Why they want more unemployed! (1966)

From the November 1966 issue of the Socialist Standard

No one would deny that the theories of the late Lord Keynes had a big influence on the views of economists, the programmes of political parties and the policies of governments and their financial institutions. For 30 years they were nearly all Keynesians, or so intiminated by the fashion that they would not or could not challenge it—all except those like the Socialist Party of Gt. Britain who remained convinced that the very different approach of Karl Marx was the sound one.

More recently Keynes has been more and more criticised by those who first followed him and the ironical thing is that just as unemployment gave Keynes his opportunity so unemployment, though in an inverted sense, is proving his undoing.

Keynes was studying and writing in a period of heavy and prolonged depression. He, like many other observers of capitalism, thought it absurd that people should be in want while there were idle men and idle machines waiting to be used. He also saw how politically dangerous it was. Through inability to abolish or seriously reduce unemployment governments were thrown out, political parties undermined and reputations ruined and, as he saw it, this situation helped to encourage the rise of dictatorship exploiting discontent and bent on war.

He argued that it was possible for governments to have positive policies for increasing production and maintaining more or less full employment, and under his influence it has become normal for the political parties, Liberal, Labour, Tory and Communist, to proclaim “full employment” as a priority aim.

Keynes was well aware of the way capitalism had, for a century or more, gone through successive phases of boom, crisis, depression and then boom again. What in effect he claimed was that if a government had full information of what was going on in industry and marketing it could always find the appropriate action to take to avoid all but minor fluctuations: in effect it was a claim that boom conditions could be made permanent.

To many admirers of Keynes the course of events, particularly after the Second World War, seemed to be positive proof that Keynes was right in theory and that his theories were politically practicable. They pointed to the generally low level of unemployment in Britain and to the way particular crises were handled, apparently with success.

The “proof’ however, is a hollow one. In the first place low unemployment has not been continuous even in Britain; it reached over 900,000 early in 1963 and no one could say that that was full employment: In many countries very heavy unemployment has gone on for prolonged periods: indeed according to the latest annual report of the International Monetary Fund (Daily Mail, 6 September)

virtually all industrial countries have been enjoying high levels of employment for the first time since the war.

And the I.M.F. is, as the Mail points out, gloomy about the future of world trade.

It is also unproved that the relatively high post-war levels of employment have been due to the Keynesian policies of governments. As Enoch Powell has pointed out (with reference to governments of his own Tory Party) the evidence is that events took their normal course irrespective of government policy: the setbacks endured for a while and disappeared just as they would have done anyway.

And a prominent American Keynesian, Professor Hansen, argues in his book, A Guide to Keynes: “full employment was, however, primarily the result of the war and post-war developments, not of conscious policy.” He was referring to the early post-war years, but some of the developments he had in mind have continued and have been added to by the vast industrialisation schemes in the new countries of Africa and Asia.

But in many countries, especially in Britain, doubts about Keynes have sprung not from heavy unemployment but from the problems of full employment and in a way that is proving disastrous for the Labour government.

The Labour Party has always claimed to have a special interest in avoiding unemployment. They believed that it ought not to exist and need not exist. For the 1959 election, when the late Hugh Gaitskell was party leader, they published a glossy pamphlet The Future Labour Offers You, which contained a scathing criticism of the Tories.

   The great ideals of jobs for all first became a peace-time reality under the 1945 Labour Government Under the Tories fear of the sack has returned. Tory ministers have now had to admit publicly that they deliberately caused the sharp increase in unemployment. In the Tory view, unemployment is the remedy for soaring prices.
    Labour totally rejects the repugnant idea that the nation's economic troubles can only be cured by throwing people out of work. The first objective of the Labour Government will be to restore full employment and to preserve full employment. This is the prime purpose of our plan for controlled expansion.

With the newspapers now full of reports of the thousands of men and women being declared redundant or put on short time, as a result of the government’s credit squeeze and other measures, the Selective Employment Tax designed to induce employers to get rid of workers in the service industries and government statements that they expect their policy of “redeployment” to produce not more than 450,000 unemployed it is not necessary to labour the point that Gaitskell’s attack on the Tories has been a boomerang.

But a wider question is involved. The Keynesians (and the Prime Minister) had habitually scoffed at the Marxian view of the way capitalism works, especially Marx’s view that capitalism needs unemployment, “an industrial reserve army.”

In the past, when some Tories and spokesmen for the employers declared that capitalism needed more unemployed, the Labour Party called it a natural exhibition of contempt for the workers. Now, when Sir Gordon Newton, Editor of the Financial Times, writing in the Director (August, 1966) declares, “I doubt myself whether anything which does not produce a level of unemployment of two per cent—will be adequate,” he is but echoing the Labour Prime Minister.

Marx wrote about unemployment in Capital, Volume I (chapter XXV) and argued that unemployment is, “a condition of existence of the capitalist mode of production." It helps of course to keep down wages and to make the workers in employment work harder than they would if not threatened with unemployment. Also, as Marx put it, the capitalist, in order to take advantage of the sudden opening up of new markets, must have “the possibility of throwing great masses of men suddenly on the decisive points without injury to the scale of production in other spheres.”

Observing the agitated “policies” of the Labour Government to “redeploy” labour so that exporters shall be able to get the men they need to take advantage of foreign markets it is obvious that they are trying to grapple with exactly the kind of situation Marx described—and the only way they can find to do it is, in the last resort, nothing more than the traditional, capitalist way. Those who believed they could run capitalism without unemployment end up by trying to create some.

Marx was right after all, and the moral for the workers is not more delving into Keynes (who did not even claim to have the answer to this particular problem) but to concern themselves with getting rid of capitalism.

Edgar Hardcastle