Tony Blair recently deplored `the division in radical politics at the beginning of this century, between Liberals and the Labour Party'. Socialists need to understand what Blair is trying to do, and it is tempting to look to the past to see if there has ever been a Labour leader as right wing as Blair. The only candidate who comes even close is Ramsay MacDonald, prime minister during the second Labour government, who broke with Labour to lead a National Government, in the `Great Betrayal' of 1931.
Ramsay MacDonald was born in Scotland in 1866. He worked first as a farm labourer, then as a teacher, then a clerk. At the age of 19 he travelled to Bristol, where he briefly joined the local branch of the Marxist Social Democratic Federation. He left to join a small `Christian Socialist' group. When this folded he joined the Fabian Society in London.
MacDonald began to build a career as a campaigner for Scottish Home Rule, and a supporter of the pro-business Liberal Party. In 1894 he nearly won the Liberal nomination at Southampton. It was only after he was blocked in this attempt that he began to look again at the working class left. In 1894 he joined the Independent Labour Party.
In 1900 the trade unions formed the Labour Representation Committee. Ramsay MacDonald, with his connections in the Liberal Party, was chosen as the first secretary of the LRC. He negotiated a pact with the Liberals: if the new Labour organisation would support the Liberals in government, then a small number of Labour candidates would be given a free run in the next election. In 1906, 27 Labour MPs were elected.
During the period of Liberal government from 1906 to 1914 Labour acted as faithful lieutenants, keeping the Liberals in power no matter what the cost. In 1910 MacDonald attempted to negotiate a deal out of which the Labour Party would have been dissolved and he or Kier Hardie would accept some junior office.
These contacts with the left wing of the Liberal Party explain the great mystery of Ramsay MacDonald's career: why it was that this champion of the Labour right was able to oppose the First World War while so many on the left actually supported it. As one historian puts it, [His opposition to the war] `was only surprising because MacDonald had kept his liaisons with Liberals so much a secret. His close personal, now almost daily, contacts with radicals and neutralists who were opposing the war meant that he was honour bound to do so as well.'
Even then MacDonald's anti-war record should not be exaggerated. He did not campaign inside the Labour Party against the war. And by 1918 he was firmly on the side of right wing Liberals such as Lloyd George. But the basic impact of the war was to push millions of workers towards socialism. There were huge mutinies in France and revolutions in Russia and Germany. In Britain there were huge strikes and protests: even the police went on strike in 1919. This rise in working class activity had an enormous impact on the Labour Party. Its membership doubled between 1914 and 1918. The leaders adopted a new constitution, including Clause IV, which promised nationalisation, as a sop to the millions of workers who were now far to the left of mainstream Labour. As Labour shifted to the left, so did MacDonald. He opposed the sending of British troops against the Russian Revolution. He even wrote in his diary that he was `getting more and more stuck with the work of Lenin as an adminstrator and his views of revolution.'
On the back of working class struggle the Labour vote increased from 450,000 to 2,200,000, to 4,300,000. In 1924 the Labour Party was even able to form a minority government, headed by MacDonald. Millions of workers expected Labour to provide some sort of alternative. In the words of one Labour minister, Margaret Bondfield, `We have taken over a bankrupt machine, and we have got to make that rickety machine work. There are some of us who will lose our reputations before this is done.'
Ramsay MacDonald's first government was a massive disappointment. There was no significant initiative, no major reform. The monarchy and the House of Lords were left in place. In industry the government supported employers against their workers. One of the government's first acts was to sanction the use of troops against an engine drivers' strike. Its last act was a botched legal case against members of the Communist Party.
MacDonald continued to assert that the problems of capitalism could be removed if only the workers and the bosses would get together, `as cooperative factors in one great common life'. Meanwhile events outside parliament made this reformist politics seem increasingly irrelevant. From 1924 the trade slump meant that in industry after industry owners were pushing for a pay cut. The coal bosses, in particular, wanted pay cuts of up to 20 percent. By 1925 the TUC was pledged to fight a general strike against any assault on miners' pay and conditions. The new Tory government responded by paying a temporary subsidy to keep wages intact while also preparing a showdown with workers.
Finally, in May 1926, the general strike broke out. MacDonald told the House of Commons that Labour had `nothing to do' with the strike. He asked for the chance to speak from the BBC in favour of compulsory arbitration. He even wrote to A J Cook, the mineworkers' leader, to tell him that he supported the scab Spencer union set up in Nottingham
The strike was immensely popular, and while it continued MacDonald's right wing stance only isolated the Labour leadership from the bulk of its supporters. After the strike was over, though, the nature of the movement changed. As in the 1890s, the combination of working class struggle followed by working class defeat was profoundly demoralising. Again, as workers lost confidence in their own power, their illusions grew in parliament. The Labour Party again came to the fore.
By the standards of today's New Labour the 1929 election manifesto reads like a declaration of revolutionary war. It promised wholesale nationalisation of the utilities and significant public works to combat unemployment. Much of the manifesto, however, was given over to a criticism of the more radical policies of the Liberal Party, whose manifesto pledged to raise £200 million through higher taxes to cut the dole queues.
Still, the Labour vote increased to 8,400,000, mostly among the workers who had been radicalised by 1926. The Labour Party was thus able to form a second government in 1929 with 287 MPs. The whole story of this government is dominated by unemployment. In January 1929 there were 1,433,000 unemployed. This figure was relatively static until the Wall Street Crash. After this, and under the impact of worldwide recession, it rose dramatically, from 1,533,000 in January 1930 to 2,725,000 by December.
MacDonald and his cabinet faced a real crisis. The recession put millions out of work, then the state had to borrow to pay for their benefits. Every time the government sought to raise a loan or a tax to pay for its deficit, the banks and the City responded with an investment strike. At times the government was spending £2 million a day just to keep the value of sterling intact.
The tradition of Labourism had prepared its leaders for a gradual transfer of power: once they had `control' over the capitalist state they could slowly transform society in a new direction. Faced with the realities of the anarchy and chaos of the system they had no idea what to do.
On the one hand the Bank of England, through its governor, Montagu Norman, insisted that the budget had to be balanced and that there could be no rise in taxation. The major capitalists, such as Sir Andrew Duncan, the steel boss, or Lord Weir, the engineering magnate, insisted that the unemployed had to be made to pay for the crisis. On the other hand, the unemployed were organising themselves. By August 1931 the Communist Party-led National Unemployed Workers' Movement had 37,000 members, paying weekly levies and organising hunger marches. The leaders of the trade unions saw their members' frustration at the inactivity of Labour and were afraid that the Communist Party would gain a real following.
Things came to a head in August 1931. The banks bayed for cuts. MacDonald fully accepted their argument. The TUC president, Walter Citrine, told him that the trade unions would accept cuts but only in return for real taxes on the rich. He reminded MacDonald that `the Labour Party was created by the trade union movement to do things in parliament which the trade unions found ineffectively performed by the two-party [Liberal and Conservative] system.'
Privately Ramsay MacDonald came to the conclusion that the real cause of his crisis was not the greed of the bankers, or the chaos of their system, but the unwillingness of unemployed workers to pay for the crisis. He was prepared to cave in to the banks but not to the TUC. MacDonald told the cabinet, `If we yield now to the TUC we shall never be able to call our bodies or souls or intelligences our own.'
On 23 August the cabinet voted 11-9 in favour of a 10 percent cut in unemployment benefit. MacDonald insisted the bankers had demanded a unanimous vote. When he failed to obtain this the government resigned. Within two days MacDonald and four other members of the cabinet switched sides, forming a National Government with the Conservatives and Liberals. In the ensuing elections the National Government won 550 seats the non-MacDonald Labour Party won just 46. For four more years Ramsay MacDonald remained, as the prime minister of an effectively Tory government.
It is hard now to imagine the anger which met MacDonald's betrayal, as 60,000 unemployed workers rioted in Glasgow and 30,000 in Manchester, while 12,000 unpaid soldiers on board warships in Cromarty Firth mutinied. The ILP disaffiliated from the Labour Party in disgust. One trade union branch even unstitched the eyes from the portrait of MacDonald that had been embroidered on its banner. And yet, although Ramsay MacDonald split the leadership, the Labour Party itself soon reunited around the trade unions. The MPs who followed MacDonald were isolated. One by one they lost their seats. The new `National' Labour Party collapsed. In a struggle between the unions with their millions of members, and the Labour leadership, which had the support of the press and many MPs, it was the TUC which won, and quickly.
There are some parallels between the situation in 1931 and any likely Blair government. The most important similarity is the weakness of the capitalist system. Because the system is so weak and so prone to crisis, there is very little space for reforms. Any future Blair government will be forced to make choices between its friends in the City and the working class majority in society. Each time Blair attacks workers and the unemployed he will open himself up to opposition from below. Blair would doubtless be willing to take the MacDonald route and split the Labour Party in order to keep himself in government.
However, there are also differences; and, if anything, they are more striking. Blair's roots inside the working class movement are much more shallow than those of previous Labour leaders. He is dependent on the unions to carry his policies among the rank and file as we saw even at his own conference.
MacDonald did want to change society, even if he did not want to antagonise the rich. The 1929 Labour manifesto did promise real, if limited, reforms. In 1996, however, `reforms' such as locking up young offenders, or `stable monetary growth' are no real reforms at all.