From International Socialism (1st series), No.78, May 1975, p.31.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
Intervention in the Mixed Economy
Stephen Young with A.V. Lowe
Croom Helm, £5.50
Whatever Happened to the Quiet Revolution?
J. Bruce-Gardyne, MP
Charles Knight, £3.50
Big Business and Government: The New Disorder
IN ALL the advanced capitalist states, the relationship between state and business presents the ruling classes with growing organisation problems. In the state-capitalist countries of the eastern bloc, bureaucratic planning becomes an ever-more apparent brake on economic growth and international competitiveness. In the western bloc, increased nation-state planning is increasingly a sine qua non of growth and competitiveness. In both cases, relations between the various power-centres with the competing nation states become ever more critical.
The three books under review all focus, in different ways, on these problems as they manifest themselves in Britain. By far the most interesting is the volume by Young and Lowe. The heart of their work is two extended essays, on the last Labour Government’s Industrial Reorganisation Corporation (IRC), and on the forced conversion ofthe Heath government to ‘state intervention’. The IRC experience remains of considerable interest, since the present government is proposing effectively to repeat and extend the ‘experiment’ with its National Enterprise Board. The IRC was a state-funded merchant bank, whose operations were (fairly typically) conducted without any serious reference to Parliament, and which was charged with ‘re-structuring’ sections of British industry to make them more competitive in world markets. Its ‘achievements’ include the sponsoring of the GEC-EE-AEI merger, which produced the largest private employer in Britain, the creation of British Leyland, and a significant number of other, smaller merger operations. The IRC operated in almost total secrecy, to the extent that at its dissolution its files were destroyed by its departing executives. Backed up with state funds, to the tune of £150m, the IRC encouraged a massive rationalisation and centralisation of British capital, greatly extending the monopolistic character of domestic industry. Its rationale rested on the inability of domestic market forces to achieve a sufficiently rapid capital concentration to meet the challenges of international competition, and the possible loss of important domestic industrial sectors (as ball-bearings) to foreign multinational control.
If the creation, and the work, of the IRC was a typical manifestation of contemporary state-monopoly capitalism, the industrial policies proposed and pursued by the Heath government in the first year or so after the 1970 election were an anomaly. A.V. Lowe, in her chapters in the ‘disengagement’ experiment under Heath’s leadership, shows how inescapable a high level of state ‘intervention’ in ‘private’ industry proved to be in an increasingly crisis-ridden world capitalism. Reliance on the forces of the domestic market, an anti-interventionalist policy under the administration of John Davies (former head of the CBI), proved to be an impossible stance to maintain. In 1971, the IRC was formally wound up, the Industrial Expansion Act was repealed, the Shipbuilding Industry Board abolished, and other administrative measures carried through as part of the government’s ‘disengagement from industrial intervention. Within a year this policy was in ruins: a new package of support measures for industry was rushed through, an Industrial Development Unit and Advisory Board were set up, new regional aids were announced by the Tory Minister, Chataway as ‘the biggest package of help the regions have ever had. The crucial background to the turn-round in government policy was, of course, provided by the crises at Rolls-Royce and UCS. To allow these simply to go to the wall was – except for a few dedicated Tory monetary backwoodsmen – unthinkable. The rising pressures of ‘stagflation’ forced the Heath government, not just to stop their proposed cuts in state spending, but in fact to expand the role of the state like any social-democratic government.
J. Bruce-Gardyne is a Tory MP, who has subtitled the book – on the collapse of Heath’s policies – ‘The story of a brave experiment in government’. As an explanation of the turn-round in policy, it is a failure: the author is too concerned to salvage the reputation of his party’s last government to see the wood from the trees. But it does contain some fascinating titbits. Among those pressing the government to save UCS was, apparently, the Chief Constable of Glasgow, who warned that if the money wasn’t put up to save the yards he would need an extra 15,000 police! The author thinks there may have been a little ‘emotionalisation’ in this, but also says it was just ‘too much’ for Whitehall. There’s a moral there, and an indication of why, to date, employers have been remarkably willing to discuss short-term working and other methods of avoiding direct confrontations with the workers.
Neville Abraham has tried to come to terms with the inevitability of state intervention from his vantage point as a lecturer at the Manchester Business School, the Cranfield School of Management, his business consultancy work and his former post as a principal at the DTI. Abraham suggests that government and business have yet to learn to come to terms with their new relationships, and looks for a ‘riew order’. Where he is at his best is in suggesting the ruling class’s contemporary dilemmas. His thinking is illustrative of the current confusion in both government and business circles about their own system, and their inability to find convincing solutions to their own economic, political and internal organisational problems. Loss of direction, confusion and uncertainty are very much part of the ideological atmosphere of establishment political economics currently, and this is reflected in Abraham’s book as much as in the editorial agonies of The Financial Times or the collapse of Heath’s ‘Selsdon man’ policies. Abraham himself wants to overcome the confusions by withdrawing into a de-politicised ‘corporatist’ world in which ‘experts’ will be trained in government, industry and trade unionism by being shifted from responsible positions in civil service or industry into the ‘larger unions’, and from the unions into management, etc. He seems to have no conception that this is possible only under fascism (or Stalinism).
A ruling class which suffers the loss of sense of direction and ideological certainty currently characteristic is a ruling class in clear decay. It is also, of course, especially dangerous. Ruling classes whose purchase on reality is slipping, whose ideologists are so manifestly unable to provide convincing solutions to their problems, are apt to resort to the final argument they understand all too well: stick and cannon.
‘State intervention’, reformism’s current nostrum for the ills of stagflation, is a capitalist solution to capitalism’s ills. Its results, increased monopolisation and hence inflexibility, and increases in ‘money supply’, are methods which for each nation-state are attempts to buy time, while ensuring that the general, world set of relations that generates thes^ responses becomes less stable, more liable to blow. Like socialism in one country, state capitalism in one country too at best prolongs the agony. None of the books provides what is really needed: a political economy of contemporary world capitalism, a new version perhaps of Bukharin’s Imperialism and World Economy. But any Marxist setting out to perform the needed theoretical work will find Young and Lowe’s study of value.
Last updated: 2.3.2008