Capitalism metamorphosed
A PNA dispatch
archives: 1997

The Path from Old Labour to Tory Neoliberalism to New Labour
Capitalist metamorphosed sentimental strategy in the U.K.
By David Scott

The human-touch New Labour party of Tony Blair in the U.K. appears to take people's needs into account. A closer look will show that Blair only represents the latest strategy of capitalists to maintain their economic policies

In the 1930's at the height of the Great Depression, British capitalism was forced to accept the Keynesian medicine of government regulation or face the possibility of a workers' revolution. In reality, it wasn¹t regulation but subsidization of industry to stimulate demand during the depression which helped inspire the confidence needed to boost investment. More goods and services were produced and hence full employment was reached.

In the long run, however, it was the arms buildup and eventual imperialist war that both diverted workers¹ attention from the problems at home and stimulated full employment. Some piecemeal taxes were also levied at big business, but the working classes ended up with most of the burden. Post-war governments, both Conservative and Labour, continued with Keynesian policies, as did many other European governments. Again, this social democratic 'intervention' into the economy was less a form of state socialism and more a first step on the road to state capitalism.

Emergence of the radical Left
Real public control and ownership of the means of production existed nowhere in Europe, much less England, which, as stated above, gave public money and working class taxes to capitalist interests to make more profits. As a security measure, a welfare state was established to take the heat out of the increased friction of labour relations. However, when the capitalist cycle produced another slump in the late 60's and early 70's, a leftist faction emerged in the Labour Party and started asking some awkward questions. They had international links with the French and Italian Left.

In analysing the reasons for this economic recession, the Labour Left questioned how much the Keynesian-inspired Labour government of 1964-70 really controlled the leading private companies in the commercial and industrial sectors. Social democratic Labourites, thinking they had transformed capitalism into state socialism, were unable to answer. The economic system was still largely unchanged and the rigid British class system was as alive and well as ever. In 1973, one fifth of the population owned all income from investment in the economy; within this category, eight percent owned three-quarters and of that, the top hundred wealthiest shareholders earned 1000 times the average wage.

When Labour got in again in 1974-79, elected by an increasingly militant workforce, its term in Parliament was besieged by infighting between the social democrats and more militant leftists. The capitalist media had a field-day by portraying the Labour government as having been taken over by the 'Looney Left', which subsequently lost the 1979 election to Margaret Thatcher.

Thatcher neo-liberalism
When Margaret Thatcher became leader of the opposition Conservative Party in 1975, she told the public that she represented the new generation of young and upwardly mobile, telling her own story of how she made it to the top from her humble origins - a greengrocer¹s daughter. When the Conservative Party was elected to Government in 1979, she brought with her the same energy and dynamism, determined to raise England from recession to the heights of grandeur.

To this end, she unleashed the most radical economic experiment in England since the Industrial Revolution. This experiment was called Free Market Liberalism. Nobody remained unaffected: Every institution, every government department was changed irreversibly. Only owners of capital breathed a sigh of relief.

Although Thatcher was mainly influenced by von Hayek, Milton Freidman, and later by the dialogue with U.S. Reaganomics, Laissez-faire capitalism has its genesis in England. Adam Smith, writing for an already sympathetic audience moulded by the 'capitalist spirit of Protestantism' (Weber), conceived of an 'invisible hand' controlling the economy without government intervention. He ideas suggested a 'trickle-down' effect that would somehow benefit workers as well. Although Smith did write about the responsibility to community, his economics seem to contradict any concern of welfare, and due to this lack of clarity, Smith has since been interpreted to be a supporter of the free market.

Edmund Burke, one of the main intellectual pioneers of British conservatism in the early 19th century, a follower of this ‘invisible hand’ theory, was heavily influenced by Smith. Down through the ages senior British statesmen Pitt the Younger, Liverpool and Peel all pursued free trade policy, tax-cutting, deregulation and tight monetary control.

Split in the conservative ranks
In spite of their differences, latter-day Neo-Liberal Market theory is philosophically related to the Classical Liberalism of the Enlightenment. Ironically, Classical Liberalism was opposed by a group of 19th century intellectuals who called themselves Classical Conservatives. The more modern conservatism of the Thatcher variety, Neo-Liberalism, is but a crude adaptation of the Enlightenment project. It sees human beings merely as rational maximisers of their interests. Tradition and culture are obstacles to free trade and their influence should be minimised. Thatcher even used to say that there was no such thing as society. Ironically she began to sound like the vulgar economic-reductionist Marxists she so vehemently criticised.

Needless to say, a huge rift developed in the Conservative party and the battle for the heart and soul for Tory Britain began in earnest. On one side, the supply-side monetarists under Thatcher and the other, the more traditional Tories who supported Keynesian economics and family values with a traditional Christian flavour.

During Major’s administration from 1990 onwards, when the Iron Lady’s dictatorial culture evaporated from the Tory party, this battle erupted for all to see. In the fierce debate on Britain’s involvement in Europe, Eurosceptics represented the traditional ‘One-Nation’ Tories, while those supporting European monetary union were the Neo-Liberals.

Capitalism ‘with a conscience’
Thus in June Œ97 we saw the worst Conservative electoral defeat since the Great Reform act of 1832. For New Labour however it was their best majority in many years. New Labour’s attraction to the ex-Tory voter and the relatively conservative middle class as a whole was Labour¹s notion of ‘capitalism with a social conscience’. New Labour have now taken centre stage by announcing a synthesis between free trade and social cohesion. The bottom line is that the Conservatives are out of a job for at least a couple of terms until they can think of a better line than their ‘back to basics’ campaign.

Of course in politics, as everyone really knows, elections are never won, they are only lost. New Labour is already alienating many disadvantaged groups, including the unions, students, disabled and the aged. Nurses and teachers will be next and anyone else who dares ask for a decent wage.

Post-ideological era?
On the surface, it appears that we live in a post-ideological era. We seem to have run out of ideas. Social Democracy, once popular in the post-war boom, is a relic of the cold war, when Western capitalist countries wanted to give the impression of a socialist society to hold the fort against possible revolution. Now it is in retreat everywhere. It has been severely curtailed in Sweden; in Italy, Christian Democracy has almost vanished. Only Norway is going strong, but that is because the country is now reaping in the profits from infrastructure investment to develop its tremendous oil reserves. The traditional Right is also in disarray in France, and in Germany the long conservative rule is nearly over. The traditional Left and Right are fast disappearing.

In the U.S., Reaganomics America¹s Free Market agenda was defeated by Clinton’s centre Democratic party. That Clinton is also promoting the basic neoliberal agenda - free trade, no restrictions on international investment, cutbacks in welfare - doesn’t negate the point. That Clinton doesn’t attract the same animosity as Reagan and Thatcher before, is the whole point. (A liberal at heart, he was forced to play the capitalist card. The Clintons burned their fingers by trying to improve general health care in their first term. American capital only allows politicians certain initiatives, and starting a European-styled welfare state was not one of them.) The key point is that in the public eye Clinton is still basically a centralist. Capital must now be represented by "ideological-free" politicians who seem to be listening to the people.

Only capitalism has survived. Not only in England and Europe, but throughout the world, owners of capital in superbly orchestrated moves have won every ‘democratic’ election since the beginning of universal franchise. Keynesian Labour and later Keynesian Conservative parties were a smoke screen to fool the people into thinking capitalism had been transformed into a ‘mixed economy’. The post-depression ‘New Deal’ package given by American President Roosevelt was from the same box of tricks. So from the war to the mid-70¹s capital had to compromise with Keynesian economics.

For many years it could afford to do so. The world had never known such a boom period in industry and manufacturing. However, when the oil crisis of 1973 hit and a global recession was forecast, capital had to cut back on wages and rethink the ‘social contract’. It was at this time, from the mid-to-late 70’s that the ideas of Neo-Liberalism first came into vogue, the counter-evolutionary antithesis to Social Democracy. The Neo-Liberal rationale was that if capital is allowed to find its own way unhindered by state bureaucracy, economic recovery is sure to follow. Social Democrats were now on the defensive. All social institutions were now to be measured according to the yardstick of the market.

Later on in the 90's, after the demise of ‘socialist’ Eastern Europe, there was less need to keep up with the pretence of Social Democracy. Public institutions like universities, hospitals and transport were all affected by the privatisation process. And since the beginning of the 90’s, multinationals, through international free trade agreements NAFTA, GATT etc., have been getting away with unilateral mayhem.

Tony Blair, British Capitalism’s Errand Boy
In England, however, big business was becoming unpopular and could not risk the direct approach of the Neo-Liberal Tories anymore. The Neo-Liberal experiment had been going on for almost two decades. The chaos and infighting that marked Major’s administrations were causing uncertainty in the markets and general confusion in the public eye. Capital therefore needed to have its interests protected by a new image. It needed the ‘softer touch’ of the Blairites. In the guise of a people’s government and a consensus approach, capital now has a perfect disguise. Who would accuse a Labour government of ripping off the people?

In Proutist terminology, this practice of always backing the winning horse, of always cunningly changing the disguise of exploitation, is called Metamorphosed Sentimental Strategy. As the future unfolds, we will surely see more twists and turns as capital slowly finds itself with its back against the wall, which is the raison d’etre for economic globalisation - a mad rush to secure the last markets. The period cannot last forever, however: It can end in two ways - another world war to revive economies involving the most dominant capitalist countries, using poor people again as cannon fodder. Or a massive uprising of disaffected soldiers, militant workers, unemployed, disgruntled intellectuals and the general exploited mass. These are the choices that will face much of the world in the not-so-distant future.

Gray, John. Is Conservatism Dead? (1997).
Holland, Stuart. The Socialist Challenge (1980).
Sarkar, P.R. The Liberation of Intellect: Neo-Humanism (1982).

***© 1997 People's News Agency. All rights reserved. Material provided by PNA may be reprinted if the author is mentioned and if the following information is included: "Reprinted with permission of People's News Agency, Platanvej 30, 1810 Frederiksberg C, Denmark,". Please send clippings to this address. PNA is a news, views, analysis and literature service for the progressive-minded. The agency is sponsored by Proutist Universal from its global headquarters in Denmark, and serves progressive publications around the world.***