By Professor Richard Roberts, King's College London
Electoral defeat discredited centrist Labour leaders and their policies with leftist Labour activists, who divined that the party’s way back to power, or at least purity, was a more wholeheartedly socialist programme. Labour did a shimmy leftwards under previous leader, Ed Miliband, but has now lurched to port with Jeremy Corbyn.
This is not the first time that Labour has followed a trajectory leftwards in the wake of a financial crisis. Five of Britain's major financial crises over the last 100 years — 1931, 1949, 1967, 1976 and 2008 — happened on Labour’s watch. Partly bad luck, but also poor policy. Whichever, all were followed by electoral defeats.
The financial crisis of summer 1931 during the Great Depression split the cabinet, leading to the downfall of the Labour government. In the subsequent election Labour was blown away, being reduced to just 46 MPs, and its moderate-left leader lost his seat. The party’s leadership solution was George Lansbury. Lansbury, like Corbyn, was an agitator of protest, not a politician of power. His key causes were the promotion of world disarmament, social justice and women’s rights.
Active in London local politics, he led Poplar’s 1921 rates rebellion and ended up in jail; hailed as a hero he was elected to parliament. He continued his campaigning in parliament, declaring “I intend on every occasion to hinder the progress of business".
In 1929-31 he briefly held junior ministerial office with responsibility for historic buildings and the royal parks; his notable achievement was the Lido on Hyde Park’s Serpentine. Under his leadership from 1932, Labour was long on rhetoric about unilateral disarmament and scrapping the British Empire but short on economic policy influence — fortunately, since he viewed capitalism as morally evil. Lansbury’s opposition to rearmament despite mounting European fascism put him at odds with the party. He resigned the leadership in 1935 but Labour still lost a further election that year.
International financial instability following the 1973 oil price shock, plus the Labour government’s fiscal incontinence, resulted in Britain’s sovereign debt crisis of 1976. Britain’s resort to the International Monetary Fund — the last developed country to do so until Greece and Ireland in 2010 — was perceived by voters as economic incompetence and a national humiliation. The economy went into recession and in 1979 the country turned to Margaret Thatcher. Labour turned to left-winger Michael Foot who became leader in 1980. Foot, whose hero was — inevitably — George Lansbury, was a founder of the Campaign for Nuclear Disarmament and an advocate of British withdrawal from the European Common Market. In the 1960s, he refused ministerial office and led the Labour left’s parliamentary opposition to his own party’s government led by Harold Wilson. Foot became minister for employment in a Labour administration in 1974 and was deputy party leader from 1976.
Labour’s lurch to the left under Foot resulted in the defection of four senior Labour politicians to form the Social Democratic Party. This consolidated the left’s hold on Labour. Meanwhile, the Thatcher government was pursuing the financial deregulation that resulted in the City’s Big Bang, while Labour headed in the opposite direction. Labour’s 1983 election manifesto was strongly socialist, advocating nationalisation of banks, industrial intervention, higher tax, abolition of the House of Lords, unilateral nuclear disarmament and exit from the European Economic Community — a cabinet colleague called it “the longest suicide note in history”. Labour lost the poll and Foot resigned, but there were further defeats in 1987 and 1992; major financial crises cast a long shadow.
The crises of 1949 and 1967 were devaluations of the pound that were widely regarded as inevitable; far from triggering recession, devaluation boosted British exports. Nevertheless, Labour duly lost power in 1951 and again from 1970-74 but the party did not see a leftist takeover.
The financial crises of 1931, 1976 and 2008 resulted for Labour in deeply leftist leaders. On the first two occasions, they led the party to a further trouncing at the polls. Not an auspicious track record for Corbyn, but a measure of historical reassurance against the scary prospect of Corbynomics.
