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From Survey, International Socialism (1st series), No.53, October-December 1972, p.5.
Transcribed & marked up by Einde O’Callaghan for ETOL.
In Britain, the rate of inflation is high and the rate of investment significantly poorer than the other major capitalist powers, profit margins and productivity are both relatively low so that higher prices cannot be absorbed. Increased export prices – along with rising prices for food and raw material imports – are generating the old pattern of balance of payments crises as soon as any modest expansion occurs. Whatever tactics the government tries, the results always seem to be the same. It tries to stimulate investment but achieves, mainly, a fantastic increase in house and stock exchange prices. High house prices, increased rents and a reduced supply of public housing are a further factor in the inflation which generates wage pressure and higher export prices. A poor investment record – with low material stocks because of low profit margins – means British capitalism cannot meet a slight increase in demand in the home market, so that a modest expansion sucks in imports and oversets the trade balance. Over all, Britain’s entry to the Common Market casts a lengthening shadow.
The Government is reduced to fighting from day to day, its sole contribution to future growth being that it continues to fight the set piece confrontations. Certainly, last year it won significant victories against workers in poorly organised industries. It forced the postmen to a dramatic defeat in the spring. This seemed to cut the rate of wage increase to 7 to 8 per cent by the end of the year, and the Government permitted itself some modest self-congratulation. Its happiness was misguided. For it had not actually been able to check some important settlements (15 per cent, for example, for motor workers). What it had won was no more than a temporary respite at the expense of future collisions. This year, the situation was transformed by the struggle and the victory of the miners. In its wake came the railwaymen, the defeat of the Industrial Relations Act by the dockers, the dock strike and the building workers strike. Wages advanced at an annual rate of 11.8 per cent in January, 12.1 per cent in March, and 12.5 per cent in June.
The Government has failed either to curb wages or, for the moment, stimulate investment. The prospects are for an even greater rate of inflation in the immediate future. The effects of the Fair Rents scheme are still to be felt in full, and next year the results of Common Market entry will also be added (through the conversion to Value Added Tax, entry into the Common Agricultural Fund and the increased cost of food imports). The price differential between British and foreign production means the British market is ripe for a massive invasion by imports, made worse by any expansion in the British economy and by the lowering of the tariff on industrial imports as the country enters the Common Market. Even the present modest expansion produced a 15 per cent increase in import volume in the year up to last June. In the matter of cars, the situation is more alarming still; in 1970, NEDC estimated car imports would take 14 per cent of the domestic market by 1974; in the first quarter of this year, they took 24 per cent of the market and were still rising.
Moreover, though the value of British exports remained roughly constant from the spring of 1971 to the summer of 1972, the actual volume of exports fell by 5%, an ominous sign for the future. Nor has the industrial upturn been so marked in Britain as in the USA and elsewhere. In the first quarter of 1972 output was up by a mere 0.6% over the last quarter of 1970 – eighteen months earlier.
The Industrial Relations Act and the policy of confrontations in conditions of rapid inflation have not cut wage pressure but have polarized political opinion more sharply than for many years. More and more, each separate battle is coming to fill the entire political stage. Those forces which formerly filled the gap between the classes, blurring the naked class struggle, are less and less able to do so. The trade union leaderships find themselves less able to prevent collisions between the rank and file and the Government. The decline of the Labour Party’s Social Democracy means its leadership is less and less able or even willing to play the honest broker, mediating between the belligerents in order to find the means of preserving the status quo without significant losses.
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