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International Socialism, Spring 1964

Richard Hyman

Hard Capitalism

From International Socialism, No.16, Spring 1964, p.31.
Transcribed & marked up by Einde O’Callaghan for ETOL.

Sunshades in October
N. Macrae
Allen & Unwin, 30s.

Mr Macrae, one of the Bright Young Men from The Economist, attacks the insistence of successive Tory Chancellors on using deflationary measures whenever faced by inflation or balance of payments troubles. The remedies for the problems of the forties are worse than useless now – like sunshades in October. What we have now is cost inflation, which, if anything, deflates demand; it is not the inefficient or unprofitable industries that suffer most from deflation, but the ‘growth’ industries with high economies of large-scale production and high export potential; so the years of enforced deflation have been years of comparatively high costs and low exports.

Mr Macrae’s solution to this vicious circle is to restore the free working of the market – especially the labour market. Workers in unprofitable industries must be sacked, to form a pool on which the more profitable may draw; and inflationary wage increases must be stopped by a showdown with the unions. It is odd that having condemned Tory Chancellors for meeting cost inflation by deflating demand, he should blame the unions for provoking this irrational reaction; he gives no intrinsic objection to cost inflation – indeed, should it cause a devaluation of sterling, he would apparently approve. His faith in the efficacy of competition seems a little naive; has he read Galbraith’s American Capitalism?

Some bourgeois economists would admit that size of the gross national product alone cannot adequately measure social well-being; but Macrae ignores such deviation from the tenets of capitalism; profitability must be the sole criterion for all politico-economic decision. As an argument from capitalist premisses, the conclusions are in general logically unassailable; Socialists will reject the premisses but the book might give Wilson and his apologists something to think about.

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