As the Conference season ends and Parliament resumes, the Tories are in triumphant mood. The Alliance – even the name now seems to mock them – have disintegrated, no longer preparing for government, but for oblivion. Part of the SDP is to go with Robert MacLennan, a year ago unknown in Britain and today unknown throughout the world. The other part, under David Owen, is being re-launched as the political wing of Sainsbury’s. At the Labour Conference there was little rejoicing over the demise of the Alliance: instead, the Party engaged in a self-critical assessment of its own part in bringing about a decade of Mrs Thatcher. What makes things even worse for radical, progressive spirits is that the Ultra-Right appears to be even more in control of the Conservative Party this year than it has been previously. Mrs Thatcher clearly regards herself as a dea ex machina, sent down from on high to ‘knock Britain into shape’. She will wield her power over the next few years dictatorially and without compunction. On the other hand, there is a tremendous danger – to which Dr Owen has succumbed – in believing that ‘Thatcherism’ is somehow now invincible, that it has established a new consensus and that all the rest of us can do is debate alternatives within its framework. It is essential to demythologise ‘Thatcherism’.

Mrs Thatcher has enjoyed two advantages over any other post-war premier. First, her arrival in Downing Street coincided with North Sea oil. The importance of this windfall to the Government’s political survival is incalculable. It has brought almost 70 billion pounds into the Treasury coffers since 1979, which is roughly equivalent to sevenpence on the standard rate of income tax for every year of Tory government. Without oil and asset sales, which themselves have totalled over £30 billion, Britain under the Tories could not have enjoyed tax cuts, nor could the Government have funded its commitments on public spending. More critical has been the balance-of-payments effect of oil. The economy has been growing under the impetus of a consumer boom that would have made Lord Barber blush. Bank lending has been growing at an annual rate of around 20 per cent (excluding borrowing to fund house purchases); credit-card debt has been increasing at a phenomenal rate; and these have combined to bring a retail-sales boom – which shows up dramatically in an increase in imported consumer goods. Previously such a boom and growth in imports would have produced a balance-of-payments deficit, a plunging currency and an immediate reining-back on spending, with lower rates of growth.

Instead, oil has earned foreign exchange and also produces remittance payments from overseas investments bought with oil money. The situation is neither stable nor healthy in the long term: but in the short term it allows the living standards of the majority to rise rapidly, even though the industrial base, the ultimate foundation of a successful economy, is still only achieving the levels of output of 1979. The fact that we have failed to use oil to build a productive and modern industry for the future is something historians will deplore. Nevertheless, oil has been utterly essential to Mrs Thatcher’s electoral success. Academics and commentators may ruminate on the Thatcher ethos and its effect on social attitudes, but the voters are looking in their pockets.

The second undeserved bonus which Mrs Thatcher has been granted is a divided opposition. It is an obvious point but one which cannot be overstated. In 1979 the Tories obtained 43 per cent of the popular vote, in 1983 42 per cent and in 1987 41 per cent. Forty-one per cent is less than Labour obtained in 1959, the year when the question whether Labour could ever win again was first raised. Moreover, in some constituencies Tories were elected with 37 or 38 per cent, or less, of the vote. It would be foolish not to acknowledge that the contours of Tory support have changed: that the Party has more voters in the suburbs and fewer in rural areas. But there have always been changes in the pattern of electoral support. What is new, in post-war politics, is the massive majority of MPs achieved for one party with a relatively low percentage of the vote. Naturally proponents of Proportional Representation see this as a powerful argument for their cause. But the point I want to make is that, although an anti-Tory vote cannot be confused with a pro-Labour one, many more voters, indeed a growing number, voted against Mrs Thatcher rather than for her: and this despite the fact that the opposition parties were divided within themselves. Mrs Thatcher has not just been blessed with a split opposition vote, with Labour and the Alliance often competing for exactly the same political territory, but has been given additional help by the parties’ internal squabbling.

Labour faces two sets of problems: those which are the culmination of a process of change and those arising from the Party’s more immediate past. The latter tend to be ignored, while the former generate volumes of discussion. The effect of three-party politics has been to make every extra percentage point of support at the margins of crucial importance. So matters that affect the parties’ day-to-day fortunes can make a dramatic difference. Anyone in any doubt about this proposition should examine the Labour Party’s standing before and after the Greenwich by-election. A victory for Labour would have meant starting the election from a position where at least it seemed within striking distance of the Tories. Defeat meant that it wasn’t even in frame when the election was called. Suppose Labour had been three or four points up in 1987: that might have meant thirty or forty extra seats – not a Labour victory, but a very much smaller Tory majority. The whole debate in British politics, which at the moment is taking place along the lines of ‘socialism is dead, Thatcherism has won,’ would have been set in a totally different context. The pundits would probably now be talking of Thatcher’s imminent departure and Labour’s springboard for the next election.

It is essential therefore to examine the lessons of the immediate past. There is really no serious doubt that, quite apart from the problems of history, Labour’s ‘extremist’ image has been a crippling liability. This image has been carefully cultivated by a deeply hostile press: but if we are to be honest about our mistakes, the media alone cannot be blamed. In retrospect, the seeds were sown in the Sixties and Seventies, when the leadership of the Labour Party was content to concentrate on stitching up the block votes, manipulating Party Conference – and, to be fair, was preoccupied with governing the country. But at the grass roots the Party was withering. Party members were not being recruited, many local organisations were moribund and participation in key decisions was limited. Once the 1979 defeat occurred, and the pragmatism of the Party’s senior figures seemed not just tired but failed, a wave of constitutional reform swept over the Party. Mandatory re-selection of MPs, and the election of the Leader and Deputy Leader by a caucus wider than MPs, were introduced. These reforms were then put to the test in the famous (or infamous) Benn-Healey contest for the Deputy Leadership.

The difficulty was that though the theory of greater democracy and increased accountability of MPs was fine, the practical context in which the theory was operating was fraught with danger. What was missing from the theory was any appreciation of the vital necessity of ensuring that, as well as MPs or leaders being accountable to the Party, the Party was accountable to the electorate. The one without the other was a recipe for disaster. Because the Party was small and did not encourage participation, it became prey to sectarian groups from the Ultra-Left. Moreover, the new situation allowed the Party to engage in the worst delusion of resolutionary socialism – the notion that resolutions passed at Conference have meaning or effect without real support in the wider community. The result was the birth of the SDP and several years of bitter in-fighting at a cost which the Party is still counting.

Enormous strides have been made in the last few years. But by comparison with its sister socialist parties in Europe, the Labour Party still has a very small number of members. The socialist party in Sweden has a million members, in West Germany 900,000, in Austria 700,000. Indeed, the Tory Party in Britain has four times the number of members that Labour has. Given that the Tories can count on the media and capital to support them, Labour has an overriding need for a large active band of supporters to put its case. Ironically, along with its small membership, Labour has a huge untapped source of potential members. Almost six million trade-unionists pay the political levy. Many did not vote Labour in 1983 and 1987, but many still do support Labour and many more might do so if they thought Labour was throwing its doors open to them.

In September, the Tribune Group of MPs published a pamphlet suggesting the steps to be taken in order to produce a ‘mass membership’ Labour Party. The first stage would be an offer of membership on attractive terms to all trade-union levy-payers. If the experiment, called Levy-Plus, works, the benefits can be extended to other sections of the community. A resolution instructing the Party Executive to implement proposals for a mass party was moved by the shopworkers’ union, seconded by my own constituency Sedgefield and passed overwhelmingly. Time will tell, but, allied to the changes in ordinary members’ voting rights on the selection of candidates, the new proposals offer the opportunity for the first time this century of creating a large, participatory, active party. That is the surest possible way to keep the Party in touch with the voters and to ensure that the errors of the past are not repeated. Of course, Labour must meet the challenge of history, adapt to the times, and plan new policy initiatives: but if its deliberations don’t reflect the views and aspirations of ordinary men and women, it will never open people’s minds sufficiently to convince them of Labour’s wider vision for society. People only listen to those they trust.

The problems which are posed by social change will take longer to solve. But there is nothing more ridiculous than the notion that socialism is inexorably dying, or has been compulsorily retired on grounds of redundancy. Socialism, as its name suggests, is based on a belief in the notion of action through the community, in the idea that individuals do not stand alone, and that it is not merely morally right that we should think of ourselves in this way but that it is the most rational way to organise our lives. The world we face today makes a socialist approach all the more relevant: from new technology to the arms race, co-operation surely makes more sense than competition.

There is no need for Labour to be ashamed of its principles or values. The task is to formulate policies that advance those values in a modern world. Post-war Britain has seen two big changes. First, and partly as a result of reforming Labour governments, there are many more healthy, wealthy and well-educated people than before. In addition, employment has switched from traditional manufacturing industries to a more white-collar, service-based economy. The inevitable result has been that class identity has fragmented. Only about a third of the population now regard themselves as ‘working-class’. Of course it is possible still to analyse Britain in terms of a strict Marxist definition of class: but it is not very helpful to our understanding of how the country thinks and votes. In fact, of that third, many are likely not to be ‘working’ at all: these are the unemployed, pensioners, single parents – in other words, the poor. A party that restricts its appeal to the traditional working class will not win an election. That doesn’t entail a rejection of socialism’s traditional values: but it does mean that its appeal, and hence its policies, must address a much wider range of interests. In doing so, the direction of policy will be governed by another major change closely connected to the first. As people have become better-off and better-educated, so they have become less enchanted with a paternalistic state which says: ‘the gentleman in Whitehall knows best.’

By 1979, a conjunction of the change in people’s life-styles and dissatisfaction at a corporatist state which people felt had become unaccountable and inefficient was bound to evoke a reaction. Mrs Thatcher didn’t create these circumstances: she was a product of them and her policies are a response to them. But the measures most closely associated with her – council-house sales, trade-union ballots, wider share ownership – reflect, at least rhetorically, the notion of devolving power. Her slogan in 1987 was ‘power to the people’; her Conference speech borrowed a phrase – ‘an irreversible shift in power in favour of working people’ – from Labour’s 1974 Manifesto. In other words, even Mrs Thatcher has had to pretend that she is extending opportunity and power. The weakness of Thatcherism is that, whatever the rhetoric, the policies don’t work. They end up concentrating power in the hands of élites, in restricting freedom and in centralising control. The ‘free’ market does not distribute fairly or efficiently: it produces inequality and monopoly.

The Tories fail in part because they naturally favour wealth and privilege; and in part because their extreme view of the individual means that they cannot undertake effective government intervention. For them, good government is no government and the only method of exercising choice is through the market. The trick for Labour is not to follow them and abandon the notion of government and collective provision: but to re-fashion it so that real power is exercised by people and not by institutions or bureaucracies. The fundamental error of Dr Owen (and, oddly, of David Steel since the election, though not before it) has been to surrender to Mrs Thatcher’s philosophy and say that power can only be devolved through the market. The 1990s will not see the continuing triumph of the market, but its failure. If in 1974 a soothsayer had predicted that by 1984 Birmingham North-field, with its 10,000 Labour majority, or Sherwood, with perhaps more pits than any other constituency, would be Tory, he would have been considered deranged. It has come to pass, but for reasons that can be analysed and understood and thus overcome. Labour can start its journey on the road to recovery with confidence in its beliefs and values. But it must keep an open mind and face difficult thoughts. The alternatives are not to embrace Thatcherism or escape from reality in some comforting romantic atavism. There is another way: to go back to our founding principles of a hundred years ago and apply them afresh to the world as it is today.