The Wilson government was facing deepening economic difficulties at this time, as a result of the long-term decline of British capitalism. Britain was being constantly outstripped by its competitors. The short-sighted British capitalists were not willing to invest in the modernisation of industry, as was evident in the steel industry and shipbuilding. Instead, they invested abroad, or in gold, in antiques and old paintings, but not in productive industry. The lack of investment forced British workers to use antiquated machinery, resulting in the loss of world and home markets. By 1964 Britain’s share of world exports had fallen to just over 14 percent. The decline was masked by the general increase in world trade, but the fact remained that Britain was falling further and further behind.
In a desperate bid to restore industry’s competitiveness and overcome the balance of payments crisis, the government devalued the pound sterling in 1967. The British bosses, however, instead of using the devaluation to become more competitive abroad, simply raised their prices. As a result, their share of world exports fell from 14.4 per cent in 1964 to 10.8 per cent in 1970. Import penetration increased from 11.9 per cent in 1964 to 14.8 per cent in 1970. Although the mass of profit increased, average profit margins fell from 14.5 per cent to 10 per cent between 1964 and 1969, reflecting a falling rate of profit. The government, operating on the basis of its incomes policy, attempted to reverse this decline by boosting profits at the expense of workers’ living standards.
The deepening economic crisis forced the Labour government to introduce a series of cuts and counter-reforms: free school milk for secondary pupils was abolished, prescription charges were reintroduced, National Assistance rules were tightened up, and wage restraint introduced, while profits rose. In terms of foreign policy, which is always a continuation of home policy, and based upon exactly the same class considerations, the Wilson government gave full backing to American imperialism in its aggressive war against the Vietnamese people. The results of these policies at home and abroad were to disappoint and demoralise activists in the Labour movement as well as its supporters throughout the country. Party meetings were reduced to a shell as activists drifted away and internal Party life collapsed.
Opposition to the American war in Vietnam caught the imagination of the youth, especially the student youth. Huge protest demonstrations were held in London and elsewhere. In fact, 1968 was the highpoint of student radicalisation internationally. A further stimulus was provided by the events of 1968 in France, where ten million workers had occupied the factories in the biggest revolutionary general strike in history. This was completely unexpected by most of the Left in France, who considered that the working class had been bought off and corrupted by capitalism.
The movement in France began with the students and has therefore been wrongly presented as a “student revolt”. But in fact the main revolt was on the part of the working class. Students, who are predominantly from a middle class background, cannot play an independent role, but they are particularly sensitive to the moods in society. At this time, they represented a barometer of the new radicalisation that was developing deep within the bowels of society. The student ferment was a harbinger of the later movement of the working class, as we saw in one country after another after 1970.
The revolt of the students provided the spark that lit the smouldering discontent of the working classes that had been quietly accumulating for years. Although there were less than four million workers organised in the unions in France, ten million occupied the factories, mines and offices. The French ruling class was alarmed and despondent. The government did know how to react, and had effectively lost control of the situation. President De Gaulle told the American ambassador: “The game’s up. In a few days the Communists will be in power.” This was no exaggeration. If the Communist Party and CGT had wished it, the French workers could have taken power without a civil war. There was simply no force able to resist them. But the socialist transformation of society was not on their agenda, and the opportunity was allowed to slip.
In June 1968, after three years of deliberation, the Donovan Commission delivered its Report on British trade unions. As expected, the Report identified the central problem as the spread of unofficial strikes, estimated to have formed 90 per cent of all strikes between 1960 and 1968. Of course, this “problem” arises from and is a reflection of the conflict within capitalist society. It has its roots not in trade union practices, but in the class struggle itself. The Commission’s recommendations were an attempt to modify the class struggle, and tilt the balance of forces back in favour of the employers.
To reduce unofficial action it urged that the semi-official shop stewards’ movement (estimated at 175,000 by Donovan) be further integrated into the union machinery. Above all, the Commission wanted to make the trade union leadership police its own rank-and-file membership more effectively. But to the dismay of the capitalist press, the Commission came out against legal sanctions on the trade unions, suggesting instead a voluntary approach. In parallel the Tory Party issued its own report on industrial relations – innocently entitled Fair Deal at Work – arguing for the introduction of anti-union laws – a foretaste of what was to come.