Malcolm Petrie: You can’t satisfy everyone

Malcolm Petrie

It looks like Britain’s long-standing electoral duopoly is coming to an end. Even though Labour won a huge majority in the 2024 general election, the combined vote share of the two main parties dropped below 60 per cent, the lowest on record. The two-party system we have been used to emerged in the first quarter of the 20th century, a consequence primarily of the growing electoral power of the Labour Party. Founded in 1900 as the Labour Representation Committee (LRC), which united trade unionists and socialists, Labour became a parliamentary presence after the 1906 general election. Before the First World War, its MPs acted primarily as a pressure group, seeking concessions from the Liberal government, but after 1918 Labour advanced rapidly, becoming the official opposition at the 1922 general election and displacing the Liberals as the principal challenger to the Conservatives. The first Labour government took office after the general election of December 1923, but it was a minority administration with just 191 MPs, surviving for barely ten months. Labour returned to power in 1929, again as a minority government, though this time it was the biggest party. It was defeated two years later, but a pattern had been set, and British elections have continued to be a contest between Labour and the Conservatives.

Labour’s arrival as a party of government stemmed partly from external developments: it benefited from the extension of the franchise in 1918 and the steep rise in trade union membership in the early 20th century. The fracturing of the Liberal Party, first through the pressures of war and then as a result of Lloyd George’s continuation of the wartime coalition of Conservatives and (most) Liberals, also gave Labour an opportunity. Internally, the central figure, as Walter Reid suggests in his awkwardly titled biography, was Ramsay MacDonald. He was the first secretary of the LRC; in 1906 he became Labour MP for Leicester; and by 1911 he was leader of the Parliamentary Labour Party. Although his opposition to the First World War forced him to relinquish this position and he lost his seat in the 1918 election, he returned to Parliament in 1922 and was prime minister in the first two Labour administrations. Yet MacDonald’s place in party history is contentious: in August 1931, during the financial crisis that followed the Wall Street crash, he agreed to lead a National Government dominated by Conservatives; two months later he led that coalition to a decisive election victory. As Reid writes, MacDonald’s decision was condemned by the left as a calculated act of betrayal, an interpretation that has persisted. He claims that MacDonald is still viewed not merely as having ‘failed his party’, but having ‘deliberately plotted to destroy it’. Reid’s intention is to demonstrate that MacDonald was guided by a consistent set of political principles, and followed, even in 1931, what he felt was ‘the path of duty’.

Born in 1866 in Lossiemouth, a small fishing village in the north-east of Scotland, to the unmarried Anne Ramsay, who worked as a maid, MacDonald was a pupil-teacher at the local parish school before departing for England at the age of eighteen. An initial move to Bristol in 1885 misfired, but the following year MacDonald settled permanently in London. He joined the putatively Marxist Social Democratic Federation in Bristol, and in London became a member of the Fabian Society and worked as a private secretary to Thomas Lough, a radical Liberal and supporter of Irish Home Rule. By the 1890s, MacDonald, now earning a precarious living through his journalism, was active in the Independent Labour Party (ILP) and stood as its candidate in Southampton in the 1895 general election. After that, his influence within Labour politics grew swiftly. As secretary of the LRC, which the ILP helped set up, he negotiated the secret pact with the Liberals that enabled the electoral breakthrough of 1906, when 29 Labour MPs were returned, MacDonald among them.

Despite his undoubted influence, MacDonald was, even at this stage in his career, a strangely distant figure, detached from the passions and concerns that motivated others in the Labour movement. He advocated a progressive alliance between Labour and the Liberal government and was dismissive of those in his party who wanted to take a more confrontational approach. In March 1914 MacDonald was even invited to join a future Liberal cabinet. This reflected, in part, his conception of socialism, which was evolutionary rather than revolutionary; for him, socialism was an extension of radical Liberalism rather than its negation, and could only be secured by parliamentary means. But his aloofness also derived from his background. Unlike most of the party’s senior figures, he had no direct connection to the trade union movement; indeed, he was sceptical of the value of organised labour, and uneasy when he was expected to defend industrial action, as he was during the 1926 general strike. His childhood in the small port of Lossiemouth, and his increasingly comfortable life in London, meant he had no tangible experience of the life of the industrial working class: as Reid writes, although MacDonald considered himself ‘part of the working class, his working classes were not those of the great towns and cities’. Other socialists, including his fellow Scots and near contemporaries Tom Johnston and John Wheatley, worked as MacDonald did as journalists or publishers, but tended to be involved in campaigning publications, Johnston as the editor of the socialist weekly Forward and Wheatley as the writer and publisher of socialist books. While he conceived of himself as a socialist and wrote works of socialist theory, MacDonald was also content to have his journalism appear in the Liberal press.

The sense that MacDonald was an isolated figure was increased by a series of personal tragedies. In 1896 he had married Margaret Gladstone, a fellow socialist from a prosperous middle-class family, who was engaged in charitable work in the East End. The couple had six children. In February 1910 their son David died, aged five, from diphtheria. Eight days later, MacDonald’s mother died (he had no contact with his father). Then, in September 1911, Margaret died of blood poisoning. Even in the 1930s MacDonald still imagined himself walking along, ‘holding the hand of my little boy in his dark blue jersey’.

The outbreak of the First World War ended his first stint as Labour leader. Unlike the majority of Labour MPs, he was unwilling to support the Liberal government’s decision to go to war, which he saw as a consequence of discreditable diplomacy. His successor, Arthur Henderson, led Labour into the wartime coalition the following year. Although MacDonald’s attitude towards the war was, Reid suggests, ‘complicated, nuanced and misunderstood’ – he believed that once Britain had entered the war, it should fight to win – he was denounced as a traitor in the press and accused of aiding Germany. There were more personal attacks: in 1915 a copy of his birth certificate was reproduced in the right-wing journal John Bull, revealing his illegitimacy; a year later, he was expelled by the golf club in Lossiemouth. Even so, his reputation as a principled opponent of the war aided his political career in the longer term in two ways. First, through his participation in the Union of Democratic Control, MacDonald worked closely with radical Liberal critics of the war, many of whom would transfer their loyalties to the Labour Party, among them the future cabinet ministers Arthur Ponsonby and Charles Trevelyan. Second, the hounding MacDonald experienced gave him a new credibility with the left of the ILP, for whom he became a figurehead. And he did flirt with a more radical stance. He welcomed the February Revolution in Russia, and appeared, later in 1917, to endorse the idea of workers’ and soldiers’ councils in a British context. Reid sees this as a rare misjudgment, a moment when MacDonald allowed himself to be guided by an unserious idealism.

At the 1918 general election, held a month after the end of the war, Labour was faced by the victorious wartime coalition of Conservatives and Liberals, led by Lloyd George. MacDonald was aware that he had little chance of winning in Leicester West, where he faced a coalition-endorsed candidate, but he was shocked by the scale of the defeat – he lost by more than fourteen thousand votes. His career seemed, as Reid writes, to be ‘in ruins’. Yet by the early 1920s his standing had recovered, while the reputation of the coalition government had faded, damaged by the postwar depression and rising unemployment. MacDonald’s criticism of the war now seemed prescient rather than disloyal. He stood unsuccessfully in the 1921 Woolwich East by-election, but came within seven hundred votes of winning. A year later he returned to Parliament as the MP for Aberavon. Labour, now the official opposition, voted narrowly to restore him to the leadership, ahead of J.R. Clynes, who had led the party into the election; the support of the ILP left, including the newly elected Red Clydeside MPs, was critical to his victory. Just over a year later, after the 1923 election, MacDonald became prime minister and foreign secretary in the first Labour government. For Reid, despite its brief tenure, and the controversies regarding Labour’s relations with communism at home and abroad that prompted its defeat, this administration had proved that Labour could govern. He finds MacDonald’s diplomatic efforts on the question of German reparations particularly impressive. The government’s greatest domestic achievement was Wheatley’s Housing Act of 1924, which led to the construction of half a million homes.

Any assessment of MacDonald must rest, however, on his second term. Whatever optimism accompanied Labour’s return to office after the May 1929 election soon dissipated. MacDonald again had some diplomatic successes, but the economic outlook was ominous: unemployment rose relentlessly in 1930, reaching 2.75 million. MacDonald was willing to consider protectionist tariffs, but his cabinet colleagues, particularly Philip Snowden, the chancellor, were incapable of imagining an alternative to the Treasury orthodoxies of free trade, balanced budgets and the gold standard. Oswald Mosley, then a government minister, drafted proposals in early 1930 for a programme of public works to alleviate unemployment, funded by government borrowing, but these were rejected and he resigned, leaving the party soon afterwards as he moved to the far right. In spring 1931 the situation deteriorated further. A banking collapse in Europe put pressure on sterling, and soon there was a currency crisis. The May Committee, established to examine potential savings in government expenditure, forecast a budget deficit and recommended spending cuts, to be achieved mainly by reducing unemployment benefits.

By August, the government had conceded the need for cuts, but cabinet ministers urged MacDonald and Snowden to soften the sacrifices being asked of the unemployed and the unions made clear that they wouldn’t accept any reduction in unemployment benefit. MacDonald, who had never been close to the unions, regarded this as ‘practically a declaration of war’. He tried to find a programme that would satisfy everyone – his Conservative and Liberal opponents, the Treasury, the Bank of England and foreign lenders. He asked the cabinet to support a package that included a 10 per cent cut in unemployment benefit. The cabinet voted in favour, eleven to nine, but it was clear that the minority, led by Henderson, would resign rather than accept collective responsibility for the proposed measures, and so the government fell. MacDonald, who had already spoken to senior Conservatives and Liberals as well as to George V, resolved that, even if his party left office, he would stay and lead a National Government that would implement the cuts. Of his former colleagues, only Snowden, J.H. Thomas, secretary for the Dominions, and John Sankey, the lord chancellor, joined the new coalition.

Reid, who is engaged in a project of exoneration, claims that MacDonald had no alternative to the spending cuts: he quotes MacDonald’s argument that his proposals were ‘the negation of everything that the Labour Party stood for’ but were ‘necessary in the national interest’. While some – including John Maynard Keynes, from whom MacDonald sought advice – argued for more radical steps, including deficit financing and the abandonment of the gold standard, Reid contends that such measures had yet to gain intellectual credibility. There was, he states, ‘not the slightest possibility of implementing Keynes’s proposals in 1931’. He is also certain that there was no conspiracy to contrive a National Government. Rather, MacDonald was motivated by his sense of duty and by the entreaties of the king, who implored him to remain in office until the crisis had abated.

It is difficult to reconcile any of this with subsequent events. The measures MacDonald felt necessary failed to deliver stability, and the resulting public-sector pay cuts provoked a brief naval mutiny. The impact on sterling was such that the gold standard was abandoned less than a month after the establishment of the National Government – the unimaginable had become reality remarkably swiftly. Reid also follows MacDonald in displaying a disconcerting naivety about the motivations of the Tory and Liberal leaders and of George V. He never asks why they all felt it was so vital that a coalition tasked with fiscal retrenchment should be led by a Labour prime minister, and not by Stanley Baldwin, the Conservative leader. Throughout the 1920s, MacDonald had faced accusations, especially from the left, that he was too fond of aristocratic company and the trappings of office. At times, this descended into petty speculation about MacDonald’s personal life, or criticisms of his willingness to appear in court dress before George V. But it isn’t necessary to accept that his desertion arose from his liking for the ‘aristocratic embrace’ to feel that his vanity left him vulnerable to flattery, that he had an innocent faith in the institutions of the British state and that his ego blinded him to the foreseeable consequences of his actions.

MacDonald seems to have been convinced that the National Government could be a temporary expedient. Reid quotes from a letter he sent to Manny Shinwell, a junior minister in the first two Labour administrations, in which MacDonald claimed that the National Government was ‘not a coalition but a co-operation between individuals who are banded together to avoid the disaster’. There were, he wrote, ‘no parties … involved in it, and as soon as the country gets on an even keel again, the government will cease to exist’. He pledged that there would be no repeat of the 1918 ‘coupon’ election: the coalition would leave office as soon as possible and normal electoral politics would be resumed. He was proved wrong within weeks. The October 1931 general election returned 554 National Government MPs, of whom 470 were Conservatives; Labour’s representation fell to 52, its worst result since before the war. MacDonald, standing for National Labour, was re-elected in Seaham, which he had represented since 1929. Reid attributes his decision to hold an election, and to stay in office, to Labour’s spiteful response to the events of August 1931. Whatever the truth, MacDonald’s views certainly shifted quickly. Within a week of the collapse of the Labour government, MacDonald complained in his diary that his colleagues had run away, leaving ‘everything unprotected’. If this was the best Labour could offer, he wrote, mimicking Conservative criticisms of the early 1920s, then the party was ‘not fit to govern except in the calmest of good weather’.

Although he remained prime minister until 1935, it was soon apparent that MacDonald was leading an administration that was Conservative in all but name. The Tory desire for protectionist tariffs was fulfilled early in 1932, prompting the departure of the free-trade Liberals and further hollowing out any claim that this was a genuine coalition. MacDonald’s presence in the government was increasingly anachronistic. His health was declining; he had glaucoma and insomnia, and his memory was deteriorating. In June 1935 he stood down, swapping roles with Baldwin, who had been lord president of the council. At the general election five months later, he lost his seat to Shinwell by more than twenty thousand votes. Although he returned to the Commons the following year after a by-election for the Scottish Universities, he was now a marginal figure. In November 1937, while sailing to South America with his daughter Sheila, he died of heart failure.

Reid admits the debt he owes to David Marquand’s comprehensive and largely sympathetic biography, published in 1977. He displays little originality in his selection of sources and anecdotes, or in his discussion of MacDonald’s political outlook. Where he does diverge from Marquand is on the question of MacDonald’s legacy. Marquand saw MacDonald as ‘decent and honourable’, but regretted his failure to follow the path outlined by Keynes in 1931, arguing that he lacked ‘a willingness to jettison cherished assumptions in the face of changing realities’. For Reid, this shows that Marquand, then a Labour MP, was a follower of the Keynesian economics that still prevailed in the 1970s. In the decades since then, Reid asserts, the ‘apparently self-evident … merits of Keynesianism and deficit financing have been displaced’. But even this restates what Marquand himself wrote in 2004 in a re-evaluation of MacDonald’s life, admitting that his earlier criticisms had been moulded by the ‘equally time-bound assumption that it would have been better to take Keynes’s advice in 1931 than that of the Bank of England’. Marquand, who followed Roy Jenkins into the Social Democratic Party in 1981, conceded that it was ‘no longer obvious that Keynes was right in 1931 and the bankers wrong’, or that governments could flout the financial markets. MacDonald, he now wrote, had been ‘not just honourable and consistent, but right’.

For Reid, MacDonald had the qualities of the ideal Labour leader: he was uninhibited by ‘dogma’ and a ‘natural parliamentarian’; he recognised that Labour had to ‘reassure moderate progressives’ and preferred ‘governing’ to ‘protesting’. The implicit negative comparison is patently with Jeremy Corbyn. Reid draws approving parallels between MacDonald and Keir Starmer, whom he views as equally pragmatic and uninterested in ‘abstract theories’. Less charitable readers may detect other similarities, not least a shared anxiety that Labour governments should, to use Reid’s words, be ‘part of’ and ‘not seen as a challenge to the establishment’. But contemporary analogies can prove treacherous, as the collapse of Starmer’s authority as prime minister demonstrates. In 2004, Marquand wondered whether MacDonald, with his ‘cautious and non-sectarian progressivism’, was the ‘unacknowledged precursor’ of the Third Way centrism espoused by Tony Blair. After the Iraq War, the financial crisis of 2008 and Blair’s decision to join Donald Trump’s Board of Peace, that comparison appears less complimentary than Marquand presumably intended.

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