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AFTER THE ELECTIONS- Perspectives for Britain Kenneth Smith The election of a Conservative government in Britain led by Thatcher, Joseph and Howe marks a the post-war watershed class struggle. Within a few weeks of coming to power, their policies have demonstrated the stark reactionism for which they stood.
Their policies on housing, health, prices, transport, public expenditure and education expose capitalism in its raw and hideous nature. Far more than the Heath government, it represents a new departure from the position of post war Conservatism. Gone are the sugary illusions of Keynesianism, and of Macmillanism as a reflection of a softer attitude on the part of the Tories. The policies they represent are the policies of reaction, of hard-faced, inhuman businessmen perfectly expressed by the hard-faced arrogant Mrs Thatcher.
The complete bankruptcy of the policies of the reform of capitalism attempted by both Tory and Labour governments has ended in a blind alley.
reality these are In not new measures, but the classical measures of the past which were the methods by which capitalism tried to restore itself in a crisis at the expense of the wish to restore the They masses.
profitability of capital by drastic cuts in state expenditure and the real wages of the working class. Thatcher, Joseph, Howe and Co economic the are trying to use witch-doctor formula of bleeding the by Ted Grant The shape of things to come? TUC anti-Tory demonstration 1971 patient-capitalism-to restore it to health. Only the working class are to be the victims. They will fail as the conditions which gave a shaky credibility to their formula of 'competition', entrepreneurial enterprise, belonging to a bygone age. 'entrepreneurs'
left are only busy in service industries and land and property speculation.
Thus Trafalgar House, the property speculation company, is worth £100,000 million, while British Leyland-employing 280,000 people and indirectly affecting the employment of another 1¼ million is worth this is only £250 million.
expressed the real crisis of British capitalism.
1 HETION NO.
The budget and other measures are intended to raise prices and to increase unemployment as a means of pressure on the employed working class. Thus, it is an attempt to change even more than in the past the balance between the working class and the employers in favour of the latter. The share in the wealth that the workers produce must be cut as mercilessly as possible. This is the policy of undiluted Friedmanism, the policies of Thatcherism or Josephism, the prophet of these policies. This is capitalism without the illusions. It is a coldly calculated, but miscalculated, attempt to restore ailing British capitalism by a •ansfusion of resources from the
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share of the workers, the capitalists.
State expenditure or the social wage, has been whittled away by the industrious efforts of the Right Wing of the Labour Party, under the pressure of the economic crisis and of the measures of the government. State expenditure on Social Services was cut by £8,000 million. Expenditure on the 'welfare State' was cut in spite of the increase in prices that was taking place. Thus, relatively, it was an even greater cut. Meanwhile arms expenditure rose from £3,600 million to £8,500 million. The argument put to explain this savage attack was that by means of cuts of this sort, room would be given to the private sector for more investment. It was argued that by increasing the share of the capitalists and by cutting the share also of the state in the wealth that is produced by the labour of the working class, principally in manufacturing industry, a higher rate of investment in industry would be obtained. This was the doctrine of the strategists of capital, of the treasury officials, of the economist witch doctors of capital. That by this means investment would be restored.
On the contrary, it did not result in increased investment, because of the contradictions that exist in capitalism. Cuts in state expenditure and cuts in the wages of the working class resulted in a cut in the market in Britain, and as a consequence further disinclined the employers to invest. This was because of the world
recession of 1975 which affected all capitalist countries. In all the industrialised nations and the under-
developed countries only 80% of
capacity of industry was used in the
recovery which took place after 1975.
Of course, with excess capacity and
limited markets there was no sense
for the bourgeoisie as a whole to
increase investment. There was not
investment even to the same extent
as during the previous period of
economic upswing when there was a
market for all that they could
produce.
Because it was impossible to cut
taxes on the industrial monopolies as
they pay virtually no taxes, due to
loopholes in the tax laws, instead,
Mrs Thatcher has cut taxation of the
personal income of directors and of
the rich. Now, Britain will probably be amongst the lowest taxed on the higher ranges of income of any of the captalist industrialised nations. Despite the insidious propaganda of the popular media, Britain's tax burden was roughly similar to most Western industrial countries of Europe, including West Germany, their most important competitor.
Since the tax changes, she must be among the most lightly taxed in the capitalist industrialised world. The burdens have been placed on the sick, on the old, the unemployed and those who receive low wages. By changing VAT and income tax, it is simultaneously a cut in the purchasing power of the masses, and an increase in the wealth of the one or two percent of the very rich. They are conducting a campaign against inflation, i.e rising prices, raising prices!
Fall in output
The pressure of Big Business and its faithful tool, the Treasury and the Civil Service, had imposed 'monetarist' policies on the Callaghan government. Monetarism, or Friedmanism is merely a new version of the old doctrine of balanced budgets of Victorian times; it is the orthodox capitalist policy of 'sound money'. It Is also the policy of bringing into being a reserve army of labour as a means of pressure on the employed working class. It is an attempt to turn the wheel of history back. This is impossible because of the economic situation of capitalism at the present time, and also because of the new power of the working class and of the labour movement.
It is true that under the Labour Government measures of this sort were carried out under the pressures of Big Business. This was done under the hypocritical guise of 'fair shares for all'. The incomes policy of the Labour government resulted in a fall of real wages of over 9%. This was in the period between 1974 and 1979. During the years of 1976-77, there was an actual fall in living standards which was the highest for two
consecutive years for a period of 100
years. f10 a week was cut in the income of every family during this
2
period.
It is true that in the following year of 1978 rises in living standards partially compensated for this catastrophic fall. This was not because of the measures of the government, but because of the resistance of the workers to wages policy and wage restraint while prices rose. This resulted in the repudiation of incomes policy and a breakdown at the end of 1978 resulting in massive strikes: at Fords, of the lorry-drivers and public service workers.
This in turn resulted in a fall in the rate of real growth in the economic recovery after 1975. This was so in all the countries of capitalism. But British capitalism, because of the policies which had been carried out by the ruling class over a period of 25-30 years was even harder hit as a consequence of the fall in world trade, and world markets.
Thus in Britain too, despite a lower capacity, due to a lack of investment in the past, only 80% of capacity was used. in practically all the capitalist countries the rate of growth of output has fallen in comparison with that of the past. So so much so that bourgeois economists, confusing terms, have even spoken of
the last period of 5 years as a 'recession'. But whereas, in the other
countries of industrial capitalism
there has beem a slower growth, in
Britain there has been an actual fall in output.
Millions invested
abroad
Thus in 1978 it only equalled the production of 1974, the year of the 3-day week. In 1978 production was 4% below that of 1973. Thus the diluted Friedmanism which was operated by the Labour government, had as a consequence added a further twist to the spiral of decline in the power and strength of British capitalism. This is shown by the figures of investment over that period. In 1970 in Britain investment in industry was f4,196 million. In 1978 industrial investment was £3,860 million. The projected investment for 1979 and 1980 was that of not quite recovering the figures of 1970. All these figures are in 19~5 prices
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Thus ! we see that in a general
crisis of capitalism, there is a
crisis of British capitalism. It
pointed out at the same time
e 1970 figures were, in real
not much higher than those
1950. That is almost three decades
Here, expressed in figures, is The crisis of British capitalism.
While industrial investment has been stagnant, investment in the service industries, property speculation, tourism, catering and other sweated trades has been buoyant. In this field the increase from 1970 to 1978 was approximately £3,000 to £5,000 million and it is projected to increase to a further £7,000 million in 1979 and 1980. In addition to this, before the dollar premium was increased in 1976, more than £2,000 million was invested in industry abroad. In 1978, nearly £1,800 million was still invested abroad.
Monetarism
In every field except production of real wealth, there was an expansion as far as British capitalism was concerned. Thus in reality Britain moved industrially from recession to recession without any real recovery since 1973. Superimposed on diluted Friedmanism or deflation to call it by its old name will be the virulent "ariety put forward by Keith Joseph and Mrs Thatcher.
To understand the reasons for this new' policy on the part of both the Right Wing Labour Government and of the Tories, and a diluted or full scale variety of Friedmanism, it is necessary to understand the background on which this has developed.
The world economic upswing was due to the growth of world trade and the expansion of world production. The domination of American Imperialism, and therefore of the dollar on the one hand, and the General Agreement on Tariffs and Trade; on the other, resulted in a sixfold increase in trade. This was due to the lowering of tariff barriers among other causes. This meant that capitalism, which found itself hemmed in by the crisis of private ownership on the one hand and the national state on the other, partially
overcame this contradiction by expanding the interdependence of nations, by expanding the international division of labour and by integrating the economies, particularly the industrial economies of Western Europe, Japan and the US into one single indivisible whole. These are some of the factors which resulted in the explosion of production in the economic upswing which ended in 1975.
Sir Keith Joseph.
In an epoch of expanding capitalism, it was possible for the capitalists to make concessions to the working class. Under pressure from the working class to allow increases in state expenditure, the welfare state and the social wage, real wages and increases in the living standards of the masses were conceded. But there was also an unsound basis for the world upswing which took place. On the other hand, there were the world inflationary measures which were introduced by the domination of the dollar. The Americans used the printing press lavishly. In Europe alone, there are over $200,000 million which are not worth the paper on which they are printed. This had the effect of what the bourgeois economists call liquidity, meaning a plentiful supply of money capital and did result in the expansion of production in the world for a couple of decades.
Superimposed upon this international cause of inflation, were the measures of governments, especially
American and British Imperialism, of deficit financing. The illusions and
3
fallacies of Keynesianism held full sway in this period. The British Marxists predicted the consequences of the policy of deficit financing. In the 50s and 60s when the capitalists were intoxicated by the consequences of their policies in headlong growth, we forecast the inevitability of an explosion of inflation in Britain, and other countries of the world.
In Britain, through deficit financing, and after 1967, devaluations, an enormous push was given to inflation. Inflationary policies of pudget deficits resulted in a further crisis for British capitalism. Clearly there was no way forward on this road. Therefore, the capitalists decided to return to the classical policies of capitalism, of deflation, of cuts in state expenditure, cuts in real wages and of general tightening of the economy. This in its turn will aggravate the illnesses of British capitalism. Neither on the road of deflation, nor on the road of inflation, can the needs of the
working class and the people of
Britain be served. The illusions of
the Tories in the restoration of the
health of British capitalism by an
unbridled programme of Friedmanism will soon be shattered. They will aggravate all the contradictions that
exist within society and within the
economy.
The dire straits of British capital-
ism can be shown on the basis of the
facts and figures which we give. The
'Economist' on the 6th June cynically
forecasts "that it [the future will
not be unlike the past with the
economy displaying the traditional
weaknesses in an unfavourable
international environment, and the
government abandoning some of the
plans which it had."
Profits
The internally generated savings of corporate enterprise's percentage of Gross Domestic Profit 1968 to 1971 was in USA 6.8% to 7.9%, in UK 6.8% to 9.4%. But in France it was 11.7% to 13.3%, in West Germany 13.3% to 15.2%, Japan, 15.7% to 16.9%. One of the main reasons for this disparity in Britain lies in the contradiction between finance and industrial capital
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Charges against tax reduced the rates in Britain by 15 to 50% whereas in Japan, it was only 5%, or below the inflation rate of Japan in these years.
If we examine profits as a percentage of sales in 1971, the latest figures to hand of the 50 largest national corporations, we see in West Germany that the profits in relation to sales were 1.4%; in France 2.1%; Japan 2.3%; USA 5.3% and in the UK 7.6%. In other words, the highest figures of profits to sales were in the UK.
Banking and Industry
In Britain loans from banks over a
period of 7 years have an average
10% added. That meant that the
cash flow of the companies was
restricted. That meant a cash flow
return of 20.54%. On the other
hand, most bank loans from 2 to 4
years, require a return of 32 to 60%!
In Japan, similar figures would be
only 10% and the interest only was
repaid, and therefore it was nearer
10% and the interest only was
10% than the 20% to nearly 60% of
the British figures.
In the 50s however, the ratio of
loans to self financing was only 20%.
80% of the financing of companies
came from internally generated funds i.e. from the direct exploitation of the workers. Nevertheless, we see that the investment at that time
was not as heavy as with her rivals.
Therefore, this is only one of the factors which dictate the lack of investment on the part of British companies. The main reason is the profitability of the non-industrial sectors; the service trades, investment abroad, investment in land, investment in stocks and shares, general gambling on the part of the ruling class.
However, undoubtedly, one of the main factors in this situation, is the contradiction between banking finance and industrial capital. The policies of governments dictated by the capitalists themselves, have resulted in a generally higher rate of interest in Britain than in other countries. As a consequence, it does not pay the British companies to invest. Any profits that come from investment or rather, the major
share of any further profits that
come from investment will go to the
bankers, landlords and owners of
land.
In other words, the division of the
spoils was different in Britain than
with her main rivals. The lion's share
went to the financiers, a somewhat
smaller share to the landlords and
landowners. Only a smaller share
went to the industrialists themselves.
These were the factors of property
speculation, swindling, office buil
ding, the general speculative boom
that took place in Britain in service industries. The money even of the industrialists themselves was invested in the banks and in service industries. This has meant that it has been far more profitable to invest in these things than to invest in the production of genuine wealth.
The bourgeoisie in Britain has been afflicted with a fit of madness. They have forgotten the elementary law of economics, that the only real wealth that is produced is manufacturing wealth, in the sense of the production of manufactured goods, of capital goods and of consumer goods. If we would compare the finance and the growth rate of two of the main rivals of British and American capitalism, we see this relationship clearly. German and Japanese companies, "have heavy reliance on external debt rather than equity finance." • This is the conclusion of an article in 'Manage-
4
ment Todar
In 1970, the average Japanese
company's finance was 85% based
on loans of capital. In the same
period, 1960 to 1970 annual growth
rate was 13%. In West Germany,
external loans, of the industrial
companies was 57% and the growth
rate was 5.7%. In France the loan
industrial
was 39% and the
growth rate was 67. In the USA,
69% equity capital, average growth
rate was only 4.9% in that period. In
the UK, equity finance was 78% and
the growth rate was only 2.8% per annum. That is one of the main differences between the economies of Japan and Germany and of the UK and USA. The large general trading companies debt in Japan, for instance, was 95% of the invested capital. In the UK and the USA it was principally internally generated funds, depreciation and retained profits: "The cost of capital in terms of cash flow, the repayment rate on capital, then becomes the crucial factor in determining the level of private sector investment. The position seems to be that, even if investment opportunities are identical, investment is higher where the cash flow cost of capital is lower" ('Management Today"). This should be obvious. Thus one of the main factors in the crisis of the British economy and also the developing crisis of the American economy lies in the role of finance capital as a
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parasite on industrial capital.
These and the other factors mentioned have, as a consequence,
resulted in sluggish investment in industry, both in America and
Britain. There was heavy investment in Japan and in West Germany, but
that, of course, will now change with the world economic crisis.
Because of the contradictions in capitalism in any event, measures would not have been taken to 'correct' this 'shortcoming" in the economies of Britain and the US. Now that the world economy is in a stage of decline this will act as a further disincentive to investment not only in the economies of Britain and America, but now the same process will begin in the formerly high investment economies of France, Italy, Germany and Japan.
An indication of the real wealth of an economy from the point of view of growth is the amount that is invested in research and development. In Britain, half the total of £1 .,200 million on research and development went to ten companies in 1975, two-thirds in three industries, aerospace, electronics and chemicals. This is the figure in manufacturing investment alone leaving aside investment by the state in armaments and other fields.
In real terms, between 1969 and 1975 in Britain, spending on research and development fell by 11% whereas there was an increase in Japan of 29%, Germany 28% and 12% in France. Investment in America fell slightly in that period and is now slightly up again. If you take the key research of mechanical engineering, Sweden's research in this field was 2.9% of turnover, USA 2.8%, West Germany 1.9%, whereas in Britain it was 07%. half the figure of 1969.
Failure of British
Capitalism
Again we see the role of finance capital as far as Britain is concerned, in the sense that in 1960 only 20% of personal wealth was tied up in mortgages, housing etc. In 1976, the figure was 41%. Falling behind in investment in industry generally, has had a catastrophic effect on all
British production figures, as articles
in the Militant International Review'
and 'Militant' have demonstrated.
Take the key industry of cars. Ten
years ago in 1969, France produced 2
million cars and Britain 1.9 million.
Today, Peugeot-Citroen and Chrys-
ler alone produce over 2 million cars,
more than the British total. In the
mid-sixties, 22% of world car
exports were made by Britain, in
the mid-seventies it was 6% and
now, more than 54% of cars sold on
the British market are imported.
With a British capacity of 2 million
cars per annum in 1978, only 1.3
million cars were produced, the same
figure as in 1964, whereas in France
in 1978 3.5 million cars were
produced.
The Tory politicians are constantly
harping on the question of produc-
tivity. But productivity cannot come
with the use of muscle; this can only increase productivity to a limited
extent, by increasing to an abnormal extent the intensive exploitation of
the working class. Productivity can only be increased as a result of investment. If we take the average annual increase in employment and productivity over the last 15 years, then we can see that US employment increased by 2.2% between 1964-73 and between 1974-78 by only 0.1%. In Japan in 1964-73 by 8.9% whereas in 74-78 the figure was only 3.4% (of course 3½ times as high the increase in the US nevertheless.) In West Germany the increase between 64-73 was 4.7% and 74-78 3.2%-almost the same as that of Japan. France largely kept pace with her bigger rival in Germany—4.5% in 64-73, 3% in 74-78. In Italy on the other hand there was a 5.4% increase in productivity and in 74-78 1.1%. If we take the figures of Britain, even in 64-73 they were far lower than those of its rivals, an increase in productivity of 3.2% and between 74-78 the miserable figure of 0.8%.
If we compare these with the figures of investment, then we would see the correlation that lies between the investment in new machinery and the productivity of industry and labour. If we apply the test of the bourgeois economists themselves, as the Harvard Business News' gives it, "the ultimate test of market
5
economies depends on the ness of business to invest."
By their own criteria, therefore, British capitalism has failed completely. In per capita output she is 21st in the world in standards of living.
In the pre-war period, relying on the enormous power of British capital ism and industry, together with exploitation of the Empire, Britain had, apart from a handful of countries, including the US, the highest standard of living in the world
willing-
Monopolisation
The accumulated total investment between 1972 and 1977 in revalued pounds according to Lloyds Bank, investment abroad was f19,019 million and investment at home £14,482 million. Of course, this analysis reflects the grievances of manufacturing industry against finance capital. Finance capital in Japan and in West Germany is indissolubly linked with industrial capital. In fact, in West Germany, 50% of industry is controlled or owned by the banks. Japan has similar figures, or possibly even higher. Finance and industry are linked together.
Of course, this merely reflects the complaints of the representatives of industry against the exploitation by the banks. In practice, it is not only the rate of interest which is responsible, although this was an enormously powerful factor. The general crisis of British capitalism was reflected in the fact that they took to the road of devaluations and of budget deficits. This in turn led inevitably to inflation, and then, in order to curb the intlation, to enormous increases in the rate of interest above that of the other capitalist nations, or rather of their main competitive rivals.
But undoubtedly, the monopolisation of British industry, having gone further than in practically all the main industrialised capitalist nations of the world, has been a powerful factor in the process. They have become bureaucratic monsters, sluggish and conservative, content to rest on their monopolies and seek agreements with other multi-nationals.
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The rate of interest is a very factor, in powerful of course, determining the rate of investment. But all the factors combined lead to the parasitism of British capitalism in comparison with its rivals. All the complaints and jeers against the banks and finance capital have no effect in determining their policy, which of course like every other section of capitalism is determined by the amount of profit which they can make.
If it is more profitable to invest in land, in property speculation, stock exchange speculation, investment abroad or catering or tourism or in any other field service industries, then of course that is where the money of the banks is going to go. In the case of Japan and Germany, it is because the banks directly control industry, and are inextricably linked with industrial capital that they are forced to give the maximum support to industrial capital. But, even taking these factors into account, it is the sum total of the general positions in these countries which has determined the position of finance capital on this question. That is the irony of the position of the new Conservative government, claiming that they will establish the basis for profitability in industry, that they will establish a basis for investment, by ceasing to support lame ducks and allowing the more inefficient and those industries which get themselves into difficulties to go to the wall. Thus with the suggested measures against Meriden, Britain, from having 98% of the work market 28 years ago, will motor-bike production.
target figure of production of 35 to 40 millon tons of steel in the early '80s Britain is scaling down production to 15 million tons. Per capita this is probably lower than pre-war! Cynicism Nevertheless, the climate that is created by the Tories is such that far from making it more profitable to it less are making invest, they profitable, with the rate of interest now at 14% which is much higher than that of their rivals abroad. The cynicism of the spokesmen of British capitalism is indicated by the fact that the Chancellor Geoffrey Howe did not deny that the measures company directors enormously increased salaries by lowering the tax on the highest rated from 83% to 60%, would in no way guarantee that these directors would spend more time trying to expand their companies, rather than on the diversions of the elite of British The aggravated crisis of British capitalism is indicated by the fact that while in France, Japan, West Germany and the smaller European countries the number of industrial jobs has increased enormously during the course of the last ten or fifteen years, now, in Britain, the number of jobs has dropped by 1% million in industry in that periodan absolutely catastrophic drop for British capitalism.
In every field British capitalism is falling behind. China and India, still largely undeveloped countries, nevertheless, in absolute terms, have more industry than in Britain at the present time. The number of engineers, technicians and scientists in these countries, far training exceeds the number in Britain. At the same time, the amount going to research in universities has been cut government in their by the Tory "insane' desire to cut public expenditure.
Less will now go for research and development in projects which would be of use to industry in the future as a consequence of these measures. The 6 real situation in Britain is that the 200 monopolies and the banks and insurance companies which control 85% of the economy, have more power than the Prime Minister, Cabinet and the whole of Parliament put together. Each monopoly and the individual capitalists are concerned only with their own profit and not with the state as a whole. As a consequence the steep decline which has capitalism of British been taking place during the course of the last 25 years will not be halted, but on the contrary will be speeded up in the period which lies ahead. Cheap Labour As a consequence of the measures of Howe the Chancellor and the Minister for Industry Keith Joseph, the Tory Cabinet look forward comp. lacently to a drop in production and a drop in investment, and to continued recession, or recession-like conditions for the whole of the period of this parliament! Or four to five years as a matter of course. In other words, all the boasts about giving a climate where investment would be viable, investment would be profitable, has been shown to be so much poppycock on the part of the Tory cabinet ministers.
The 'Protestant work ethic' which was developed by capitalism im Britain in the period of its rise has decayed completely. In its place we have the parasitic drones and the coupon clippers. Those who are interested in only paper money. Nero played his violin while Rome burned; they are incapable of playing any instrument but on musical the contrary, find their satisfaction im parties at horse-racing at Ascot, att Wimbledon on the tennis court, im yachting, in parties and the general inane activities of the degenerate section of the ruling class. capitalism has become British parasitic. All the measures which have been taken by the capitalist governments in the period of the last three decades have reboumded against them.
The policy of budget deficits has resulted inevitably in the stop-go cycle of the economy, which course existed in other countries ci
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capitalism as well, but was not so pronounced and marked as it has been in Britain. They have passed from inflation to deflation, reflation, devaluation, revaluations, and none of them have succeeded in solving the problems that face British capitalism at the present time.
The domination of the City meant that strenuous efforts were made to keep the value of the £ as a mighty talisman in the past. Now, it is a nightmare to the capitalists that they find the £ is rising in value, which will make their exports on world markets dearer. So far as West Germany is concerned, the revaluations did not make any great difference. The price was increased but the German goods were of such quality and with such certainty of delivery on time, that it affected to a smaller degree their exports than could have been anticipated by the
rise in the value of the currency.
This is not so in the case of Britain. Britain has ceased to rely on the quality of her goods, but on the contrary relies on cheap labour. The British workers have been reduced to the coolies of Western Europe-the cheapest labour of any industrialised country in the world. We have the irony that in the past, strenuous efforts were made to maintain the value
of the f. Now the efforts are in the
other direction, to try and prevent the
from rising as
has been in the last period. The rise
of the f on the international currency
markets is in itself an indication of
the madness of international finance
and of international capitalism.
With. a sick diseased economy like
that of Britain, nevertheless, capital
has been flowing in on the basis of
the higher rates of interest and of
course on the basis of the enormous
wealth of oil which Britain has in
abundance and which has become a
viable proposition due to the
enormous increase in the price of oil
in the last 5 or 6 years.
Without oil, Britain would im-
mediately be facing a crisis of
gargantuan proportions. But the oil
guarantees at least £4,000 million
difference in the balance of payments
during the course of 1979-81. In
spite of this it is not certain that
either this year or next the balance ot
payments will not be in deficit as far
as Britain is concerned
The weakening in the power of British capitalism seems to have resulted in light-mindedness taking the place of hard-headedness of the British bourgeoisie in the past. For example, the 'Iron Maiden' has the delusion that by expenditure on arms, Britain's power and weight in the councils of world capitalism will be increased. The burden of arms in relation to the GNP is greater in Britain than with most of our rivals apart from American capitalism. In comparison with her immediate rivals, certainly Japan, West Germany, Italy and France, Britain spends a greater part of her gross national product on arms than any of these countries. That means an additional burden on the economy
Inflation
and Stagnation
The dream of Mrs Thatcher and her crew of the restoration of British capitalism's power abroad are only dreams. The supremacy of British capitalism in the past was not so much based on the navy and her army, which of course was an enormous factor in the situation, but the army and the navy rested on the power of industry and finance.
Now that industry in proportion to other countries has been depleted, that means the power of British capitalism has inevitably waned. The dream of maintaining that power without the empire, and without the economic basis of the past, is an indication of the complete lightmindedness of the ruling class in comparison with the sober attitudes and cold calculations that they made in the past.
The measures of the Callaghan government which were dictated by Big Business laid the basis for the victory of the Tories in the disillusionment of large numbers of Labour workers who lapsed into indifference on the one side, and on the other side, the movement of the middle class overwhelmingly to the side of Big Business. The Tory
workers were repelled by the capitalist policies of the Labour
Government.
The consequences
will not only be a spurt to inflation, which will increase by 20% by the end of this year, but in addition there will be a stagnation of production, or as the capitalists call it, stagflation. In other words, Britain will have the disadvantages of both inflation and of stagnation of the economy.
That will be the consequence of the measures which are taken by the Tories. They will not solve any of the problems which are facing the British capitalists at the present time, but aggravate them. This will have profound consequences, not only on the working class, but on the middle class as well. According to the opinion polls they had turned against the Tories within weeks-a record time. This shows enormous dissatisfaction within the working class and increasing disillusionment of the middle class as to the consequences of the policies of Thatcherism at the present time.
This has already begun to have its effect on the Labour Party and the trade unions. This has resulted in conflict between Right and Left in the Labour Party and trade unions, on the question of the election of the leader and the reselection of MPs. In that slow but certain way which was noted by Marx, Lenin and Trotsky, the British workers have been drawing due conclusions from the failure of Labour governments in the post-war period. A movement for change has begun within the Labour
Party and within the trade unions that on the basis of events will assume a powerful scope. Under these
conditions, the pressure on the Tory
government will grow enormously.
Even the most serious journals of
capitalism such as the 'Financial
Times' already question the validity
of Mrs Thatcher as the leader of the
Tory Party. Within weeks of the
election, Keith Joseph has already
been compelled to make a half-turn
on the question of subsidies to big
business in investment. Under the
Labour government as is known,
50% of all investment was paid for
by the state. Without this additional
aid from the state, which turns the
monopolies into pure parasites
preserving no role, investment will
slump even further than it has as a
consequence of the other economic
measures of the Tories.
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Therefore, the pressure of Big Business will become irresistible for a change in the policies of the Tory government. The Heath government was compelled within the space of 2 years to reverse completely, or as the popular media put it, to do a U-turn on their policies. In the case of the Thatcher government, in spite of the "Iron Maiden's" supposed willingness to stand firmly for her policies, under pressure from the back benchers, more sensitive to public opinion, rather than the Right Wing on whom she rested for her election as leader, Mrs Thatcher too, will be compelled to reverse her policies far quicker than these policies were reversed under the Heath government. Despite the fact that the most
demagogic play had been made of "free collective bargaining' between
unions and industry, without inter-
ference from the state, very quickly
Mrs Thatcher will have to abandon
Because of the changed relation-
ship of forces between the working
class and the capitalist class,
between the organised workers, and
the capitalist class it would be
impossible to maintain this position
probably even as long as the coming
winter. The union conferences have
already begun to take due note of the
explosion of inflation on the one
hand and of the baying of MPs for
their 85% increase in wages, in
salaries and the increase in the
wealth of the capitalists with all the
tax changes, on the other hand.
Within a matter of months the
working class have seen that they
have been short-changed. Capitalism
has given to them with the left hand
a pound or two and taken in return
with the right hand 3, 4, and 5
pounds, mostly in the rise in prices.
Consequently, much increased wage
demands are being put forward.
Rather than wait to be tested out
with direct industrial action the
Tories may suddenly impose a wage
freeze. It is most likely that before
the first strike on the part of the
workers takes place in response to
attempts by employers to refuse to
give the wage increases that are
being demanded for instance by the
miners of 65%, the Tories will act. It
is interesting that in the whole of the
post war period, there has hardly
been 'unfettered collective bargain.
ing.'
On the contrary, one of the factors in the failure of the British capitalists to invest has been due to the low wages of the workers in Britain in comparison to their rivals, at least towards the end of the fifties, and during the course of the 60s and 70s. There was no incentive on the part oi the capitalists to invest to try to overcome higher wages by increasing productivity, thus increasing the intensity of labour, increasing the exploitation of the working class in this way. Low wages in an industrialised country can be a disincentive to investment. Or rather under the specific conditions of
British capitalism, they were a
disincentive to investment.
Power of
Working Class
This is shown by what has happened in printing and on the docks. The "Times' , attempting to overcome the high wages of printworkers by increasing technology and getting rid of labour by this means, has not succeeded completely because of the resistance of the printers' unions.
Yet The Times was quite prepared to lose £25 million in an endeavour to introduce new techniques which would make it easier to shed labour for the purpose of increasing its profitable investment. Now because of further contradictions with the inflow of capital into Britain, because of oil and the interest rate, restraints on the export of capital will be further reduced and a flood of capital will flow abroad.
In the last days of February 1974
before the return of the Labour government, the Confederation of
British Industry put in a demand in
menacing terms for £3,000 million of
subsidies and £5-6,000 million of
cuts in state expenditure. While the
promises to the workers in the
Labour manifesto werę not kept the
demands of the CBI were met
lavishly. They asked for £3,000
million of subsidies to industry and
got £4,000m. They asked for
£5-£6,000m in cuts in state expen-
diture and got £8,000m.
It is clear, that investment will
collapse without government money:
and without government aid. The U-turn on this and the other economic policies by the Tory government will provoke further chaos and further disillusionment. Not only the middle class but even sections of the working class have consistently voted for the Tories because they have not had the experience of Labour government which acted overwhelmingly in the interests of the working class.
Even if the measures that have been introduced by the Tories succeded they will not restore the health of British capitalism and in fact as the analysis has shown, will have the opposite effect. Some years ago it was estimated that it would require £100,000 million of investment for British capitalism to have the remotest hope of catching up
with their more successful rivals.
That figure, on the basis of inflation
would have to be increased to
£120,000 million or £150,000 mil-
lion.
It is clear that with the climate of
crisis in Britain and a climate of
crisis for international capitalism,
this investment will not be
forthcoming. The "Times', recently,
when it was published, pointed to the
"irreversible decline' of Britain, i.e.
British capitalism.
This irreversible decline will in its
turn produce an enormous explosion
of the class struggle. The volatility
and swings of British society over the
last 10 to 15 years have been
predicated by the crisis of British
capitalism. The swing of sections of
the petit-bourgeoisie in Scotland and
in Wales to the nationalists and then
the swing back again to Conserva-
tism are an indication of extreme
volatility, which in its turn was
caused by the crisis within society,
the blind alley which British
capitalism is in.
On the other hand, in this period,
we have had an enormous increase in
the power and organisation of the
British working class. Lenin had
expected that under capitalism it
would not be possible for more than
one-third of workers in an advanced
capitalist country to be organised
But now in all the countries
advanced capitalism, especially
Britain, there has been an enormous
explosion of organisation on the par
of the working class. 54% of
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employed workers are now organised in unions, which in itself is an enormous and decisive figure. The rapid disillusionment of the workers will speed up during the course of the winter, and in the years which will follow.
Just as Heath's phrase, 'cutting prices at a stroke' gained enormous currency, and remained to haunt him during the whole period of the Tory government of 1970-74, so in the same way, Thatcher's lies on television in response to the Labour leaders as to the effect of the increase in VAT where she pointed out "there would only be a little rise in prices" and "you would have your own money to spend", will return to haunt her. These hollow remarks will have an enormous effect in the agitation within the working class in the coming period.
As with the victory of the Heath
government in 1970, so in the
election of 1979, probably the votes
of the women and of a large section
of working class women, were
decisive in the return of the Tories.
This is because of the failure of the
labour and trade union movement to
reach this important layer of the
working class. Now, the crisis that is
developing will fall on the shoulders
of the working class much more than
in the past.
Class Confrontation
The storms and crises of the Heath
government, the outbursts of strikes
and demonstrations led the Tory Par-
ty to become a rump of representati-
on in Parliament largely from the rur-
the commuter belts and
areas,
South-East of England, in the
elections of 1974. They lost seats in
the main industrial connurbations.
As a result of open confron-
tation of classes under Thatcher they
will lose even more in the industrial
areas not only of Scotland, Wales
and the North but in the Midlands
and South-East England.
Thus the paramount crisis of
British capitalism will begin to seep
into the consciousness, not only of
the advanced layers of the working
class, but of the masses as a whole.
The period of the post-war Labour
government from 1964 onwards has
been that of reformism without
reforms but with counter-reforms.
Reformism of this character will not
be countenanced by any length of time.
However, the development of the post-war period has been such that it has made the white collar workers much closer to the industrial workers as far as organisation and even so far as trade union consciousness is concerned. In the past the employees of the state and of the councils had a privileged position in relation to the industrial workers, and even in relation to the other white collar workers employed by the private sector. Now they are in the front line of attacks as far as maintaining jobs and standards of living is concerned.
The capitalists wish to cut down the burden of the state, which incidentally has largely been paid by the taxes on the working class and on the middle class. The capitalists want to try and get part of the portion of the share of the surplus produced by the workers. Thus they hope to increase their depleted profits. But this will drive these layers further towards trade union
consciousness and struggle.
We have had national strikes of
civil servants, strikes of council
workers, and so on, which did not
take place in the past. This process
will be further intensified and lead to
a politicisation of these layers, in the
sense of socialist consciousness, or of
labour consciousness at least. For a
period, perhaps, there will be a fall
in the membership of the Labour
Party, of old Tribunites and Right
Wingers, disillusioned and disap-
pointed with the results of the
Labour Government of "74 to '79.
But the Labour Party remains the
political arm of the unions and in
consequence the crisis of British
society will inevitably be reflected in
the Labour Party.
The revulsion against the prog-
ramme of the Right, is already
beginning to be reflected in struggles
which are taking place in the
constituencies and in the unions. The
the programme that the Labour
Party should put forward. The
accountability of MPs and even of
the leader of the party to the
organisations of the class itself will
be insistently demanded. This is the
beginning of a process of politicis-
ation which will take place, of a more
will inevitably result in an influx inte
the Labour Party.
Later, we will deal with the attitude of the Tribunites to the crisis in British society, and to the crisis within the ranks of the labour movement. Space does not allow us to deal with it in this particular article. However, the Marxist wing of the Labour Party and the programme that they put forward is bound to gain further support within the ranks of the Labour Party and within the ranks of the trade unions.
The demand for increased expenditure on public works, as a means of allaying unemployment will be one of the demands which will be taken up by the working class. The demand for the 35-hour week without reduction in pay will ve a further demand which will receive enormous support in the period that lies ahead. The demand to reverse the cuts and expand expenditure on education and social services, on health, on housing and transport will secure stormy support within the ranks of the trade unions and labour
movement, the shop stewards, the
trade union branches, and among
the working class as a whole.
This, which could only be carried out with a planned economy on the basis of the nationalisation of the 200 monopolies, the banks and insurance companies, will gain enormous support within the period which lies ahead. This programme must be linked to the programme of the abolition of the Monarchy and the House of Lords as an indispensable means of ending the medieval survivals of the past, which are now used for the advantage and benefit of capitalism as reserve weapons.
Marxists do not make the mistake of the Tribunites and also the Communist Party in putting these demands for reforms, higher wages, better conditions, increased social services and so on, and allow them to stand in mid-air. Only by the transformation of society would it be possible to carry through this programme. Without a transformation of society, merely to put forward demands of this sort would
be an illusion and a trap for the
working class, as was shown by the
events in Chile and the failure of the
post-war Labour governments. How-
ever, this theme will be expanded
and developed in the next article.
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