Labour's programme for capitalism (1972)

From the October 1972 issue of the Socialist Standard

Many Labour activists were thoroughly disillusioned by the record of the 1964-70 Wilson government. Some became inactive, others even resigned from the Labour Party, and fewer newcomers were recruited to take their place. This loss of activist support has disturbed the parliamentary leaders of the Party because these are the people they rely on to gather in the votes at election times. Without them the Labour Party is in trouble, but the activists are not going to work hard for the parliamentary leaders unless they are reasonably satisfied with the policy and practice of those leaders. Of this the leaders are fully aware. Which is why soon after their defeat in the June 1970 General Election they took steps to “involve” the Party’s activists in policy-making. What reforms would you like to see Labour make? the activists were asked. Their answers, carefully edited by the Labour leaders, are published in the document Labour's Programme for Britain presented to this year’s Party Conference.

The document begins with the ridiculous claim, “We are a democratic Socialist Party and proud of it,” and goes on to give a familiar list of reforms long-promised by Labour: planning, price controls, pro-union laws, a wealth tax, no health charges, abolition of public schools, more houses, cheap food, etc., etc. Nevertheless it is probably an accurate guide to what the activist wants to see done. Indeed it was the last Labour government’s failure to do many of these things that disillusioned them in the first place.

Accumulation

The leaders are careful not to commit themselves to implementing everything in the document. Some of the reforms, they say, could not be implemented in a five-year term of office, while there may not be enough resources to implement others. The document, they repeatedly emphasise, is merely a list of desirable social reforms; in time for the next general election the leaders will choose which of these reforms are to go into the Party’s manifesto; and a future Labour government will decide, in the light of existing economic circumstances, when (and if) those in the manifesto should be implemented. In other words, as in the past, the Labour leaders are to be given a free hand by their members to run capitalism in the way economic circumstances may dictate.

For, both in theory and practice, the Labour Party has always been fully committed to capitalism. What it stands for is not Socialism, but State control of capitalism. At one time the aim of this State control was said to be the improvement of the conditions of the working class. There are still echoes of this in the document. But actual experience of running capitalism has led to a revision of this aim: it is now the steady and uninterrupted accumulation of capital. This change is nicely illustrated by the complaints in the document about the wasteful consumption of the rich. At one time the suggestion would have been that this would have been better consumed by the workers; now it is that it should have been invested productively.

But both these aims are unrealistic. Capitalism cannot be reformed so as to work in the interest of the workers. Nor can it be planned so as to avoid booms and slumps or stops and gos as they are now called.

Labour v. Workers

Capitalism is an anarchic system subject to its own uncontrollable economic laws. Based on the ownership and control of the means of production by a minority class (the top ten per cent own three-quarters of the wealth of Britain despite four Labour governments, the document admits), the purpose of production is profit and the accumulation of capital out of profit. In order to keep going its products must be continually sold at a profit, in Britain’s case largely on the world market. For capitalism is an international system. The governments of all the various States into which the world is divided find their policies dictated by the workings of international capitalism, not by their own desires to improve living standards or plan growth.

This is what the last Labour government discovered. Elected in October 1964 they had to give immediate priority to a balance of payments crisis caused ultimately by the failure of British exports to sell well enough on the world market. In a bid to restore profitability to British capitalist industry, Labour Ministers were soon calling for wage restraint, seeing Communist agitators behind strikes and denouncing workers for not doing a full day’s work. In 1967 the pound had to be devalued and a legal wage freeze imposed. Anti-union laws were planned.

Re-investment

Reading between the lines of this document, the Labour leaders have learned the lesson of this last Labour government. This time they are not going to try to give priority to desirable social reforms or to increasing working class consumption. Priority is definitely to be given to creating what they themselves describe as an “internationally competitive economy” in Britain.

“The share of Britain’s resources devoted to investment”, they complain, “has been chronically low by international comparison”. They promise to remedy this. To keep industrial costs in Britain down they will aim to increase the re-investment of profits in new, more efficient productive equipment. For this they are prepared to allow British capitalist firms to make sufficient profits and to restrain (voluntarily of course) workers from gaining too large a share of these profits in the form of wage increases. Their policy is to be that the maximum amount of profit should be re-invested productively and not wasted in property speculation or in consumption by the idle rich—or by the workers. And, thanks to planning, a conflict between wages and profits is supposedly to be avoided:

Labour believes that there is scope in an expanding economy for rising money wages and, too, that rising wages and expanding profits for re-investment can co-exist.

Maybe in an expanding economy, but only for a while. For sooner or later the expansion phase of the business cycle will inevitably give way to the contraction phase, and what then? Wage restraint? Cuts in working-class consumption in order to restore profitability? This possibility is provided for too, for those who read the document carefully. Says an important reservation:

There will be times when any Government will need to take interim measures to regulate the purchasing power of consumers.

Which suggests that the Labour leaders themselves are not too confident about their ability to plan “sustained economic expansion”, “steady economic development”, “uninterrupted industrial expansion”, balanced economic development”, to record a few of the phrases they use to describe their utopia of permanent capitalist prosperity.

Prices & Profits

The second aspect of their policy for making Britain an “internationally competitive economy” (which, we repeat, must be their priority, not that after their experience between 1964 and 1970 they now bother to deny this) is yet another “attack” on “the scourge of inflation” because, the document explains, “if inflation is higher in Britain than elsewhere, our exports lose their ability to compete in foreign markets”. Labour is going to “attack” inflation not at its source—but one of its effects, rising prices. There will be, they promise, severe and legally enforced price restraint. Maybe, but not for long. For the effect of this, if rigidly enforced (which it won’t be of course, and for this very reason), would be to reduce profits. Since with the oversupply of money continuing so would the inflationary pressures. In these circumstances legal price restraint will be a miserable failure and, we predict, soon abandoned. Actually, here again the Labour leaders recognise that price restraint would threaten profits and so conflict with their other aim of encouraging productive investment:

In those cases where key prices have to be held down to a level which does not provide a level of profit adequate for re-investment, we shall consider the possibility of government investment to meet a firm’s capital needs.

Food prices are to be subsidised, as they were in the first post-war Labour government, in order to keep wages down.

Cartoon by Barltrop.

Futile Reform

Housing is one field in which the futility of legal price controls as a means of improving working class living standards has been demonstrated. For the effect of years of rent control was to make investment in private housing for letting relatively unprofitable. Investors tended to avoid this field and landlords to let their houses decay. The result was a worsening of housing conditions for many workers. Eventually Labour recognised this and allowed landlords to make bigger profits under their so-called fair rents legislation (Labour now gives the impression that this is a Tory scheme, but all the Tories have done is to extend it from private to council houses). At the same time they provided for landlords to be given grants to “improve” their property, the intention being to overcome the deterioration in housing conditions caused by rent control.

Landlords have certainly been taking up these grants, but not with a view to improving the housing of the poor. What many of them have been doing is to buy up this kind of housing, “improve” it and then or sell or let it to the better-off. The document complains about this:

There is evidence, however, that although the take-up rate for such grants is increasing, they are being used to a disquieting extent by property companies, converting and improving houses to sell at an unreasonable profit. They are also greatly used by people who are already well housed, but wish to improve a weekend cottage.

So capitalism has made a mockery of yet another of Labour’s reforms! As we have always said, reforming capitalism is ultimately futile as no sooner is one reform made than another is needed, as often as not as a result of the previous one.

Disillusioned Optimists

But trying to reform capitalism so as to benefit the working class is at best all Labour’s policy has ever amounted to. And it’s a futile policy since it seeks to do the impossible: make capitalism work against its own economic logic of production for profit and the profit-makers. Capitalism is a class system and can only function as a class system in the interest of the minority that owns and controls the means of production. Any Party that takes on the administration of capitalism, as Labour has done on four occasions so far and seeks to again, must sooner or later come into conflict with the interest of the working class whose consumption it must restrict in the interests of profitability. This has happened to every previous Labour government and will happen to any future ones.

Labour’s present activists must be a gullible lot if they believe their leaders’ promise that the next Labour government will somehow be different. But then it’s because they think there is some hope in the Labour Party that they are members. Which means they are due to be disillusioned yet again.

Adam Buick