Wednesday, September 10, 2008

Economic Crisis: Learn From The Past

As we all lurch into economic crisis, will the labour movement and the left be up to the challenge? Our job is to organise for the working class to defend itself from the effects of the crisis. We need to do so ideologically, politically and economically ie. to understand the crisis, to put forward demands for government action, and to encourage effective industrial action by workers.

Failure to do so means that working-class people pay the price for a crisis not of our making. And sadly, that is what has happened in the past. So I want to take a look back at the slump of the early 1920s and examine the labour movement's response, in the hope that we won't make the same mistakes this time round.

Towards the end of 1920, the brief post-war boom came to a sharp end, as prices began to fall and trade declined. The following year, 1921, Britain's exports and imports fell by nearly half, prompting The Economist to label it ‘one of the worst years of depression since the industrial revolution’.

Employers being employers, they argued that trade could only revive by making prices more competitive, meaning costs must be cut, meaning wages in particular must go down. Over the next three years, wages fell faster than they ever have done in British history. Despite the bosses’ predictions, this did not reverse the slump. But it did have a catastrophic effect on working-class people.

In any recession, the two main classes fight over who is to carry the cost. So as employers made the workers pay the price, how well did the labour movement fight for the workers?

Soon after the war, two union leaders had made their names in two big industries. Jimmy Thomas was the General Secretary of the National Union of Railwaymen (NUR), which won wages rises through a successful national strike in 1919. At the same time, Ernest Bevin was earning the monicker 'The Dockers' KC' by his articulate and successful advocacy of the case for better wages, conditions and job security at the Shaw Court of Enquiry into port labour.

But the slump wiped away the gains of these two mammoth fights, as the union leaderships responded inadequately.

As slump set in, passenger journeys and freight tonnage on Britain’s railways fell dramatically. The government was preparing to hand the railways back to the private companies having 'borrowed' them into government control during the war, and did so by drastically cutting costs. In May 1921, they suspended the guaranteed working week - and bizarrely enough, Thomas supported them! He and the other union leaders were so scared of job losses that they accepted attacks on working conditions rather than fight both. And guess what happened next? Yep - the job losses came too: in the year following March 1921, the employers sacked nearly 60,000 railworkers.

And Bevin? He saw the Shaw Report's recommendations fall by the wayside and negotiated not improvements for workers but pay cuts. His biographer Alan Bullock wrote that "The most that Bevin and the [Transport Workers'] Federation could do was to retreat in good order, preserving the machinery for national negotiations and using it to negotiate each reduction by agreement."

After the formation of the T&G on 1 January 1922, Bevin was so determined to avoid confrontation with the employers that he negotiated a three-stage pay cut for already-underpaid dockers. In 1923, there was some hope that the third cut would not go ahead, and when those hopes were dashed, dockers walked out across the country. But the T&G refused to make the strike official and ordered members back to work. The willingness of dockers to take action like this suggest that negotiating pay cuts was not 'the most' that Bevin could have done: he could have led a fight.

On the political front, Labour had not yet formed a government, and its 60 MPs were in the most part a rump of ageing trade unionists who were not in the habit of challenging Lloyd George's Tory-dominated Coalition government. But Labour did have power in local government, having won control of a fair few Councils in the 1919 elections in which many working-class men and women had the right to vote for the first time. Many of these new Labour Councils improved pay and conditions for their own employees, several introducing a minimum wage of £4 per week. But when private-sector wages fell, political pressure came on the Councils to cut municipal wages too. Some, such as Herbert Morrison's Hackney Council, willingly obliged; others, such as Poplar, resisted. And Ernest Bevin? He denounced Poplar's intransigence and argued that they should negotiate cuts! Why? Because he could not stand to see the role of union negotiators sidelined.

The Communist Party's J.R.Campbell argued that labour movement leaders’ collaboration with wage cuts arose from a wrong understanding of capitalism: they accepted the view that the slump was abnormal for capitalism, whereas communists recognised that economic crisis is a natural feature of capitalism. “In the sphere of wages, the reformists stand for concessions to capitalism, in order to help capitalism get back to ‘normal’, while the Communists stand for a resistance to the demands of the capitalists and the preparation for a decisive struggle against capitalism.’

So industrially, politically and ideologically, let's not repeat the mistakes of the past.

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