Objects in space are in constant free fall towards earth. Since the whole pendulum is in free fall motion, the arm of the pendulum is going at the same speed as the rest of it, and it does not swing.
In orbit, you are in free-fall; constantly falling towards the center of the Earth. A pendulum in your orbiting spacecraft is no different than you, in that it is aslo constantly falling toward Earth. This means there is no tension in the string holding the pendulum bob, so the pendulum cannot swing back and forth.