Ted Grant

Fight crisis with socialist policies

Source: Militant, no. 81 (October 1, 1971)
Transcription: Francesco 2009
Proofread: Fred 2010
Markup: Niklas 2010

Tory attacks on the social services, the sick and the poor, the offensive against the trade unions through the Industrial Relations Act, have been supplemented by measures in the interests of the rich and big business. Reduction of surtax from 94 to 70 percent, reduction of corporation tax from 45 to 40 percent, reduction of the tax on high incomes have taken place side by side with the attacks on school milk, prescriptions and the social services.

This declaration of open class war by the representatives of the CBI and big business has been forced on them by the crisis facing British capitalism. The main complaint of big business has been against wasteful state expenditure on social services and other items which have pushed up the share of the gross national product swallowed up by the state from 37 percent in 1959 to 50 percent last year. Of course, they had not objected to the services rendered to big business by expenditure on subsidies to industry and scientific research which consume large sums. Nor have they criticised the over £2,500 million spent on armaments, nor the burden of the national debt, which parasitically swallows up about another £1,500-1,800 million a year.

Ten percent inflation

With a falling share of world exports and the balance of payments being temporarily high because of favourable terms of trade, at the expense of the under-developed world, the producers of raw materials and food, the outlook for even the immediate future, let alone the long-term future, is bleak. With an inflation continuing at the rate of 10 percent, prices will rise, not only in Britain, but on the world market and cancel out the temporary breathing space given by devaluation.

US economy at 73 percent capacity

This year’s Labour Party conference takes place at a time when the comfortable myths of the post-war era have been shattered by the world currency crisis. The theory put forward by the right wing of the labour movement, that capitalism could be managed, and that the problems and economic crises of the past had been dispelled forever, were destroyed by the experience of the Labour government, and now by the measures introduced by the American government. Nearly one million unemployed in Britain and six million in America are a grim foreshadowing of world developments. The measures undertaken by Nixon are caused by the incapacity of American capitalism to solve its problems by internal means alone. America wishes to put the burden of its insoluble dilemma on Japan and Western Europe. This means that there will be less leeway for Britain to find a road out of its problems by exporting.

The American economy is only being worked up to 73 percent of capacity. The attempt to use Keynesian means of “reflating” the economy, accepted in desperation by the Republican Nixon, did not get the results desired. Nor did the measures of Friedmanism, which were imposed as an alternative. The attempt to juggle with the money supply, as could have been forecast with an elementary knowledge of Marxist economics, neither prevented continuing inflation nor a paralysis of the economy. Investment fell, prices continued to rise, the economy remained slack and unemployment has increased. It is these factors, as well as the colossal deficit in the balance of payments which has dictated America’s changed policy on the world market.

Common Market no solution

The Tory government’s panacea for Britain’s economic ills, entry into the Common Market, has already been exploded by America’s actions, which have provoked a split between France and Germany as to how to face up to their more powerful rival. Britain’s entry would merely add another element of discord between the big Common Market powers. It cannot solve their problems. Neither would non-entry solve the problems of British capitalism.

Consequently, the perspective before the labour movement and the working class is a grim one indeed. Investment in Britain is still falling. For the first seven months of this year it was lower than the catastrophic figures of previous years. These were already much lower than the same period last year. And these were already much lower than the figures of previous years.

There is an 11 percent fall in investment and a 43 percent fall in production of machine tools, probably more than half for the British market. Productive capacity of industry generally is not used more than 60 percent. This is the background to a disastrous fall in the rate of profit, of about 25 percent in ten years. During the last year, a further fall from 13 percent profit to 11 percent took place. On top of this, the amount of profit of the big companies has fallen from £4,500 million in 1969 to £4,000 million in 1970.

Logic of capitalism

This is the explanation for the vicious measures of the Tory cabinet. Heath, Barber, Davies and Maudling have undertaken their retrenchment policies because of this situation. It is totally false, and can give an entirely misleading impression, to use the arguments of the Labour leaders, of Wilson, Jenkins, and of the Lefts, Foot, Mikardo and others, that the Tory representatives of the C.B.I. behave in this fashion because Heath is vain, Davies is doctrinaire, Maudling is harsh and Barber is callous. Undoubtedly all this is true, but these acts provoke the resentment and resistance of the working class, which big business would prefer to avoid if they could. It is the logic of capitalism and its economic laws which have the ruling class in their grip.

Production for profit not use

Davies’ argument that higher production would have meant more employment and therefore less unemployment must sound like a death-bed joke to the tens of thousands faced with redundancy notices at the present time and the hundreds of thousands who are in the dole queues. There is a fallacy that more production means more work under capitalism, as demonstrated at the UCS where the workers nearly doubled their output after thousands had been sacked. This arises because the purpose of capitalist production is not the production of goods that are required, but purely for profit. In the classical socialist phrase, production for profit and not for use.

It is in this situation that the T&GWU and the AUEW have come out for demands which include a 35 hour week, a month’s holiday with pay, raising pensions, a £20 minimum wage and other modest demands.

Learn from past experience

The rising tide of disgust with Tory policies is reflected in the by-election votes, where Labour’s percentages steadily increased and the Tories’ have fallen. Demands for revolutionary inroads into capitalism are reflected in the unanimous vote at the TUC and a big majority of Labour’s NEC for the re-nationalisation of the profitable hived-off sections of nationalised industry, without compensation to the looters of the state economy. It is also reflected in the demands for a whole series of reforms put forward by the Labour leadership.

However, the leadership have learned nothing from the bitter experience of 1964-70. Demands for reflation put forward by the TUC and the Labour Party leadership are entirely impractical and utopian on the background sketched above. The hankering, in an ambiguous way, by members of the shadow cabinet, including Wilson and Castle, for a return to a prices and incomes policy is an indication of this. If we start from the fundamental proposition that profit is the unpaid labour of the working class, and that the share of the capitalists can only be increased by cutting down the share of the working class, we will see the flaw in the reasoning which has already been proved by experience.

Strike of capital

However, even the left Labour and trade union leaders have the same naïve illusions in the possibility of running capitalism better than the capitalists. Attempts to do this will always fail against the resistance of the financiers, industrialists and landlords. Wilson has spoken of a strike of capital against the last Labour government, of which we heard only after Labour lost power. The next Labour government will be faced with even greater pressure by big business. They will sabotage any attempt to carry through reforms in education, housing, social services, rents, higher wages and lower hours, which would mean a further cut in already falling profits.

Socialist plan

Consequently the next Labour government would be a government of crisis right from the start. Either they will be prepared to take over the commanding heights of the economy and run them in the interests of the working people, or they will have to capitulate, as did the last Labour government, to the needs and interests of big business.