Problems for Labour Governments
The enthusiasm of Labour Party supporters for their government is not what it used to be. They voted for Wilson’s government last October—just sufficient of them to give it a bare majority—and no doubt they are convinced that it is more deserving of support than the Conservatives, but there is not the fine careless rapture with which Labour voters heralded earlier Labour victories. In politics it is often better to travel hopefully than to arrive, and certainly the end of each Labour government has been in an atmosphere of disappointment among even its most loyal friends.
The “Government of Brains”
It would probably surprise many of those who voted Labour at the last election to be told that it is now over forty years since the first Labour Government took office, in the winters of 1923, and that the present Labour Government is the fourth—the fifth if Attlee’s second government, after the election of February 1950 is treated as a separate administration.
Although the first Labour Government claimed to be “the Government of brains” its year of uneasy office made little difference to the way things had been going before it came in. It was not the largest party in the House of Commons: the Tories had 258 M.P.’s, the Liberals 158 and the Labour Party 191. But the Liberals wouldn’t support a continuation of Tory government so it fell to the Labour Party to become a government dependent on Liberal votes.
The main issue of the election had been the Tory government’s proposal to introduce a wide range of duties on imports. This was opposed by the Liberals and by the Labour Party, both of which at that time were devotees of free trade. In view of the fact that the Labour Party is now as much committed to protective tariffs as the Tories (and signalled its entry into office by the 15 per cent import levy) it is interesting to read in the Labour Party’s 1923 election manifesto that “tariffs are not a remedy for unemployment. They are an impediment to the free exchange of goods and services upon which civilised society rests. They foster a spirit of profiteering, materialism and selfishness, poison the life of nations, lead to corruption in politics, promote trusts and monopolies and impoverish the people”.
True to his Party’s pledge the 1923 Labour Chancellor, of the Exchequer, Snowden, reduced taxation on food by £24 million a year to keep down prices, though when they went out of office the retail price index was slightly higher than when they went in. Unemployment had fallen a little, from 1,340,000 to 1,247,000 and wages had risen by five or six per cent.
One of the promises of the Election Manifesto was that, if elected, Labour would at once introduce a “capital levy” on everyone owning £5,000 or more and use it to pay off the National Debt and reduce taxation. For various reasons, including their lack of a Parliamentary majority, the Labour Party dropped the scheme and never revived it again, though it had been presented as an indispensable measure. If they had enacted the levy it would have been of no interest to workers: all that it would have achieved would have been, as one of its supporters admitted, “a transfer of wealth among wealthy persons”. It would have deprived property owners of some property but at the same time reduced their tax burden.
When, after a year, the Labour government were defeated in a “vote of confidence” and resigned, it was not over some action to show that they desired “the suppression of the capitalist system” as they had declared in Parliament only a few months before taking office, but over the withdrawn prosecution for sedition of a member of the Communist Party.
Some sections of the Labour Party drew the conclusion from their disappointing first experience of government that they should not again take office without a majority in Parliament. A resolution to this effect was moved by the late Ernest Bevin at the 1925 Labour Party conference but was overwhelmingly defeated.
The Government of Disaster 1929-1931
When the Labour Government came back in May 1929 they were full of optimism. They were now the largest party, with 287 M.P.’s against Tory 260 and Liberal 59. They had seen the continued decline of the once powerful Liberal Party and the failure of Lloyd George to stage a Liberal come-back in spite of his pledge that within 12 months the Liberals would reduce unemployment to “normal levels”. Unemployment had for several years been above the million level and the new government, under J. R. MacDonald (who also had led the first government in 1923-24), gave priority to dealing with it. They gave J. H. Thomas, the railway union leader, the ministerial responsibility, helped by a committee of three, one of whom was Oswald Mosley. MacDonald (like Attlee and Wilson in later governments) collected round him an Economic Advisory Council, consisting of economists, industrialists and others to advise him on economic problems; but, as Henry Pelling remarks, “unfortunately, the experts could not agree and Snowden preferred to follow the recommendations of his Treasury officials”. (Short History of the Labour Party.)
It was later confessed by Thomas that he had been advised by an “expert” that unemployment had at last reached its peak and was about to decline; and he had believed this. Unfortunately for Thomas, the government were not at the bottom of the depression but at the edge of another trade decline, the biggest for half a century. The unemployment figures started rising almost immediately the Labour Government took office. At the time of the election in May 1929 unemployment was 1,165,000; a year later 1,759,000 and two years later 2,702,000. What was happening was a long term decline of some big British industries, coal, cotton, shipping among them—and a world-wide decline of trade, with record unemployment in America and Europe alike.
Many people have said in the years since the second world war how happy they would be if only prices would not go on rising. The years of the second Labour Government were years of falling prices—but few were happy about it and wages were falling too.
Government revenue was not growing as fast as Government expenditure—a situation which was pushing them towards reductions in the pay of civil servants, teachers, police, etc, and towards cuts in unemployment pay. At the same time exports were declining heavily month by month and producing the symptoms of the “adverse balance of payments”—too few exports to pay for imports and the consequent selling of British Pounds by foreign holders for fear of devaluation.
The tension split the Government and the Labour Party. Prime Minister MacDonald, along with Snowden, Thomas and some others formed a National Government with Tories and some Liberals while the rest of the Labour Party went into opposition. Ironically it was the National Government, formed “to save the Pound” which proceeded to go off the gold standard.
Attlee’s Turn in 1945
For the first time in its history the Labour Party at the election in July 1945 obtained a clear Parliamentary majority of 146 over all other parties, 393 in a House of 640, the Tories having 213 and the Liberals 12. There was nothing now in the political balance of parties to prevent Labour carrying out the Nationalisation and other measures named in their Election Manifesto.
Governments sometimes flagrantly break their election pledges and fail even to try to do what they said they would do. It was the fate of the Labour Party’s first majority government that, having carried out a lot of its specific pledges, nobody liked the results very much, not even the Labour supporters who had shouted for them. This was true for example of Nationalisation—the railwaymen and miners soon found that it was only a different name on the industry, and any misguided gratitude the electors may have felt for the new Health Service and National Insurance Scheme did not last very long.
On a superficial view the Government’s financial position was a happy one. Had they not ended the war and cut armament expenditure to half, and could they not devote the money to social reforms? In fact what they faced was industry running at a production level well below that of pre-war; the need to get aid from America; difficulties in getting foreign produced raw materials owing to war-time destruction; and the problem of the desperate shortage of housing, made far worse than usual by the war.
Capitalism has many faces at different times. In 1929-31 the Labour Government’s biggest worries were mounting unemployment, falling prices and falling exports. In 1945-1951 they were equally worried by scarcities of labour, scarcity of materials, inability to take advantage of overseas “sellers markets”, and by rising prices. They had promised stable prices and had to explain why prices steadily rose and why wage rates were lagging behind them.
History was to have an ironical revenge on them about the maintenance of the Pound. In 1931 the Attlee group in the Labour Party, which did not follow MacDonald into his coalition with the Tories and Liberals, had scoffed at the gold standard and argued that it was something better got rid of: they were only too pleased to see MacDonald’s government unable to save the Pound. But in 1949 the position was reversed: now it was the Labour Party led by Attlee which, after repeatedly pledging “no devaluation”, and declaring that devaluation would cause prices to rise, suddenly devalued by thirty per cent. (The present Labour Government under Wilson is promising not to go in for another devaluation.)
Rising prices had quite a lot to do with the eventual defeat of Attlee’s government in the 1951 election, after they had staggered along between 1950 and 1951 on a very narrow majority. The outbreak of the Korean war in 1950 drew the Labour Government into a massive programme of rearmament at the same time as the war had sent prices of many raw materials rocketing. The rise of 10 per cent in retail prices in 1951 was the sharpest for years and must have influenced many voters “to give the Tories a chance”.
What has experience of governing, spread over forty years taught the Labour Party? It has possibly made them more knowledgable in handling capitalism’s financial and economic problems, though their Tory opponents profess to doubt it; otherwise all it appears to have done is to induce them to drop even the pretence of replacing capitalism by Socialism about which they used to declaim before they first took on the job of administering British capitalism.
H.