Why were the institutions of the post-war Keynesian and social democratic settlement so easily dismantled, often in spite of widespread popular support for public services and regulation? The British experience especially pushes this question to the fore,2 but the destruction globally of what was public or common gives it a wider ambit.
Attempting to answer this question leads me to stress the importance of the creativity of labour, and an approach to political economy that has this creativity at its centre. A full answer must take account of (at the very least) the international repercussions of the collapse of the Soviet Union as well as differing national histories, political institutions, and business and banking structures, including their relations to US-dominated international institutions such as the IMF and WTO.
An initial response may well be to point to the weakness of the opposition, notably the political successors of those who constructed the post-war order (Ali 2003). It would highlight the way in which parties of the left, predominantly from social democratic traditions, adopted at differing speeds the neoliberal mantras of the superior efficiency of the private sector and capitalist markets, and acquiesced to the threats that investors would flee if more radical, interventionist policies were pursued. This was a process led in the North by ‘New’ Labour’s Tony Blair and later in the South by the ANC’s Thabo Mbeki (Anderson and Mann 1997; Panitch and Leys 1997; Bond 2004b; Satgar 2008).
This argument, however, does little more than re-describe the problem. One still needs to ask, why? Why were the parties representing working or would-be working people so acquiescent, from the 1970s onwards, in the financialisation of the economy and commodification of society?
A limited conception of labour
This period was one in which the institutions of the post-war settlement faced various crises, and a process of transition to new political and economic arrangements was under way. Different directions were possible and were indeed taken or attempted. In Japan, what became known as ‘Toyotaism’ – as partial attempts were made to emulate it internationally – was one such alternative. Its ‘just-in-time’ methods of organisation addressed the problems of fluctuating demand, and a consumer shift away from standardised mass production. Its distinctive labour process, based on teams and ‘quality circles’, sought to make workers’ practical knowledge a source of continual innovation, built into capitalist production. In Japan the context was one in which autonomous trade unions had long been defeated. In Western Europe, where in the late 1960s and most of the 1970s trade unions in many countries were at the height of their strength and self-confidence, other possible directions were being attempted, by organisations of labour themselves in which the creativity of labour was gathered and turned into the basis of alternative strategies and organisational principles through the labour and social movements – both workplace trade unions, and social movements such as the women’s movement. They were associated too with alternative models of ownership, investment and relations with government and, in different forms, the goal of extending democracy from the political to the economic sphere, a project expressing the popular self-confidence of the time.
The best known of these experiences were the ideas of the left of the Swedish labour movement associated especially with Rudolf Meidner and his proposal for ‘Wage Earner Funds’ (1993) and those radical industrial strategies associated in the UK with Tony Benn and later Ken Livingstone, and briefly illustrated by the Lucas Aerospace workers‘ alternative plan for socially useful production3 (Panitch and Leys 1997; Wainwright and Elliott 1980) as well as the London Industrial Strategy (Greater London Council 1984) . But these sorts of initiatives could be found across Western Europe.
These examples, all emerging from the late 1969s through to the early 1980s, indicated a potential. As parties allied with the organisations of labour, social democratic parties have potentially had access to the practical knowledge of how production does and doesn’t work, and how it could work in the future to achieve social and environmental goals. Similarly, they had the support of large numbers of providers and users of public services and therefore sources of know-how about how these services could become more responsive to public needs, including the potential for socially driven economic development.
But instead of seeing these supporters as knowledgeable and creative potential agents of the transformation of the existing economy, the predominant institutional culture of the labour movement has tended to understand them only as voters, sources of funds, and carriers of specific issues arising from their interest as wage earners or recipients of welfare provision (Miliband 1961; Minkin 1991; Wainwright 2012). In general, the perspective of the unions mirrored this view with an understanding of their role as being to bargain and campaign over the purpose and use value of labour as well as it's price and conditions This separation of work from politics, union from party, and the non-political nature of workplace relations ran through the institutions of the labour movement. In the boom years of Fordist production it made sense, and was consistent with a factory militancy; workers felt they were indispensable, giving them considerable bargaining power. But as companies, faced with intensified competition, internationalised and/or rationalised production and moved to regulate the independence of the workforce and threaten closures and redundancies, the limits of ‘factory consciousness’ and ‘official trade unionism’ was exposed (Beynon 1973).
At the same time as industrial issues appeared on the political agenda, social democratic parties lacked the institutional and intellectual capacity to realise the potential at their own base to initiate new economic directions, with economic democracy as it driving force.4 For the corollary of this limited conception of the role of labour and of citizens more generally was the absence, when the Keynesian, Fordist model hit the rocks, of knowledgeable and potentially powerful allies working on the inside of production towards the shared goal of a democratic and socially just solution. Even where social democratic governments attempted to introduce new industrial strategies, they depended on the knowledge and judgment of private management to implement them in practice. This helps to explain the vulnerability of social democratic governments to corporate capture, economic blackmail, and the pervasive assumption that ‘there is no alternative’.
This narrow approach to labour was also evident where utilities, infrastructure, and sometimes strategic industries or companies were taken into public ownership. In these cases change tended to be limited to ownership, which helps to explain how weakly they were defended as public organisations. More or less behind the public political stage, the boundaries between the public and the private were constantly contested and often steadily eroded by private business from the moment the foundations of the post-war social state were laid, even though at the same time private business gained considerable benefit from the fact that infrastructure and the health and education of the labour force were provided for by the state. The tendency on the part of political leaders to treat production – be it of goods, infrastructure or services – as a matter only for the professional engineer (mechanical or social) meant that little consideration was given to the practical importance of involving citizens as knowing producers, users, or members of society with a vested interest in the social efficiency of those public bodies. As a result, there was no foundation for effective mobilisation to defend and develop these public organisations, among others as a basis for a wider decommodification of the economy.
This restricted conception of labour was not inevitable. A complex of historical factors explains these relationships between politics and production. A general problem is that these parties, and the trade unions with which they were allied, reproduced the separation of politics and economics typical of liberal democracies. They saw themselves as representing labour as a sectoral interest – as wage earners and their families – within more or less existing relationships of production.
Moreover, the reform programmes of these parties were mainly concerned with redistribution through taxation and the welfare state, and full employment through Keynesian demand management. Insofar as industrial strategy was on the agenda, the alliances with labour tended to be corporatist and nationally negotiated on the basis of the sectoral interests of labour, rather than with labour understood as a distinct and creative ally in the productive process at all levels.
There were exceptions, of course, across Europe; in SA, with the ANC’s and COSATU’s Reconstruction and Development Plan; and, on a different scale, in Latin America, with Allende’s Socialist Party, the most ambitious attempt yet to challenge corporate power and redirect the economy towards social goals through alliances with a variety of popular economic actors, though mainly with the emphasis on ownership and on new forms of planning and co-ordination rather than changes to the labour process.5 Their defeats, however, make them the exceptions that demonstrate the rule.
These defeats point to the importance of the balance of power between government and private business. But we still need to explore behind this, in the European cases at any rate, and understand a mentality that helps explain why the leaders of the mass parties of the left did not even try to shift this balance of power by activating and empowering their supporters as knowing and creative producers, or sources of positive counterpower. Two dimensions of dominant thinking in these parties, reproducing wider cultural orthodoxies of the time, were important here.
The first is the predominant view of knowledge that followed the positivist orthodoxy of the time. This is best summed up for our purposes as an understanding of science – both social and natural – as a matter of laws based on regular correlations of events (rather than, say, the identification of mechanisms and underlying structures) and consequently of a kind that could be centralised and codified. In this powerful epistemology, tacit, experiential knowledge, the kind of knowledge that is now recognised as vital to the creative – including scientific and productive – process, had no legitimacy (Bhaskar 2011; Wainwright 1994). This epistemology was directly replicated in the ‘scientific management’ of F.W. Taylor, whose ideas directly inspired Henry Ford in his design of production. ‘Every single act of the workman can be reduced to a science,’ remarked Taylor (1911). He went on to define the sphere of management on the basis that ‘the development of a science involves the establishment of many rules, laws and formulae which replace the judgement of the individual’. It was not until the late 1960s that this approach came under serious challenge from business interests as well as the left. Until then, it was the accepted way of making the work process as productive as possible. By the late 1960s, that paradigm had been exhausted.
The second kind of dominant thinking concerned the nature of equality that underlay these parties’ conception of the processes of reform. They understood equality as economic and social change that could be delivered to the people by committed experts. Cultural equality was not generally part of their vision6 (Williams 1961). Indeed, it would have been deeply out of sync with the Fordist paradigm, with the separation of mind and hand as a central tenet. ‘Leave your brain at home’ underlay the white-collar versus blue-collar distinction at work, and also middle-income consumption at home. I stress these deeply embedded, materially significant mentalities because the challenge to them in the 1960s and 1970s opened up the possibility, in an ambivalent way, of a new economic paradigm, inspired by a belief in the creativity of labour and it's importance. .