Putting the Debate over Labour ‘Cuts’ into History
Open Democracy, January 14th 2010
The mainstream media coverage of the future of public spending has become entirely focused on the need for future spending cuts with the only issue left in doubt that of timing, the degree of brutal language used and the areas which are supposedly meant to be exempt: the latter thus combining hardness and special pleading!
Nick Clegg, Lib Dem leader, got into a small amount of bother transgressing the boundaries of this new consensus when he talked of the need for ‘savage public spending cuts’.
Larry Bogad of the University of California, Davis earns special marks for describing the power of this ideological dogmatism as a ‘hegemonologue’ (1). Whether this catches on we will see, but it is clear that the determination of the elites who gave validation and gained from the ideas of the ‘weightless world’ and ‘the knowledge economy’ are not going to give way voluntarily, or because the evidence is stacking up against them.
This ideological prism is combined with a very personalised, superficial interpretation of domestic politics in which the stock of Gordon Brown is low and not trusted, while David Cameron’s is higher and trusted more.
Thus, Brown’s recalcitrance in coming out and admitting the need for public spending cuts has been used to point out his stubbornness, lack of clear-headness and inability to be honest. The entire Labour debate is presented as the need to get Brown and his acolyte Ed Balls to admit what everyone else has: that there have to be stringent cuts.
Normally this debate is conducted without any reference or understanding to British political history, and so Daniel Finkelstein in ‘The Times’ has to be thanked for introducing history to current events in his recent piece (2). However in so doing he frames the entirety of Labour history through a perspective to justify the dominant political and economic interpretation of the present crisis, which makes you question his interpretation of past events at least a bit.
Basically Finkelstein argues that the Brown/Balls disagreement with everyone else in the Labour Cabinet is the time honoured debate Labour have in government when things go wrong about the need and scale of cuts in public spending:
The scene of senior Labour men arguing about public spending is one of the most common in the party’s history. Every Labour Government we have had has been punctuated by a deep division of this sort, requiring late night summits and dramatic deals.
Finkelstein cites Ramsay MacDonald, then Prime Minister, and Philip Snowdon, his Chancellor in 1931 trying to win the Labour Party to cuts, particularly to unemployment benefits. They failed to and defected to the Tories. He then cites Labour in 1951 in the dog days of Clement Attlee’s administration debating Hugh Gaitskell’s proposed cuts. Then comes the bitter and agonising debate in 1976 under Jim Callaghan when at the behest of the IMF Labour had to preside over major public spending cuts which heralded the onset of the age of monetarism.
This is where the politics and mindset of groupthink and clinging to economic orthodoxy begin to become transparent. The 1931 cuts were at the behest of City financers to maintain a classical economic approach as the pound came under threat and the country’s commitment to the Gold Standard (a form of managing currencies in relation to the price of gold). The main targets of the pain were the poor and suffice to say like many other crises once Labour fell from office the need for economic conformity diminished and Britain left the Gold Standard while the pound devalued.
The 1951 crisis saw Labour pay for the rearmament of the Korean War with the introduction of prescription charges, eye and dental charges in the NHS a mere three years after the service was set up. This episode led to the resignation of three Labour Cabinet ministers including Nye Bevan, and the start of a decade of Bevanite v. Gaitskellite intra-party feuding; the sort of stuff which still makes the Brown dog days seem small fry!
The 1976 crisis, we now know in retrospect saw Labour taught a lesson by the markets and IMF to see if it could deliver savage public spending cuts. Jim Callaghan and his Chancellor, Denis Healey, delivered, only to find out later that the supposed scale of cuts had been much over-stated and that much of the pain could have been avoided.
Finkelstein makes the ridiculously superficial point, also citing the 1968 mini-crisis involving Wilson post-devaluation, that all of these examples show the need of Prime Minister and Chancellor to remain united, whereas the nasty Gordon Brown is on the opposite side of the argument from his Chancellor, Alistair Darling.
The real lessons are much deeper, more profound and alarming. I would not go as far as Seamus Milne in seeing this debate put Brown and Balls ‘on the side of the angels’ in terms of current policies (3).
What the current political dispensation shows is that the New Labour experiment of governing in a way which made peace with the City and finance capital has come to a close. The New Labourites had done their history and recognised that the power of folklore in these Labour Government crises showed that you couldn’t buck the market or defy the City. The Bennite version of Labour history post-1976 IMF crisis had tried and played with this one, before the party came to its senses.
Thus Labour is being brought to heel by the realities and limitations of the City and the markets, with despite everything a deeper, wider commitment in politics, media and elite opinion to the dogmas and faiths which produced this awful mess.
Finkelstein throws a lot of invective on Brown commenting that he is ‘a poor leader, that no one likes him, that he is a loser’, but that this lets him off lightly, concluding, ‘But this verdict, damning though it is, is too kind’. Such personalised attacks, reminiscent of the way the media systematically treated Tony Benn or Neil Kinnock, tells us that something is up, and that the prejudices of the anti-Labour press (and Murdoch part of it) are now in full flight.
More importantly, Finkelstein has done us the service of bringing history into this debate. The Labour cuts demanded in the 1931 bankers crisis, 1951 over the Korean War, 1968 after devaluation, and 1976 and the IMF crisis, were all more about political imperatives than economic need. In retrospect, it is now clear that each of these episodes saw the need for cuts completely over-stated, and that the real driver of events was the power of financial markets and bringing Labour and any idea of alternative political paths to heel.
Does Gordon Brown, imbued as he is in Labour history, remotely understand this state of affairs at the end of the longest period of Labour Government in UK history? Seamus Milne will push the argument that Brown and Balls are taking a more ‘left’ line than Mandelson, Darling et al, but the great ship of Labour has dramatically deformed and distorted itself for such definitions to have meaning any more. And isn’t there a little bit of such thinking linked to post-election manoeuvring of how David and Ed Miliband, Ed Balls and the rest position themselves as the ship goes down?
Yes, we need a historical and economic interpretation of current events, but not just one about bankers and financial markets ala Finkelstein. And we also have to understand the historic failure of Labour to ever amount to being a genuine radical force in British politics, and that is a story which began long before Blair, Brown and New Labour.
1. Many thanks to Stephen Duncombe of New York University for this reference. For Larry Bogal’s writings see: http://www.lmbogad.com/word.html
2. Daniel Finkelstein, ‘The same old row. But with one big difference’, The Times, January 13th 2009, http://www.timesonline.co.uk/tol/comment/columnists/daniel_finkelstein/article6985460.ece
3. Seamus Milne, ‘ Brown may have survived. But the coup was a success’, The Guardian, January 14th 2009, http://www.guardian.co.uk/commentisfree/2010/jan/13/brown-coup-blairites-in-charge