Pivotal powers: The British Labour Party and European unity since Pivotal powers: The British Labour Party and European unity since 1945

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1 Pivotal powers: The British Labour Party and European unity since Pivotal powers: The British Labour Party and European unity since 1945 John Callaghan This article examines the roots of European unity and Britain s relationship to it, primarily in terms of foreign policy and the failed alternative political economy of the empire/commonwealth. Continuity of policy emerges as the dominant theme. The strong Atlanticist orientation of the state and its attempts to maintain a special relationship with the USA were objects of a bipartisan approach, as was the commitment to Britain s world role. Membership of the European club in the 1970s did not constitute a break with this tradition so much as an adaptation in circumstances of prolonged relative decline. The article shows how the British left attempted to comprehend European unity in terms of the prospects for socialism and left reform in Britain itself. Cold war origins This article examines the historical and political background to left-wing perceptions of the European integrationist project since the end of the second world war, focusing on Britain. Without an appreciation of the strategic and foreign-policy dimensions of this project and of British objections to it, no proper analysis of the political economy of European unity is possible. The war itself accelerated the pace of what is now termed globalisation, in large measure to address the

2 200 Capital & Class 93 problems that had given rise to the conflict. It also produced the cold-war division of Europe. Both factors made possible a confluence of interests between the usa, France and West Germany, without which the first steps to west-european integration, represented by the Schuman plan, would never have happened. The usa was interested in the economic and military recovery of West Germany and the reconstruction of western Europe on the basis of open capitalist markets; West Germany, under Adenauer, sought political and economic rehabilitation, protection from the Soviet Union, and the eventual reunification of the country as part of the west ; and any revived Germany represented an overriding security problem for the French unless a means could be found to tame it. In the absence of viable alternatives, the French came to believe that the integration of West Germany was the best way to achieve this objective. Here, then, was the basis for an enduring collaboration. As Duchene puts it; Throughout the Cold War, the minimum as well as sufficient force for the progress of European unity was the triple alliance of the United States, France and Germany (Duchene, 1994: 224). While there was undoubtedly popular support, based overwhelmingly on the desire to avoid war, for the 1952 formation of the European Coal and Steel Community, foreign policy is essentially made by elites; and what was begun as an elite project was thereafter conducted on that basis. Left-wing governments made no difference to this approach. Social democracy had taken the national rather than the class view in foreign policy since at least 1914, and had shown little sustained interest in reforming the ways in which it was conducted. Centralist, secretive government prevailed whichever party was in office in countries like Britain and France. Agreement on fundamentals still left plenty of scope for disagreement between social democrats and their rivals. Thus Fritz Schumacher s Social Democratic Party (sdp) was opposed to the federalist project because the party opposed any initiative it judged likely to consolidate the partition of Germany and obstruct its reunification. This stance was clearly informed by the national interest, but was at odds with Adenauer s tactics for achieving the same objective. Apart from disagreements of this kind, social democracy also contained principled critics of militarism, imperialism and power politics. It also enjoyed long periods of opposition in which the critical voices were sometimes prominent. But the

3 Pivotal powers: The British Labour Party and European unity since shorter periods of office were marked by a pronounced tendency to exclude critics from foreign-policy decisionmaking. Continuity of policy was the norm, and with the partial exception of the communist parties debate was contained within national-interest perspectives. Socialist parties in the original six countries (France, West Germany, Italy, Belgium, the Netherlands and Luxembourg) made no significant contribution to the Treaty of Rome; nor did they oppose it on principle (Sassoon: ). In its favour, as Sassoon points out, was the feeling that it would help to solve the German problem, promote affluence and modernisation, and compensate small states in the age of superpowers. The first decade of the Common Market strengthened this case empirically. The parties of the smallest states became the most convinced federalists, though there was no evidence of this in 1951, at the time of the Monnet- Schuman plan, and federalism generally remained a much weaker impulse than free markets in 1957, when the Common Market was formed. The left parties of the three largest member states were in any case unable to form majority governments until much later. Social democracy was everywhere led by Atlanticists. For the main left parties in France and Italy the communist parties cold-war considerations dictated their opposition. Both initially opposed the Common Market as being part of the us-led crusade against communism, as well as a device for intensified exploitation and loss of national sovereignty. The deeper interpretation of the Common Market was thus generally identified in cold-war terms. In the 1950s, ad hoc coalitions rather than party ideologies took the integration process further. Naturally, domestic and foreign-policy considerations within states changed over time, and specific parties could revise their position on European integration, as the spd, the Italian Communist Party (pci) and the Labour Party showed at different times (Haas 1968). British Labour It so happened that there was a Labour government in Britain when the Monnet-Schuman plan was first hatched. The response of a Conservative government would have been just the same as Labour s: there was little enthusiasm for it in either party. British foreign policy aspired to partnership with the usa in the management of world order. The decision-

4 202 Capital & Class 93 makers recognised that Britain would have to recover its economic independence and resist all us attempts to treat Britain as just another European country. Yet Britain had depended on us aid in wartime since The heavy burden of armies and armaments implied by a world role of indefinite duration in cold-war conditions might prolong that dependency. The cold war initially shored up the British claim for partnership; but it also generated an arms race the country could not afford. As an official observed in September 1950, in the context of the Korean war, the prospect is that the burden will remain very heavy and therefore that the need for substantial American aid will also be prolonged. As the Americans increased their own burdens, moreover, they would be less patient of opinions not exactly coincident with their own we shall lose the position we were just attaining, the partner in world affairs of the United States. We shall be back again in the European Queue as in 1947 (Franks, 1950: ). All were agreed that the uk would not bend to us pressure over the issue of European integration, even though us enthusiasm for this project was evident in the European Cooperation Act (1948), and both economic unification and political federation were again endorsed when mutual security replaced Marshall aid in The uk would raise no objections to us-sponsored European unity, except on the question of British participation. Labour politicians led the way in compiling the list of reasons why it was not for Britain. Ernest Bevin initially favoured some sort of west-european integration for political reasons, such as combating communism, as well as for economic reconstruction, but only on the basis of pooled colonial resources and a customs union that excluded federal ambitions. It was also recognised that a semblance of British cooperation with the usa s integrationist plans was necessary if Congress was to approve the European recovery programme. But European union involving a supranational authority was always seen as a threat to imperial preference, preservation of the sterling area, British sovereignty and a role as an independent world power, as the Cabinet economic-policy committee made clear in November 1947 (Callaghan, 2007: 172 3). It seemed obvious to the Labour Cabinet then as it had done to the Churchill coalition that Britain s future economic independence depended on colonial economic development, not closer ties with western Europe.

5 Pivotal powers: The British Labour Party and European unity since World role Most Labour and Conservative politicians continued to assume that the Commonwealth would be the best basis for British economic prosperity throughout the 1950s. Harold Wilson entered office in October 1964 still persuaded that the reinvigoration of Commonwealth trade and faster British economic growth were indissolubly connected. The British, it was said, were closer in every respect to their kith and kin in the dominions than they were to other Europeans; the maintenance of Britain as a world power [was] a precondition of a socialist foreign policy ; socialism in Britain was indispensable in democracy s struggle against communist totalitarianism; the economies of the Commonwealth were complementary to Britain s to a degree to which those of Western Europe could never equal ; and the Commonwealth was the nucleus of a potential world society and a bridge between east and west (Callaghan, 2007: ). On a more mundane level, the party also doubted the economic benefits attributed to a supranational economic unity. Doubts about the feasibility, let alone the desirability of the federalist project accompanied its evolution. Labour argued that the states involved were unstable, prone to reactionary politics and antipathetic to socialism. Ratification of the Treaty of Rome in July 1957 appeared to make no difference to British scepticism, even though the Foreign Office conviction that it would never happen was proved wrong again (Young, 1999: ). But in 1958, the West German economy surpassed Britain s in size for the first time since the war. Britain took the lead in creating the European Free Trade Association in 1959, but this only brought forward the date when the common-market countries adopted a common external tariff. Even after a decade of relative decline, when doubts had developed about the utility of the Commonwealth and unfavourable comparisons were beginning to be made between British and common-market economic performance, Hugh Gaitskell could still unite the Labour Party by promoting a sentimental image of Commonwealth unity and British sovereignty at the 1962 party conference. Meanwhile, the leadership remained confused about both the economic benefits of membership and its impact on Britain s role in world affairs (National Executive Committee [nec], 1961). Some of the strongest Atlanticists in the party feared that

6 204 Capital & Class 93 membership would fuel the belief that Europe could somehow contract out of the world struggle ; that it might cause a major political and economic split in the West ; that it somehow implied the desire to stabilise the unnatural postwar status quo in Europe and render it more permanent ; and that Britain s entry might assume the same obstructive role in relation to the usa s demand for a global free trade area as France adopted towards Britain on the European Free Trade Association ( Healey, 1962: 111). It never mattered that the usa itself favoured British participation. The us ambassador to Britain reported to the state department in March 1964 that Denis Healey, attending an embassy social event, only showed emotion when he referred to the prospects of European unity. Indeed his anxiety to prove that unity would never happen seemed to reflect special concern (Callaghan, 2007: 216). Socialist opposition It almost certainly did. Similarly, some of the strongest supporters of socialism in the party evinced a special concern when they objected to entry on the grounds that the Treaty of Rome excluded their vision of an expanded role for the state and centralised planning in Britain. Such objections were impervious to evidence to the contrary. The fifth congress of socialist parties of the six member states of the Common Market in November 1962 pledged itself to both a democratically controlled Federal Europe and socialist planning, arguing that a stronger executive was a precondition for such planning. We must tell our British friends, said George Brutelle of the sfio (Section Francaise de L Internationale Ouvriere), if they only want intergovernmental co-operation then there is no place for them. Each nation must accept common policies in every field. The programme for common action adopted by the congress amounted to a call for a United States of Europe, based on mixed economies, liberal democracy and alignment with nato. Labour was assured that the implementation of the European Community creates no obstacle whatever to the achievement of socialist aims. The majority of the political and democratic forces of the European Community recognise that the creation of a vast economic unit implies the need for Community economic planning based on national economic plans (nec, 1962). The nationalisation of fuel and power in Italy was said

7 Pivotal powers: The British Labour Party and European unity since to be a clear illustration of the neutrality of the Paris and Rome treaties on questions of ownership. Yet in response to Macmillan s application for British membership just a year earlier, in July 1961, Harold Wilson, newly appointed shadow foreign secretary, denounced the Common Market as an arid, sterile and tight trading and defensive bloc against the East (Pimlott, 1993: 247). The Communist Party of Great Britain (cpgb) agreed with Wilson. Not only did it denounce the proposed Common Market in 1957, it called for a campaign to prevent it from coming into being. It would be both an instrument of the cold war against the Soviet Union the counterpart of nato and a device of German and American monopoly capitalism to increase their grip on the industry and trade of Western Europe (Callaghan, 2003: ). These two strands of the party s objections were always present: those emphasising the Common Market s reactionary international role, and those stressing the detrimental impact of membership on specifically British interests. Objections based on British interests were dominant by the 1970s. Membership of the Common Market was said to involve surrender of British sovereignty, a weakening of parliament, attacks on the working class and the renunciation of the power to plan the national economy. In 1962, however, the emphasis had been on the maintenance of Britain s imperial position and the exploitation of the former colonies and semi-colonies, especially those in Africa. Yet by 1963, colonies, semi-colonies, dependent territories and dominions which in Lenin s day had covered 77 per cent of the world s earth surface and contained 69 per cent of its population represented just 7.7 per cent of the world s territory, and 1.7 per cent of its population (Dutt, 1964: 10). Britain s imperial position thus no longer depended on colonies, but the communists never made clear what it did depend on. Some believed that by joining the Common Market the British hoped to enhance their status with the usa. They would seek to exploit contradictions between Germany and France and play a dominant role in the Common Market. Others argued that the application to join expressed the interests of monopoly capital, which had furthered transnational economic integration in practice and increasingly took the form of commercial and capital flows between the advanced capitalist countries and global competitive struggles. Communists also thought that Britain would act in us interests, perhaps by wrecking the Franco-

8 206 Capital & Class 93 German alliance from within. Most communists, however, were content to regard the Common Market as a device of monopoly capitalism injurious to working-class rights and living standards. World role in trouble If we look beyond the fog of argument and ideology to what British governments did rather than what British socialists said, a clearer pattern appears of British reorientation. Suez was a stark enough expression of Britain s inability to act in world politics without us support. Other experiences reinforced these doubts. The general repression required from the mid-1950s in Northern Rhodesia, Kenya, Sierra Leone and Nyasaland to deal with labour and land disputes exacerbated by widespread opposition to the British-imposed Central African Federation raised fears in London of further radicalisation and violence ahead. France had already held a referendum to decide the future of all twelve of its African colonies in September 1958 when the rush to independence was adopted as policy in Britain. Sierra Leone, Tanzania (both in 1961), Uganda (1962), Kenya and Zanzibar (1963), Northern Rhodesia and Nyasaland (1964) were all deemed ready for self-government before Labour came back into power. Similarly, Conservative governments could already see the writing on the wall for the east-of-suez policy. Britain planned for a Greater Malaysian Federation and a Southern Arabian Federation, preparatory to withdrawal from south Asia and the Persian Gulf. The driving force was both economic and political. Many believed that western interests would be better safeguarded under the new arrangements, with local elites taking charge. The economic and strategic utility of the Commonwealth was coming to be doubted and defence spending was subject to continuous economies. A total service manpower of 700,000 in 1957 was shrinking to a targeted 400,000 by Duncan Sandys s defence white paper in 1957 had even argued that the cost-effective way forward was an increasing reliance on massive nuclear retaliation. Conventional defence had absorbed 10 per cent of gdp in each of the previous five years, placing a heavy burden on the balance of payments and using some 7 per cent of available manpower (Ovendale, 1994: 115). But nuclear policy itself ran into difficulties when the government had to cancel the Blue Streak missile in the

9 Pivotal powers: The British Labour Party and European unity since summer of Two years later, Britain obtained Polaris. The dangerous and cowardly reliance on the us deterrent, which Labour s front bench had deplored as the morally bankrupt consequence of unilateral nuclear disarmament, was now national policy. Meanwhile, Selwyn Lloyd proposed further cuts to Britain s conventional armed forces in June 1961, even at the risk of a reduction in Britain s nato contribution and worldwide commitments. The balance of payments had been heavily in deficit since mid The chancellor described the situation in 1961 as alarming to put it mildly, as external reserves declined rapidly and the pressures on the economy both from within and without [became] increasingly dangerous (cab, Public Record Office, 1961). The core executive was beginning to realise that the world role was no alternative to Europe. Macmillan may also have been encouraged by President de Gaulle s conception of L Europe des Patries, which implied intergovernmental cooperation rather than federalism, while others (such as the us and West Germany), alarmed by de Gaulle s antinato and anti-dollar diplomacy, were keen to support Britain s entry. In the event, Britain s application to join was vetoed and there was no mention of a European ambition when Labour returned to power in October The balance of payments had further deteriorated, however, and Britain s economic performance compared to that of the Common Market looked seriously deficient. Assuming an unlikely economic growth rate of 4 per cent sustained over four years, the outgoing Conservative Cabinet had been informed that taxes would still have to rise by 100m annually up to and by twice that amount if the recent growth rate was merely sustained. Even before Wilson became prime minister: The conclusion is inescapable that to maintain the health of our economy over the next few years we shall have to make substantial changes in the use of our resources. The commitment of so much of our manpower and foreign resources to defence purposes is only one example of a load that the economy cannot indefinitely carry. We have not thought it right as a Government up to now to make fundamental changes in defence policy to meet the financial realities although we have recognised that this would have to be done in due course. We must point out

10 208 Capital & Class 93 to our colleagues that the time for doing so is rapidly approaching. (cab, 1964) There was nothing new here; similar things had been said before. The difference was that countless economies had already been made without curing the problem or changing underlying policy. Now, perhaps, the stage had been reached at which a whole political economy was unravelling. The Commonwealth was becoming a political nuisance, decolonisation was proceeding apace, and confidence in the economic future and political clout of Britain outside the Common Market was waning. Inside the Labour leadership, however, the old ideology was tenacious. This was an age in which Labour believed it could do something about economic growth rates. Wilson believed that he could drive up national output by 25 per cent over a four-year period. Defence was subject to virtually continuous review up to the day Labour left office in 1970, but Britain s east-of-suez role was initially protected as evidence of Britain s unique contribution to western defence (prem, Public Record Office, 1964). This position was heartily endorsed by President Johnson and his leading aides when Wilson visited Washington in December If the Americans had the Vietnam war on their minds, the British were cognisant of the continuing confrontation with Sukarno s Indonesia, in which 55,000 British troops were deployed at its height. Wilson spent much of his time concerned with international issues, but the Common Market was not among them. Meanwhile Enoch Powell, the Tory shadow secretary of state for defence, spoke in favour of the withdrawal of British forces from east of Suez at the Conservative Party conference in October The opposition was also led by a man known for his pro-european outlook, Edward Heath. Continuing economic pressures forced Wilson to reappraise policy along these lines. By October 1966, he had decided to apply for British membership of the Common Market without any reference to the conditions of entry. The Cabinet approved this approach in April 1967, and the application was made in May. In July, a supplementary defence white paper announced British withdrawal from the Persian Gulf by the mid-1970s, and a halving of service personnel in the far east by Tactical shifts Wilson occasionally stressed to his colleagues that membership was now vital if Britain were to retain its political

11 Pivotal powers: The British Labour Party and European unity since independence in the world a point two of his foreign secretaries, George Brown and Michael Stewart, had made to him as early as December Diplomatic and military clout could not be disentangled from economic strength, of course. Britain s economic weaknesses were indisputable, and the wonder was only that the government had persisted with the world role on the old basis for as long as it had. A government so committed to faster economic growth as Wilson s was, and so unsuccessful at achieving it, was bound to be impressed with the superior economic performance of the common-market countries. The Department of Economic Affairs had joined the Foreign Office in agitating for a declaration of intent to join in October 1966 and Wilson himself became more favourable to the idea after the financial crisis of July 1966 (Crossman, 1975: 443, 461). Even opponents of entry like Richard Crossman saw advantages to membership if it entailed ending the special relationship with the usa and led to Britain s withdrawal from the world role. The critics also linked a British membership application to the devaluation of sterling, something they thought necessary if the country were to escape from the cycle of sterling crises and deflationary budgets. By 1967, support for entry was also strong in the press, in all three main political parties, in business organisations such as the cbi, in the tuc, and with public opinion. Foreign-policy considerations and economic arguments were inextricably connected in the case for entry. Renewed speculation against sterling led to devaluation in November 1967, but de Gaulle again vetoed Britain s application less than two weeks later. In France, especially in Gaullist circles, there was disappointment as well as schadenfreude at sterling s devaluation. French policy had been to seek to hoard gold since 1965, signifying its conviction that the dollar was over-valued. Britain, in this view, had apparently missed a great chance to assert real independence from the usa. Instead, it put the usa first by not coordinating a general devaluation of the major currencies, which would have exposed the over-valuation of the dollar and isolated it (prem, 1967). The British embassy in Paris was informed that the French were disappointed to see that Britain had not abandoned its special relationship. The cia came to a similar conclusion, deducing that sterling would remain a reserve currency while the special relationship remained intact (Roy, 2002: 33 60, 46). Meanwhile, the price of gold, which had been rising since mid-september, continued its upward

12 210 Capital & Class 93 turn a clear sign of low confidence in the current value of the dollar. Financial turmoil continued until the end of March 1968, when the usa abandoned its commitment (except to the central banks) to supply gold at $35 an ounce, and the Labour government introduced the biggest tax increases in British economic history. The bipartisan policy to seek entry did not change. Behind the scenes, Wilson pressed on, as secretively and as exclusively as possible, preparing the ground for a third application. A white paper on the costs of entry was published in February This allowed the succeeding Conservative government to make the third application for membership just twelve days after taking office (Parr & Pine, 2006: 126 9). Wilson s presentation of his policy changed, of course, after Labour s general election defeat in June He now sought to distinguish himself from Heath by attaching conditions to Britain s entry, while claiming that the Conservatives were inconsistent on such matters. This was rather obviously the best way to manage his own party, in which every conceivable opinion about the Common Market was expressed, and where the sensible middle was defined in terms of safeguards for essential British and Commonwealth interests. Outright opponents on both the left and right of the party were mollified by hearing Jack Jones say that Labour would demand protection for the balance of payments, the cost of living, the national-health and social-security systems, and the preservation of independent decision-making in matters of foreign policy and economic planning (Jones, 1969: 309). A focus on the terms of entry made even more sense after the Conservative government made rapid progress towards British accession. Summing up the debate on the Common Market for the nec at the 1971 annual conference, James Callaghan reflected the mood, which had grown more rather than less sceptical about the benefits, in the face of what he called the most intensive barrage of propaganda in favour of entry that I have ever seen (Callaghan, 1971: 138). A long list of objections was rehearsed, including the rising price of food; the constitutional and parliamentary position; the adverse impact on unemployment, regional policy and industrial development; the greater mobility of capital (as against labour); and the absurdity of supporting inefficient French farmers with taxes on Britain. The solution proposed was to obtain the verdict of the British people in a general election, with the attendant threat that if Heath signed the Treaty of

13 Pivotal powers: The British Labour Party and European unity since Rome in advance of such an election, he must expect the issue to remain open. Labour would reopen the principles and renegotiate the details when next elected to power. Apart from the question of new terms of entry, there was no organised body of opinion in the Labour Party with a vision of what the Common Market might become after British entry. If Europe was in any case an ill-defined, fluid enterprise that it was possible to interpret in a multitude of ways, there was no chance that the British left would join the Common Market in order to impose a vision of the future upon it. British foreign policy itself was devoid of grand strategic thinking. The Labour Party left was thinking increasingly in terms of socialism in one country during the 1970s, as was the left in France and Italy. Confidence in Keynesian management of the economy may have flagged, but only to be replaced by confidence in an alternative economic strategy (aes) involving a greater role for public ownership and centralised planning. Variants of the aes dominated debate over economic policy in the Labour Party for the next ten years. Some of the more radical proponents of this approach gave up on it soon after the recession of , which eliminated about 20 per cent of British manufacturing. By this time, deflationary policies were dominant on both sides of the Atlantic. Socialist governments in France, Greece, Portugal and Spain ended up pursuing the same neoliberal approach in the course of the 1980s, while Labour in Britain was confined to prolonged opposition. The retreat from the aes accelerated after the 1983 general election, though the commitment to withdraw from the Common Market remained party policy if only with diminishing conviction until the end of the decade. The 1980s witnessed a new drive for further integration that fused the deregulatory priorities of British neoliberals with those of enthusiasts for federalism, at a time when smaller European states were increasingly aware of the obsolescence of purely national economic management. Labour s active interest in Europe was stimulated when Jacques Delors set out his vision of social reform at the 1988 tuc, apparently showing that preparations for the single market involved commitments to enhanced workers rights. The Thatcher governments had degraded such rights in Britain, and many of its supporters were voicing fears about a creeping federalism in Brussels. Labour s conversion to a pro- European stance, which it held up to its return to power in

14 212 Capital & Class , took place in this context. Throughout this period, the prospect of placing Britain at the heart of Europe promised to raise standards in Britain across a range of industrialrelations and social-policy issues. But Labour s opportunism did not stop there. Blair took the experience of the 1970s and 1980s to mean that global market forces had in any case undermined national sovereignty and were forcing governments to operate transnationally for a growing range of purposes, while rendering the old socialist aspirations of national economic planning obsolete. He was careful to point out that there was no choice between being closer to the eu and maintaining the special relationship with the usa. Nor was there a choice between national interest and membership of the eu. This pragmatic enthusiasm for Europe was bounded by the Euroscepticism of a significant portion of the British electorate and business doubts about European monetary union. As the process of integration accelerated after the passage of the Maastricht Treaty, opposition and scepticism increased throughout the member states (Taggart, 1998: ), and aside from the explicitly anti-eu parties formed in France, Britain, Germany and Denmark opposition was prominent to varying degrees across the political spectrum. As always, domestic and national foreign-policy considerations informed the stance of parties, and these changed over time, as parties chased the votes that mattered the ones cast in national elections. New Labour, old refrain By the end of the 1990s, three more developments worked to dilute the Labour leadership s enthusiasm for the European Union: sustained economic growth in the uk and the usa; the poor performance of the German, French and Japanese economies; and the memory of defeat in the 1992 general election saw Labour go to its fourth consecutive generalelection defeat in circumstances in which it expected to win. This set in train a fresh round of policy renewal based on the perceived need to persuade the voters of Labour s capacity for responsible economic management, which 1992 s voters were allegedly sceptical about, despite the boom/bust experience of the Conservative government of The last remnants of Labour s industrial policy were ditched after Tony Blair succeeded John Smith as party leader in Despite the fact that an ideologically-driven Conservative

15 Pivotal powers: The British Labour Party and European unity since government had managed economic restructuring in the uk in the 1980s, it became fashionable to argue that a stateorchestrated industrial policy could only fail in the uk context. There could be no transfer of the Rhineland model to Britain. Going with the grain meant recognising that as a liberal market economy, the uk had more in common with the usa. These ideas had force in the context of the comments about economic performance made above. The relatively fast economic recovery of the uk in the 1990s led to the discovery that Britain s comparative economic advantage depended on the preservation of many of the Thatcherite reforms. Strong economic growth in the uk and the usa after 1992 contrasted with the much poorer performance of the economies of France, Germany and Japan. Rates of unemployment in 1998 were 4.6 and 4.3 per cent in Britain and the usa respectively, while they reached nearly 11 per cent in Germany and more than 12 per cent in France. Liberal market economies were now thought to generate more jobs and prosperity than the more organised economies suffering from stagnation and rising unemployment. The less-regulated, lower-tax economies were said to be more adapted to globalisation a favoured buzz-word of Clinton and Blair. By contrast, the European Union was stuck with Eurosclerosis an at-best sluggish economic performance related to relatively high levels of regulation and expensive social policies. The deregulated City-state of London, by contrast, notably thrived. Oskar Lafontaine s ideas for tax harmonisation designed precisely to prevent social dumping and the race to the bottom that globalisation threatened to generate were quickly scotched by the Labour chancellor, Gordon Brown. Some observers began to see a growing degree of convergence between the uk and usa across a wide range of structures and policies (Cronin, 2000: 789). The argument began to be heard within the eu that the Anglo-Saxon model was something to emulate (business groups) or fear (the left), perhaps as an inevitable effect of globalisation. The collapse of the communist states in reinforced claims of inevitable convergence. Practically, it presented the usa with an opportunity to exploit the unipolar moment, driving nato into eastern Europe and its own bases into central Asia. The eu itself resolved to expand eastwards under the stimulus of a reunited Germany. A new world order was in prospect, though the usa s commitment to European integration was said to be as strong as ever (Times, 1991). Britain s own semi-

16 214 Capital & Class 93 detached relationship with the eu was no longer an obvious weakness. The security map had changed. The cold war was over. Germany was reunified and reoriented. The eu s very expansion had undermined the federal momentum and provided increased opportunities for factionalism. For eu publics, as Perry Anderson observed, The Union remains a more or less unfathomable mystery to all but a handful of those who, to their bemusement, have recently become its citizens (Anderson, 1997: 51). Predictions about the future trajectory of the eu, given the complexity and scale of these changes not to mention gathering global crises, such as those of the environment are worthless. Britain s own role was estimated by us observers as ranging from that of a useful transatlantic bridge (Nye, 2000: 51 59, 55) to one devoid of interest to the Washington-based foreign-policy elite: It is America s key supporter, a very loyal ally, a vital military base, and a close partner in critically important intelligence activities. Its friendship needs to be nourished, but its policies do not call for sustained attention (Brzezinski, 1997: 43). Both judgements were made before Tony Blair s decade of diplomacy and war, but both might be vindicated by it. The pivotal power, as Blair described Britain, had never been closer to the usa or more irrelevant to us foreign-policymaking. References Anderson, P. (1997) Under the sign of the interim, in P. Gowan & P. Anderson The Question of Europe (Verso). Brzezinski, Z. (1997) The Grand Chessboard (Basic Books). cab (1961) 129/105, Economic situation: Memorandum from the chancellor of the exchequer, 29 June (National Archive). (1964) 129/118, part 2, cp(64)143, Economic prospects for expenditure, 15 July (National Archive). Callaghan, L. J. (1971) Labour Party Annual Conference Report (Labour Party). Callaghan, J. (2003) Cold War, Crisis, and Conflict: The History of the Communist Party of Great Britain, (Lawrence & Wishart). (2007) The Labour Party and Foreign Policy: A History (Routledge). Cronin, J. E. (2000) Convergence by conviction: Politics and economics in the emergence of the Anglo-American model, Journal of Social History, vol. 33, no. 4, Summer, p. 789.

17 Pivotal powers: The British Labour Party and European unity since Crossman, R. H. S. (1975) The Diaries of a Cabinet Minister, Volume I: Minister of Housing, (Jonathan Cape). Duchene, F. (1994) Jean Monnet: First Statesman of Independence (Norton). Dutt, R. P. (1964) National liberation today, Marxism Today, January. Jones, J. (1969) Labour Party Annual Conference Report (Labour Party). Franks, O. (1950) Memorandum, 17 September, in R. Bullen & R. E. Pelly (eds.) Documents on British Policy Overseas, series 2, volume 3, German Rearmament September December 1950 (hmso, 1989). Haas, E. (1968) The Uniting of Europe: Political, Social and Economic Forces, (Stanford University Press). Nye, J. (2000) The us and Europe: Continental drift? International Affairs, vol. 76, no. 1, January. Ovendale, R. (1994) Defence Outline of a Future Policy (hmso, April 1957), in British Defence Policy since 1945 (Manchester University Press). nec (1961) Britain and Europe: A draft report, Labour Party nec international sub-committee, March. (1962) Message from the fifth congress, November, Labour Party nec, minutes of the international subcommittee, Labour History Archive, Manchester. Parr, H. & M. Pine (2006) Policy towards the eec, in P. Dorey (ed.) The Labour Governments (Routledge). Pimlott, B. (1993) Harold Wilson (Harper Collins). prem (1964) File 13/104, Record of a Meeting, Washington DC, 7 December. (1967) File 1365 (National Archive). Roy, R. (2002) The battle for Bretton Woods: America, Britain and the international financial crisis of October 1967 March 1968, Cold War History, vol. 2, no. 2. Sassoon, D. (1996) One Hundred Years of Socialism (I. B. Tauris) Taggart, P. (1998) A touchstone of dissent: Euroscepticism in contemporary western European party systems, European Journal of Political Research, no. 33. The Times (1991) 7 November. Young, H. (1998) This Blessed Plot: Britain and Europe From Churchill to Blair (Macmillan).

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