Policy achievements

by Chris Bertram on March 31, 2005

Oliver Kamm “has a crack at me”:http://oliverkamm.typepad.com/blog/2005/03/james_callaghan.html for my judgement that Jim Callaghan & Co. let us in for 18 years of Tory misrule. He struggles somewhat to rebut my claim that Callaghan had not a “single policy achievement worth listing to his credit.” After all, as the convoluted one reminds us, Callaghan

bq. had been undistinguished – failing to devalue sterling early enough; the Commonwealth Immigrants Act of 1968, which violated this country’s obligations to British citizens in East Africa; and his role in the defeat of industrial relations reform in 1969 …

Never mind:

bq. His greatest single achievement was to destroy Socialism as a serious proposition in British politics.

Not a “policy” achievement exactly, and hardly something for a self-proclaimed socialist (as Callaghan was) to boast about, but still….



John Quiggin 03.31.05 at 5:43 am

In fact, the statement cited as “destroying socialism” is an attack on Keynesian policies of fiscal stimulus, which, as quoted represents an extreme version of classical economics that few economists today would accept

We used to think that you could spend your way out of a recession, and increase employment by cutting taxes and boosting Government spending. I tell you in all candour that that option no longer exists, and that in so far as it ever did exist, it only worked by injecting a bigger dose of inflation into the system.

It’s probably true that further fiscal stimulus was not a realistic option at the time Callaghan was speaking, but the stronger claim cited here is contradicted by the Blair government’s Golden Rule fiscal policy (budget balance over the cycle).

In any case, there’s only the most tangential link to socialism here. That’s not to say that the Callaghan government didn’t destroy British socialism, of course.


mc 03.31.05 at 5:52 am

I know 76-79 looks like some kind of turning point, but I can’t really believe it. I must admit I agree with Kamm that Callaghan’s own worst mistakes came earlier (over devaluation and in place of strife) and Labour’s worst collective mistakes later (over defence in 83, just as the tories were benefiting from their lucky war)


lenin 03.31.05 at 7:38 am

Tragically, your link doesn’t work Chris. Try this one instead: http://oliverkampf.blogspot.com/2005/03/jim-callaghan-rest-in-peace.html


Sean Hurley 03.31.05 at 7:51 am

Does this mean Blair will get credit for destroying, utterly forever, the “third way”… whatever the hell that is?


Bob B 03.31.05 at 9:10 am

Callaghan’s devaluation of the Pound in 1967 was belated but essential to take account of Britain’s differentially higher inflation rate compared with most trading partners since the previous devaluation of Sterling in 1949.

Callaghan could also be given credit for introducing the Selective Employment Tax on jobs in the service industries so as to boost manufacturing – the policy was the brainchild of Messers Kaldor and Balogh, otherwise colloquially known as Buddha and Pest. As it happens, employment in manufacturing in Britain peaked in 1967 and declined on trend thereafter, as I recall. Oh well.


mc 03.31.05 at 9:24 am

bob – odd to credit Callaghan with devaluation given that the reason why, though ‘essential’ as you say, it was also ‘belated’, was mostly down to him; and that so far from seeing devaluation as ‘his’ policy, he felt it to be such an obvious and humiliating personal reverse that he had to resign.


Urinated State of America 03.31.05 at 12:16 pm

“I know 76-79 looks like some kind of turning point, but I can’t really believe it.”

I think the lesson is that winning elections in the 1970s in the US or UK was a poisoned chalice, given the inevitable economic pain that would be experienced after oil price shocks. (Although in terms of real GDP growth, the 1970s weren’t that different from the gung-ho 1980s).

One could construct an alternate history where after the misrule of Heath and Ford in the late 1970s, Callaghan and Ted Kennedy win elections in 1978-1979 and 1980, and then benefit from declines in oil prices in the 1980s.


bob b 03.31.05 at 5:28 pm

mc – I was being a tad ironic about crediting Callaghan for the 1967 devaluation. My impression – with a little inside info – is that it was primarily Wilson who blocked devaluation earlier. Since Wilson had been an economics don at Oxford pre-WW2, there was a tendency to automatically defer to him on anything to do with economic policy and the decision was kept very close anyway.

By accounts, Wilson’s rationale for not devaluing shortly after coming into office in 1964 is that it would create – or strengthen – an adverse reputation of Labour governments as being prone to devalue, given that the previous devaluation in 1949 had been during the Attlee government. Future Labour governments would therefore be faced with a credibility problem over maintaining the exchange rate on coming into office. We can note in that the implicit attachment of Labour to maintaining the Bretton Woods framework for pegged exchange rates.

Shortly prior to the 1967 devaluation, I had the fortuitous opportunity of a brief conversation with CAR Crosland – previously an Oxford economics don but with little influence on government economics policy at the time despite his impressive professional credentials – and stressed to him the importance IMO of devaluing. He was already there and, as I recall, said he thought the government should have devalued.

Predictably, the Conservatives made much of the 1967 devaluation, when it happened, being a sure sign of the failings of the Labour government. Curiously, Sterling was finally – and very sensibly – floated by the Heath’s Conservative government in 1972. There was in that some replaying of history. It was the attempt to maintain the Gold parity of Sterling which eventually brought the collapse of Macdonald’s Labour government in 1931. The National Government which followed promptly – and very sensibly – took Sterling off the Gold Standard. And there are some echoes of those earlier controversies over fixed versus flexible echange rates for Sterling in current arguments over whether Britain should join the Euro.


kasei 03.31.05 at 6:29 pm

I think it’s a joke that Kamm still thinks he is of the left (“my beliefs have hardly changed” etc). Personally, I think Nuclear Weapons are not a good idea, and at the very least see no reason for the UK to maintain its own stockpile, so I disagree with Kamm’s opinions on that. And as for the not “spending our way out of a recession” bullshit, I believe that wasn’t so much a matter of free choice rather than something forced on the British people and its government by the IMF (much noted in recent years for its wise economic advice…)Any self-confessed left-winger who proclaims the ‘death of socialism’ to be a good thing is obviously an idiot anyway.


charlie b. 04.01.05 at 12:04 am

I lived through Callaghan’s time as prime minister. I remember someone completely out of his depth, blustering and threatening, willing to do anything to hang on to office with a tiny parliamentary majority or none at all, and relying on self-important idiots like Shirley Williams. There were few things he touched, from economic policy to devolution that he did not remorselessly foul up. Few prime ministers deserve more to be remembered as an ignoramus, a failure and a fool. I can think of only one more worthy of those judgements – John Major.


mc 04.01.05 at 6:43 am

bob – if you’re still reading – sorry, had missed the irony – always a danger in compressed posts – or perhaps I am just a little too earnest. Anyway, I was primarily going on my memory of reading diaries/autobiogs/biogs of the time (crossman, healey, crosland) but if you were around and talking to the people concerned, then fair enough. I thought I remembered the various accounts (none entirely reliable on its own, but powerful evidence when unanimous) jointly fingering wilson and callaghan – callaghan being less secure on the economic theory but more inherently small-c conservative, and equally concerned with not appearing weak (that being an entirely reasonable concern, esp for Labour administrations, but also one which requires treading the line between strength and bloody-mindedness).

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