Modern Times: The World From the Twenties to the Nineties (118 page)

The Moscow visit itself achieved nothing (nor did the Big Power summit in Paris in 1960), but it proved a costly error, for it persuaded Adenauer that Britain in general, and Macmillan in particular, were unreliable partners, capable of doing a deal with Russia behind Germany’s back and at her expense.
⁷⁴
It brought out his Anglophobia. He saw Britain as an international con-man, pretending to a status unjustified by her resources or her efforts. ‘England’, he wrote, ‘is like a rich man who has lost all his property but does not realize it.’
⁷⁵
He said his three chief dislikes were ‘the Russians, the Prussians and the British’. Macmillan was trying to exploit ‘us poor, dumb Continentals’. British policy was just
ein einziges Feilchen
, one long fiddle.
⁷⁶
De Gaulle, during their long and frequent talks together, played skilfully on Adenauer’s antipathy and suspicions. Macmillan finally applied for Britain to join the
EEC
in
July 1961, by which time it was a working community, becoming set in its ways. Britain’s adherence meant structural changes which threatened the delicate balance of Franco—German advantage. When this became apparent, de Gaulle vetoed British entry, at a spectacular press conference on 14 January 1963. If Britain entered, he said, it would be as a Trojan horse and ‘in the end there would appear a colossal Atlantic Community under American dependence and leadership which would soon completely swallow up the
EEC
‘. This would jeopardize ‘the friendship of Germany and France, the union of Europe as they both wish it and their common action in the world’, which rested ‘on incomparable popular support’.
⁷⁷
To Britain’s chagrin, Adenauer signified his silent approbation of the French
non.

Nevertheless, the way in which these two old men saw the world was not the only reason for rejecting British membership. With every year that passed Britain was growing poorer relative to the members of the
EEC
. This posed a different set of problems. For if the structure of the Community (especially the
CAP
) was based on a bargain between France and Germany, the bargain would apply even more forcibly to Britain, which would have to pay for expensive
EEC
food in return for access to markets for its manufactured goods. Would these prove competitive enough to make the bargain work? In November 1967 de Gaulle again vetoed British entry, and this time he pointed to chronic weaknesses in the British economy, and the difficulty of correcting them, as his justification.
⁷⁸

Structural weakness in the British economy,
vis-à-vis
her main industrial competitors, had become apparent in the period 1870–1914 and again in the 1920s. But there had been a recovery in the second half of the 1930s, especially in high-technology areas; the economy had performed well during the Second World War, and it continued to do so up to 1950, when exports were 144 on a 1938 index of 100.
⁷⁹
In 1950 the British
GNP
was $47 billion against only $75 billion for all six future
EEC
powers. British exports, at $6.3 billion, were more than two-thirds those of the Six ($9.4 billion) and
GNP
per capita
was nearly twice as high ($940 to $477). Twenty years later, in 1970, British
GNP
per capita
had rather more than doubled, to $2,170. That of the Six had multiplied more than five times, to $2,557. While British exports had tripled, those of the Six had multiplied nearly ten times. Their reserves, smaller than Britain’s in 1950 ($2.9 billion against $3.4 billion), had also increased by ten rimes, while Britain’s had shrunk.
⁸⁰
By any conceivable continental standard of measurement, the British economy had performed badly. The gap widened throughout the 1970s, despite the fact that Britain actually joined the
EEC
on 1 January 1973.

Why this chronic weakness? Britain had been the first to industrialize, a process starting on a large scale in the 1760s. In the two hundred years since, it was the only major industrial power which had not suffered the convulsion of revolution, foreign conquest or civil war: those fundamental breaks with the past which, as the post-war history of France and Germany indicated, promote social and economic dynamism. Britain had no constitutional bill of rights, no written guarantees designed to protect the assumptions of a liberal society. It had instead the Common Law tradition, arbitrated by the judges, which effectively upheld rights of liberty and property and was, indeed, the legal framework within which the British created the first modern industrial society. This continued to function throughout the nineteenth century as an effective legal setting for industrial enterprise. In 1900, however, the trade unions, which already reflected the anachronisms and anomalies of early industrialization, especially in the multiplicity of ancient craft unions, created the Labour Party, to promote ‘legislation in the direct interest of labour’ and oppose ‘measures having an opposite tendency’.
⁸¹
The salient characteristic of the British Labour Party, as opposed to other socialist movements in the West, was that it was not primarily Marxist or even socialist but a form of parliamentary syndicalism. The unions owned it. They directly sponsored a hard core of Labour MPs (128 in 1975, for instance) and, more important, paid about three-quarters of the party’s national funds and 95 per cent of its election expenses.
⁸²
The party constitution, by a system of union membership affiliations expressed in block votes, made the unions the overwhelmingly dominant element in the formation of party policy.

Parliamentary power was quickly reflected in statutory measures to destroy the Common Law balance within Britain’s unwritten constitution, and tilt it decisvely towards organized labour. In 1906, the first year Labour was strongly represented in parliament, it passed the Trade Disputes Act, which gave unions complete immunity from civil actions for damages (torts) ‘alleged to have been committed by or on behalf of the trade unions’. Such immunity existed nowhere else in the West, for in effect it made unions impervious to actions for breach of contract, though the other parties to the contract, the employers, might be sued by the unions. Even the Webbs regarded it as ‘an extraordinary and unlimited immunity’. The constitutional lawyer A.V.Dicey protested: it makes a trade union a privileged body exempted from the ordinary law of the land. No such privileged body has ever before been deliberately created by an English parliament.’
⁸³
This critical act, giving unions a special status in law, became the plinth on which was subsequently erected a
weighty and complex superstructure of union statutory privilege. The Trade Union Act of 1913 legalized the spending of trade union funds on political objectives, that is the Labour Party, and laid down that union members with other party affiliations had to ‘contract out’ of their political dues (a difficult and unpopular procedure) if they did not want to contribute to Labour funds. This procedure was reversed to ‘contracting in’ by the Conservative Trade Disputes Act of 1927, which also made political strikes illegal. But as soon as Labour got an absolute majority in parliament in 1945, it repealed the 1927 act and went on to give the unions special status within the nationalized industries it created and, indeed, within all its social and economic policy acts. The judges continued, from time to time, to uphold Common Law protection for individuals against unions. But whenever they found a hole in union privilege law, the unions were able to lean directly on a Labour-dominated parliament to plug it. Thus, the House of Lords in
Rookes v. Barnard
(1964) held that an unofficial strike in breach of contract was actionable. The next year, a new Labour government legalized it in the 1965 Trade Disputes Act.

In the 1960s and 1970s, growing union power was exerted in a variety of ways. In 1969, the unions vetoed the so-called in Place of Strife’ legislation the Labour Prime Minister, Harold Wilson, proposed to enact to reduce the number of strikes. In 1972 the unions introduced new forms of direct action, including ‘mass picketing’, ‘flying pickets’ and ‘secondary picketing’, which the police were unwilling or unable to curb. In 1974 they used these devices to destroy a Conservative government responsible for the 1971 Industrial Relations Act which attempted, albeit ineffectually, to introduce a statutory code of union conduct. The Labour government which followed not only repealed the 1971 Act but pushed through parliament a mass of legislation extending union privileges, of which the Trade Union and Labour Relations Acts of 1974 and 1976 and the Employment Protection Acts of 1975 and 1979 were merely the most important. These extended immunity to tort actions to cases where unions induced other parties to break contracts, obliged employers to recognize unions and uphold ‘closed shops’ (to the point where an employee could be dismissed without legal remedy for declining to join one) and to provide facilities for union organization. The effect of this mass of legislation was to increase the number of ‘closed-shop’ industries and to push unionization above the 50 per cent barrier of the workforce for the first time, compared with 25 per cent or less in the United States, France and West Germany. Even more important, however, was that it removed virtually all inhibitions on union bargaining power. As the Master of the Rolls, Lord Denning,
remarked: ‘All legal restraints have been lifted so that they can now do as they will.’
⁸⁴
In the early months of 1979, under chaotic leadership, the uninhibited unions effectively destroyed their beneficiary, the Labour government. Its Conservative successor thereupon introduced minor abridgements of union privileges in the Employment Acts of 1980 and 1982.

Excessive union legal privilege and political power contributed to Britain’s slow growth in three main ways. First, it promoted restrictive practices, inhibited the growth of productivity and so discouraged investment. In the quarter-century 1950–75, Britain’s investment and productivity record was the worst of any major industrial power. Second, it greatly increased the pressure of wage inflation, especially from the late 1960s onwards.
⁸⁵
Thirdly, trade union social and legislative demands on government had a cumulative tendency to increase the size of the public sector and government share of
GNP
. Britain had traditionally been a minimum-government state: that was part of the benevolent framework which made the industrial revolution possible. The census of 1851 registered less than 75,000 civil public employees, mostly customs, excise and postal workers, with only 1,628 manning the central departments of civil government, at a time when the corresponding figure for France (1846) was 932,000. In the century that followed the proportion of the working population employed in the public sector rose from 2.4 per cent to 24.3 per cent in 1950. To put it another way, during the 120 years 1790–1910, proportion of
GNP
accounted for by public expenditure never rose over 23 per cent and averaged 13 per cent. After 1946 it never fell below 36 per cent.
⁸⁶

The really damaging increase, however, occurred after 1964, during a period when Labour was in office in eleven years out of fifteen. In the 1950s and early 1960s it had been just over 40 per cent. In 1965 it passed 45 per cent and in 1967 50 per cent. The 55-per-cent mark was exceeded immediately after Labour returned to office in 1974 and the following year it rose to 59.06 per cent. In 1975–6 public sector borrowing alone had reached 11.5 per cent of total output, and the total of new public borrowing over the past five years alone exceeded £31 billion.
⁸⁷
By this stage the combination of public overspending and wage-inflation was in danger of pushing the British inflation rate into the 40 per cent band. In the autumn of 1976 Britain was obliged to call in the broker’s men of the International Monetary Fund and submit to their
diktat.
Thereafter there was some retrenchment and, after the Conservative electoral victory of 1979, a systematic attempt to reduce public borrowing, restrain the public sector and expose the economy to the deflationary discipline of market forces. This, combined with the impact of the
North Sea offshore oilfields, which made Britain self-sufficient in oil by 1980 and a substantial net exporter by 1981, stabilized the economy and raised productivity to competitive levels, though on the lowest level of economic activity since the late 1960s. By 1983 Britain was recovering, but very slowly, and unlikely to be able to exert any form of leadership, inside or outside the
EEC
, for some time to come.

Britain’s relative failure, however, was an exception. Over the whole of Europe west of the Iron Curtain, the four post-war decades saw a spectacular social and economic improvement. It was accomplished, moreover, against a background of constitutional legality and political peace. The contrast with the inter-war period was stunning, even in the most favoured areas. The Scandinavian countries had one of the worst records for unemployment throughout the 1920s and 1930s. In the winter of 1932–3 the percentage of the labour force out of work rose to 31.5 in Sweden, 42.4 in Norway and 42.8 in Denmark.
⁸⁸
It was a period of intense class-warfare. Paramilitary forces had to be created to maintain order, and it was from the bitterness of social strife that Vidkun Quisling built his Nazi-type movement with its uniformed
birdmenn
modelled on the
sa.
⁸⁹

The change came in the second half of the 1930s. In Norway (1935), Sweden and Denmark (1936) and Finland (1937), Social Democratic governments emerged which introduced comprehensive social security programmes. They were financed by rapid economic recovery. In Norway by 1938
GNP
was 75 per cent above its 1914 figure and in Sweden it increased 50 per cent in the years 1932–9, though Social Democracy was no more able than any other pre-war system (Hitlerism alone excepted) to solve mass unemployment.
⁹⁰
Already, in the later 1930s, British and American observers, such as Marquis Childs and Lord Simon of Wythenshawe, were drawing attention to what Simon called ‘the most encouraging thing in the world today’.
⁹¹
The Social Democrats continued to dominate Scandinavian politics until the late 1970s, achieving prodigious democratic continuity. In Sweden Tage Erlander held the premiership for a record twenty-three years. Einar Gerhardsen had a comparable record in Norway until his retirement in 1965. The Social Democrats retained power from 1936–76 in Sweden and in Norway from 1935 to 1981 (except 1965–71); and they were dominant throughout this period in Denmark and Finland. This social and political stability enabled Scandinavia to make a striking contribution, in relation to its numbers, to the world economy. In the mid-1970s, 22 million Scandinavians produced nearly 20 million tons of grain, 5.6 million tons of fish (twice America’s and five times Britain’s production),
25.2 million tons of iron ore (more than Britain, France and Germany combined) and 49 million tons of wood and paper (a quarter of US production). Scandinavia generated more electric energy than France, and its shipbuilding exceeded that of America, Britain, France and Germany together.
⁹²
But in the 1970s the growing cost of welfare services, the exigencies of the powerful trade union movements, as in Britain, and the impact of very high taxes combined with the energy crisis to destroy the dynamism of the Scandinavian economies, especially in Sweden, and ended the Social Democratic power monopoly. Non-socialists recovered office from 1976–82 in Sweden, in Denmark and in 1981 even in Norway, which had benefited from North Sea oil. The Scandinavian experience indicated that, even in the most favourable circumstances, there were severe practical limits to what a social welfare democracy could offer.