At Home
The Budget
Many of the professional economic forecasters came out rather better than usual from Mr. Maudling’s second Budget. The heavier taxes on alcohol and tobacco had been widely tipped and so had some extension of the betting tax. But the Chancellor upset many predictions by not altering the standard rate of income tax, the tax on petrol and National Insurance contributions and benefits.
There is always plenty of advice and prognostication from the financial experts before a Budget. Experience does not encourage us to regard this as very valuable. Said The Economist of April 11th:—
. . . the surge in demand and productivity during this last financial year . . . . has looked astonishingly similar to that in the financial year 1959-60 . . . (when) most economic commentators urged Mr. Amory to raise taxes by between £100 million and £200 million in his Budget . . . but . . . from that first quarter of 1960 demand and productivity suddenly ceased to grow and, apart from minor fluctuations, remained at about the same level for two years. Modern economic computers can sometimes badly overestimate the exact amounts of tax increases that are really desirable in times of boom, because nobody has yet devised a science for gauging the way in which a boom mentality among consumers can quite suddenly be deflated.
This last admission did not, of course, prevent The Economist from offering its own advice to Mr. Maudling.
It is a widely held assumption that tax alterations are bound to affect prices. But the facts show that this is not the case. There have been plenty of recent examples—cinema seats, lawn mowers, some types of confectionery—in which a change in tax has not been responsible for a change in price.
Prices must move as the market allows them to. At one time the market may allow a manufacturer to recoup a tax increase by putting up his price—or perhaps even to over-compensate by putting the price up by more than the rise in tax. At another time selling conditions may not allow such an increase and the manufacturer will have to yield up some more of his profit to the government.
Whatever happens, the government are only interested in raking in the taxes to help pay for the upkeep of the State machine and all its ramifications.
This year’s Budget will probably be unpopular among the working class, who seem to get a real kick out of the couple of shillings a week extra which some Budgets may bring them—and who can be cast into deep depression by a Budget which goes the other way. In this confusion and ignorance, Mr. Maudling may have done enough to set the seal on his party's fate in the Autumn.
A Labour London
The Labour victory in the elections to the new Greater London Council was widely forecast, although even so in some of the contests they were surprisingly successful.
The government at the moment is in very heavy weather and the dissatisfaction with the Conservatives at national level was bound to influence local affairs as well.
It was not so long ago that the Tories were saying that politics were better kept out of local government. The Town Hall was, apparently, the place where local men good and true did their level best for the locality. To introduce party labels into this was ungentlemanly.
The father of the present Duchess of Kent, in an interview with The Observer, once gave a typical expression to this attitude. He was at the time a prominent member of an urban council in Yorkshire. Sometimes, he said, some Labour fellows tried to get on the council, but in most cases they soon learned to drop that stuff and to work for local interests.
Officially, this is no longer the Tory line. None of their candidates for the G.L.C. stood under the old labels of Ratepayers, or Municipal Reform, or anything like them. They were all Conservatives. “I hope," said the leader of their candidates, Sir Percy Rugg, “ there is no Conservative who thinks his vote does not matter."
This taking off the gloves has helped in the notion that the local elections are a sort of primary for the general election which is to come in the Autumn. Certainly, the Labour Party are hailing their victory as a precursor of what is to happen when Sir Alec finally names the day. The Tories, as we may expect, are analysing the voting figures again and again, looking for evidence that they prove exactly nothing at all.
Nobody was anxious to draw attention to another way in which the G.L.C. election resembled a general election—in the glowing promises which were made to the voters. Sir Percy Rugg offered “. . . humane and personal administration as well as efficiency . . . a realistic housing target ”
His Labour counterpart, Mr. W. Fiske, was promising cheaper land for housing and a lower interest rate for house building loans. Council mortgage rates were, indeed, the big electioneering point of the campaign.
Labour are cock-a-hoop at their win and are waiting impatiently for the day when they take over the government. But their chickens are by no means yet hatched.
One of the depressing features of the G.L.C. election was not simply the fact that once again the working class made it known that they are satisfied to choose between alternative ways of running capitalism. It was the simple, almost incredible, ignorance and naivety of the reasons which the voters who were interviewed on radio and television gave for voting as they did.
At the moment these people are largely being fooled into voting Labour. Come the Autumn they could just as easily be fooled into voting Conservative. And while everyone in going up and down on the see-saw capitalism goes grimly on.
Politics
Powell speaks out
Mr. Enoch Powell, who is supposed to be a very clever man, and the conscience of the Conservative Party, has been a source of embarrassment to his leaders for a long time. They must shiver, now, whenever he opens his mouth for fear of what uncomfortable revelation he will make.
But Mr. Powell is the sort of politician whose ideas have little relevance to the hard realities of administering capitalism. In this he is rather like the pacifist in the Labour Party. His speech at the beginning of last month to the East Renfrewshire Unionist Association, in which he attacked the government's attempts to direct industry to the development areas, showed what a dreamland this one time professor of Greek lives in.
If labour were perfectly mobile, said Mr. Powell, if the market were theoretically perfect, the level of unemployment would be precisely the same everywhere.
These are the sort of “ifs” which capitalism has long ago ruled out of the reckoning. Mr. Powell has said more than once that profitability should be the only motive for productive activity. The rulers of capitalism have come to realise that the profit motive is best served by a certain amount of interference with Mr. Powell’s “theoretically perfect” market.
Mr. Powell himself, indeed, appears to have seen the need for this. For some time he was Minister of Health, running the National Health Service, which is anything but a “theoretically perfect” market for, say, the labour power of the doctors and for the hospital services which patients require.
Mr. Powell has yet to say that he favours a health system in which hospitals charge patients as much as they can and in which the patient is free to take his custom to the quack up the road.
Nor has he said whether he is in favour of free enterprise armed forces and local authorities.
All political parties, of course, have their wild men whose ideas, especially when they are out of office, seem extreme enough to rule them out of all chance of ever getting to the top. Aneurin Bevan is one who was once in this category. Yet if he were still alive, he would probably now be the leader of the Labour Party—and perhaps the next Prime Minister. It is certain that, if he had ever made Number Ten, he would have been a different Bevan to the man who once made the Tories' blood go cold.
By the same token we may yet see Enoch Powell at the top, complacently administering the very things which he now denounces.
Abroad
Cyprus
Anybody who is surprised at the continuing struggle in Cyprus ignores the fact that the Treaty which closed the last bout of trouble there was almost bound to break down.
The Treaty took little account of the political complications involved and, like so many of its kind, ignored the nationalistic prejudices of the island's people. Years of guerilla warfare against the British rulers, accompanied by all the usual hate propaganda and brutality from both sides, succeeded in fanning these prejudices to a dangerous temperature.
It would have taken more than a few signatures on a piece of paper to remedy this situation. So the Treaty, as is usual, simply pretended that it was not there.
But certain things are there. The age old clash of interests between Greece and Turkey, over who shall dominate the eastern Mediterranean, is there. So is the British interest in the oil and the Suez Canal and the other strategic potential of the area. And so, in the background, is the American resolve that nothing shall threaten their standing in the Middle East.
The United Nations has shown once again how ineffectual it is when it is up against the confusion of capitalist interests. As in the Congo, it has taken a long time and a lot of argument to get the pale blue flag into Cyprus. Contrast this with what happened in Korea, and later in the Lebanon, when the United States moved in against what it saw as a powerful threat and was determined to have no nonsense about keeping the peace.
The climate of Cyprus, and the eradication of the mosquito there, have made it one of the healthiest spots in the world. It is the inevitable conflict of capitalist interests, and the hate and strife which this arouses, which makes the island a place of such unpleasant memories—and promises to do so for some time in the future.
Business
City & Labour Party
It is a popular misconception that a Labour victory in the Autumn will be bad for the capitalist class; that production, investment, and so on, will be less profitable and that business will, therefore, be in the doldrums.
It is true that the City generally prefers a Conservative government, but this is not to say that their professed fear of a Labour government is sensible. Business men, after all, are as capable of misjudgement as anyone else. And, anyway, there are plenty of industrial and commercial tycoons who support the Labour Party.
Robert Heller, the Business Editor of The Observer, has polled what he calls “influential City men” on their reactions to a possible Labour government. He reported the comments of seven of them on April 12th last.
Two of them thought that a Labour victory would be bad for business; two thought that it would have little or no effect. The other three thought that the policies of a future Labour administration would depend upon the conditions under which it took power—in particular, on the size of its majority.
Three said that investment was being held back by the prospect of a Labour government. The other four said that this prospect was having no real effect on investment.
One thought that the Stock Exchange had not adequately discounted the risks of a Labour victory — had not, in other words, sufficiently rearranged its interests so that they will remain just as profitable when Labour policies are in action. One gave no opinion on this question, but the other five were of the opinion that whatever risk there may be had been adequately discounted.
What this means is that the attitude which the capitalists arc adopting to the prospect of a future Labour government is much as we might expect. Some Labour policies, they think, may be bad for some types of business. In the same way, some of them probably think that some policies of the Conservative government have been bad—the R.P.M. Bill, the attempt to join the Common Market, and so on.
But, as Robert Heller comments: -
With certain extremely forthright exceptions, they don’t regard the prospect as very dreadful. . . . Some top boardroom names not only hope but expect to carry on business as usual. (Under a Labour government).
A Wilson administration may bring some superficial differences in the overall pattern of commercial, industrial and investment affairs.
But the City still expects to be able to carry on and to show some nice profits for the shareholders.
And the City is right.
Because under a Labour government capitalism will still be there.
Two giants
Two of the world’s industrial giants reported last month.
General Motors claimed that world sales of their vehicles were 14 per cent. above the 1962 record. Their total sales were worth nearly $16,495 million; they paid out almost $2,245 million in taxes and $4,313 million in wages.
There are many GM subsidiaries in this country, among them Vauxhall Motors, which, it is claimed, plays a “ significant part . . . in the British economy.” Another way, this, of putting the old crack about what is good for GM being good for the U.S.A.
Imperial Chemical Industries are now in process of writing off a lot of their old plant at the pace demanded by the developing technology of the chemical industry. Their total sales last year were £508.5 million (£10 million of them to the U.S.S.R.). They plan to spend £100 million this year on capital projects.
These figures may not mean much to the people who daily commute to a £15 a week job. But they reflect something which should be obvious to everyone.
It does not take much knowledge of industry to realise that the productive processes of plants like those owned by G.M. and I.C.I. are extremely complicated and require an enormous co-operative effort to keep them flowing.
In their way, they are a testimony to man’s ability to provide for himself. At the moment that ability is restricted by the anarchy of capitalism's commodity production. In a free world, in which all men’s interests were the same, the ingenuity which is evident in modern industry would make its contribution to the common good.
The tragedy today is that it goes to preserve a shareholding minority in their privilege.
When capitalism’s industrial giants trumpet their achievements abroad, what they are really saying is that the skill and the co-operation of their workers has once more done its best and been exploited to the full.
Postscript
B.B.C. European News“Mr. Krushchev has said that as well as the moral stimulus of Communism, workers in the Soviet Union also need the material stimulus of being able to earn more when they work harder. He told a special agricultural committee of the Communist Party Praesidium that the more workers on state farms turn out, the more they must receive. ’We must struggle resolutely against wage-levelling,' Mr. Krushchev declared, 'and advance boldly along the path of material encouragement for quality and quantity produced ’.”
1 comment:
That's the May 1964 issue of the Socialist Standard done and dusted.
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