From the March 1978 issue of the Socialist Standard
Since the end of World War II there have been half a dozen periods during which the government has operated an incomes policy, sometimes a Labour government sometimes Tory; and in between periods of so-called “free collective bargaining”. When Labour governments have been operating the incomes policy Labour politicians have urged the Unions to co-operate on the ground that if they did not do so the result would be falling exports, heavier unemployment and rising prices and that this would bring in a Tory government and make things worse for the workers.
So how have the workers fared since a Labour government came to power in February 1974? Unemployment is up from 630,000 to over a million and a half and prices have nearly doubled. As wages have been “restrained”—that being the purpose of an incomes policy—and have risen less than the cost of living, the amount of goods wages will buy has been reduced and workers, even those in work, are worse off. Professor Alan Day (Observer 1 May 1977) estimated that after allowing for inflation the take-home pay of typical male workers in 1977 was 5 per cent, to 10 per cent, below the level of 1973.
Another consequence was the effect on profits. The gross trading profits of companies, which had fallen from £10,250 million in 1974 to £9,961 million in 1975, rose sharply in 1976 to £12,666 million and rose further in 1977.
The way the Callaghan government ran its income policy involved such notions as the use of troops to break the firemen’s effort to get more than a 10 per cent, increase, and the Minister of Agriculture “deploring” a proposed 12 per cent.-13 per cent, increase in what is one of the lowest-paid industries, agriculture. (Financial Times 3 Dec. 1977).
But at least the very low paid workers are protected by minimum wage legislation. Or are they? Those who accept this belief do so under the impression that the Acts are effective. In times of heavy unemployment many employers ignore the Acts and workers put up with it rather than lose their jobs. In the 1930s it was reckoned that as many as half the farmworkers were being paid less than the statutory minimum. And a similar situation in other industries has recently come to light. Recently the independent Low Pay Unit found that in 1977 nearly a quarter of employers in the retail, catering and hairdressing industries were paying “illegally low wages”. (The Times 3 Feb. 1978) And a TUC report found homeworkers receiving as little as £10 to £15 for a 30 or 40 hour week. (Evening Standard 26 Jan. 1978)
Among the employers are sub-contractors of H.M. Stationery Office employing homeworkers on Income Tax work at rates of 12½p to 25p an hour. (Daily Mail 3 Feb. 1978)
This is the workers’ life under Labour government. Would the past four years have been different if Mr. Heath had been re-elected in 1974, as Tories maintain? Demonstrably not. Tory policy at that time, including incomes policy, and currency policy was almost identical with that of the present government. What did happen at the end of 1973 was that capitalism lurched into the depression that is still with us. A Tory government could no more have prevented it than could a Labour government and the consequences of Tory government would have been much the same — higher unemployment, rising prices and falling living standards.
In 1945 the Tory Party declared that it knew how to maintain full employment and prevent depressions. So did the Labour Party and both based their belief on that monumental fallacy of the Keynesians, that busy factories and jobs for all can be guaranteed simply by pushing more currency into circulation (The Labour government has added £1000 million in the past 12 months). All this in fact does is to raise prices.
One change has taken place. It is that some leading Tories have at last abandoned Keynes, and if they get their way they say they really will stop inflation or reduce it to a very low rate. They could do it by curbing the note issue, as the government did in 1919. But anyone who supposes that capitalism without inflation becomes more tolerable for the workers has only to look at past history. There was no inflation for 100 years before 1914, and the depression of the 1930’s took place after prices had been falling for ten years.
The trade unions are in a tragic plight, of their own making. The unions’ function in capitalism is to try to defend or improve their members’ wages and conditions of work, and the TUC professes to co-ordinate union policies and actions. Yet repeatedly since 1945 they have taken on the role of holding down the wages they exist to push up. Even if it didn’t make a lot of difference in practice, since in a depression most workers would be lucky to be able to maintain purchasing power, let alone increase it, that policy inevitably creates confusion and obscures from the workers the real nature of capitalism. It is made worse by the unions’ policy of refraining from pressing the wage struggle in order to make it easier for a Labour government to deal with capitalism’s problems. Finally the unions and the TUC are as firmly tied as ever to the Keynesian nonsense. They think that they are exercising the option of running capitalism in a manner that will rid it of its major evils. What they are actually doing is to prevent the workers from making the decision that someday they will have to make, to get rid of their real enemy, the capitalist system of society.