Ted Grant

Profits up—1,200,000 unemployed? Bring down the Tories

Source: Militant, no. 122 (September 15, 1972)
Transcription: Francesco 2010
Proofread: Fred 2010
Markup: Niklas 2010

The outlook for the working class is grim. Unemployment by next year is expected to rise to 1,200,000. The employers and their government are already preparing a campaign to put the responsibility for this on the trade unions and the resistance of the workers to the lowering of living standards.

As The Times expresses it in elegant language:

“Companies generally are now taking a more optimistic view about their prospects for exports and investment, but the signs are that the employment situation in manufacturing industry is unlikely to improve from now on… given the wage inflation prospect, companies will be more inclined to shed labour or at least to revise their plans for new staff.”

Despite the weeping and wailing of the Tories, due to the measures of the government the big business companies have increased their profits. Company profits this year and next are expected to be good. Company profits were up 12 percent in 1971.

“Both the price increases and labour savings that companies have made and the fact that industrial output can now be improved with little addition to costs” is a favourable factor, says the Times. This means that the capitalists regarded the situation complacently. It also gives the game away as to the cause of unemployment and high prices. An increase in wages, other things being equal, means a cut in the profits of the capitalists because, as Marx explained, profit is the unpaid labour of the working class. If the share of the workers is cut the share of the capitalists rises.

Capitalists will always raise their prices if the market will stand it, even if the wages of the working class are lowered.

What caused the rise in prices has been world conditions and the policies of British capitalism and the Tory government. Now the basis has been set for a price explosion to dwarf the present British price level among the highest of all the major industrial powers. Entry into the Common Market and Value Added Tax will result in a minimum increase of 10 percent.

The de facto devaluation of the pound will add to this. The Housing Finance Act and property and land speculation will pile it on. Up to a 15 percent increase or more in prices next year is likely.

Thus “cut prices at a stroke” Heath has brought the biggest increase in prices and the highest rate of increase of prices since the war.

At the same time these policies have not been tamely accepted by the working class. The organised workers have fought back against the attempt to cut living standards. Heath’s policy of “confrontation” is in ruins. The miners, railwaymen, dockers, engineers, building workers and others have beaten back the Tory attacks.

Nevertheless, there are still 7 million workers who earn less than £20 a week which with today’s prices is below social security supplementary benefit standards for a family.

While the capitalists have increased profits in absolute terms, nevertheless industrial investment has fallen. The capitalists have found it more profitable to invest in office blocks, property, restaurants and posh housing. So that is where the money has gone.

Imports increased 28 percent

In addition large sums have gone into investment abroad where greater profits could be obtained. Patriotism is all very well for working class suckers but as W.J. Keswick, director of the Bank of England declared in 1957 “re-investing in foreign shares is anti-British and derogatory to sterling, but, on balance, if one is free to do so it makes sense to me.”

Thus the vital investment in new capital for British industry has dropped by 3 percent in fixed investment of plant and machinery this year. Four and a half years after the 1967 devaluation its effects have worn off. This was one of the main causes of the accelerated increase in prices. But now the volume of imports has increased 28 percent while domestic industrial production is up by 11 percent.

The amount of money in circulation will increase by 30 percent this year it is estimated. Large amounts have been borrowed from the banks by property speculators, not by industrialists to buy new plant. Consequently British capitalism is losing out on its competitors. In the first half of 1972 the value of exports was 1.5 percent below the second half of last year and in volume 2.5 percent below. In the first half of this year imports were 9 percent greater and volume accounted for nearly all the increase!

Maudling’s article

Manufacturing investment in the first six months of this year was 7 percent lower in Britain than the last half of 1971 and 8 percent lower than the first half of 1971. This while distributive and service investment was up by 2 percent in the first 6 months of 1972 over the last six months of 1971 and 4 percent over the first six months of 1971.

But as capitalist commentators have said ‘‘a surge in capital spending is vital for reducing unemployment as well as meeting the challenge of Europe.” Yet investment in industrial new buildings, plant and machinery (including new vehicles) is 7 percent down on the second half of 1971.

It is in this situation that Maudling has written an article in the Times of September 12th demanding what amounts to a disguised but compulsory prices and incomes policy, in reality a restriction of wages despite the inflation caused by capitalism and government policies.

Maudling admits that the,

“capitalist system…has led inevitably to wide disparities in living standards and to the concentration of large amounts of wealth in a fairly limited number of hands…but we must recognise that this has only persisted because the majority have not been prepared to use their potential economic and political power against the prosperous minority…We have seen in the last two decades an arising consciousness of the power of organised labour”.

Maudling is muddled but he sees that the state must intervene openly on behalf of the capitalists. If only the Labour and trade union leaders were half as conscious of the enormous power of the labour movement. It is the pressure and initiative and activity of the active section of the trade union movement which has really mobilised the workers to combat the capitalists and their government on all fronts,

Let our leaders be worthy of the militant rank and file. No collaboration in the schemes of the Tories to bind the workers and their organisations whether through the Industrial Relations Act or an incomes policy. Recognise what the capitalists and their Tory representatives understand—the organised power of the working class.

Fight unemployment

Conduct an offensive against capital and its representatives. Fight unemployment with the programme of the last TUC. Fight for an 8 hour day, 4 day week without reduction in pay and 4 weeks holiday on full pay. Fight for the full demands of all the unions.

The productive potential is there for these demands plus a minimum of £30 a week for all. If capitalism ‘‘cannot afford” these elementary demands then fight for a Labour government pledged to take over the 350 monopolies, banks, land and insurance with minimum compensation on the basis of need. Plan the economy to produce abundance and with workers’ management of industry and the state through the unions and the TUC.