production targets of the 1974 Plan for Coal. “The recession – and particularly the decline of large-scale energy users – reduced demand further, thereby increasing the stranglehold of the EFLs. … [The NCB] therefore decided in February 1981 that it would be necessary to accelerate the rate of colliery closures. The NUM responded by threatening to call a strike ballot, and the miners in South Wales jumped the gun and went on strike.”  [Helm, 74]

Thatcher had learned from the success of Reagan’s gamble with PATCO that governments could gain politically from a dramatic confrontation with unions. The Tories’ 1980 Employment Act virtually replicated US labour laws to prohibit secondary picketing and remove unions’ legal immunity. However, Thatcher was not politically ready for a confrontation with the miners at this stage; her cabinet was still dominated by Tory “wets”, and the government did not have the full support of its middle-class base. Above all, she wanted to avoid Heath’s fate. So she ordered the NCB to back down, while continuing to implement strategic preparations for a strike.

The monetarist economist Friedrich Hayek urged Thatcher to implement yet more drastic increases in interest rates, citing the example of Chile. Thatcher replied: “I was aware of the remarkable success of the Chilean economy in reducing the share of Government expenditure substantially over the decade of the 70s. The progression from Allende’s Socialism to the free enterprise capitalist economy of the 1980s is a striking example of economic reform from which we can learn many lessons. However, I am sure you will agree that, in Britain with our democratic institutions and the need for a high degree of consent, some of the measures adopted in Chile are quite unacceptable. Our reform must be in line with our traditions and our Constitution.”

The subtext of Thatcher’s reply bears analysis. She did not disagree with Hayek’s lionization of Pinochet’s “remarkable success” in achieving economic “reform,” despite her distaste for mass killings of trade unionists. But she was able to create within British institutions – Parliament, the police, the judiciary – the consent for shock tactics of a different kind in order to restructure the economy.

At the end of 1981 the government was at its lowest ebb. Riots in the inner cities broke out against unemployment. But in March 1982 Argentina occupied the Malvinas islands, known to the British as the Falklands, and Thatcher made a strategic gamble that her ideological kinship with Reagan would result in American assistance for a British military response, succeeding in getting the use of a US airbase on Ascension Island, advanced weapons technology, and intelligence help. Her sympathies for Pinochet were also returned: the Chileans installed a long-range military radar opposite Argentina’s main air base that supplied early warnings of Argentine air attacks to the British invasion fleet. When the radar had to be switched off for maintenance one day in June, the Argentinians were able to launch a surprise attack and sink two troopships.

Although demonstrating Britain’s political and economic dependence on the US, the war’s success changed the political climate to one of belligerent chauvinism, and within the government Thatcher was able to centralize cabinet decision-making in her own hands, bypassing the “wets” in the cabinet. She worked to dissolve the collectivist spirit of the country into the responsibilities of individuals, an ideological message aimed at the aspirational middle class and skilled working class, that lay behind the selloff of council housing to more prosperous tenants. In late 1984 the privatization of British Telecom “made privatization part of a wider cultural shift among the British people, including wide swathes of the working class. Many hundreds of thousands of trade unionists were among those who became shareholders for the first time. … There followed the privatization of British Aerospace and Britoil, and finally the huge sale of British Gas for £5.434 million in December 1986.” [Morgan, 469]

The real beneficiaries of the selloffs were the financiers in the City of London whose central role in mobilizing capital for the privatizations did not mean the strengthening of nationally-based capital, but enhanced its power as a key conduit for the circulation of global finance. The pressures for privatization did not originate within the nation-state but were imposed on it by international capital.

The Thatcher government won re-election in 1983 with renewed political confidence and the results of four years of preparations to take on the miners. The coal industry represented capital locked up in a nationally-circumscribed economy, tightly linked to the electricity industry, and as such was a barrier to the circulation of international capital. But the global economy had already undermined these national arrangements: “The real underpinning of the coal industry lay in the demand for electricity. The 1980-82 recession decimated heavy industry, and, thereafter, the structure of the economy changed to one in which economic growth no longer needed ever more electricity generated.” [Helm, 81]

While in opposition, the Tories had prepared a report on nationalized industries that called for: (a) the building up of maximum coal stocks, particularly at the power stations; (b) contingency plans for the import of coal; (c) the recruitment of non-union lorry drivers by haulage companies to help move coal where necessary; (d) introduction of dual coal/oil firing in all power stations as quickly as possible. There should also be “a large, mobile squad of police equipped and prepared to uphold the law against violent picketing. ‘Good nonunion drivers’ should be recruited to cross picket lines with police protection.” [Saville, 296]

The government’s tactical retreat in 1981 meant that surplus coal was being produced and coal stocks built up at the power stations. The closures of Cortonwood and Polmaise, two of the left’s traditional strongholds, made a strike inevitable, despite the tactical disadvantages of starting a strike in the spring. “[T]he stark choice [for the NUM leadership], faced with MacGregor’s closure programme, was either to capitulate and accept what the NUM had resolutely opposed since the late 1970s, or to fight as best they could … The EFLs were tightened, and hence the Treasury squeeze could only force closures. … Without the new labour laws, without the stocking policies, without the more gentle treatment of what became UDM areas… and without the generous redundancy packages, it would have been more close-run.” [Helm, 87]

During the strike the miners were consistently portrayed as violent, when large numbers of police escorted a very small number of “working miners” into pits. While the violence against pickets was unprecedented in British terms, by international standards it was mild: the police were armed with riot shields, helmets and batons, and nobody got shot, unlike miners in South Africa or South America. Public opinion about the rules of engagement still mattered, but the government were able to prejudice this opinion through its control of the media message. In the course of the strike paramilitary techniques developed in Northern Ireland were refined and the police were “in effect allowed by the courts to re-write the law.” [Saville, 326]

What a focus on the violence of the police against pickets obscures, however, is that Thatcher was carrying out a political war against the miners, that involved an all-round ideological campaign to manufacture consent for her government. The police, as well as being a physical force, were also a means to an ideological end. Her rhetoric of the “enemy within” framed the strike struggle as a conflict contained within national borders; the more she channeled the interests of international capital by harnessing the state to neutralize trade union militancy, the more she appealed to national chauvinism to bolster the legitimacy of the state’s violence against its own citizens.

Her hectoring bombast targeted the social democratic institutions of the postwar consensus; she invested the ideas of “democracy,” “liberty” and the “rule of law” with the content of “obeying orders from superiors,” framing the strike as one that challenged the rule of an elected government and democracy in general. When she said there was “no alternative,” she was able to do so unchallenged because the Labour party elite had already conceded the necessity for austerity in the course of the IMF crisis.

What Thatcher actually achieved through the defeat of the miners was to remove the most important political obstacle to a transition from an economy embodying barriers to global production and exchange in the form of the nationalized industries, to one open to international capital circulation. For this she won the applause of global corporations and their shareholders.

Next: the left fails to acknowledge the international dimension of the strike

Works cited

David Harvey, A Brief History of Neoliberalism, Oxford, 2005

Dieter Helm, Energy, the State, and the Market: British Energy Policy since 1979, Oxford, 2003.

Kenneth O. Morgan, The People’s Peace: British History 1945-1990, Oxford, 1992 (rev. ed.)

John Saville, “An Open Conspiracy: Conservative Politics and the Miners’ Strike 1984-5,” The Socialist Register, 1985-86

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No Nostalgia for Thatcher, but a Tribute to the Welfare State by Ken Loach


The muted protests at Thatcher’s funeral on Wednesday gave the world a glimpse of the deeply-felt divisions in British society. She did not create this social cleavage, which at root is part of an international process: a shift of manufacturing out of Europe and the U.S., and a rapid expansion of speculation in financial centres like London and New York. What she is responsible for is ending the ruling elite’s Keynesian commitment to the mitigation of regional and social inequities.

Although her death evoked few tears in Britain’s industrial heartland, there was more than a little interest in showings of Ken Loach’s new documentary about the Attlee Labour government, “The Spirit of ‘45”. I was fortunate enough to see it while in the UK recently, and my own feelings were mixed: my childhood was spent under the wing of the welfare state, so I took state-provided health and education for granted, and share Loach’s affection for the cradle-to-grave policies that characterized the period.

The interviews with people who were children in the 1930s and 1940s were very moving. They remembered the harsh and degrading conditions of that time and the optimism for a better future after the 1945 election, articulating the general disaffection with prewar society and the determination that things were going to be different.

The interviewees vividly recounted the social impact of the Labour government’s nationalization and house-building program. The experience of state-directed industry during the war had established the feasibility of state intervention to achieve social goals. There was a huge sense of pride and ownership of the newly-nationalized industries, especially the National Health Service, which brought free health care to working-class families who had never been able to afford it. The government channeled state resources into solving the immediate problems of poverty, unemployment, and bad health. Housing for millions of families living in slums or private boarding houses was made a priority.

The weaker part of the film was the final segment, which showed participants urging a return to the collectivist spirit of the postwar era. While Thatcher was the clear villain of the piece, the discussion gave the impression that she imposed privatization and unemployment from above, an arbitrary political decision that could be reversed by a revived social-democratic party in Britain.

But the world has changed since Labour’s manifesto was written in 1945.  Globalization has made national forms of struggle increasingly ineffective in resisting corporate power. What troubled me was the message that the younger generation should look to the history of the Attlee government for an alternative to austerity, which amounts to advocating old solutions to qualitatively new problems.

The achievement of a welfare state after World War II was essentially a political compromise between an organized and homogeneous working class and a capitalist class that had survived the war and needed to restart capital accumulation. This cemented the priorities of the Labour leaders to the recovery of British-based capital within the economic boundaries of the old empire.

The Labour electoral landslide was not the result of some mass revolutionary wave, as some on the left like to think, but rather came from a popular determination to continue the state planning established during the war. State technocrats were more enthusiastic about nationalization than the government, which never intended to change the balance of power in industry, and obsolete production relations were kept intact along with antiquated machinery.

While making a huge difference in people’s lives by alleviating the prewar degradation of the working class, nationalization also released capital bound up in older industries with more than generous compensation to the former owners. Later Conservative governments continued the social compromise, while full employment and expanding markets gave shopfloor militancy leverage to gain a larger share of the surplus being produced. As production rapidly accelerated, the focus of capital accumulation shifted from the national arena to the global. The revival of the German and Japanese economies intensified competition in the world market, and the boom began to falter.

Signs of the erosion of the postwar political compromise were evident by the time of the Heath government, with a wave of inflation and industrial slowdown in 1973; national control of the economy dissolved with the IMF loan to the Callaghan government in 1976. As Michael Hudson explains it: “Labour Prime Minister James Callaghan made a token attempt to address [problems of the economy] by requesting an IMF loan in 1976 to finance tangible industrial re-investment as bridge financing until the UK’s North Sea oil could begin generating foreign exchange. But US Treasury Secretary Bill Simon read him the riot act. IMF and U.S. policy was to provide credit only to pay bondholders, not to build up the real economy. Britain would be advanced loans only if it reoriented its economy to let high finance do the planning.”

At the same time, industries based on new technology were expanding in the south of England, dividing the country socially and politically, and intensifying existing class divisions which had been left unchanged even after thirty years of the welfare state. This created the upwardly-mobile forces Thatcher was able to mobilize to champion populist capitalism against the Keynesian compromise. Her neoliberal agenda corresponded to the changes in international production and exchange that had weakened the unions and enabled her to change the ideological climate within the British ruling elite to toleration of the harsh monetarist doctrines shared by U.S. capital.

She did not set out to empower bankers, but that was the inevitable result of lifting restraints on capital as soon as she took office. As Hudson puts it: “Attacking central planning by government, she shifted it into much more centralized financial hands – the City of London, unopposed by any economic back bench of financial regulation and ‘free’ of meaningful anti-monopoly price regulation. … The Iron Lady was convinced she was rebuilding England’s economy, while in reality it was only getting richer from London’s outlaw banks.”  Her administration was the last to stridently claim an independent nationalism before later governments succumbed to the dictates of international finance – there is no pretense today that British foreign or economic policy is anything but dependent on the US and the City bankers.

Like the rest of Europe and the US, Britain has moved to a low-waged, service economy dominated by global corporations. The labour movement is faced with finding new ways of organizing and fighting in line with the realities of this globalized economy. That is why signs of international resistance to global capital are significant. US workers are flying to Europe to take on their Dutch supermarket owners. Striking immigrant McDonalds workers are returning to their homelands from the US determined to spread the campaign for a living wage. Bangladeshi survivors of the Tazreen factory fire and Nicaraguan victims of antiunion assaults are in New York to confront Walmart board members. And US unions are creating non-traditional ways to organize workers who have no recognized union at their workplace; the AFL-CIO affiliate, Working America, now claims 3.2 million members and is planning to establish chapters in every state in the USA.

I made this brief sketch of events in the years not covered by Ken Loach’s film to give some historical context to Thatcher’s administration, and to argue that the revival of a social-democratic perspective, necessarily limited to winning concessions from a nationally-based state, would not be productive. I believe that activists should focus on connecting with workers in the international supply chain feeding commodities into Western markets, which is corporate capital’s weakest point.

Nostalgia for the welfare state is understandable, but we need to learn from the creative solutions of the international labour movement in order to defend those reforms that remain from the past.

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Filed under BBC, credit creation, financiers, political analysis, poverty, riots in Britain, strikes, Thatcher, Walmart