Friday, 20 July 2012

All The Frightened People Running Home Before Dark


The last glimpse of a mainstream political party not assuming that Britain’s future lay in ‘the service economy’ (in general) and the City (in particular) was in 1988 when the Labour Party was doing its policy review after the defeat of 1987. The economic part of that review was done by a committee chaired by Bryan Gould MP. Gould represented a current within the Labour Party and wider labour movement at the time which was hostile to the bankers. It had concluded that the key structural conflict in Britain wasn’t between the classes, the Marxist view, but between the interests of the domestic and overseas sections of the economy; which in shorthand boiled down to the City on the one hand and manufacturing on the other. 1 This group included Neil Kinnock, as his 1986 book, Making Our Way, shows, and Bryan Gould, who was appointed by Kinnock to chair the committee on economic policy. Gould’s committee duly produced a detailed analysis of why the bankers had too much power and how to reduce it. 
We still don’t know why the Gould report was dumped. My guess would be that the group around Kinnock wanted to get elected more than they cared about the state of the British economy or the fate of its citizens; and having lost two general elections, decided that the bankers were too powerful to challenge. By this time – 1988/9 – the City had been largely sold off to American banks in the so-called big bang of 1986 and was well on its way to being an extension of Wall Street; and thus to be anti-City of London increasingly meant being perceived as anti-American. But for a while a Labour Party which was explicitly an anti-City of London party did seem a real prospect. For whatever reason, the policy review document on the economy was abandoned and Labour began the long process of making itself acceptable to the City of London – even though the City then was only about 2% of the British economy.

2 comments:

Phil Knight said...

I think the problem with British industry was that at the beginning of the 70's, it basically had to decide between massive reinvestment (e.g. suppressing profits, dividends and wages) or running itself into the ground to squeeze out whatever profitability remained.

And it chose the latter, I think largely because unlike say the Germans in the 90's where they nationally disciplined themselves in order to absorb the costs of reunification, British people don't believe in making sacrifices in peacetime.

I think this is part of the underlying reason for the industrial unrest, which seemed to break out randomly and irrationally - really everybody deep down knew that they had to get as much as they could before it all caved in - both management and workers.

So after that it was up to the financiers to conjure up ways of generating revenue, which they did in spades.

David W. Kasper said...

I think it was more following a US-led doctrine. By the time of Ford, the US-based ruling class had taken a lot of knocks, so had more time for cranks like Friedman and Hayek (gurus of the IMF etc). Germany's strategic position in the Cold War gave it more soc-dem leeway IMO.

But that's not to say Britain had no influence on the matter. By the 80s, the Labour party capitulated to Thatcherism's excesses via different ways (including the 'breakway' SDP). The problem remains that anything 'left' in this country still orbits around the labour party in one way or the other. There's some element of not being able/willing to sacrifice (the Miner's strike being a major example) but there's so much international top-down skullduggery with these things that 'the British public' isn't really left with much choice at the end of the day.