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From International Socialism, No.55, February 1973, pp.1-3.
Transcribed & marked up by Einde O’Callaghan for ETOL.
In the last quarter of 1972 the visible trade deficit was £220 million compared to a surplus of £76 million in the last quarter of 1971. This huge turnover on the main factor in the balance of payments took place before any big scale revival of the British economy.
Indeed the latest figures for the Department of Trade and Industry suggest that there was an actual decline of around 10 per cent in investment in manufacturing. industry during 1972.
The economic revival that did occur was a boom in consumer spending (up 6 per cent in 1972), fuelled by tax cuts and easy credit together with successful working class action on the wages front. This sucked in imports, the prices of which, after the summer, were automatically boosted by the devaluation of the downward floating pound.
On top of that, world commody prices continue to rise. Consumer prices follow, rising, on average in 1972, by 6 per cent in West Germany and 6½ per cent in France, Italy and Denmark; the British figure is 7½ per cent (as is the Dutch). Bat the USA and Japan showed significantly lower increases – 3½ and 4 per cent respectively.
The relative competitive position of the British economy weakened well in advance of the increased investment (and increased imports) necessary to sustain the government’s 5 per cent growth target. The most pessimistic of current forecasts, that of the London and Cambridge Economic Survey, predicts that if the 5 percent target were achieved in 1973 there would be a £1,000 million deficit on the current balance of payments!
The overall picture is one of still stagnant industrial investment, further weakening of the balance of payments, rising interest rates and still expanding (though perhaps at a reduced rate) consumer spending with a greater than average price inflation. It is a picture of deepening economic crisis in the British economy, a crisis which the government seeks to solve at the expense of the working class.
The government’s central economic problem is how to cut consumption without choking off the real but fragile economic revival. Phase One of the freeze had some success here. Wages were effectively frozen (although earnings are up 1 per cent) while as the Economist noted, ‘the cost of basic materials (including food and particularly meat) and of fuels rose by a massive 3¼ per cent in a single month (December), cutting through the ice like a blow-lamp’. Shop prices rose 6 per cent But these price increases during the ‘total freeze’ (!), whilst welcome to the government in that they represent reductions in real wages, have worsened the government’s central political problems. The use of the trade union bureaucracy, and to a lesser degree the Labour Party, to control the working class while real wage rates are cut, has been made more difficult by the manifest fraud of the freeze. And this reliance on the leadership of the labour movement is essential to the Tories.
Heath was forced to abandon ‘confrontation’ by the big industrial defeats the employers and the government suffered in the spring and summer of 1972. The search for ‘voluntary agreement’ and Heath’s current argument that phase two ‘could form a framework’ for such an agreement, are by no means mere public relations. As we wrote last month, ‘Heath needs the TUC in 1973 even more than he, needed it last year’.
Phase Two must see increases in the prices of home manufactured goods to increase profits to stimulate investment. This is why there are separate pay and prices boards, instead of Labour’s single Prices and Incomes Board. ‘The board on pay has a real job to do, while the board on prices has to arrange the least damaging sorts of cosmetics’ was the Economist’s cynical but accurate comment. While the pretence will be made that world price movements (cost of imports) are the sole factor determining increases, the credibility of price control is going to get thin to the point of vanishing.
The illusion of ‘fairness’ is already dissipated in the minds of large sections of workers. Heath’s quite significant concessions on rents, control of VAT profiteering, school meals, divided restraint, etc. are a recognition of this fact. But since a shift from consumption to investment – to profits – is the fundamental object of the whole operation, ‘control’ of manufacturing profits (as opposed to dividends) cannot mean a real squeeze. The ‘cosmetics’ of concession will wear off quite quickly.
What then holds the line? The law is formidable, brutal, to individuals and small groups. It is impotent against large numbers. Any struggle on the scale of last year’s miners strike will smash the freeze and the law along with it. It will also bring down the government. This is the nightmare reality, and no-one knows it better than the government itself. By the £1 plus 4 per cent plan it has given itself a little room for manoeuvre and, no doubt, this formula will be ‘bent’ to accommodate pressure from determined and well-placed groups of workers. Yet the fact remains that without the help of the official trade union leaderships, extended over months and years, Heath’s plan will be shattered. The government’s strategy and its very existence depend on the TUC.
The TUC is a ship without a rudder. It was driven to the left by the widespread dissillusionment with the 1964-70 Labour government which put wind into the sails of ‘broad left’ candidates for union offices, and then pushed into a sharply op-positional role by Barbara Castle’s In Place of Strife and still more by the Tory Industrial Relations Act. It now flounders helplessly between a return to the ‘corridors of power’ strategy of the Woodcock era and the ‘resolutionary’, abstentionist, opposition policy of the ‘lefts’.
The high tide of opposition to the Tory law shifted the balance of power to give the first period of ‘leftish’ dominance in the TUC since the Swales-Hicks-Purcell period in the middle twenties. The collapse of the ‘lefts’ this time is less spectacular than then, but no less sure. Jack Jones has already made the transition to ‘respectability’. The right wing is resurgent in the NUM, and increasingly in the AUEW. But unlike the situation in 1927, the right wing revival does not take place at a time of massive defeat for the working class.
After 1926 the Citrine-Bevin-Turner right wing was able to impose its policy of thoroughgoing class collaboration because the left-wingers, revolutionary and resolutionary alike, were undermined by a huge drop in membership, the near total destruction of effective shop floor organisation and the catastrophic moral effect of the sell-out and defeat.
Today the situation is quite different. 1972 was a year of working class victories – hence the government’s complete reversal of policy. Membership is at record levels, shop floor organisation has never been stronger, redundancies and unemployment notwithstanding. The right wing success to date, and those to come, cannot solve the problem of enforcing out and out collaboration with a policy of real wage cuts on the membership. And so the TUC vacillates. Its leaders, for the most part, would be only too glad to act as Heath’s policemen and propagandists but they dare not risk too great a divorce from the feelings of the active sections of the rank and file. The ‘lefts’, on the other hand, wish to persist in verbal opposition but they will not lead a real opposition to the freeze for that, inevitably in present circumstances, is a political struggle, a struggle to destroy the government. There is, in the classic sense of that much misused phrase a ‘crisis of leadership’.
The Labour Party is in no better case. The Tories have stolen all its political clothes. Heath’s tough, abrasive, every man for himself, weakest to the wall policies have all been replaced by social-democratic ones. Incomes policy, from Brown’s ‘Declaration of Intent’, through the Prices and Incomes Board, to the statutory freeze (’nil norm’) was the heart and centre of Wilson’s economic policy from 1964 to 1970. The party leaders are reduced to complaints, amply justified – about the ‘unfairness of Heath’s Phase Two. They have, quite literally, no alternative policy. In a period of growing resentment the effects of a ‘we will be fairer approach’ should not be underestimated. But Labour’s record is a millstone round its neck.
The miserable bye-election record – and especially the ignominious failure at Uxbridge – prove that Labour voters are profoundly sceptical of the Party’s promises. In this they show more political sophistication than certain ‘marxists’ who have argued that as ‘awareness of the need for political forms of struggle grows, the working class will look to the organisation they know – the Labour Party’. There is no sign of it, nor of the long-promised ‘influx of workers’ into the local parties ‘when the crisis comes’. The crisis is here.
The ‘lefts’ are strongly entrenched on Labour’s NEC. Party Conference passes very radical resolutions. Yet the famous ‘socialist policies’ leave no mark on the conduct of the Parliamentary leaders. No clearly distinctive policy – socialist or otherwise – emerges.
None of this alters the fact that if Heath is driven to a general election – and he will be driven to one if Phase Two is wrecked by working class militancy – the Labour Party stands a good chance of winning; if only on the basis of a protest vote against the enormous 25 per cent increase in the price level and the savage welfare cuts since 1970. A Labour government returned under these circumstances would be a government of crisis. On the one hand it would have, for a short time at any rate, a better chance of selling an incomes policy swindle. On the other hand, the expectations aroused by an electoral defeat of the Tories will doom such a policy to destruction. There are no forces inside the Labour Party capable of resolving the contradiction. Here too is a crisis of leadership.
The great struggles of the last fourteen months on wages as on rents, have to an unprecedented degree depended on rank and file initiative. The aggressive picketing that won the miners strike – and later the builders strike too – the mass defiance of the law that freed the Pentonville Five, the wave of sit-ins and work-ins and much else besides has depended on the often uncoordinated actions of local militants, many of them Labour or Communist Party members, many of them without party affiliation. They are an impressive and indisputable demonstration of the fighting power of the British working class. But as the crisis in the labour movement grows the need for a consistent revolutionary leadership, guiding, organising, coordinating and uniting militants in the struggle becomes more and more urgent.
The Communist Party, which once aspired to and made heroic efforts to fulfil this task, has abandoned it for ‘Parliamentary Roadism’ and electoral deals with trade union ‘lefts’. The task now falls to IS.
The central immediate political aims of the struggle are clear. Smash the freeze, kick out the Tories. In 1972 the dockers proved the instability of Tory power, and at the same time the limitation of politically uninformed trade union militancy. In 1973 by Government fiat all the ingredients for bigger Pentonville strikes will exist. The fight for economic improvement, spurred on by inflation, is the key element in any revolutionary perspective. Government power – capitalist power – can and must be challenged. To achieve these, and still more to go beyond them, to develop an offensive strategy for working class power, is part and parcel of the building of a revolutionary socialist party rooted in the working class. 1973 is a year of economic and political crisis. How these crises are resolved – at the expense of the working class or in the interests of the working class – depends on our success or failure in grouping those many militants who are looking for a way forward around the revolutionary programme. The crisis in leadership also extends to the revolutionary left. We have to raise ourselves to the level of our opportunities and responsibilities.
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