Who is in Charge? (1962)

From the June 1962 issue of the Socialist Standard

The government is now well past its halfway mark and soon it must start thinking about the timing of the next general election. Whatever date it decides on, we may be sure that it will be the result of a careful calculation. A time like the present, with bye-elections running against it and with signs of internal strain, is not likely to be chosen. Mr. Macmillan—if he is still Prime Minister—will try to wait until he can feel surer of victory. This does not mean that he will leave it until the last minute, which would give him little room for manoeuvre. It does mean that, as in the past, the next election will almost certainly be held some time before the government’s term expires in October, 1964. This time next year, then, the decision may not be far off.

Whenever they are called upon to vote, the workers in this country will display all the bemused docility which we have grown accustomed to. They will concentrate on the wrong issues, at the wrong time. They will allow themselves to be misled by the government’s claim to have been a sage, responsible administration and by the clamour from the opposition parties that they are the men to put fire into the belly of British capitalism. The workers will not pause to consider the futility of it all and to compare the anomalies of Capitalism with the obvious impotence of the political parties to deal a with them. As a whole, they will not even toy with the idea that it might be a good thing to abolish Capitalism and to have Socialism instead.

We can say all this with some confidence, because experience has taught us that the working class prefer to take Capitalism on trust to what must be the painful business of thinking and remembering and comparing. The election policies of the Tories, the Labour Party and the others always amount to a claim that they are able to control Capitalism. As each of Capitalism’s crises blows up, there is no lack of political leaders to make speeches which state their solution to it. City Editors are prolific with schemes which put the politicians straight. Nobody seems to notice that some of the schemes are not very different from those which are being blamed for producing the crisis in the first place and that some of the bright ideas contradict others which have been offered before as the solution to our problems.

Let us, for example, consider the recent reversal of the government’s policies of last July, when Selwyn Lloyd pushed through his emergency Budget. The main provisions of that Budget were the increase of Bank Rate to seven per cent., the increase of some taxes by ten per cent. of the previous rate and the imposition of the pay pause. These policies were necessary, said the government, because we had all been living too well. The working class forgot to ask themselves when Capitalism had ever allowed them to live anywhere near as well as some of the people who make speeches about the Budget. They grumbled a little about it, but in the main meekly accepted it. The Budget was sold to them as essential to save British Capitalism—and there is no higher task to which a British worker can feel himself called.

Since then, apparently, British Capitalism has been saved, because the emergency Budget has gone. Bank Rate has come down steadily until now it is lower than it was last July. The pay pause, formally at any rate, is finished; workers who ask for higher wages have some other reason given to them for the employers' resistance to their claim. The ten per cent. increase in taxes has been dropped; some taxes, in fact, have been even further reduced. The entire tax structure has been somewhat simplified, which may be a clue to a new theory hatching in the Treasury—that British Capitalism would work better if it imposed a uniform sales tax upon its Capitalist class instead of the various purchase taxes which apply at present. There is, of course, no evidence to support this theory and in any case it has nothing to do with working class interests. But never mind; the experts at the Treasury must cultivate restless minds to keep up with Capitalism and it all makes good copy for the election programmes.

Perhaps the experts would feel more confident about the effectiveness of their remedies if they could all agree on them. But this they cannot do — is it any wonder then that mere inexpert Socialists should have so little confidence in them? Each time a Chancellor slaps restrictions on — or takes them off — the economy, there is a chorus of dissentients who assure us that he is too late or too early, too bold or too timid, or just plain wrong. In July, 1960, for example, the government reverted to the sort of credit restrictions which they have been imposing for years, on and off. This was met with anything but unanimous applause. The Guardian commented on July 5th, 1960:

  The past week has brought fresh support for those who questioned the need for the Chancellor's latest round of credit restrictions. The Board of Trade's admission that hire purchase sales in May dropped below last year's level simply confirms the view, expressed by many manufacturers and traders, that the boom in demand for consumer durable goods had already slackened off . . . the Government ought to have been congratulating itself on achieving a desirable new balance in the economy, rather than imposing new restrictions.

Newspapers, of course, need only comment upon the muddle which political parties get themselves into when they try to run Capitalism. Happily for the press, they do not have to involve themselves in trying to sort out the muddle. Even so, newspapers may sometimes hit upon the basic features of a crisis. There is an obvious question which is provoked by the continual upsets which Capitalism's economy is heir to, and by the contradictory policies which are put forward to settle these upsets. Do the politicians, the economists and the Chancellors control the economy? Or does the economy control them? As we have seen, The Guardian thought that the Chancellor in 1960 was trailing a long way behind events. And this is what Samuel Brittan, the Economic Editor of The Observer — who thought the pay pause was a good idea — wrote on September 3rd, 1961, about the effect of the Lloyd policy:

  The Government's hand will be enormously strengthened in the coming months by a marked change of trend in the labour market, which actually began as early as June . . . unemployment has since been creeping up and unfilled vacancies have been declining . . . labour should become a good deal easier to obtain in the coming months.
  At the same time manufacturers will find orders on the domestic market fewer and further between; and with profit margins under pressure they will offer fiercer resistance to wage claims . . . All this was without Selwyn Lloyd, who has administered a cold douche to an economy that was probably already coming off the boil even without his efforts.

Current Trends
What this means is that the Chancellor's policies are only a desperate attempt lo straighten some of the wilder zig-zags of Capitalism. They do not run counter to the current trends in the economy; they do not try to deflate a boom, nor to shake out a slump. They do not, in fact, have any considerable effect upon economic conditions, but only reflect those conditions, usually some time after they have passed by. Samuel Brittan's rival — Mr. Rees-Mogg, the Political and Economic Editor of The Sunday Times — summed it up for us all on July 30th, 1961: “. . . what Mr. Selwyn Lloyd has produced is not a policy, it is a reaction.”

We can now consider the conditions which make the Chancellor's policies for him. Two of the industries which The Guardian mentioned as being in difficulties were those making cars and domestic appliances. These were among the industries which cashed in on the post war boom; they built great factories, often in old depressed areas of the country. They invested tens of millions of pounds in their productive machine and up to a few years ago this all seemed to be paying off. They were riding high. Times have changed since then. The motor car firms have suffered violent ups and downs some of them have gone altogether and others are sickly plants.

Similar conditions have hit the domestic appliance trade. A. J. Flatley, a washing machine, drier and refrigerator firm which suddenly sprang up in Manchester a few years ago, to expand at great speed, has recently gone bankrupt. Hoovers are busily cutting their cloth to suit a severely restricted coat—last year they took a fifty per cent. cut in their profits. Hotpoint—part of the mighty Associated Electrical Industries—have recently reduced their washing machine prices to catch sales in a hardening market. We all know what has happened to the price of refrigerators over the past few years, and to some of the firms which make them.

Now why does this happen, to these industries and to others? In August, 1960, the Economic Review, published by the National Institute of Economic and Social Research, drew attention to what it called the “over capacity” of the durable consumer industries. This “over capacity” was largely the result of the enormous investment which was placed when consumer durables were booming. When the boom slackened the extra productive power became an embarrassment—stocks of machines accumulated, production had to be cut and workers laid off. That is the immediate, at any rate, explanation of a slump.

The fundamental explanation goes deeper. What could the consumer durable firms have done to avert the decline? Should they have held off their investment when the boom was going strong? Of course, they could not. At the time, intense investment was not merely a good idea, it was an absolute must for a company which wanted to get its share of the market. Could they then have correctly gauged the market, foreseen how long it would hold and so forecast the slump? This is something they have never been able to do, nor ever will be able to. The Capitalist class train up expensive experts and economists, but still they are caught napping by the disappearance of a market.

For Capitalism's slumps, like its booms, happen because its wealth — whether it is motor cars, washing machines or anything else — is made to be sold. This means that the market is the key to Capitalism's fortunes. And the market is a capricious, unpredictable, anarchic thing. It sums up Capitalism, that its fortunes should rest in such uncertainty.

So we know that as fast as one policy is knocked from under him, the Chancellor must come up with another. They all will be equally ineffective, but that will not stop him groping for another palliative, another stopgap, another lame horse to sell to the working class. Rees-Mogg put it bluntly in his article when he said, “The Chancellor is not in charge of the economic machine: it is in charge of him.”

Sadly, this will almost certainly pass the working class by, when the next election gets under way. Then there will be many lame horses on display at capitalism’s political market place. The voter, will prod them over, examine their mangy hides and finally plump for one or the other. A depressing prospect? For humanity, yes. But for those who pocket the proceeds, no.

Ivan