Notes of the Month


[A New Election]

(June 1974)

From International Socialism (1st series), No.71, September 1974, pp.3-6.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

AN ELECTION now seems certain for the beginning of October. In the weeks until then, national politics is going to be dominated by the claims of the rival parties. The real issues facing both capitalists and workers are likely to get drowned in a flood of rhetoric.

The election is certainly going to be rather different from the one in the spring. Class issues came very much to the fore in that, as the Heath government tried desperately to shore up its wages policy with a mandate for union bashing. This time we can expect the tone from the different parties to be much more alike as each urges ‘voluntary’ wage restraint as ‘the only alternative’ to mass unemployment.

However, that in itself should not change the attitude of revolutionary socialists to the election. Despite the similarities of the policies of the different parties, most of the ruling class will support the Tories when it comes to polling day. They will do so, not because they see Wilson as any great menace to capitalism, but because they know that in British elections the vote is very much a class vote. A massive majority for the Tories would signify that a large number of workers had accepted the undisguised apologies for capitalism put out by the Tory press. By contrast, a large Labour vote would mean that workers, while still subject to immense reformist illusions, felt in some vague sense in opposition to the system.

The outcome in either case would be a government committed to making capitalism work – and therefore committed to attacks on the working class. But such a government coming to power on the basis of a massive vote of confidence in the system would have a much easier time than one based upon a vote of confused opposition to the system.

For revolutionaries, an added point has to be taken into consideration. Few things expose reformism better than Labour in power. Under such conditions the most outspoken of the left reformist leaders are forced to accept the logic of capitalism and impose anti-working class policies in practice. By contrast, in opposition, it is easy for them to engage in wild sweeps of rhetoric which are never put to the test. And if they can somehow blame the revolutionary left for the electoral defeat, their positron is even stronger.

That is why the International Socialists will be urging our supporters to vote Labour in this election as in February.

We would, of course, prefer to be ip a situation in which we could put up candidates – not with the aim of merely winning seats, but so as to make revolutionary propaganda. But the British electoral system makes it very difficult to do so effectively while the revolutionary left is still small. Votes cast for revolutionaries inevitably reduce the total Labour vote, opening the left up to the accusation of ‘letting the Tories in’. In the face of such arguments, all but the most hardened leftists tend to vote Labour, with the result that the vote of the revolutionaries considerably understates their real strength. At the same time, the degree to which television coverage dominates the actual electoral debate makes minimal the propaganda impact of putting up a few candidates only. Overall, the result is that standing candidates damages, rather than strengthens the revolutionary left at present.

However, that does not reduce the need for revolutionaries to make as much propaganda as we can in the preelection period. We have to argue that while a Labour vote is necessary, no-one should have any illusion that it can stop the developing crisis damaging workers’ living standards. What is necessary is a fight outside parliamentary confines against the wages and employment policies of whoever wins the election. The only reason for voting Labour is that it adds to the confidence of workers when it comes to waging such a struggle and narrows the room for manoeuvre of the ruling class.

Bleak Prospects

THERE IS now little doubt that British capitalism is entering into a period of crisis more severe than most of us can remember. The London Business School recently summed up the results of its survey of the economic situation by speaking of ‘the most difficult ‘set of economic circumstances since the war’. The National Institute Economic Review has backed up this forecast with talk of a ‘very cloudy’ outlook.

The conclusions they draw are bleak indeed The economy is expected to remain virtually stagnant for at least two years, while unemployment rises to around a million and price inflation stays at about 18 per cent.

‘We are not simply faced by the prospect of no increase in the standard of living between 1973 and 1975, but by a fall of three per cent.’

Investment is expected to fall by about eight per cent next year, while the balance of payments deficit stays at above £3000 million.

What makes the picture even blacker for the ruling class is that there seems to be no policy that can actually deal with the crisis conditions. In recent years its economic advisors have been divided into two main camps – the ‘Keynesians’ and the ‘monetarists’. But neither camp is able to put forward a realistic policy.

The ‘Keynesians’ are those who still accept what was very much the prevalent orthodoxy in the 1950s and early 1960s: that judicious state intervention at the right moments can smooth out the crises that have historically plagued capital ism. According to their view, faced with the threat of recession, as at present, the government ought to increase public expenditure and cut taxes, so encouraging increased consumption and investment But the consequences such actions at present rule them out as a possible policy. The Business School suggests that attempts to make the economy expand at even the meagre rate of 2½ per cent would force the balance of payments deficit up from £3,000 million to £5,000 million and push inflation up to unprecedented heights.

The monetarists recognise this and insist that the main problem is inflation, caused in their eyes by excessive creation of money by the government. The only solution is to cut back the money supply, so forcing firms to cut back on their production costs and leaving rising unemployment to deal with wages. This is an approach that has gained growing favour in ruling class circles in recent years, as Keynesian remedies have failed to end either the increasing instability of the system or the upsurge in prices. But it too has to confront insurmountable obstacles. Such a policy would quickly threaten very big and politically powerful firms with bankruptcy. Carried through to the end it would risk turning stagnation of the economy into a vicious slump that would be very damaging to the main sectors of British capitalism. And even then it could not guarantee ending inflation. The last period of recession (1971-2) hardly seems to have affected prices at all.

With each of these options leading it into apparently endless contradictions, the ruling class just doesn’t know what to do. The National Institute has said that there are ‘no panaceas’ – by which it seems to mean no way of dealing with the crisis – and the London Business School argues that ‘the only sensible course is that which the Chancellor has already set himself’ (presumably doing next to nothing), ‘until some benefit is felt from the flow of North Sea oil’.

Without an overall policy for dealing with the crisis, the ruling class alternates between vague hope that it will muddle through and outbursts of panic-stricken hysteria. We have seen that alternation of moods over the last year – with the panic measures of the time of the miners’ overtime ban and strike giving way to the apparent complacency of the spring and early summer, now giving way once more to panic in face of the slide in share prices. We can expect the same sort of sudden change of mood to characterise the period ahead – with dramatic political consequences.

The Future for Wage Restraint

ONE OF the things over which the ruling class has not yet finally made up its mind is that of another bout of compulsory wage freeze. The arguments for such a policy are strong. It alone would seem to offer a way of holding the British rate of inflation below that of most other countries and so allowing a rapid expansion of exports. That is why it has been recommended by the National Institute, the Economist and certain sections of the Tory leadership. That is also why certain Labour leaders would turn to such a policy.

Nevertheless the feeling is by no means unanimous. Certain big employers welcome at least a short period of wages free-for-all, because it enables them to overcome certain shortages of skilled labour and problems of differentials, productivity bargaining etc that occurred during Phases One, Two and Three. They also fear that for ideological reasons a wage freeze would have to be tied to some restriction on price rises, making it difficult for them to maximise profits.

A more extreme hostility to the idea of a statutory incomes policy is being expressed by sections of the Tory Party – notably by Sir Keith. Joseph who seems to be implying that he did not really approve of Heath’s economic policies when in office. The Financial Times – which backed Heath in Phases One, Two and Three – has also expressed the view that ‘the experience of the last few years does not suggest that control of incomes works well in this country for more than a short time.’

A key factor in producing this shift of opinion against a statutory incomes policy is, of course, the success of the miners earlier this year in blasting their way through Phase Three. The defeat of the Tories in the election was the last blow in persuading big business that voluntary co-operation with the union leaders was better than a series of running battles. That is why they have been prepared to watch the demise of Phase Three in recent months without a protest. There has been the feeling that a stand up fight with the unions would deepen class resentments without achieving real successes. According to the Economist, such fears are even shared by many of Heath’s colleagues.

That, of course, has been the logic behind the turn to a ‘voluntary’ incomes policy. But despite the support of the TUC for the social contract, it does not seem likely to achieve any great successes for the ruling class. Although wages have not yet caught up with prices, the average wage rise in the first seven months of this year was twice as high as 12 months earlier. Most of the big unions have been committed by their conferences to substantial wage claims in the months ahead. Their leaders will, no doubt, do their utmost to water these claims down (although they would probably have behaved the same without a ‘social contract’) but with the present rate of inflation their room for manoeuvre will be limited. And a number of local deals have already been signed giving workers rises of 20 per cent or more. It is hardly surprising that the business school concludes that ‘there is as yet no evidence that the social contract proposed by the government is likely to have any effect on wage settlements’.

The ruling class is unlikely to sit back indefinitely while the crisis develops if voluntary wage restraint does not work. At some point whichever government is in power is going to be forced to turn to some expedient or other In an attempt to cut the rate of inflation – whether through a statutory wage freeze, drastic cuts in the social services, a confrontation with a key union, measures designed to boost unemployment or some combination of all four.

Whichever option they adopt the economic struggle will take on overt political dimensions. Indeed, given their lack of an overall strategy and their propensity to sudden outbreaks of panic, it is very likely that they will over-react in one way or another – giving a political focus to the crisis much greater than that strictly required by the economic condition of British capitalism.

Moves to the Right

ONE EXPRESSION of the psychological edginess of the ruling class in the face of a situation it cannot control has been the recent extreme right wing mutterings of certain of its members. The Walkers and the Stirlings are not completely alone in their views. Those sections of the ruling class (for instance, those directly linked to the stock exchange) who have suffered most from the symptoms of developing crisis, are capable of wishing for anything in their fits of hysteria. But the main sections of the ruling class, particularly those who usually give the political lead to the rest, are still far from such views. Their political vehicle is still the Conservative Party, rather than some extra-parliamentary force; their main weapons for controlling the working class movement remain the trade union bureaucracy and, to an increasing extent, the forces of the state.

The situation is also different from that in 1925, when a number of prominent figures set up the Organisation for the Maintenance of Supplies as a cloak for government preparations to scab on the General Strike. Such plans were part of a strategy by the political leaders of the ruling class to deal with the trade union movement. What is being talked about at the moment are vague suggestions which correspond to the individual feelings of large numbers of members of the ruling class, rather than anything that is part of an overall strategy.

But the mood itself is not something that can be ignored in a period of deepening crisis. It fits in with the suggestion from various mainstream ruling class voices that ‘blacklegging has to be made respectable’ and with the ‘apprehension’ expressed by ‘moderate politicians of all parties’, according to the Economist, ‘that the British political system is being put to a test which it cannot meet.’

That does not mean that the months ahead are going to see either mass struggle on the streets or preparation for a military coup. It does mean that the ruling class can turn in moments of crisis to repressive measures of the sort it has not used for many years. Certainly, sections of the state apparatus have been preparing for this. As the Observer could report when commenting on the movement which Stirling and Walker would like to build:

‘Most contingencies for which the newly formed civil assistance movements are mustering are today prepared for at national and local government level.

‘In recent months an entirely new structure – including the appointment of small teams of emergency planners-has been created to cope with the kind of breakdown feared by General Walker and Colonel Stirling, leaders of two new organisations.

‘Under the umbrella of home defence-preparation to meet hostile attack on the population – many local authorities have refined existing services to meet a civil emergency.

‘In 1972, the Home Office sent a circular to local authorities saying that planning for wartime and peacetime emergencies should be brought closer together. County councils were empowered to set up small units for emergency planning for which they would get 75 per cent Exchequer grants.

‘Though officially earmarked for home defence war preparations, the money could also be used to pay for civil disasters,

‘The Home Office now runs a Home Defence College at Easingwold, near York, at which Government, police, military and business representatives come together to see how the nation’s services could continue to function in time of crisis.’

Unemployment and Nationalisation

DISCUSSING massive unemployment as an alternative to wage restraint recently, the Economist warned its upper class readers:

‘A slump would fail because redundant workers would not then simply reduce their wage demands. They would increase their sit-ins and their violence, trying to push more than the whole of the accelerating fall in real incomes on to the middle classes.’

This realisation that workers have learnt a number of important lessons on how, to resist redundancy and factory closures underlies much of the hysteria in the press about nationalisation.

Industrialists know that the worsening of the crisis is going to force growing numbers of them to become dependent upon the state for support. No government, whatever its political complexion, would sit back and watch major chunks of British capitalism collapse – if only because of the devastating effect that would have on the sectors that remained. Just as the state was forced to intervene to prevent the impact of a complete collapse of Rolls Royce on the rest of the British aerospace industry four years ago, it will be forced to take action if any giants of British industry face real trouble in the next 12 months. Even in normal times, state funds finance something like a quarter of the investment of private industry. If British capitalism is going to remain at all competitive internationally, that proportion is bound to rise in a period of crisis.

What worries the big employers is not the fact of state intervention, but the forces that determine its direction.

Harold Wilson does not represent a threat for them in this sense. Nor does Wedgwood Benn in himself. During the term of the last Labour government they presided over the erection of the Industrial Reorganisation Corporation, chaired by a prominent merchant banker Charles Villiers, which offered massive bribes to firms prepared to rationalise themselves. On this basis they were able to force through a number of key mergers that concentrated the productive resources of British capitalism at enormous cost to the workers in terms of jobs. One only has to remember the IRC’s role in reorganising Upper Clyde Shipyards or encouraging redundancies in GEC.

But during the last recession of 1971-2 workers developed new methods of fighting redundancy based, above all, on occupying plants to prevent movement of work or machinery. If such actions develop in the months ahead just as the government is doling out large subsidies to the employers to tide them over the crisis, there will be immense working class pressure for such subsidies to bring some benefit to the workers involved. Big business fears that Labour, angling for working class support, will not be hard enough in resisting that pressure, and will make concessions of the sort that would completely distort efforts to rationalise production and cut real wages.

The campaign being waged against nationalisation aims to weaken such pressures in advance. It is meant to bolster up the ideological defences of the system before the battle is actually joined.

The revolutionary left has to recognise this, and to see that the question of nationalisation will be of central importance in the period ahead.

But we have to raise the demand in a quite different way to that of the reformists or Wedgwood Benn.

Labour’s approach has been exemplified in the case of Triumph Meriden and the Scottish Daily Express. In each case, it did not intervene to carry through nationalisation of the firms creating redundancies, but rather to offer limited state support to workers’ co-operatives to run the particular plants that were being shut. What is more, it did so only on condition that the workers could prove that they could run them much more efficiently according to capitalist criteria than the previous employers. And to prove the point, workers had to tie up some of their own funds in the ventures. Effectively, workers were being offered the chance of keeping their jobs – providing that they proved that they could out-compete privately owned firms by accepting wages and manning levels that privately employed workers would have rejected. They have been offered their jobs in return for spearheading rationalisation and manning agreements that could only, in time, lead to redundancies elsewhere in industry.

Our approach has to be quite different. We have to reject the notion that workers’ co-operatives operating according to capitalist criteria can protect workers from the crisis. Instead we have to raise the question of nationalisation as a way of protecting the jobs, the wages and the manning levels of workers. That means nationalisation, without compensation, and with workers’ control over these key questions.

Workers’ control in this sense is something quite different to workers’ management It does not mean running the factories within a capitalist framework, but rather a fight to compel the employers and their state to obey the workers’ dictates over certain questions. It is a fight that of necessity involves the use of each and every weapon available to the workers. It is also a fight that can begin to raise the most important questions about the control of society as a whole.

Fragmentation and Politics

IF THE PROSPECT ahead is of a deepening of the economic malaise over the months, punctuated by the sudden development of political crises, that does not mean that the revolutionary left can afford to sit back and wait for these to occur.

Certainly, the heightened level of popular political interest that characterised the period of the miners’ strike, the three day week and the spring election, has died away in the last six months. The government, by retreating before the wage claims of all but the weakest groups of workers (like the nurses) has managed to keep nationally organised industrial militancy at a fairly low ebb.

However, it would be a gross mistake to see the past summer as a period of lull in the class struggle. In fact the actual level of economic struggle in the factories has been higher than at any time in the last two years (if one excludes the miners’ strike itself). But it has been a fragmented militancy, expressed by workers in particular factories or combines, rather than in big national struggles. This is shown clearly by the Department of Employment figures for strikes: the number of ‘days lost’ was twice as high in July than 12 months before.

What has changed in recent months, compared to the period of Tory rule, is that there has been a quantitative rise in the struggle in industry, at the same time as a drop in the political heat generated by each dispute. Both are a by-product of the government’s policy of stepping back from confrontation.

The difficulties some revolutionaries have faced in adjusting to this situation arise because there has still been a tendency to react as in the pre-election period, when there was a premium on generalised political agitation, with a relatively low level of industrial struggle in most factories.

In many ways the situation of late has been closer to that of some years ago than to that of the last months of Tory rule. The effect of Phases One, Two and Three of incomes policy was to stifle the local, small scale, fragmented struggles that used to characterise whole sections of industry; to most workers it seemed that only very powerful, nationally organised struggle could break through. With the demise of Phase Three, the trend has once again been the other way. Relatively small groups of workers can force substantial gains and individual, often, isolated militants have something to bite on.

This state of affairs is unlikely to last for long. Whichever party wins the election, it will hot be able to step away from confrontation with workers for ever. But while the present situation persists, it offers immense possibilities for revolutionary socialists: possibilities not so much of conversion of massive numbers of workers to revolutionary ideas, but of increasing both the range and the depth of the penetration of the class by the revolutionary organisation.

During the last period of the Tory government, it was relatively easy to attract workers to revolutionary politics by raising national, political issues. But it was much more difficult for the revolutionary organisation to deepen its base in the factories, because of the inhibiting effect of incomes policy on local struggles. Now it may be more difficult to get political ideas across to large numbers of people; but it should be much easier to build up the muscle of the organisation in the factories, on the basis of leading low level, local struggles. What is needed by the revolutionary left in such circumstances is a willingness to turn from concern with global political questions to the minutae of local, fragmented economic struggles, drawing the best leaders of these towards the revolutionary organisation in preparation for sudden changes in the political climate, which will once again put the global question to the fore. That does not mean neglecting revolutionary propaganda and education – far from it. But it does mean a preparedness to agitate on little issues while making propaganda labout the crisis and the need for socialist solutions.

Last updated on 18 November 2009