From the October 1980 issue of the Socialist Standard
Beneath all of the pomp and ceremony of the Conservative Party Conference at Brighton this month, there are likely to be a few doubts and differences. As the brainless, small-minded crowds wave their Daily Telegraphs at their smiling idol, the number of unemployed has passed the 2 million mark for the first time since 1935, and the employed are finding it increasingly hard to make ends meet. The number of advertised job vacancies is also the lowest since the war, at about 400,000. Prices are still rising, while the high unemployment produces weighty downward pressure on wages. As a government cabinet composed almost entirely of very substantial members of the capitalist class poses proudly before press photographers, education, health and other welfare services are being drastically cut back.
Forty-six patients at Dulwich hospital are expected to be dead before Christmas for want of sufficient finance to provide them with kidney-machines and after-care treatment. As they wait in their second-rate National Health beds, they can read in the newspapers that this government is spending more than £10,000,000,000 a year on armaments. And if any of those patients actually owned any substantial part of the property which those weapons of destruction are supposed to be protecting, then they wouldn’t have to wait to die, while the machinery necessary for their survival can be made but cannot be bought. The deaths of these kidney patients would pass by almost unnoticed, just another direct result of the system of society which the Conservatives are currently trying to run.
Margaret Thatcher will receive tumultuous applause, a standing ovation. Anyone who is party to such applause must have a disturbingly distorted view of what is in their interest. She and her colleagues represent a system which can only be run in the interests of the small group of people who own most of the wealth of society. Labour’s way of doing this involves the deceitful hypocrisy of those who claim (albeit occasionally) that capitalism can be run in the interests of those who work to provide wealth to which they do not enjoy access. But this government has approached the problems of the profit system in a particularly callous and brazen-faced way.
When Keith Joseph told the working class that we shouldn’t “price ourselves out of our jobs”, for example, did he say anything about the fact that he doesn’t have to worry about a job himself, because he inherited a stake in the building firm Bovis? When Margaret Thatcher advised unemployed workers to “move to where the work is”, did she offer to put them up at Ten Downing Street when they arrive without money or jobs in London? And when Geoffrey Howe told us in a recent Party Political Broadcast that “We’re paying ourselves too much for making too little” and that “Pay rises must be well below the level of price rises”, did he mention the fact that his shareholdings mean that he receives dividend cheques without “making” anything? He was a director of six major capitalist enterprises, and one of his first budget measures on taking office was to remove all restrictions on the proportion of profits that companies can pay out as dividends to shareholders. (Dividends paid by Woodrow Wyatt Holdings for example, subsequently increased by 2,400 per cent.)
During their first fifteen months in office this government have managed to get as many as sixty Acts of Parliament on to the statute book, including much of the 1979 election manifesto. But statements in that manifesto such as “It is not our intention to reduce spending on the Health Service” have been ignored as Local Authorities are forced to close more and more hospitals. For although spending in such areas has been slightly increased on paper, the very high rate of inflation means that in real terms, spending is cut. Benefit for families of strikers has actually been cut by £12 a week, but last month the police received a pay rise of 21.3 per cent. Thatcher recently said that the right to buy council houses will “bring joy to many, many people. It will give them the chance to buy their own homes, small estates” (Guardian, 8.8.80). In her patronising contempt for the working class she forgot to mention that the right to buy is not the same as the means to buy. Most of those who manage to buy council houses will be saddled with mortgage repayments to replace their rents and will be no better off at all.
From the early Budget measures to the anti-Trade Union provisions of the Employment Act, this government has done much to increase the wealth of the capitalist class (who already own the essential means of life in society) at the expense of the impoverished majority. Significant cuts in real terms have now hit housing, hospitals, transport, roads, environmental and social services, education, arts, science and libraries. At the same time there is a commitment to an annual increase in military expenditure of 3 per cent, again in real terms. Organised poverty is defended in the name of the “good of the nation”.
All this means is that reductions in government expenditure relieve the capitalist enterprises of some of the corporation tax they have to pay to fund government spending. A recent report from the Inland Revenue discloses that more than a quarter of income tax is received from the top 5 per cent of income earners; and income tax itself is small compared with taxes levied on companies’ profits. Tax is a burden on the propertied capitalist class, and tax cuts are designed ultimately to benefit them. Under the Labour government, from 1974 to 1977, there was an increase in the concentration of wealth in the hands of a few, and by 1979 a Royal Commission was able to show that the richest 1 per cent owned more wealth than the whole of the bottom 80 per cent. Only 7 per cent of the adult population own any shares at all in capitalist enterprises, and less than one thousandth of the population possess 80 per cent of privately-owned shares (CIS Report: The Wealthy). This represents the real wealth in society; the means of wealth production. It is possible, however, that this government will have presided over an even greater concentration still, as inflation and unemployment hit all but the very wealthiest in society.
The ideological screen to all this has been the monetarist theory of Hayek and Friedman, as espoused in particular by Industry Secretary Keith Joseph, Chancellor Geoffrey Howe and the Prime Minister herself, who said in a recent television interview that “the economic strategy is absolutely right”. At the Conference, the cabinet will defend these “free market” policies against any cries for “moderation” or even “U-turn” reversals involving government expenditure or intervention. The press and the Labour opposition will be eagle-eyed, fearing to blink lest they should miss any give-away signs of U-turn to match Ted Heath’s baling out Upper Clyde Shipbuilders, Mersey Docks, Rolls Royce and BSC after he, too, had proposed tight monetary control. “U-turn” accusations have already been made when, after selling shares in British Aerospace and the British Transport Docks Board, and planning the same for other nationalised industries, the government announced the shelving of plans to sell warship yards to private investors.
Monetarism claims that decreased expenditure will allow the government to borrow less money from the banks, that is to sell them less Treasury bills; and that the banks will then create less credit through deposits and inflation will fall as the money supply will not be increasing so quickly. But banks cannot in fact “create” credit out of thin air without borrowing money themselves, and anyway it is not a rise in this mystical monetarist money supply which produces inflation, but an overissue of actual currency—the printing of bank notes by the billion in excess of what is required. Hardline Tories like Joseph also claim that lower expenditure will allow tax cuts to give people more money to spend, to “stimulate the economy”. But Tory policy is not directed at “giving people more money to spend”, and even if it was, it would not prevent unemployment, which is an inevitable part of one of capitalism's recurrent international recessions. Even more, their one futile offer, to “control the money supply” has fallen flat on its face; when the Financial Times reported on August 6, more than a year after they had taken office, that “The government's monetary policy has been knocked off balance following a 5 per cent rise in the money supply last month”. Unemployment cannot be blamed on a government, whether Labour or Tory. If they happen to take office at the inception of one of capitalism’s cyclical economic crises, then the mass unemployment of a depression will follow. Of course, cutbacks in government expenditure can aggravate unemployment, particularly in the public sector; but the trends of unemployment regularly produced by the restrictions of the profit system can in no way be averted.
The reverse of low government spending is high government spending, and it is hardly surprising that this latter alternative has also been claimed as the solution to all of the ills of capitalism. It has been tried, moreover, and has failed time and again under the label of Keynesian policy. The resultant depreciation of the currency was something Keynes had to pass over, for it is where his theory falls down. So we have the absurd spectacle of one group of politicians saying “spend more, make jobs and never mind the inflation”, while the others say “spend less, control inflation and never mind the jobs”. Both policies have been tried and have proved equally futile in dealing with either unemployment or inflation. The economic laws of capitalism belittle the petty wrangling of these helpless, squirming politicians.
The fact that the Conservatives are currently in the embarrassing position of actually running capitalism, will probably make for a slightly more tense tone than that prevailing at the Labour Party Conference this year. Any dissent at the Tory Conference will come from the legendary, infamous “Wets” who, on humanitarian grounds it is claimed, are opposed to the Thatcher policies in the face of mass unemployment and deprivation. They hint at the need for import controls, incomes policies, and even state subsidies. A brief look at these patrons of the Tory Reform Group will show that opportunism is more likely to be their motive for cashing in on popular opposition to Thatcher’s policies than is humanitarianism, or concern for the interests of the working class.
First there is William Whitelaw, who owns much of Cumbria, with his “short, sharp shock” for young offenders. As Home Secretary he promised recently in the Commons that as part of a civil defence programme over the next few years the government would “publicise the best buy family nuclear raid shelters” and “improve wartime broadcasting”. He insisted that these measures were “positive and cost effective” (Guardian, 13.8.80). That is his answer to the imminent threat of nuclear devastation. Then there is James Prior, the Employment Secretary, who on hearing of the latest unemployment figures, returned from a holiday on his Norfolk farm to blame the workers for “the recent high level of wage increases” (Guardian, 13.8.80). Lord Carrington, who inherited about half of Buckinghamshire and is on the boards of Barclays Bank, Cadbury Schweppes, Hambros Bank and Rio Tinto Zinc amongst others, has an ambitious streak which his class position generally allows him to satisfy. It was particularly apt that in a party political broadcast last year it should have been he who announced that “We have our interests in farming, fishing and oil to protect”. They are his interests, not ours. Others, like Ian Gilmour, whose father-in-law the Duke of Buccleuch owns 268,000 acres of land (Labour Research April 1979), and Michael Heseltine, the Environment Secretary, also number among the ranks of the “Wets”. It is significant that they are mostly in non- financial ministries. Those who are loyal to Thatcher include John Biffen, Chief Secretary to the Treasury, Howe, Joseph, John Nott and David Howell.
There is a fairly stable coalition between these groups, though, and it is quite likely that their differences will be settled by some compromise. But the question is: now that Keynes and Friedman have both been irremediably discredited in the face of the problems thrown up by the profit system, will the working class have the sense to scorn the gibbering and posturing of these frantic opportunists? As they quibble and crow, and then pat each other or\ the back and smile for the cameras; as they stomp and clap and respectfully sing the praises of the Iron Lady in glorious unison, are we not going to reject them and their meaningless promises? The answer does not lie in seeking yet another leader, yet another proposed policy or confused economic ideological scheme for trying to run capitalism smoothly. Let us leave them to their dream world of sherry and boaters at Brighton, and undertake the production of wealth on the democratic foundation of common ownership.