After This Crisis . . . ? (1976)

From the February 1976 issue of the Socialist Standard

The world capitalist economic and political system is in crisis. The signs are so obvious that the mere statement of fact is almost superfluous. The system is beset by not one crisis but several crises. These are separate entities, but inter-related and from the same root cause.

The three major economic problems for all industrialized countries, and the primary producing countries of the so-called Third World, are: inflation, the five-fold increase in oil prices since 1973, and a recession. If the previous cycles of commerce ending in slumps could be referred to as capitalism’s “anarchy of production”, the present situation is chaos. A few press headlines from a single day, 7th September 1975, bear witness to this.

Japanese Bankruptcies at a Peak.

Inflation Rises in U.S.

French Reflation Scorned.

TUC Expecting Autumn Reflation to Cut Jobless.

The “French reflation” was the proposed use of £3,300 million by the French government to try to stimulate the economy, and the dissatisfaction was expressed by the trade union movement and others. M. Georges Seguy of the CGT, the Communist-dominated trade-union organization, said the plan did not alter “the disastrous situation in which our country finds itself”. The French "Socialist” Party said the plan "did not meet needs on employment and prices”.

The TUC’s hope was voiced at the recent conference in Blackpool where a majority had decided in favour of the Labour Government’s £6-a-week wage-restraint policy — a condition of acceptance being the expectation of measures to bring down unemployment. Len Murray, the TUC General Secretary, said that backing the wages policy would “make it easier for the Chancellor to start judicious and selective measures to reflate the economy . . . We shall be looking for action this Autumn to project jobs.” (His word was “project”, not “protect”!)

Trade-union leaders and politicians are, of course, whistling in the dark. The Labour government’s efforts to create jobs are as unrealistic as its other attempts to control capitalism. A sizeable proportion of the unemployed are young people who have been unable to find jobs since they left school last July. In a recent speech in Edinburgh, Edward Heath spoke of a danger that disillusioned youngsters might reject political democracy if the problem were not solved.

Laid Off

Earlier last year, in the writer’s experience, workmates and fellow trade-unionists were not over-concerned at the situation. Something was wrong, there were problems, but things would sort themselves out. The same attitude was found in the audiences at Socialist Party meetings. Now it is different. People up the road are being laid off, “shaken out”, and “surplus to requirements”. Examples in South London are the closure of Decca Radar at Battersea, due to the decline in the sales of colour TV, and the proposed shut-down of the Telephone Manufacturing Company at West Dulwich.

The latter is due chiefly to the cut-back in Post Office orders. The Company’s work is to be centralized at an existing factory in Wiltshire. Two larger companies are also affected by the Post Office cut-back: Plessey’s and the General Electric Company, with 20,000 predicted additions to the numbers of unemployed. In the case of TMC the redundancies include many West Indians and Asians from the Brixton, Herne Hill and Croydon areas. Some long-service employees are jobless: the writer knows one who has been with the Company since he left school in 1938.

The editorials and city columns are full of strident talk about “overmanning”, lack of “mobility of labour”, and “natural wastage”. The writers (employees themselves, of course, and presumably members of the National Union of Journalists) wish other workers to travel obediently at a moment’s notice. This insistence on a “Have tools, will travel” outlook appears only when it suits — or seems to suit — capitalism. Perhaps the ideal situation would be an “Unemployed Disposal Unit” into which workers and their dependants could be fed when not required.

There have been numerous comparisons with the crisis of 1931. There are two economic phenomena from the past which haunt capitalism — the German inflation of 1923 and the “Wall Street Crash” of 1929. At the Durham Miners’ Rally last summer Harold Wilson said we were “facing the worst recession since the 1930s, because the world was in the midst of the most serious decline in trade for over forty years”. We have a slump — because we have a slump!

The President of Australian Council of Trade Unions, Bob Hawke, stated at the CTU Conference in Melbourne that Australia “faced an economic crisis unprecedented since the 1930s”; and “the entire Western world was in a state of economic crisis, and it was naive to blame the Labour government for Australia’s economic difficulties”. (Hawke is also the federal president of the Australian Labour Party.)

Comparison with the nineteen-thirties is interesting in more ways than one. It is not only that the scale of the present recession is the most widespread since that period, but that the proposed solutions are remarkably similar. At the TUC conference, what was most noticeable was the sheer poverty of ideas. The so-called “left”, arguing against the £6-a-week policy, said it would intensify the depression by further reducing workers’ purchasing power: bigger wage increases would increase the workers’ ability to buy goods and services and so make things better.

This is a variant of the simplistic theory that crises occur because the working class cannot buy back what it has produced. Of course it is true that the workers cannot buy the total product of their labour: not only during a depression, however, but at all other times, including periods of expansion and “recovery”. Marx dealt with this in Capital, Volume 2:

  [that the workers] receiving too small a portion of their own product, and the evil would be remedied by giving them a larger share of it, or raising their wages, we should reply that crises are precisely always preceded by a period in which wages rise generally, and the working class actually get a larger share of the annual product intended for consumption. From the point of view of simple commonsense, such a period should rather remove a crisis.

Once a slump is under way, things happen cumulatively. Workers are laid off, their purchasing power decreases, and a chain reaction sets in affecting other industries and other workers. Simultaneously, this helps promote the capitalists’ “loss of confidence” and their cut-back in investment. But the idea that the situation can be remedied by advancing wages is unrealistic. This is unpalatable for Socialists to state, and workers often resent it, but it cannot be ignored.

Searching for Answers

Equally dangerous, but more reactionary, are the continual calls for import controls. This type of economic nationalism in the nineteen-thirties produced restrictions and counter-restrictions, tariffs and further tariffs. The slump and attempted national solutions at the expense of other capitalist states was a contributory factor to dictatorship in countries particularly "hemmed in” by these policies.

There are still demands for further nationalization as the supposed cure for the problems produced by capitalism. This is happening in sections of the motorcar industry. Such is the magnitude of the recession that Coventry, a centre of car production, has been transformed within a couple of years from a high-employment and high-wage area into one with unemployment figures comparable with the depressed areas of Northern Ireland and North-east England. According to the Sunday Telegraph (10th September 1975) car production has fallen to 44 per cent. of its capacity, and studies conducted by McKinsey & Co. (American management consultants) estimate that a further cut of 25 per cent. is necessary ‘“to ensure a profitable future” for the industry.

Part of the objection to the government’s putting money into the Chrysler company was that it would prejudice the recovery of Leyland. The McKinsey report blames “overmanning” and low productivity for the problems of the car industry, and of course this is the cry with regard to British capitalism generally. The proposition is that if only British workers were as profitably employed as workers in other countries — “our competitors” — all would be well. The flaw in this analysis is the recession and high unemployment in those other countries: the Japanese bankruptcies mentioned earlier, the 8 million unemployed in the United States, the numbers in Germany and France.

Under the heading ‘“Shipyards fight undercutting” the Daily Telegraph (2nd October 1975) had a report:

  The desperate hunt for new orders is leading European shipbuilders being undercut by Far East yards that are trying to tempt British and other shipping companies to give them contracts.

It went on:

  The slump in international trade means there is vast over-capacity in shipbuilding, with the bulk of it in Japan and the emerging nations such as South Korea. Japanese yards fear they will be down to only 25 per cent capacity in about two years’ time, and have been pressing for Government help to retain their 50 per cent share of world shipbuilding.

  Now European shipbuilders are starting to urge the Common Market to draw up a shipbuilding policy that will thwart the Japanese ideas.

It must be obvious that neither low productivity nor high productivity in capitalist society is the answer.

Frank Simpkins