Wednesday, February 19, 2020

Finance and Industry: Government and Industry (1965)

The Finance and Industry column from the February 1965 issue of the Socialist Standard

Government and Industry

On December 15 last, representatives of employers and trade unions signed a Declaration of Intent on Incomes with Mr. George Brown, Minister of Economic Affairs. Mr. Brown proudly proclaimed the end of the class war and the co-operation of Labour and Capital for the Nation's good. A few days later, in a letter to The Times, he indignantly denied that the Labour government regarded “ the City, Investors, Property and Industry” as their enemies.

This should not have come as a surprise. Since the 1920’s, when the Labour Party first became the official Opposition, it has always declared that if elected it would govern and governing involves protecting the interests of the City, Investors, Property and Industry, in short, of the capitalist class. In office the Labour Party has done precisely this. Out of office it has acted as a responsible alternative government.

An expressive phrase of Karl Marx describes the government as the executive committee of the ruling class. The British government is, as it were, the board of directors of United Kingdom Ltd. For a “Nation” is a kind of business, a community of capitalists. On occasions the interests of the whole differ from those of the parts. It is the task of the government to see that the interests of the whole are maintained.

In Marx's time this involved little more than the keeping of law and order at home and abroad so that Industry could flourish, could make profits, in peace. Later the scope of government activity expanded: it had to concern itself with economic affairs as such and not merely as a source of revenue. Today various government departments have the task of drawing up detailed balance sheets for presentation to the capitalist class, the shareholders in UK Ltd.

A vast and detailed mass of figures on trade in general, on consumption, imports and exports, prices, profits and wages and the like are collected. In addition a large part of British industry is nationalised and the government has to answer to the capitalist class for its efficient running. The government is also expected to allow a high level of economic activity to persist and to avoid, or deal with, balance of payments difficulties.

The Class Struggle

The capitalist class is only one of the two classes of capitalist society. The other is the working class. These two classes have no interests in common so that any party which takes on the task of governing is inevitably brought into conflict with the working class. The history of the various Labour Party governments is ample proof of this.

George Brown proclaims the end of the class struggle. Unfortunately for him, however, the class struggle is a social phenomenon which cannot be abolished by mere pronouncement or by signing scraps of paper. It has its roots in the structure of society. Capitalism is based on the monopoly over the means of production by a minority, the capitalist class. As a result the working class are forced to work for this class.

And there is a struggle over the division of the product of labour. The share of the capitalist (profit, rent, interest) can only be increased at the expense of the share of the worker (wages) and vice versa. But this is not just a price struggle which can be settled by bargaining; it is a class struggle which can only be finally ended by the expropriation of the capitalist class.

This struggle takes place whether it is recognised for what it is or not. The trade unions in Britain, though to a certain limited extent an expression of this struggle, have never recognised this. They have regarded the struggle between employers and workers as a mere price struggle. They have sometimes acted on the assumption that there is a community of interests between employers and workers. Now trade unions have become an accepted part of the capitalist order in Britain.

Respectable trade unions

It is not generally appreciated the extent to which the trade unions are today a part of the institutional framework of British capitalism. The trade unions obtained legal recognition in the period 1871-5. This status was however fairly unstable;, many employers were still hostile to the very principle of trade unionism.

A series of court cases culminated in 1902 in the Taff Vale judgement, which seriously jeopardised the legality of strike action and picketing. An act of 1906 restored and improved on the previous position. The fact that trade unions were legal allowed the government to make use of responsible trade union leaders: not a few sat on Royal Commissions or became government inspectors of one sort or another.

During the first world war government-trade union co-operation grew. The attempt to continue this co-operation after the war through the joint industrial councils (Whitley councils) failed in the slump of 1920-2. Economic conditions also led to the General Strike of 1926.

The capitalist class was divided as to the legality of this strike; in any event it led to the Trades Disputes Act of 1927. The year 1928 is an important date in the evolution of respectable trade unionism in Britain. For in that year a group of employers led by Sir Alfred Mond (later Lord Melchett) approached the General Council of the TUC for discussions.

The chairman of the council at that time was Ben Turner, so that the discussions became known as the Mond-Turner Conference. It was agreed that the trade unions should be recognised as collective bargaining agents by the employers and should be encouraged by them as such. In addition employers and trade unions should insist on being consulted by the government before action on matters affecting industry.

Thus 1928 can be said to be the date that British capitalists recognised the usefulness of trade unions as collective bargaining instruments. Such bargaining is essential under capitalism and involves fairly detailed negotiations. Mond and his colleagues recognised the useful part trade unions could play in the process of wage-fixing. From this date on trade unions have been consulted on matters affecting industry and higher honours such as knighthoods have been distributed to prominent trade unionists.

Trade union-employer co-operation during the second world war followed as a matter of course. Since that war no government would dream of acting on matters concerning the TUC without prior consultation (an attempt to do so in 1948 by Sir Stafford Cripps caused an outcry). Indeed the economic council of the TUC exists for this very purpose.

The TUC decision to appoint members to the National Economic Development Council in 1962, and the recent signature of George Brown’s Declaration of Intent, are but a continuation of the process described above. Its only significance is that it represents a transition from trade union- employer co-operation to trade union-employer-government co-operation.

Government and wages

In the days when trade unions, in the employers’ eyes, were disreputable organisations, the government was used as a naked class instrument. Featherstone, Llanelly, Liverpool, Belfast are places where members of the working class were killed in clashes with the armed forces called in to maintain law and order during industrial disputes. No one has been killed in such a clash since before the first world war.

Nevertheless the government is still a class instrument even if not now so obviously. Its task is to run the general affairs of British capitalism. Since 1928 trade unions have been recognised institutions and the government has found them useful. In keeping with the changed status of trade unions, official strikes have a legitimacy which unofficial strikes have not. Of course the press are still hostile even to most official strikes and employers are still interested in getting as much as they can for as little as possible, but the role of the government has somewhat changed.

No longer are troops used to drive workers back to work in Britain. Instead, especially since the second world war, approaches have been made to trade union leaders to “moderate” their demands, to "discipline" their members and to get “capital and labour to co-operate in the nation’s interest.”

The second world war had a disastrous affect on the economic position of the British capitalist class. It meant that exports assumed a position more important than previously, as many overseas investments had been sold to pay for the war. All British governments since the war have had to devote much time to the balance of payments and exports.

One aspect of this has been their preoccupation with “too high” wages. Academic economists have disagreed as to whether these affect the balance of payments by increasing export prices or by encouraging imports. The various governments since the war tried many ways to solve this problem of “excessive” wages.

The post war Labour government tried ‘‘wage restraint” (1948) and a “wage freeze” (1949). The TUC agreed to co-operate in both. Despite this, the policy failed as economic forces (rising prices and labour shortage) proved stronger than government appeals and scraps of paper. The Conservative governments which followed had even less success: they couldn’t even get TUC co-operation.

At first they pursued a tough line, backing employers in their resistance to wage demands. As a result they provoked a series of official strikes, for example in engineering, transport and printing. These were the first big official strikes for over twenty years. Once again the economic forces won out and the government was forced to abandon its tough policy.

In 1961 the government tried again with Selwyn Lloyd’s “pay pause.” This again provoked unions. Nevertheless the TUC did agree to co-operate with the NEDC, set up in 1962. This was in keeping with the oft-repeated declaration of their general secretary that the TUC is prepared to work with any government.

George Brown's Declaration of Intent is the latest attempt to solve the problem of wages and exports for the capitalists. He has managed to get the TUC to agree to “moderate” their demands. Such an agreement runs quite contrary to the interests of the working class, but considering the position of the TUC in the economic structure of British capitalism, it is not really surprising.

As long as the membership of the trade unions are not class-conscious, it can hardly be expected that the unions themselves would act on the principle of the class struggle. Although the trade unions are not all they might be as working class organisations, this does not detract one bit from the importance of trade unionism, of working class organisation on the economic field.

But the working class, despite George Brown, should recognise that there is a class struggle, a real conflict of interest between the employing class and themselves.
Adam Buick

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