Donate to my Legal Action vs Oliver Kamm

Tuesday, September 09, 2008

How Jim Callaghan changed the world

Thirty years ago this week, British Prime Minister James Callaghan (above) changed the world. Here's my Guardian piece from twelve months ago on how Callaghan's failure to call a General Election in September 1978 had global ramifications.

Twenty nine years ago this month, a decision was made by a Labour party leader whose consequences still reverberate around the world today. Prime Minister James Callaghan stunned the nation by announcing that he was not going to call an autumn election. Instead, he announced he would carry on until the following year. It was to prove a catastrophic misjudgement.

Suppose Callaghan had called an election in September 1978 and won- as most opinion polls said he would. How might things have been different?

Callaghan has been blamed for introducing monetarism to Britain, but the cutbacks in public spending his government introduced after taking out the IMF loan in 1976, were mild fare compared to the ideologically-driven "rolling back of the state" which Mrs Thatcher had in store.

Although Callaghan's second government is likely to have included rightwing figures as David Owen and Shirley Williams, the presence of socialists such as Tony Benn, Michael Foot, Peter Shore, Judith Hart and Stan Orme would have ensured that the party did not stray too far from a progressive agenda.

In 1978 the economy was rapidly improving. Inflation was down to single figures and unemployment was on the way down too. The great Thatcherite myth that late 1970s Britain was the "Sick Man of Europe" is not borne out by the facts. "The outlook for Britain is better than at any time in the postwar years," was the verdict not of a Labour party propagandist, but of Chase Manhattan bank's chief European economist, Geoffrey Maynard.

Under Labour, North Sea oil revenues would not have been squandered on paying people not to work, but spent on industrial regeneration. To ensure that the benefits accrued to the nation, energy secretary Tony Benn had set up the state-owned British National Oil Corporation. Another country in Europe followed a similar statist approach to its oil industry: Norway, now one of the richest countries in the world.

In terms of the Labour party's electoral fortunes, victory in 1978 would have meant the party staying together, avoiding the damaging Gang of Four/SDP breakaway, which by splitting the anti-Tory vote helped keep the party out of power for the whole of the 1980s.

The presence of a strong parliamentary left would have prevented the government adopting too hawkish a foreign policy stance: it's inconceivable that Callaghan would have formed the same relationship with Ronald Reagan as his successor did. Without the Iron Lady's neo-con aggression, it's more likely the cold war would have ended differently, not with the triumph of one system over another, but with the gradual coming together of east and west, within a peaceful, democratic socialist framework. It was not a forlorn, utopian hope - at the time western european countries were becoming progressively more socialist, while communist countries - most notably Hungary, Yugoslavia, and the Soviet Union itself, after the death of Brezhnev in 1982, were becoming less authoritarian.

A Labour government in the 1980s would have carried on the mixed economy model- and probably would have extended public ownership still further: even the 'right-wing' Callaghan had nationalised ship building in 1977. The mines would have stayed open, and large scale de-industrialisation would have been avoided. Yosser Hughes would have found a job and Sheffield steel workers would not have had to become striptease artists.

Defeat for the Tories in 1978 would undoubtedly have meant the political death of Margaret Thatcher. The party's lurch to the right in 1975 had already alarmed many Tory grandees - after an election defeat in 1978 the party is likely to have moved back to the one nation centre, under a more consensual leader such as Jim Prior, William Whitelaw, or Sir Ian Gilmour. Had the party returned to power in 1982/3, it's most unlikely they would have done so on a programme as radically neo-liberal as in 1979.

Of course it's easy to exaggerate the significance of general elections. But Labour's defeat in 1979 really was a watershed: marking the end of the collectivist, mixed economy consensus and its replacement with privatising, pro-big business neo-liberalism. The neoliberal road has led not just to social disintegration and an ever widening gap between rich and poor, but to war: if Callaghan had called an election in the autumn of 1978, it is unlikely that British troops would now be fighting in Iraq.

The victory of Margaret Thatcher - and the triumph of the ideals she represented transformed not only Britain, but the world. The former communist countries of eastern Europe do not follow the progressive, mixed economy model which brought the fastest rise in living standards for ordinary working people in the history of the world, but the rapacious, socially destructive capitalism which Thatcher championed. And when Labour did eventually come to power 18 years later, it did so with a neoliberal programme that owed more to Thatcher than it ever did to any previous Labour party leader.

It's a sobering thought that had Jim Callaghan simply done what everyone expected him to do on that fateful September day 29 years ago, "Thatcherism" is a word the world would never have heard of.


Anonymous said...

I've heard people describe a post like this as "going Harry Turtledove," in honor of the American alternate-historian. That's a descriptive comment as opposed to a evaluation.

While I like you as a person, and enjoy reading your blog, I hate your suggestion of moral equivalence between the US and the Soviet Union with the white-hot heat of a thousand suns.

Have you read The Gulag Achipelago? After the recent death of Alexander Solzhenitsyn, I've read reports of many bloggers saying that that book disabused them of the moral equivalence notion.

Here's one such account by Minnesota treasure James Lileks, and here's one by Minnesota economist King Banaian.

If Solzhenitsyn had read your post, here's what he would say to you (a quote from Gulag):

Oh, Western freedom-loving "left-wing" thinkers! Oh, left-wing labourists! Oh, American, German and French progressive students! All of this is still not enough for you. The whole book has been useless for you. You will understand everything immediately, when you yourself — "hands behind the back" — toddle into our Archipelago.

Neil Clark said...

Hi Douglas,

Thanks for your post.

I've always made it clear in my writings that I do not support the hard-line authoritarian Stalinism which Solzhenitsyn experienced. But there's a world of difference between old-style Stalinism and its gulags and the more liberal communist regimes which began to emerge in the 60s and 70s, such as Kadar's Hungary. Kadar, don't forget was imprisoned himself under the Hungarian Stalinists.
Goulash communism didn't do gulags. No one is saying that it was a perfect model, but the hope in the 70s was that western european countries would become progressively more socialist/collectivist (as many of them, including Britain and Austria, were doing) and eastern countries progressively less authoritarian- and they would meet in the middle in the best of all possible worlds-part Kadar's Hungary- part Kreisky's Austria. A truly mixed economy, with state health care, a welfare state and progressive taxation to ensure that there were no huge disparities in wealth.

On the subject of Solzhenitsyn, have you read any of his later writings, in which he attacked the west's obsession with materialism and aggressive western foreign policy?

Solzhenitsyn didn't just rail against Stalinist dictatorships and imprisoning people in gulags for the 'crime' of holding the wrong view- he also railed against the excesses of modern turbo-capitalism.

Best wishes,

Anonymous said...

"The great Thatcherite myth that late 1970s Britain was the "Sick Man of Europe" is not borne out by the facts. "The outlook for Britain is better than at any time in the postwar years," was the verdict not of a Labour party propagandist, but of Chase Manhattan bank's chief European economist, Geoffrey Maynard."

There was also a book in 1978 called "Britain: A Future that Works", by Bernard Nossiter of the
Washington Post. Part of his thesis was that the UK, unlike America, had got the balance roughly right between work, leisure and remuneration. We did not want to work ourselves into an early grave, preferring to have less money but more spare time. Mrs Thatcher came along and destroyed all that, making us much more like the USA.

I have long wanted to rescue 1970s Britain from its undeserved bad reputation, and wrote briefly about this at . Jamie Graham's comment on that blog piece is germane to what you call the Thatcherite myth and how that myth is perpetuated by the right-wing press.

On a small point, I balk slightly at your description of Peter Shore as a socialist. I think he was only ever regarded as "left wing" because he was so stridently anti-EEC. I think he was basically an English nationalist.

Neil Clark said...

Peezedtee: many thanks for your very informative post.
Thanks too for the info re the Bernard Rossiter book, which I'll certainly look up.
Trashing the 70s- and massively exaggerating the problems of those times, is of course a key part of the great neoliberal rewrite of history. The dominant narrative says 'there was no alternative' to Thatcherism and economic 'reform'. But of course there was, only it was an alternative that did not deliver quite so many profits to global capital. The Lab govt of 1974-9 did a great job when you consider that (a) they had to deal with the aftermath of a quadrupling of the price of oil
(b) they never had the benefit of massive North Sea oil revenues which the Thatcher govts had.

Re: Peter Shore, I class him as a socialist because of his support for progressive taxation and public ownership. He once said it was an intellectual cop-out to talk about a fairer, more equitable economy without tackling the issue of public ownership.

All the very best,