Posts Tagged ‘Simon Matthews’

Jim Callaghan and Andrew Shonfield’s Alternative View of the British Economy

May 8, 2016

Simon Matthews begins an article on the career of Jim Callaghan in government, ‘Jim Callaghan: the Life and Times of Solomon Binding’ in Lobster 49 for summer, 2005, with a discussion of Andrew Shonfield’s critique of the British economy in the 1950s:

It is still possible to find an interesting Penguin Special that appeared in 1958, British Economic Policy Since the War, by Andrew Shonfield, then economics editor of The Observer, remains a striking piece of work. Among his conclusions were: that the maintenance of a separate Sterling Area, giving the comforting feeling and appearance of great power status, actually hindered the UK economy; that the UK should be more closely involved with Europe; that UK governments and the UK private sector failed to invest sufficiently in their own country and invested instead elsewhere in the Sterling Area; the City of London had a poor and distorting effect on the UK economy; that public spending in the UK was more restrained than in other European countries for reasons that did not make much sense; that the Treasury possibly had too much power; that although industrial relations in the UK were poor, days lost through strikes were often no higher than in other countries, but too much power resided with individual shop stewards (a fact that some employers actually quite liked); that the national offices of the big trade unions had surprisingly little input in either planning or negotiation within significant industries, with matters being handled at a purely local level; that because of the low level of pay and facilities offered by major employers a better relationship with the trade unions was difficult to attain; an that the UK spent too much on defence.

In 1958 this was prescient. Shonfield anticipated the essential economic debates of the 1970s and 1980s, some of which remain unresolved to this day. (P. 21). He notes that ultimately Shonfield’s views had little effect, though that doesn’t mean they went unnoticed. He considers that Harold Wilson arrived at some of Shonfield’s conclusions independently.

These issue are still, with some caveats, very much with us. Britain does not invest in public services at the same level as the other European countries. Spending on the NHS, for example, in the 1970s was below what other European nations spent on their health services. The City does not like investing in Britain, and most of the investment networks are geared towards the Developing World. As for government investment, you can see how reluctant the British government is to support British industry by the desperate efforts to find a foreign buyer for failing British companies or factories. The most recent example of this is the closure of the Tata steel plants in Bridgend and elsewhere. However, Cameron is cutting the defence budget to ludicrous extremes, and we have been saved much of the chaos that has overtaken some of the Continental economies because we kept the Pound instead of joining the Euro.

Matthews also has a broadly positive view of Callaghan’s government in the 1970s, which has been blamed for the economic failures that led to the rise of Maggie Thatcher.

It is convenient for contemporary politicians to say that the Thatcher years were something that Britain either needed or could not have avoided. But had it not been for Callaghan’s decision to postpone the election from 1978 to 1979 Thatcher might never have got to 10 Downing Street; or, if she did, would have been ousted very quickly. It is also true that the 1974-1979 Wilson-Callaghan governments made a reasonable job of recovering from the inflation caused by Heath and Barber in 1971-1973. ‘Old Labour’ id OK. It was just a shame it didn’t have a better leader. (P. 23).

So much for the conventional Tory wisdom that Thatcher was needed to sort out the chaos Labour caused. In this view, Callaghan was needed to sort out the chaos Heath had caused.

Blair’s Ideological Legacy

March 27, 2014

Tony-Blair-006

Earlier today I posted a long piece on the origin of New Labour and its legacy on Ed Miliband’s current leadership of the party. This means the way Labour after the 1987 General Election turned away from state intervention to embrace the middle classes, the free market and the financial sector, at the expense of domestic manufacturing industry and the working class. Simon Matthews also further summarises Blair’s fundamental attitudes to the economy, the press and the middle classes in his review of Anthony Seldon’s biography, Blair (London: Free Press (Simon & Shuster) 2004) in his piece ‘Our Leader’ in Lobster 48, Winter 2004, pp. 34-5. He notes that under Blair, Brown and Balls allowed unelected officials from the Treasury control vast areas of domestic policy, such as the railways, housing and defence. These schemes tended to implode, forcing Blair to intervene personally. He then states

What is not clearly articulated in this book is the world view that Brown, Blair and the various other UK politicians like them follow. This appears to be the same as the outlook many demoralised US and Australian leftists and centre-leftists adopted in the ’80s after the seemingly invincible triumph of the Reagan-Thatcher agenda. Namely:

1. Support of the middle classes is critical at every level. Therefore direct personal taxes can never be raised.

2. The media are too powerful to challenge. Therefore flatter them, give them good stories (‘briefing’, ‘spinning’ etc) and allow them a deregulated area in the market place in which to work.

3. If you either need to or want to pay for additional domestic projects because of (1) you can only do so by increasing the amount of cheap foreign labour within the domestic economy (in the USA, Hispanics; in the UK anyone in the world) and as the working population goes up and costs go down, so the amounts of taxes coming in from low wage jobs goes up.

4. Anything other than this is impossible and should be resisted.

It is striking that the tribulations that Blair and Brown have with Europe stem from this approach. (thanks to their electoral arrangements, Europe did not have majority governments that implemented the Reagan-Thatcher policies.)
Generally one senses, when the narrative concludes in mid-2004, that we have not seen the end of the Blair years by a long chalk.

Blair’s administration is long over, as is that of his successor, Gordon Brown. However, Blair and his free market policies and pursuit of the middle classes and the media at the expense of everyone else still casts a very long shadow in the form of Balls, Miliband and their coterie.

New Labour and the Abandonment of Socialism and the Working Class

July 11, 2013

Yesterday Ed Milliband announced that he was ending the automatic contribution to the Labour party from the subscriptions of individual members of the trade unions. It marks a continuation of the New Labour policy of distancing the party from its origins in the unions. Way back in the 1990s, Tony Blair threatened to end the party’s ties to the unions altogether if they did not toe his line. It’s also part of the New Labour campaign of presenting itself as more middle class party. This process began under Neil Kinnock. The satirical British magazine, Private Eye, satirised Kinnock’s new middle class direction for the party by showing him shouting ‘Ich bin ein shareholder!’ Other spoof photographs on the same theme showed Kinnock shouting declaring, ‘I am an estate agent, and the son of estate agents’. Later Tony Blair was shown next to John Prescott saying, ‘We’re all middle class now’, to which Prescott replied ”appen I am, you middle class ponce’. Or words to that effect. We’ve come a long way since the Fabian Society published the pamphlet Natural Allies: Labour and the Unions, by Martin Upham and Tom Wilson in the 1980s.

New Labour and its Pursuit of the Middle Class and Increasing Alienation of the Working Class

The British conspiracy magazine, Lobster, has published a series of pieces charting and strongly criticising the rise of New labour and its abandonment of socialism and the working class. Simon Matthews in his review of Anthony Selden’s biography, Blair notes that the core of New Labour was a group of ‘modernising’ Labour MPs, the Project, consisting of Blair himself, Peter Mandelson, Margaret Hodge, John Carr, Jack Dromney and Sally Morgan, amongst others. It was essentially a response, shared by many other demoralised Leftists in Britain, the US and Australia, to Reagan and Thatcher’s electoral triumphs and the apparent victory of Neo-Liberal economics. Matthews considers that at the heart of New Labour’s political philosophy are the following ideas:

1. Middle class support is absolutely critical at every level. They must not be alienated through raising direct personal taxation.

2. The immense power of the media means that it is impossible to challenge them. They are therefore to be flattered and given good stories. The press are to be allowed to work in a deregulated market place.

3. If extra money is needed to pay for domestic projects, this may only be raised through the importation of cheap foreign labour. This increases the working population and lowers labour costs, so allowing an increase in tax revenue. This last policy has led to the increasing alienation of the White working class, that feels that Labour and the other mainstream political parties has abandoned them. The result is a resurgence in right-wing parties with anti-immigration policies, such as UKIP, or the English Defence League, which campaigns against radical Islam. This alienation has been noted by the BBC. A few years ago the BBC ran a series of programmes devoted to the issue of race in contemporary Britain. The trailer for this showed a White, working class man standing in front of a black background, slowly having his face covered in black ink until he became invisible. A gravelly voice then asked if the White working-class were being written out of Britain today. American critics of Neo-Conservatism have noted much the same attitudes in both the Democrat and Republican parties. The middle-class White members of these parties support affirmative action programmes, so long as they do not affect their children. See the volume, Confronting the New Conservatism.

American Commercial and Political Interests

Critical to the New Labour project has been collaboration with the Democrats in America, and the Australian Labour Party, but not with the Centre-Left European socialist parties. In the summer of 1993 Blair and Brown visited America, a trip arranged by the British embassy. There they met Alan Greenspan, the chairman of the Federal Reserved, who recommended that the Bank of England should set the interest rates in the UK. This was put into practice four years later when they gained power. Blair, and many of the other leading figures of New Labour – Gordon Brown, Ed Balls, David Miliband, Mo Mowlam, Patricia Hewitt and Tessa Blackstone, amongst others, had extensive transatlantic connections. They studied at American Universities, and/or worked for American companies.
Robin Ramsay, Lobster’s editor, has noted that New Labour represent American interests, and those of the British Foreign Office, determined to preserve both the ‘special relationship’ with the US and British commercial interests overseas. Blair himself stated as much in a speech he gave to Rupert Murdoch’s News International.

‘The Americans have made it clear they want a special relationship with Europe, not with Britain alone. If we are to be listened to seriously in Washington or Tokyo, or the Pacific, we will often be acting with the rest of Europe … The real patriotic case, therefore, for those who want Britain to maintain its traditional global role, is for leadership in Europe … the Labour government I hope to lead will be outward-looking, internationalist and committed to free and open trade, not an outdate and misguided narrow nationalism’.

The Primacy of the Financial Sector over Manufacturing

The privatisation and deregulation of the economy under Mrs Thatcher resulted in British companies having the largest overseas investments after the United States. The Blairites supported continued American power and international hegemony because it offered the best global protection to British commercial interests. Manufacturing industry and the public sector became merely special interest groups, which were simply taken for granted and ignored. Gavyn Davies in his comments supporting an independent Bank of England stated that the ‘one quarter of the economy that is affected by the exchange rate’ – in other words, manufacturing, could not be allowed to ‘take precedence over the inflation target’. In others, it should not prevent interest rates being kept high to attract capital to London.

A major part of the New Labour programme was the promotion of the interests of the City of London. The first draft of the Labour Party policy document, Meet the Challenge Make the Change: A New Agenda for Britain by a committee chaired by Bryan Gould stated in its section on finance:

‘The concentration of power and wealth in the City of London is the major cause of Britain’s economic problems’. It further argued that Britain’s economic policies had been for too long ‘dominated by City values and run in the interests of those who hold assets rather than those who produce’.

Seven years later, however, when New Labour had become dominant, the power of the City was seen as a source of economic strength. Peter Mandelson and Roger Liddle, in their book The Blair Revolution, published in 1996, claimed that

‘Britain can boast of some notable economic strengths – for example, the resilience and high internationalisation of our top companies, our strong industries like pharmaceuticals, aerospace, retaining and media; the pre-eminence of the City of London.’

The Blind Trusts, Labour Finance and Industry Group and Commercial Donors as Alternative Funding Sources to Traditional Membership Fees and Union Contributions

Tim Pendry, another contributor to Lobster, has described his experience with the Labour Finance and Industry Group and its use by Labour to construct an alternative source of funding from the trade unions and constituency activists. He considers that the party deliberately constructed an opaque and highly centralised funding system. The idea was that this would remove the party’s reliance on its traditional supporters, who as a demographic were considered to be aging and declining. The constituency system was believed to be costly and impossible to police. Moreover, it was vulnerable to being captured by the activists, who would make the party once more unelectable. The funds raised could be used by the Party to fund the kind of mass marketing that the Tories had achieved with Saatch and Saatchi. This policy was to result in the scandalous creation of a series of blind trusts. Pendry notes that the scandals surrounding New Labour and business came from their complete ignorance of the Puritanical ethics of the business community. He considered that many business leaders were horrified by the type of conduct that was considered acceptable in politics. Pendry wrote this in 2006. After the near collapse of western Capitalism under Goldman Sachs, Lehmann Brothers and the other major banks, these comments now seem somewhat ironic. Pendry himself has strong affection for the members of the Labour Finance and Industry Group. He describes them as decent, clubbable people, and notes that they themselves tended to be very much Old Labour – Gordon Brown, rather than Tony Blair. The result of the current parties’ reliance on funding from rich donors has resulted in the membership of both Labour and Tories plummeting. He estimated that Labour had about 200,000 members, while the Conservatives are around 300,000. The Conservative parliamentary leadership has also had problems recently with the apparent contempt with which it holds its members. Yesterday Cameron delivered a speech stating that grassroots Conservatives were highly valued by the party. This followed previous comments by senior party figures describing them as ‘swivel-eyed loons’.

Conclusion: Labour as Centre-Right Pary; Alienation of Working Class

The result of all this is that the Labour party has been transformed from a Centre-Left to Centre-Right party, keen to promote Neo-Liberal economic policies and distance itself from its roots in the 19th and early 20th century trade union movement. The result has been the gradual erosion under Labour of worker’s rights and the encroachment of the market through the Private Finance Initiative. Apart from the continued legacy of Mrs. Thatcher’s destruction of Britain’s manufacturing economy, the British working class has felt disenfranchised and alienated. A minority of its White members have been turning to more extreme nationalist organisations, such as UKIP, which are perceived as far more receptive to their interests.

Sources

Simon Matthews, ‘Our Leader’, in Lobster 48, Winter 2004, 34-5.

Tim Pendry, ‘The Labour Finance and Industry Group: A Memoir’, Lobster 51, Summer 2006, 3-9.

Robin Ramsey, ‘Contamination, the Labour Party, Nationalism and the Blairites’, Lobster 33, Summer 1997, 2-9.

A Note on Lobster

I’ve described Lobster as a conspiracy magazine, which makes it sound like one of those magazines devoted to insane, and frequently dangerous theories about secret governing elites like the Freemasons, Jews and now Reptoid aliens from the Pleiades. It’s not. It’s devoted to what its founder and editor, Robin Ramsey, describes as ‘parapolitics’. This is the study of politics as affected and influenced by genuine covert groups, such as funding lobbies, think tanks and the intelligence and security services. It bases its material on published studies and memoirs from the various groups involved, newspaper articles, and the personal experience of its contributors. It’s also on the web, and has an archives of some articles on-line.