The Multinational Monitor


B R I T A I N ' S   T W I L I G H T

Thatcher's Toll on the Empire

by Teresa Hayter

LONDON, England - In 1979 Britain's economy was in shambles. Nearly one million people were out of work. Inflation stood at nearly 10 percent. Bitter strikes divided the country.

Labor Party Prime Minister L.J. Callaghan, nearing the end of his party's five years in office, called for an election in early 1979. In May, the Tories, or Conservatives, were elected by a two-million vote majority. Margaret Thatches became the new prime minister. On June 9, 1983 the Conservatives were elected again. Although this time they received only 13 million votes, a division in the Labor Party split the opposition and Labor received just shy of 8.5 million votes. The newly formed Social Democratic/Liberal Party alliance received 7.7 million votes. Despite the overwhelming opposition, the Conservatives received a massive 144-seat majority in Parliament.

Up until 1979, British governments, like American governments, had usually alternated mildly between one centrist party and the other. Throughout the years of post-war prosperity, there was little to distinguish Labor from Tory governments. The post-war Labor government, elected in 1945 despite Winston Churchill's war-time popularity, carried through some radical reforms, in particular the establishment of the welfare state. But most of the reforms had been anticipated during the war and had all-party support.

Even the nationalizations of the railway system, coal mines, iron and steel plants, shipbuilding facilities, and the Bank of England were considered necessary by both parties. These industries were in ruin under private ownership and if the market economy was to function, it needed an efficient infrastructure. No attempt was made to democratize the new publicly-owned industries. And workers, who at first cheered the nationalizations, soon found that their new bosses were much the same as their old ones.

From the 1960s on, as Britain's economy began to lose steam, both parties, once in power, cut government expenditures, attempted to hold down wages, cut immigration and weakened the trade unions. Unemployment rose.

Undoubtedly the main reason the Tories were elected in 1979 was simply that people wanted a change. The Tories' most telling slogan was "Labor isn't working." The slogan was attached to posters depicting long lines at dole offices. At the time the Tories were elected, unemployment was reaching the then unthinkable figure of one million - since then it has of course more than trebled. Today, government calculations put the number of unemployed at 3.2 million, but many estimates go as high as 3.9 million. In 1979, however, the Tories promised, and moreover delivered, a radical break with the cozy post-war Keynesian consensus.

The Tories succeeded in placing the blame for Britain's economic slump on the trade unions, lazy workers, the social security system, and the influx of minorities. Like President Ronald Reagan, they proffer a "bootstraps" ideology: anybody, once freed from the shackles of government and the trade unions, can make it if they try. Norman Tebbitt, one of the most eloquent in the Tory Party, told the unemployed to do as his father had done, "get on yes bikes" and go out to look for work. Tebbitt and others within the Conservative Party ignored the evidence of desperate and persistent searches for work, the relationship between vacancies and the numbers seeking jobs, and the catastrophic failure rate of small businesses. The Tories also received the votes of those who, it had been feared, might vote for the fascist National Front; before the election, Thatches complained that the country was being "rather swamped" by immigrants, and the Tory manifesto hinted at sending foreigners back home.

Once elected in 1979, the Tories delivered much more than they had promised. The Tories offered tax breaks to the rich, a cut in public services, and accelerated unemployment - it is estimated that Tory policies doubled the expected rate of increase in unemployment in the first five years after they took office. Although the Tories at first were unpopular, Thatcher's fortunes revived with her exploits in the Malvinas - the Falklands War. The Labor parliamentary opposition dithered; it neither supported nor opposed Thatches.

Although the Tories themselves have broken quite dramatically with the post-war consensus, some have blamed Labor's defeat on the radicalism of its 1983 election manifesto. But Labor had been elected on equally radical platforms in the past and, unlike Thatcher, had failed to implement them. As the Labor Party abandoned many of its reforming ideals in the 1970s recession, the socialist left in the Labor Party began gaining strength and numbers; it dominated and still dominates many local Labor parties, but fails to make much of an impact on the parliamentary Labor Party or the trade unions.

The most important way in which this advance of the left has affected the electoral fortunes of the Labor Party is that it has caused the flight of some prominent figures on the Labor right. Rather than see Labor take power with left-wing policies, Roy Jenkins, David Owen and their colleagues split the anti-Tory vote, thereby at least temporarily destroying Labor's electoral chances. Jenkins helped form the Social Democratic Party which joined the Liberal Party in the 1983 election to oppose both the Tories and the Labor Party.

The Tories have fought a desperate and somewhat successful battle to cut public expenditures. When their efforts have been foiled, it is because their own policies have backfired: the rise in unemployment has meant a steep rise in expenditures on social security benefits, even though the value of these benefits has been cut. The effects on the public sector deficit have been kept in check mainly by the fortuitous rise in oil revenues, a prop which is now faltering.

The Tories' desire to cut public expenditures is based on a double ideological imperative. They believe, as monetarists, that public deficits cause inflation and crowd out investment in the private sector. They also believe that people should "stand on their own two feet," and not rely on state hand-outs. The aim of at least some Thatcherite ideologues is that state provisions for health, pensions, and even education should wither away, or at least provide merely a minimal fall-back service for those who cannot look after themselves in the private market.

Privatization of industries and services has followed a similar ideological imperative. The privatizations have also been seen, increasingly, as a desperate means of raising cash. Critics have charged the Tories with "selling off the family silver."

The Tories have set about the task of weakening those who are still employed. Their most powerful tool in this undertaking is the threat of unemployment. The Tories know, and sometimes say, that this threat is the major reason workers will accept speed-ups and deteriorating conditions at work, the firing of their stewards and other "trouble-makers," and the weakening of their unions.

The threat of unemployment has been backed up by other means. Thatcher never forgot that the miners had brought down her predecessor Edward Heath, and was determined to defeat them. The Tories have passed a series of anti-union laws, the most damaging of which is the prohibition against secondary picketing; it is now illegal for workers not directly involved in a dispute to support striking workers. The new laws and old ones have been applied with great ferocity by police acting in ways reminiscent of the U.S. labor struggles in the 1930s.

At the same time, the ability of workers to defend themselves by standing together has been undermined by changes in the organization of production. Large companies, and large organizations such as hospitals, have been cutting some of the permanent and relatively well-organized workforce and contracting out tasks such as cleaning, catering, manufacturing and maintenance work. Sometimes, as in the case of cleaning, the outside contractors are multinationals; sometimes they are small "independent" manufacturers. Nearly always, they provide poor working conditions - contractors usually offer less security, lower pay, no holiday or sick pay, and less opportunity to unionize.

Dependence on part-time work is also increasing, and with it the loss of rights enjoyed by full-time workers. It is estimated that half of the jobs Britain creates annually go to part-time workers. Shift working is also on the increase as is work contracted out to "homeworkers," who have practically no protection under the law.

Tories welcome these developments as a means of increasing the "flexibility" of labor and keeping wages and other costs down.

Thus, the Tories' industrial policy, insofar as they have one, is largely a low-wage policy. The government seerns set on competing through cutting costs and encouraging low-wage service industries such as tourism, rather than through investment in and modernization of the existing manufacturing industry. Wages in Britain are already far from the top of the list of industrialized countries, but British ministers still blame Britain's economic stagnation on "excessive" wage increases.

The Keynesian view that growth can be stimulated by an increase in demand has been abandoned by the government. Instead, the Tories have made the reduction of inflation their major objective. It is one of their few "successes" - although the Bank of England Quarterly attributed the drop in inflation almost entirely to the fall in the price of imported raw materials. These policies, however, have not resulted in any revival of productive industry, let alone manufacturing. Britain has become, for the first time since the industrial revolution, a net importer of manufactured goods. And manufacturing output is still below where it was in 1979.

As a result, the Tories have lost the support of many of their long time boosters. As the economy deteriorates still further, the Labor Party's revamped emphasis on interventionist industrial policies, combined with its downgrading of the goal of public ownership, and its attempt to persuade, or coerce, London's financial institutions to invest their money in British industry may begin to attract voters disillusioned with the Conservatives. If Labor is successful in attracting this new support and in bringing the rank and file workers back into the fold, Thatcher's economic agenda may run aground next election.

Facts on File: The United Kingdom

Head of State: Queen Elizabeth II

Head of Government: Prime Minister Margaret Thatcher

Major Political Parties: Conservative, Labor, Liberal, Social Democratic

Capital: London

Population: 55.9 million

Infant Mortality: 13.3/1,000 Literacy: 99 percent

Major Imports: $88.3 billion -- Machinery and transport equipment, foodstuffs, petroleum, chemicals, iron ore, cotton, rubber, sulphur, wool, paper, tobacco

Major Suppliers: European Community, United States, Japan, Norway, Sweden, Switzerland

Major Exports: $86 billion -- Machinery and transport equipment, petroleum, chemicals, woolen and synthetic textiles, clothing, iron, steel, communications and navigation equipment, scientific instruments, arms, whisky

Major Markets: European Community, United States, Sweden, Saudi Arabia, Nigeria, Switzerland, South Africa

Natural Resources: Coal, oil, gas

Gross domestic product (GDP): $353 billion

Per Capita GDP: $6,309

Source: U.S. State Department and U.S. Commerce Department

Teresa Hayter was employed by the Greater London Council until it was abolished by the Thatcher administration. She now works for the London Strategic Policy Unit, which is supported by a number of Labor-controlled London boroughs. She is the author of Aid: Rhetoric and Reality, with Catherine Watson (Pluto, 1985), and other books.

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