Tuesday, August 30, 2016

Labour Party pains (1980)

From the October 1980 issue of the Socialist Standard

The Labour Party meets in conference this year in a condition of customary agony. To begin with, they are displaying serious symptoms of frustration caused by their being in a position which they find acutely unenjoyable—in opposition. This position is guaranteed to cause them to experience extremely painful bouts of dispute and self-questioning—not, of course about anything other than finding the quickest way back into power. Their political backsides do not rest easily on the opposition benches and too long spent there is liable to give them the Parliamentary equivalent of bedsores.

One symptom the Labour Party are, again, suffering is the constitutional crisis which has been simmering for so long. The standing of their leader James Callaghan is in jeopardy—he, after all, committed the cardinal sin of leading his party to defeat in a general election and an energetic group inspired by Tony Benn is pushing for organisational reforms aimed at persuading the working class in this country that a future Labour government will do something other than administer the capitalist system of society.

Whatever decisions the Labour leadership and the delegates take, they will have their thoughts fixed firmly on the next general election and their hopes about deceiving the working class into voting for a Labour administration of capitalism rather than a Conservative one. But working class problems, which those parties are elected on promises to solve, are caused not by which party is in office but by the capitalist system of society. Labour administration of capitalism is no better for workers than the Tory variety. Capitalism has its own priority profit which it imposes on any government, as experience of Labour governments has proved time and time again.

There must be very few members of the Labour Party who think it stands for socialism, even as a very, very “ultimate object”. The only people to take this view seem to be the Tories! Let us assure them: they have nothing to fear from Labour. The Labour Party is openly and obviously committed to capitalism, both in theory and in practice.

Those who say that workers should support the Labour Party come up with two basic arguments: that the Labour Party is the political organisation of the working class, the political arm of the Trade Union Movement, and that the Labour Party has a better reform programme on such subjects as health and education than the Tory party.

It is true that Labour (like the Tories) has the support of millions of workers but that does not make it a working class party. The standard for judging this should rather be: does Labour further the interests of the working class—and to this question the answer is, they do not. As long as capitalism lasts it is our interest as workers to exert what pressure we can to get the most out of it, to increase our share of the wealth we alone have produced. But in this class struggle Labour governments have always been definitely on the other side: trying to reduce what goes to the workers in the interests of the capitalists of Britain.

Perhaps the strongest argument in favour of the Labour Party was that it was the political arm of the Trade Union Movement, that it was an instrument workers could use to protect their interests within capitalism. But who dares to put forward this argument now? It is true that many unions are still affiliated to the Labour Party—but much of the money Labour gets from the unions is gathered under false pretences through the contracting-out swindle. Indeed, instead of the union link with Labour being of use to the unions, it has been the other way round: Labour governments have ruthlessly and cynically exploited the link in order to get union leaders to betray their members by supporting a policy of wage restraint.

So, Labour is not a socialist party, nor a working class party, nor a trade union party. Is it, then, at least a social reform party? In the sense that the need for reforms is built into capitalism and any pro-capitalist party must be a reform party—even the Tories—then Labour is, yes, a social reform party. Labour governments have brought in various reform measures, but capitalism has later forced them to attack their own previous reforms. For example, in 1965 they abolished prescription charges. In 1968 they brought them back at a higher rate. They also ended free milk in secondary schools, which was a long-standing Labour reform demand dating from the 1900s. These are just some examples of how those who seek to govern capitalism have to do so on its terms—thus confirming that human priorities cannot be imposed on capitalism, since capitalism is motivated by production for profit.

Before there can be a solution of the many problems of capitalism, the framework for those solutions must exist — and that means the common ownership of the means of production and distribution. But that will not be an issue at Labour’s conference, in 1980 or in any other year. The delegates will spend — will waste — their time discussing footling and ineffective adjustments to a social system which must result in the exploitation and degradation of the majority of its people. They will give their support, as Labour has done consistently during all its history, to the society which cannot work in the interests of its people. They will go home satisfied, perhaps even inspired to continue their work for the continuation of capitalism

And capitalism, with its massive burden of human misery, will go on.

RISING COST OF SURPLUSES (1980)

From the October 1980 issue of the Socialist Standard
From Financial Times (5.9.80)  
Malthus, for those who don’t remember, was an 18th century cleric who forecast that within a few years world populations would grow to the extent that the possibilities of food production would have been exhausted, and mankind would perish from hunger and consequent disease. Over the last two centuries Malthus has been proved several hundred per cent wrong. The producers of food have suffered and are still suffering the pangs of hunger, are the victims of inefficiency or war, neither of which have the least bit to do with food production. In European markets meat is showing nasty signs of surplus too . . . In view of this trend the Commission in Brussels must be hoping for some really disastrous crop news from the US and elsewhere.

Conservative Party at prey (1980)

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.
Clifford Slapper

Agendas of despair (1980)

Editorial from the October 1980 issue of the Socialist Standard

Each autumn the three big political parties of British capitalism hold their conferences and work their way, in a style established enough to be predictable, through agendas of blinkered delusion.

The party faithful gather at some favoured seaside site in the solid conviction that they are about to take part in an event of historical significance and debate motions both critical and laudatory. From time to time the party leaders take the floor to receive their ration of acclaim, from polite applause to prolonged standing ovation.

At some point, the conferences climax in the appearance of the Leader, who makes a speech denouncing the other parties and asserting that their party holds the key to freedom, prosperity, peace . . .  even if there must be some delay before the gate to all of this can be unlocked. This speech is greeted with the longest, loudest ovation of them all, sending the delegates back to the constituencies flushed with the excitement of it all, inspired to work even harder at their canvassing, envelope addressing, dues collecting . . .

On occasions a conference will actually lay down a fresh policy, like Labour in 1960 voting in favour of the British capitalist class unilaterally abandoning their nuclear weapons. (There is no evidence that the British capitalist class were in any way worried, or even impressed by this piece of hysterical self-delusion.) Or like the Labour Party last year, when they voted for some changes in their constitution, which convinced their more impressionable and ignorant members that the party's basic character had somehow changed.

When a conference decision is accepted, and implemented by the leadership this is hailed with general satisfaction as evidence of the party’s essentially democratic nature. When other decisions are rejected or ignored by the leadership this is justified on the argument of the pragmatic guardianship of the greater good against depradations by the party’s wilder extremists. Somehow, through the regular experience of this type of cynicism, the party faithful keep their faith-keep canvassing, addressing envelopes, collecting dues . . .

Cruel reality is perhaps too much for them to face. The fact is that their conferences are meaningless affairs. They can debate and resolve however they will; unless their decisions fit in with what are seen as the needs and the priorities of British capitalism they will lie unregarded.

An example of this was, again, that famous vote by Labour in 1960 on nuclear armament. Whether that decision had been later reversed or not, there was there could be no serious possibility that a subsequent Labour government would have disbanded the nuclear arsenal of the British ruling class class, regardless of how the other powers of world capitalism were operating.

Capitalism works on the basis of a priority more powerful than the collective satisfaction of a few hundred excited, deluded party members. It operates on the remorseless drive to accumulate capital, to exploit workers to the highest possible intensity, to monopolise markets and to dominate sources of raw materials. It works on the basis of the demands of commodity production, leaving little scope for a concern with human interests.

If any of this gets through to the delegates at the seaside, they may ask themselves how they might enrich their conferences with some significance, and justify themselves a page in history. Well they might begin by discarding entirely their agendas of reformist pessimism and substituting a simple motion, in these terms:
This conference rejects the capitalist system of society, based on the private ownership and control of the means of production and distribution and giving rise to such problems as poverty, famine, disease, bad housing, war, social disharmony. We recognise that these problems cannot be ended by reformist schemes such as we have advocated, and won votes on, during our existence as a political party, which has hitherto been an exercise in futility. They can be ended only by the abolition of their cause —the capitalist system of society. We therefore resolve to campaign ceaselessly for the overthrow of capitalism and for its replacement by the common ownership and the democratic control of the means of production and distribution for the overthrow of capitalism and its replacement by socialism.
Such a resolution would not imply an upsurge of collective madness among the delegates but an abrupt expansion of their social and political awareness, to the point at which they saw exposed the futility of trying to reform capitalism and the urgent need for social revolution.

It would signal the acceptance of the need for a classless society — which would mean a society without political parties, since the function of those parties—the representation of class interests—had become redundant. It would signal the end of the massive deception which is capitalist politics and of the most useful act the parties of capitalism can perform—their own abolition.

Socialism will be a truly democratic society in which public communication and decision making will centre upon agendas of hope and progress. For those who are looking for it, that offers real excitement.

2 million out of work (1980)

From the September 1980 issue of the Socialist Standard

“The Government accept as one of their primary aims and responsibilities, the maintenance of a high and stable level of employment after the War”. This statement formed part of a White Paper issued in 1944 by the then coalition government comprised of the Tory and Labour Parties and an odd Liberal. Many workers thought the ultimate in working class existence had arrived—a job for life. Some stupid Labour MP’s thought a high level of employment meant jobs for all, but they were quickly disillusioned. What has gone wrong? On both counts —‘high’ and ‘stable’ — all governments, particularly over the past decade, have missed their aim.

Unemployment, a social scourge of the twenties and thirties, is again front page news. Politicians vie with each other in putting a mathematical equation to words. In 1975, when unemployment reached 1¼ million under a Labour government, Michael Foot, then Minister of Employment, said this figure was ‘intolerable’. In May of this year, 1,659,000 unemployed was ‘distressing’ to Mrs. Thatcher, ‘terrifying’ to Eric Varley; and when the July count rose to nearly 1,900,000 this, said the Shadow Cabinet, was ‘appalling’. All these crocodile tears do nothing to solve the problems and indeed encourage an air of cynicism about politics.

It seems likely that the 2 million mark will be reached by the time this article is published. The official figures are only for those who have registered at the Labour Exchange, (or, to give it some class, the Job Centres) and the real number is undoubtedly higher. Ron Brown, Labour MP for Leith, in a recent letter to the Guardian, when the official figure was just over 1½ millions, said . . .“the true figures would be nearer two million if unregistered women were included”.

The current recession has almost tumbled into a slump. One region after another feels the lash of redundancies and short time working. Newspapers give an almost daily tally of the lost jobs, many from firms that are household names and the ‘pride' of British industry. Guest Keen and Nettlefold; Courtaulds; British Steel; Ford Motors . . . The reasons given for the downturn in the workforce are standard—a fall in demand for their products. This is a common feature of capitalism, in which demand has nothing to do with people’s needs; it is a market reflection of a system based on the profit motive.

Suddenly it seems that all politicians and the media are concerned with young people. It is not the same for those workers around 60 who are getting towards the end of their useful productive life.The teenagers who cannot find a job are a serious matter. Supposing these young people, on the dole for months on end, developed a disinterest in, or even an antipathy towards, wage slavery. Wouldn’t it bode ill for this system? The writer, leaving school at 15 in the middle of the thirties, was the successful applicant out of 82 others for the plum job of office boy in a respectable firm of Estate Agents; salary (not a wage in an office) was fifteen old shillings a week. Forty five years on, history repeats itself as 500 young people apply for a shop assistant’s job in Sheffield at £32 per week. A director of the firm stated . . . “We were stunned when we saw the queue. They were standing five abreast . . . we managed to interview about 80 and had to send the rest home. Some of the youngsters who turned up were highly qualified . . . but we were more concerned with dress sense and personality”. In Smethwick, West Midlands, 167 applied for a vacancy as Junior Office Receptionist at £24.50 for a 48 hour week.

The July figures included 108,000 young people leaving school and entering the labour market. This high figure will be repeated until 1982 when the result of the baby boom of the early 1960s runs down. (We are just waiting for the politician who claims that part of the reason for high unemployment is the irresponsible sexual habits of the working class.) A large proportion of the young people can take heart in the government promise that if by Easter 1981 they are still on the dole, they will be guaranteed a place in the Youth Opportunity Programme and taught an alternative trade. Whatever they are taught at the centres is no guarantee of a job. With flames of ambition quickly dampened, young people are finding out early in life how capitalism can discard them.

Promises to deal with unemployment have always been a vote catcher to the major parties. Labour (who “care” for people) like to be known as the Party/government who are concerned that the workers follow their traditional role of wage slaves. Tories are pictured as the hard-faced crowd who by forcing workers on the dole will be able to run the system more effectively for the benefit of the rich. Both the self bestowed accolade and the accusation are untrue.

In 1976 the Labour Government set themselves a 3 year target; to reduce unemployment to 700,000 by 1979. The April 1979 figure was 1,340,595, nearly double their target. How’s that for a party who claimed they could plan capitalism and deal with its ups and downs. High though the April figure was, it showed a drop of 60,000 on the previous month and this decrease was hailed by Mr Callaghan as . . . “a product of the economic and industrial strategy” which Labour had been following. If we grant him this concession, can we also assume that the figure 1,340,595 was also due to Labour strategy. Oh no. This high figure, according to Callaghan, was the result of ‘‘fundamental structural problems” in the world economy. He has probably never come closer to a more accurate assessment of the situation. But now he is in opposition, he blames the Tories for the high figures. Let us, and him, not forget that under the Labour Government in 1977 unemployment was over 1,600,000.

Capitalism is going through one of its periodical crises and the Tories claim that they have not increased unemployment deliberately. Their major concern is to reduce inflation to single figures and if this means unemployment has got to rise, then so be it. Callaghan held an identical view . . . “But as long as we are trying to squeeze inflation out of the economy, this unemployment is unfortunately one of the consequences that we must face”. (House of Commons. 25/1/77). But does one necessarily give rise to the other? Between the end of 1920 and the middle of 1933, prices fell by over 50 per cent, yet this same period saw record levels of unemployment. Inflation and unemployment are not hand maidens. The former is a deliberate act by government, the latter a logical sequence of the capitalist system.

A more detailed analysis of the causes of unemployment appears in another article in this issue. Many solutions are put forward. Perhaps the most novel so far emanates from the three former Labour Cabinet Ministers Williams, Rodgers and Owen. “Such a national industry training scheme would ease unemployment. So would longer holidays”. The last one takes our fancy, although no mention is made of extra holiday money.

“Heavy unemployment is not a British phenomenon. It is a global epidemic” said the Daily Express on 28 July 1980. There is a global answer, not only to this problem, but to the other social evils that prevent us from realising our full potential.
Cyril May


Economics of unemployment (1980)

From the September 1980 issue of the Socialist Standard

With the experience of two centuries of capitalism to go on, it might be expected that by now everything about the causes of unemployment and its fluctuations would be known. In fact, most economists and politicians are as confused about it as were their predecessors. They go on propounding old discredited theories, or the new absurdities that have emerged in the last half century. The TUC and the various wings of the Labour Party are as much in the dark as are the Tories. In defiance of the evidence, they all have a childlike faith that there must exist somewhere a magic formula that would enable them to run capitalism without unemployment—if only they and their computers could find it.

Although Karl Marx was derided for saying that capitalism inevitably goes through successive phases of expansion, boom, crisis and depression, it has continued to follow that course. Marx’s view has been challenged from two directions. In each longish period of low unemployment (as in the years 1895-1900, and again after World War II), it was claimed that the way to permanent boom had been discovered. In each long period of heavy unemployment (as in the very long depression in the last quarter of the 19th century, and again between the wars) it was expected that capitalism would never expand again and that depression had become permanent. This theory is being revived again now.

Past experience in Britain gives no support to the idea that unemployment consistently tends to become heavier. Unemployment now (August 1980) is 1,897,000, or 7.8 per cent. As a percentage it was often higher than this in the 19th century, and for the whole of the years between the wars it averaged 12 per cent. At its peak in 1932 it was 22 per cent, which would mean over 5 million unemployed at the present time.

Nor, of course, does experience support the belief of the Labour and Tory governments from 1945 to 1970 that they could “manage” affairs in such a way as to keep unemployment down to about 2 per cent. That long period of low unemployment was partly due to replacement of war damage, and partly to the fact that it took years of reconstruction in Germany and Japan before their modernised and highly competitive industries came back into the world market to the detriment of British capitalism.

The Tories have now reverted to an earlier myth which held that if capitalist is left to its own devices without government intervention it will create full employment. Their argument is that if inflation is stopped and if the government spends less and therefore reduces taxation, employers will retain more of their profits and will invest that extra money to provide more jobs. (“If the government cuts expenditure by £4,000 million a year, unemployment will fall.” Sir Keith Joseph). This argument is easily answered. There was no inflation from 1820 to 1913, and government expenditure (measured against total national income) was less than a quarter of what it is now: but it did not prevent continuous unemployment or the Great Depression. The argument overlooks that employers are not in the business of creating jobs but of making profits. “Companies invest when they think they can make a profit” (Financial Times 21 March 1978). When they see no prospect of making a profit, they do not invest.

While Sir Keith Joseph says that the way to reduce unemployment is to reduce government expenditure, the TUC and Labour Party say that the way to reduce unemployment is to increase government expenditure. A pamphlet published by the trade union NALGO claims that if government expenditure is increased by £7,000 million a year, unemployment will fall by 600,000. And Labour MP Michael Meacher says that each additional £1,000 million a year spent by the government creates an additional 235,000 new jobs (Sunday Times 20 July 1980).

What actually happens in practice? The Labour Government did increase government expenditure, from £20,000 million in 1973 to £44,000 million in 1977. But unemployment went up from 629,000 to 1,600,000. Both the Tory and Labour governments overlook that if a government collects more taxes and spends more, or collects less taxes and spends less, these are mere transfer operations; the combined buying power of the government and the rest of the population altogether is not altered.

But, say the advocates of increased government expenditure, it also leads to an expansion of production generally, and thus increases the total number of jobs. Again the facts say otherwise. When the 1974 Labour government vastly increased government expenditure, the Index of Production did not show a rise but a fall. In 1976 it was nine per cent below 1973, and in 1977 it was still below the 1973 level.

Post-war governments, Tory as well as Labour, operated on the principle adopted in 1944 by the Labour Party Conference “If bad trade and general unemployment threaten . . .  we should give people more money, not less to spend.” The only way in which a government can “give everybody more money” to spend is by printing more notes, each of which buys less and less. While Denis Healey was Chancellor of the Exchequer, his government printed and spent an additional £4,500 million; to which the Thatcher government has added another £1,200 million. This has had no effect on unemployment. Its only achievement is to put up prices. Sir Keith Joseph recently resurrected another old but plausible fallacy: “Just as you can price yourself out of a job, so you can price yourself into one, by taking lower wages.” There might be some employers who would take on more workers if wages were reduced from, say £100 a week to £80, to employ ten workers at £80 instead of eight workers at £100, but as a remedy for unemployment it is a non-starter. The ten workers would produce more than the eight workers, so their employer would have to sell more. If he succeeded in capturing a larger share of the market, it would be at the expense of rival employers, who would employ fewer workers in consequence.

Sir Keith’s non-solution for unemployment prompted an opposite solution from the unions. A union official put it like this: “Workers are unemployed because wages are too low to buy all the factories produce. If wages were raised, workers would buy more and more workers would be employed”.

This too is a plausible argument. If wages went up more than prices, workers could buy more. But, as profits would be correspondingly reduced, the profit-receivers would have to spend or invest less than before. As profit margins would be reduced, it would also discourage investment. In the period 1973 to 1977 wages did rise more than prices but, as already mentioned, unemployment more than doubled.

Marx met and dealt with a similar argument. It was put to him that if wages were raised it would enable workers to buy more and would prevent a crisis occurring. Marx pointed out in reply that “crises are precisely always preceded by a period in which wages rise generally and the working class actually gets a larger share of the annual product intended for consumption”. Far from preventing a crisis this phase of higher real wages is always “harbinger of a coming crisis” (Capital Vol. II, Kerr edition, page 476).

Marx dealt with unemployment from two aspects. First, there is the displacement of labour by machinery. This increases unemployment, but if the investment of capital grows fast enough (as it does when sales and profits are rising) it “absorbs not only the men thrown out of work but also fresh contingents” (Capital, Vol. I, Kerr edition, p.496). So in that phase total unemployment falls.

But in the competitive struggle which gives markets to the cheaper producer, each capitalist is trying to accumulate capital and expand his scale of operations, not just to meet a known demand, but as an end in itself. Inevitably “overproduction” develops in some big markets, as for example motor cars, shipbuilding and steel in 1974, and a crisis occurs. Sales in those markets decline, investment ceases to be profitable, production is cut and workers are stood off. The declining industries and falling wage totals drag down other industries and there is depression, with unemployment at peak levels. This continues until such time as conditions develop which make investment profitable again.

This is the course capitalism follows, paying no heed whatever to ministerial vapourings about full employment, whether Tory or Labour.
Edgar Hardcastle