Telegraph gets it wrong (1985)

From the March 1985 issue of the Socialist Standard

The Daily Telegraph ran a two-day feature last January putting forward a "cure" for unemployment. This wasn't promoted with quite the same vigour as bingo in the Sun or Mirror, but within the constraints imposed by its upper class image the Telegraph mounted a reasonable advertising campaign. The views expressed were scarcely of working-class origin, yet they are held quite widely, by workers as well as capitalists. So in offering a critique of what the Telegraph says we are in fact examining misconceptions. for it became clear after only a few lines that these articles were not going to live up to their billing, despite the 23 "experts" consulted by the three staff members who did the actual writing. An editorial in the issue of 29 January stated: "While Western Europe as a whole has succumbed to the disease known as 'Eurosclerosis', the United Kingdom has consistently done worse than its near neighbours in terms of either unemployment or inflation and for most of the 1970s in both at the same time".

The inflation question did not figure in the advance publicity and its inclusion hints that the paper's real concern is not unemployment but regret that the British capitalist economy appears to it to have lost out to its competitors over recent years. In such circumstances we can expect unemployment here to rise more sharply than elsewhere. We therefore need not be surprised to find that the solution offered (eight specific proposals were put forward) are designed to increase UK competitiveness in the hope of regaining lost markets. Even if successful in this (and to accept even this would be an act of faith) the most to be expected is a slight decrease in British unemployment at the expense of a corresponding rise elsewhere. This is no gain; the total unemployment problem has not diminished one iota. The gainers are those capitalists able to resume operations.

Reluctantly the Telegraph editorial did at least acknowledge that unemployment is currently endemic across Europe. But the use of the term "Eurosclerosis" indicates that they have not appreciated the worldwide character of the present slump. Despite overwhelming evidence, nowhere is the existence of a similar problem in America noted and part of the presentation of the 29 January entitled US Experience of Employment exaggerated minor differences between American and British economies almost to the point of suggesting that the former had "cracked it”. Similar notions were expressed by the ageing Earl of Stockton in the first televised Lords debate. These were in no way the product of his ninety-plus years for Harold Macmillan was just as confused in his economic thinking when he was in his prime as Supermac.

A further interesting Telegraph comment was that "Many people view unemployment as akin to a natural disaster — we are unwilling to accept the pessimism — unemployment. like inflation is a soluble problem". On the first point, no doubt many workers believe that unemployment is here to stay but it is barefaced cheek for the Telegraph to talk like this. From the end of World War II right up until the current recession was well developed, the Telegraph, and all of Fleet Street, supported by a host of economic "experts", told us almost daily that the “bad old days" were gone, that unemployment was a thing of the past and that we must change our ideas accordingly. Militant trade unionists were told to forget their old "class war shibboleths" and unite with the capitalist enemy to build a new paradise of prosperity, class co-operation and peace. Even in 1985, when the flimsy premises of these arguments have long since been destroyed this claptrap can still be heard and has perhaps had some success in discrediting sound ideas by branding them as out of date.

In saying "unemployment, like inflation, is a soluble problem", however, the Telegraph is right even if for entirely the wrong reasons. Unemployment is soluble, but only by abolishing the capitalist system which spawns it. Under capitalism labour power will be utilised only if more can be extracted from it than is paid out in wages — in Marxist economic terms if the surplus value embodied in the finished product can be converted to actual profit through sale. In contrast the Telegraph has found itself unable even to recognise, let alone tackle, the world wide unemployment problem. Inflation, although also a problem of capitalism — or at least of money economies is different. Inflation is caused by governments increasing the supply of inconvertible paper money (in earlier times debasing the coinage served the same end) without a corresponding change in the total value of the goods in the economy. The remedy is therefore to cease this practice, as has been done successfully on a number of occasions (one was by Lloyd George in 1919-20). The Telegraph however propagates the fairly common myth that there is a relationship between unemployment and inflation, claiming that there is a "natural rate" of unemployment which was at the 200,000-300,000 level in the 1950s and 1960s but has risen significantly since because

  welfare benefits increased by 30 per cent in real terms and the labour market rigidified under the influence of incomes policies and increasing union power.

Here the Telegraph in effect says that if unemployment is below a certain level workers are more easily able to increase real pay. This is of course often the case. However they come close to admitting that when this situation arises governments often react by deliberately increasing inflation in order to steal back these gains through higher prices. This is certainly a plausible explanation of the inflationary policies pursued by many governments, particularly since the last world war, although it is not the sole motivation. Here the reduction of real wages emerges as the main plank in the Telegraph's "solution", the argument being that if wages and other costs were lower employers would see more potential profit in expanding production. The example of America is cited, where real wages have been falling for some time and unemployment has fallen slightly. However the net effect is small, especially remembering the falling standards of those in work.

Clearly we cannot expect any sensible analysis to come from such sources, but for the record here are the Telegraph's eight suggestions. We have heard such ideas many times before and expect to hear them a few times yet. possibly as part of the 1985 Budget Speech.

1. Cutting the tax on jobs. This is merely cosmetic and very old hat.
2. Easing the Unemployment Trap. The unemployment trap means situations where the going rate is so low that the worker is nearly as well off on the dole. As the idea is to reduce real wages there are no prizes for guessing that the suggestion here is to cut "benefits". To a large extent this proposal is post-dated, as the authors themselves point out that benefits have been cut since 1979 so that the "trap" is much less common nowadays than in the 1950s or 1960s.
3. No Penalties for Part-Time Work. Yet another way to shove wages down. The idea here is to encourage the jobless to take cut rate part-time work to the disadvantage of those who still have jobs.
4. Reforming the Unions. This offers further ideas to back up those already embodied in actual or projected legislation with a view to weakening the unions' efforts to protect living standards.
5. Training to the age of 18. An extension of the old idea of raising the school leaving age. coupled with complaints that young workers' wages are too high.
6. Community Work. Another cheap labour scheme. In the 1930s a few swimming pools and similar projects were carried out at cut-price rates in this way.
7. New Work Patterns. More of the same. Wage rates to be reduced by encouraging existing trends towards part-time and more flexible working arrangements generally.
8. Profit Sharing. A hoary old chestnut. The idea this time is to cut employers' costs and make staff more profit-conscious. What will shareholders (the real ones) say about this, as there will be less profit for distribution among them.

A last example of the Telegraph's lack of perception is that they recognise only two explanations of economic crises. Firstly, the neo-classicist, where the cause is believed to be excessive real wages as seen from the employers' viewpoint as part of production costs. Secondly the Keynesian, which contends that the cause is insufficient demand and the cure increased government spending. Although the Telegraph's experts are able to point out the shortcomings of these two theories, they are quite unable to offer any alternative.

The true alternative model is the Marxist which has been in existence for about 120 years but unfortunately for the Telegraph and its allies it tells us that these problems cannot be solved within the framework of capitalism. However it also gives us genuine cause for optimism. The Marxist model also shows us how society can be re-shaped on a co-operative basis so that all the present social ills will disappear.

E. C. Edge