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Dwight Macdonald

England at War

3. The War Economy of Great Britain

(January 1941)

From Labor Action, Vol. 5 No. 1, 6 January 1941, p. 3.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The papers are now full of the failure of the American ‘national defense’ program to progress as planned. It is now seven months after the German blitzkrieg against France; the situation of England has grown desperate and it is becoming clear that only large-scale shipments of guns, planes, ships from America will make up for her productive losses from German bombing. Congress has appropriated billions on billions, orders have been placed, great gestures have been made of putting America on ‘a war footing’. Yet it now appears that little has been so far accomplished. The current statements of Stimson and Knudsen (who revealed a serious lag in plane production), the open conflict between New Dealers and private industry over increase of steel capacity and diversion of planes to the private airlines – when this much dirty linen gets washed in public, we may be sure much more is still in the hamper.

Much the same situation – and for the same reasons – seems to obtain in England today. The British Government is now spending on the war about $40,000,000 a day. It is expected that in the coming year, England’s $14,000,000,000 – which is half again as much as the highest national budget yet borne by the 131,000,000 American people. A war effort on this scale cannot be conducted within the social, political or economic framework of normal peacetime capitalism. War today is a social – though by no means necessarily a socialistic undertaking. It involves such enormous expenditures, such wide participation by the whole civil population, such a drastic shift in the national productive effort as to require that production be centrally controlled, planned and coordinated and that the interests of specific individuals, groups and classes be subordinated to the general aim of winning the war.

The particular war which the Churchill-Labor Government is trying to win has a twofold aspect. To the great majority of the British working class it is a war for ‘democracy’, a war to protect their class interests against the black reaction represented by Hitler. To the British bourgeoisie, however, it is a war against a rival group of imperialist bandits, who constitute a deadly threat to British imperial profits and plunder. Since the British bourgeoisie are still most definitely the ruling class, and since both the Labor and the Tory chiefs of the Government are agreed on the preservation of capitalism in England, it is the second view of the war which is the reality, the first which is the illusion The Churchill-Labor regime is waging an imperialist war, in defense not of ‘democracy’ but of the British Empire. The nature of this war has determined the nature of the present British war economy.

I can see two methods of getting the degree of centralized State control and coordination of the entire national economy which is necessary to meet on equal terms the kind of totalitarian war economy that has been built up in Germany. A working class socialist regime, which puts the most numerous and progressive class in full control of the economy, could build up a war potential in a country like England or the United States which could easily outstrip Hitler’s war machine. Or, of course, it can be done by instituting the same kind of a regime as Hitler has – a totalitarian dictatorship exercising rigid control over both the working class and the bourgeoisie, and able to suppress the contradictions of the capitalist market. But I doubt that it can be done as the bourgeoisie of America and England – with the enthusiastic cooperation of the important working class organizations – are now attempting to do it: by a patchwork ‘war economy’ built within the confines of democratic capitalism. Let us look briefly at the English experience as a case in point.

The Chamberlain Government

Every one now agrees that, for the first eight months of the war, under the Chamberlain Government, England had little more than the forms of a modern ‘war economy’. As Fortune (July 1940) described it:

“Englishmen could not recall such a state of laws and decrees. All shipping and ship construction, transportation and food distribution were nationalized ... A Ministry of Supply with power to decide priorities for thousands of commodities, was assembled and charged with the double task of organizing British industry for war and holding up exports ‘to win foreign exchange’ to pay for war goods. Yet, as in France, this State control for the first eight months of the war, was theoretical more than it was real, for it, too, sought to reconcile its aspirations with those of private enterprise.”

The forms of war economy can look fine on paper, but can prove to be merely forms. (Even the supreme step of nationalization may turn out to be a form merely; thus the French war industries, especially aircraft, were nationalized in the Popular Front period, while those of Germany remained in private hands.)

Despite all the laws and decrees, economists noted that under Chamberlain the number of unemployed remained well over one million, aircraft production rose very slowly, shipbuilding lagged, and all sorts of profitable but militarily useless luxury and consumers’ goods continued to be produced. The reason was that the control of this ‘war economy’ was in the hands of the same conservative politicians and big businessmen who had built up and controlled Britain’s peacetime capitalist system – and who stood to lose by any very drastic or sudden transformation of this system into a war economy. It is true that this loss would be merely immediate and temporary, and that victory in the war will mean huge postwar profits for the British ruling class. In this sense, an effective war economy would be a shrewd ‘long-term investment’ for the British bourgeoisie. But history goes to show that, so long as big business itself remains in direct political control of the war economy, immediate property interests are not effectively curbed and the result is pretty much of a compromise patchwork. This is the situation in England in this war.

Churchill-Labor Reorganization

When the new Churchill-Labor government, on May 22, twelve days after it took office, put through Parliament the Emergency Powers Defense Bill, giving Government the widest powers over capital and labor, much to-do was made in the press about the new ‘totalitarian’ regime. And indeed, compared to the laissez-faire policy of Chamberlain, there was considerable tightening of the British economy. A month later. Minister of Supply Morrison was able to announce some impressive gains in production of aircraft, guns and tanks. Unemployment has been reduced, civilian consumption curtailed, non-military imports severely rationed, a firmer control exercised by the State over production in general.

But looking back on the eight months the Churchill-Labor Government has been in office, and considering how desperate has been, and is today more than ever, the situation of Britain, one is struck not with how much but with how little has been done.

Chamberlain’s Sir John Simon has been succeeded in the key economic post of Chancellor of the Exchequer by the equally conservative and equally incompetent Sir Kingsley Wood, whose budgets, like those of Simon, have been sharply criticised as inadequate and timid.

Not until October was a real effort made to stop the wasting of productive facilities on luxury goods, and even then only a stopgap measure was taken: the imposition of a 24% sales tax. The sale of new automobiles was stopped only in October, and the sale of silk stockings and silk underwear (which had diverted much needed silk from the armed forces) was prohibited only this month. Most incredible of all, according to Commerce Reports of October 5: “A civil building control similar to that in the last war becomes effective on October 7, under which private building and construction will be prohibited except under license from the Commissioner of Works.” Measures like these were, of course, taken in Germany years ago. Unemployment has been reduced, but not very much. The latest figures to hand show 829,000 unemployed in the middle of September. Many of these, of course, lost their jobs because of the curtailment of consumers’ goods which the Government has been carrying on. But it is a severe indictment of the regime that, despite its desperate need for industrial production, it is unable to use these workers.

Finally, with a few exceptions such as Laborite Hugh Dalton in the Ministry of Economic Warfare, the representatives of the business community are still in control of the key posts in the British war economy. Beaverbrook, the millionaire publisher, heads the Ministry of Aircraft Production. The aforementioned steelmaster, Sir A. Duncan, in October replaced Laborite Morrison in the vital Ministry of Supply. And so on down the line. These gentlemen are still hesitant about invoking too drastically against their class colleagues the enormous powers they possess on paper. Thus in Commerce Reports for August 10, we read: “The compulsory powers available to Government have been invoked sparingly, reliance being placed on voluntary cooperation as far as possible.” What this means is that, as in the case of our own War Industries Board in the last war, one group of businessmen, temporarily representing the collective interests of the national bourgeoisie, sit down to bargain with another group of businessmen, representing each his own private interests (by no means necessarily synonymous) – and the result is at best compromise, at worst stalemate. England is in no situation today to afford either luxury.

Laborite Shinwell on the Situation

In Time for December 9 last, there was an interesting report on a speech recently made in Parliament by a Labor member, Emanuel Shinwell:

In a powerful, reasoned and disturbing speech, Shin well shocked the House by declaring: ‘Unless we can with speed and with utmost efficiency reorganize our resources ... victory may be beyond our grasp.’ Laborite Shinwell went on to denounce the Government’s propagandist optimism (lsquo;The people of this country have no desire to be fobbed off with an exaggerated optimism which has no foundation in fact.’) and the Government’s inconsistent announcements on industrial production ... Shinwell then gave some pertinent figures to back up his claim that shipping losses were ‘ominous’ ... Since the beginning of July, shipping losses have been at the rate of 4,000,000 tons a year. Against this the Admiralty’s shipbuilding program aimed at only 1,250,000 tons in the first war year, and even this figure was not reached. Lord Beaverbrook had upped aircraft production at shipbuilding’s expense, said Shinwell; the Government had not used its emergency powers to transfer labor to the most useful work; emergencies were being met by appeals, not by compulsion; “we can’t run the war by a succession of Flag Days”.

“Flag Days won’t win the war against Germany.” But for the kind of unstable, uneasy Tory-Labor coalition now ruling England, any too direct pressure against either capital . or labor is risky, and Flag Days (“appeals, not compulsion”) seem a much less dangerous method of conducting the war. It would not improve matters decisively if the Labor Party took over full control of the war effort. For the Labor Party is also committed to the defense of capitalism, and its leadership also fears to violate property interests and its leadership also must respect the ‘rights’ and interests of the British plutocracy. Nor is the Labor top bureaucracy any too sure of its holds on the working class, which is constantly pressing in a leftward direction.

The people of England can organize a war economy as effective as that of Germany only by changing the character of the war – overthrowing the present British ruling class by revolution and replacing it with a democratic working-class socialist order. This would put an unconquerable morale into the British masses, it would make possible a really planned and coordinated war economy, and above all, it would mean a set of war aims which would call forth working-class support behind Hitler’s lines on the Continent. Or the British plutocracy can do the job in its own way by trying to put into power a native brand of fascism. These are the ultimate choices. There is another aspect of British war economy, not touched on here, which I plan to consider next week: namely, the relative burdens borne by the workers and the bourgeoisie, and what if any shift has followed the coming into power of the Churchill-Labor Government.

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