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John Palmer

[Credit Squeeze]

(Spring 1966)

From The Notebook, International Socialism (1st series), No.24, Spring 1966, p.7.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

John Palmer writes: Labour’s credit squeeze continues its relentless course. With 15 months operation already passed it is still – in the view of many of Britain’s international banking creditors – taking an ‘unconscionable’ time to produce the goods – the ‘goods’ in this case being a softening of the labour market to permit the incomes policy a chance of working. Indeed there is now almost universal agreement in Government and employer circles that far from incomes policy being an alternative to unemployment, some controlled increase in unemployment is a pre-condition for the implementation of a long-term policy of wage control. In this context, then, Callaghan’s April budget will not be able to relax any of the existing battery of squeeze measures, and he may have to impose new restrictions on consumption – a turnover tax is being widely mooted. At the same time the Labour leaders are anxious that industry’s longer-term investment plans should not be hit by the imposition of new taxes. It is for this reason that the Government is introducing its revised scheme for investment incentives, the effect of which will be to increase the rate of return on capital through state subsidies on new investment projects in the manufacturing and extractive industries.

The most popular jobless target being proposed by bourgeois economists is about 500,000. It seems that the present assault on the railwaymen is designed to provide a reserve labour pool from this source.

Unfortunately for Wilson the mathematics of unemployment and deflation cannot be calculated exactly and with some slowing down in world trade expected this year there is always the danger that the investment boom – which has been the mainstay of what little economic expansion there has been in the past 18 months – will crack. There could well then develop a situation in which deflation goes too far in Britain for the National Plan to have any chance of being fulfilled by 1970. The calculations of the Labour leaders rest, however, on the American boom continuing in full flood, a sharp recovery in Europe and the repayment of the sterling credit by the end of 1967. In any event the campaign to dragoon the working class into the new disciplinary pattern at work will continue. Success or failure of the Government’s economic hopes will dictate the speed and the ruthlessness with which this goal will be pursued.

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Last updated: 14.5.2008