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HEATH'S FIRST IDEA
The idea that the political representatives of the bourgeoisie and the working class should meet with the state to discuss inflation first appears on the political scene as more than a random notion in late June. Up until then, the employing class were willing to take the Government and Mr. Heath's 'new-style Conservatism' at its face value: to at least give their programme a fair crack at the whip. That programme was 'new-style' insofar as it rejected the Conservative approach evolved during the interwar and War period by Baldwin, R.A. Butler, H. Macmillan, Boothby etc. This was to accept that it was the job of the state to act as 'honest broker' in facilitating the forces of society (the bourgeoisie and the working class) in their new task of consciously regulating production and the relations of production (it was a new task because it was only in the interwar period that both sides came to see this as a definite job that had to be undertaken if production were to continue). This approach was followed in the Conservative Governments from 1951-1964. It was abandoned by the Party during their period of opposition because it was seen by the party leaders to have failed.
The material reality of the failure was the Labour Government's attempt to formalise and further develop this approach in the 1964 tripartite agreement on prices, incomes and productivity. The Conservatives watched George Brown's promised land of a growing national cake where all benefited sealed with the Declaration of Intent from the TUC, CBI and the Government in 1964 amidst much ceremony and smell of historic occasion. They watched as the god turned out to be an idol with feet of clay: the working class did not formulate its wage demands on the basis of the amount of the national cake which was actually available for consumption if the amount necessary for investment (i.e. growth) was also to be found. Instead, they saw the trade union leaders insisting that it was the right of the working class to make their wage bargains with no Government interference; the state had only been fettering the working class in its pursuit of its just demands all along. The working class could look after itself in the economic struggle; the state had no place there.
"At the time I am speaking of (Gladstone's childhood), the working man was forbidden by law to join with other working men for the purpose of giving value to his labour in the market. Capitalists were powerful, were individually powerful, and were permitted to combine as much as they pleased; but working men might not lay their heads together for their own purposes ... There is no doubt there has been very much done since those days to secure a fair remuneration for their labour. They are now, what they ought always to have been, as free as law can make them to sell their labour in the market at the best price it will yield." (WE Gladstone, The Workman and his Opportunities, 1889)
Faced with the working class's classic expression of liberal principle (the 1871 TU Act gave legal sanction to the working class's right to organise their side of the contract making - giving substance to the formal equality of the wage bargain) the Conservatives accepted it at its face value; and also took up a liberal stance: the state indeed had no place in bringing together employer and employee to consciously regulate production; the state's job was to permit the market to operate and it was the market which did all the regulating that capitalism required. Thus, the Conservatives' programme for dealing with inflation when they assumed office was to set a good example for private employers in making wage contracts. They reasoned that the present economic situation compelled employers to slow the rate of money wage increases and therefore the Government as employer of labour must do just that. The Government approached public sector negotiations as an employer who had his own economic interests to safeguard first and foremost. The Department of Employment Conciliation Service was told to cease conciliating in an inflationary way. The philosophy of the Conciliation Service from its inception in 1896 had been to promote industrial peace and develop orderly ways of settling disputes. But now industrial peace should not be pursued at the peril of the economic forces in the situation. Inflation was making it impossible for capitalism to function; therefore, the prime consideration was to reason with both sides until they too saw the necessity for moderating wage demands.
On the Tory accession to power, the "left" pronounced that Heath was taking us back to the days of laissez-faire and satanic mills. In fact, the Conservatives were simply following the political logic of the working class leaders and the working class to its inescapable conclusion. As the working class had now decisively rejected all attempts to consciously regulate production and the relations of production, it was only possible to return to the position where the forces in society met head on - the relative strengths of each had to be tested against each other and the "solution" appeared as the result.
The Conservative Government began by baldly stating the economic facts and drawing the conclusions from them: inflation must be moderated and therefore wage demands of more than 7-8% would be unacceptable to it as public sector employer. The first reaction of the trade union leaders and the "left" was frank disbelief; this was not negotiating but intransigence and pigheadedness. It should be noted here that the development of left militants' strategy in the late sixties was even more clearly in this direction. For the first time, trade union annual conferences were mandating their executives as to the exact amount of the increase required by the rank and file. There was to be no negotiating as to the figure, that would constitute a sell-out: it was either the demand in full or withdrawal of labour. The 'left' saw this strategy as one for control over the slimy bureaucrats at the top. It was crucial for the 'left' because they saw the reason for the failure of a revolutionary consciousness of the working class to appear as the trade union leaders' 'stranglehold' over the rank and file. If the hold could be broken, a revolutionary upsurge must follow. Thus, the Conservative Government (and the Engineering Employers Federation in the recent dispute) laid all its cards on the table at the beginning of the game because the trade unions had opened by revealing their hand.