THE knives are OUT for Harold Wilson. Nearly fifty Labor Party backbenchers have signed a petition condemning the Labor government’s economic policies, and the number of dissidents can be expected to rise, together with the number of unemployed. The Conservative Opposition abandoned bipartisanship on foreign policy to come out directly against Wilson’s request to the UN for mandatory sanctions against Rhodesia.
Wilson is a fascinating phenomenon. Unemployed car workers march on the Labor Party’s Annual Conference to protest the governmentinspired slump, and their leaders are greeted by the Prime Minister, bullhorn in hand, and invited in for tea. Conservative merchant bankers in the City of London comment approvingly that Wilson is the first Prime Minister to confer seriously with the Queen; in fact, he times those conferences to drive speeches by Tory Leader Edward Heath off the front pages. The Foreign Secretary announces that Britain will never give up its ties to the United States; Wilson begins his address to the English-Speaking Union the next day by claiming that the first act of his government was to save the British computer industry from an American take-over. All sides are played against the middle.
Wilson’s domination of the British political scene has until recently been unquestioned. His Foreign Secretary and Deputy Prime Minister, George Brown, demonstrated his incapacity for top leadership during his bumbling year and a half as Minister for Economic Affairs. The Chancellor of the Exchequer, James Callaghan, sits and suffers at the Treasury while the government’s economic policies produce unemployment — and while he is set up as a scapegoat.
New discontent with Wilson inside the Labor Party has produced a fresh figure in the wings: Roy Jenkins. As Home Secretary he has an opportunity to effect some reforms in Britain’s archaic legislated morality, and he has no responsibility for economic affairs — his good fortune. At forty-six, Jenkins is only four years younger than the Prime Minister, although his vocal support in the Parliamentary Labor Party comes from the younger generation of M.P.’s, particularly those elected in 1966 to help “modernize Britain.” But the experience of those former threats to the throne — Brown and Callaghan —offers ample warning to Jenkins. In fact, one political journalist (Alan Watkins in the Spectator) has already used his weekly column to advise Mr. Jenkins “to ask his young supporters to lower their voices slightly when they next decide to appoint him Prime Minister.”
Threats to Wilson’s leadership from within his own party appear more substantial than the threat from without. Wilson’s victory in March gave him a majority of nearly 100 seats and what can be a clear run until 1970. Moreover, Edward Heath, the leader of the Conservative Opposition, has the misfortune to be identified by Laborites and Conservatives alike as “the Tory Harold Wilson.” Heath’s two major assets are in fact a talent for political organization and a sincere desire to get Britain into the Common Market. “Ted Heath is honest and sincere and hardworking,” says one old-time Tory. “But while Wilson amuses or outrages or excites, Ted has this extraordinary ability to bore. He might have been a first-class Ted Heath, but he’ll never be more than a secondclass Harold Wilson.”
Winter of discontent
The opposition may not be particularly challenging for Wilson at this juncture, but that is made up for by the intractability of the problems with which he must deal. This is a winter of discontent for Wilson and for Britain. The honeymoon after Labor’s massive victory last March is over. There are two issues which have crystallized opposition to Wilson: one foreign, Rhodesia; and one domestic, the “freeze and squeeze” being applied to the British economy by the government. In both cases, the danger for Wilson is that his “realistic” policies will erode his position within the Labor Party without gaining him sufficient Conservative and Independent backing to offset the loss to his political base.
Wilson’s realism over Rhodesia was summed up recently by a rightwing Labor M.P. of shrewd political judgment: “This government doesn’t want a fight with South Africa. We have too big a stake there in trade and investment. So Wilson will go on beating Ian Smith with a fly whisk while all the time telling the left-wing boys that he’s flogging him with a cat-o’-nine-tails.”
Whatever the official line, it is difficult to find anyone in London who believes that mandatory sanctions against Rhodesia will bring down the rebel regime. The Tory cry is that Britain should dispense with the fiction by coming to terms with the white Rhodesians. The left-wing Labor response is to call for force, particularly the bombing of the rail and road links from South Africa to Rhodesia. From both points of view, Wilson’s position — no use of force but also no recognition of illegal independence — seems pure hypocrisy. But the government’s dilemma is real. Wilson did not have the troops or the planes to force a settlement on Rhodesia.
Sanctions offered a way out, at least temporarily, but strict enforcement of sanctions, especially oil sanctions, has all along raised the specter of direct confrontation with South Africa. South Africa is Britain’s fourth biggest trade partner. No Prime Minister can calmly contemplate losing some $1 billion in exports and investment income, the price of a total break. Hence Wilson’s dramatic flight to Gibraltar in early December and the Churchillstyle talks on the Tiger with Ian Smith. “Harold tried to sell out,” a longtime Wilson observer commented. “He did his damnedest to sell out. But those idiot Rhodesians won’t let him.”
Economic freeze and squeeze
Wilson’s Chancellor of the Exchequer has said that the price of confrontation with South Africa in terms of Britain’s balance of payments would mean an even tougher and longer squeeze on the domestic economy than the government has imposed to date. But unless sanctions against Rhodesia escalate into trade war with South Africa, the real gut issue in Britain remains the economy itself, and the government’s handling of it. Last July, Wilson met the latest outbreak of the chronic crisis over the pound with the economic equivalent of overkill. Following up a series of deflationary and restrictive moves to check spending and credit expansion, he slapped on the tightest credit squeeze of modern times, slashed government expenditures, and called for a sixmonth freeze on both prices and wages.
With the Great Freeze, Wilson tested the loyalty of the political and financial base of the Labor Party, the trade unions, to the breaking point — and in a few cases, beyond it. But he also gained widespread support as the first Prime Minister in a generation to “take on the unions,” a popular cry in today’s strike-ridden Britain. He earned the respect and partial cooperation of Tory bankers and businessmen, yet set off hopeful speculation among left-wingers that the Freeze would finally suppress wasteful capitalist free-for-alls. And he prevented a crisis devaluation of the pound, and consequent chaos in the world’s money system.
Six months later, the smoke is still clearing. The initial political success of the tough measures has faded as the extent of their impact has become clear. The various estimates of the fall in new investment plans for 1967 range from 8 to 20 percent— this in the country which has had the lowest rate of new investment and of economic growth in the industrialized world. Automobile sales fell by 30 percent in three months. Most important of all politically, unemployment has doubled. Although the British unemployment rate of slightly more than 2 percent seems absurdly low by American standards, the level of tolerance in Britain is far lower than in America. Cause and effect are readily grasped: between the wars there were never fewer than 1 million unemployed in Britain; during the worst years of the Depression unemployment reached 3 million, more than a quarter of the working force. Whole towns disappeared, and few of today’s older generation have forgotten.
When the six-month total freeze on wages ran out, the government moved to keep the lid on any possible inflation with at least another sixmonth period of “severe restraint.” In the meantime, tight money, high interest rates, and high taxes are bound to produce still more unemployment and lower spending. A December OECD report projected British growth in 1967 at precisely zero percent. One disgruntled Labor M.P., Eric Heffer, has predicted 1 million unemployed by the end of the year. The left-wing New Statesman summed up criticism of the government when it concluded an editorial in December with the question “How long can we afford Mr. Wilson?”
A Labor government pledged to modernization, industrial advance, and social justice has resorted to the deliberate creation of unemployment. Why did Wilson do it? One explanation, offered by the business editor of a London daily, is that “by July the Government had already set the stage for a pretty serious slump. They had pulled hundreds of millions of pounds out of the economy with each regular and emergency budget since reaching office. When there was still another sterling crisis, after all they had done already, they panicked. They overdid it. And now they are stuck with it. If they call off the Freeze, there will be another sterling crisis before you can turn around.”
But even if the July program was improvised in the face of unforeseen disaster, there is some method in it. Conservative economic policy from 1951 to 1964 consisted alternatively of promoting the pent-up demand for consumer goods and stamping it down. According to sympathetic observers, Wilson’s new wage and price freeze, combined with “planned unemployment,” offered hope of being the final “stop” in the post-war “stop-go” cycle. It could provide the opportunity for a major reorientation of the British economy away from domestic consumption and in the direction of exports and investment.
A new program means much greater pinpointing of the government’s economic weapons. It means inducing workers to move to highproductivity industries, and providing them with the skills to do so. It means the direct encouragement of new investment in industries whose products compete with imports into Britain or the world’s export markets, or which offer the potential of breakaway growth (such as computer-run machine tools).
The impact of the Squeeze and Freeze — the rising rate of unemployment and the clampdown on wages — is dramatic stuff indeed. But even more dramatic, and dangerous, is Wilson’s gamble that his moves can give him the opportunity to convert growing discontent with orthodoxy into support for a program to modernize Britain.
Can Britain join Europe?
While Rhodesia and the economic situation dominate the headlines, Wilson is active in a third area which could prove the most significant of all. Since last December and through the spring, he and Foreign Secretary Brown have been undertaking a series of visits to all major European capitals (and a goodly number of minor ones) for consultations on Britain’s entry into the Common Market. This is the “European play,” shrewdly timed and long awaited, not least because successful negotiations for British entry into Europe would remove almost the last vestiges of Edward Heath’s distinctive political clothing. Wilson is making a great play of touching every base before making formal application for entry, in contrast to the alleged naïveté of Harold Macmillan’s Tories in 1962, who spent months settling butter prices in Brussels, all the time neglecting the task of gaining the assent of General de Gaulle.
What are the chances for British entry? According to a Department of Economic Affairs insider, “the technical agreements on economic adjustment are all signed and sealed. They could be taken off the shelf where they were put in January, 1963, and go into operation tomorrow.” Certainly on the economic side, only the Common Market’s protectionist agricultural policy seems to offer real problems. It is in the political and diplomatic area that the most serious questions lie.
For example, Wilson has aroused suspicion by his obvious silence on the issue of joint defense arrangements within Europe. A parliamentary defense expert, not unsympathetic to the Common Market, explains Wilson’s reticence this way: “Johnson and McNamara have us so closely tied in on defense matters . . . that Wilson couldn’t cut the string if he tried.”
The ties with the United States
An influential backbench Labor M.P. elaborated on the knots in that string recently: “We are all Europeans now; this is the big change since 1962. But the political price of the entry still seems to be a real break with America. If the Prime Minister becomes more Gaullist than De Gaulle, he may get us in reasonably soon. But if the cost is to cut ourselves off from America, where the real power lies, it will be too great. So” — with a deprecating smile — “I am for Britain joining the Common Market — and for America joining it too.”
Wilson himself has gone to some lengths to offer British membership in the Common Market as the answer to American economic domination of Europe. It is an approach that strikes sympathetic chords across Europe. For the fear of the economic weight of the “Colossus of the West” is second only to opposition to the Vietnam war as a source of anti-Americanism.
For settlement of all three issues — Rhodesia, the economy, Common Market entry — Britain is dependent upon the political skills and strategic judgment of Harold Wilson. The Prime Minister can call the tune on any and every issue — unless and until he loses the confidence of his own followers or is disowned at a general election. Wilson has been called “an opportunist,” “a man without principles,” and, perhaps most flatteringly, “that man.” He is not a dogmatist, at any rate. Britain’s problems are great enough today to lest any political leader to the limit. If Wilson deals with them satisfactorily, he will be “a very great man” indeed, even if to do so he must get himself thoroughly distrusted.