Labour’s Governing Icebergs #1: The Warning of a Century
The troubled history of Labour's 1920s governments haunts a potential return to power
Over the last year The Political Inquiry has explored what a future Labour government could achieve: whether a green energy state, tax reform, housing reform, or broader governing concepts of freedom and security and the progressive nation.
In opposition to these pieces the following series will explore the possible downfalls of an incoming Labour government – or as we term it, their governing ‘icebergs’. This first piece will focus on the lessons of its first two governments, and why continued electoral victory is never assured.
The Anniversary of Discontent
The 1920s were the first of two decades in what EH Carr called ‘The Twenty Year Crisis’. This was the period between the two world wars in which empires and rising nation-states alike struggled with international and domestic instability. The world order of Great Imperial rivalry had collapsed during World War One, with it destroying half the economies of Europe and bankrupting the rest – most notably Britain, who, as the pre-eminent economy, had bankrolled its allies at the cost of ballooning debt. Domestic instability followed, particularly with poor industrial relations (1926 saw the only General Strike of British history) and numerous minority governments in a fragile parliament.
A few weeks ago was the hundredth anniversary of the first Labour government. Led by Ramsay MacDonald, the 20s would see two minority Labour governments, both short-lived and ending, notoriously, in a split and the 1935 general election defeat that 2019 is always compared to. These administrations struggled to govern effectively in those years of crisis, failing to implement a decisive agenda to deal with the problems of chronic unemployment and address Britain’s place in the world, losing subsequent elections as a result. This is the future that threatens an incoming Labour government if it does not learn from the lessons its first governments, and more recent ones, can teach.
The parallels with the modern day are stark, if a little cliche. Regional conflicts are on the rise, most notably in Ukraine, and tensions between China and the USA have, for years, threatened a global confrontation not seen since the Cold War. The Global North’s economy has been creaking since the 2008 Great Financial Crash, especially in Britain, where two self-imposed mistakes, first austerity and then Brexit, has particularly held it back. This, of course, was only made worse by COVID-19 and the Ukraine War, alongside a third self-inflicted wound (Truss’ mini-budget) and the recent instability in the Middle East with its ramifications for shipping through the Red Sea. It is worth noting, however, that, despite the media’s obsession with recent economic troubles, particularly in terms of the debt level, the economy had already stagnated in the last quarter of 2019 and in the first quarter of 2020 thanks to a broken economic settlement . High inflation and interest-rate rises has made improving that unstable and already stagnated domestic situation extremely difficult. The next government will undoubtedly have a difficult time after a decade of crises. But there are more specific parallels within the Labour Party itself, too.
A Century On
There have been rumblings of a cautious first term under a prospective Starmer government, and stronger, more decisive second term. This is all very well and good, given second terms are traditionally the time government’s can achieve more radical change – but that assumes a second term to be inevitable. It may well be, given the Conservatives’ divisions and extremism. But we should not forget that much the same was said in 2019 about the Conservatives, with many articles even predicting the end of the Labour party – as they are now for the Tories. Labour have come a long way since then, and it would be wrong to predict the most successful political party in Britain’s history (the Conservatives) could not do the same, even if it is unlikely.
The 1920s Labour Party faced a stronger Conservative party, and were governing in minority governments, which hamstrung attempts at enacting radical policies. But so too did their philosophy of respectability. The MacDonald governments believed the only way the country would support a transition to socialism was if they believed that the only mainstream socialist party could put the national interest first – and this was defined by an emphasis on fiscal responsibility, on righting the ship before enacting socialist change, despite British capitalism’s deep crisis. Often this is a justified caution, we saw the result of ignoring this in 2019. But sometimes economies cry out for change. This was the case in the 1920s and 30s, British capitalism only being revitalised by postwar Keynesianism – state intervention and deficit spending to fund growth. It's likely the case a century on, too.
Even if you think we’re wrong on this somewhat gloomy prediction, Labour might look to its last electorally successful prime minister – Tony Blair himself has said that his government was not active enough in the first years of government. This obviously, did not lead to defeat in 2001, or even 2005, for that matter. However, what remains of the Blair governments? The largest increase in funding for the NHS in 2004, Sure Start and all the education (x3) you could want seem a long time ago after fourteen years of the Tories. Of course we are being somewhat harsh, these policies, and others like the Child Tax Credit, had hugely positive effects for many people. But it is noticeable that the truly lasting change came from more structural policies like the imposition of a minimum wage – the one (economic) policy that has lasted. There were not enough of what Hennessy calls ‘bridge’ policies, the policies that remain almost untouchable for decades – to name a few, Attlee’s NHS and house-building programmes, or Thatcher’s deregulation of the City and right-to-buy policies, all topics of consensus in British politics for at least three decades after their implementation. (Hennessy, A Duty Of Care p. 97).
But Labour are in danger of forgetting these lessons its past can teach. If MacDonald’s Labour believed in fiscal responsibility and waiting for the economy to right itself, then so does the iteration Starmer leads. Ask Rachel Reeves, the shadow chancellor, what the plan for public services is, or how she intends to oversee a growing economy, and the answers are painfully woolly, and point to a party at pains to present itself as fiscally responsible even if this boxes them in to that MacDonaldite mistake of assuming an economy beset by global instability will magically correct itself. Indeed, the party is in danger of, as in the 20s, of almost accidentally falling into a period of austerity due to their concern with keeping a lid on spending and the structural traps the Tories have left in delaying departmental cuts. The OBR may now be predicting a less bad economic forecast, but it is still just that – less bad. Already at the end of 2019 the economy had stagnated, and little has been done to change that fact since, especially considering the global situation has worsened and the only accepted way to growth, in the media and the Tory Party, is to lower taxes little by little. The overall economic picture remains as grim as ever – stagnation since 2008 in productivity and wages, and even the prospect of per capita GDP decreasing in the next year.
The Ming Vase
Of course, much of Labour’s caution is the result of a ‘ming vase’ strategy. This is the idea that the party has to be as careful as possible in protecting their polling lead (the vase) while crossing a room with a waxed floor (the months preceding the election). We don’t dispute the necessity for caution with a hostile media and an electorate ready to believe the worst of Labour, though we do think they have more political ‘space’ than they might realise. What we are concerned about is that this strategy will continue into government. Labour’s reputation as the party of change and public services will only last for so long, and there are already (rightfully) predictions that Starmer’s honeymoon period will be very short. Here, then, is where the current party must learn from its formative years. MacDonald’s governments of the 1920s took plenty of long-term goals for a transition to socialism into government – but, concerned with only righting the status quo in the short term, they were rapidly booted out of office. If the nation wanted things to stay the same, they would vote for the Conservative government – their patience with an incoming Labour government will not last long.
There is something else we fear Labour are forgetting: the calls for change still resonant in the electorate, those that cried out in 2016 and 2019 for a revolution in the status quo. To us, it seems like this has been forgotten in the last two years – the call for change interpreted only as a cry for an end to a Conservative Government out of time and out of ideas since the end of Johnson’s ignominious reign. Starmer must be the one to interpret the new consensus effectively, else he will be remembered like a MacDonald or a Wilson, not an Attlee or a Thatcher. One may instinctively believe, or more accurately want to believe in Marr’s opinion (as we have at times) that:
“Starmer will emerge, after winning the election, as a quiet, methodical radical who, if things go well, may be, one day, compared to Clement Attlee.”
But one only has to look at Marr’s record of analysing political figures in history to realise he of all people is no oracle on this, stating about Thatcher in 1995:
“Five years on, there is no monument to Baroness Thatcher...The woman who was once a political iconoclast, a radical of world class, is reduced to the level of an exiled Stuart, restlessly travelling and remembering past glories.” (‘The ghost in the Tory machine’, The Independent, 1995 23 November)
And this points to the lessons Labour’s history can teach. An overly cautious approach in government can, and very well might, create the conditions for a forgettable, short-lived reign – or at least a missed opportunity to create long-lasting change. This is especially the case given the structural challenges facing a Starmer government, namely a Blairite wing gearing up to support an already too-cautious British state. It is to these issues of ideology and structure that the second and third parts of this series will turn.
Never Forget
What must not be forgotten, therefore, is that Labour must use power when it can. When the moment calls for a larger state the party has to take advantage. This is the lesson Labour must take from the MacDonald governments and, to an extent, from the New Labour governments. There is no guarantee of a long period in office if a government is overly cautious when change is demanded, and there is no point being electorally successful if your end goals are not achieved or, as in the case for many of Blair and Brown’s achievements, are simply reversed the next time the Conservatives win.
Learning these lessons from past governments speaks to what Labour must hold onto from its period in opposition: that politics, at the moment, as it was in that last ‘twenty year crisis’, is fuelled by instability and that, therefore, the state is a structurally important part of creating a new settlement that can preserve democracy as it travels into ever dangerous decades. Britain’s problems are too large to be wished away by a return to the orthodoxies of the past five decades. The world is not getting safer anytime soon and though caution is all very well in opposition, to achieve success a Labour government must cast off its shackles quickly. If it doesn’t, it either won’t last very long, or be remembered as a missed opportunity.
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Tom Egerton is a political writer and researcher, his upcoming book ‘The Impossible Office?: the history of the prime minister’ is out in March 2024, published by CUP and co-authored with Anthony Seldon. Follow Tom on X / Twitter here and email him at tom.egerton.003@gmail.com.
