"Of course, we want to create wealth." Prime Minister James Callaghan assured a rally of Labor Party faithful here with his familiar friendly, yet firm smile. "But we also want to distribute it fairly. This is democratic socialism."
Callaghan, a tall, commanding figure of a man with an unflappable manner, reminded the predominantly working-class crowd in this heavily industrialized city what democratic soclalism meant for them: Government proection of jobs in declining industries, government investment in new industries, government cooperation with labor unions in setting wages, gove ament review of price increases, government support for the poor, sick, aged and unemployed.
The Conservatives threaten to undo much of this if they win next Thursday's national election, he warned. Their plans to cut income taxes and make up the difference by increasing sales taxes and cutting government spending, he said, would help higher-income families at the expense of the rest.
Callaghan has delivered the same defense of Britain's three decade-old welfare state in slightly altered form each day in morning press conferences and evening speeches as he ambles amiably through a low-key campaign in comparison to Margaret Thatcher's hard-charging Conservative Party crusade against socialism.
To some extent, it seems to be working. Even though public opinion polls here show that a large majority of voters have become disenchanted with Labor's democratic socialism and want lower taxes and less government spending, the Conservatives' lead over Labor has shrunk from well over 10 percent a few weeks ago to only 3 to 5 percent in the most respected polls today, with less than a week to go.
Callaghan's lead over Thatcher in personal popularity is now greater than ever before during the campaign. Despite a lackluster and often disorganized campaign that appears on the surface to be no match for the slick media-oriented packaging of Thatcher, Callaghan's calm, confident elder statesman image clearly has won out over Thatcher's intense aggressiveness.
But this has enabled Callaghan only to keep Labor's strength in the opinion polls steady at about 40 percent of the prospective voters, not enough to win an overall majority of the seats in Parliament. Meanwhile, the Conservatives' strength has been falling from well over 50 percent to just 44 percent today, with the Liberals, Britain's third-largest party, picking up most of the rest.
What those figures do not show is the tough time Labor is having here in Britain's industrial heartland -- from Manchester and its industrial satellites in the northwest to Birmingham and Leicester in the Midlands -- where the election is likely to be won or lost.
The Conservatives are expected to win an overwhelming majority of parliamentary seats in squthern England, where middle and upper-income families like Thatcher's promises to cut taxes and government spending and curb union power. Labor is likely to sweep the lion's share of seats, except those won by nationalist parties, in Scotland and Wales, where incomes are lower, government subsidies higher and trade unions strong.
Here in Britain's historic industrial belt, the demographics are more evenly balanced and the election's outcome may well be determined by relatively small groups of voters: women who rate Thatcher higher than men do, families of skilled workers whose incomes have been edging up only to lose much of the gain to taxes, people who were more inconvenienced here than elsewhere in the country by last winter's many strikes, and victims of increasing burglary, hooliganism and vandalism in the congested cities here. If the Conservatives win more than their usual share of these voters in closely contested seats here, it could be enough to win control of Parliament.
Most of the Conservative candidates trying to unseat Labor members of Parliament here are emphasizing tax cuts and law and order. In the Salford shopping center on the northwestern edge of Manchester, Conservative challenger Jim Markwick, a handsome young business executive running a very professional campaign, repeated the theme over and over today on the loudspeaker of his campaign van: "only a Conservative government will take action against unemployment... only a Conservative government can be relied on to cut taxation for ordinary people."
His opponent, Labor Social Security Minister Stanley Orme, is a veteran trade union leader who has held the seat for 15 years and dismisses the stronger than usual Conservative threat this time. When Orme rolled his bullhorn-equipped car up near Markwick's today to vie for the ears of shoppers, he relied on what has become a familiar Labor refrain here: "Vote for the party that believes in a compassionate society."
Callaghan, a successfully calculating man behind his genial smile, has kept Labor's left in check. He tried little that was daring during these past several years of guiding a minority government and allowing few radical proposals to creep into the party's election platform.
His primary innovative aim in office was to reach an understanding with the unions under which union, government and management leaders could, after determining what the economy would allow, set guidelines for wage increases each year. After this winter's labor strife, he won only a cosmetic agreement with union leaders to work toward this goal.
Callaghan, a lifelong union man and former tax office employee who doggedly worked his way up the parliamentary ladder, is the only British prime minister in this century to have held the top three Cabinet positions -- foreign secretary chancellor of the Exchequer and home secretary. Although he never previously led his party in an election campaign before -- he became prime minister at the age of 64 in 1976 when Harold Wilson suddenly stepped down -- the polls show that his biggest assets in comparison to Thatcher are experience, leadership ability, moderation and humility.
A master behind-the-scenes tactician who is less interested in ideology than in running things smoothly with as great a consensus as possible. Callaghan has also been a clever tactician during this campaign.
He blunted some of the appeal of Thatcher's promise to cut taxes by continually pointing out that sales taxes will have to be raised to make up part of the difference. He countered Thatcher's appeal among some housewives by presenting attractive, eloquent women Labor candidates at his press conferences and speeches to argue that only Labor would keep food prices down and child care centers open. He allowed others in his Cabinet to make slashing attacks on the Conservatives that would conflict with his statesmanlike approach.
Although it has been repeatedly said and written during the campaign that if Labor is returned to power. Callaghan, now 67, would retire in midterm, touching off a power struggle between the conter and left wings of the party. He insisted in a rare television interview this week that he would not retire. But he was smiling, and it was not his firm smile. CAPTION: Picture, Police escort Prime Minister Callaghan through a crowded market in Halfield., UPI