Supply and Demand
According to the economists who explain and justify economic laws, supply and demand have to be accepted as a necessary mechanism of the free market. If supply increases without an increase of demand prices fall. If demand increases without an increase of supply, prices rise. And this, they say, is all to the good because falling prices of a commodity cause production in that industry to be curtailed and capital and labour move into new industries where they are needed. This argument was used by the Government recently to justify the rocketing prices of land for building: it would, they said, cause owners of land to come into the market and would also induce more economical use of the limited land available.
But when it comes to wages they find it necessary, in their own interests as employers and property owners, to take a different line. They no longer preach the beneficial effect of a “true market price” when it is wages, the price of labour-power, they are considering.
Politically, for vote-catching purposes, the parties which seek to win elections have to pay lip-service to “full employment” and high wages. But full employment and high wages mean reduced profits, and capitalism, whether under a Tory or a Labour government, can only function when commodities can be sold at a profit. So we have the government at the present time trying to threaten or persuade the workers not to take advantage of the labour-shortage by pressing for wage increases.
One form this takes is that the expanding firms, which need to recruit more workers, offer extra inducements to entice workers away from rival firms. The British Employers’ Confederation recently made an analysis of the total wages of industrial and commercial wage-earners. It was summarised in the Times and Financial Times on July 29. It showed that out of a total annual wage bill of £8,600 millions, only £6,500 million represents the agreed trade union wage for a normal week’s work (now generally 42 hours for most workers). A further £1,500 million represents excess payments above agreed rates, paid by employers to attract scarce labour, and another £600 million represents payment for overtime.
Naturally the employers would prefer to get the labour they need without having to compete with each other for it, and the Government shares their view.
But it was just the same under the Labour government. On August 6, 1947 (Hansard, fol. 1514) the Prime Minister, now Lord Attlee, made the following appeal:
I appeal to workers in all industries and employments not to press at this time for increases of wages or changes in conditions which would have a similar effect, especially when these increases are put forward on the basis of maintaining differentials between various categories of workers on the basis of former practice.Thus does capitalism impose its own necessities on those who administer it. In opposition the Labour Party is in favour of high wages; in office high wages become a “vicious spiral.”
Equally. I would appeal to employers not to seek to tempt workers away from essential work by offering higher inducements to work in less essential industries thus creating a vicious spiral.
A Telephone
When the Postmaster-General recently announced some higher telephone and postal charges figures were given out by the Post Office to the Press about the numbers of houses with and without a telephone. According to the Daily Mail (25/7/61) there are over 13,000,000 homes without a telephone. To install one telephone to each home would involve a capital expenditure of £1,500 million and a post office official is quoted as saying that the idea of a phone in every home is “dreadful nonsense.” The number of people with a residential telephone is less than 3½ million, of whom one million have a shared telephone.
The Price of Land
The high prices of land in Britain resulting from the pressure of demand on limited available areas have their counterpart in Germany and Japan. A letter in the Times (26/7/61) contains the following about Germany:
At Hofheim the price of farm land has gone up from DM.3 to DM.30 per square metre (equal to, say, £1.075 to £10,750 per acre). At Bad Soden the ratio is the same, from DM.5 to DM.50 (£1,790 to £17,900) and even to DM.70 (£25,070). Even near towns like Giessen, where there is not yet much industry, the price is around DM15 (£5.370).It is the same in Japan, as reported from Tokio in the Guardian (19/5/61):
Near Cologne, beyond the green belt, the price in 1950 was DM8 (£2,865) and is now some five times more, while in Kiel it is as high as DM.90 (£32,230) for residential sites.
A modest middle-class part-Western house in Tokio is rented at from £60 to £90 a month to which must be added about £30 to £40 monthly for utilities and service. Land prices in downtown Tokio are higher than in London’s West End or New York’s Madison Avenue. In good class residential areas of the city, the pressure of population has increased land values by 4,000 per cent in 10 years—and land continues to increase in value in most parts of Japan on average by 20 per cent annually.
Enforcing the Law
There are many well-intentioned reformers who work on the assumption that when you pass a law declaring something to be illegal the thing ceases. They forget that economic pressures go on operating and if strong enough will find ways of evading the law. In times of depression minimum wage laws cease to have any particular effect because workers would rather give up their legal rights to the declared minimum wage than lose their jobs.
The Times (17/7/61) in a survey of the present position of housing, argues that the Tory legislation of 1957 has failed to achieve the declared objects of the legislators. In particular the Times writer estimates that there were at least half a million controlled houses in 1959 that were being let at rents higher than the levels permitted by the Acts. The tenants would rather pay those rents than face the worse alternatives.
Goodbye Siesta
It has been observed in many countries that among the “advantages” of industrialisation the workers have been forced to forego many of the numerous religious holidays that belonged to earlier and less strenuous times. Now in Spain the government is making war on the siesta and on keeping late hours. A new law requires shops, cinemas and theatres to close earlier, and it is expected that the midday siesta will be shortened.
The Guardian correspondent in Madrid (.9/7/61) explains this move:
The motive for these reforms is mainly economic. It is hoped thereby to induce more Spaniards in the cities to turn in earlier so that they will be in better shape the following morning to put in a good day’s work, which would be in the national interest. The new hours also are intended to bring Spain closer, as it were, to the rest of Europe.
Edgar Hardcastle
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