As ‘Double-Dip’ George prepares for his U-turn and, in the words of Mary Riddell, announces a splurge of spending, there is an uncanny sense that we are reliving the 1970s.
After the 25 years of mixed economy, state-owned, welfare state society that was put in place in 1945, the 1970s was an era of transition from one socioeconomic era to another. Similarly the long cycle of liberalised, globalised growth since 1980 came to a shuddering stop in 2008. We are again in a transition period between one economic model and the next – as yet undefined – new economic model era.
The same symptoms of the 1970s are in place. A new Tory prime minister full of puff and hate against his predecessor. A promise for a new way of governing the country. A desire to introduce more rigorous control of state expenditure.
The Edward Heath-David Cameron parallels go further. Heath was disliked by his party base just as Cameron is not trusted by his. Both were haunted by the European question – Heath wanting to take the UK in, and Cameron not sure whether to take Britain out as many of his MPs and advisers now say should be done.
Tony Barber was Heath’s lieutenant as chancellor. To begin with he insisted that the state lessen its presence in the economy and cut spending. Within two years, as unemployment and business closures soared, Barber was forced to revise his philosophy. The U-turn as it came to be called, saw public spending go up and efforts to support business just as George Osborne will announce today.
There is social unrest. In the 1970s it was the post-1968 generation of radical activists who fanned out into unions especially the white collar ones like the NUJ and NUT as well as the public sector. Like the Occupy movement today there were endless campus occupations. There were giant national strikes led by miners which caused Britain almost to shut down just as tomorrow’s mammoth strike could see Britain closed to the world as Heathrow will barely function.
The Labour party in the 1970s was uncertain. It did not know whether to defend or move on from the Wilson era government of 1964-1970. But as with Labour’s brilliant new generation of MPs – soon to be boosted by the arrival of the impressive young Fabian woman, Seema Malhotra, in the Feltham and Heston seat – the 1970s saw the arrival of Robin Cook, John Smith, Neil Kinnock and other young MPs who moved swiftly to leadership positions.
Today it is the eurozone crisis. In the 1970s it was stagflation. Purchasing power is depressed today as debts have to be cleared and, other than for the top bosses, there is pay standstill which given the rise in fuel and food costs actually means a pay cut for most people. Then it was 30 per cent inflation that destroyed pensioner and other fixed-income purchasing power.
Today it is a shaky ConDem coalition. In the 1970s, it was minority governments. In fact, in the nine years 1970-1979 there were four elections and five administrations as politics was febrile and uncertain.
In the 1970s there was a great fear about immigration from Pakistan. Today there is a great fear about immigration from Poland. Enoch Powell’s incantations found echo then just as Maurice Glasman’s blue Labour calls for bans on EU workers resonate today. China is hailed as the coming world economic power today just as Japan was in the 1970s. The loss of confidence in British ability to control the nation’s destiny was palpable 40 years ago just as it is today. America was seen as weak and badly led by Gerald Ford and Jimmy Carter after the Nixon years. Until 1975, the US was bogged down in Vietnam just as America is mired in Afghanistan under a president who is contested and without clear national authority.
The 1970s transition era ended with the arrival of Margaret Thatcher and Ronald Reagan and, in their different ways, Francois Mitterrand and Helmut Kohl. The world economic model stabilised around a more open, individualised, get rich-style. Paradoxically, the state grew in this liberal era. It exchanged ownership for regulation and was called upon to create new structures and interventions.
Unions gave up confronting capitalism and instead become concentrated in the public sector where fellow working-class taxpayers had to pay for any union advances. In the postwar welfare state era, it was largely centre-right governments who held power – Macmillan, Adenaur, de Gaulle, or the eternal Christian Democrats in Italy. The 1980-2008 globalisation, liberal era saw the left take over government for long periods. 21 years for the Spanish Socialists. 14 years for Mitterrand. 13 years for Labour and 10 for Social Democratic German leaders.
Today’s panic spending announcement from Osborne is typical of the 1970s. The Tories did not understand then what was happening to the national and global economy. Heath liked to blame Nixon’s decision to break up the Bretton Woods system just as Cameron likes to blame Europe. Infantile politics always demands an external bogey-man to blame for political incompetence.
What was not clear in the 1970s and is not clear now is how a transition era ends. But end it will and the only question is which political set of ideas will emerge triumphant. So far there is no sense that anyone is working on the next era’s political philosophy so the current transition era could last as long as that of the 1970s.
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Denis MacShane is MP for Rotherham and a former minister for Europe
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I joined Labour in the 1966 period when low wages, but you could get a job, Ted Heath is now seen by many as a Tory come socialist, he helped out a lot of people, today after New labour and Blair I’m willing to give Cameron the time he needs after thirteen years of labour we have to give the Tories a chance, after all you lot messed up big time, and I do not think we can yet trust you lot yet.
So Labour were to blame for world economic events but the coalition is not? Wish people would be consistent. Sure blame Labour for the collapse of the sub-prime mortgage market in the USA and the consequential global impact but then have the decency to blame the coalition for the crisis in the eurozone!
Just like Labour it was no me it was them, we did nothing.
Denis:
You say “there is no sense that anyone is working on the next era’s political philosophy…”
This is an unexpected view, coming from you. I would have thought, with your European perspective, that you could see the new emerging in the old. An EU in which sovereignty is, in part, pooled. An EU in which the de facto coalitions of the Council of Ministers, the Commissioners and the Parliament are a source of strength rather than a sign of weakness (as is the case with the current UK coalition). An EU of the regions of Europe – as well as of the states of Europe. An EU projecting soft power in place of hard power.
These structures, relationships and their trajectory are located within a political philosophy of democratic consensus. And all can have their counterparts in the governance of the UK of GB and Northern Ireland, displacing the tiresome spectacle of our bi-partisan politics that alienates people from politics and that is massively inefficient because consecutive governments flip-flop on policy implementation.
I’m guessing Denis wrote this prior to hearing most of what the Chancellor had to say. Ossie’s public sector pay cap annoucement suggests he’s still living in the 1870’s, such is his disregard for ordinary public sector workers. How can a millionaire employer expect to get away with saying to people who have had no pay rise for two years and are in fear of losing their job along with 1/2 million other public employees that they need to pay an extra 3.2% from next April so they can get worse pension benefits than they’re currently contractually entitled to receive. A pension is saving for a rainy day when most are hoping this is as wet as it will get! Now he says this pay cut will be consolidated by a miserly below inflation 1% cap on pay rises until April 2014 at the earliest! For clarity a 3.2% increase (or tax rise as in most cases this isn’t going into any pension pot) is over £70 a month for someone on £22K a year; around £100 a month for someone on £32000 and for someone on £50,000 (say a head of department in a secondary school) £160 a month. If the later has two kids they’ll also lose access to universal childcare benefits and be a further £200plus a month worse off before other tax and NI changes – that’s equivalent to a targetted tax rise of over 8.6%.
Now imagine what the reaction from the private sector (let alone the banking sector) would be to Ossie announcing targetted income tax rises from next April of 3.2% for average earners and 8.6% for all earning over £45,000 p/a. I predict not a single commentator would say he could be elected to a Bullingdon Club Social Committee let alone parliament but so how in modern Britain it’s ok as long as its only those pesky miserable public secotr workers who are targetted.