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John Palmer

British Capitalism, Workers and the Profits Squeeze

(October 1972)

From International Socialism (1st series), No.53, October-December 1972, p.40.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

British Capitalism, Workers and the Profits Squeeze
by Andrew Glyn and Bob Sutcliffe
A Penguin Special 55p.

There are three reasons for welcoming this book. Firstly it contains, in compact and easily understood form, a mass ot economic data which will be invaluable for socialist and trade union militants. Secondly the authors disdain to hide their socialist politics behind an academic bushel. Thirdly their work brings to the forefront of the debate about the nature of the present economic crisis of capitalist society its most important characteristic – the decline in the rate of profit. Glyn and Sutcliffe insist, absolutely correctly, that it is this phenomena of a declining profit rate and a declining share of profits in the national income (particularly in Britain) which provides the setting to the present upsurge in the class struggle and sets the limits to the concessions which the ruling class can make to organised labour. Having said that it would be nice to conclude that they have written a book which will, in their own words, enable trade unionists to convert ‘the fight for the rights, wages and conditions of the workers into a simultaneous fight for a revolutionary strategy inside the labour movement.’ This they have not achieved, precisely because of a failure of analysis of the crisis which they describe in such stark terms. Indeed the mere descriptiveness of much of this book makes it possible for some of it to be quoted ‘out of context’ by the spokesmen for the employers to prove their case on wages and inflation.

Central to the Glyn & Sutcliffe case is the argument (first deployed in New Left Review) that ‘the decline in the share of profits and the rate of profit in the UK has resulted from the combination of international competition and wage pressure.’ But this is only partially true. It is beyond doubt that the decline in the rate of profit in so many of the advanced capitalist economies in the past seven years has been associated both with intensified competition and with wages pressure. But this has been true at any time for the past thirty years. Until the mid 1960s international competitions did not obstruct but arguably facilitated the maintenance of profit rates. The case on wages looks on the face of it more convincing. It is certainly true at the moment that the determination of workers to maintain the modest rate of increase in real wages they have been used to since the war has led to monetary wage claims of almost unprecedented dimensions. This, in turn, is seriously hampering the efforts of at least a major section of the employing class to improve the rates of return on capital. But the wage pressure itself has to be explained.

There are three possible explanations; a conspiracy of organised labour; the consequence of full employment; or a response to an already inflationary situation. The first is ruled out on the grounds that a conspiracy of these dimensions would have already produced a revolution. The second also fails to convince. After all full employment has also existed to all intents and purposes since 1940. Why was it only in the last 1960s that the working class used this bargaining power? The truth is that workers did use their market power effectively during the later period to obtain increases in real wages at least as good (and in most cases better) than those obtained in spite of the heroic strikes and struggles of recent years.

The truth is that Glyn and Sutcliffe cannot get to grips with the dynamics of the present crisis because of their failure to get to grips with the long boom which preceded it. The treatment in the book of the post war boom is startling peremptory. Reference is made to the crucial significance of the re-structuring of capital, which is central to understanding why profit rates held up in spite of full employment induced wage demand. But quite excessive emphasis is given to the contribution, in Britain’s case, to the re-structuring of capital by the post war nationalisations. But these dwarf into insignificance against the restructuring arising out of changes in the techniques of production and the scope of capital made possible as a result of the maintenance of the semi-militarisation of post war capitalism – the imperialist arms economy. Glyn & Sutcliffe do see the employment generating role of arms spending but fail to its vital generation of new technologies which made possible the immense growth of productivity which was what enabled the system to ‘contain’ wage demand. Now the arms economy did not produce either an employment floor to cushion the cyclical volatility of the system nor the transformation of technique which made possible the containing of inflation deliberately but, as Kidron has pointed out in Western Capitalism since the War, as a response to the anarchic global pressures of the post war imperialist arms race. For as long as the needs of the arms race broadly complemented the needs of the productive sector of Capital well and good. But in recent years this has proved less and less true.

The reasons for this include the imperative need of the leading arms giant (the United States) to restore the balance between productive and non productive capital (precisely because of world competitive tendencies), the consequent economies on the research and development of weapons systems which produced the new technologies, and the increasingly esoteric nature of modern largely nuclear missile arms systems. This has resulted in a decline in the technological spin off to productive capital and thus a reduction in the scope for productivity increases. Since wage expectations have not been reduced in line, a decline in profit rates necessarily follows. And declining profit rates in turn lead to forms of competition, to inflation exacerbating policies etc. which only make the global profit problem even more serious. The point is that these problems arise out of contradictions in the system although they appear to arise merely out of the action of workers. That said it is true of course that the refusal of workers to sacrifice themselves to the changed needs of the system makes its crisis worse.

Because they do not see the contradictions of the system Glyn and Sutcliffe do not see the springboard of the present responsive struggles of the working class. But it is precisely the relationship between both which is the bedrock of the politics of socialist revolution. To present the actions of workers out of this context can lead to either defeatism (the power of the ruling class is formidable if only faced with workers determination) or reformism (’change the workers motivations’). Glyn and Sutcliffe have worked a gold mine of facts and figures which will lend muscle to the revolutionary case. But the weakness of their analysis (basically their method) means they have not written a revolutionary book.

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