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John Palmer

The Notebook

The Economy

(Autumn 1967)

From International Socialism (1st series), No.30, Autumn 1967, p.6.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

John Palmer writes: In line with the predictions made in the past three issues of Notebook, the Government’s rosy hopes for economic recovery in 1967 have been dashed. The cumulative deflation imposed on important British export markets – notably in West Germany – and the slow down in the United States, have taken their inevitable toll on the British trade balance. Since May the import/export gap has been widening. Not only does it appear as if exports will decline throughout the most of what is left of 1967 but the very high import bill shows little signs of having been curbed by the Wilson-imposed ‘Stop.’ The main point of cutting back domestic economy activity was to bring down the demand for imports. While this may have worked out for consumer items in the total import bill, it has not proved effective in the case of most types of industrial capital equipment. This should cause little surprise since British industry clearly becomes increasingly import dependent for vital industrial components with every ‘stop-go’ and cut in new industrial investment at home.

The growing trade gap has sparked off worries about the overall progress being made to bring Britain’s total balance of payments into surplus to enable the repayment of the aid granted to sterling in 1964, 1965 and 1966. It does look as though the Government is going to get the worst of both worlds: continued stagnation of production at home – involving a further growth of unemployment during the next six months at least – with the balance of payments surplus target receding well into 1968 or 1969. This will effectively rule out any further radical measure of reflation at home – for fear of giving the import bill a further jolt. Further ahead, the Government seems to be planning to finance new investment out of cuts in the social services.

Clearly much depends on the pattern of economic activity abroad. Total world trade is expected to grow at a significantly slower rate this year – and will not be helped by the decreasing reserves of internationally acceptable liquidity available to finance it. The West German recession is bringing problems in its wake for France and the other important European economies. At the same time a question mark remains over the United States. The administration hopefully awaits a recovery in the last months of this year but the sluggish economy will also have to digest the higher interest rates and tax increase which the financing of the Vietnam war require.

At home the Left in the Parliamentary Labour Party has gone some way to recognising in the Tribune manifesto the seriousness of the crisis. Their remedy is a curious amalgam of anti-working-class pieces of bourgeois heresy – devaluation – and radical demands for action against the freedom of capital. Of course socialists should demand a freeze on capital exports, the appropriation of the vast private investments abroad to pay for our import bill, abolition of sterling, defence cuts, etc. The trouble is that the Labour leadership is right in rejecting these as unworkable in a mixed economy. These demands could only properly be considered as part of a programme for the socialist conquest of capitalist power in Britain.

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Last updated: 6 May 2010