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Henry Judd

England and Its Labor Government

A Summary of Six Months

(February 1946)

From New International, Vol.XII No.2, February 1946, pp.39-42. [1*]
Transcribed by Ted Crawford.
Marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Ernest Bevin, England’s top labor leader, stated the facts – but only half the truth – when he admitted, over a year ago, that England was broke as a result of the war. Actually, the current $14 billion indebtedness of the mother country to the dominions and colonies of its empire – a dramatic reversal of England’s traditional position – is a far more accurate description of the situation than Bevin’s admission. England is “broke” and deeply in debt, with the island’s historic markets threatened as never before. The Marxist contention that the war would immeasurably speed the general decline of the British Empire is clearly verified.

To pay for her imports and maintain her living standards even at their present and war level, Britain “must increase her exports by sixty per cent – which means that her exports of manufactured articles must expand by no less than one hundred per cent,” according to the journalist Pertinax. In other words, an England in desperate need of housing, its factories hit by bombing, and its railroad and plant equipment seriously worn out and deteriorated from six years of strain – this tired. England, is called upon to redouble its exports of precisely the things it needs most – machinery and textiles; raw and finished products vital for solution of its rehousing problem, etc.! This is the obvious and insoluble post-war problem of the empire’s mother country.

This classic land of capitalism, whose crucial problems of social life and history are always expressed and concretized in economic terms (exports, imports and their financing; investments, foreign shares and securities; invisible items and the balance of payments, etc.), is now hard up against the most crucial of its problems. How does the British bourgeoisie propose to tackle it? Nothing could further bring home to us the seriousness of the matter than the crisis within the British Tory Party itself, the party of modern British imperialism. Not only did its great war leader, Churchill, suffer a smashing defeat but the party’s present internal crisis, again directed against Churchill, reflects its inability to devise a sound bourgeois program, in the classic Tory tradition, and its inability to answer questions. On the issue of the American loan to Britain (that “bitter pill for Britain” – The Economist) – a question of such magnitude that one might have expected a real and great debate in Parliament – the Tory Party could do no more than whine, criticize the terms of the loan, and then abstain from the vote! An admission, in effect, of political bankruptcy; that it too was helpless before England’s general predicament and would have done what the Labor Party did, except for some secondary details. Hence, our conclusion that the British bourgeoisie has entered a deep crisis of uncertainty and insecurity in which it seeks to adjust itself to new conditions and prepare a conspiratorial solution to impose upon .the British people and working class.

Policies of the Labor Government

Meanwhile, the Labor Party has consolidated its election victory, taken over the responsibility of government and postwar Britain has its Labor Government. From the viewpoint of the British bourgeoisie, as it prepares its inevitable counterattack upon the people, its capitalistic interests are in safe hands. The Labor leadership, in foreign affairs, simply carries on the Tory policy of “not presiding over the liquidation of His Majesty’s Empire”; while, in internal affairs, it stems and blocks the social aspirations of the British workers, creating the necessary atmosphere for the ultimate attack by the British ruling class. In general, the policies of the Labor Government may be summarized as follows:

  1. To continue to hold the Empire together, by all means and methods, that may be necessary (Palestine, Java, India, etc.); to continue the. unending series of rear-guard, defensive battles launched by British imperialism twenty-five years ago in an effort to slow up the rate of the Empire’s disintegration. This is the first and principal objective of the Labor Government.
  2. To speed up the process of industrial reconversion so that England’s position in the world market shall not become even weaker than it has; to revive trade and commerce within the Empire as much as possible, as well as with Europe; to sharply raise the volume of production available for export trade.
  3. To organize, in Europe, its conception of the “western bloc,” comprising the nations and small states of western Europe together with the British occupied zone of Germany; to stand at the head of this bloc and to maneuver it successfully in its commercial, political and diplomatic war with Russia and America.
  4. To carry out the program of internal social reform on which the party came to power (“nationalization” and “ socialization”) only to the extent to which it is forced to, in order to quell the Labor Party ranks and retain its indubitable popular support; to shadow box with the British working class as long as possible.

But the Labor Government does not function within a vacuum. It was elected with a certain mandate and it is undoubtedly correct to say that, of all the existing governments today, it is the one most closely linked to the people supporting it and most sensitive to criticism and mass attacks upon it. As we shall see when we examine the “nationalization” measures of the government, the real class treachery of the Labor leadership comes into play when it specifically and deliberately attempts to cheat the British people out of the fruits of victory and to substitute a counterfeit program for the real content of, the workers’ program. It is in this sense that the Revolutionary Communist Party of Great Britain – the British section of the Fourth International – is correct in pressing upon the government its revolutionary transitional program for nationalization and workers’ control of industry – the legitimate expression of what the British proletariat meant when it put its Labor Government in office.

Post-War Living Conditions

We are all familiar with the story of the strain and sufferings endured by the British people during the six years’ war. Likewise, it is not difficult to understand that the desire to gain a meaningful reward for these years, plus the even stronger desire to see that such a war would never happen again were the basic drives behind the Labor election victory. But what is not so familiar is the actual condition in which England and its forty million people emerged out of the war; the wholesale shortages of all materials and commodities, the general low standards of living and recreation.

The British soldier who, on the average served five years (as contrasted with the American GIs three years) has been demobilized to confront an even worse housing shortage than his fellow American soldier. English housing suffered not only from a lack of new building, but also from the outright destruction of hundreds of thousands of housing units by bombing. Clothing is more stringently rationed now than during the war, accounting for the worn-out appearance of the suits, dresses, coats and shoes worn by the people. The food diet, as anyone who has spent any period in England is keenly aware of, is poor, monotonous, unhealthy and inadequate. General health standards are considerably below pre-war rates. Particularly among industrial workers, small middle-class people and children there is a considerable fatigue and weakness noticeable. In general, it is accurate to state that British living standards today are only slightly above those of France, a country victimized by outright conquest, pillage and occupation. Life is better organized and more orderly in England, but the wartime measures (“temporary,” according to the English bourgeoisie) of rationing, shortages, brownouts, etc., are in full force under the government that proposes to solve shortages by increasing exports.

As for Britain’s industry – the “workshop of the world” – it is clearly in bad physical and technological shape today. Many detailed studies have been made of Britain’s coal, textile, metallurgical, chemical, railway, etc., industries, and their backward status. To this falling behind must be added the war’s terrific wear and tear, destruction from bombing and overstraining, failure to keep apace with modernization and technological invention and a general inability (nothing new to English industry) to rationalize, properly plan and divide production. John L. Lewis is not exaggerating when he boasts that an American coal miner can triple the daily productivity of an English miner. The same deterioration has affected the railroad system, backbone of economic life. Trains average ten to fifteen miles per hour (six hours to travel between London and Oxford, a distance of about seventy miles) and experienced railroaders claim equipment and stock are badly worn. English industry requires, if it is to approach its American competitor, nothing less than a thorough overhauling, modernization, capital renewal and planned reorganization. But the British capitalist class – just like the French bourgeoisie – is incapable of such an undertaking, and can only resort to reactionary measures (that is, measures that tend to further lower production, both in rate and total volume) in order to artificially keep up its profits. Actually, it has turned the whole problem over to the Labor Government and we shall see how these successful labor careerists, led by the mouselike Mr. Attlee, go about handling the matter. Then we can fully appreciate the accusation of treachery and backsliding directed by the British Trotskyists against the entire Labor Government. For, instead of taking those stern measures demanded by the situation (and already approved of by the British people) that could lift British industry out of the slough of underproduction, backwardness and volume-planning for a limited market; instead of deliberately removing all these worn-out capitalist brakes upon production, the Labor Government is simply attempting to fall in with the economic strategy of the ruling class.

Labor’s Foreign Policy

We are already familiar with the government’s black record in the international field. Everywhere, without a single exception, its record is black and bloody. Greece, Palestine and the Near East, Indo-China and Indonesia, India and China ... Let us summarize and leave the matter by pointing out that not a single action or policy has failed to win the approval of His Majesty’s loyal Tory opposition leader, Churchill.

Internal policy was most effectively displayed by the efforts of the government to break the London dockers’ strike; by the constant speeches, articles and preaching on the part of Labor ministers to the effect that “one must go slow” and “stand behind” the government; by the efforts to slow down the rate of demobilization of the armed forces to as slow a pace as the public would stand for, and by a complete failure to advance through Parliament any of the social, reform legislation promised by the Labor Party leadership. But what of the nationalization measures, it will be asked? Has not the LaborGovernment pressed forward at least on this part of its program?

To begin with, it must be recognized that the nationalization program advanced by the Labor Party in its election campaign has, this time at least, proved to be something more than promises. Slowly and reluctantly the government has proceeded to action. Although to date only legislation nationalizing the Bank of England has been carried out, there are bills and measures, in various stages, preparing for the nationalization of the coal industry, public ownership of civil aviation, nationalization of cable and wireless communications and plans for drafting bills providing for public ownership of fuel and power, inland transportation (railroads, highways, canals, etc.), iron and steel industries, etc. Despite everything, it is clear that this Labor Government is subject to pressures unknown by its infamous predecessor, headed by MacDonald. The pressure of these ties to the people, plus their dear mandate for basic changes, have already pushed the leaders much further than they had intended. But, when we analyze the concrete terms of some of these actions, or proposed measures, the story is rather different. Then we .see that they are, after all, tied down by the British capitalist class and have only adapted the methods of MacDonald to new historic conditions.

The Bank of England

The plan to nationalize the Bank of England has already been passed and is being put into effect. Concretely examined, it is seen as a deception and not what it should be; that is, a measure to wrest control of England’s finance, credit and money out of the hands of the ruling class:

  1. The British Government is exchanging for each $400 worth of stock (formerly drawing twelve per cent interest), $1,200 worth of government stock (drawing three per cent interest)! This switch guarantees the stockholders their prior interest rate, plus a neat profit, since the actual stock exchange value of the government bonds they will get is higher than their former Bank of England stock. This is a worthwhile “expropriation”!
  2. Lord Catto, governor of the Bank and a big-shot representative of finance in England, remains as chairman of the new Board of Governors.
  3. The Joint Stock Banks, which issue and control the bulk of new credits to industry, have large holdings already due to their loan powers and are considerably more important to industry, in an immediate sense, than the Bank of England – these are untouched by the measure. The relation of these commercial banks to the newly nationalized Bank of England rests in the hands of Lord Catto.

Such is the reality of the first “nationalization” measure to be adopted. It stands in true contrast with the simple measure proposed by the British Trotskyists, “Nationalization of the Bank of England together with the Big Five (commercial banks) and all financial institutions without compensation ...” Let us examine another measure, the proposed nationalization plans for the coal industry, now under discussion.

Reuter’s reports (December 26, 1945),

“The coal nationalization bill introduced last week into the British House of Commons has been fairly well received by the Stock Exchange – so far. Coal mining shares, which had risen appreciably since the first shock of Labor’s victory at the polls last July, rose on the feeling that arrangements made in the bill for arbitration tribunals to assess the compensation the owners will receive are ‘reasonable’.”

What are these reasonable assurances?

  1. A National Coal Board, which is to have control of the entire coal industry, is to be appointed by the government on an “unrepresentative” basis. The government has rejected demands by the miners’ labor organizations to be represented, as such, on the board.
  2. A special tribunal of two Supreme Court judges and one accountant is to determine the amount of compensation paid to the mine owners!
  3. The value of coal mines and attached properties is to be fixed according to the. principle of what amount might have been expected “if the bill had not been passed and they had been sold on a specified date in the open market to a willing buyer.” That is, their current market value, or compensation in full. As with compensation payments for the Bank of England, this money will be paid in government securities. Its total is variously estimated at $4 to $6 billions. This sum, we should add, is guaranteed by the government and its value (plus the interest it yields) are completely unrelated to the coal industry’s future! Coal industry shareholders thus exchange uncertain, fluctuating shares of a declining industry for comparatively stable “gilt-edged” government securities.
  4. In general, the same group of managers, technicians, administrators (among them, ex-owners) will be retained to run the coal industry.

Nationalization Summed Up

In summary, then, we may draw the following conclusions regarding the nature of the Labor Government’s conception of “nationalization of industry.”

  1. It has nothing in common with the socialist conception of nationalization under control of the British working class and its organizations (factory and mine committees, trade unions, councils of producers and consumers, etc.): the British people do not become the direct controllers, administrators or beneficiaries of this type of nationalization. It is capitalist “nationalization” as distinguished from the socialization of heavy industry and finance that a revolutionary government would enforce.
  2. The British taxpayers – that is, the masses of workers and middle-class people – are to have a super-burden imposed upon them; a burden that, in effect, is a subsidizing of the coal industry, banking, and any other industry or service which the Labor Government intends to “nationalize” in its generous (with other people’s money) compensatory style. The burden of these billions in government securities (their cashing-in value, annual dividends and amortization) must, of course, be paid for by the British people.
  3. Fundamentally, this type of “nationalization” falls into line and harmonizes with the basic trends of British capitalism – greater state control and intervention; further concentration and rationalization of heavy industries that now face stiff American competition; in a word, what the Germans called “autarchie”. Weak industries (such as coal) are subsidized, modernized and better organized, with the people’s money, while the same class of financiers, big industrialists and bankers still retain control from above.

This is declining capitalism, squirming and maneuvering for new capital (its life-blood) and planning to pass off the costs of its decline upon the workers and middle-class; with socialism it has nothing whatever in common. To quote Reuters again, on the practical effect of “nationalization” of the coal industry, “In effect the government is taking only the shareholders’ interest in the industry – retaining perhaps more power over the ‘directors’ than shareholders usually exercise though not necessarily more than shareholders should.” In this respect, the Labor Government marches in step with British capitalism.

England and America

Finally, in studying the actions of the Labor Government, we must consider the recently concluded loan agreement between America and England. We may safely pass over the ignorant statements or ultra-reactionary American Congressmen and their supporters who spread the stupid lie that kindhearted America (Uncle Sucker) has again been sold down the river by our English cousins, this time to the tune of $3¾ billions.

No, Uncle Sam drove “a hard bargain” (The Economist) and made clear the actual relationship that exists between the American and British economies. In accepting this loan, with its harsh terms, the Labor Government extended into the field of foreign commerce the same policy of class capitulation and service to the bourgeoisie that its domestic policies indicate. In effect, British industry has mortgaged itself to American imperialism, and the first great step toward penetration and undermining of the Empire closed market has been made. True, it was inevitable that bourgeois England must accept a subordinate status, but it was not inevitable that an alleged people’s Labor Government should perform this task for its own bourgeoisie. However, this is what has occurred. Let us examine the principal points of the agreement.

  1. In return for its loan of $3¾ billions, America is to receive (a) ultimate repayment of this sum in dollars, plus (b) interest amounting ultimately to over $2 billions! It should also be understood that these dollars will never leave America, since they are credit dollars to pay for American exports to England and the Empire. So much for the fairy-tale of “giving billions to those Limeys.”
  2. Britain agrees to remove immediately all exchange restrictions in its transactions with America, including all restrictions on imports. Do we agree to reciprocate? No.
  3. Finally, and most important from a long-range point of view, is the agreement affecting the so-called Sterling Area. [1] Most important because it represents the means by which American imperialism hopes to break up Britain’s Empire trade monopoly and penetrate into colonial fields. This agreement has various aspects:
  1. The Sterling Area wartime dollar pool is terminated and those Sterling Area nations having dollars in this pool may now spend them directly within the United States ... “the Government of the United Kingdom agrees that any sterling balances released ... will ... be freely available for current transactions in any currency area without discrimination.” “... each member of the Sterling Area will have its current sterling and dollar receipts at its free disposition for current transactions anywhere.”
  2. Britain is to take steps at once to “unfreeze, fund, and have cancelled” various parts of the $15 billion indebtedness which it now owes to the Empire and Sterling Area, as a result of war purchases, etc. Such steps will raise the world value of sterling, facilitate its exchange and conversion into dollars and thus stimulate trade; specifically, trade between America and those Empire countries to whom England is now indebted. “The Government of the United Kingdom intends to make agreements with the countries concerned ... for an early settlement covering the sterling balances accumulated by sterling area.” This will indirectly stimulate trade between America and the Empire areas.

Dollar Imperialism

The real beneficiary, in summary, of the whole agreement is American imperialism, which clamps a stranglehold on future British industrial profits and trade and, simultaneously, takes a long step forward toward replacing England as principal exporter and trader to the Empire. As Lord Keynes pointed out during the debate in Parliament; England had no other alternative, since other countries, to whom England might have turned, “we already owe more money than we can pay,” besides not having any money themselves and therefore being unable to buy from England or anyone else, for that matter. The real shrewdness of “Uncle Sucker’s” deal with England lies in the fact that with the dollars loaned England will have to pay (or settle up) her debts abroad, thus furnishing American dollars to those very countries whom “Uncle Sucker” wishes to seduce away from British competitive trade! Thus, it is the Labor Government which bears the responsibility for accepting and signing this wily agreement baited by American imperialism. As we have previously indicated, the Tory Party in power would have had to do likewise, but it is the Labor leadership that accepted this dirty chore, in actuality.

Largely discredited by the war, sharply defeated in the July general elections, the British capitalist class and its Tory Party have accepted the temporary necessity of retreat and, even, a momentary hiding. During this period of eclipse this most reactionary and decadent of world bourgeoisies relies upon the Labor leaders and their government to hold power for them and retain the substantial props of imperialism and the Empire. We have seen that this confidence is far from misplaced; the Tories know what manner of men they are dealing with.

Meanwhile, the British bourgeoisie plans and plots for its return to direct ruling and governmental power. No one can predict what shape or form this inevitable attack upon the people will take – whether it will be a unique form of British fascism, organization of a new political party, etc. At the same time, the new Labor Government is still tied to, and susceptible to, the Labor Party masses. The British working class is now in the midst of its Labor Government experiment, with all the militancy, hopes, desires and illusions that such an experience entails. It would be mistaken to conclude there is already widespread disillusion, and a tendency by the people to seek out other ways. The experience still goes on, with its great possibilities and its great dangers.

It is in such a transitional situation as England finds itself today that we can see the profound and realistic value of Trotsky’s revolutionary transitional program; a lever for the mobilization of the British people. The Revolutionary Communist Party of Great Britain, the English Fourth Internationalists, must succeed in their efforts to win popular support for the carrying out of this program. It is the only way to forestall and prepare for the conspiratorial reaction that the rulers of England will attempt to impose upon the English people.


The next issue of The New International will contain Part III of this series, France in 1946.



1. This area includes the British Isles, any Dominion, India, any colony or mandate, Egypt, Sudan and Iraq. Canada is not included.


Note by ETOL

1*. Henry Judd was a pseudonym of Stanley Plastrik.

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