1974

Yesterday, I have mainly been watching the Parliament Channel. Well, not really, but I did spend some time during the day, popping back to it, as they were playing a re-run of the October 1974, General Election coverage. Partly for nostalgia, but also for political comparison, it was very interesting. The most obvious thing to come across was how all of the right-wing Labour MP's they had on, such as Brian Walden, Bob Mellish and so on, all came over as left-wingers compared to 95% of today's PLP. How far we have fallen. But, it was also interesting to note how many similarities between now and then, were highlighted by the coverage, not just in relation to the EU referendum. 

The day, before, the Parliament Channel had covered the February 1974 election. It was called in the middle of a Miners Strike that had led to a three day week, which itself was less economically damaging than the lockdowns that the Tories are now imposing, goaded on by Labour. In 1974, the three day week did not see a too marked drop in GDP, because productivity rose, with nearly as much produced in the three days as was normally produced in five. The lockdowns, by contrast have caused a huge drop in GDP, along with further drops in an already low level of productivity. 

Tory Prime Minister, Ted Heath, called the February election on the basis of trying to beat down the Miners, and the support for them from the rest of the labour movement, with the slogan “Who Rules Britain?”. The voters answered, “Not you, mate!” Labour also failed to win a majority, but established a minority government. The miners won a big pay rise and went back to work, but the economy was in a mess, as with other economies. The immediate spark for that economic mess was the quadrupling of oil prices, a OPEC used oil as a weapon to attack all those developed economies that had supported Israel, as it engaged in yet another period of Zionist expansion into Arab lands, taking over more of Palestine, as well as part of Egypt and Syria. However, the real cause was much deeper. 

The fourth long wave uptrend had started to falter in the late 1960's, and by the 1970's, global capitalism had entered a new crisis phase of the long wave cycle. It was marked by the onset of a generalised crisis of overproduction of capital. A crisis of overproduction of capital arises when capital has been accumulated to such a degree, relative to labour/the social working day, that it is no longer possible to expand surplus value via absolute surplus value, and where this demand for labour means that wages rise, causing relative surplus value to fall. In the 1950's, as the new uptrend had got underway, there was abundant labour supplies, with soldiers coming out of the army, and with all of the labour saving technologies of the 1920's and 30's, meaning that high levels of productivity could bring increases in output with relatively less labour to produce it. 

But, rapid growth soon meant that more labour was required. Married women were brought into the workforce in large numbers, and the Tory government begged immigrants from the Caribbean and elsewhere to come to Britain to provide labour-power for British capital. This increase in the number of simultaneously employed workers increased the social working-day, and the production of absolute surplus value. At the same time, workers were encouraged to work overtime to boost their wages, and they sought higher wages to be able to buy some of the new domestic appliances such as vacuum cleaners, TV's, washing machines, fridges and so on that the previous technological revolution had also brought forward at prices that workers could now afford. 

The 1950's and 60's saw wages and living standards rise sharply, as part of this rapid expansion of capital. By 1960, the first of the baby boom generation, began to leave school, aged 14, and this too provided an increase in workers, the social working-day and absolute surplus value. But, by the early 1960's, even this increase in the workforce was not happening at pace that now was required by the accumulation of capital, as the productivity gains brought about by the technologies developed in the 1930's, and applied in the 1940's and 50's, began to disappear. This was, now, a period of extensive rather than intensive accumulation, with more capital being employed that required additional labour, rather than replacing labour. 

In the 1950's, and 60's, this increasing demand for labour, and rising living standards, meant that workers, particularly in the larger industrial capitals, such as the new car factories, were able to rebuild their organisations. The ability to win pay rises fairly easily, by taking wildcat strikes, strengthened rank and file workplace organisation, and the development of the shop stewards movement. By the 1960's, instead of workers seeking overtime to increase their weekly wages, they began to refuse to work weekends, to demand rises in hourly wage rates as an alternative to overtime, and sought reductions in the working week, along with more holidays. That in itself reduced, or curtailed the increase in the social working-day, and of absolute surplus value. As Glyn & Sutcliffe describe, in the 1960's, this led to wages rising, and squeezing profits. The same phenomenon was described by others in relation to the US, and other developed capitalist economies. It is this condition that leads to generalised crises of overproduction of capital. As Marx puts it in Capital, 

“As soon as capital would, therefore, have grown in such a ratio to the labouring population that neither the absolute working-time supplied by this population, nor the relative surplus working-time, could be expanded any further (this last would not be feasible at any rate in the case when the demand for labour were so strong that there were a tendency for wages to rise); at a point, therefore, when the increased capital produced just as much, or even less, surplus-value than it did before its increase, there would be absolute over-production of capital; i.e., the increased capital C + ΔC would produce no more, or even less, profit than capital C before its expansion by ΔC. In both cases there would be a steep and sudden fall in the general rate of profit, but this time due to a change in the composition of capital not caused by the development of the productive forces, but rather by a rise in the money-value of the variable capital (because of increased wages) and the corresponding reduction in the proportion of surplus-labour to necessary labour.” 

(Capital III, Chapter 15) 

This is the condition that began to arise in the late 1960's, and reached a crescendo in the 1970's. This fall in the rate of profit/profit margin, means that small variations in market prices, quickly turn large profits into large losses. But, the second problem that capital faced was not only this overproduction of capital, but the fact that the same rise in wages and living standards that squeezed profits also meant that workers consumption had risen to levels whereby for many commodities they were now consuming as much as they required. Consumption of food had risen, and cheaper foods had been replaced by more expensive, healthier foods, which was also responsible for workers' life expectancy rising, as many diseases caused by poverty, began to disappear. Even many of those new consumer goods introduced in the post-war period, were now established in most households. You only needed one fridge, vacuum cleaner and so on, and these were durable items that lasted several years. Although we take it for granted today that homes will have several TV's, in the 1950's, and 60's that was unheard of – just watch the first Back to the Future. 

So, capital faced a problem that the profit margin was shrinking as wages rose, and yet the growth in the market was being restricted, because for many wage goods, workers already had enough, and to get them to buy more required large falls in market prices, falls which took the price below the cost of production, meaning that profits turned into losses. Capital was able to string it out for longer, as some of the more expensive commodities became cheaper, and also by increasing the ability to buy using HP and other consumer credit. Cars were an obvious example. In the 1950's and early 1960's, few households had a car. But, by the 1970's, car ownership was widespread. Moreover, unlike things such as washing machines or vacuum cleaners, it was possible to encourage every adult in the house to own a car, and in the 1970's, single people invariably lived at home with their parents. 

This was the crisis of overproduction that arose in the 1970's, both as an overproduction of capital, and an overproduction of commodities. As capital responded to it with Keynesian stimulus to reverse rising unemployment, as firms laid off-workers, it led simply to rising inflation, which led to workers demanding even more pay rises to compensate. The Heath government introduced a sliding scale of wages to try to prevent wages rising too much, and to avoid industrial disputes. That sort of worked so long as the inflation was driven by internal factors, but, in October 1973, OPEC introduced its embargo, causing oil prices to quadruple. This imported inflation, at a time when oil played a central role in the developed economies was more than the mechanism could withstand, provoking the miners to strike. The inflation was a consequence of the underlying crisis of overproduction, and misguided attempts to resolve it via Keynesian intervention, and monetary stimulus. But, the same factors were at play in stimulating inflation on a wider basis. 

The US had been engaged in the Vietnam War, and in huge welfare spending as part of Johnson's Great Society. The US printed Dollars to pay for it, and these Dollars were issued at a fixed value against gold and other currencies. In essence the US could get other countries to finance its spending, because the real value of those Dollars was a fraction of their face value. When other countries decided enough was enough that system too collapsed. Nixon ended Dollar convertibility to Gold, which meant the system of fixed exchange rates collapsed prompting currency wars. Gold, which had been at a fixed price of $30 an ounce in 1971, rose to $800 an ounce by 1980. 

These were the conditions that led to the Labour government of February 1974, and which, when it was re-elected with a majority of just 3, in October 1974, it had to deal. What is interesting watching the interviews of Labour and Tory MP's at that time, is how much it puts this history, and the subsequent history into perspective. In the 1960's, Wilson had come to grief confronting the unions over “In Place of Strife”, the White Paper brought forward by Barbara Castle to try to legislate for industrial relations. It was a typical piece of social democratic, managerialist ideology. But, coming at a time when workers were strong, and winning pay rises and better conditions with little difficulty, the unions were having none of it. 

In 1974, by contrast, Wilson begins by scrapping the existing Tory anti-union laws, and legislating for positive trades union rights in the form of the Trades Unions and Labour Relations Act. Other positive legislation came in the form of the Equal Pay and Equal Opportunities Acts. Labour puts in place the measures that allowed Wilson to form the Social Contract with the TUC. But, these were not the only measures. Tony Benn as Industry Minister, brought forward proposals for the National Enterprise Board, there was support for the development of Worker Owned Cooperatives and so on. Wilson set up the Bullock Committee on Industrial Democracy. 

All of these were well within the confines of social-democracy, and yet compared to the Labour agenda in subsequent years, they appear startlingly radical. And, indeed, as stated earlier, in 1974, those right-wing Labour MP's, were themselves mostly in favour of most of these measures, which had the same kind of tone as those of the 1945 Attlee government. They were seen as the kinds of measures required to revamp a decrepit British capitalism, and to modernise it along the lines of European capital in France and Germany, where this kind of state intervention, and worker participation was taken for granted, much as was described in Wilson's 1960's agenda of The White Heat of Technology. 

We remember, because of the defeat, and because the bourgeoisie writes the history, the defeat of 1983, and John Golding's description of the Manifesto for that year as the longest suicide note in history, but the reality is that the agenda that won the 1974 October General Election, was equally, if not more, radical, in a social-democratic sense, than that of 1983. What was different in 1983, was that the contradictions had become further heightened, the crisis intensified, Thatcher had already had four years in government, and workers were on the back foot, unlike 1974, where they had just ejected a Tory government from office. 

And, again, that is reflected in the comments of particularly the Tory MP's interviewed at the time. You can always expect Tories to claim that Labour is more left-wing than it has ever been, no matter how moderate, or conservative it actually is. But, those interviewed in 1974, were honestly convinced that Labour's Manifesto amounted to imminent socialist transformation, and even the right-wing Labour MP's were happy to defend it. Every Tory MP interviewed spoke about this being a “different kind of Labour Party”. It was they said more left-wing than the Labour Party of 15 years earlier, meaning the party of Gaitskell. Of course, reflecting the fact that the contradictions in 1983 had sharpened, we could likewise say that it then was not the same Tory Party as in 1970, or of 1960, when it too was the party of Butskellism. 

One of the most fascinating comments I heard came towards the end of the programmes, when Robin Day interviewed Edward DuCann, Chairman of the 1922 Committee, and potential replacement for Heath. He was talking about how the new government might proceed, and along with these comments about it being a different, more left-wing LP, he made the following comment, which I paraphrase. 

“This is not the same Labour Party as that of the past. No longer do we have on the Labour benches the former trades union leaders, who could speak from a position of moderation. Instead, we have Labour MP's who are intellectuals, academics and ideologues, and this reflects the fact that the Labour Party is no longer the party of the working-class, but has become the party of the educated middle-class.” 

The characters on the stage change, but the dialogue it seems, remains the same!