It was in [the post-war] period of upswing that the right wing of the labour movement – who always base themselves on the capitalist system, as opposed to socialist ideas – were given a new lease of confidence. The theoreticians of the right wing, in the Fabian Society, for example, fell over themselves to announce that class struggle was at an end and that the very concept of 'class' was losing its meaning. Slumps and mass unemployment were the horrors of the past that would never be repeated, society had learnt to overcome past conflicts and from now on, they argued, there would be a gradual and unbroken increase in living standards. The leadership of the Labour Party, around Hugh Gaitskell, even tried (unsuccessfully, because of the resistance of the rank and file and the trade unions) to remove the socialist Clause 4 from the Labour Party constitution.
The second part of this chapter consists of an article in the International Socialist (edited by Ted Grant), November-December 1952, commenting on the New Fabian Essays. In the Essays, writers like Richard Crossman, Anthony Crosland and Roy Jenkins, put forward the idea that the 'welfare state' or 'welfareism' had superseded class society. 'By 1951', Crosland argued, 'Britain had in all essentials ceased to be a capitalist country'.
Cutting through the superficiality of the Fabian theories, Grant defends the basic Marxist position, that as long as the market dominated the economy, then there would inevitably be cycles of boom and slump. Explaining the causes for the longevity of the boom, he also points out its limitation and the inevitability, at a later stage, of new recessions and slumps. This article, although directed particularly towards the British economy, was no less relevant to the other main capitalist countries, where similar conditions prevailed and similar arguments raged.
Nearly forty years later, the arguments in the article have lost none of their relevancy, because in all their essentials, the so-called 'modern' policies put forward by the right wing in the Labour Party in the late 1980s are the same as the discredited notions of their 1950s predecessors.
A Political and Philosophical Basis for the Left Wing
The publication of the New Fabian Essays with an introduction by Attlee marks a stage in the development of the labour movement in Britain. In it is supposed to be summed up the experience of the last 50 years both nationally and internationally, by the intellectual elite of the Labour Party including Crossman, Crosland, Strachey, Mikardo, Denis Healey, Austen Albu, Jenkins and others.
The old programme of the Fabians, having been largely carried out by the Labour government between 1945-50, is recognised as being inadequate or outmoded to solve the problems of creating a socialist society. At the same time there is ferment within the ranks of the labour movement; the rank and file are looking for a theoretical and practical explanation of the inadequacies of the government of 1945-50 in order to implement policies which will clear the way for socialism.
The publication of Bevan's book(1), the new Socialist Union publication, and the New Fabian Essays are all symptomatic of the awakening and the searching for a fresh policy. The Bevan controversy which has shaken the movement from top to bottom is the best indication of this search for a policy and programme which will serve the needs of socialism.
To analyse adequately and criticise all the arguments in New Fabian Essays would require another book as lengthy or lengthier than the Essays themselves, especially as the Essays contradict each other in many fundamentals and do not constitute a harmonious philosophical, theoretical or political whole. Despite the varying views and some healthy criticisms of the bureaucratised nationalised industries (from the point of view of pressing for greater democracy and greater participation of the workers in the control of these industries), there are some basic threads of thought underlying all the Essays: the idea that the structure of British society has been fundamentally changed by the nationalisation of some of the basic industries and the creation of the 'Welfare State', the rejection of Marxism which is equated with the doctrine of totalitarian Stalinism, and the theory that this is the epoch of the so-called 'managerial revolution'.
One striking feature of the Essays is the rejection at least in words of the narrow and provincial view of old Fabians who confined themselves to Britain and British problems and ignored world developments. At a time when even capitalist politicians have been forced by the realities of economic evolution to recognise the interdependence of the world, and when events have brought home crushingly the urgency of international problems even from the point of view of day to day policies, it is no longer possible to maintain such a provincial outlook. At the same time, on home problems too, Fabian pace, snail's pace, has been discredited as a method of obtaining the socialist objective. Without a drastic overhaul of social relations reaction is bound to set in.
Leadership Holds Back
Richard Crossman perhaps unwittingly gives the key to the solution of the dilemma facing the workers in the labour movement when he says 'At that time (first months of Labour rule) the British people were ready to accept the peaceful socialist revolution; and if what it got was merely welfare capitalism, the fault lay with the politicians and not with the public.' Thus a golden opportunity of transforming Britain into a workers' democracy and shaking the world by her example was lost by the cowardice and shortsightedness of the leadership. A bold and radical nationalisation of all industry with, perhaps, compensation on the basis of a means test, an appeal to the workers of Europe and Asia to join and set up a United Socialist States of Europe and Asia would have changed world history and begun the transition to socialism for the people and states of the whole world.
The people of Britain, and of the world, will have to pay in agony and suffering for the failure to accomplish the overthrow of capitalism which lay within the grasp of the Labour government in Britain. The rearmament race, and the undermining of the reforms of the Labour government, even in the latter period of Labour's rule, indicate that 'welfare capitalism' cannot maintain itself for any extended period of time. In the situation of British and world capitalism reforms are inevitably undermined by the impasse of the system itself. Only a fundamental change, economically and politically, can stabilise reforms and steadily prepare the way for a new socialist society.
The new Fabians are haunted by the experience of Stalinism in Russia, China and Eastern Europe. This leads them to stress the dangers of the 'concentration of power in the hands of either industrial management or the state bureaucracy'. Says Crossman:
"This task was not even begun by the Labour government. On the contrary, in the nationalised industries old managements were preserved almost untouched, and appointments to the national, regional and consultative boards were made as if with the express intention of reaffirming that no change was intended. The government's attitude to central planning was simple. Up to 1947, no serious attempt was made to construct even a central mechanism for assessing resources and requirements of wealth and labour, and allocating them to the various needsNor was an effort made to encourage popular participation in the new Welfare Statethe impression was given that socialism was an affair for the Cabinet, acting through the existing Civil Service."
Crossman and the other Fabians might have added that the power of the capitalists remained largely as it was. Over the period of Labour's rule the profits of the capitalists actually increased, while the state machine: army, police, civil bureaucracy, in its topmost strata remained the preserve of faithful members and supporters of the ruling class. In the structure of rule the power of the ruling class thus remained virtually intact. It is this, at least in part, which the new Fabians are compelled to recognise and to call for the active and direct Participation of the masses in industry and, we might add, in the direct administration of the state from top to bottom, if enthusiasm and activity are to be engendered.
Has Capitalism Been Transformed?
Nevertheless, as a result of full employment in Britain consequent on the post-war boom, the mirage appears of a change in capitalist economy which has transformed it into a post-capitalist 'managerial', 'controlled' economy, in which the laws of capitalist economy no longer operate, thus eliminating slumps and booms. This receives its finished expression in the essay of Anthony Crosland.
He starts with a complete distortion of the Marxist analysis mainly because, to put it mildly, of his ignorance of the economic and philosophical doctrines of Marx. It is a pity he did not take Engels' advice 'a man who undertakes to discuss scientific questions should learn above all to read the works of the author whom he wishes to study, just as they have been written, and especially not to find anything in them which they do not contain'. For example, the idea theat 'capitalism would collapse of its own accord'. An idea more foreign to the method of Marxism would be more difficult to conceive. And a few paragraphs after the assertion that the Marxist prognosis is false (how explain the revolutions in China, Russia and Eastern Europe on this basis?) he asserts 'The resistance to change, moreover, has been weakened by the fact that the capitalist bourgeoisie is no longer as self-confident as in its hey-day.' And again 'Savage taxation of income and property and the nationalisation of private industries have aroused scarcely more opposition than measures to limit child labour a hundred years ago.'
It never occurs to him that it is the twilight of capitalism nationally and internationally which has undermined the confidence of the capitalists; the development of capitalism beyond the framework of private ownership which forces the capitalist class to swallow limited measures of statification to keep the economy going. It is the industries ruined by capitalism, too expensive to regenerate by old methods, in which the capitalists swallow nationalisation as a necessary evil. But, as soon as a favourable opportunity occurs, profitable industries like steel and road transport are handed back, at a handsome discount, to big business.
This it is which makes so dangerous the complacency of Crosland and others in the Labour Party who think as he does that the capitalists will inevitably swallow other reforms as tamely as in the last period of office of Labour. Shortsightedness could not go further in analysing the reaction to reforms by the capitalists. You can trim the claws of a tiger but its dangerous strength remains, especially when its teeth are untouched. Woe betide the unwary who place their bodies at the mercy of the wild animals of big finance.
After the first world war capitalism in Western Europe, especially in Germany, accepted many reforms to ride the revolutionary tide and save the system from complete overthrow. It did not prevent them later, in desperation, from financing and supporting Hitler. In 1936 the French capitalists acquiesced in many reforms for fear of the masses, following the stay-in strikes. This did not prevent them from returning to the attack and whittling away the reforms as soon as the mass upsurge was spent. After 1918 in Britain many reforms were achieved which did not prevent Baldwin later from launching an all out attack which precipitated the general strike of 1926.
Under Crosland's nose and as he wrote, the Conservative government of Churchill is cautiously whittling away the gains made by the workers in 1945-9. And this while 'full employment' remains!
In what would undoubtedly have been written in humorous vein if Crosland had even a nodding acquaintance with Marxist doctrine, he says 'The propertied class has lost its traditional capitalist function -the exploitation with its own capital of the technique of production - and as the function disappears so the power slips away.' Leaving aside the error in the last few words, Marx had already observed the process and predicted the result a century or so ago. The 'modern' Crosland is a little behind! And as if the necessity of change from one social system to another is not signalised by the loss of function in production (as Marx explained a thousand times) of the old ruling class! Thus the loss of function of the feudal lords who became parasites before the Cromwellian and especially the French revolutions, as even Carlyle observed. And as if the socialisation of labour under capitalism, the centralisation of capital, the creation of joint stock companies - had not been analysed by both Marx and Engels. Also the consequent transformation of the entrepreneurs from a necessary function in production to complete parasites and drones has been shown as an inevitable result of the process of capitalist production:
"Stock companies in general, developed with the credit system, have a tendency to separate this labour of management as a function more and more from the ownership of capital, whether it be self-owned or borrowed. In the same way the development of bourgeois society separates the functions of judges and administrators from feudal property, whose prerogatives they were in feudal times. Since the mere owner of capital, the money-capitalist, has to face the investing capitalist, whilst the money capital itself assumes a social character with the advance of credit, being concentrated in banks and loaned by them instead of by its original owners, and since, on the other hand, the mere manager, who has no title whatever to the capital, whether by borrowing or otherwise, performs all real functions pertaining to the investment capitalist as such, only the functionary remains and the capitalist disappears from the process of production as a superfluous person." (Capital, volume 3, page 387) [source (translation differs)]
Ironically enough it is precisely Crosland and his colleagues who believe that capitalism collapses automatically by transforming itself into something else once the function of the entrepreneurs has disappeared! Marx, on the contrary, pointed out the necessity under these conditions for the proletariat, organised in the labour movement, consciously to overthrow the dying system of capitalism. The reaction to these conditions would produce the party and leadership, despite many errors and lost opportunities, which would ultimately destroy capitalism. The existence of such conditions, to a Marxist, would merely prove the extreme decay of capitalism and the ripeness of the social system for the socialist revolution.
Crosland, however, excels himself in his analysis of the economic plight of capitalism. Airily dismissing the Marxist thesis on the contradictions of capitalism he observes that 'The 1931 depression, although unusually severe, was not the first depression of such severity - the famous slump of 1873-7 was at least as bad.' This is to compare the effects of a cold in youth to pneumonia in old age. The slump of 1873-7 marked a great economic convulsion of capitalism. It succeeded in escaping its effects by the intensive expansion of the Californian gold fields, the opening-up of Africa and Asia, the development of imperialism. These were some of the reasons why, after the slump of 1873 there was a relative ascent of capitalism. Says Schumpeter(2):
"The broad fact of great steadiness in long term increaseremains, both in the sense of rough constancy of the gradient of the trend and in the sense of what, merely by way of formulating a visual impression, we may term the general dominance of trend over fluctuationsIn no country does 1873 look very catastrophic. In America 1844 produced almost no fall at all. The crises of the early nineties shows, for Germany, only a considerable dent. In the long English series it happens only twice that absolute fall outlasts two years. In the case of Germany, this occurred only in 1868, 1869 and 1870; in America also but once." (Business Cycles, McGraw-Hill Volume 2, page 494, our emphasis)
But every authoritative capitalist economist and observer was profoundly dismayed at the spectacle of the slump of 1931-3. The period of rising capitalism came to an end in 1914. After 1873-7 there were depressions but not such as to shake the economy from top to bottom. After the 1929-33 collapse had been painfully overcome only the rearmament boom and the war prevented an even more shattering recurrence of the slump. It was this in economic terms which precipitated the second world war of 1939-45. This is hardly a symptom of the health of the economic system. Periodic wars of destruction which threaten to annihilate the cities man has built and technical conquests achieved, are hardly an inspiring alternative for capitalism to offer to periodic crises of over-production. But here Crosland, Strachey and others deny or half deny that over-production or slump will occur. They think the full employment which obtained in Britain under the Labour government (and to a slightly less extent obtains also under Churchill's government) was a consequence of the policies of the Labour government.
This was so only to a secondary extent. Full employment obtains in America, the last stronghold of capitalism, also since 1945. In both cases this is due to the boom which usually follows every war. War has the same effect as a slump, where the ruin, destruction and wearing out of capital and consumer goods paves the way for recovery, but in an enormously intensified form. The capitalist crisis is overcome in war by the destruction of consumer and capital goods, by the production of fictitious capital in the shape of arms and arms production, which has, after the war, to be made good by economy. But despite measures of 'regulation' and 'control', despite the enormously increased role of state and of militarism (incidentally forecast by Marx and Engels) the problems of capitalism are not overcome, neither is the elimination of capitalism achieved thereby. Where, as in Britain, 80 per cent of the economy is privately owned, the laws of capitalism basically continue as before. The capitalists continue to operate for profit not for the sake of keeping the economy on a high level. Any spending by the state by so-called 'Keynesian techniques' can only aggravate economic crisis once the crisis of over-production begins.
A simple point which even the orthodox capitalist economists can understand is that 'money' or 'credit' is not created in the void. It has to be obtained by taxes ie by cutting into the profits of the capitalists, or the subsistence standards of the workers, or by 'deficit financing, which in a roundabout way comes to the same thing. This is because by artificially increasing the note issues, it decreases the purchasing power of money by inflation and thus in the long run has the same effect as the above. Either way a fall in the rate of profit is inevitable. Purchasing power is cut and endeavours of this sort can only aggravate the outbreak of mass unemployment and crisis.
Effect of Rearmament
In a certain sense rearmament on a world scale is having this effect in the capitalist countries. The expenditure on arms creates an enormous amount of fictitious capital which gets its share of the total wealth, of the surplus created by the working class. It has as a consequence a rise in prices, and usually a decrease in the standard of living of the workers. While injecting a further element of disease in the already decaying organism of capitalism, it cannot prevent but only delay the outbreak of crisis.
It is true that many in the Labour Party, particularly some of the Bevanites, think that rearmament can be replaced and slump avoided by an extended 'point 4' programme. But even a 'plan' (if it were to be agreed upon by the European powers and the USA) greater in scope than point 4 would, despite the ballyhoo, be microscopic in relation to the needs of Asia and Africa. It would be even less able to absorb the production and potential over-production in the capitalist world and would not succeed in preventing crisis.
In particular Crosland and others of like mind are living in a fool's paradise when the problems of the world market are taken into account. A minor economic recession or fall in production of a few per cent, which would hardly provoke a ripple in America, will mean major economic convulsions in Britain and Western Europe. It can be imagined then what would be the effect of a big fall in production. This is recognised fearfully even by such journals as the Observer and The Economist.
Nationally and internationally the market economy still dominates in Britain. In his muddled way even Crosland has glimmerings of the problem. He says 'Under the post-war Labour administration the tempo of change was enormously accelerated and by 1951 Britain had in all essentials ceased to be a capitalist country' (my emphasis). And on the very next page he unconsciously contradicts himself. 'It ('Welfare State', 'Mixed Economy') is capitalist to the extent that private ownership of industry predominates, that most production is for the market, and that many of the old class divisions persist.' To what extent? Where 80 per cent of the economy is privately owned, capitalism, its economy and its laws are predominant. The public sectors, like the post office in the past, will operate for the benefit of the private sector. No amount of financial juggling can overcome that decisive fact. Until the dominating heights and the dominating proportion of industry is nationalised the laws of capitalist economy will dictate to the government, whether Labour or Conservative.
It is from this fundamental error that flow the mistakes and dreams of Crosland and other Fabians. No more Jarrows and Ebbw Vales. 'Both the area, and the bitterness, of social conflict are much reducedno uniquely delineated ruling class, nor clearly defined class struggle.'
Class Antagonisms Intensified
In reality, however, the rumblings of the coming storm are faintly foreshadowed in the strike of steel workers and miners in America and the wage demands of the engineers, miners and other workers in Britain, in the face of the steadily increasing cost of living. The capitalists are cautiously preparing for the struggle. If in the post-war period in Britain and America (not on the Continent be it noted) a relative period of quiet has ensued, that has been because of international relations, the class relations within the countries themselves, the mighty strength of organised labour, the fear of the ruling class, but above all because the ruling class could afford crumbs of concessions from the feast of profits in the post-war boom.
But this period is now drawing to a close. Far from the fond dream of class reconciliation, a period of bitter, more implacable class conflict looms ahead in all its stark horror. The 'new' Fabians may think their themes are really 'modern', 'realistic' and 'new'. In fact in one form or another every boom has seen the dissemination of these panaceas and utopias, of a change in capitalism, of a new stage, of sedate, kind and tolerant amelioration of class antagonisms, of a rosy period of gradual change for the better, of great reforms which all ended in disaster. On the basis of the new Fabians' themes the labour movement could only find catastrophe.
(1) In Place of Fear by Aneurin Bevan, was published in 1952 in the aftermath of the 1951 election defeat.
(2) Joseph Schumpeter was a member of the 'Austrian School' of economists, who put forward an alternative theory of business cycles to that of Marx, emphasising the innovative role of small businesses.