There are many questions which refuse a reassuring answer. This is no less true within socialist theory. The issue of whether socialists and Marxists should work within the Labour Party has preoccupied the British Left throughout this century. The Social Democratic Federation decided to disaffiliate in the early 1900s. The question of affiliation to the Labour Party took up half the agenda of the founding conference of the Communist Party in 1920. In 1932 the Independent Labour Party broke away from the mass organization it had fathered. In the late 1960s, with both student and working-class disillusionment with the Labour Government of Harold Wilson, the issue seemed finally to be resolved: Labour was finished as a socialist party. After decades of ‘entryism’, most of the major Far Left groups left the Party. Thousands of other socialists also moved out in disgust. After the May 1968 events in France the hope was for a similar revolutionary upsurge in Britain: which would be bound to bypass the Labour Party. By 1970 a large section, perhaps the majority, of the Left in Britain had dismissed the possibility of ‘entryism’ into the Labour Party; such a strategy had been rejected. Three years later, the second edition of Ralph Miliband’s Parliamentary Socialism appeared, suggesting that the attempt to transform Labour into a socialist party should be abandoned.footnote1 Against this tide of opinion, Ken Coates responded with a brilliant theoretical testament which still remains highly relevant.footnote2 At about this time the ongoing shift to the Left within the Labour Party came to public attention, and the question of working within the Labour Party re-emerged. Thus the debate re-ignited by Ralph Miliband and Ken Coates continues to this day.footnote3 A mark of its renewed strength was the fact that the ‘Debate of the Decade’, organized in London in 1980, was almost totally preoccupied with the question which had been summarily dismissed ten years before.footnote4

In the 1970s another debate re-emerged. It had been commenced with the posthumous publication of the third volume of Marx’s Capital in 1894, six years before the birth of the forerunner of the modern Labour Party. The debate concerned the theory of value, Marx’s theory of the falling rate of profit, and the nature of the capitalist system. Initially, Böhm-Bawerk and Hilferding were the main protagonists.footnote5 In the 1970s, quite different opinions were involved.footnote6 Apart from the remarkable synchronization of their emergence and re-emergence, what did these two debates have in common? Surely, it may be asked, they involve quite separate issues?

I do believe that questions of Marxist economic theory have a certain autonomy from the more immediate question of political strategy. It would be a mistake to suggest an automatic, or one-to-one relationship between theory and strategy; they operate at quite different levels of abstraction and involve different degrees of judgement and uncertainty. However, in two of the more recent contributions to the debate on the Labour Party the issues have become entwined. I refer to the article by David Coates and his recent book on the Labour government of 1974–79.footnote7 Implicitly in the former, and explicitly in the latter, the two debates are merged. His critique of the Alternative Economic Strategy of the Labour Left, and his arguments for remaining outside of the Labour Party, are based on a specific conception of class struggle and capitalist development. It is to Coates’ merit that the latter has become clearly explicit for the first time.

There are four important theoretical assumptions which underlie David Coates’ argument. Three of them relate directly to the debate on the nature and trajectory of the capitalist system to which I have referred. It is beyond the scope of this article to survey this latter debate here, or to support in detail the alternative position that I hold. Where possible I shall refer the reader to the more important and useful discussions of the issues.

Coates’ analysis of ‘the determinants of Labour politics’ is based on the following four assumptions.