The Turning Point
1974 proved to be a turning point not only for Britain, but also for world politics and the world economy. The world slump of that year was the biggest since 1929. The post war economic upswing, fuelled by the expansion of world trade, had dramatically come to an end in the first simultaneous world downturn since the Thirties. Industrial production in the advanced capitalist countries fell by a massive ten per cent between July 1974 and April 1975. In the first half of 1975 output was three-and-a-half per cent down on the previous year, and international trade was 13 per cent lower. The crisis indicated that the “Golden Age” of capitalist expansion was over. Capitalism would never again be able to attain the growth rates of the 25-year upswing.
This slump in turn ushered in a new period of political, social and industrial turmoil throughout the capitalist world. The ruling class was seized with a deep sense of foreboding for the future of their system. “For years the gold enthusiasts have been regarded as barbarians”, noted The Economist. “Now that it is fashionable to talk of the imminent collapse of civilisation, their day has come on Wall Street.”
1974 was a year of revolution. Portugal was rocked by a revolutionary movement of workers, soldiers, sailors and peasants, which succeeded in sweeping away the hated dictatorship of Caetano. In Southern Africa, the events in Portugal resulted in profound revolutionary changes in Angola, Guinea Bissau and Mozambique. In Ethiopia the removal of emperor Haile Selassie ended up in the nationalisation of the economy. In Spain, the dying Franco regime was met with an explosion of opposition and mass strikes. The overthrow of the Greek Junta produced a pre-revolutionary crisis in the country.
This was the most disturbed period faced by capitalism since the inter-war years. The strategists of capital, terrified by the scale of revolutionary events, began to make serious preparations for civil war to defend themselves and their system. The movement in the direction of revolution produced its opposite in the form of counterrevolutionary plots and conspiracies, like the “Gladio Conspiracy” that came to light at the time. It revealed the existence of secret military plans for the instalment of military police dictatorships throughout Europe. The ramifications of this made themselves felt in Britain too.
After the miners’ strike had brought down the Heath government, the question of a military “solution” to the problems of capitalism was not only discussed in the smoke-filled clubs and boardrooms of big business, but was openly debated in the “quality” press. The Times carried a series of articles on contingency measures to deal with a possible general strike situation, drawing on experiences such as the Kapp putsch in Germany in 1920. However, this was not a very pleasant analogy. General Kapp had marched at the head of his army into Berlin but was met with a spontaneous general strike. Unable to find a single stenographer to take down his decrees he eventually marched ignominiously out of the capital, impotent in face of the power of the German workers.
Military exercises took place at Heathrow airport under the guise of “counter-terrorism”. Brian Crozier, the MI6 and CIA “alongsider”, gave regular talks to groups of army officers warning of the possibility of military intervention in British politics. On one occasion, he recalls an audience of officers were so enthusiastic about such a scenario, that they “rose as one man, cheering and clapping for fully five minutes.”
The ruling class were preparing for a showdown with organised Labour. The Tory theoretician and MP Ian Gilmour wrote a theoretical justification for doing away with democracy if it ever posed a threat to the capitalist system. Gilmour was no right-wing crank or obscure figure, but a leading Tory who became a minister in the Thatcher government. In his well-known book, Inside Right, Gilmour showed admirable frankness when describing the real attitude of the ruling class to democratic rights and the rule of the majority:
“Conservatives do not worship democracy. For them, majority rule is a device… Rational, economic, utilitarian man exists only in the imagination of some economists and philosophers. Similarly, majorities do not always see where their best interests lie and then act upon their understanding. For Conservatives, therefore, democracy is a means to an end not an end in itself. In Dr Hayek’s words, democracy ‘is not an ultimate or absolute value and must be judged by what it will achieve’. And if it is leading to an end that is undesirable or is inconsistent with itself, then there is a theoretical case for ending it…
‘Numbers in a state’, said Burke, ‘are always of consideration, but they are not the whole consideration.’ In practice, no alternative to majority rule exists, though it has to be used in conjunction with other devices. And in the Conservative Party, unlike the Labour Party, there is no extreme wing which hankers after the death of parliamentary democracy and the imposition of a dictatorship. If our free institutions are overthrown or totally perverted, the Left not the Right will be responsible. There is no danger of a right-wing coup. Only if the constitution had already been destroyed by the Left, might the Right react and the Left find itself overthrown in its turn by a counter-coup from the Right.”
Stripped of its rhetoric about the dangers of a so-called “left dictatorship”, these authoritarian views represented a dire warning to the trade union and Labour movement. It was clear that if capitalism was in any way threatened by a left Labour government, despite being elected through the ballot-box, it would be faced with a conspiracy and overthrow by reactionary forces, as happened in Chile in September 1973, when the socialist government of Allende was overthrown in a military coup led by General Pinochet, backed by British and US capitalism.
In the aftermath of this coup, 30,000 Chilean workers were murdered in cold blood. Now the US imperialists try to distance themselves from the Pinochet regime and the coup, but at the time Henry Kissinger, a leading member of the Nixon administration and a Nobel Peace Prize winner (!) declared: “I don’t see why we need to stand by and watch a country go communist because of the irresponsibility of its own people.” The CIA, with the authorisation of Dr Kissinger, spent eight million dollars between 1970 and 1973 to destabilise the Chilean economy, sending money to right-wing strikers to bring down the Allende government. In Britain, The Times, echoing the real feelings of the ruling class, welcomed the Pinochet coup: “there is a limit to the ruin a country can be expected to tolerate… The circumstances were such that a reasonable military man could in good faith have thought it his constitutional duty to intervene.”
Ulster workers council
A few months later the potential power of the trade unions was demonstrated once more, although in a distorted and reactionary manner. In May 1974 there was a “general strike” in the North of Ireland, called by the sectarian Ulster Workers’ Council against the “power-sharing” Executive established by the Sunningdale Agreement. Despite the fact that this was a reactionary sectarian strike, involving threats and physical intimidation by Protestant paramilitary groups, it nevertheless showed the power of the organised working class. Workplace after workplace was shut down and the government was impotent to do anything about it. Faced with a strike of power engineers and technicians, the military tried to employ naval technicians to run the power stations, but they were completely baffled by the voluminous instruction manuals! “The army therefore concluded they could do nothing to maintain the power system in Northern Ireland, and by inference anywhere else in the United Kingdom”, stated Robert Fisk in his book The Point of No Return. After a fortnight of trying to use troops to break the strike, the Tories were forced to back down, demonstrating how ineffective military intervention was in any large-scale industrial stoppage.
Following the successful 1972 miners’ strike, the Tories established the secret Civil Contingencies Unit, a government anti-strike operation. This body had direct links with the heads of the military establishment, who had been drawn into, and were a vital component of the government’s strikebreaking plans. At this time, the military top brass, together with high-ranking civil servants, businessmen and politicians were in constant discussions about the dangers of revolution in Britain. To their utter dismay, left-wing “subversives” had come into positions of influence in both the unions and Labour Party.
Brigadier-General Sir Frank Kitson became the focal point for the military option. In his book, Low Intensity Operations, he argued that the main role of the British Army was not abroad, but increasingly at home dealing with social disorder: “If a genuine and serious grievance arose, such as might result from a significant drop in the standard of living, all those who now dissipate their protest over a wide variety of causes might concentrate their efforts and produce a situation which was beyond the power of the police to handle. Should this happen the army would be required to restore the position rapidly.” The Tory Minister of State for Defence, Lord Balniel, rather than condemn it, recommended Kitson’s book in the House of Commons. He said that it was viewed as an official manual, “regarded as being of valuable assistance to our troops.”
It subsequently emerged that senior army officers were considering military intervention in the event of the situation “deteriorating”. But the more sober, and far-sighted sections of the ruling class were not amused. Lord Carver, Chief of the Defence Staff in 1974, recalled that he personally intervened “to make certain nobody was so stupid as to go around saying those things.” That is to say, the problem was not the idea itself but that it should not be publicly expressed. They preferred such plans to be kept under wraps until needed. Carver was also reported to have used his influence at the time to prevent army officers openly establishing right-wing paramilitary organisations. Not that he was against these initiatives in principle, but for the moment they proved counterproductive and highly provocative to the Labour movement.
The industrial battles of the early 1970s resulted in a number of important victories for the working class. Real take-home pay increased by 3.5 per cent a year between 1970 and 1973, four times the rate achieved under the 1964-70 Labour government. The miners’ strikes, in particular, had given rise to increased self-confidence among workers. This had wrong-footed the ruling class. But these successes also served to produce a semi-syndicalist mood amongst certain sections of union militants – who regarded the trade union struggle alone as sufficient in dealing with the Tories and the employers. The fall of the Heath government certainly tended to reinforce this outlook.
Nevertheless, the election of the Labour government in 1974, despite being in a minority position, created high expectations from the working class. The new intake of Labour MPs was also clearly to the left, the majority being aligned to the Tribune Group in Parliament, which had doubled in size in comparison to the period 1964-70. Although the new Wilson administration was right wing, both Michael Foot and Tony Benn were included in the Cabinet, at the Department of Employment and the Department of Industry respectively. The first real task of the government was to produce a settlement with the miners. They were eventually awarded wage increases ranging from 22-32 per cent. Within a week of the election, industry was back to five-day working and the crisis was resolved.
The Labour government began by introducing a series of welcome reforms: it raised old age pensions, increased food and rent subsidies, cut the rate of VAT, and encouraged the building of council houses. To the great relief of the Labour movement, the government repealed the hated Industrial Relations Act, abolished the Pay Board and scrapped Heath’s statutory incomes policy. The Housing Finance Act was also repealed and a rent freeze was introduced. As promised, the Labour government introduced gift and wealth taxes, although not as much as to make the rich squeak too loudly. The granting of these reforms produced a honeymoon period for the Wilson government, which appeared at long last to be carrying out a radical programme.
From the beginning, the Labour government was under colossal pressure from both the working class and the capitalist class. At first, it attempted to appease the workers with reforms, which worked for a period as workers were prepared to extend credit to the new government. For big business, however, these reforms were a source of major irritation and annoyance. But for the moment the capitalists were forced to bide their time. Within months Wilson was compelled to go for a second general election in October 1974 in an attempt to gain a working majority in the Commons. Despite these hopes, Labour still only managed to secure a small overall majority, and remained vulnerable.
The Labour government had come to power at a time of a new world slump. Throughout 1974 industrial production declined in the face of a deepening economic slowdown. It was the first generalised worldwide slump since the Second World War. In Britain, unemployment began to climb insatiably towards the politically sensitive figure of one million, reaching 1,319,000 by the third quarter of 1976. Orders for steel products in western Europe during the first quarter of 1975 were down 33 per cent from the same period in 1974. The same was true of shipbuilding, aeronautics, electronics, textiles, automobiles, construction, and electrical appliances. The number of bankruptcies in the United States rose by more than 30 per cent during 1974-75, and in Britain by more than 60 per cent.
Bourgeois economists attempted to explain away the slump as a consequence of the quadrupling of oil prices, but this was a shallow argument. The rise in oil prices certainly aggravated the crisis, but it did not cause it. It simply accentuated the trends that were already present. The elements of overproduction existed prior to the rise in oil prices. The boom and slump cycle was always present under capitalism but the fluctuations were hardly noticed in the unprecedented post war upswing. Now the situation was entirely different, and more like the slumps of the past that were explained by Karl Marx:
“Too many commodities are produced to permit of a realisation and conversion into new capital of the value and surplus value contained in them under the conditions of distribution and consumption peculiar to capitalist production, i.e., too many to permit of the consumption of this process without constantly recurring explosions”,
stated Marx in volume three of Capital. The crisis arose out of overproduction, as Marx had explained over 100 years previously, and would reoccur periodically in 1979-81, 1990-92, and 2001-2. This fact alone shows that the slump of 1974-75 was not the product of an accidental rise in oil prices, but the re-emergence of the boom/slump cycle.
In Britain, inflation rose to nearly 20 per cent, which served to erode living standards very quickly. The economists ironically dubbed the situation “slumpflation”, reflecting a new disease of world capitalism – a combination of slump and inflation. In order to stand still, unions had to fight for sizable wage increases, which averaged 25.4 per cent by the end of the year. At the same time, pre-tax profits fell from 7.2 per cent in 1973 to 4 per cent a year later, and then continued to decline. This fall was primarily due to the tendency in capitalism for the rate of profit to decline. This tendency arose from the accumulation of capital, greater resources ploughed into constant capital (materials and machinery) relative to that invested in variable capital (wages). As the only source of surplus value comes from variable capital, the rate of profit tends to decline. To counter this decline, which would eventually affect the mass of profits, the capitalists are forced to take measures to increase the exploitation of labour power and increase their margins. In particular, they demanded that the Labour government cut public expenditure, hold back wages and stop all state interference.
According to the Financial Times, “the CBI told Mr. Wilson that there was absolutely no room for compromise or negotiation about further state intervention in industry and further nationalisation”. Two days before the November Budget, the Director General of the CBI sent Wilson an open letter threatening drastic action if the government did not toe the pro-business line. Just after the general election, big business had begun a “strike of capital” with the announcement by Pilkingtons that their £150 million investment would be shelved “until such time as essential changes are made in taxation and price control”. As in October 1964, Wilson was again faced with the blackmail and sabotage of Britain’s ruling class. As then, the Labour government had a choice: either capitulate to big business or act against these powerful interests. There was no middle road. Wilson decided to bend the knee to capital. Once again he came forward with an incomes policy to restore profitability, known as the “Social Contract”, but later dubbed the “Social Con-trick”.
The Left on the TUC General Council, headed by Jack Jones and Hugh Scanlon, also faced a stark choice, either back Wilson or fight for the alternative of socialist policies. But like the Left union leaders in 1926, they looked over the abyss and stepped back. These left leaders had built up a powerful reputation and massive support amongst workers because of the militant role they had played between 1968-74. But now, lacking a clear perspective and policy, they recoiled from an all-out struggle with the Labour government. Instead, they used their colossal authority to back Wilson’s policies. In September, the TUC, with the full backing of Scanlon and Jones, accepted a “Social Contract” with the Labour government. The government, in turn, leaned upon the trade union leadership to deliver the support from the rank and file for this wages’ policy.
The problem was that it is not possible to serve two masters and the Wilson government had already surrendered to the blackmail of the City of London. The 1974 November Budget proved a watershed for the government. The Chancellor announced measures to increase profitability: reduction of corporation tax, less stringent price controls, and state handouts for industry. Healey also announced restrictions on public expenditure for the duration of the government. As in the past, this signalled a continuation of orthodox economic policies, and as usual the working class was being asked to pay for the crisis of capitalism.
In spite of the “Social Contract”, the initial TUC guidelines on wages were quite vague. In fact real wages grew by eight per cent between April and December 1974. However, by the spring of 1975, with the acceleration of inflation, real take-home pay began to decline. By June real wages were nine per cent lower than December 1974, and living standards were falling. Wages were chasing higher prices and falling behind. Yet the economists who had the ear of the Labour government argued that prices were following wages, and that the latter had to be controlled to halt inflation.
At this point the government used the sterling crisis to turn its policy firmly to the right, to the delight of big business. Denis Healey announced that he intended to reduce inflation – which was around 30 per cent – to 10 per cent by the following wage round, and to single figures by the end of 1976. Since the government regarded wages as the main cause of inflation, pay increases would have to be dramatically curtailed.
Wilson’s economic arguments, supplied by bourgeois economists, were bogus. In reality the inflation of the 1970s was not caused by wage increases, but by the colossal sums of speculative fictitious capital that had been injected into the system as a result of decades of Keynesian deficit financing. The propaganda about “excessive” wage rises causing inflation was used as a pretext to boost profits at the expense of wages.
The Wilson government put forward a voluntary incomes policy in co-operation with the TUC based on raises of 10 per cent. However, Wilson warned that if this proved unworkable, a statutory limit would be imposed. As was to be expected, the TUC readily acquiesced to the government’s wage controls and published guidelines for voluntary restraint with a £6 limit on all settlements prior to August 1976:
“The £6 policy was accepted by the General Council at its meeting in July but only narrowly, nineteen votes to thirteen”, recalls Jack Jones. “I urged those who opposed the policy not to push the government to the point where it might fall… Whatever my misgivings I was determined to back the government, ‘warts and all’.”
Although it meant a cut in real wages, the £6 limit was agreed at both the TUC, on a resolution proposed by Jack Jones, and the Labour Party Conference. When left-winger Ian Mikardo attacked the decision at the Tribune meeting at Labour Conference, Jones shouted across the platform, “I object to these attacks like this!” Hugh Scanlon also supported Jack Jones’ stance. The Labour movement demonstrated tremendous loyalty to its leaders, and the incomes policy of Wilson and Callaghan was taken on trust. The Labour leaders demanded sacrifices to overcome “the legacy left by the Tories”, and, without any alternative being offered by the Lefts, this was accepted as a necessary price to be paid for a Labour government.
But when a “Phase Two” followed “Phase One” of the incomes policy, there was a growing disquiet in the Labour movement. As a concession to the government (which wanted a three per cent limit), the TUC offered its own voluntary five per cent norm, with a lower limit of £2.50 and an upper limit of £4. A special TUC conference adopted this policy by a massive majority of 17 to 1. But this decision was to have grave effects on the living standards of ordinary workers. In fact, between 1974 and 1977, the Labour government was to preside over the largest fall in real wages than at any comparable period in British history.
The sterling crisis of early 1976 forced the Labour government to go cap in hand to the IMF. But the IMF would only grant these loans on condition that a £3 billion cut was made in public expenditure over the following two years. The Cabinet reluctantly accepted this IMF proposal.
Anthony Crosland later told Labour Party Conference, to everybody’s astonishment that “the party was over”. Callaghan also stated that Keynesianism was dead and that no government could now spend itself out of a crisis. “We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending,” stated Callaghan to the 1976 Labour conference. “I tell you in all candour that that option no longer exists and that insofar as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment at the next step”. In all, over the following period, the government was to slash public expenditure by an estimated £8 billion. This proved to be the thin end of the wedge.
When Wilson resigned the premiership, Callaghan took his place as prime minister. Labour had now lost its overall majority. There was a growing sense of political instability. The following year, in order to get a working majority, the Labour government entered into a formal “Lib-Lab” pact with the Liberals. This retreat, which gave rise to despondency in the rank and file, sealed the fate of the government.
Around this time, a bitter industrial dispute at Grunwick, a photographic processing business in North West London hit the headlines. Mass picketing took place in an attempt to gain the reinstatement of sacked women, mainly Asian workers. The dispute was led by the APEX union, and attracted widespread support. Postal workers refused to handle mail, a key to the company’s business survival. The right-wing National Association for Freedom rushed to the owners’ support in organising alternative deliveries. “I gave NAFF as much support as I could”, stated Margaret Thatcher.
It was the Grunwick dispute that caused Margaret Thatcher to began to formulate her future plans to cripple the trade unions:
“Yet, for all that, Grunwick was not limited to the closed shop; it was about the sheer power of the unions”, wrote Thatcher. “Appalled as I was by what was happening at Grunwick, I did not believe that the time was yet ripe to depart from the cautious line about trade union reform (which I had agreed with Jim Prior) in order to mount radical attack on the closed shop. We had to consider a much wider raft of questions, ranging from the unions’ immunity under civil law, to violence and intimidation which only escaped the criminal law because they came under the guise of lawful picketing. Until we had begun to solve some of these problems, we could not effectively outlaw the closed shop.”
As might be expected, the World Bank and the IMF took a hard view of the Labour government – given its links with the unions and the presence of a left wing inside the party. They correctly feared that the intense pressure of the working class could force Labour to take measures against big business.
“As I saw it, it was a choice between Britain remaining in the liberal financial system of the West as opposed to a radical change of course because we were concerned about Tony Benn precipitating a policy decision by Britain to turn its back on the IMF”, stated William Rogers from the US State Department. “I think if that had happened the whole system would have begun to come apart... it would have had great political consequences. So we tended to see it in cosmic terms.”
The strategists of capital were alarmed by these dangers and called for disciplinary action against the Labour Left, which according to them, was subverting the Labour Party from within: “Moderates in the constituencies must be organised to combat the activities not just of the undemocratic sectarian left, but of the more numerous, less sinister supporters of the Tribune group whose leaders effectively control the NEC”, urged The Economist. “The sensible leaders among Britain’s larger trade unions must be persuaded to purge the national executive.” At all costs, the Labour Party had to be kept in reliable (that is, pro-capitalist) hands, and that was a job for the right-wing trade union leaders.
The cuts in public expenditure were followed by a further stage – Phase Three of the incomes policy. This now stipulated a ten per cent limit on wages rises. But for the working class, this phase proved to be the straw that broke the camel’s back. Enough was enough! Asking for a further round of restraint was simply adding insult to injury. Under pressure, the TUC voted to reject the incomes policy and demanded an immediate return to free collective bargaining. Jack Jones realised the game was up when the vote went against him at the TGWU national conference. In November, 80,000 trade unionists lobbied Parliament against the government’s incomes policy. Callaghan’s attempt to impose a wage limit in the public sector simply pushed “moderate” sections into industrial action. Although strikes were limited in the first period of the Labour government, things began to come to a head at the end of 1977.
In early November, a special conference of the Fire Brigades Union voted to take industrial action (against the wishes of its Executive Council) in pursuit of a 30 per cent wage rise and a reduction in hours from 48 to 42. It was to herald the first national fire brigades’ strike in British history. In spite of the attacks by the press and the use of troops to break the strike, the action remained solid for over two months. Despite the Home Secretary’s hand wringing at the potential loss of life, Merlyn Rees’ over-riding principle was to maintain the government’s pay policy.
Despite widespread sympathy for the striking firefighters, the TUC refused to endorse the dispute. At a special FBU conference in January 1978, 70 per cent of the delegates voted to accept an immediate ten per cent offer, with a new pay formula that was to link firefighters’ pay to manual workers. To the government’s dismay, the 1977 firefighters’ strike served to break the dam of wage-restraint and open the floodgates for other workers.
Winter of Discontent
It was the beginning of the end for the government’s incomes policy. Within a matter of months, the “Winter of Discontent” had commenced. This movement was initially sparked off by an announcement by James Callaghan of a further round of wage restraint. But the prime minister had misjudged the mood entirely. Workers had reached their limit and were not prepared to tow the line any longer. With the TUC in opposition, the incomes policy was dead in the water. Callaghan’s wages proposal was again rejected by the full TUC conference in September 1978.
This signalled a general offensive by the trade unions keen to get back the ground they had lost. Between October 1978 and March 1979 some ten million working days were lost through industrial action. Perhaps the most significant strike was at the Ford Motor Company in 1978, where after seven weeks on strike workers won a 17 per cent increase in wages. In the course of this dispute, the Labour Party Conference also voted against the Labour government’s new five per cent pay policy. This represented a mortal blow for the government. The vote reflected an important shift to the left within the unions and Labour Party. The workers had needed time to digest the lessons of the past period. Now consciousness began very quickly to catch up with reality. By the end of 1978, all hell was let loose.
It is a social law that discontent within the working class finds its expression within the official mass organisations, and this is above all true in Britain. Opposition tends to develop first in the trade unions, then with a certain delay, in the Labour Party, which is historically the political expression of the unions. If their leaders, as in the 1950s and early 1960s, block the workers from taking official action they will tend to take unofficial action. Nevertheless, this accumulated resentment will ultimately find its expression within the trade unions – as is currently taking place today – and also inside the Labour Party.
Local authority manual workers, who were one of the poorest paid sections, took widespread action in support of their wage claim, beginning with a major one-day strike on 22 January 1979. Talks finally broke down at the end of January and half a million workers took strike action in the first week of February. These workers were subjected to a smear campaign in the press, with lurid stories of dead bodies being left unburied and rats in the streets, but they managed to hold out until a revised offer of nine per cent was made at the end of the month.
In a remarkable show of militancy 185,000 TGWU lorry drivers won their first national strike for 50 years through effective picketing. Strike committees were established to run the strike, which vetted transport needs, permitting emergency and essential deliveries, but stopping all others. It was once again a demonstration of the potential power of the workers, and an echo of the Councils of Action of the 1920s. These committees constituted elements of “dual power” in the strike, as they challenged the prerogatives of employers and the state. Thatcher, who was horrified at this display of union strength, declared in the Commons,
“Now we find that the place is practically being run by strikers’ committees... They are ‘allowing’ access to food. They are ‘allowing’ certain lorries to go through... They have no right to prevent them from going through.”
Other low-paid sections, like ambulance workers also followed suit. Although troops were brought in to deal with the dispute, the government made an improved offer of nine per cent plus the promise of pay comparability. On the basis of the revised offer the strike was called off. The struggle of these low paid workers – predominantly women workers – brought them into the trades unions in droves. Membership of the National Union of Public Employees (NUPE), for instance, swelled from 256,000 in 1968 to 693,000 a decade later! Total union membership in 1979 reached unprecedented levels, embracing some 13.3 million or 55 per cent of the workforce. It was an incredible figure and a historic high point of trade union organisation.
The tremendous strike wave of 1978-79 was largely a product of the wage restraint of 1974-77. Workers were prepared to make sacrifices for the Labour government, but were now no longer prepared to see a dramatic fall in their living standards. After months of dithering, in May 1979, Callaghan decided to call a general election. This was a bad miscalculation. As in 1964-70, the counter-reforms of the Labour government had created widespread despondency and disillusionment. On 28 March the government lost a vote of confidence in the Commons by 312 to 311, and Callaghan was forced to dissolveParliament. In the ensuing general election on 3 May, the Callaghan government was defeated. The Tory leader, Margaret Thatcher, became the first woman Prime Minister in history. She would end up also as being the most hated.
The pundits blamed the 1979 defeat on the “Winter of Discontent” and the militant actions of the working class. This is fundamentally false. It was not the struggle for decent pay that caused the defeat, but the growing alienation of workers fed up with the counter-reforms of the Labour government. It was this mood of widespread apathy and abstention amongst Labour voters that led to the electoral debacle. “Disillusion with the Callaghan government was almost complete. Once again, a Labour administration had lost touch with its own supporters”, stated Eric Heffer. Even Denis Healey concurred, “Jim himself was badly out of touch with popular feeling.” The same process had resulted earlier in Labour’s defeat of 1970, a lesson that was not lost on the rank and file of the labour movement.
The coming to power of Margaret Thatcher in 1979 was to pose a new and dangerous threat to organised Labour. The strategy of the Tory Party, developed while in opposition, was to break the power of the unions and to seek revenge for the humiliations of the past. This, in turn, was born out of the special crisis of British capitalism and the need to tame the working class. Thatcherism, which represented capitalism “red in tooth and claw”, was to prove the greatest of test for the trade union movement for more than half a century.
 The Economist, 16 February 1974
 Quoted in Seumas Milne, The Enemy Within, p.275, London 1994
 Gilmour, op. cit, p.211-12.
 Chile, the State and Revolution, ed. M. Gonzales, p.152, London 1977
 The Times, 15 September 1973
 See Steve Peak, Troops in Strikes, p.122, London 1984
 The Financial Times, 16 October 1974
 Jones, op. cit, p. 298
 Margaret Thatcher, The Path to Power, p.401, London 1995
 Quoted in Glynn and Harrison, The British Economic Disaster, p.97, London 1980
 The Economist, 11 December 1976
 Eric Heffer, Labour’s Future, Socialist or SDP Mark Two, p.16, London 1986
 Denis Healey, The Time of My Life, p.463, London 1991