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Cold wars and class wars

Amidst pandemic and partygate, many may have missed that Boris Johnson’s government has now produced two major policy initiatives that will shape the future of Britain independent of who leads it. Attempting to articulate the new international and domestic role of the UK state post-Brexit, together they replace aspects of the quietly canned Industrial Strategy in order to present a geopolitical justification for national investment in productivity, jobs and skills. This touches upon, if only incompletely, the topic of this Futures of Work special: workplace geopolitics, or in other words, the relationship between international relations and industrial relations.

Published last year, the Conservative government’s international outlook is captured in Global Britain in a Competitive Age, otherwise known as the Integrated Review of Security, Defence, Development and Foreign Policy. Authored by the foreign policy thinker and Clement Attlee biographer John Bew, it sets out an ‘Indo-Pacific tilt’ in recognition of intensified systemic competition with China and a more robust defence of liberal democracy against rising authoritarianism. This will be powered, in part, by a more self-sufficient, coordinated and export-led national economy based on ‘on-shored’ strategic industries like defence and high-tech manufacturing supported by vast sums of R&D spending. This push for greater national productivity, innovation and competitiveness on world markets will, the Review suggests, help create high-skilled, well-paid, secure jobs.

Connecting these gains to the regional rebalancing of the domestic economy, here the Integrated Review intersects with a second, more recent, policy intervention – the Levelling Up White Paper. Headed up by the Secretary of State, Michael Gove, and former Bank of England Chief Economist Andy Haldane, the White Paper proposes to ‘level up’ productivity, pay, jobs, skills, innovation and R&D in the largely working-class former industrial areas that swung behind the Tories in the aftermath of the Brexit referendum.

These initiatives have arguably opened up some useful policy space for voices in and around the Labour Party to advance criticisms and alternatives that push and cajole the government to go further and do better. As Paul Mason argues in the lead article of this edition of Futures of Work, the ‘Indo-Pacific tilt’ announced in the Integrated Review left the government initially ill-prepared for Russian aggression closer to home, an excessive openness to market forces, foreign money and inward investment having impoverished the UK’s strategic autonomy in defence and security – as demonstrated this week in newspaper stories about Downing Street’s sometimes wayward approach to Chinese state capital.

Meanwhile, as Lisa Nandy argued in the House of Commons last week, the White Paper’s hifalutin historical comparisons of the new role of the British state to ‘Rome, Jericho and Renaissance Florence’ obscure the bottom-up means through which ‘Preston, Wigan and Grimsby people are delivering real change for themselves’ already, ‘not because of their government, but despite it’.

The Conservative offer of industrial and economic renewal as a dividend of new geopolitical conditions cannot be so easily dismissed, however. Setting the question of leadership aside, there is undoubted danger for Labour in the Tory attempt to park their tanks on the lawn of the politics of work. The gains it claims to guarantee would be underpinned by a big-spender state levitating on the leeway provided by the need to rally the national effort in a so-called ‘new Cold War’ fought on economic and technological fronts. Concealing within a future-facing narrative a new spin on the same nostalgic politics that has lately characterised left and right, this promises voters a reconstruction of the conditions for the twentieth-century ‘golden age’ of capitalism: great-power rivalry between productive national economies based on stable, skilled, well-paid industrial labour.

Rhetorically, the Johnson government’s agenda resonates with a transatlantic political consensus that jobs, skills and industry will be central to a new Cold War waged, like the last, between two military-economic blocs vying for markets and power – one arranged around the US and Europe, the other around China and Russia. In the US, President Biden has foregrounded the role of unions in this industrial renewal. But, whereas the institutionalisation of worker voice was a vital part of the social and industrial compromise struck in the shadow of the last Cold War, the Conservative initiatives that speak most strongly to the geopolitical turn in industrial policy lack all mention of a role for workers or trade unions.

The Tories were keen to trumpet their credentials as the ‘new party of workers’ when on manoeuvres in the so-called ‘Red Wall’ before and after Brexit. Brexit having been settled, workers and their organisations are nowhere to be seen in the legislative outcomes of the political realignment it fostered. Whilst words like ‘jobs’, ‘skills’, and ‘productivity’ pepper the Integrated Review and White Paper, they are treated as things that either happen to workers or within which workers play a purely incidental part. The Levelling Up White Paper mentions trade unions only as one ‘civic institution’ among many that can play a role in ‘driving economic development’ and ‘building skills and social capital’.

As Western governments in the mid-twentieth century recognised, workers, unions and industrial relations can make a key contribution to the kind of (geo)political economy this policy agenda is proposing. In this respect the White Paper shows little sign of having learnt from the New Deal liberalism Gove extolled in his 2020 Ditchley Annual Lecture, which lauded the ‘new world of liberal, democratic nation states with welfare systems, social insurance and cross-class solidarity’ that was built from ‘bottom up’ out of the world wars and into the Cold War period.

 

Countervailing power

In that lecture, Gove’s analysis echoed the attempts of US conservatives to reckon with the age of populist upheaval and geopolitical rupture by returning to history. In The New Class War, released in paperback in the UK last year, the US commentator Michael Lind documents working-class participation in the institutions and compromises that mediated social conflicts in the name of popular mobilisation during the great-power rivalry of the twentieth century. The culmination of a series of articles written for various conservative periodicals in the US over the past half decade, Lind argues that wars throughout history have compelled rulers, from fear of external threat, to share power with the ruled through democratic reforms.

The history Lind tells has vital lessons for the government’s experiment with a new (geo)political economy of jobs, skills and productivity. For Lind, World War One prompted Western states to broker business-labour pacts restored in peacetime by reforming governments in the wake of the Great Depression. World War Two subsequently consolidated gains like sectoral minimum wages, strengthened collective bargaining and expanded organising rights. In the UK and US alike, this manifested in what Lind labels a ‘democratic pluralism’ extolled by social democrats and ‘labor liberals’. At its best, this saw a range of civil society organisations and institutions, including trade unions, bargain with those of capital and the state. This pluralist politics rejected the notion that there was a ‘unitary public or national interest’ institutions should express and preserve, such as that proposed by populists and dictators. Rather, institutional frameworks were set in place to enable competing interests and ideologies to contest a terrain over which there could be no absolute control – this absence of the possibility of total power being the precondition of liberal democracy itself.

In the political sphere, the production of public policy was underpinned by negotiations between the representatives of competing interest groups. The greater toleration of antagonism and capacity for the construction of compromises between vying tendencies set democratic pluralism apart from Nazi and Soviet totalitarianism. This was driven partly by the ideological threat posed by the latter, which prompted Western governments to share power with workers and their organisations in order to channel inevitable class conflict through forms of institutional mediation rather than demobilisation or communism. In many cases this saw the economy structured by tripartite bargaining between government, unions and employers over wages and working conditions. This was seen as a core component of the national productivity effort to sustain a competitive wartime and peacetime economy.

In the favourable conditions of Cold War US and Europe, these political and economic dimensions realised J. K. Galbraith’s notion that unions and other civil society organisations and institutions could pose a productive ‘countervailing power’ to big business and the state. Encouraged by reforms to labour laws, the rising industrial working class was incorporated into public policy as a balance against the overweening strength of state and capital, encouraging economic dynamism from below. As Huw Thomas explains elsewhere in this issue, the necessity of this accord was accepted across the mainstream political spectrum in Western democracies, part and parcel of the post-war ‘golden age’ of capitalism.

The pluralist class compromises of the twentieth century rested on bounded national polities that, with Cold War conditions constraining globalization, employers could not transgress. This prevented them relocating labour elsewhere or recruiting cheap labour from overseas in order to evade the terms of their compacts with unions and governments. But the gradual opening of the world economy that began in the sixties and seventies, and the diminishing fear of great-power conflict, disincentivised business and government from granting concessions to workers.

Rather than the elite conspiracy some imagine, broader economic shifts structurally necessitated the neoliberal overcoming of the working-class countervailing power that had anchored ‘golden age’ capitalism. Where once it had been a stabilising factor, tripartite bargaining became an obstacle to the reproduction of the conditions of continued capital accumulation in a radically different economic context. The West saw a long downturn during the seventies as the Cold War thawed and globalisation unfolded free of the constraints that were formerly fixed in place by the systemic rivalry cleaving the world in two.

The waning of the Cold War saw Western economies open to the export-oriented developmental states of the post-war recovery and, later and most importantly, China. The sudden increase in lower-cost manufacturing capacity placed new competitive pressures on industry in countries like the US and UK, sparking overproduction and declining profitability. Worker demands for wage and productivity bargains were thus financially unsustainable. The so-called ‘China Shock’, as Amitrajeet Batabyal terms it elsewhere in this issue, capped off this process, Chinese accession to the WTO seeing imports flow into the US and other Western economies as manufacturing jobs went in the other direction.

Policymakers in the West assumed that the exploitation of low-paid labour in factories in China and elsewhere would benefit Western economies by cheapening goods and enabling greater specialisation in the growing knowledge economy. As Lind puts it, cheap labour abroad guaranteed cheap imports at home and thus lower wages for domestic labour, containing the contradictions of an increasingly low-skill and low-productivity economy, as well as guaranteeing cheap imports for the dwindling number of manufacturers that remained onshore. Moreover, the capacity to provide the world’s ideas and innovations and let others do the work of turning them into saleable commodities was taken to confer advantages that outweighed the negative consequences of deindustrialisation for working-class communities dependent on manufacturing for skilled, durable and meaningful livelihoods. These shifts were to have unforeseen implications, at home and abroad.

 

The new developmental state

With the social settlements and cross-class compromises that cohered post-war Western societies having long since crumbled, the material consequences of these economic transformations provided some, if not all, of the context for the contemporary rise of populism. Exhibited in Brexit and the Trump presidency, populism has inaugurated a likely long-lasting break with a global order based on free trade, international institutions and reasonably open borders.

Some, on right and left, may see in this retreat from globalisation the possibility of a restoration of the national sovereignty that circumscribed the social and industrial compacts of the Cold War period. But, as Lind argues, national populism represents a poor basis for the resurrection of a pluralist strategy to restore working-class countervailing power, forcing uniformity and closure upon the representation of different interests and communities. Presuming to speak for a majoritarian national interest, it obstructs the revival of institutionalised forms of bargaining and negotiation central to earlier social compromises.

At the same time as the economic shifts associated with the thawing of the Cold War were sowing the seeds of populism at home, a new geopolitical rivalry was emerging from the contradictions of globalisation.

In the Cold War period there was little economic entanglement between the West and the Soviet Union, maintaining a separation between trade policy, security concerns and military posture. Initially, this separation persisted in the post-Cold War period. At the same time as drawing up military plans to counterbalance China’s rising power, US governments simultaneously facilitated the offshoring of a sizeable chunk of the country’s industrial base to Chinese manufacturers. However, as Jeffrey Henderson highlights elsewhere in this issue, things changed with controversies around Huawei and other Chinese firms involved in the provision of technological infrastructure in the West. Military and security concerns gradually became much more tightly intertwined with economic and trade policy. Unlike the Soviet Union, China presents the West with the prospect of a serious commercial rival and economic challenger. This means, Lind suggests, that any new Cold War combines geopolitical and geoeconomic dimensions to a much more substantial degree than the first.

As the UK government’s new agenda makes clear, the domestic expression of this in the West will likely be a stronger commitment to reshored manufacturing in critical industries associated with defence, security and dual-use civilian-military technologies, mimicking the strategic support Western governments granted sectors like electronics, nuclear, aerospace and computers in the second part of the twentieth century.  But, even as globalisation unravels, a simple restoration of the post-war settlement by means of greater state intervention in industry and the reshoring of skilled, well-paid manufacturing jobs sits uncomfortably with the international complexity of contemporary commodity production. The more limited reshoring or retention of specifically high-value advanced manufacturing aligned to the dynamic combination of technologies associated with the so-called ‘Fourth Industrial Revolution’ (see Darryl Snell et al, this issue), meanwhile, would benefit only a minority of the workforce.

Without some other force compelling capital from above or below, its dependence on the fundamentally low-value exploitation of low-cost, low-skill labour underpinned by cheap inputs from China would create little incentive to invest in the productivity-raising technological and managerial innovations necessary to compete on this terrain. Indeed, a paradox of some of the Conservative proposals for British industrial renewal is their lack of commitment to the sheer scale of state investment and intervention in industry that would be required to overcome this barrier, twinned with an aversion to the kind of worker power that could compel capital from the shopfloor up.

What is demanded, Lind contends, is an approach that counterbalances shareholder value by driving reinvestment of profits in productivity-raising measures across all sectors and regions rather than a select few. It would harness these broad-based productivity increases to combat wage suppression through shared gains strategies superintended with industrial relations that empower rather than stifle worker voice. By increasing worker incomes, this would also generate the domestic prosperity to provide home markets for goods and services where global markets contract, enabling newly productive firms a foothold for further growth and competitiveness. Such an approach would recognise the intertwined character of trade and national security by buttressing industrial power as a foundation of military power in times of peace as well as war.

This alternative is best guaranteed, Lind suggests, by a ‘new developmentalism’ updating the export-oriented ‘developmental state’ of the post-war reconstruction. The return of a multipolar world order in the shadow of a new Cold War realises some of the conditions for such a developmentalist turn. Overcoming the limitations of national-protectionist responses to the shifting geopolitical picture, this would likely be established on the basis of competing military and economic blocs led by great powers like the US and within which some measure of trade liberalization and harmonisation applies, such as the EU or G7. The states within such a bloc could, Lind contends, under the right political conditions, use this accord as a platform for new cross-class social settlements and compromises replicating some of the foundations for shared economic prosperity associated with the post-war period: working-class jobs, wages and conditions.

 

The political integration of the labour interest

Lind’s account has received criticism for the failure of its partial perspective on the experiences and fortunes of the so-called ‘traditional’ working class to capture the diverse reality of the working class as a whole, both then and now – an elision characteristic of many mainstream attempts to navigate between contemporary class and culture wars. Nonetheless, the potted history it helps construct, taking us up to the present day, has some important implications for how we understand the current policy landscape in the UK, where developmentalist ideas are being picked up on both sides of the parliamentary aisle.

This is partly out of recognition, the ‘postliberal’ thinker Adrian Pabst argues, that geopolitical shifts make a ‘new developmentalism’ necessary, with the kind of democratisation of labour and domestication of capital achieved by post-war governments once again central to the national interest – whether policymakers realise it or not. However, the propitious conditions and consequences of post-war developmental states in the West – namely large, vertically-integrated firms operating from a national base for global market domination and a military-industrial complex powered by state R&D spending to produce dual-use civilian-military technologies – are either lacking or unlikely in countries like the UK today. Rather, Pabst suggests, the Cold War focus on ‘the central state and big business’ needs to be scaled back to a more local and regional level, and the gains of a more active industrial policy spread evenly across urban, rural and coastal geographies, as well as across small, medium and large enterprises with varying existing degrees of productivity.

Whilst it is questionable whether the Conservatives have the historical store of intellectual and emotional resources to really follow through on such this new (geo)politics of work and productivity, voices in the Labour Party are already articulating an increasingly confident alternative. As argued in the editorial for the previous edition of Futures of Work, Labour has seized upon the policy space opened up by the incomplete Conservative vision of the connection between local and Global Britain to more fully articulate across its frontbench an emergent political-economic programme putting work and workers at the centre of foreign, defence, trade and industrial policy.

A recent Labour Foreign Policy Group report, China’s Place in a Progressive British Foreign Policy, captures some of what is at stake. And, published late last month, a new pamphlet from party grouping Labour Together, Labour’s Covenant, represents an attempt at providing philosophical coordinates for this reorientation. Informed by contributions from Pabst and others, the pamphlet provides what some might characterise, not altogether accurately, as a ‘Blue Labour’ response to the weaknesses and silences that characterise the government’s ‘Global Britain’ and ‘Levelling Up’ agendas.

Labour’s Covenant identifies many of the same problems that the various government interventions reckon with. Offshoring of strategic manufacturing capabilities and jobs, the pamphlet claims, has left the UK, like many Western countries, dependent on a systemic rival – China – or else high-tech hubs like Taiwan that face mounting geopolitical risk. The shift from an industrial economy to a financialised or ‘rentier’ economy based on the satisfaction of shareholder value, expansion of asset prices and exploitation of cheap labour is taken to have harmed British productivity. The UK, the pamphlet claims, is behind the curve on the revitalisation of strategic national industrial policies undertaken by the US and EU in response to the rise of China, which aim to regain strategic autonomy in industry, technology and more.

The Covenant proposes a potential solution to this malaise in the shape of a programme of ‘national reconstruction’ based on the developmental state Labour raised from the foundations of the war economy between 1945 and 1970. It follows historian David Edgerton in associating Labour’s developmentalism with the political integration of the labour interest through tripartite bargaining. At its best, this saw business, unions and government engage in forms of social partnership and negotiation that shared the gains of productivity and profitability.

The pamphlet proposes that a new Labour government recapture this compromise in two ways. First, it recommends a ‘more robust role for the nation state in the economy’. Industrial strategy would be combined with foreign, security and defence policy, reducing Britain’s reliance on ‘untrustworthy foreign powers’ by recovering control over key manufacturing capacity by reshoring jobs and industries. This geopolitical reorientation would ‘level up’ productivity and economic dynamism through repatriating the production of critical supplies and strategic goods. Second, the populist backlash of recent years will be combatted by granting workers ‘a far more significant role within national politics’. New forms of tripartite social partnership and negotiation will address power imbalances and enable compromises and consensus to be constructed from contemporary political conflicts.

Rather than a purely nostalgic revival of the ‘centralised state’ of the war and post-war years, however, Labour’s Covenant advocates a ‘bottom-up’ model of social and economic development based on empowering workers and communities. This would take the form of ‘semi-autonomous bodies’ sitting ‘between the individual and the state’ as a site for the working through of vying claims over the ‘control and organisation of the economy’, including industrial codetermination and worker representation on company boards and remuneration committees.

 

All that glitters is not golden

Suggesting that the Johnson government cannot carry off a worker-centred connection of the global and the local owing to the continued attraction of ‘liberal market policies’, Labour’s Covenant rescues from the historical integration of the ‘labour interest’ in the developmental state the coordinates of a modern alternative. Yet, in understanding Labour’s golden age as a product of ‘post-war’ rather than ‘Cold War’ dynamics, the role of great-power conflict in compelling the mid-twentieth century compact between unions, business and government is left somewhat understated for a pamphlet whose justification for the rediscovery of the developmental state is coloured by the context of new geopolitical ruptures.

The experience of the UK, US and Europe under the shadow of systemic competition with the Soviet Union is arguably as relevant as post-war reconstruction to the issues at stake today. The Cold War stabilised the pluralist consensus that mediated wartime mobilisation and post-war reconstruction. Its thawing produced the political and economic shifts eventually expressed, in a distorted fashion, by populism. The question today is whether policymakers on all sides of the mainstream political spectrum are correct in thinking, like Lind, that the restoration of some of the domestic conditions associated with that period will bring about an equivalent accord to end the so-called ‘new class war’ and revitalise the political centreground.

It is unlikely the outcome will be anything like as seamless as some imagine. As the upheavals of recent years testify, there is no inevitable relationship between given economic conditions and the political expressions available to the ‘labour interest’ at any one time. And, as Russia’s belligerence in Eastern Europe lays bare (see Gregory Schwartz and The Federation of Trade Unions of Ukraine, this issue), war and great power conflicts place us very far from the predictable determinations of economic rationality. In Ukraine or Taiwan, the ‘new Cold War’ could easily end up running hot.

The ‘golden age’ compromise of the mid-twentieth century is often seen as the archetype for a well-functioning capitalism. But, as the late Robert Kurz tells us elsewhere in this edition, it was an aberration produced under highly specific and contingent conditions laced with the threat of totalitarianism and annihilation. The dark secret of the golden age is that the background maintenance of military tension kept the system of national economies intact and enabled governments to grant concessions to workers and other social actors, but at great cost.

With these contingencies and the discontinuities of our own time in mind, it cannot be assumed that a restoration of the national economies and geopolitical rivalries that anchored previous class compromises will settle in workers’ favour without a fight. In this sense it is questionable whether the social and political costs of a new Cold War are a price worth paying for the uncertain gains of a potential new ‘golden age’ of capitalism without workers at the wheel. The defeat of an open, global, internationalist politics, and the subsequent retreat into the political horizon of the nation state, was an avoidable and self-inflicted source of regret, but we are where we are. Labour’s emergent new developmentalism, rather than that of the Conservatives, offers a better set of building blocks to reconstruct the kind of countervailing power necessary to make the best of what is, by all accounts, a bad situation.

 

Frederick Harry Pitts is a Lecturer in Work, Organisation & Public Policy at University of Bristol School of Management and a co-editor of Futures of Work.

Image credit: David Fowler