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John Palmer

The Notebook
[Credit Squeeze]

(Winter 1965)

From International Socialism (1st series), No.23, Winter 1965, p.6.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

John Palmer writes (9 November): Like the unwelcome guest at the wedding – between the Labour Government and capitalist industry – the credit squeeze is proving a considerable embarrassment to both parties. The circumstances in which the new ‘planned, discipline-conscious, expansion-oriented capitalism’ is – to change the metaphor – being born, are not going to make the weaning of the infant possible without perils. The high-level interest rates which have been imposed for nearly 12 months, the battery of orthodox credit squeeze measures and the higher taxes imposed in three successive budgets are now gradually taking the toll of the targets of growth and investment for the first vital years of George Brown’s plan.

It is true that the pipeline leading to recession has proved longer than some, including Callaghan, believed would be the case earlier this year, but the survey recently carried out by the Confederation of British Industries gives clear warning that at best manufacturing investment will only be held at this year’s level during 1966. Indeed the very length of time for which the squeeze measures have had to be maintained – in order to be seen by the international banking backers of sterling as having real bite – may mean that expansion comes all the more rudely to a lengthy plateau in the next twelve months. Meanwhile the employers have been reluctant to part with labour, and shop-floor pressure has been making nonsense of the Labour leaders’ belt-tightening exhortations on the wages front. Prices too have shown little heed for the big stick threat made by Mr Aubrey Jones so that industrial competitiveness is as blunted as it was 12 months ago.

Even more worrying for the Government is the continuing absence of any real proof that British capitalism is winning out in its desperate bid for a bigger slice of world trade. Export markets are, in any event, proving relentlessly more competitive and the series of deflationary measures imposed by the Western European states and the near bankruptcy of some of the more important neo-colonial states make the British export industries perilously dependent for overall improvement on the extension of the North American boom.

For 1966 the outlook at home is – at best – a rate of economic activity which will puncture both the National Plan target for 1970 and the remarkably resilient employment figures. At the same time, the foreign trade surpluses which will have to be earned – to balance the payments – and repay the 3,500 million dollars lent by international bankerdom, will be increasingly difficult to achieve without a further twist of the wage-squeeze screw.

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Last updated: 8.10.2007