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International Socialism, July/August 1970

Fred Lindop

After the Election

From Survey, International Socialism, No.44, July/August 1970, p.10.
Transcribed & marked up by Einde O’Callaghan for ETOL.

The post-election euphoria among the Tory leadership and its supporters is unlikely to last long. The major problems facing the government – in particular inflation – will soon force it to adopt policies which will bring it into conflict with the labour movement and stoke up tensions within the ranks of its own party.

The rate of price inflation has been increasing in recent months; at the present rate, prices will increase by some 8 per cent this year. This massive increase poses a serious threat to the government. It cuts into its middle class, fixed income support, which will turn increasingly to Powell, thus undermining the already threatened unity of the party. And every price rise threatens the precarious balance of payments situation: higher prices lose exports, suck in imports, resulting in a loss of reserves, encouraging speculation against the pound, thus preparing the way for another round of deflation and devaluation.

What policy is Heath likely to adopt? The main planks of the Tory campaign were cuts in government spending and legislative action against trade unions. It has been argued that the anti-union rhetoric is not really to be taken seriously; that it is no more than verbal concessions to the small business mass base of the party intended to strengthen party unity in the election period. The party leadership is well aware of the dangers of attacks on the unions, and has no wish to force the trade union leaderships into the hands of the militants. Big business – the main influence on the Tory leadership – has no wish to see increased government interference in its wage negotiations, with the possibility of more, not less, disruptive conflict. So, the argument continues, the government will rely on good old fashioned deflation – credit squeeze, cuts in government spending, in particular in the social services and education. (In some sections of higher education, there are already predictions of two-year degree courses, in particular at the polytechnics.) The result of this policy would be further curbs in the standard of living and increased unemployment – perhaps two to three hundred thousand more in the winter of 1971-2.

There are good reasons for rejecting this ‘business as before’ argument. In the first place, it seems unlikely that credit squeeze and increased unemployment will actually succeed in holding down wages. Skilled workers are still in short supply and will continue to be able to force up their wages to meet or more than meet price increases. Others workers can usually manage to follow the pacemakers. The us experience indicates that rising wages and prices are compatible with deflationary policies. In the second place, big business – the companies that matter when it comes to determining what happens in the economy – are becoming less sensitive to external pressures. They are so big that they are usually able to pass on increased costs – including increased wages – to domestic customers. The old standby of Western governments since the war – alternate touches of inflation and deflation – is beginning to lose its effectiveness in controlling the economy.

That is not to say that the government will not try them. The result of squeeze and deflation is likely to create new ranks of support for Enoch Powell among the masses of small businessmen who are really knocked by the tightening of credit. We can expect a new hysteria against the ‘subversive elements’ that Powell was attacking during the election campaign, and renewed demands for attacks on the organised working class. And probably the increased unemployment and uncertainty will result in more support for Powell amongst the working class, and a strengthening of racialism.

But the government’s main resort is likely to be to follow in the path of the Labour Government, in the direction of direct controls on wages through incomes policy, labour legislation and productivity dealing. But these policies are likely to be pursued with greater urgency. Two factors are likely to influence Heath in this direction, perhaps against his better instincts. Firstly, the rate of growth of world trade is likely to fall fairly drastically from last year’s fantastic 16 per cent increase. Since Britain could only maintain its volume of exports in that very favourable situation, there is little doubt that the next year will see a renewed crisis. This is likely to lead to even more frenetic ‘Back Britain and bash the workers’ campaigns than we saw under Labour. Second, the Powell threat, exacerbated by government policies, will become more of a threat to the unity of the Tory party and Heath’s own position within the party. The economic situation will not allow Heath to isolate Powell; and in order to defend himself, he will have to incorporate Powell, or outbid him. The Wolverhampton virus might then begin to look like an epidemic, unless the left has some strong alternative policies.

Powell himself is not a fascist and could not lead a fascist movement; but he might well prepare the way for a much more powerful fascist movement if British capitalism goes in to a real crisis. The left has got to take the initiative in forging policies to fight the dangers from the government attack and from the renewed racialism and nationalism that those policies will produce. The fight in the factories and the trade unions must go together with the fight to build a united organisation of political militants which can seriously offer a real alternative.

 
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