What Cable Street means for Labour Today

By Doctor Michael Herron

Last Sunday marked the 80th anniversary of the Battle of Cable Street. This historical event of 4th October 1936 was a watershed moment for the Labour movement in the lead up to the Second World War. It offers important lessons to the Labour Party today at a time when the Labour Party and movement has been rocked by allegations of anti-Semitism. The battle was significant for the fact that the grassroots of the Labour movement joined together with Jewish residents of Stepney in the East End of London to repel Sir Oswald Mosley and his marchers from the British Union of Fascists, forcing them to abandon their march.

The backdrop to the march and battle was fraught. Britain at the time was ruled by the National Government. Although the National Government had originally been formed by the Labour Prime Minister Ramsay MacDonald at the time of the battle it was essentially a Conservative administration led by Stanley Baldwin. The Spanish Civil War had also just begun. The Labour Party leadership was torn over officially supporting the Spanish Republican government since it feared this would upset its Catholic voters in the Northwest of England and Glasgow, who may have been concerned about Republican atrocities against Catholic clergy. This did not deter many in the grassroots Labour movement from joining the International Brigades to fight with the Spanish government against Franco. At the same time membership of the British Union of Fascists had peaked at a quarter of a million, which rang alarm bells in government. Nevertheless, according to Graham Macklin, the Conservative Party’s “resistance to ‘dangerous fascism’ however, was perhaps born of the Conservatives’ electoral neurosis than steadfast anti-fascism.”

This hesitancy was most marked in the lead up to the battle. When Mosley announced his intention to march through Jewish neighbourhoods in the East End of London, the Jewish People’s Council set up a petition signed by 100,000 people to ban the march. Local Labour MP, George Lansbury, and the mayors of the four London boroughs affected by the march requested Home Secretary, Sir John Simon, to ban the march. He stated that it would be undemocratic to do so.

A number of points need to be stressed about the battle. Many of those in leading positions such as the Labour leadership and the Jewish Board of Deputies were opposed to any action against the march that could result in violence. The opposition to the march was largely launched by local Jews and rank and file trade unionists, including mainly Irish dockers and what-ever leadership against the march was provided by the Communists. These anti-fascists were inspired by the Spanish Republicans’ struggle against Franco as they declared “no pasaran” (they shall not pass) to the Fascist marchers.

According to the Cable Street Group, Mosley’s original plan for the march on 4th October 1936 was for Fascists to assemble at Tower Bridge then divide into columns “which would march to meetings in Shoreditch, Limehouse and Bow and finally to a rally in Bethnal Green.” As the march progressed there were fights between fascists and anti-fascists but the main battle was between the anti-fascists and the 6,000 police, who were trying to clear a pathway for Mosley’s marchers. According to Nicholas Mosley, eldest son of Sir Oswald Mosley, the Police Commissioner “Sir Philip Game saw the whole occasion as primarily one concerning the police: he seemed determined to show that the streets would be controlled by his men and not by rival gangs.”

There were huge crowds in the area at the time of the march. The local press gave a figure of 310,000 whereas some eyewitnesses said there were half a million people there. The congestion and violence meant that there was only one street that seemed open to the marchers in the Jewish neighbourhood in Stepney, Cable Street. As the marchers and police entered Cable Street they ran into an overturned lorry and other barricades and were hit with “fruit, bottles and the contents of chamber pots emptied by Jewish women” and were forced back by the anti-fascists. Eventually, Sir Philip Game ordered Mosley to give up the march and turn back. Mosley later accused the government of surrendering to “red terror.”

Perhaps one of the best accounts summing up the encounter was made by Charlie Goodman who was 21, living in Mile End at the time and politically non-aligned. “And it was not just a question of Jews being there on 4th October, the most amazing thing was to see a silk-coated Orthodox Jew standing next to an Irish docker with a grappling iron. This was absolutely unbelievable. Because it is not a question of a punch-up between the Jews and fascists, it was a question of the people who understood what fascism was. And in my case it meant the continuation of the struggle in Spain.”

Arguably, the greatest lesson for the Labour Party in the years that followed Cable Street was that the Labour movement needed to be united in the face of fascism particularly when war broke out. In a sense the Labour Party took its cue from the Labour grassroots as it was the rank and file who had defeated the fascists at Cable Street.

The fact that the Labour Party was largely united meant that soon after the British war effort took a turn for the worse, as British troops were evacuated from Norway, it was perfectly placed to engineer a vote of no confidence in the Chamberlain government. As the Conservatives’ majority fell from 200 to 81, it became clear that there had to be a new Prime Minister. Churchill’s unstinting opposition to appeasement, despite his poot reputation in labour relations, made him the obvious choice to the Labour Party. It was therefore the Labour Party that was instrumental in facilitating Churchill’s rise to war leader.

Labour’s role in Churchill’s wartime government with Clement Atlee, Ernest Bevin, Herbert Morrison, Stafford Cripps and Arthur Greenwood as key members and its perceived unequivocal opposition to fascism in contrast to perceived Tory weakness in confronting Nazism before the war were strong contributing factors to Labour’s landslide victory in the 1945 general election. The lesson then was that a united party with a clear message could overcome even the greatest majority of the governing party.

The lessons of Cable Street for Labour today are that it should be clear what it is opposed to and it should present a united front in opposition to all groups and forces that prey on the vulnerable. The recent position against anti-Semitism in light of the inquiry led by Shami Chakrabarti is a good start. However, witch-hunts against those perceived to have betrayed the leadership and constant infighting distracts from the real struggle to maintain progressive politics and justice for those groups who most need a strong Labour Party in a world moving ever to the right. If it engages in this struggle and with competence when the pendulum of power swings again in its favour just as in 1945, it may be ready to seize the day.

Graham Macklin Very Deeply Dyed in Black: Sir Oswald Mosley and the Resurrection of British Fascism after 1945 (London: IB Tauris, 2007)
Cable Street Group The Battle of Cable Street 4th October 1936 A People’s History (London, 1995)
Nicholas Mosley Beyond the Pale (London: Secker Warburg, 1983)
Andrew Thorpe A History of the British Labour Party 4thEdition (London: palgrave, 2015)

The Wealth of Adam Smith’s Moral Sentiments

By Doctor Michael Herron

Since the early 1980s free-marketers the world over have recited the mantra that the “invisible hand” of market forces should be the guiding light of the world economy. This phrase is most associated with the work of Adam Smith, the Scottish philosopher and appears in his two most famous works “The Wealth of Nations” and “The Theory of Moral Sentiments.” While, undoubtedly, Smith was a champion of the free market, arguably, it is important to view his ideas on the free market both in the context of the time in which they were written and within his wider philosophy. This is especially true for the role he envisaged for morality to play in shaping business affairs. These points are developed in an important work by Arthur Herman entitled “The Scottish Enlightenment.”

According to Herman, it is important to note that Smith wrote his most famous work “The Wealth of Nations” published in 1776 in response to the prevailing orthodox economic theory of the time, mercantilism. This theory stipulated that there was a finite amount of monetary wealth available at any one time. It was vital then for a country to acquire as much wealth as possible while keeping this wealth out of the hands of other states. This underpinned the notion of empire, whereby the British state would enrich itself at the expense of other states, principally its main rival at the time, France.

This theory was also used by British policymakers to justify granting and supporting monopolies to certain British companies such as the East India Company to conduct trade within the British Empire. Smith had seen how such monopolies had caused friction with American merchants in the thirteen colonies who felt shut out of imperial trade. Smith believed that these monopolies, particularly, that of the East India Company were the root causes of the demands by Americans for independence from Britain.
Smith argued against this government interference in the market supporting these monopolies and believed that “every man as long as he does not violate the laws of justice is left perfectly free to pursue his own interest in his own way.” Here is the basis for Smith’s reputation as the inspiration for the free market. While it is true, according to Herman, that Smith opposed government interference in the market for either imperial aggrandizement or to promote social justice, he also debunks three common myths about Smith.

The first myth is that Smith believed prosperity in the market was due to the “invisible hand” of the market. According to Herman this was meant to be ironic. He did not believe that the market system was perfect, only better than one driven by politicians. Again, his primary argument was against the mercantile system.

The second myth is that Smith invented the concept of laissez-faire capitalism, which was in fact developed by French thinkers. Smith did believe in a strong government to defend the nation, provide a system of justice and rights to allow commerce to flow freely.

The third myth is that Smith wished to excuse big business and the merchants class from all limits on their power and influence over society. In fact, he stated in “The Wealth of Nations” “the government of an exclusive company of merchants is, perhaps, the worst of all governments for any country whatsoever.”

His observations in “The Theory of Moral Sentiments” about the real drives of human nature and the need for morality to govern human relations were, perhaps, his most important and surprising legacies to us, given how Smith’s ideas have subsequently been interpreted. Smith did not believe that most people are driven by the need to acquire material wealth and are prepared to make the sacrifices to acquire it. Only that some are and these individuals drive progress. Smith also did not believe that individuals are completely free agents with no sense of responsibility to each other. In “The Theory of Moral Sentiments” Smith argued that people have a “fellow feeling” for each other that governs their behaviour to each other. In other words, people have natural empathy for each other and there is such a thing as society.

This has implications for policymakers today. Smith’s actual ideas contradict the arguments made by free marketers. One common argument made by these free marketers is that we are all rational free agents attempting to maximize our own material welfare and that somehow this will achieve maximum efficiency of the market, in other words, the fabled equilibrium. Arguably, Smith believed that since we are governed by morality and are not completely free agents we have to take others’ interests before acting. Of course our priority is to promote our interests, but this is not taken in isolation of society. When making economic decisions we have to weigh up a number of factors not just one or two.

The most famous proponent of the free marketers’ worldview was Milton Friedman, the American economist and high priest of monetarism, the theory that controlling the money supply is the chief method of stabilizing the economy. In one of his public statements, Friedman stated that “the world runs on individuals pursuing their separate interests.” While this statement does not contradict Smith, who made the same point, Friedman’s observation in his preface to Frank Knight’s book “The Ethics of Competition”, arguably, does. In this preface Friedman stated “social responsibility is a fundamentally subversive doctrine, there is one and only one social responsibility of business- to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

Friedman’s economic theories and the aversion to Socialism of the Austrian philosopher Friedrich von Hayek were the key inspirations behind many of Margaret Thatcher’s policies in the 1980s. Friedman’s thinking was certainly in tune with Thatcher’s when she made one of her most famous comments in an interview with “Woman’s Own” magazine in 1987. She stated, “there is no such thing as society. There are individual men and women and there are families. And no government can do anything except through people and people must look to themselves first.”

Perhaps the biggest contradiction between the arguments made by free marketers today and Smith’s original beliefs is their attitudes to monopoly capitalism. The Adam Smith Institute, the foremost champion of Smith’s ideas in British politics has lauded itself on its website as “one of the key drivers of the privatization revolutions in the 1980s and 1990s.” Much of this privatization has resulted in large companies acquiring monopolies over services in what used to be the public sector and over the railways. This outcome of monopoly capitalism and oligopoly, the concentration of politico/ economic power in few hands is surely the complete opposite of Smith’s thoughts on the matter. It was because of his opposition to monopoly capitalism that he wrote “The Wealth of Nations” in the first place since he believed the British government had encouraged monopolies to develop that excluded many businesses from trading profitably. If one wanted to create a true free market one should try to break up monopolies. Where Smith believed that monopolies were the unnatural results of government intervention and left to its own devices the market would right itself and eliminate monopolies, we know that often of their own accord, big businesses will tend to become monopolies and cartels against the public interest. As was the case in the United States in the late 19th and early 20th centuries it was left to the federal government to break up these combinations through anti-trust legislation. To create a true free market, there is therefore a role for government to ensure that monopolies do not emerge and to protect the public interest against any harmful consequences of their trading.

In conclusion, despite Adam Smith’s work being written to confront the problems caused by the trading system of the British Empire of the 18th century it has been invoked by ardent free marketers today to support their arguments. The fact that these arguments are so out of kilter with many of Smith’s actual beliefs should give many of these free marketers pause. If their founding principles are built on sand is it any wonder that the world economic system does not work the way they say it should. It, perhaps, explains why it works for the few and not the many.

Arthur Herman The Scottish Enlightenment: The Scots’ Invention of the Modern World (London: Harper Perennial,2006)
Adam Smith The Theory of Moral Sentiments (Strand & Edinburgh, 1761)
Adam Smith An Inquiry into the Nature and Causes of the Wealth of Nations (London: W Strahan, 1776)
The Concise Oxford Dictionary Ninth Edition (London: BCA, 1996)
Milton Friedman Preface to “The Ethics of Competition” by Frank H Knight (1935)
Margaret Thatcher in an interview with “Woman’s Own” on 23rd September 1987
Adam Smith Institute www.adamsmith.org

What we can learn from 1920s America

By Doctor Michael Herron

There has been some recovery from the 2008 Crash but there are still some inherent problems with the US economy. One such problem is that of inequality. Although many would argue that inequality is just a fact of life in the American free market economy, others might argue that it poses a threat to the stability of the system itself. Indeed, some argue that the great inequality that existed in 1920s America contributed to the Wall Street Crash of 1929.

John Kenneth Galbraith identified five weaknesses of the US economy in the 1920s that led to the Crash, “the bad distribution of income”, “the bad corporate structure”, “the bad banking structure”, “the dubious state of the foreign balance” and “the poor state of economic intelligence”. “The bad distribution of income” was particularly serious since this meant as Galbraith put it “the economy was dependent on a high level of investment or a high level of luxury consumer spending or both.” This posed a problem because, according to Galbraith “both investment and luxury spending are subject, inevitably, to more erratic influences and to wider fluctuations than the bread and rent outlays of the $25-weekworkman.” The economy was thus vulnerable to a shock such as the Wall Street Crash. Furthermore, according to Richard Hofstadter, the 631,000 richest families were wealthier than the 16,000,000 poorest families, who could not meet their basic needs. In the midst of the boom of the 1920s there were simply not enough customers to buy the products supplied by American factories.

The responses of Presidents Herbert Hoover and Franklin Delano Roosevelt to the Crash contrasted sharply. While Hoover refused to intervene to help the ailing American economy, FDR developed the New Deal when the Federal Government supported the American economy through deficit financing. Conservatives are probably correct in their argument that the US only finally emerged from the Great Depression with the onset of the Second World War as Western European powers bought armaments and supplies from the United States thereby fuelling the American economic recovery.

Despite this fact, arguably, FDR laid the foundations for post war economic prosperity by regulating the financial system and by reducing inequality through the imposition of a wealth tax. However, widespread prosperity only really took off in the United States when returning American servicemen received grants to go to college under the GI bill and received federal assistance to buy homes, thus relieving them of potentially heavy debt burdens. These measures greatly reduced inequality in the United States and underpinned the prosperity of the next thirty years.

In 2016 two of the weaknesses identified by Galbraith of the US economy in the 1920s are still with us today “the poor distribution of income” and “the bad banking structure” since the Glass-Steagall law of 1933, which separated investment and commercial banking, as part of the 1933 Banking Act was repealed during the Clinton presidency in 1999. Indeed, Thomas Piketty has argued that the “poor distribution of income” contributed to the Financial Crisis of 2008. The main reason for this was that since the working and middle classes did not have enough money to buy the goods and services they wanted and needed they took on more debt which was supplied on credit by unregulated banks using savings built up by the elite.
The elite 1% has, indeed, according to Piketty built up massive savings, having gained 60% of the increase of US income from 1977 to 2007. However, the nature of this wealth owned by the 1% has changed where today’s elite’s wealth largely derives from earned income through managerial salaries rather than mainly from capital such as share dividends as was the case in the 1920s. Nevertheless, this distinction is not completely clear as many of the management class that comprise the 1% have stock options that are included as part of their salaries. As in the 1920s, arguably, the elite cannot use their savings to consume enough of the goods and services produced by the US economy to comfortably sustain it compared to the 1950s when there was a much more equitable distribution of income, the result of the GI bill and similar measures.

Are Hillary Clinton’s or Donald Trump’s economic programmes likely to replicate these post World War II outcomes? Taking into account the fact that after the Second World War, the United States was pretty much uniquely placed to prosper, this growth of prosperity is unlikely to be replicated. Trump’s plan of tax cuts may produce a short boost but is unlikely to solve the underlying problems of the American economy. Clinton’s proposal to subsidise American students’ college education comes closer to solving the problem. This is because, as Piketty has argued, the best way out of poverty is through the acquisition of skills and knowledge, as long as students are not saddled with heavy debts after graduation.

John Kenneth Galbraith The Great Crash 1929 (London: Penguin Books, 2009)
Richard Hofstadter The American Political Tradition & theMen Who Made It (New York: Vintage Books, 1973)
Thomas Piketty Capital in the Twenty-First Century (Cambridge, Massachusetts: The Belknap Press of Harvard University Press, 2014)