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International Socialism, Spring 1980


Bob Rowthorn

The Alternative Economic Strategy

From International Socialism 2 : 8, Spring 1980, pp. 85–94.
Transcribed by Marven James Scott, with thanks to the Lipman-Miliband Trust.
Marked up by Einde O’Callaghan for ETOL.


As a member of the Communist Party I should like to thank the editors of International Socialism for the opportunity of writing in this journal. The views I shall express are purely personal, although they are broadly in line with the British Road to Socialism.

As everyone knows British capitalism is in a state of crisis. Manufacturing output is less than it was in the peak year 1974 and is falling. Imports are growing rapidly and, despite the benefits of North Sea Oil, Britain faces a severe balance of payments problem. Unemployment is approaching the 1½ million mark and rising fast. Recent estimates predict that by 1985 there will be 2.75 million people unemployed and 3.75 million by 1990 which is only ten years away. The general future is of a decaying economy beset by falling living standards, inflation and rising unemployment.

There is widespread discontent, industrial conflict is increasing, and to repress this conflict and quell opposition to its policies the government is resorting to ever more authoritarian measures. In sections of the working class and in certain regions radical ideas are gaining ground, and a broad movement for resistance and change is beginning to emerge. At a national level this movement is and will continue to be dominated by the left-wing of the Labour Party, although at a local and grass roots level a wider range of forces is involved and the Communist Party plays an important role. In the economic sphere the demands of the movement are embodied in what has become known as the “Alternative Economic Strategy”.

This Alternative Strategy seeks to achieve the following objectives: to promote a rapid recovery from the present economic recession; to modernise British industry and provide a secure foundation for future prosperity; and to bring about the “fundamental and irreversible shift of the balance of power and wealth in favour of working people and their families” which the Labour Party promised in its 1973 Programme but failed to deliver when in office. This strategy is both democratic and national in character.

Democratic because it contains a number of measures for extending the influence of the working class and its allies, and for exerting social control over the direction of the economy. Amongst these are: nationalisation of key financial and industrial companies, compulsory planning agreements between big firms and the government, controls over imports and overseas investment, withdrawal from the Common Market, wider disclosure of information by big companies and the state, redistribution of income and wealth, and better social services. Taken together, these measures amount to a powerful attack on the rights of capital and the privileges of the upper bourgeoisie. But they still fall a long way short of a full socialist programme, and the economy would remain basically capitalist.

The strategy is also national in character because it is based primarily on changes within Britain itself, and does not consider the wider question of how to overcome the present crisis in world capitalism. Whilst recognising that Britain is linked to the world economy, the strategy assumes that she still has or can obtain enough freedom of action to pursue a fairly independent policy, and that a vigorous programme of reforms would stem the industrial decline and lead to a real improvement in the national economy.

What should be the attitude of Marxists to the Alternative Economic Strategy? On this question there is a sharp disagreement between the Communist Party and the Socialist Workers Party. The Communist Party welcomes the Alternative Strategy, and indeed has played an influential role in formulating and popularising it. The Communist Party sees the Alternative Strategy as one part of much wider programme of democratic reforms which cover all aspects of economic, social and political life. Such a programme, the Party argues, can help establish the left as a credible force in British politics and provide a focus around which a powerful movement for resistance and change can be mobilised. The Communist Party is opposed to a more radical programme of full socialization of the economy which it believes would be unpopular at the present time, and would alienate millions of potential supporters for the left. To quote the British Road to Socialism:

“Millions of people who are not yet convinced of the need for socialism are nevertheless deeply concerned about the present plight of Britain and the effects of capitalism’s crisis. The big question is whether they will be won to struggle for democratic, political and social advance, or whether the Tories and other reactionary forces will be able to take advantage of frustration and confusion to secure support for policies which would further worsen living standards and increase the danger of authoritarian rule.

A great and urgent responsibility therefore rests on the labour movement and other progressive forces. They need to put forward and campaign for an immediate policy which can rally all those seeking a way out of the crisis and unite them in a broad alliance for democracy and social and political change.

As people are drawn into this movement of struggle and action, the Communist Party and other socialist forces need to raise their political consciousness and convince them of their common need to end capitalism and advance to socialism. For the experience of past decades has also shown that capitalism’s crisis cannot be solved within the limits of capitalism. A new strategy of social change is needed. It must be a strategy for socialist revolution.” [1]

The Communist Party believes that this strategy must be primarily national in orientation. The strategy must assume that during the transition to socialism in Britain the rest of the western world will remain under capitalist control. The Party recognises, of course, that a transition to socialism in Britain would be incomparably easier and more complete if it was accompanied by a similar transition in all or even several other major capitalist countries. But, there is no guarantee that this will actually be the case. On the contrary, the experience of the Russian and other revolutions shows that political change occurs in an extremely uneven fashion. Whilst in one country the ruling class may be overthrown, in others it may be hardly shaken, and even where it is challenged the ruling class may soon re-establish its control.

In 1917 the Bolsheviks came to power in Russia under the most favourable international conditions in which most of Western Europe was in turmoil as a result of the suffering and chaos of the First World War. They expected that other countries would soon follow their example. Yet this did not happen. Revolution in Germany and elsewhere were brutally crushed and the bourgeoisie quickly re-established its control of Western Europe. If the Bolshevik revolution did not lead to the overthrow of capitalism in Western Europe under almost ideal conditions, why should one assume that a revolution in Britain would achieve a more favourable result? The Continental bourgeoisie is far more secure than in 1917, and it would be lunacy for the British left to base its entire strategy on the assumption of a simultaneous European revolution. A viable left strategy must assume that the rest of Western Europe remains under capitalist control during the transition to socialism in Britain.

This is unfortunate, for it means confronting unpleasant realities and making difficult choices which could be avoided or eased in a socialist Europe. But what is the alternative? The conditions for a revolution throughout Western Europe, or even a major shift to the left, do not at present exist. Nor are they likely to do so in the foreseeable future. Yet the crisis which is affecting millions of British people is upon us now. If the left is to exploit the present situation, it must have a programme which offers these people some hope, and it must think in terms of something more practical than a European or world revolution. Those who attack a national strategy for socialism in Britain as doomed to failure, and call for a European or world revolution, may sound very revolutionary. But in fact theirs is a doctrine of despair, and however much their views may inspire a small vanguard of sympathisers, they can only breed demoralisation amongst the mass of workers to whom they offer nothing.

Although the Communist Party supports and promotes the Alternative Economic Strategy, it has a more revolutionary view of this strategy than many on the Labour Left who are often quite reformist in their approach. For example, in their writings the Labour MPs Stuart Holland and Brian Sedgemore give a rather harmonious impression of the Alternative Economic Strategy, and very much understate the degree of resistance it would face and the conflict to which it would give rise [2]. In the British Road to Socialism, by contrast, the Communist Party takes a far more contestational view of things, and warns repeatedly of the resistance this programme would meet and of the need to overcome such resistance through mass struggle. The role of mass struggle is summarised as follows:

“Mass struggle outside parliament has a vital role to play now and in the future - as an educator of millions of people whose socialist ideas will be developed in such struggle; as the essential means for ensuring that an elected Labour Parliamentary majority does the job it is elected to do; and as the essential weapon for breaking the resistance of the monopolists and their political representatives and transferring political power into the hands of the working class and its allies. Indeed, the major changes won throughout the history of the labour movement have mainly come as a result of the struggle outside Parliament.” [3]

The Communist Party also lays more stress on the role of state power than is common among Labour Party supporters of the Alternative Strategy. The British Road to Socialism points out that “the ‘neutrality’ of the state is an illusion”, and warns that state power must be taken out of the hands of the ruling class and its allies. To undermine their control over the state apparatus it proposes a series of reforms which include changes in the structure and leading personnel of the civil service, police and armed services, and full trade union and democratic rights for their members. The latter reforms are designed “to bring the mass of state employees into closer relationship with the rest of the working class” and make it easier for the left to “win direct political support from among the armed forces themselves.” [4] Such changes, it is argued, will increasingly turn the state machine into “an arena of class struggle”, and allow the left and its democratic allies to challenge the power of the ruling class and diminish the prospect of a military coup.

Although the Communist Party supports a programme of reforms it is not reformist. It sees the implementation of this programme as the first stage in a revolutionary process characterised by intense conflict and struggle. As already mentioned, however, many elements in the Labour left do not share this perspective. They have a highly reformist conception of the Alternative Strategy, and are quite unprepared for the confusion and conflict which would accompany its implementation. Indeed, it is the strength of such reformist tendencies within the Labour left which accounts, I believe, for the hostility of the Socialist Workers Party towards the Alternative Economic Strategy. The SWP believes that these reformists will use the Strategy to hold back the development of a truly revolutionary movement in Britain, and to direct working class energy into safe channels where it will be harmlessly dissipated. Moreover, as Jonathan Bearman has pointed out in this Journal, the Alternative Economic Strategy is a major propaganda weapon in the arsenal of what he calls the Bennite Left, and is gaining them widespread attention and support. [5] Bearman sees the Alternative Strategy as a menace because in his view it both strengthens left reformism and holds back the development of revolutionary politics in Britain. To discredit this strategy is therefore a major priority, and he asserts that the SWP will be able to win the argument over the parliamentary road to socialism “only if we take on - and defeat - the pretensions of the whole Bennite Alternative Economic Strategy’.” [6]

Bearman attacks the Alternative Economic Strategy on two grounds. As a limited programme of reforms it does not, he argues, challenge capitalist power in any fundamental way and, if implemented, the programme would merely re-establish this power in a new and more secure form. And, as a national programme, the Alternative Strategy is doomed to failure. It rests on the illusion that Britain can achieve prosperity in the midst of a world capitalist crisis, and, if implemented, would in Bearman’s words “subject the working class to untold rigours and barbarities”. [7]

In the present article I cannot deal with all of Bearman’s arguments, so I shall confine myself to those which concern international aspects of the Alternative Strategy.

This strategy rests on the assumption that Britain is a declining industrial power whose problems are primarily due to structural weaknesses in the domestic economy, although it recognises that these problems have been exacerbated by the present world crisis. It concludes that by tackling these structural weaknesses, Britain’s situation could be greatly improved, even during the present world crisis, and the material base could be created for higher wages and improved social services. By contrast, Bearman argues that Britain’s crisis is merely a “spin-off from the world economic crisis and that, in the absence of a world economic recovery, no significant improvement is possible in the British economy or in the situation of British workers. He pours scorn on the idea that there is anything specifically British about the present crisis.

The view that Britain’s problems are merely a spin-off from the general world crisis is central to Bearman’s whole argument. It is therefore reasonable to expect some detailed evidence in favour of his position. Yet Bearman makes no attempt to provide such evidence, and merely repeats the same unsubstantiated proposition in a number of different ways. And nowhere does he confront the vast weight of evidence against him. Let us review briefly some of this evidence.

Throughout the entire post-war period output, productivity and real incomes have grown more slowly in Britain than in most other capitalist countries. In the advanced capitalist countries as a whole, which make up the OECD, gross domestic product grew at an average rate of 4.8% a year over the period 1948–73. In Britain over the same period it grew rather over half this rate – 2.8 % a year. Cumulatively, such differences have an enormous effect, and over this period Britain changed from being one of the richest industrial countries to one of the poorest. During the present world recession this difference in performance has continued. In Britain output has stagnated, whilst in most other advanced capitalist countries it has continued to rise, albeit at a slower rate than before. Over the past six years, since the onset of the crisis, output in the OECD as a whole has risen by nearly 3% a year, which is as fast as Britain grew in the “never had it so good” years of the 1950s. If the Alternative Strategy could only raise Britain’s long term growth rate up to the level recently achieved by other capitalist countries during the recession, this would be a significant achievement and would allow for a modest rise in living standards.

Productivity in manufacturing is a good indication of the health of a capitalist economy, and here the contrast between Britain and other countries is striking. Up to 1973 Britain just about kept pace with the United States, although productivity grew much faster in Continental Europe and Japan. Since the crisis began, however, productivity in Britain has stagnated, whilst elsewhere including the USA it has continued to rise at between 2 and 5% per year.

Growth of Output per Man-Hour in Manufacturing
Percent per Annum

























Source: National Institute

Clearly Britain’s crisis does have a specifically British dimension, and Jonathan Bearman is wrong in claiming it is just a spin-off from the world crisis. Compared to other countries, her industrial base has been declining for the past thirty years, and during the past few years she has stagnated while other countries have continued to grow at a modest if irregular pace [8]. These facts are well-known and I am amazed that Bearman should ignore them.

Several other points in Bearman’s argument deserve mention. In places he suggests that the Alternative Strategy seeks to break Britain’s links with the outside world and pursue a policy of economic self-sufficiency. He claims that “Britain is envisaged as being able to plan its development in a fairy tale world free of international links.” [9] This is, of course, complete rubbish. Nowhere does the Strategy suggest breaking all links with the outside world or making Britain self-sufficient. It accepts that Britain is inevitably bound to have close links with the rest of the world, and its objective is to alter the character of these links. It aims to weaken the hold of multinational firms and international finance over the British economy, to exert some form of conscious control over Britain’s participation in the international division of labour, and to establish new economic relations with other countries. Instead of cutting Britain off from other countries, as Bearman claims, such a strategy might have quite the opposite effect, and lead to closer relations with certain countries, such as the Soviet Union and Eastern Europe, with which Britain’s trade is at present unduly restricted.

Elsewhere in the same article Bearman abandons his claim that the Alternative Strategy seeks to cut Britain off from the rest of the world. Instead he attacks its proponents for their “overriding concern for the competitiveness of British industry”, and he claims that the Alternative Strategy would turn “Britain into a large company operating on the world market where Britain would compete with such savage labour exploiters as Brazil, Taiwan, and South Korea”. It would, he says, “be a constant and desperate struggle to keep above water” and “the only way to survive would be by making Britain more and more competitive, which means massive investment and accelerating productivity.” [10]

These passages are very revealing. They show quite clearly that it is not the proponents of the Alternative Strategy who live in “a fairy tale world free of international links”, but Jonathan Bearman. If British industry is not competitive in world markets, how on earth does he think that Britain can pay the imports which British workers require, for the “cheap shoes from Seoul” which he holds so dear, or the materials and equipment for our factories? Will the rest of the world supply us with these things for nothing? Of course not. Britain must pay her way in the world. This is a harsh fact of life which applies no matter what kind of economic system or what kind of government we have. If British workers seized every single factory in the country tomorrow and ran them under workers’ control, they would still have to compete on world markets. And, like any capitalist they would still have to invest in new equipment and increase productivity. Naturally, production would be socially organised in a different way, and different techniques of production might be used, but workers would still have to produce things which other countries were willing to purchase. If they could not do so, living standards would collapse, disaffection would spread, and socialism would either be overthrown or degenerate into Stalinist authoritarianism. So, even in a fully socialist Britain, the problems of production and trade would have to be solved.

The same thing applies in a transitional situation where there is a Left government in office which is implementing an “alternative strategy”, and capitalism is being challenged but is not yet defeated. As the example of Chile shows, production and trade assume a highly political character in such a situation. Once the ruling class sees the writing on the wall and realizes its days are numbered, it will do everything in its power to create a sense of chaos by sabotaging production and refusing to invest. To defeat such sabotage the left must fight for all those things which Jonathan Bearman professes to despise – investment, productivity and competitiveness. Such things must not be achieved by methods which destroy the revolutionary dynamic, but they are nevertheless extremely important, and we neglect them at our peril.

At this point I am sure to be accused of narrow nationalism, of failing to see that socialism in one country is impossible. What we need, I shall be told, is a world revolution! In a socialist world we could forget about such unpleasant things as investment, productivity and competitiveness. What rubbish! Not only is such a world revolution nowhere in sight, but even if it did occur, does anyone seriously imagine that other countries would supply us for nothing and that British workers could expect a free rise from the rest of the world? Of course not. Under world socialism the international division of labour would be organised in a more rational, cooperative and planned way than it is now. But Britain would still have to export, to supply things in return for all those goods and services received from workers in other lands. British workers would still have to pay their way in the world, and to do so they would still have to produce cheaply and efficiently, and supply things which other countries actually wanted.

An aspect of the Alternative Strategy which seems to evoke extreme hostility amongst followers of the SWP is its call for import controls. These are variously denounced as chauvinistic, as exporting unemployment to other countries, as self-defeating or positively harmful to the interests of British workers. In calling for import controls the Alternative Strategy starts from the fact that Britain has a chronic balance of payments problem. Rising imports of finished manufactured goods are destroying the industrial base of the economy, and to pay for them Britain must spend foreign exchange which could otherwise be used to purchase raw materials and intermediate goods for further processing in this country. Under present trading arrangements any major expansion of output would suck in huge quantities of materials and intermediate products, and consumers would spend much of their additional incomes on imported manufacturers. Since Britain could not pay for most of these additional imports, the result would be a huge balance of payments deficit, the country would be faced with bankruptcy, and expansion would have to be abandoned. It follows that, if the British economy is to expand, something must be done about the balance of payments, either by holding back the growth of manufactured imports or by raising exports.

Given the depth of the problem it is inconceivable that higher exports alone can be sufficient, and something must therefore be done about imports. A greater proportion of foreign exchange must be devoted to imports which contribute to higher production and thereby employment in Britain, and proportionately less on other kinds of import. Note that there is no need to reduce total imports below the current level, or even the imports of finished manufactures. The problem is due to an extremely rapid increase in the import of finished manufactures, and their rate of increase must be reduced, so as to release foreign exchange from the additional import of essential items such as raw materials. Such a change in Britain’s imports is absolutely necessary if there is to be a sustained economic expansion. Anyone who opposes it is in effect saying that sustained expansion and full employment are impossible in the forseeable future, and that, not even if they seized power tomorrow, could British workers improve their situation to any great degree. This is not, in my view, a serious political position and, as far as I am concerned, the only real question is not whether a change in the pattern of trade is required, but how such a change is to be brought about.

The Alternative Strategy calls for controls to limit the rate of growth of finished manufactured imports, and seeks to insert some limited form of planning into Britain’s trading relations with the rest of the world. This policy would indeed involve limits on the rights of industrial capitalists to trade as they wished, and on the ability of multinational companies to transfer production from Britain to other countries. It would assert the principle of social rather than private control over trade and the international division of labour. In this sense, even if not implemented, the Alternative Strategy involves a strong attack on the free market ideology of the Tory Right.

One objection, perhaps, to import controls is that they do not go far enough, and that a full state monopoly of foreign trade is required. Indeed, this is just what Andrew Glyn argues in a Militant Pamphlet on the Alternative Strategy. [11]

It is often suggested that the Alternative Strategy would export unemployment to other countries. This objection rests upon a misunderstanding. There would be no overall reduction of imports, but rather a change in their pattern. Less would be purchased from some producers and more from others. For example, less would be purchased from the advanced capitalist countries and more from the socialist countries and the Third World. [12] However, this would not mean a reduction in the overall exports of the advanced capitalist countries. The extra money received by the socialist countries and the Third World from Britain would be spent on imports from advanced capitalist countries. So what the advanced countries lost in exports to Britain they would gain in additional exports to socialist countries and the Third World. Of course, things would be different if controls were used to produce a reduction in total imports and to obtain a huge trade surplus for Britain. This would be a classic “beggar my neighbour” policy, and really would export unemployment. But this is not the aim, and criticisms based on this assumption are beside the point.

To conclude, may I repeat my view that the Alternative Strategy is not a recipe for social peace and capitalist prosperity, as some of its more reformist supporters believe. It is a recipe for mounting class struggle and a growing challenge to the authority of big capital. It is for this reason that the ruling class is so frightened of it, and why the Communist Party supports it. Instead of attacking the Alternative Strategy the Socialist Workers Party should be supporting it and fighting for its adoption by the Labour Party and the trade union movement.


1. The British Road to Socialism, 5th edition, p. 15.

2. S. Holland (ed), Beyond Capitalist Planning (Oxford 1978); S. Holland, Strategy for Socialism (Nottingham 1975); B. Sedgemore, The How and Why of Socialism (Nottingham 1977).

3. Op. cit., p. 35.

4. Ibid., pp. 48–49.

5. J. Bearman, Anatomy of the British Left, International Socialism 2 : 6, p. 68.

6. Ibid., p. 68.

7. Ibid., p. 51.

8. Further evidence is provided by G. Hodgson in his article Britain’s Crisis and the road to international socialism, International Socialism 2 : 7.

9. Op. cit., p. 59.

10. Ibid., pp. 55 and 65.

11. A. Glyn, Capitalist Crisis (London 1979).

12. By “socialist” I mean what the SWP calls “state capitalist”.

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