There Is No Alternative: The Myth of the 1970s

The ever loveable and canny Michael Rosen was on Good Morning Britain this morning clearly and patiently explaining why the economy doesn't work as a household budget and that we do print our own money. Here's the clip on Twitter.

Kate Garraway's response: "But the 1970s!"

You can see how frustrated Rosen gets by his gesturing of the universal symbol for "Hen, you talk shite".

So anyway, let's bust that myth of the 1970s right now because it's a constant stumbling block for the left.

The first problem, inflation, was caused by two oil shocks. The second problem, the decline in manufacturing and productivity, results from two factors: imperial overhang (i.e. the end of Empire) and erratic government policy. What resulted was a crisis of production - lots of goods being produced but nowhere to sell because imports had cracked the markets and were generally cheaper. As oil prices rose, so did the cost of production resulting in various cutbacks, usually of the labour force. With fewer places to sell, there was less income which resulted in - you guessed it - various cutbacks.

That's stagflation in a nutshell - rising commodity prices and declining productivity.

A good overview of the decline in manufacturing and the subsequent effects can be found here. As with most economic crises, it was global. It wasn't isolated to the UK as the myth would have you believe.

The crisis wasn't caused by militant trade unionism; that was simply a symptom of the crisis. There was militant trade unionism, but the unions were only doing what they've always done: protecting the worker, agitating for better wages. Thatcher demonised them, reframed their actions as those of greedy union barons who are the sole cause of the crisis. She did this to obscure the true source of the crisis - capitalism itself.

A central tenet of Thatcher's "There Is No Alternative!" rhetoric is the “awfulness of the 1970s” and its use as a bogeyman to frighten people. As the quote from Andy Beckett below explains, the 1970s were awful for the rich and the rentiers.  As one example, they were having to invest more capital in keeping businesses running, in stocks and shares, and paying workers, which squeezed profits. For the Marxists among us, that's basically a real-world example of the tendency of the rate of profit to fall over time.

1977, the apex of the crisis, holds the record for the lowest level of inequality in British history. And that's at least partially thanks to the trade unions and some government policies such as nationalisation.

But for the capitalists, something had to change.

Rhetorically, Thatcher's 1979 victory can be seen as a counter-revolution against what were historic levels of equality. It was a means to resolve this particular crisis of capitalism and keep it limping along whilst maintaining the class inequality that is integral to capitalism in the process. It sort of worked as well, if by "worked" you mean "caused all sorts of untold misery". At least until the financial crisis of 2008, that is, which was the delayed consequence of Thatcher's "Big Bang Economics". But the point is this: the capitalist class got what they wanted - continued class hegemony at the expense of the workers.

The myth of the 1970s is an example of how the powerful, ruling class manufactures consent. The false narrative of a dreadful decade of a sharp decline in which everyone suffered terribly is exactly that - false.  Yet it’s now popularly accepted and weaponised as a fear tactic. The 1970s is essential in maintaining the There Is No Alternative rhetoric.

There's always a kernel of truth to these fearmongering narratives manufactured by the ruling class. It's just that to examine said kernel, you have to dig through mountains of shit to find it. Yes, there were 3-day weeks and power cuts but this was a result of capitalism and the capitalist class in crisis: high commodity prices, the end of Empire, decline in manufacturing, and rising class consciousness which lead to workers taking a fairer share. These all squeezed the profits of the capitalists in one way or another.

To answer Kate Garraway's "But the 1970s!", it clearly wasn't the printing of money that was the problem and Michael Rosen remains correct. In fact, it was the government printing money to purchase oil at higher prices that prevented the situation from becoming even worse! If we want a bit more historical context, Arab petrostates increased the price of oil and enacted embargoes against Western nations as punishment for their support of Israel in the Yom Kippur war against Egypt.

So what are we to draw from this? After 1971, money in the UK became fiat - not backed by the Dollar or gold. The government since then has had the ability to create and spend money as it pleases. It just so happens that it prefers to spend money in the private sector and in maintaining capitalism - it is entirely ideological. The mythologised narrative of the 1970s is about maintaining the illusion that Thatcher's neoliberal revolution was necessary. This lie is deployed as part of means to deter people from understanding how the monetary system actually works.

It's fascinating that a similar lie, the austerity lie, is used to deter people from understanding the 2008 crisis as well.

"There is no alternative!" 

But there was, there was clearly a juncture, a fork in the road if you will, during the late 70s. This was the first point in British history where socialism became a real possibility. The choices were to either nationalise and socialise all private property giving overall control to the workers, or further liberalise the economy.

In other words, we had a choice between socialism or barbarism.

Guess which one we got.