Failure of Keynesian policies (1983)

From the April 1983 issue of the Socialist Standard

In the depression of the thirties, with unemployment rising to peak levels and governments toppling because of their inability to do anything about it, most economists and many political parties were overjoyed to adopt the theories of J. M. Keynes, which held out to them the guarantee that capitalism's principal troubles were over. This is not surprising since Keynes promised continued full employment — the end of depressions with their accompanying massive demonstrations of working class discontent, the removal of one of the causes of war, and the arrival of lots of other good things. Keynes, they said, had revolutionised economic thought, blotted out the growing interest in Marx’s theories, and made capitalism safe. In 1944 the three parties. Tory, Labour and Liberal. all part of the war-time National government. formally endorsed the main Keynesian doctrines in the government White Paper, Employment Policy, which set out the principles to be followed by post-war governments.

The attitudes of the three parties have partly changed since then. While the Labour Party, the Liberals and their allies the Social Democratic Party are still unrepentant Keynesians — as also are some Tories—the main body of the Tories, under Thatcher's leadership, have thrown Keynes over and adopted the theories of Professor Milton Friedman.

Some leaders of the Labour Party went through a phase of doubting their saviour when Callaghan the Labour Prime Minister and Healey the Chancellor of the Exchequer adopted the “monetarist” policies now followed by the Thatcher government. It is for this reason that the present leader of the Labour Party, Michael Foot, gives 1976 as the date of the abandonment of those Keynesian principles which, he says, "for a quarter of a century or more, worked with such beneficial effects" (New Statesman, 26 November 1982).

The Keynesian argument is that if the demand for goods is maintained at a high level, industry is kept busy and unemployment will remain low. The "demand management" cure for rising unemployment is therefore for the government to increase its expenditure and investment, meeting the additional cost by borrowing: this will, the Keynesians say, increase the number of jobs. It is crucial for the Keynesian argument that the increase of government expenditure and investment should not be offset by a simultaneous fall in the investment by private industry. The Keynesians claim indeed that increased expenditure by the government will positively stimulate investment and activity in private industry.

The Keynesians have an early showpiece, supposed to vindicate Keynes, in the Roosevelt New Deal in America. A Keynesian admirer of the New Deal is Dudley Dillard, sometime Professor of Economics at Maryland University who wrote about it in his The Economics of J.M. Keynes (Lochwood & Son, London. 1948). In his book Professor Dillard compared the Keynesian policy of the New Deal with what happened in Great Britain at the same time, under the anti-Keynesian National government. His specific claim for Roosevelt is:

The economic expansion between 1933 and 1937, despite occasional minor relapses, was one of the most rapid in the history of American business cycles. The speed of this recovery was undoubtedly conditioned by the depths to which activity had plummeted in 1932. It was, nevertheless, a remarkable recovery which was nurtured by fairly large-scale loan expenditure (p. 127).

So how successful was the New Deal with its Keynesian policies? Unemployment in America was 24.1 per cent in 1932, the year when Roosevelt became President, and 25.2 per cent in 1933. By 1937 it was down to 14.3 per cent, though it rose again in 1938 to 19.1 per cent, which is nearly double what it is in America in 1983. In Britain at the same time, with a government running a non-Keynesian policy, unemployment fell from 22.1 percent in 1932 and 19.9 per cent in 1933 to 10.8 per cent in 1937. and it was 13.5 per cent in 1938. So, as Marxist theory would lead us to expect, the trend of unemployment was much the same whether the policy was Keynesian or not.

And what about the Keynesian argument that increased government expenditure stimulates private industry? In the pre-depression year. 1929, “government expenditure, including capital expenditure” was $22 billion, and “gross private domestic fixed investment” was $39.5 billion. In 1938 the former had risen to $34.2 billion but the latter had dropped to $21.5 billion. As the one went up and the other went down. Dillard admits that private investment “remained abnormally low". He and Keynes met this with the plea that it might have been different if the Roosevelt government had increased its expenditure still more. It is difficult to counter arguments of the “what might have been" variety, but it is worth remembering that in Germany where the government in 1920 not only increased expenditure but multiplied it enormously (also in the belief that it would create jobs) in 1923 about 25 per cent of the workers were out of work and nearly as many again were on short time.

Michael Foot believes that Keynesian policy was a success for 1945 to 1976 in Britain. But did it work as he thinks it did? Unemployment for years after 1945 was abnormally low. In fact it was considerably lower than Keynes expected from his Full Employment policy. But was it the result of Keynesian policy? One Keynesian, Joan Robinson, in her Problems of Full Employment (1950) said it was not. “Employment after the war would have been high in any case.”

Another Keynesian, Alvin Hansen, in his Guide to Keynes (1953) said the same: “Full employment was however primarily the result of the war and post-war developments, not of consensus policy”. And Aneurin Bevan, Minister in the Attlee government, attributed the low unemployment to Marshall Aid. These hundreds of millions of dollars enabled British industry to obtain materials the lack of which was hampering production. Bevan said, in 1948: “Without Marshall Aid unemployment in this country would at once have risen to 1½ million.”

So it wasn’t Keynes but Marshall and the American government who kept unemployment abnormally low for some years after the war. From the mid-fifties until 1976, in spite of Keynesian policies, unemployment has been on a more or less continuous upward trend. It touched 575,000 in 1958, 747,000 in 1963, a million in 1972, and 1½ million in 1976, and so on to the present 3⅓ million. Keynesian policy had nothing to do with the very low unemployment in the early post-war years, and nothing to do with the subsequent steady increase.

A major factor was first, the war-time destruction in Japan, Germany and some other countries which pul them for all practical purposes out of the world market, and later on their return to the world market in strength after their industries had been rebuilt and modernised, largely with American finance. They came back as cheap producers able more and more to undersell British products.

In 1955 British capitalists’ share in world exports of manufactured goods (based on 11 industrial countries including Japan and Germany) was 19.8 per cent. It had dropped to 13.8 per cent in 1965 and to 10.6 per cent in 1970. The fall has continued so that for the first time British imports of manufactures now exceed exports. And with this change of conditions unemployment in Britain went on rising, well before the start of the great depression in 1979. So Keynesian “demand management” is based on fallacious theory and its two showpieces, Roosevelt’s New Deal and Foot’s golden age of 1945-76, demonstrate that it does not work.

Two other aspects of the doctrine deserve mention. The 1944 White Paper looked forward to more or less stable prices, and Keynes himself looked to slowly rising wages “while keeping prices stable" (General Theory, p.271). What we got was continually rising prices, so that the level in 1976 was more than four times what it had been in 1945.

Lastly. Keynes held that many wars are caused by “the competitive struggle for markets” and they would be ruled out by the adoption of his full employment policy (General Theory, p.381). It is therefore interesting to notice that the Labour Party, Liberal Party and Social Democratic Party, while all professing to accept Keynesian policies, are all busy with schemes for increasing the competitiveness of British exports against foreign rivals, by such devices as lowering the exchange rate of the pound. In the House of Commons on 10 November 1982 Roy Jenkins, Leader of the SDP, said that “Britain’s lack of competitiveness was the central problem requiring solution”, and he agreed with the Labour Party spokesman, Peter Shore, that “a reduction in the exchange rate could make an important contribution".

According to Keynes, his full employment policy makes it unnecessary to go in for the war-promoting, competitive struggle for markets. Is the explanation that the three Keynesian parties do not now believe that full employment works, and are hanging on to it only because they have to oppose Thatcher’s policies and believe that the empty promise of full employment may still be a vote-catcher at the next election?

Edgar Hardcastle

White Law (1983)

1965 cover.

Book Review from the April 1983 issue of the Socialist Standard

117 Days: An Account of Confinement and Interrogation under the South African 90-Day Detention Law by Ruth First (Penguin. 1982).

Originally published in 1965, 117 Days has been reissued following Ruth First's death last year in Maputo, Mozambique. She was killed by a letter bomb which, according to Ronald Segal in his preface to this new edition, was issued by “those guards of the South African regime . . . not swaggering in their uniforms but in a seemingly safe package which had been treated to blow her apart". Ruth First was well known to the South African authorities before her imprisonment in 1963 because she had published accounts of the use of forced labour on the farms of the Transvaal and exposed the conditions under which migrant labourers worked in the gold mines of South Africa.

First was arrested under the General Law Amendment Act of 1963. A person could be arrested without warrant if they were suspected of having committed or intending to commit any offence under the Suppression of Communism Act (1950), or if suspected of sabotage or in possession of any information relating to such an offence. The person could be detained for a period not in excess of ninety days or until that person, in the opinion of the Commissioner of the South African Police, had satisfactorily answered all questions during interrogation. The act became known as the "90-Day Law".

Ruth First was arrested under suspicion without warrant and without facing trial. After her initial arrest she was released just within the period of ninety days, only to be immediately rearrested. She spent a total of 117 days in solitary confinement undergoing repeated interrogation. She had already been banned "from writing, from compiling any material for publication, from entering newspaper premises . . . I had worked for five publications and each had, in turn, been banned or driven out of existence by the Nationalist Government". She had in her home, at the time of her arrest, a copy of Fighting Talk, a publication she had edited for nine years and possession of which was punishable by imprisonment for a minimum of one year.

First was originally imprisoned in Marshall Square. The conditions under which she was detained are described in horrific detail and with touches of irony:

   I, a prisoner held under top security conditions, was forbidden books, visitors, contact with any other prisoner; but like any white South African Madam I sat in bed each morning, and Africans did the cleaning for the “missus".

Even the bucket of hot water for washing, a concession for “Ninety-Dayers". was brought to the cell by the African inmates until a shower was finally installed in the prison during her two months at Marshall Square. She was then moved to Pretoria Central Prison for the next twenty-eight days before being returned to Marshall Square.

Although never charged. First was aware that the Security Police knew of the magazine at her home and that she had attended meetings at Rivonia with Nelson Mandela, Walter Sisulu and others. Interrogation took a number of forms and ranged from threats such as "this is the first period of ninety days; there can be another after that, and yet another" to cajolements such as “we’re not holding you, you’re holding yourself. You have the key to your release. Answer our questions, tell us what we want to know , and you will turn the key in the door".

Ruth First’s portrait of prison is not limited to her experiences but covers the experiences of many others including Looksmart Solwandle Ngudle, who committed suicide during imprisonment, and Isaac Tlale who revealed evidence concerning his own torture during “90-Days" imprisonment and of the torture of Ngudle:

  Looksmart by his death and Tlale by his courage had lifted the lid for the first time on the systematic resort to torture of Ninety-Day detainees by the Security Branch.

First focuses attention on the South African prison system’s concern with vengeance. She herself attempted suicide during her second period of detention. Her conclusion is that "these amateurs in political sleuthing who seized books because they had ‘black’ or ‘red’ in the title had developed into sophisticated sadistic mind-breakers in the matter of a few years”. This is a savage indictment of the South African policies of apartheid and the suppression of any ideas conflicting with the status quo in that country.

Philip Bentley

Pin-stripe power (1983)

From the April 1983 issue of the Socialist Standard

Civil servants have always had many detractors and few defenders. Among the latter was Bernard Shaw, with his back- handed tribute that “even those public departments that were bywords for incompetence and red tape were far more efficient than the commercial adventurers who derided them”, and Sir Leo Chiozza Money who, with experience to guide him, presented an argued case on the same lines of comparison with private industry. Among the criticisms may be listed that the numbers of civil servants needlessly keep on increasing and that they enjoy a privileged position in respect of pay, holidays and pensions and finally, that it is they and not the government who run the country. The criticisms are mostly based on ignorance of the facts and disregard of the purposes for which capitalism needs a civil service and the interest capitalists have in running the service as cheaply as possibly.

The numbers of civil servants have indeed increased enormously, from 21,300 in 1832 to 521,000 in 1982. As the population is now four times what it was in 1832 this means that, relative to population, the civil service has been multiplied by six. (These figures all exclude the postal and telecom services whose staff were, until 1969, civil servants, and the industrial civil servants employed in government dockyards and the Ordnance factories.) But the increases have all been the result of the government taking on additional functions called for by capitalism as, for example, in the fields of Income Tax. Customs & Excise, Education, Factory Acts and latterly the social services.

Governments have always been aware of their need to overhaul and reorganise the civil service periodically, to bring it into line with new functions and to keep the cost down. This began with a Report on the Civil Service in 1853 and a corresponding report in 1854 on the Post Office staff, and has been followed by several other enquiries including three Royal Commissions in this century, 1912, 1931 and 1955. Further enquiries and reorganisations have been undertaken under the present government. Some of the recommendations of the 1854 Report have a modern ring. It proposed paid holidays for lower grade Post Office staff—not in their interest, but in that of efficiency. The principle was laid down that it is possible to recruit suitable staff at low rates of pay by holding out the inducement that some of them may get promotion to a more highly paid grade. It observed that “subsistence allowances" to meet necessary out-of-pocket expenditure arising out of the job were not intended to be an undercover method of getting more pay.

The idea that civil servants are privileged appears to be based on the suspicion that this half-million strong army is a self-governing body which fixes its own pay and conditions in defiance of efforts of Parliament and government to control them. There was some justification for this in respect of the smaller body of civil servants before 1853. Each department had its own arrangements, appointment was by patronage or influence or the actual sale of jobs, and there were no qualifying examinations. This was progressively altered between 1853 and 1870, by which time most features of the modern system had been established. Successive governments and committees of enquiry have considered all sorts of methods for fixing pay and conditions, including leaving them to market forces, so that pay need only be enough to attract a sufficient number of applicants

Of course the civil service would, if it could, be "privileged" but no government or committee has accepted the claim made by civil service unions that the government should be “a model employer" in the sense of setting a "good" example to all other employers.

The idea of fixing civil service pay in relation to movements of outside pay, which had long been operated in the Post Office, was recommended by the Tomlin Commission in 1931 and in a much more elaborate form by the Priestley Commission in 1955. Under the latter comparison is made grade by grade with outside comparable work, taking into account not only pay but hours, annual leave, pensions and so on. Two particular points of criticism have been that full account in making the comparisons has not been given to the fact that civil service pensions are kept in line with the rise in prices ("index-linking”), and that in the depression little or no weight has been given to the civil servant's security of employment. Both have been under review.

Have governments then been unable to control the size and pay of the civil service? Actual events show otherwise. All awards of the arbitration tribunals have been subject to what is called "the overriding authority of Parliament", meaning that the government reserved the right to disregard an award. When the Thatcher government, at the end of the abortive strikes of civil servants in 1981, promised arbitration it was "on the understanding that the government reserves the right . . .  to ask the House of Commons to approve setting aside the Tribunal's award on grounds of overriding national policy". On occasion awards have been disregarded, arbitration itself has been suspended, as also the agreed application of the "fair comparison" operatives. Civil service pay was subjected to the "economy" cuts in 1931 and the present government has fixed overall limits on expenditure. From time to time the numbers have been drastically reduced as between 1945 and 1960 with the loss of 80,000 jobs and again under the Thatcher government with a reduction from 571,000 in 1977 to 521,000 in 1982. More cuts are threatened.

If Sir Chiozza Money were alive today and making his comparison between the size and efficiency of the civil service and the position in industry he would certainly want to look into what happened in the fourteen years 1953-1967. For those years the government Statistical Office published figures showing the changes that had taken place in respect of the staff employed in manufacturing industry as a whole. The staff were divided for this purpose into "wage-earners" and “salary-earners" and presumably a large proportion of the latter were doing jobs similar to those of the clerical civil service.

While during those fourteen years there was hardly any increase in the number of civil servants, manufacturing industry showed a fall in the number of wage earners from 6,160,000 to 5,780,000 but the number of salary earners in manufacture went up from 837,000 to 2,040,000, an increase of 1,203,000.

No doubt the employers would say that the increase resulted largely from the masses of paper work thrust on industry through legislation on taxation, factory acts, and the provision of information to government departments; but it is factors like these which have explained the increase in the number of civil servants in those periods when the civil service was growing.

All of the above relates to the civil service as a whole. A different interpretation of civil servants "running the country" concerns only the permanent officials at the top of each department who are in direct contact with the political heads, the Ministers. Professor Brian Chapman has defined their role as being "To advise, warn, and assist those responsible for State policy and when desired, to provide the organisation for its implementation. The responsibility for policy decisions lies with the political members of the executive, and customarily civil servants are protected from public blame or censure for their advice". In the modern British civil service it has been accepted that, whatever their own political views may be, those permanent officials will give their advice objectively, irrespective of the politics and policy of the government. (In America the "spoils" system has operated, under which the incoming administration appoints its own political supporters in place of the old lot.)

In practice governments have not always been satisfied to rely on the permanent officials either to carry out their internal administrative responsibilities or their work of advising Ministers, as when Thatcher appointed Derek Rayner from Marks and Spencer to secure economies of staffing and Professor Walters as adviser on economic matters.

Ministers in charge of departments are there to see that the permanent officials carry out cabinet policy. They work under considerable disadvantage. They are not, and are not intended to be, expert in the work of the Department, and may be shifted, at the will of the Prime Minister, from one Department to another. That they immediately make speeches about the work of their new department is possible only because the permanent officials provide them with informed briefs.

Opinions on how the system works vary greatly. Some politicians have said that they have had the fullest co-operation. Others (the late Richard Crossman is one) have complained of greater or less degrees of obstruction. The Times, (20 December 1982) pin-pointed the problem in relation to the Defence Department when John Nott resigned and a successor had to be chosen: “There is undoubtedly a mammoth administrative challenge if the Secretary of State is to run the three services, rather than the three services running the Secretary of State". In the Defence Department and all other departments the government has its remedies. It can change the Minister, choose the men it wants to be the top permanent officials and of course it controls the finance.

So what remains of the charge that government policies are determined by the permanent officials in the Civil Service? The case with which different governments adopt different policies, and the same government goes in for U-turns, shows it to be baseless. The same, or the same kind of. permanent officials were there when steel was nationalised by the Labour Government. de-nationalised by the Tories and re-nationalised by the next Labour government. The same applies to the “privatisation" policies introduced by the Thatcher government. The permanent officials went along with Labour and Tory Keynesian policies for thirty years after 1945 and then fell in with monetarist policies when the Thatcher government came to power.

If there are Labour Party members who complain that the old Keynesian rubbish did not solve the unemployment problem, and Tory Party members who complain that the Thatcher government's old monetarist rubbish has likewise failed, they really cannot blame the Civil Service permanent officials. They brought it all on themselves, as the determination of both parties to perpetuate capitalism.

Edgar Hardcastle 

Bleak age — 1983 (1983)

From the April 1983 issue of the Socialist Standard

Answering questions recently in Parliament about Conservative intentions towards the Welfare State, the Prime Minister spoke of government determination to give individuals and their families more choice and freedom to exercise responsibility. According to the proposals drawn up by senior Cabinet Ministers, this means encouraging families to reassume responsibilities taken on by the state. The idea that the Welfare State takes care of all our needs is in stark contrast to the suffering of the growing numbers of people forced into dependence on social security, for at least part of their income. If a figure of 140 per cent of the supplementary benefit level is taken then around a quarter of the population is living in poverty or close to it. For those in doubt there is the evidence of the DHSS final report on deprivation.

In 1972 Sir Keith Joseph, then Secretary of State for Social Services, made a speech in which he expressed concern that, despite the growth of “affluence” since 1945 there was still widespread prevalence of personal and social problems. He suggested that a lack of appropriate parenting skills might be partially responsible. As a consequence of that speech the Social Science Research Council and the Department of Health and Social Security set up a Joint Working Party to carry out a programme of research into transmitted deprivation. The final report by Muriel Brown and Nicola Madge was published last July. Despite the Welfare State is the result of nearly ten years of enquiry involving 37 studies and including surveys of existing statistics and literature. (There are 17 pages of references.)

The original subject was problem families but the scope was widened to cover many aspects of deprivation and ways it might be transmitted across generations. Various “separate" states of deprivation affecting many families were studied including low income, bad housing, unemployment, poor health and family problems. People experiencing an overlap between these states are suffering multiple deprivation! One estimate gives over one million families in this condition. Not surprisingly “those individuals or families who are deprived in income or occupation are most likely to have other deprivations”. Inadequate living accommodation contributes to ill health, which in turn adds to the difficulties of coping with family relationships. People on low incomes have no alternative to seeking help from state social agencies. Studies failed to reveal a common identity for "problem” families.

The measurement of social deprivation is both inexact and controversial but “quite definitely substantial in amount”. The Report gives a conservative estimate of roughly ten million people suffering poverty, four million of those in families with children. About one-quarter of the workforce hold unskilled or semi-skilled jobs “with attendant deprivations of insecurity and poor work conditions”. 1.8 million households are living in physically unsatisfactory housing conditions in terms of overcrowding, shortage of amenities or general unfitness, and "a small minority” (about 50,000) are officially regarded as homeless in any one year.

For the families concerned poverty means an actual shortage of necessary goods, including food. Not starvation but limited diets, going hungry and missing meals. “Many surveys” indicate severe shortages of furniture, especially beds. A smaller proportion of those on low incomes own or have use of fridges and washing machines. Among poor people a drop in income level is a major cause of debt. Failure to pay fuel bills and keep up with hire purchase payments can mean the disconnection of electricity supply and the loss of goods. Rent arrears are a factor in homelessness. There is chronic anxiety and despair with the added fear, especially for single parents, that the consequence of debt or acute financial difficulties may mean children taken into care. Approximately seven out of ten families whose children were fostered, adopted or placed in residential homes "had been judged to have a precarious or very precarious financial situation at the time of reception into care”.

In summarising the studies made by the Joint Working Party Brown and Madge deal sympathetically with the deprivation and disadvantages suffered by several million people. They are unable to fully explain it. finding that there is no single form of deprivation and no single cure. They believe that “there will always be some worse off than others”.

Everyone on a low income is not considered to be suffering special hardship. All those in low-skill occupations, unemployed, in the “worst of housing”, with large families, single parents, do not have problems which make them turn to the social services for help. (Not being “problem families” they are really outside the areas considered by researchers.) This does not mean that they do not have problems or that the difficulties of “problem families" are not the result of poverty.

All forms of deprivation occur most frequently within the lowest “socio-economic groups” but similar problems are experienced by families not in low-skilled occupations. This does not invalidate the relationship between income and life-style opportunities and expectations. But looking at problems in relation to individual families and classifying people into separate socio-economic groups according to occupation and income level, ignores the common economic identity of these groups. People who need to work, no matter how their skills and payments differ, all belong to the same class.

The working class does all of the work of society, produces the social wealth, but does not own the means to produce that wealth. On the other hand the capitalist class which owns the means of production, and therefore what is produced, does not need to work — or to claim social security. The motive for production is sale and profit and for the working class access to what is produced is limited by the amount of their wages — or social security benefits. This fact restricts choice for the majority in all areas of life. It hardly needed a ten-year programme of enquiry to discover that people on the lowest incomes are likely to have most problems coping with life, and the greatest difficulty in improving the position for their children. Whether or not particular deprivations are transmitted across generations of individual families, poverty-based problems are certainly experienced by successive generations of working class families.

All the aspects of deprivation and disadvantage investigated by the DHSS Joint Working Party are related to the role of the working class, in a social system which lacks the motive to provide for human wealth, dignity and contentment. Capitalism needs a varied workforce, people to do all kinds of work, including menial unskilled work which requires little training. It is not necessary for everyone to be qualified to do the highest paid jobs. And while there is “a great shortage of trade" some 3½ million people are unemployed.

Members of the working class unable to work, whether through unemployment, sickness or old age, are dependent on the state social security system. The hardship which they may face is an aspect of the relative poverty of the whole class. Workers looking at the deductions on their own payslips, for income tax and national insurance contributions, are far from sympathetic to any increase in their contributions as a means to improve social security benefits for others. Myths about the generosity of state welfare provision, and its abuse, are widely accepted, together with the idea that the poor have only themselves to blame — or they are not poor at all. When David Donnison was Chairman of the Supplementary Benefits Commission, complaints about supporting layabouts and scroungers, which arrived by the hundred each month, were "rarely on headed notepaper from leafy suburbs" but were mostly from “ordinary voters and taxpayers" (The Politics of Poverty).

If the DHSS report is not enough the mass arrest of claimants, during the infamous Operation Major at Oxford, further revealed the opportunities for "getting rich" on social security: 175 people were accused of drawing £67.20 board and lodging allowances, by giving bed and breakfast addresses at which they were not staying. In March a judge dismissed the case against one man who had changed to cheap accommodation which did not include breakfast. According to the DHSS his money should have been reduced to £52.75! Who would turn to the DHSS, in the hope of getting meagre and qualified help, if they had another option?

Government exploration of possible changes in the welfare state is not concerned with remedying the failure to end poverty, but with finding cheaper ways of running welfare services. About £2 billion has been cut from benefits affecting pensioners. families, the sick, disabled and unemployed, but social security now accounts for 29 per cent of all government expenditure. During a debate in the House of Lords last November Lord Trefgarne (Under Secretary of State for Health and Social Security) said that the government was committed to protecting the needs of those who relied on social security benefits, but that the success of the economic strategy meant limiting the growth of social security as far as possible. (The Times, 25 November 1982.)

Piecemeal reform, within the existing social services, is seen by the authors of Despite the Welfare State to be the only realistic solution to deprivation. Even without a recession reforms cannot end working class poverty. But there is an alternative.

Pat Deutz

Letter From Europe: Allah under the bed (1983)

The Letter From Europe column from the April 1983 issue of the Socialist Standard

In January a number of strikes broke out in the French motor industry resulting in a shortfall, for Renault, of some 42,000 vehicles. This worried the government, both because of the loss of production and as it was clear that the dispute would be settled only by a wage increase above the 8 per cent norm they had laid down for 1983.

In other circumstances the government would have blamed “communists” (as Harold Wilson did when confronted with the seamen’s strike in 1966) but this propaganda ploy was not open to the French government since it included four ministers from the Communist Party. But another scapegoat was to hand. It so happens that the majority of shopfloor workers in Renault’s two factories in the Paris area are immigrants, mainly Moroccans and Algerians from North Africa. At Flins, the centre of the strike, 53 per cent of the 17,000 shopfloor workers are immigrants while at Billancourt the figure is 55 per cent of 12,000.

The campaign was opened by the Minister of the Interior, Gaston Deferre, who declared in a television debate on 26 January that there was a “special phenomenon" in the conflicts in the car industry: “Fundamentalists, Shiites are involved". The next day the Prime Minister himself, Pierre Mauroy, joined in. claiming that immigrant workers were “being stirred up by religious and political groups which decide their policies by criteria which have little to do with French social realities”.

After the strike at Renault was over (resulting in provision for an 11 per cent wage increase, without productivity strings, for three-quarters of the workforce in 1983) and after a conflict has broken out at a Citroen factory near Paris, the Minister of Labour, Jean Auroux, returned to the charge, alleging that the strikes were not purely industrial and that workers had sworn on the Koran to be loyal to their union (in the event the “communist”-led CGT!). He went even further:

Some people have an interest in the political or social destabilisation of our country. . . Certain forces in France and in the world arc seeking to make us fail but we are vigilant.

A newspaper comment, probably inspired by the Ministry of Labour, added: 

The underlying fear of the Minister is that fundamentalist agitators arc using Islam to manipulate immigrant workers, destabilise the French car industry and disturb social peace in the country (Républicain Lorrain, 11 February 1983).

Who are these Muslim fundamentalists who want to stir up social trouble in France for the benefit of some foreign power? The mind boggles at the possibilities. Deferre spoke of “Shiites”, the Muslim sect whose spiritual leader is the Ayatollah Khomeini. The Iranian government might well have reason to want to destabilise France since France has committed itself wholeheartedly in favour of Iraq (supplying arms, buying petrol) in the Gulf War. However, the trouble is that the Shiite sect is unknown in North Africa and there is probably not a single Shiite employed in any car factory in the whole of France!

Then there is Colonel Gaddafi whose expansionist ambitions have brought him into conflict with French imperialist interests in Africa, just as stoutly defended by Mitterand as previously by Giscard. Another possibility might be Ben Bella, one of the leaders of the FLN during the Algerian war and first President of Algeria from 1962 until he was overthrown and imprisoned in an Army coup in 1965. He emerged from prison in 1980 a Muslim fundamentalist. As if to point the finger at him. in the middle of the strikes the police raided the house he uses when he visits France, found some armed guards, arrested one of them for a bank robbery and expelled the others to Italy.

But there is not the slightest shred of evidence to back up the government’s smears. Despite Mauroy’s claim, the strikes clearly had their origin in “French social realities”: in the atrocious working conditions, lack of promotion prospects, and low wages (aggravated by the recent wage freeze) which workers in car factories have to suffer under capitalism.

Perhaps some workers did swear loyalty to the CGT on the Koran (for doing the equivalent of which six farm labourers at Tolpuddle were sentenced to seven years transportation to Australia in . . . 1834). But this would merely be a way of strengthening solidarity among workers with little experience of trade unionism and strikes. As to the suggestion of an international Muslim plot against France involving Khomeini, Gaddafi and Ben Bella, it would be hard to invent a sillier story. The government dearly made this all up as a way of setting public opinion against the strikes.

Inventing stories and spreading lies has always formed part of the arsenal governments of capitalism have used to try to discredit and defeat strikes. In employing such techniques the PS/PC government in France has shown once again that it is running capitalism in the only way it can be — against the interests of the wage and salary-earning majority.

Adam Buick (Luxemburg)

Socialism before reformism (1983)

From the April 1983 issue of the Socialist Standard

Many objections to the case for socialism are rooted in the argument that, while a social system based on common ownership of the means of production and distribution with free access to wealth is highly desirable, something must be done now about the problems which afflict the human race.

This argument, which on the face of it has much merit, for the problems of capitalism are urgent and horrific, makes a number of concessions to the socialist case. It agrees that capitalism cannot satisfy the needs of its people, that it must continually throw up wars, poverty, famine and the like. It concedes that the customary political parties do little to alleviate the situation; it does not raise any objections that socialism is somehow at odds with "human nature", that people are naturally so divisive, aggressive and greedy that a co-operative society could not survive. It does not waste time in questioning whether a moneyless, classless society is practicable. It accepts that what are now everyday blights on our lives simply will not exist when we have socialism.

But such concessions, though important, are not conclusive to the reformists. Millions dies each year, needlessly, in famines; the world's power blocs possess an obscenely high level of destructiveness, enough to kill each one of us again and again; in this country alone there are millions living in slums, or homeless, or in the direst poverty. Such problems—and there are many others—say the reformists, must take priority over any efforts to revolutionise society. We must act now to get rid of the bomb, to organise food supplies to the famine victims, allow special state benefits to the needy. When we have cleared up these matters it will be time to turn our minds to socialism.

The reformist argument then spells out, often in impressive detail, the current social troubles. It tells us, with the help of graphs, tables, statistics, about the scope of these and their effects on people's lives. Thus CND has a wealth of knowledge about the numbers of nuclear weapons in existence, their destructive power, the area which one bomb could wipe out, how many it would kill at once, how many it would leave suffering a slower, more agonising death, how it would cripple millions of survivors with radiation diseases. As an indictment, an encouragement to question why a modern society should devote such effort to destroying itself, it is impressive and valuable.

From that type of indictment the reformists proceed to an assumption that the problem can be eliminated by applying some piecemeal remedy to it. CND is sure that nuclear weapons can be abolished simply by persuading the government in this country to do just that, on its own. Oxfam workers are convinced that food shortages can be dealt with by rushing supplies of the stuff to the areas which are suffering from famine. It needs, runs the reformist argument, no more fundamental action than that.

In fact, in terms of logical argument, there is a massive, unbridgeable chasm between the indictment and the policies which the reformists put forward as the solution. There is no evidence to support the assumption — for it is no more than that — that capitalism's sickness can be cured by taking each symptom separately without any reference to the cause and to the fact that all the symptoms spring from a common basis.

In the case of CND, despite over a quarter of a century of marches, demonstrations, sit-downs, terms of imprisonment, the weapons are still there, growing worse and more threatening as they proliferate across the world. We live less securely now than we did when CND first came into being. This applies also to the other issues we have here discussed; the most sanguine of reformists can offer no hope that they are diminishing in intensity. Indeed, such is their grip on our lives that the reformist campaigns cannot relax in the assurance of success; all the time they must keep up the pressure and start new protests, each making the same claims as their discredited and exhausted predecessors.

The unbridgeable chasm bars the way because the reformists are following the wrong route. An effective indictment of social problems should lead to an analysis of them and then to their cause. Nuclear weapons spring from the fact of modern war, which is directly attributable to the basic nature of capitalism. A similar approach to the other problems will point to the conclusion that they also have the same root cause. And from there it is a small, irresistible step to the final argument, that only by abolishing capitalism will we rid the world of its problems.

But abolishing capitalism is not the end of it; as human society must continue, what is to replace the system of class ownership of the means of life, of war, famine, poverty, avoidable disease, insecurity? The only other basis possible is the opposite of private ownership — it is communal ownership of the means of production and distribution and their democratic control by the entire human race. That is socialism.

An examination of capitalism, then, leads by a series of logical steps to the conclusion that socialism is the next, necessary, step in social evolution. Capitalism is critically sick and there is need for urgent treatment. The human race need not continue to suffer the nuclear threat, or endure famine and poverty and we must act at once on that knowledge. Only socialism will answer human needs; only socialism will enable us to build a world which allows the people to live co-operatively, in abundance and freedom and to contribute to the limits of their abilities.

The priority is socialism.

Bermondsey and the Press (1983)

From the April 1983 issue of the Socialist Standard

Fleet Street's descent further into the gutters was clearly demonstrated by the campaign of vicious character assassination pursued in the run-up to the recent Bermondsey by-election. The power of the media to persecute those who do not fit in with its smug capitalist values is proof that the much-celebrated freedom of the British press is all too often a freedom for journalists to imitate the tactics of their colleagues in Moscow and Johannesburg in defaming with impunity the characters of their opponents.

Much as the press attack must be exposed and deprecated the Labour candidate in Bermondsey, for all his sincerity, was defeated because of his own political opportunism. It was only because he was a candidate for a party which traditionally wins votes from ideologically conservative, nationalistic workers that the press attack was successful. The press labelled Labour's candidate as a homosexual; the old Labourite bigot, John O'Grady, went around the streets of Bermondsey singing a song accusing his Labour opponent of homosexuality; the Liberals, whose official policy is supposed to favour "gay rights", also used the homosexual smear. But the Labour candidate, seeking votes from workers who detest sexual non-conformity, refused to stand up and affirm his homosexuality.

Similarly, the Labour candidate was attacked for being a "draft dodger" because he refused to fight in Vietnam. All socialists would seek publicity for their opposition to all war, and would make it clear that those who fight cannot call themselves socialists. But Labour, when in office, supported the war in Vietnam, just as it has given its support to many other bloody capitalist battles. The Labour candidate had to appeal to nationalistic Labour voters who are all in favour of flags and armies and wars. When that sickening enemy of the working class, Frank Chapple, President of the TUC, was asked on Any Questions why Labour lost Bermondsey he replied, "Well, I ask you, who's going to vote for a gay draft dodger?" In short, the man at the top of the TUC and close to the top of the Labour Party, admits openly that Labour voters are too bigoted to vote for a man who is homosexual and too chauvinistic to vote for a man who refuses to kill Vietnamese workers.

The hacks of Fleet Street made much of the fact that the Labour candidate was not even English -  the ultimate crime. Ignorant people with nothing more sensible to say, were reported as running after the Labour candidate and telling him to "go back to Australia". It is doubtful whether the same workers will be urging the Duke of Edinburgh to return to Greece. The Labour candidate for Bermondsey will not be the first aspirant political leader to fall victim to his own political opportunism.

Labour's opponents in Bermondsey accused them of being communists and Marxists; and the Labour Party does not like that. The fact is that Labour has no more to do with Marxism or true communism than the Mafia has with fighting crime. Communism and socialism are, when properly defined, synonymous terms: they have identical meanings. The Labour candidate for Bermondsey was not unacquainted with the real party of Socialism (or communism), the Socialist Party of Great Britain. But, like his fifteen electoral opponents, he dismissed the aim of abolishing the wages system and creating a classless, propertyless, moneyless society as one not worth working for. Instead, he spent his time on the traditional path of capitalist reform—trying to gain a few more crumbs for the wage slaves of Bermondsey from the cake that they had baked. When the lie-makers of the press called Labour's candidate a revolutionary he protested with all the horror of a radical vicar whose belief in god has been questioned. Any real socialist candidate in Bermondsey would have proclaimed to all the electors that he or she is a revolutionary—not in the anachronistic sense of building barricades in the street, but in the social sense of aiming to end capitalism and replace it with worldwide production for use.

Where there are leaders it will always be possible for the media to direct their viciousness against personalities rather than principles. That is why the Socialist Party enters elections as a political party, advocating a clearly stated object; our candidates are simply put up to satisfy the electoral laws of Britain—a vote for the Socialist Party is a vote for socialism, not for any particular socialist. If the media wants to talk to us they will have to discuss serious ideas. The Socialist Party, unlike all other political parties in Britain, does not make promises or ask for votes. Indeed, we alone urge workers not to vote for our candidate unless they are convinced socialists. Those who we have convinced will not be persuaded to desert the socialist cause by the puerile tactics of the capitalist-owned press. The greatest strength of the working class is the strength of ideas; once we are consciously organised the propagandists of capital can pervert the truth until their faces are as blue as their rosettes—the workers will treat them with the contempt they deserve. That is why socialists are so emphatic about the need for political education. A single worker who is conscious of the system which exploits him and understands the realisable alternative is better than fifty floating voters with floating minds.

In Bermondsey, an apparently solid Labour majority of 12,000 was reduced to a total vote of just over 7,000: the voter who lacks class consciousness can be manipulated by whichever trickster is the most cunning.

Steve Coleman

Labour's plan for capitalism (1983)

From the April 1983 issue of the Socialist Standard

Millions of workers will vote Labour in the next election; for many of them it is a habit. But like watching the Boat Race or going to church, the tradition of blind allegiance to the Labour Party is on the decline. Some Labourites are turning to that gang of political tricksters, the SDP, with their instant policies to suit all prejudices and their moderate vision of a capitalist system in which the exploiting and exploited live in perfect consensual harmony. The politicians who dominate the Labour Party are worried by the mass exodus of members, supporters and voters from their ranks. Having in the past gained working class allegiance by the most sickening opportunism, the Labour Party is now viewed as no more capable than any others of eradicating the inherent ills of capitalism.

There are still those who believe that Labour is, or could be, a socialist party. Indeed, Labour's enthusiastic activists are workers, often young and energetic, who are fired by the illusion that a Labour government will one day do something about establishing socialism. In many respects, the hatred of the iniquities of the present social order and the sincere pursuit of "something different" is to be admired; it is also proof of the socialist contention that capitalism is doing the job of creating class conscious workers for us. But the militancy of Labour's Leftist activists is misdirected; their conception of socialism is vague at best and, when clarified, amounts to little more than a programme of widespread nationalisation — state capitalism — which can provide no solution to the problems of the working class. It is for this reason that the Militant Tendency, despite all the rebellious rhetoric and the zeal for nationalisation, is no real threat to capitalism as a system. Support for the Labour Party in the misguided belief that this is support for socialism leads inevitably to disillusion; the ranks of political apathetics are filled by more than a few workers who wasted their energies "fighting for socialism" in the party of Attlee, Wilson, Callaghan and Foot.

According to deluded Labourites, the transformation of the Labour Party into a genuine socialist party is always just about to happen. In 1963, when Left-wing Harold Wilson was elected as Gaitskell's successor, the Communist Party's Central Committee was so overjoyed that it passed a resolution stating its confidence in the new leader's socialist credentials. In 1982 we debated in Croydon against a representative of the Militant Tendency who stated emphatically that his faction was destined to grow within the Labour Party; at the Labour conference that year a resolution to expel Militant "supporters" was carried. Just as Christian workers tolerate their drab existences and repressed moral codes only by believing in a heavenly paradise, so the Labour Left can only put up with the tedium of futile Labour reformism as long as they have an illusory hope that one day, maybe soon, a Labour government will do what none has done before: make society run in the interest of the wealth producers — ban the bomb, end inequality and abolish poverty. The fundamental question which any reasonable political activist must ask, but which the Labour Left refuse to pose, is: How would a Labour government set about changing society?

we have seen what has happened in the past. Labour governments have carried out every anti-working-class action which the Tories have gone in for: they have supported wars; initiated the British atom bomb; sent in troops to smash strikes; established the vicious Special Patrol Group and set them on the picket lines at Grunwick; passed racist immigration laws; imposed "monetarist" expenditure cuts leading to the closure of hospitals and other vitally needed services. They have left power and, above all, the ownership and control of the means of wealth production and distribution in the hands of a parasitic capitalist minority. The record of Labour governments is one of total subservience to the needs of capital — of the rich and powerful and privileged — against the material interests of the class which produces, but does not possess.

Understandably, modern Labour supporters like to forget; a qualification for allegiance to the Labour Party is a short memory. But under Michael Foot, we are told, all will be different. Foot — who insisted in the House of Commons Emergency debate on the Falklands that the government should send its armed killers to the South Atlantic — has a reputation as a man of peace, a true radical. Indeed, if his past writings are anything to go by, Foot is a more literate, articulate and "radically" inclined politician than his four predecessors. But what does such radicalism amount to? The Labour Left sees in it reason to anticipate "socialist" policies from a Foot-led government. Apart from the fact that socialism cannot be enacted by a government, and that Labour's Clause Four definition of socialism is a recipe for state capitalism, there is evidence that Michael Foot has no intention of doing anything — if he ever obtains power — which has not been tried and failed before.

Foot's recipe book for changing society is the dated, tried, tested and failed theories of John Maynard Keynes. It was Keynes's intention to demonstrate the invalidity of Marx's analysis of capitalism as a system which can never run in the interests of the working class. He set out to show that capitalism can be made to work without economic crises, high unemployment and wars and in the 1930s was regarded by many as the new messiah. Since then Conservative, Liberal and Labour parties, in and out of government, have adopted versions of Keynesianism as the solution to capitalism's problems. By the mid-1970s the Keynesian "answer" was wearing rather thin. The last Labour government began to abandon Keynesian theory for recent American monetarist theories and Thatcher's Tory government has adopted monetarism as fanatically as earlier politicians had taken the Keynesian cure. Neither theory is in any way able to change capitalism from the anti-working class system it necessarily is.

The prospect of Foot and Thatcher fighting over the claim to be the true followers of Keynes is a comic reflection of the similarity of the two apparently opposed parties of British capitalism. It was in the Sunday Times of 27 February 1983 that Margaret Thatcher stated: "I would say that I really am the true Keynesian, when I'm taken as a whole". This profoundly upset Michael Foot, who in the same newspaper on 6 March 1983 wrote that "To claim that what she's doing is in any way blessed by Keynes, or Keynesianism, is an insult to the memory of Keynes". Having denied the Tories the blessing of Keynes (a blessing of little value to the Keynesian Wilson, Heath and Callaghan governments), Foot goes on to point out that a future Labour government will repeat the failed Keynesian policies of the past:

First of all we'll get into operation a new budget, which will start on the road to expansion and stop all this nonsense that is going on. A full-blown Keynesian budget, with expansionary protections built in.

Foot's Keynesian offer is a request to the working class to accept a repeat performance of an unworkable, discredited economic theory. In the run-up to the general election the Labour Party will drag out all sorts of previously failed policies and put them before the electorate as brand new solutions. Michael Meacher has already given his Leftist support to the idea of a pre-election deal between the Labour Party and the TUC, promising voluntary wage restraint under a Labour government. Tony Benn has called for all factions to rally behind Foot and Healey—because defeating the Tories is more important than anything else. A watered-down policy on defence has been published which is designed to deceive the unilateralists, while satisfying Labour's multilateralist Foreign Affairs spokesman and the majority of Labour voters, who nationalistically support NATO and the need for nuclear weapons. The old game of opportunism for the sake of electoral success is once again being played within Labour's ranks. For how much longer will members of the Labour Party be prepared to mouth the rhetoric of radical change while accepting the expediency of policies which leave the capitalist system firmly intact?

The Labour party must be defeated. The energy and commitment of Labour activists must not be wasted on the struggle to elect yet another poor person's Tory government. The alternative is not apathy — or the SDP, which amounts to the same thing. The Socialist Party is serious about changing society. Unlike the Labour Party, we understand what capitalism is and how it works. Unlike the Militant Tendency, we have a conception of socialism which is fundamentally different from any form of capitalism. To elect another reforming Labour government promising to make a better society for the workers while jumping to every demand of the profit system would be a tragedy for those who desire a peaceful, united, free society. The only alternative to the capitalist system is a world where  everything is owned in common and controlled democratically — where there is free access to all wealth — where the sole aim of production is to satisfy human needs. There can be no socialism without conscious socialists; it is time to give up hope in the sterile fantasies of Michael Foot and his fellow Keynesian reformists — it is time to take socialism seriously.

Steve Coleman