Ted Grant

A Strategy for Socialism

A reply to the document “Labour’s Economic Strategy” produced by N.E.C. of Labour Party

Written: November 1969
Source: Militant, No. 55 (November 1969)
Transcription/Proofread: Henry Whittaker (December 2006)
Markup: Emil

The title of this document issued by the Labour Party N.E.C. is bold and striking. It is supposed to be a discussion of the economic programme for the 1970’s and after, which the Labour Party will present to the people of Britain. The material in it constitutes a crushing indictment of capitalism and of the monopolies which dominate the economy.

A searing attack on the Tory programme and record is made. In the last year of Tory misrule:

“By 1964…the state pension was inadequate; 50% of the schools in Britain had been built before the First World War; no new hospitals had been built since 1945; and there was a shortage of between 2 and 3 million homes. This was the measure of the public squalor and the price paid for economic decline.”

But unfortunately the measures of the Labour Government at best have been a palliative, and have not altered the fundamental facts of economic life. If anything the capitalist class is in a stronger position than it was even under a Tory Government. For example the document claims:

“In the period 1961-64 industrial development certificates were issued in development areas bringing 155,000 new jobs. In the following 4 year period 1965-68 the number of I.D.C. approvals issued in respect of jobs in development areas was 267,000 – an increase of 72%.”

The scale of government assistance to industry in development areas has risen from about 30 million annually before 1965 to over 250 million in 1968-69. Thus the main beneficiaries of this programme have been the capitalists who have held out the begging bowl to the state for ‘national assistance’ on a truly princely scale. Why should the government pay the employers to exploit the workers for their own individual profit? If factories are to be set up with government money why should not the state and the people benefit, not the parasitic minority?

We live in a period of rapid technological change, where the skills of the past rapidly become obsolete. Under these conditions the boast rings hollow that 6% of the total labour force in May 1968 were undergoing some form of training. Especially as the claim is proudly presented that this is 15% higher than 1964. Baling out the sea of capitalist anarchy with an egg cup instead of a spoon! This hardly solves the problem, especially as by the spring of 1971 there will still be only 22,000 in government training centres for skilled workers compared with the even more miserable 8,000 ay the end of 1964.

“Over the last 4 years, government expenditure in the four central areas of social policy has risen faster than at any time since the end of World War II—2 million new homes in Labour’s first five years in office, a real improvement of 20% in retirement pensions by Autumn, 1969; 110 million spent on hospital building in 1967-68 as against less than 60 million on average in the last 3 years Tory Government, 600 million spent on roads and lighting in 1968-69 as against an average 365 million in the years 1962-64; 1,010,000 new school places provided by the building of new schools and improvement to existing ones in Great Britain in the three years 1965-67, compared with 763, 000 in 1961-63, an increase of nearly one third.”

Even setting aside the increase in inflation, which reduces the real expenditure somewhat in comparison with the Tories, this does not take into account the real needs and demands of the people in all these fields so shamefully neglected by comparison. The slums still make up at least one third of the houses in Britain. According to shelter more than one million people still today are homeless in reality. These filthy rat-infested hovels are not homes. Children in many schools are still 40 to a class. The school buildings in many areas date back to Victorian times. Many hospitals are dangerously old and outdated, resulting in outbreaks of infection because they cannot keep the wards and even the operating theatres in antiseptic conditions. Thus the undoubted reforms in comparison with the miserable expenditures of the Tories nevertheless only scratch the surface of the problem. After 5 years of Labour Government, capitalism remains virtually intact.

Reference to the many taxes introduced, such as Capital Gains Tax, miss the fundamental point. No matter what taxes are introduced, the capitalists, with the aid of their accountants, or tax dodge merchants, can drive a modern tanker through the loopholes. There are 2,000 different exemptions to Capital Gains Tax alone!

Because of the ruin of the industry by the monopolists, steel (or rather the 90% which stood to lose money) has been re-nationalised, with the necessary modernisation and large capital expenditure required—this with the enormous over-compensation which resulted in a rise of the share price on the stock exchange! The 10% making a third of the profit was not nationalised. They stand to make greater profits because of the co-operation of the nationalised sector.

The proud claim is made that the nationalised industries, with assets valued at 11,600 million, have an annual investment of 1,600 million. This is equal to the entire investment of private industry! What a shameful indictment when it is considered that 90% of productive industry is in the hands of private owners.

It hardly demonstrates a socialist (or even a ‘social’) conscience to glory in the work of the Industrial Reorganisation Corporation which:

“…has been associated with approximately 30 mergers. Some of them – the heavy electrical industry, the motor car industry, electronics, cranes and pumps – are sections of industry crucial in the total export pattern.”

The notorious GEC-EEC merger, which was one of these mergers, resulted in fabulous capital gains to the chief stockholders. Arnold Weinstock made 1,250,000, then the board proceeded to prepare to sack thousands of workers on Merseyside, thus cancelling out the hand-outs to the capitalists to provide jobs in this development area. In Woolwich thousands were dismissed. In areas all over the country the industrial butchers of these mergers are preparing to sack workers. Profit is the only true god of the capitalists; all else must be sacrificed in its name.

This becomes staggeringly clear when, with unconscious grisly humour, they state (for this almost the entire capitalist press has patted them on the back without revealing its real significance):

“Between the second half of 1967 and that of 1968 the economy grew at 4% while personal spending rose by just over 1%. Exports, on the other hand, rose by no less than 18% (1968 prices) over the same period.

“It made the contrast between this and the last previous periods of relatively rapid growth, 11958-59 and 1962-63, striking. In both these periods private consumption grew substantially faster than exports.”

So they are crowing over the Tories at the fact that personal consumption rose more under the Conservative Government! What this means is that the share of the wealth they produced is less for the working class. The exploitation and the unpaid labour of the working class which goes to profits rose enormously. That has been the meaning of the incomes policy. The strikes of the dustmen, miners and other sections of the industrial workers, the awakening of the white collar workers such as teachers and bank clerks, shows that the lower paid, as well as the skilled sections of blue collar workers, are demanding a greater share of the wealth that they produce.

“Britain’s new economy”

In 1958 ‘acquisitions’ of subsidiaries by big firms amounted to a total of 121 million; in 1968 the mergers of giants totalled over 2,000 million, a figure more than 16 times as great. Thus the speeding up of the centralisation and concentration of capital refurbishes the prediction of Marx on this process: so much for the sneers of capitalist economists and reformist politicians.

The real relationship of governors and governed is shown in the following quotation:

“The five largest companies in the United Kingdom now have a combined annual turnover of over 6,000 million; the combined budget of the top 30 firms considerably exceeds that of the National Exchequer.”

This means that the Board Room directors of these 30 firms have far more power over the economy, and thus the lives of the British people, than the entire cabinet including the Prime Minister. The document then underlines the extent of concentration of power, not only nationally, but internationally, when it quotes the estimate of economic experts that:

“The economy of the ‘free world’ will be largely controlled by a mere 300 giant corporations in the year 1990 – only 20 years ahead.”

At the same time all the vague and woolly promises that society would become more equal by taxation policy proclaimed in the first section of the pamphlet are given the lie in the section on ‘Inequality in Britain’:

“According to the latest official estimates nearly one third of the total personal wealth—27,600 million out of 383,700 – is owned by the richest 1% of all adults, the top 5% own 59% and the richest 10% own 74%. At the other end of the scale, nearly 60% of all adults appear to have little or no recorded wealth at all. Yet evidence from ‘independent’ estimates indicate that these official figures (based on death duty statistics) considerably underestimate the degree of concentration; they ignore entirely the wealth which evades duty via inter vivos gifts, discretionary trusts, family settlements etc. And the picture that emerges from the independent estimates is that this extreme concentration of wealth has changed little over the past 20 years.”

Since 1945 Labour has been in power for 11 years out of 25, including the last 5 years, yet even according to the statements of the NEC nothing fundamental in changing society has been achieved.

“…with 80% of the income of those with incomes above 100,000 being in the form of investment income, it is not surprising that the distribution of income is also extremely unequal. The official estimates, which again tends to understate the degree of concentration, reveal that the richest 2% and the bottom 29% of incomes received about the same share of the total personal income in 1966. Yet these figures include all social security benefits. The result is that whereas there were 40,000 incomes over the 10,000 mark, a million families (a quarter of whom had three or more children) had to manage on 700 a year. Before tax, the poorest one-eighth received just under three percent of total personal income; after tax they received three and one half percent. Meanwhile the richest 1/8th received ten times as much – and this remained the case both before and after tax.”

The authors comment:

“Britain’s progressive tax system is largely a myth… the overall picture, however, (in spite of Labour measures of amelioration) for both income and wealth, remains one of stark inequality.”

What a criticism, in fact, of the ‘practical politicians’ who, they claimed, were practising Fabian tactics of introducing equality painlessly;  according to their own statements, the inequality and the injustices of the social system have never been greater!

“The capitalist dynamic”

“What is the effect of all this on the distribution of wealth and income? This can be gauged from the fact that only about 1.8 million adults (under 5% of all adults) directly own industrial ordinary shares. Between them, this tiny group directly own about half the total stock of equity – and their stake, in June 1969, amounted to a cool 15,000 million. Each 1% increase in overall share prices thus adds a further 150 million to their wealth.

“Since the end of 1966 alone, despite the recent setback in prices, they have gained no less than 5,000 million. And this is quite apart from any stake they may have via the various financial institutions.”

In a similar period of years under the Tories the capitalists gained less on the stock exchange, but the Labour leadership in parliament correctly referred to the ‘casino society’. With a new croupier at the wheel they have increased their unearned wealth without lifting a finger. The labour leadership hope, as they have done now for a generation, to redress the balance with a ‘wealth tax’ after the next election. But, besides being completely impractical, it would not have the effect they desire.

“We must note, however, that the steady long term growth in the value of company assets has dwarfed the yield from these taxes (capital gains tax, betterment levy etc.). Persistent inequalities remain because they are built in to the system, and one of the first needs is a far more powerful capital tax structure.”

Thus secondary reforms do no more than hamper the capitalists’ control of the economy. While they enormously increase their wealth they are prepared to tolerate this. This is not the purpose for which the trade union and Labour movement was created. The taking over of the 250 monopolies with compensation on the basis of need is the only way in which the needs of the people can be satisfied. The colossal wealth of Britain created by the labour of the working class can only be used if it,  together with the banks and insurance companies, is taken into public ownership. The balance of payments problem can only be solved by the monopoly of foreign trade.

Under the Labour Government:

“British firms are playing an increasingly dominant part in the economies of other countries. Overseas investment by Britain during 1968 amounted to 621 million compared with 435 million in 1967 and 303 million in 1966. Total private investment overseas was 11,550 million in 1967.”

Capitalists are not concerned with ‘patriotism’, but with profits. They will invest in brown, black, yellow or green labour if they can make an extra profit. They are not concerned with ‘righting’ the balance of payments, but with squeezing an extra surplus from those they exploit.

A real and democratic plan of production can only be possible when the resources of the country are rationally planned for the benefit of the people. Then hours of work and wages could be raised with a basic minimum guaranteeing comfort and a decent standard living for all. Tinkering with the system leaves the levers of the economy in the hands of handful of selfish millionaires. This way the houses, schools, roads and hospitals that are really necessary can never be built. This way the law of the jungle decides. It is time to cage the capitalist tigers, and take the necessary measures without which a planned economy is impossible.