Is it really possible for government ministers not to understand how capitalism operates? And to be unaware of the inevitable consequences of their own policies? Indeed it is possible. During the nineteenth century, although capitalism regularly went through the recurring cycle of expansion, boom, crisis and depression outlined by Marx as the economic law of the system, governments, capitalists and many economists were forever expecting booms to be permanent and being amazed as each crisis blew up. There are plenty of similar examples in our own times.
Any serious student of capitalism knows that the capitalist is in business to make a profit and therefore will not invest more to expand production at those times when there is no prospect of selling the product profitably. Yet in the last recession, in 1971-2, Heath and Barber complained bitterly that though for months on end they pleaded and threatened and offered inducements for increased investment, “nobody would listen”. Healey, Chancellor of the Exchequer in the present government, confesses to having been equally ignorant of the facts of economic life. “One thing I have learnt from my experience in the past seven months [as Chancellor]: there is no chance of investment if business expects a general and prolonged recession, however generous the tax incentives” (Report of speech, The Times, 5th October 1974).
Later in the same month he was again airing his ignorance, this time as guest speaker at the Lord Mayor’s banquet for bankers and merchants of the City of London:
“I simply cannot understand how it can make economic sense . . . to keep a million active men and women idle when the nation needs the goods they could produce“ (Times, 18th October 1974).
Since when has capitalism been interested in meeting people’s needs? And, in a depression, who needs additional production of unsaleable cars, motor-cycles, supertankers, steel and so on?
[From The Crisis: Capitalism’s Stranglehold on the Labour Government by Edgar Hardcastle, Socialist Standard, August 1974]
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