Source: Militant, no. 3 (January 1965)
Transcription: Nick 2008
Markup: Niklas 2008
The Labour government, in its first weeks of power, has been confronted by the crisis caused by the long-term decline of British capitalism.
Labour must take immediate and sweeping action to tackle the crisis with socialist planning before the situation grows worse and cripples and even defeats the government.
The Tories left the economy with a balance of payments [deficit] of £800 million. This called for drastic measures, either in the interests of capitalism or against it.
It is impossible to take half-way measures with a system so malignant as the British economy.
Events have demonstrated that there cannot be a middle way. Hardly had the echoes of the speech of the Chancellor, James Callaghan, to the bankers in the City of London died down before the crisis forced the government to raise the bank rate to 7 per cent. Callaghan has followed in the footsteps of Selwyn Lloyd.
The Chancellor and Wilson have promised to work hand-in-hand with the employers and big business. Callaghan, in his speech in the City, said, “Let me make it quite clear that we recognise your contributions to the national economy, and we recognise that you need to earn your living; it is not our job to make it more difficult for you to do so.”
The only “contribution” the gentlemen of the City make is to live in great luxury on the wealth produced by the workers.
The Financial Times of November 28th commented, “The government, after the crises, has in fact completely altered its economic strategy. The priorities are now the defence of sterling, the boosting of exports, the review of overseas defence expenditure and the release for export industries of skilled men from prestige projects.
“It is hoped to avoid further deflation, but growth, and the 4 per cent, have been abandoned for the time being.”
Having forced the Labour government to take the “traditional” measures, measures in the interests of capitalism, the City is preparing to demand further retreats. The Financial Times, the writer continues, “If the Europeans (OECD) press hard, however, the government may be forced to choose between postponing many of the measures on which it was elected to office and squeezing the economy hard, and going to the country for a fresh mandate... There is certainly a strong case for cutting public expenditure in some way, since the 4 year programme drawn up by the Conservative government was based on the assumption that the economy would grow at a rate of 4 per cent; since the assumption is no longer tenable, the programme ought to be revised.”
Even the poor measures foreshadowed by the Conservatives are far too radical for these financiers, let alone the modest measures of reform suggested by Labour’s election programme.
It is a sorry state of affairs when one of the richest countries in the world, with accumulated resources worth more than £100,000 million, is reduced to the paralysis of “stop-go” which Wilson and company so sternly condemned before the election.
The answer of the labour movement must be that if capitalism cannot afford even these reforms, they can’t afford capitalism. If emergency measures are necessary let it be emergency measures against those who can afford it and are responsible for the mess.
There are already hints that steel nationalisation is now too controversial and must be dropped in the present climate of economic crisis. But it is not state measures the city gents are against, only state measures that even remotely threaten the existence of the capitalist system.
Under the Tories, major concerns, like the aircraft industry, were subsidised lavishly to the extent of £300 million. The state provided the money, ran the risks, paid for the losses, while the capitalist “free unenterprisers” pocketed whatever profits were going.
Capitalist industry is becoming so parasitic that the capitalists have lost their former “pride”; they are eager to put out the begging bowl and ask greedily for “national assistance,” not the beggarly pittance of a few pounds given to workers and old age pensioners “down on their luck” but hundreds of millions of pounds.
While the capitalist Scrooges are demanding realistic finance and the cutting of money to be spent on schools and hospitals, their brothers in industry are demanding subsidies. The Times Review of Industry of December shows the calculations of big business.
“Unlike previous Labour governments this administration is more concerned about the efficiency of industry than about its ownership,” declares the review. “The cost of modernisation nowadays is often too great for individual firms and as the FBI (Federation of British Industries) pointed out last year the state must prime the pump of research.”
Even the suggestions of stringent capital gains taxes have now been repudiated in panic by Callaghan. The corporation tax and the capital gains tax will be no heavier than those of the American citadel of capitalism.
Even before the “hundred days” are up, Labour’s programme of reform is in ruins. The miserable 4 per cent rate of growth suggested by the Tories will not be reached next year in a capitalist economy; the Labour government will be lucky if it reaches 2 per cent.
Labour must either introduce drastic measures against the insurance giants, the big banks and the monopoly concerns that dominate the British economy, or the Labour leaders will become tools in their hands.
Yet the British economy is marvellously rich. All that stands in the way of a real plan of production is the domination of the market and the interests of the tiny handful of the owners of the means of production. This is an emergency.
Labour’s stated intention to carry out their full programme was warmly received by the working class and the electorate generally.
The increase in old age pensions, in spite of the fact the workers [pay] through higher national insurance contributions, was widely welcomed. This reform, however small, heartened the workers, in spite of the justified criticism that it should have been introduced immediately or, at the worst, post-dated like the salary increase of the MPs.
The pressure of Labour backbenchers to backdate the pension increases had to be resisted because of fear of the reaction of bankers at home and abroad.
Nevertheless Labour has a tremendous fund of goodwill to draw upon from an electorate nauseated by 13 years of Toryism. The current opinion polls show growing support for the government.
If Labour proclaims an emergency and draws up a national plan to introduce sweeping socialist measures, based on control of the giant industries, the banks and insurance companies, with the co-operation of technicians, shop stewards, scientists and friendly civil servants, it will have the broad mass of the population behind it and can comfortably increase its majority at an early election.
If these steps are not taken, international finance will cripple the government and bring it tumbling to defeat, to be replaced by the enemy of progress and the ally of racketeers and slum landlords, the Tory Party.