Progress | Centre-left Labour politics

Siege economics

Socialist protectionism is as unattractive now as in the 1970s

After Labour’s 1970 election defeat, Tony Benn convinced himself that he could succeed next time where last time he and his colleagues had failed. Benn’s ‘alternative economic strategy’ envisaged import controls (quotas or tariffs on manufactured goods); rationing and allocation of certain imports and of fuel; work-sharing and employment subsidies; controls on capital outflows; tax increases; selective subsidies to industry; controls on banks and financial institutions to channel funds into the public sector; further defence cuts; and the wider development of Anglo-Soviet trading arrangements.

Few of Benn’s cabinet colleagues during the 1974-79 government were enthused. ‘It would produce a run on sterling’, and ‘a cut of six per cent on our living standards’, declared chancellor Denis Healey. Prime minister Jim Callaghan was dismissive of import controls, arguing that in 1964 they had been a temporary sticking plaster over the country’s economic ills rather than anything that addressed the fundamentals of the economy. Moreover, import controls were illegal under European Economic Community rules. But during the 1970s, Benn had reinvented himself as a ‘Brexiteer’, arguing that outside the EEC the ‘siege economy’ measures could be introduced which would build a better Britain.the British public would likely plump for the opposite of the hard-left’s core worldview- greater control over the borders and an openness to free trade.

But would they? Benn thought they would have helped British businesses such as the great Norton Villiers Triumph motorcycle plant at Meriden, which produced what were essentially 1950s technology motorcycles. But Japanese rivals were cheaper to buy, cheaper to run, often easier to handle and maintain and more reliable. In consequence they were what consumers were buying. That was why the private firm was in financial difficulties. Healey claimed that Transport and General Workers’ union leader Jack Joneshad alarmed him with the view ‘you didn’t need research and development for motorbikes’.

On one level you did not. But in a competitive market where overseas firms were producing better designs, you most certainly did. The alternative was the Soviet block model which culminated in the East Berlin of Wartburgs and Trabants so ridiculed in the West after the fall of the Berlin Wall. Norton Villiers Triumph’s motorcycles were not quite so backward, and many are prized by devoted enthusiasts, but the principle is the same, as it was with the British car industry. Given the choice between an Austin Maxi/Morris Marina or a Volkswagen or Honda, growing numbers of Brits were buying the non-Leyland cars – because they were better. Import controls wouldn’t change that.

Healey responded in his famous conference speech of 1976: ‘There are some people who would like to stop the world and get off, and I do not blame them, it has not been an easy world for us in recent months. They say, “Let’s go to a siege economy”, but a siege economy of a rather odd type, a siege in which we stop the imports coming in but we demand total freedom for the exports to go out. Now I have never heard of a siege Screen Shot 2017-02-01 at 16.10.35in which you keep the enemy out of the castle, but the enemy allows you to go and come as you please through its ranks. And yet that is the sort of siege economy that some of our critics are asking for. Oh yes, you want the exports to go out, you want the jobs in the engineering factories to increase as the exports increase, but you want to stop other people having the advantage of selling their goods to us.

‘Now I tell you, comrades, the probability is that that would be a recipe for a world trade war and a return to the conditions of the thirties, and I ask you to consider seriously, do you not believe there are trade unionists in Germany, in France, in the United States, who are considering exactly that type of siege economy for themselves? And do you think it would be of any advantage to any of us if we started off on that road again?’

Benn did. The British electorate, however, remained unpersuaded.


Greg Rosen is chair of the Labour History group. He tweets at @GR1900



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Greg Rosen

is author of Old Labour to New, chair of the Labour History Group and a political columnist for the Scotsman

1 comment

  • The age old argument of British politics that dates back to Cobden/Bright and the anti corn law leagues. Their names are celebrated in many working class areas by street names as free trade led to a massive increase in working class prosperity.

    Socialist protectionism is an abomination

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