Daily Archives: 24 December 2016

Britain on the Eve of Thatcher, 1970s

From Strange Rebels: 1979 and the Birth of the 21st Century, by Christian Caryl (Basic Books, 2014), Kindle Loc. 360-398:

The postwar consensus endured because it worked—at least for the first few decades. The British economy grew steadily through the 1950s and 1960s, widely spreading the benefits of expanding national wealth. But by the 1970s, the bloom was off. Rising global competition had revealed the structural rigidities of Britain’s social-democratic system. The oil shock hit at a moment when traditional British manufacturing industries were already affected by painful decline. Once-proud working-class cities had turned into landscapes of blight, factory ruins defaced with graffiti. In the 1970s, the British economy tottered from one crisis to another. In 1974, in the wake of the Arab oil embargo, Conservative prime minister Edward Heath was forced to introduce electricity rationing and a three-day workweek. Unemployment surged and productivity sagged. British business seemed to have lost its way. Entrepreneurs fled punishing tax rates for more hospitable climes. Strikes punctuated the national news with benumbing regularity; the trade unions repeatedly demonstrated their enormous political power, contributing mightily to the fall of Heath’s government in 1974.

These were the problems that confronted James Callaghan as he assumed the office of prime minister two years later. His Labour Party had won the 1974 election under the leadership of Harold Wilson, who returned to Number Ten Downing Street after an earlier stint as prime minister. But Labour’s margin of victory in the election was narrow, and the best that Wilson could do was to form a minority government with his party in the lead. His administration soon foundered as it struggled to deal with the aftereffects of the energy crisis and the intensifying demands from the unions, his party’s most powerful constituency. By the time Callaghan stepped in to take the beleaguered Wilson’s place, inflation had reached a staggering 25 percent. Outside investors lost confidence that the British government would ever regain control over its finances, and the pound became so anemic that London found itself facing a full-blown balance-of-payments crisis. Put simply, the British state had run out of the foreign exchange it needed to pay for imports. Bills were coming due that the United Kingdom was not in a position to pay.

To his credit, Callaghan did not soft-pedal the causes. He inherited stewardship of the economy at a moment when the old sureties were crumbling. His chancellor of the Exchequer, Denis Healey, declared that Britain couldn’t go on spending its way out of crises. Callaghan’s son-in-law, an influential journalist by the name of Peter Jay, had even become a convert to the economic school known as “monetarism,” which deemed strict control of the money supply to be the only remedy for inflation. This flew in the face of the Keynesian principles of Britain’s postwar consensus, which placed a premium on combating unemployment through government spending. The speech that Callaghan gave at the 1976 Labour Party conference, authored by Jay, turned into something of a elegy for Britain’s postwar economic system:

For too long this country—all of us, yes this conference too—has been ready to settle for borrowing money abroad to maintain our standards of life, instead of grappling with the fundamental problems of British industry. . . . [T]he cozy world we were told would go on forever, where full employment would be guaranteed . . . that cozy world is now gone. . . . We used to think we could spend our way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candor that that option no longer exists, and that insofar as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy followed by a higher level of unemployment as the next step.

Finally, in November 1976, the United Kingdom was forced to ask the International Monetary Fund (IMF) for a $3.9 billion loan to tide it over through the crisis. The conditions included brutal spending cuts and across-the-board austerity measures. Back in 1945, the United Kingdom had been America’s partner in creating the international economic system that had brought the IMF to life. Now London was calling on the fund for help in an existential crisis. It was the first time that one of the world’s developed countries had ever asked for IMF support. (Nothing comparable would happen again until 2008, when Iceland was forced to follow suit during the global financial crisis.)

This was a humiliation of epochal proportions. A country that had been at the heart of the Western economic and political system found itself reduced to the status of a banana republic. Callaghan diagnosed the problems but was unable to come up with a remedy. Something always seemed to get in the way: the resistance of the unions, the global economic climate, the accustomed way of doing things. The old ideas no longer worked—that much was clear. But where were the new ones? Britain was waiting for something to give.

Advertisements

Leave a comment

Filed under Britain, democracy, economics, energy, industry, nationalism

Poland’s Greatest Saints, 1079 & 1979

From Strange Rebels: 1979 and the Birth of the 21st Century, by Christian Caryl (Basic Books, 2014), Kindle Loc. 1902-1919:

John Paul II had begun to think about making a pilgrimage to Poland within days of becoming pope. The coming year of 1979 offered a perfect occasion for a visit. It was the nine hundredth anniversary of the martyrdom of Poland’s greatest saint, Stanisław Szczepanowski. He was the Polish equivalent of Thomas à Becket, a man who stood up to the highest power in the land in the name of his faith. In 1072 Szczepanowski became the bishop of the city of Kraków. What we know of him is blurred by legend, but it is clear that he must have been a man of strong will and stubborn principles. He soon became embroiled in a feud with the king of Poland, a brutal character by the name of Bolesław the Bold. (As is so often the case in history, the nickname “bold” was really a euphemism for “psychopathic.”) Bolesław refused to put up with the churchman’s challenge to his authority, and he demanded the death of Stanisław. But no one would carry out the order, so Bolesław did the deed himself. He is said to have cut the bishop down while he was conducting a mass. Few of the king’s deeply Catholic subjects were willing to countenance the killing, and Bolesław soon lost his hold on power. Stanisław, on the other hand, quickly achieved sainthood as one of Poland’s greatest martyrs.

Though many of the details of Stanisław’s death remain mysterious, one thing we do know for certain is that it happened in 1079. A thousand years might seem like a long time to most of us, but the particulars of the story—the principled stand of a bishop of Kraków laying bare the moral bankruptcy of untrammeled state power—gave it unnerving relevance to Poland’s situation in 1979. The Communists certainly thought so, in any case.

So the announcement that John Paul II intended to return to Poland to celebrate the nine hundredth anniversary of Stanisław’s martyrdom sent a shiver of dread through the ranks of the United Polish Workers’ Party. “The cause of the bishop’s death was a conflict with the king,” one internal party memorandum noted in late 1978. “We see no sense in invoking the memory of the bishop’s head and the royal sword, because they symbolize the sharpness of church clashes with the government. We are for cooperation and create favorable conditions for this.”

Leave a comment

Filed under democracy, nationalism, Poland, religion