From The Notebook, International Socialism (1st series), No. 22, Autumn 1965, pp. 5–6.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
Michael Kidron writes (8 August): Talk of another 1931 is ludicrous. World trade, while not expanding at the pace of recent years, has not collapsed.
In Britain, the Government has the hidden advantage of improving terms of trade for at least another year or two. This will cheapen imports relative to exports, or enable more to be bought for the same expenditure in foreign currency. The flow of sterling abroad is being staunched while speculation against the pound is nearing a limit beyond which only a major political decision to break the Government by one of the larger Sterling Area countries can break it. The Government is assured of US support for the pound, since, to put it at its lowest, devaluation here will upset American foreign trade sufficiently for the dollar to weaken. Finally, devaluation – by featherbedding traditional industries and not touching the problems of the newer ones (investments, ancillary services, skilled labour, etc.) – can only enfeeble further the Government’s long-term modernisation programme.
The outlook: continued pressure against sterling until October or early November. Once passed without devaluation (although there might well be further direct controls), and with Bank rate at its current high level, there is likely to be an immense reflux of funds to London. By the year’s end or very early 1966, the Government will be in a position to announce an end to the balance of payments crisis, a substantial reduction in the Bank rate (to four per cent?) and to promise a massive renewal of home-building and capital works. The backdrop to an election will be there.
Meanwhile the squeeze exerted until now, more selective in fact than anything the Tories have ever thought up, will have broken relatively few bones – unemployment this winter is unlikely to top three-quarters of a million. By the spring, Brown’s Plan will have provided industry with guidelines for expansion. The crisis will be over.
But not the need for a structural adaptation of the British economy to the changing world market. This remains and with it the permanent threat of renewed crisis. Wilson’s long term hope of administration must continue to rest on his ability to begin this process of adaptation, and to exploit his ‘special relationship’ with the trade unions in the attempt. And so, armed with the shadow of unemployment and talking ‘crisis’ and ‘emergency’, Labour can be expected to switch their pressure from wages and ‘incomes planning’ (next year’s round of increases will in any case reflect this year’s deflationary attack) to attacking defensive workshop practices (alias ‘restrictive’).
Over the next period, then, our war is more likely to be waged on the front of ‘management prerogatives’ than on unemployment and wages.
A gathering pressure is visible from the British ruling class to transform the practice (if not the essence) of British foreign policy. Initially, this pressure arose from the succession of balance of payments crises and the ensuing pressure on British investment abroad, starkly contrasted to continued and increasing British military expenditure abroad – expenditure that is envisaged East of Suez as increasing and, in Malaysia, lasting for ten to fifteen years (cf. the last defence white paper). This prompted various newspapers to do, for the first time, ‘cost-effectiveness’ sums – the military cost in South Arabia and Malaysia in relationship to the economic grounds – with the almost universal conclusion that, whatever the political rationale, Labour’s neo-imperialism (complete with the terminology) made no economic sense. This isolation of the ‘political’ element has helped to spotlight the sole reasons for British military activities beyond Suez – US pressure, backed by US support for sterling. That pressure means, in the short-term at least, both a cutback in British investment abroad (which, given a reasonably stable dollar, means increased US business opportunities) and payments crises: British business would be less than true to itself if it agreed to curb its own profits and pay to play a subsidiary role in American strategy for the benefit of its American competitors without even a squeak, particularly alongside France and West Germany who pay no such cost and get whatever derisory benefits are supposed to ensue from murdering Vietnamese.
The final catalyst to this ‘agonising reappraisal’ that demands Europe, not Asia, as its primary focus, is the expulsion of Singapore from Malaysia. The last British federation of a long line ends; the strategy of federation has always been the same – to contain the developed and radical elements with the backward – in the Caribbean, the Central African, the East African, and, on its last legs, the South Arabian. In Malaysia, the spearhead of an advanced Chinese business class in Singapore was to be contained by the Malay political hegemony of Malaya and the lumpen minorities of Borneo. Lee’s attempt to unite the Chinese and take over Malaysia has been checkmated by the Malays – in the midst of confrontation, the ‘free world base’ has split.
Whatever the significance in south-east Asia may be, in Britain the more aware sections of the ruling-class have been activated into pointing out that the collapse of the Malaysian myth only goes to demonstrate the futility of military exercises at all east of Suez – to spend, as The Sunday Times (15 August) pointed out, £100 millions in Malaysia to defend £150 millions worth of British investment is economic madness. Britain must abandon all this and integrate itself with Europe, so the legend goes. This native Gaullism that threatens to undercut Labour with ‘anti-imperialist’ arguments is likely to grow.
Last updated on 18 February 2017