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Pete Green

‘Alternative’ and ‘Socialist’ Economic Strategies

(Summer 1981)

From International Socialism 2 : 13, Summer 1981, pp. 90–103.
Transcribed by Marven James Scott, with thanks to the Lipman-Miliband Trust.
Marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

A review article of A. Glyn & J. Harrison,The British Economic Disaster (Pluto Press, London 1980, £2.95); and CSE London Working Group, The Alternative Economic Strategy (CSE Books, London 1980, £2.50)

The two books under review have been well timed. Having barely recovered from the slump of 1974–75, British capitalism is now in the throes of an even more abrupt decline. Manufacturing output has dropped to the level of 1968 (excluding North Sea Oil). Redundancies are running at the rate of 50,000 a month. Predictions of 3–4 million unemployed by 1983, made by the Cambridge Economic Policy Group, are no longer looking far-fetched. A forecast by the ITEM Group of prestigious economists (Guardian, Oct. 13, 1980) predicts falls in total output of 9% and of manufacturing output of 16¼% for the period 1979–1982. Comparable figures in 1929–32, the years of the ‘Great Depression’, were only 7% and 10% respectively. It is true of course that even in an epoch of world crisis, capitalism moves cyclically and there will some sort of upturn in about 1982, just as there was in 1977. De-stocking will have ceased, replacement investment will occur, public expenditure may be raised as the Tories fear an approaching election. Yet only hardline monetarists who take their own models seriously are confident that such an upturn will have any major impact on unemployment levels. Proposals for an Alternative Strategy, backed as they are by the Labour National Executive and even ‘moderates’ such as Sid Weighell on the TUC will therefore grow in appeal.

The Strategy, as presented by the CSE London Group, sounds deceptively simple. Expansion will occur through boosting demand by increasing public expenditure. Planning agreements and selective nationalisation will serve to increase investment in industry. Price controls will prevent inflation and import controls will provide the space within which the British economy, insulated from world when redundancies are very hard to resist, when wage-settlements of 6–8% are being reached despite inflation at 15% – even the most militant workers are looking to London and placing their hopes on the leftward swing in the Labour Party coming to their rescue.

It will be no surprise to anyone acquainted with the politics of this journal that I consider such hopes to be sadly misplaced. It is true that a serious attempt to implement such strategy (an unlikely event even with Michael Foot as Prime Minister) would galvanise the political situation in this country. The conflicts generated would provide a decisive opportunity for revolutionary socialists. However, it is only if we have a clear awareness of the contradictions of attempting to reform a capitalism in crisis, and can make a sober appraisal of the political realities of such a change, that we will be able to seize such an opportunity. That in turn demands that we hold out against the pressures sucking even professed revolutionaries towards the Labour Party, that we lay the foundations now for the rank and file organisations rooted in the workplace which could become a mass force when a ‘left’ government fails to meet the expectations it generates.

It is on this question that Glyn and Harrison for all their trenchant criticism of the Alternative Strategy (AES) are most fundamentally lacking. Their book, despite serious flaws which I will return to in a moment, provides a lucid, coherent account of the course of British capitalism in the 1970s. As I discovered to my annoyance when asked to recommend a simple Marxist account of recent events and debates to a NUPE shop-steward, they have filled a glaring gap in the market. What disturbs me most about their work however, is the nature of that attack on the AES which has received much attention elsewhere. This may surprise those who quite rightly see a lot of similarity between their criticisms and those which have emerged in recent years from the SWP. Yet theirs is a vision of socialism in which the working-class is just as much confined to a walk-on part in elections and demonstrations as it is in the more outright reformism of the bulk of the Labour Left.

To the Alternative Strategy, Glyn and Harrison counterpose a ‘Socialist Plan’. It appears very revolutionary with its call for outright nationalisation of the top 200 monopolies, without compensation, production for need rather than profit, and full-blooded workers control. The arguments about how a socialist society could reorganise production and eliminate waste are to the point. Yet the proposals are mere rhetoric in the absence of a clear statement about how they are to be implemented. It is a perspective in which the plan is to be imposed by a workers’ government but nothing is said about the destruction of the existing state apparatus let alone about the persistence of the national state form itself which they appear not to question. The difference between their Plan and competition, can be modernised and rejuvenated. In a period when unemployment is crippling shop-floor organisation, that of the AES is at heart merely quantitative, a matter of 200 monopolies rather that 50, of total control of foreign trade rather than just import controls. The qualitative upheaval and transformation implied by a mass working-class revolution seem to be beyond the grasp of their imagination. What, for example, and its not a trivial point, if workers in companies other than the 200 monopolies decided to seize control?

An abstract concern for the technical difficulties of ‘balancing foreign trade’, or the number of firms to be taken over, suggests a politics whose central focus remains the world of governments, rather than of the streets and the workplace. At heart it is a matter of the difference between what Hal Draper termed the ‘two souls’ of socialism, one a Statist view common to both Stalinism and Social Democracy, the other rooted in the struggle, the self-activity of the exploited and oppressed. Glyn and Harrison do reveal a sharp awareness of the obstacles to any sort of socialism. They reject the tinkering of the AES. They emphasise that even modest proposals for nationalisation and import controls, will provoke the wrath of international capital, and generate the chaos which undermined the Allende government in Chile before its brutal end. Yet Andrew Glyn is a member of the Militant group whose allegiance to Orthodox Trotskyism has long hidden an increasingly reformist practice, tail-ending the Tribune group within the Labour Party. The impotence of their politics, of Socialist Plans without an agency, will ultimately place them on the same side as the proponents of the AES.

In earlier issues of this journal John Bearman and Sue Cockerill [1] have emphasised the political weakness of the AES, and the contradictions involved in any attempt to isolate the British economy from the world crisis, the ambition which underpins the whole strategy. To the political weaknesses of both books there corresponds a serious deficiency in their analysis of the nature of the current crisis, in particular the difficulties with an explanation of the crisis in terms of working-class militancy and the upward pressure of wages on the rate of profit which is shared by both of them. It is in this light that I want to examine the significance of monetarism and of the revamped Keynesianism which lies at the heart of the AES.

Britain and the World Economy

The current crisis is scarcely confined to Britain. Unemployment levels are higher in Belgium and Ireland, almost as high in France, Italy and the USA. Even the German economy is beginning to slow according to recent estimates, pulled down by the rest. The only apparent exception is Japan with its phenomenal export capacity. Yet in the CSE book a critical passage runs:

It must be stated clearly that the features of the slump, which we have described as constituting a crisis – the massive unemployment, the sharp contraction of industry, the prospects of falling living standards – can be attributed directly to government policy ... The crisis is not due to the world recession; indeed exports have been surprisingly high. (p. 31)

The implication of the argument is simple, and simple-minded. It is the same argument used by Michael Foot as he urged the mass demonstration in Liverpool on November 29 to wait for the next election. A slump attributable solely to Government policies can easily be cured by a reversal of those policies. It makes you wonder why nobody else including the last Labour Government has found it possible to solve things. Was it simply pure malevolence on its part?

Certainly the squeeze imposed by the Tories has precipitated a slump in Britain earlier than elsewhere. Monetary squeezes however are not unique to Britain. They are being enforced with varying degrees of intensity by governments in every major industrialised country. Such responses are not without effect but nor are they accidental. They express the inability of the individual nation-state to cope with the deep-rooted contradictions of the world economy. If the consequences of monetarism are more severe in Britain it is because of long-term structural weaknesses in the British economy which no government has been able to reverse.

These weaknesses are relative. They matter only because they undermine the ability of British capitalism to compete in the world economy with which it is totally and inextricably interlocked. In the post-war period British capitalism grew continuously. Yet, productivity growth lagged substantially behind that of its major competitors, with the single exception of the USA which started from a much higher level. Whereas Germany, Japan and France have largely caught up and in a few areas overtaken the American technical lead, Britain has fallen further behind, as Glyn and Harrison (p. 38) indicate with the following table:

Industrial Capital and Productivity, 1953–72


Annual Rate
of Growth
of Capital Stock %

Annual Rate
of Growth
of Productivity %




W. Germany















These figures also suggest that the main reason for this has been the low growth of capital stock (or investment in new plant and machinery). Explanations for this are legion. My own emphasis for the decisive period of the 1950s and early 1960s would be on the legacy of Empire. Reliance on guaranteed markets in the aftermath of the war reduced the competitive pressures to which Japan and Germany were subject. The same links delayed British entry into the Common Market, the area of most rapid growth of trade in the 1960s. The legacy bought with it the dominant role of financial interests and multinational companies, which arguably diverted funds away from domestic investment. Not least, the delusions of grandeur quite disproportionate to reduced economic power led successive British governments to sustain high levels of arms spending absorbing resources which elsewhere could be put to more ‘productive’ use.

Whatever the reasons, the British economy was caught by the 1960s in a vicious cycle. Low investment meant low productivity and lower sales on the world market. This in turn entailed low levels of capacity utilisation, lower profits and lower investment. The problem expressed itself through a series of balance of payments crises to which governments responded with deflationary measures, lowering domestic demand and hoping for export-led growth. These government-induced recessions were severe enough to discourage investment but not to eliminate the weaker, or inefficient sectors of British industry.

Glyn and Harrison acknowledge the importance of many of these factors but place overwhelming emphasis on the impact of labour shortage, the strength of working-class organisation, and the supposed decline in the share of output going to profits rather than wages. The CSE London Group refer to ‘the basic conflict underlying capitalism – between Capital and Labour’ which has resulted in ‘falling profit rates and rising inflation’. At first sight the evidence looks convincing. On the figures quoted (Glyn & Harrison, p. 52) the share of company profits fell from 23.0% in 1960 to 14.8% in 1970.

However Chris Harman (IS 2 : 9, Summer 1980, Theories of the Crisis) has suggested a number of reasons why such statistics are open to question. They leave out the share of the total surplus going to interest and rent. They ignore that portion of salary income, expense accounts etc. entered as costs in the accounting books which are really concealed profits. Most crucially they leave out taxation, for a period in which a growing share of working-class income has gone to the state. Given the large share of public expenditure which directly benefits capital (investment grants, regional subsidies, nationalised industry subsidies which keep their prices down etc.), quite apart from the dubious value of defence and most education spending to the working-class, the effect is to markedly distort the actual share of output available for capital.

Yet even if the share of profits has diminished, this does not prove the point Glyn and Harrison are trying to make. The Financial Times (12.8.80) recently published the following table:

Wage Costs in Manufacturing Industry in 1979 (in Deutsch Marks)


Average Hourly

Additional Social
Costs per Hour

Total Labour
Costs per Hour

W. Germany
























These figures indicate that Britain is now a cheap labour country by comparison with its major competitors. A recent report of Citibank of the US (Financial Times, 29.11.80) gave a similar picture. Now, internationally traded goods (accounting for a large proportion of the British economy given its dependence on world trade) will tend to be sold at the same price, allowing for exchange rates. If British firms are making lower profits on these goods this can only be because of lower levels of productivity, for which even low wages cannot compensate. This whole dimension of competition between capitals is ignored in the concentration on Capital-Labour relations by the authors under discussion. The ‘British’ dimension of the crisis, in other words, is not characterised by high wages as the ‘wage push’ theory might suggest, but by its exceptionally low wages.

Glyn and Harrison have one other argument to support their thesis. This is that worker resistance is itself partly responsible for the low rates of investment in British industry, and thus for poor productivity. This is an argument which has become very popular on the basis of very flimsy evidence. It is given a great deal of prominence for example in the recent Brookings report [2], although the best support they can provide is a statistical correlation between industries of low productivity and a high number of disputes. Yet this can equally well be explained by management seeking to compensate for low investment and poor performance with increased pressure on their workforce. Certainly the history of the British car industry bears this out. In the 1950s with little competition BMC, the predecessor of British Leyland, gave most of its profits away in dividends. [3] The lack of investment, and a failure to rationalise or develop new models left the firm very vulnerable to the resurgence of the European industry. Militancy, far from being the cause of the problem, was the response to a management offensive, a response which has scarcely been very successful.

Other industries suggest a similar picture. In textiles, which has suffered the biggest decline in recent years (250,000 jobs in the last decade), it is arguable that low wages and weak organisation enabled many firms to persist with outdated equipment and low productivity. In steel a sorry history of managerial incompetence, and the private running down of assets in the face of prospective nationalisation, was matched by a right-wing union which called not one national strike between 1926 and 1979. Time and again British capital has sought to shift the burden of its own failure onto the working-class and then blamed any resistance for being the cause of the problem. For socialists to do the same, however much they might endorse that action, is a terrible mistake.

The conclusion, however, that low investment lies at the root of the relative decline of British capitalism, is not one which the CSE London group would question. Their response, that a massive increase in the level of investment is required, is not as unproblematic as it might seem. One obvious difficulty is the scale of the investment required. They themselves quote one estimate by FE Jones that fixed assets per worker in UK manufacturing are only £7,500 compared to £23,000 in West Germany and £30,000 in Japan. It would take £100,000 million worth of investment just to catch up with where the Japanese are now. Another estimate is that an increase of 50% on the recent highest trend of investment sustained over ten years would be required. Resources for this could only be provided by holding back wages and welfare expenditure, even allowing for an effective seizure of the profits of North Sea Oil and the financial sector. The difficulties here are not in other words going to be met except by a sustained assault on either the working class or on some of the most powerful sectors of international capital. Yet the CSE group seems to think that both options can be avoided.

Even if this difficulty of resources is dealt with there is a deeper problem. Crudely, on a world scale the crisis is not the result of too little investment but too much, not the function of a shortage of capital but, as Marx emphasised, of an over-accumulation of capital. It is important to be clear about this paradox. The very measures which might serve to restore British capitalism to health can only serve to worsen the crisis for the system as a whole. The expansion of capital through the reinvestment of surplus-value serves to lower the overall rate of profit. Yet those capitals which fail to reinvest and expand, which fall behind in the competitive race suffer precisely the elimination of these weaker capitals from the race, the destruction of their capital, which is necessary for the recovery of the system.

Two examples can perhaps serve to clarify the point. On a world scale there are too many motor car firms fighting it out for shares of a stagnant world market. With the growth of economies of scale it is estimated that a minimum capacity of 2 million cars is needed for effective competition in this market. The persistence of British Leyland, with a capacity of less than half that, serves as an obstacle to the worldwide rationalisation which is required, and helps to squeeze the profits of all the other car manufacturers. Extra investment in British Leyland may help to secure the prospects of much of the engineering industry in the West Midlands. It may even, though this is very unlikely, restore BL to a strong competitive position. Yet it can only shift the burden of the crisis elsewhere, and prolong the crisis in the industry as a whole. The world steel industry is in a similar situation, demanding a comparable rationalisation. In Britain, British Steel did invest, to the tune of £600 million a year in 1976, in the most up to date equipment. But the new plants came on stream at a time of chronic overcapacity in the world as a whole and have simply served to increase the company’s losses.

The retreat from Keynes

It is in the light of the above analysis that we can make sense of the failure of Keynesian policies and the general shift by every major national state towards policies of a ‘monetarist’ hue. The question is important here because the AES can fairly be described as a programme of Keynesianism with teeth. It involves a recognition up to a point of the obstacles to the classic remedy for a slump so widely heralded in the 1950s – that governments could step into the breach and stimulate investment and restore employment through expanding public expenditure and pumping money into the economy.

According to the CSE group, these obstacles were essentially twofold. On the one hand, firms might respond to the increase in demand stimulated by government spending by raising their prices rather than by expanding output and investment. On the other, particularly in a weak economy such as Britain’s, expansion of demand is likely to suck in many imports creating a severe balance of payments crisis. Both of these problems are blamed in part on the growth of multinational companies not subject to the influence of the state, with a penchant for encouraging imports and investing overseas.

Now this analysis, though rather superficial, does capture some of the difficulties. Where it is lacking is in its failure to grasp the depth of the crisis. Keynesian policies were not responsible for the boom. Indeed they were scarcely seriously attempted until the growth of the world economy began to slow in the late 1960s, and this was as much due to the accident of the deficit spending entailed by the Vietnam War in the USA as anything else. In turn the crises of the 1970s were not simply the result of an abandonment of expansionary policies by Governments as at times the CSE group implies.

Glyn & Harrison have a more sophisticated analysis. They locate the worldwide slowdown in the rate of capital investment as central to the crisis, and not something attributable to the vagaries of multinationals. However, their explanation of that slowdown in terms of a decline in the rate of profit attributes the sole responsibility for that fall to a worldwide squeeze on profits from rising wages. Chris Harman has dealt with this thesis in more detail in his articles in this journal, and I have already suggested why it is a false account of specifically British problems. That said, their recognition of the underlying weakness of investment levels enables them to explain the inflationary character of the boom of 1971–75. Internationally all the major western capitalist states responded to the slowdown with expansionary measures, boosting the amount of money in the system enormously. The result was a drastic boom which broke equally spectacularly when the rise in oil prices and accelerating inflation led to a synchronised squeeze.

The point is not to deny the influence that changes in government policy and expenditure can have, but to recognise the constraints imposed by the system which limit what any state can do without generating unintended consequences. In Britain the Tory government of 1970 came in with the intention of holding down prices, and letting the lame ducks go to the wall, thereby restoring the competitiveness of the rest of British capitalism. By 1972 the famous Heath U-turn in the face of unemployment topping a million and the UCS work-in, had led to massive subsidies to British industry and the highly ‘inflationary’ Barber boom. Investment however failed to respond, and money poured into speculative ventures in the City and the property market. As inflation mounted so did interest rates putting the squeeze on industry even more.

It was in response to developments like this worldwide that ‘monetarism’ came back into favour. Fighting inflation became the major ‘priority’, which in practice meant hitting public expenditure, letting unemployment rise, and trying to ensure that wages were held down below the level of prices. In this sense monetarism is scarcely a Tory prerogative and in Britain such ideas first came to the fore with the Labour government of 1974–79. All this Glyn and Harrison describe very well, and their book is worth reading for anyone who simply wants to refresh their memory about how savage that government really was.

The difficulty with Glyn & Harrison’s account is that their own analysis suggests that if the monetarist policy of increasing unemployment and attacking working-class living standards had succeeded in lowering wages, the conditions for renewed expansion would be there. Given the restoration of the underlying rate of profit, they argue that a revival of investment would in itself tend to generate the demand necessary (pp. 6–7).

In fact matters are far more complex than they allow. The restoration of the rate of profit on a world scale requires not just a lowering of real wages but a massive destruction of accumulated capital. Such a process of restructuring cannot be implemented within the framework of a single national capital. It demands, as suggested earlier, the elimination of the British Leylands and the British Steels of this world. Such a process would lay waste whole sectors of industry in the weaker national areas such as Britain. In turn the scale of such a slump would be so great, that there would be no automatic recovery. It took fascism and war to bring the world economy out of the last such crisis. Something comparable would be required in this epoch. Certainly any recovery would demand a degree of international coordination by the major nation states. Yet as the slump deepens competition between those states is intensifying. More likely is a world-wide resort to precisely the sort of protectionism advocated for Britain by proponents of the AES. Yet in reducing the level of world trade such measures could only intensify the slump as they did in the 1930s.

It is in this light that the vacillation of national governments has to be seen. ‘Keynesian’ measures have not been entirely abandoned, far from it. As the slump deepened throughout the 1970s, so did the level of budget deficits despite all the attempts to keep them down. Sustained levels of public expenditure, especially on defence and social security, helped to limit the scale of the crisis. Yet such measures have also helped to sustain the agony, delaying the rationalisation that capitalism requires, and sustaining high levels of inflation. Internationally most governments sought to delay expansion, each hoping to benefit from the expansion of the rest by increasing its exports. The USA, which tried to boost the world economy by itself, simply revealed that it was no longer up to the task. Whilst experiencing quite rapid growth (4.4% in 1978), the US economy was subject to a flood of imports especially from Japan, a traumatic fall in the value of the dollar and mounting inflation.

Monetarism, in part just a new name for old-fashioned deflation, is also subject to acute contradictions. The record to date of the Tories in Britain illustrates the point. The squeeze has not been very severe by Milton Friedman’s standards. Bank lending to firms in trouble has been allowed to soar, limiting the number of bankruptcies which have, nevertheless, still reached record levels. The key ‘lame ducks’ such as British Steel and British Leyland have been forced to pare down but are still being propped up by huge amounts of government money. Yet the Tories have still had to face a chorus of complaint from leaders of the CBI for threatening the very industrial base of Britain.

Glyn and Harrison are right to stress that Tory policies are not irrational, that the aim is to restore profitability by forcing out the least efficient companies and attacking wages. They do recognise that the scale of the recession required to achieve this could get out of hand. Yet because their own theory does not get to grips with the roots of the crisis one is still left with the impression that monetarism, for all the short-term difficulties, could work.

Alternative Strategy?

Keynesianism sought to manage the national economy without touching the fundamental structures of capitalist power and the world market. It collapsed from that contradiction as soon as it was seriously tested. The response of monetarism to that failure is a strident call for return to the mythical age of laissez-faire and a sustained old-fashioned assault on working-class living standards and the welfare state. In practice ‘monetarist’ governments have recoiled at the catastrophic implications of such policies and are discovering that their cure for the disease could itself be fatal. What then of the Alternative Strategy?

I have already suggested that the Strategy can be described as Keynesianism with teeth. Import controls to handle the balance of payments, planning agreements, nationalisation of key companies and the finance sector to boost investment, price control to stop inflation – all these can be seen as ways of plugging holes in a simple policy of expanding demand. As such the strategy is just another, rather more radical, plan for curing the deep-seated problems of the British economy. In the CSE book and. elsewhere it is simultaneously presented in a major step in the transition to socialism. A close examination soon reveals that it is the objective of restoring the competitive position of British industry within the world system which has priority.

As Jonathan Bearman outlined at length in his An Anatomy of the Bennite Left (IS 2 : 6, Autumn 1979), the programme is one which challenges existing property relations, but not the underlying relations of production, the structure of capitalism as a world system. Its logic is the logic of state capitalism, variants of which have been adopted by whole numbers of states from the USSR to Tanzania, seeking to bolster their national economic base in the face of the ravages of international competition. However well intentioned their advocates might be, the notion of workers’ control, along with the rhetoric of democratic planning have as their function the incorporation of the working-class and its organisations in that programme. The inescapable constraints of the system will demand the subordination of working-class interests to the programme of rationalisation, sacrifice and hard labour, dressed up with appeals to the national interest and the spirit of socialism (whatever that might be).

Having emphasised that, it is also necessary to insist that such a programme of national economic development is no more workable in Britain than it has been in China or Poland – even less so given the obstacles to eliminating private capital and multinational enterprise. On the one hand the AES will leave the bulk of industry and trade in private hands, the market will persist, money and profit remain the decisive indicators of economic performance. On the other, profits are to be taxed; the most powerful sectors of British capital, the multinationals and the banks, either seized by the state or put under strict control; the links tying Britain with the European and World Economy disrupted.

The contradictions are glaring. They emerge in the disagreements among the advocates of the strategy themselves. Should there, for example, be an incomes policy? Some, such as Brian Sedgemore and others in the Bennite left say yes, to be accompanied this time by a genuine Social Contract and stiff price controls. Others, such as one section of the Communist Party say no. The CSE group hedge their bets but suggest that there is ‘no need to reduce the sphere of output going to wages.’ Why there should be something sacrosanct about the the existing rate of exploitation I am not sure. But then the whole debate points to the absurdity of the idea that you can simultaneously rescue a capitalism in crisis with measures that must as a minimum secure the current levels of profitability, and at the same time shift resources towards the working class. At root there lurks here the thoroughly un-marxist notion of a common national interest embracing everyone except multinationals and bankers (especially when they’re foreign).

On occasion the CSE group are honest enough to confess their own confusion. Thus we find remarks like:

... it is not entirely clear what role profit is supposed to play in the whole process.

Even more astonishingly, having acknowledged that capitalist opposition ‘could certainly be anticipated’, leading to an ‘all-out investment strike and the shift of capital overseas’, they can only say feebly:

Whether this opposition could be overcome is a matter for judgement. We believe that it could, provided the rationale for planning was broadly understood [by whom? – PG] and supported and provided the workforce of the companies involved were committed to its implementation.

This is a programme which rests on the assumption of parliamentary democracy, the belief that the existing apparatus of the state could be so used to implement thorough-going reforms. The necessity of calling, even half-heartedly, for the mobilisation of the working class to overcome resistance, reveals the shallowness of that assumption. Such a mobilisation is of course what capital finds most frightening in the rhetoric of Bennery, the reason why they will bitterly resist even the most diluted version of the strategy. The logic of such a situation points to a decisive class confrontation. At such a moment the choice would be a simple one – either retreat, or a move towards the seizure of power and the creation of socialism. It is that choice the Bennites, the CSE group, and the Communist Party claim to be able to avoid. Yet all such evasion can only lead to the inevitability of retreat and compromise, the very commitment to parliamentary means and constitutional legality, immobilising and disorienting the working class, and inviting disaster.

That is the most decisive contradiction of the strategy but there are others. The fate of even the muted proposals of the last Labour Government suggests the problem. The industrial strategy becomes a means of bolstering up the more distressed sections of private capital and pumping money into the rest. The Social Contract became a device for imposing wage cuts, and workers’ participation in firms such as British Leyland successfully softened up the workforce for the body-blows of the likes of Michael Edwardes. To blame all that on right-wing ideas or the malevolence of the IMF is to ignore the fact that a government trying to steer the British economy through its most serious crisis since the war had no choice but to meet the demands of capital. The very weakness of British capitalism on a world scale limits the freedom of manoeuvre of any government. Once you fall behind in the race to be a big successful capital, there is no way you can catch up except at the expense of your workforce.

The advocates of the AES hope to avoid these consequences by trying to opt out of the system altogether. That is why import controls are so crucial. The aim is to insulate Britain from the world crisis and provide space for the boosting of demand and the expansion which might provide better shares for all. The ambition is Utopian. The CSE group takes the dangers seriously and concedes the inevitability of retaliation. Yet their answer, to negotiate deals ‘with other countries which have suffered from the international trading system’ is pathetic. Such countries are not identified and can only be the slowest-growing parts of the system, those which in most countries can not even pay their oil bills.

Import controls have as their corollary, departure from the EEC which now takes over a third of Britain’s exports. In turn exports account for a bigger proportion of the UK’s Gross Domestic Product than for any of its major competitors (26.5% in 1979, compared with, for instance, 22.5% for West Germany and 7.7% for the USA). The disruption arising from such a break in trading connections would be enormous. On its own such a move would suffice to antagonise every major multinational and every other powerful capitalist state. It would accelerate the worldwide trend to protectionism which can only serve to deepen the crisis. The reply that such controls could be selective (in some versions) or limited and across-the-board (in others) misses the point. Either the controls would be rigorous enough to provoke anger and reprisals – or they will fail to meet the objective of insulating Britain from the world crisis.

Two interrelated but contradictory developments have characterised the world economy in the postwar period. One is the growth of the state, managing the national economy, taking over responsibility for the weakest industrial sectors, intervening in the class struggle, etc. The other is the internationalisation of the production process, the spread of the multinationals, the ever-deepening dependence of national economies upon the world economy as a whole with the growth of trade and the international division of labour. The patterns are complex with degrees of integration into the world economy, a shifting hierarchy of nation states, and the emergence of regional blocs such as the EEC, or the ties between Japan and South East Asia. Nevertheless, within Britain as elsewhere one can see conflicts within the ruling class as a whole over the role of the state and the degree of openness of the economy to the world market.

The deepening polarisation between the Tories’ commitment to exposing the economy to the rigours of international competition, and the advocates of protection and the extension of the state, is not one in which revolutionary socialists should be taking sides. Both strategies are beset by contradictions, both are doomed to failure. For the world working class, to quote the slogan, there’s but one solution, revolution.


1. Jonathan Bearman, An Anatomy of the Bennite Left, International Socialism 2 : 6 and Sue Cockerill, Reply to Left Reformism, International Socialism 2 : 8.

2. R. Caves and L. Krause (eds.), Britain’s Economic Performance, Brookings Institution, 1980.

3. British Leyland and the Beginning of the End, CIS Report, 1974.

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