Is there a Parliamentary road to social democracy?

In an alternative universe, the British Left would now be readying itself to fight the massed ranks of the establishment. Following Labour’s victory in the 2019 general election, the civil service, the military, the City of London, the CBI, the media, the judiciary, the Conservative party, a significant section of the Parliamentary Labour Party, even foreign governments would all see themselves as engaged in a life or death struggle to undermine the implementation of Prime Minister Jeremy Corbyn’s red-blooded socialist programme. Parliamentary coups, bureaucratic stalling, capital flight, manufactured economic crises, even military disobedience will all be on the agenda.

Parliamentary socialism would be put to the test just as it was under Harold Wilson’s governments of the ’60s and ’70s – just to seal the sense of historical continuity, Corbyn had a cat called Harold Wilson.

As we know now, none of this will happen. It isn’t necessary. Jeremy Corbyn was successfully undermined before he got to Downing Street. The irony that what has actually happened in the first months of 2020 is a level of public spending and economic intervention that Corbyn never dreamed of should be tempered by the realisation that none of it undermines the wealth or power of society’s elite – in fact it is likely to solidify it.

We are looking at two general elections where Corbyn’s chances were, possibly fatally, torpedoed by his own side. In 2019, Corbyn’s alleged personal responsibility for allowing antisemitism to run riot in the Labour party became, after Brexit, the issue of the campaign. It undoubtedly had an effect, likely cementing the popular sentiment that he should never be allowed to become Prime Minister. But it was an inversion of the truth.

However, the most revelatory and sobering aspect of the whole sordid affair is that all this effort was expended to stop a political programme that wasn’t even socialist.

It might seem semantic to point out the differences between democratic socialism and social democracy but they do exist. Whilst the former seeks changes in ownership and the disappearance of a small class of capitalist owners, albeit gradually, the latter is content with a mixed economy, some public ownership, regulation and a strong welfare state. Social democracy is a modus vivendi with capitalism.

Whilst it is true that Labour under Corbyn mulled over different forms of ownership, its political programme, expressed in the two manifestos of 2017 and 2019, never went beyond the boundaries of social democracy. This was expressed in renationalising utilities, ending NHS privatisation, raising corporation tax (to below what it was in 2010), ending the Work Capability Assessment, creating a Ministry of Labour, setting up a National Investment Bank and using the state to orchestrate an economy-wide shift to renewable energy. In terms of ownership, Labour went no further than promising that one-third of company boards be reserved for “worker-directors”, territory briefly occupied, but hurriedly vacated, by Conservative PM Theresa May.

In the context of four decades of neoliberalism in Britain, this platform was undoubtedly radical, certainly admirable, but it wasn’t socialism. In the words of conservative journalist Peter Oborne, Corbyn was “asking for nothing more drastic than a restoration of the social democratic settlement that prevailed in Britain between the end of World War II up to the rise of Margaret Thatcher in the 1980s.”

The two ‘Corbynite’ manifestos didn’t mention the word ‘socialism’ once – in contrast, for example, to Harold Wilson’s 1974 manifesto which proudly proclaimed its “socialist aims”. Even Evan Durbin, the intellectual leader of Labour’s right-wing in the 1940s, thought it axiomatic that Labour was a democratic socialism party that, once in power, would nationalise industries employing “one third of the wage-earning population”. Corbyn proposed no such thing.

That is why the idea, propounded by current shadow foreign secretary Lisa Nandy during the Labour leadership election, that Corbyn wanted to “nationalise everything” was such a lazy caricature.

One may wonder why Corbyn’s mellow social democracy provoked such a furious reaction, not only among Conservatives, but from his own side. My guess is that Britain’s political settlement, created by Margaret Thatcher and congealed by Blair, Brown and Cameron, has enticed so many powerful people onto the PFI-privatisation-outsourcing gravy train that even mild, post-war consensus leftism, was perceived as an existential threat.

But the elite rejection of the social democratic option will have consequences far beyond squashing the reluctant ambition of Jeremy Bernard Corbyn. The raison d’être of the Parliamentary Left since its beginnings in the late 19^th century, has been that capitalism, by dividing society into those who own (lots of) property and those who don’t – a class society in other words – inevitably created discontents which have to ameliorated by government. If they aren’t, other lethal solutions – imperialism or Fascism for example – will step into the breach.

In the 1990s and early 2000s, it appeared as if this dilemma had been deftly sidetracked. Rising wealth and ever wider home ownership (the “patrimonial” capitalism of Thomas Piketty) could plausibly be seen as nullifying capitalism’s discontents. This inherent satisfaction might manifest itself in unattractive ways – turnout fell to 59% in the 2001 general election for example – but apathy, more politely ‘electoral fatigue’, was infinitely preferable to destructive social conflict.

Such apolitical complacency has been blown apart in the last decade. Merely because the beneficiaries have been, in general, the populist right rather than the Left, doesn’t mean that the sources of discontent – lower wages, worse employment conditions, vanishing opportunities for home ownership – are not real. It might be argued that, paradoxically, the driving forces behind right-wing populism come from asset-rich older generations, while younger cohorts often without property – the under-40s for example – are less prone to its allure.

However, this was always a simplification and ignores how Corbyn did better – nearly achieved power in fact – when he was an anti-establishment figure than when he tried to make peace with the neoliberal wing in his own party. More to the point, when the dust from covid-19 settles, the coming economic conditions will likely be more extreme than those of the 1930s’ Great Depression (which led to Nazism and world war). Mass unemployment, bankruptcies, evictions, depleted incomes, even greater concentration of economic power all call for a social democratic alternative just at the point when its British iteration at least has been banished to the shadows. Alternative Parliamentary ‘safety valves’ – the Liberal Democrats and also the Greens – are either discredited or hampered by a shallow marketing approach to politics, attempting to hoover up voters nobody else wants.

We may well come to see what John F. Kennedy meant when he berated those who make a peaceful revolution impossible.

Last time it was different. A review of Ken Loach's 'The Spirit of '45'

If you listen, as I do, to the American economist Richard Wolff’s one man alternative news service, you’ll find one historical theme and name referred to with metronomic regularity. That of the New Deal and Franklin Roosevelt. During the last deep crisis of capitalism during the 1930s, Wolff relates, the American state didn’t react by embracing austerity but rather became prodigiously more generous. Even though tax receipts shrunk markedly as unemployment hit 23%, the government spent more money and reinvented itself as the guardian of public welfare. In the depths of the Great Depression, unemployment benefit and old age pensions were created and 12 million unemployed people were given jobs in state conservation or cultural projects.

Last time it was different.

Although the action takes place a decade or so later, Ken Loach’s documentary, The Spirit of ’45, provides, for Britain, a similar corrective to pervasive historical amnesia and the fatalistic assumption that austerity is the only conceivable response to economic hardship. The film is about the achievements of the Labour government elected in the immediate aftermath of the Second World War.

Here is the trailer:

Then the country really was broke. Britain, as government minister Douglas Jay relates in the film, had sold all its foreign investments, lost all its ships in war and run out of dollars. Yet there were no homilies about inescapable hardship and living within our means. Rationing continued but the government, in the six years of its lifetime, was still able to achieve a phenomenal amount. The National Health Service – free healthcare – was created, 2-300,000 council houses built a year and the transport system and gas and electricity were nationalised.

People came back from the war imbued with the spirit that “anything was possible” says one contributor. And so politics changed.

Where did the money come from?

But whatever the moveable limits of the possible, you can’t defy economic gravity. How were the accomplishments of the ’45 Labour government afforded?

One explanation is that many of its landmark policies didn’t cost a great deal. The NHS was formed, although it still lacked medicines, and the railways were nationalised. But neither cost the earth. By contrast, it has been estimated that the cost of creating a market in public healthcare, which current UK government legislation is doing, is a cool £20 billion a year. Nationalise the railways now in Britain, and you would save £1.2 billion annually and wouldn’t have to gift billions in subsidies to Richard Branson. Squirreling away tax in contriving private profit, is not, shockingly, a money saver.

But a more complete explanation would have to take account of the fact that the ’45 Labour government was not in thrall to supply side fixations and so taxed the rich and business. The highest rate of personal taxation back then was 97%, in contrast to 45% now. Corporations were taxed by a mixture of income tax and a tax on profit distributed to shareholders, set at 50%. Present corporation tax was created by another Labour government, in 1965. It was 53% in 1979. Now it stands at 20%.

Thus a lot of money was available to the ’45 Labour government that is now siphoned into consumption by the very rich and to the shareholders of large companies.

But tax rates are not set in a vacuum. The reason why they were so high after the war on corporations and the rich is that the holders of private economic accepted, for a time, that they were a price worth paying to escape a far worse fate. As the Conservative, Quentin Hogg, rationalised in 1943, “if you do not give the people social reform, they are going to give you social revolution.”

According to Richard Wolff, a similar modus vivendi was reached during the New Deal in the US. Roosevelt essentially gave an ultimatum to economic elites. Either you accept high tax rates – the highest band in personal income tax was 96% - and cough up the money for job and social insurance programmes, or the other people coming down the road after me – socialists and communists – will cut you a far worse deal. Enough of them accepted the bargain.

Now economic elites are not remotely threatened. There is no danger they can spy on horizon. So the result is austerity.

Sepia tinted history?

But though The Spirit of ’45 conveys the ‘where there’s a will, there’s a way’ post-war atmosphere, it also brushes over the limitations of the ’45 Labour government and embraces a deliberate amnesia of its own.

“The central idea was common ownership,” explains Loach in the insert that accompanies the DVD. “Production and services were to benefit all.”

Clause 4 of the Labour Party’s constitution (the part that Tony Blair abolished, anointing New Labour) is emblazoned on the screen.

“To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange.”

And there it ends. But Clause 4 doesn’t, in reality, end there. The film mysteriously omits the last phrase – “and the best obtainable system of popular administration and control of each industry or service”.

According to Wikipedia, Clause 4 is generally assumed to refer to nationalisation, but “close reading of the text shows that there are many other possible interpretations” – “common ownership” could mean municipal ownership, worker cooperatives or consumer cooperatives. But such a close reading is not possible from viewing The Spirit of ’45 because the viewer is given a truncated version of Clause 4.

The reason, I think, the film overlooks this element of Clause 4 is that the ’45 Labour government did precisely the same thing. The interpretation of Clause 4 it chose was state ownership. The public corporation in which ownership switched but, very often, the senior management remained the same.

This is very important. There are allusions to this in the film. “I’m not saying it wasn’t a better system because it was,” says Tony Benn, “but the idea that people who worked in an industry should have any say in how it was run was completely foreign.” A miner, in archive footage, says that the “same tyrants” were in charge after nationalisation.

But The Spirit of ’45 does not dwell upon these flaws and they were the very features that enabled the ’45 settlement to be overturned. By the 1970s, companies like BP, ostensibly nationalised, were not only intrinsically undemocratically organised, they were actively working against government policies when it conflicted with their commercial interest. 

The top down nature of these “public corporations” mirrored the way their private sector equivalents were organised. The only way the public could exert influence was very indirectly through electing a government, and even that method, as BP shows, was very much honoured in the breach. When Margaret Thatcher came along promising to abolish “socialism” the senior managers in these public corporations, encouraged by the prospect of mushrooming pay and share options, were very happy to oblige with the new project, while the wider public did not see enough to defend. There was something intrinsically wrong with British “socialism” and The Spirit of ’45 seems to want obscure what that was.

Then and Now

Nearly 70 years have elapsed since the election of that Labour government and while there are clearly analogies between then and now, in significant respects the situation we are facing in 2013 is vastly different.

“The economy had to grow very rapidly as the end of the Second World War,” says one interviewee, Raphie de Santos. Britain, not completely decimated by war, in contrast to continental Europe, had a vital role to play in producing things. “The world actually needed a lot of manufactured goods to be made,” de Santos goes on. Britain had to fill this gap in production and that is why full employment was an aspiration that could be fulfilled.

This situation is in wild contrast to now where there no dearth of manufactured goods. Quite the opposite, there is a glut of products. There is no lack, for example, of cars in the world. “Too many cars, too few buyers”, as The Economist magazine puts it. Last time really was different.

The government is indebted now as it was in 1945. In fact, the government was far more indebted in 1945 and still managed to achieve and create; the polar opposite of austerity. But corporate and consumer debt are inescapable feature of today’s landscape, absent in 1945. Real wages in Britain have dropped by 8.5% since 2009. There was scope for massive growth in the economy in way that doesn’t pertain now.

But The Spirit of ’45 is, ultimately, about an intangible, yet real, social atmosphere. You were your brother’s and your sister’s keeper, says one contributor. It was all for one and one for all, says another. If anything should be imported, unadulterated, from that age into this, it is surely that spirit. Because we need it.