James Callaghan became the Labour prime minister from 1974 to 1979, after the resignation of Harold Wilson from the post. On the 40th anniversary of his resignation from political life, two politics lecturers have collected a number of essays that reflected on Callaghan’s legacy.
The book offers a timely reminder of how far to the right Labour has moved over the decades. The 1970s saw a rise in the confidence of workers to fight to defend conditions that were under almost continual attack. The oil-producing countries (Opec) cut production of oil and the price rocketed. Inflation was much higher than it is now, the pound plunged. The British economy was plunged into crisis, an overused word, but appropriate here.
The defining issue of Callaghan’s tenure as prime minister was the acceptance of an International Monetary Fund (IMF) loan of £3.9 billion pounds on crippling terms. Those terms required deep public sector cuts, including savage wage cuts, rising interest rates and tax increases. This is widely regarded as the point when the post-war Keynesian consensus—using public spending to stimulate growth—was replaced by monetarism, the idea that the market and the supply of money in the system is paramount.
Previously, most people in Britain had never heard of “the markets” and the latest exchange rates. After the IMF loan, they were a feature of all news bulletins.
The background to Callaghan’s premiership is well documented in different chapters in the book, the Trotskyist left getting a mention as does the rise of the far right in the form of the National Front. After the promise of Harold Wilson’s “white hot heat of the technical revolution” in the 1960s, British industry was stagnating in the 1970s. The bosses withdrew investment. Unions were confident and strikes were common, even unofficial ones.
The Labour Party was split between those who favoured increased public spending and extending public ownership, and those who wanted to reign in spending. In a speech by Callaghan to the Labour Party conference of 1976, the right wing shift was signalled. “We used to think that you could spend your way out of a recession by cutting taxes and boosting government spending. I tell you in all candour, that option no longer exists,” he said.
Denis Healey, the chancellor, accepted the IMF terms and imposed vicious cuts, worth £87 billion in today’s figures. Labour was signalling that capitalism was in safe hands.
Callaghan himself was a contradictory figure. Traditional, patriotic and conservative, the radicalisation and social transformation that characterised much of the 1960s in Britain seemed to have passed him by. He was a trade unionist and believed the unions needed to be taken seriously. His image was that of a gentleman farmer, a world away from the decaying inner cities about to explode in rage.
This was the time of punk, the Anti-Nazi League and Rock against Racism, all necessary reactions to rising anger at unemployment, racism and fascism. In contrast, Labour introduced tougher, racist immigration controls and failed to support the courageous strike of Asian women workers at Grunwicks.
A layer of militant shop stewards, closer to the shop floor, organised resistance. The National Rank and File Movement and the Right to Work campaigns attempted to organise rank and file workers against the attacks. Along with many marches and protests there were strikes.
In a telling example of Labour’s political intent, the government sent the army in to break a firefighters’ strike in 1977. Private- sector workers could break the limit of 5percent by agreeing overtime and bonus payments. In 1978, rail workers, ambulance workers, grave-diggers and refuse workers struck. In January 1979, lorry drivers struck. Shortages of oil for cars and heating resulted. Shops ran out of stock.
The Tory- supporting media portrayed a country descending into chaos and crisis as rubbish mounds built up in the streets and, it was claimed, the dead remained unburied. This became known as the Winter of Discontent.
Callaghan returned from abroad and seemed to be oblivious to the situation. The Tory supporting Sun newspaper ran a headline, ‘Crisis? What crisis?’ and it stuck. Callaghan lost the election in 1979. The fight between left and right continued after Labour lost the election to Margaret Thatcher’s Tory Party. Tony Benn’s challenge to Healey for the deputy leader post was a rallying point for the left. Benn lost.
The Tories now embarked on a well-planned process of shutting down manufacturing and building up a service- based economy. This required the defeat of key sections of workers, particularly the miners. The Tories achieved this but had to buy off a large section of British workers with generous pay rises and improved conditions.
Some industries disappeared and widespread demoralisation affected the union movement. The British economy still suffers from this structural imbalance and is less resilient to slumps and less able to benefit from the few and far between booms. Capitalism has not returned to profitability and is turning the screws on all of us.
So, Callaghan, friend or foe? Some right wing commentators in this book say hey what else could he do? He took tough decisions for the good of the country and that is why he deserves credit. Others say he was the first monetarist prime minister and that he betrayed Labour’s principles.
Socialists with experience of Blair governments would say what principles are they? The treatment of Jeremy Corbyn after the election of Keir Starmer shows the Labour Party is not the home of socialist principle. We need to build a movement outside of Labour to fight for workers’ rights, fight racism and stop the destruction of the environment.
For people interested in the process of government this book has some interesting insider accounts of the decision-making process. However, one is left with the impression of a man buffeted by events he could not understand, without a clear political vision.
James Callaghan An Underrated Prime Minister? Edited by Kevin Hickson and Jasper Miles. Biteback publishing. £25.00
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