First published in Socialist Review, Mid-June 1959.
Reprinted in The New Reasoner, No.10, Autumn 1959, pp.80-88.
Republished in A Socialist Review, London 1965, pp.93-101.
Transcribed and marked up by Einde O’Callaghan for the Marxists’ Internet Archive
Thanks to Ted Crawford.
Ken Alexander’s arguments  amount to an overall strategy for the Labour Movement and go beyond the wages plan which is the immediate subject under discussion. The strategy is simple and plausible: “A radical social policy would probe the limits of reform within capitalism, but strike hard at those points of private economic power which obstruct reforms that have democratic support” (pamphlet, p.7). Of course, “a national wages policy is central to such a strategy.” Alexander means by this “an alliance of government and trade unions” to redistribute incomes by taxation at the expense of “unearned incomes,” to maintain stable prices and to raise real wages and salaries by “at least” 3 per cent annually (pamphlet, pp.7, 32).
We can ignore the finer constitutional details. such as the formation of a National Wages Advisory Council representing the “three sides” of industry – Government. TUC and British Employers’ Confederation – or the provisions for “moral pressure” and “public opinion” to be brought to bear on any of the recalcitrant “sides” by the others and by other members of the same “side.”
We can ignore, likewise – for the moment at least – the extraordinary modesty of the plan. If 3 per cent plus stable prices is an example of capitalism’s “sticking point” beyond which “democracy must retreat or capitalism must be replaced,” we are wrong. very wrong. in thinking capital in one form or another rules the world.
Compare Alexander’s goal with the actual achievement by, say, the Japanese working class of a 7 per cent per annum increase in real wages while prices kept steady between 1951 and 1956 (G.C. Allen, Japan’s Economic Recovery, Oxford, 1958, p.201), or by the Germans of 8 per cent annually or the Dutch of 5 per cent between 1950 and 1955 (United Nations, Economic Survey of Europe in 1956, Chapter IX, p. 4) – and all this without the benefit of a Labour Government pledged to a “socialist wages plan.”
But these are incidentals. Let’s accept as desirable the aims of the plan. however limited. Let’s forget the finer points of constitution-mongering. What we are after is an appraisal of the overall strategy of “probing the limits.” What does it mean in practice, or in terms of a socialist wages policy. how is it to come about? What is the social agent that will implement it? These are fundamental questions. Their answers will help to explain the differences between SR’s What we Stand For and Alexander’s strategy. between a transition program of revolutionary reformism, if you like, and a reformist program of accepting the status quo.
Alexander is quite explicit about the method, the agent of reform. It is a Labour Government that has worked out a wages policy with the unions and obtained a promise of support for its implementation; that has, besides, obtained a clear mandate for it from the country (pamphlet, p.58 and elsewhere).
Then he stops. Nowhere does he so much as suggest that a future Labour Government would be any different to its predecessors. Nor does he analyse its predecessors. He gives no reason to suppose that another Labour Government will not try to repeat the Crippsian wage-freeze of 1948-49, will not give way to rising prices as did the last one in its final phase, will not adopt as do-nothing policy on income redistribution as its predecessor.  Nor does he give any grounds for supposing that a new Labour Government will deal more firmly with the monopolists, be they midgets like Tate & Lyle or mammoths like the steel firms. He shows clearly enough how monopoly profits and profit margins soared throughout Labour’s last administration (pamphlet, pp.60-5). He does not outline a guarantee against repetition.
The plan rests on the Labour Government’s ability to squeeze monopoly profits, to prevent prices from rising. A strengthened monopoly Commission, government fiscal measures – differential taxes, investment allowances – will be used to induce business to keep profits below “prescribed maxima” (pamphlet, pp.43-5). That is all. Whether a Commission can bust monopolies which are capitalism’s normal form of organization today, is left vague. Whether profits can be controlled by a (presumably) hostile government without destroying private capitalism, is neither asked nor answered.
Alexander does recognize that capital might offer opposition. “Clearly,” he writes. “it would be dangerous to rule out the possibility of a ‘strike of capital’ at some point ...” But what should be done? How prevent it and keep the capitalist machine running despite the capitalists? Ah, “it would be necessary for a Labour government embarking on such policies to prepare public opinion for such a possibility, and to make clear that it would know how to meet such a crisis.”
And how would it meet such a crisis? How would a Labour government, pledged to pushing capitalism to its “sticking point” while retaining the basic fabric of class control, lack of planning and so on prevent, say, a massive desertion of capital from Britain? Can a program of redistribution, unacceptable to the ruling class, tally with recognition of the chits of paper and other capitalist property conventions which are dynamite for a “legalistic,” “constitutional” Labour government?
No answer. Not the briefest reference to the last attempt.
It is worth recalling. As long as the Labour government was in power there was a constant – and illegal – drain of capital abroad. As Challenge to Britain, the Party’s policy statement published in 1953 stated, “of £645 million of private capital which left Britain during 1947-49 only £300 million represented genuine investment in new projects. Some £350 million was “hot money” quitting Britain because its owners disliked the Labour Government’s policy of fair shares or were engaged in currency speculation” (p 6).
That was until 1949. Export of capital became disastrous in 1951 when, in conjunction with panic stockpiling of raw materials, it led to the balance of payments crisis which pushed Labour out of office. Not exporting sufficient to cover the rising costs of imports, the country had to pay £344 million out of its precious gold and dollar reserves. (The sum was originally thought to be £521 million). At the time, the rise in prices was blamed; nobody in authority thought of paging through the capitalists’ books to check whether there was any other reasons.
Subsequently it was shown that in the same year £315 million WOO million more than was estimated at the time) was shipped abroad in “hot” and “cold” investments and that stocks worth £610 million (a full £370 million more than was estimated at the time) were laid up during the same period (T. Balogh, Pitfalls for a Labour Government, New Statesman. December 19th, 1953). The extra £470 million spent abroad illegally and semilegally was more than enough to cover the balance of payments deficit.
But the Labour government did not know. It could not know, not without infringing capitalists’ “property rights” by opening the hooks of companies and by using the information so obtained to control their activities in detail. At a later date. Gaitskell could do no more than look back regretfully at the really deplorable ignorance about stocks and works in progress. I have little doubt myself, he wrote, “that our policy in 1950 and 1951 would have been more successful had we had accurate and up-to-date information on this point.” (Fabian Journal, No.14, November 1954).
In the light of this, would Alexander agree to nationalize the banks and foreign trade? No! Open the books of capitalist concerns? Oh no! Appeal to workers to report on destination and source of all goods, to take control? Certainly not! That would not do. Remember, we are probing the limits of reform, not cleaving to the heart of revolution. Therefore, “prepare public opinion , and make it clear that Labour “would know how to meet such a crisis” as, presumably it knew in 1931 or 1951 or 1961 (?). Once again, inducements will be lavished on business to “restore confidence” and Britain turned into a haven for Capital. What then of the wages plan? The 3 per cent? The stable prices?
The handcuffs Alexander prepared for capital have turned into cufflinks. And no wonder. His executive agent, the next Labour Government, can no more curtail the workings of the capitalist system than a butler dismiss his Lord.
This Alexander refuses to admit. His whole analysis tends to give the state independent power. above and beyond the classes. When he tried to define its function he is compelled to recognize social reality, but nevertheless manages to emasculate the state. to make it neutral, classless, the instrument of whosoever wishes to use it: “The state in a mixed economy,” he writes. “... will carry out policies either primarily in the interests of capital, or in the interests of wage earners” (pamphlet, p.57). After Eric Heffer remonstrated in his critical article (SR, mid-April) reminding him that “the British state is a class state, created by and for the British ruling class,” Alexander retreated once again: “I accept,” he writes, “that ... I could have been more explicit and thorough (as if an thing could be more explicit – MK) in our treatment of !his crucial issue. We did not make it clear what I think is an important distinction – between the policies that can be wrung out of a capitalist state and which can favour the working class relative to other sections of the community, and the ultimate policy question of the abolition of capitalism and exploitation the defence of which is the main function of the capitalist state” (SR, June 1st).
Admission is not, however. understanding. To give us that the defence of capitalism and exploitation “is the main function of the capitalist state” is not to think out the myriad interconnexions between business and state regulation, business and law; it falls far short of analysing the effect of the state’s class nature on reforms such as are implied in a socialist wages plan.
We needn’t theorize. There is a wealth of experience to summon, and precisely from the period of the last Labour government.
Probably its most shocking feature-shocking to any socialist who retains illusions as to the socialist character of the Labour government in office – was that Big Business itself administered the controls over Business. Even the Civil Service had to make way. The following facts, taken largely from Rogow and Shore’s excellent work, The Labour Government and British Industry (Oxford, 1955), are revealing:
The Chief Planning Officer, 1947-51. was Sir Edwin Plowden. a director of British Aluminium and two other companies. he Capital Issues Committee (which approved or vetoed any major investment plan) consisted of seven bankers, stockbrokers and industrialists plus one Treasury official who, being Secretary, took no active part in the proceedings. The chief industrial adviser to the Board of Trade was Sir William Palmer, Chairman of the British Rayon Federation. Most of the advisers and commodity directors at the Ministry of Food were representatives of business interests, paid by their firms. Unilever alone filled ninety posts in the Ministry of Food, twelve of them senior posts. A director of the iron and Steel Rearmament Panel of the Ministry of Supply and the personnel of the various metals controls was drawn largely from the Non-Ferrous Metals Federation.
G.R. White, an official of the United Tanners’ Federation, was leather controller at the Board of Trade. The match controller in 1946 was employed by Bryant and May and even had his offices on that firm’s premises. The paper controller was Sir Ralph Reed, Chairman of one of the largest paper manufacturing firms in the country. Major F.J. Stratton, a director of Dolcis, was footwear controller, and the hosiery, furniture and tobacco controllers or advisers were trade officials. Employees of Distillers Ltd. occupied the top posts in the Molasses and Industrial Alchohol Control of the Board of Trade, and Liverpool’s cotton firms supplied the bulk of Cotton Control personnel. Timber Control, the largest of the lot, was almost completely staffed by industry people, working to a large extent on an honorary basis, i.e., paid by private industry.
Newsprint was allocated to a trade body, the Newsprint Rationing Committee. The Meat Importers’ National Defence Association and the Wholesale Meat Supply Association distributed imported meat. Rationing of clothing was the concern of trade associations, while controls over the “sweets” trade was in the hands of the cocoa and confectionery trade associations who, by 1950, were allowed to classify and distribute the raw materials without further authority from the Ministry of Food.
The Mond Nickel Co. imported all nickel and rationed it to users through “an unofficial system working between the Mond Nickel Co. and the Ministry of Supply. Sulphur was purchased by the National Sulphuric Acid Association which consisted of three sulphuric acid producers. When the Ministry of Materials became the sole importer of tungsten ores and concentrates it proposed to form a company whose management would include representatives of three private firms in the trade.
The Ministry of Food worked with private companies in a big way ... But why go on?
This was a Labour government, a government supposedly dedicated to working-class interests, supposedly riding roughshod over those of the capitalist class. This was Labour in power before the rejection of nationalization as an instrument of policy, before the leaders had accepted the Tory program of pound-first-employment-after implied, inter alia, by convertibility, before the Gaitskellite emasculation. That was then. To expect the present aspirant to power to form an alliance that will “probe the limits of reform within capitalism” (assuming, for the moment, that the concept meant anything in practice) is ludicrous.
We must be fair, if one can discern a naivety, a vagueness, a hopefulness and a fine liberal optimism in Alexander’s approach to state/capital relations, there is nothing like it in the other plank of his “socialist wages plan.”
On the contrary, when it comes to the Labour government’s relations with workers, he shows a finesse, a grasp of detail, a “realism” that would put many a labour relations officers in private industry to shame,
He writes: “Now income groups are iii some circumstances to be asked not to press to the limit their influence on money incomes, arising from strong bargaining positions” (pamphlet, p.32). (We are not, of course, told the circumstances). Workers are to be restrained from pressing claims where profits are high but to “tackle this through fiscal policy, or anti-monopoly investigation and controls, or possibly direct price control (pamphlet, p.35). Workers – and this under capitalism, mind – should “concern themselves about increased economic efficiency and higher productivity” (pamphlet, p.38). There are to be no higher than nationally-negotiated rates since “we invisage a fiscal and price policy tough enough to reduce the ability of firms to push earnings faster than negotiated rates, whether by way of merit rates or other plus rates or bonuses ...” (pamphlet, p.53) which means, of course. that sacking – here called “propulsion” – must be recognised as an instrument of policy: “re-allocation of labour between firms by propulsion rather than attraction based on high earnings differentials” (ibid.).
This then is the sum total of Alexander’s “socialist wages plan”; dragoon the workers into accepting its stringent requirements, wheedle or bluff the capitalists into accepting its (for them) limited demands in order to present to the world a magnificently conceived “socialist” plan that has one-half the dimension and one-tenth the reality of recent capitalist wage behaviour in the rest of the world.
The Socialist Wages Plan alone need not have required so much critical space were it not that it represents a substantial trend of thought within the Labour Movement – that of the “enlightened” labour bureaucrat – and that it is a detailed exposition of a more general strategy: “probing the limits ... within capitalism.” I have tried to show that the major weakness in the plan and by implication In the strategy, is the attempt to substitute a concept – the state – disembowelled of any reality, abstracted from society, for a social force as the agent of reform. Alexander fails to see the state as a class implement, fashioned specifically and exclusively for the rulers. He fails to realize that under capitalism, workers will never be able to force the state to serve their ends. At most, they can hope to lessen its bite, to force it to retreat a bit here and there.
This is not to say that reforms are impossible within the system. On the contrary, they are palpably with us and have been for a long time. Rut they do not derive from abstract planning of alliances between Party and Union machines, nor from slick attempts to inveigle an enemy state into part-expropriating its rulers. The matrix of reform is workers’ strength in pursuing the class struggle.
It need hardly be said that we do not see in every worker a conscious crusader. Far from it. His gains come to him often. indeed, mainly, through compelling circumstances over which he has no control: labour shortages and bottlenecks during wars and booms, for example. But conscious or not, circumstances can only be turned into hard cash and soft conditions through working-class action, through workers taking advantage of a favourable opportunity, of a sellers’ market, to push up the price of their labour power.
What, then, is the function of socialists? Is it sufficient to pronounce that class struggle is a fact. vas a fact before Marx revealed it as such, and sit back to wait for history to unfold? Certainly not. Working-class consciousness, working-class action, is the philosophers’ stone that transmutes favourable circumstances into better conditions; it is, equally, the sole agent in seizing power to change society, in building a workers’ state to smash the capitalist state.
The socialist’s job is to work with and on this consciousness, to deepen it, make it more inclusive; to make, in other words, working-class action contradict the system more directly and unambiguously. He is not working with a lifeless concept. Class consciousness and action are two necessary aspects of being a worker under capitalism: they are always manifest in one form or another, in one degree of intensity or another. Every new machine throws speeds, rates, conditions into a melting pot, raises imperatively the need to determine new conditions, to resolve anew the precariousness of employment. Day by day workers are thus forced to battle for partial control over production. Every day, again, the chaos of capitalism shoves its ugly mess into the workshop, crying out aloud for order, efficiency, planning. Day after day, the labour bureaucrats – both from Transport House and King Street – sour workers’ victories, engineer their defeats. shackle their mobility. Daily, workers thrust against these and other problems, sometimes fighting on clear issues, sometimes not; sometimes strong, sometimes feeble; but always, fighting.
These built-in conflicts within capitalism are the seedbed of working-class consciousness. They are an inescapable struggle that claims real solutions, solutions that cannot but contradict the system.
Where Alexander sees a part-solution in a plan in which workers are assigned a passive role, in which they are required merely to adjust to changes in the system brought about by some other agent, we see no solution unless it rests on workers’ action, on deepening consciousness. These are the sole agents of change within the capitalist system (reform) and of it (revolution). By ignoring class struggle in its public and subjective manifestations. Alexander ignores the power of change. He is thus forced into accepting the system, to respect its limits, to present a plan and a strategy that are as static in conception as they are innocuous to the rulers.
This then is where we differ from Alexander. By building its propaganda and agitation around workers’ control, not 3 per cent; full nationalization and national planning, not stable prices; independence from labour bureaucrats, not submission to them. SR helps to develop dynamic elements which contradict the bases of the system. By “probing the limits” Alexander accepts them, fixes them.
SR’s program is one of transition from politically unconscious battles to conscious class struggle within our system; it is equally a program of transition from capitalism to socialism. It is a program of both reform and revolution. It is one of transition from the one to the other through class consciousness and action. Alexander’s is one of acceptance, class collaboration around a common plan. a static program of reform which, by ignoring the workers, is as sterile as it is tepid.
We differ from Alexander. Fundamentally.
1. Socialist Wages Plan in SR, June 1; together with John Hughes, in the pamphlet, A Socialist Wages Plan, published by New Reasoner and University and Left Review, (called here pamphlet); his review of Conviction in the New Reasoner No.7.
2. Here Strachey is our authority. He states that the post-war Labour Government did nothing but “maintain this new and markedly, though not enormously, more equalitarian pattern of distribution” which “took place mainly during, not after, the war” (Contemporary Capitalism, p.137).
Last updated on 13 July 2010