Is this what Labour voters wanted? A world made safe for investors (1946)

From the March 1946 issue of the Socialist Standard

In a country where the whole adult population have votes and where the overwhelming majority of the voters are workers, the art of administering capitalism is a delicate, tricky business. To attract and keep the support of a majority of voters the party in power must have a programme that promises to introduce improvements in the miserable conditions of the poor; but in order to make capitalism function at all the government must not at the same time frighten and antagonise the rich, whose investment and spending has to go on unless industry is to slacken towards a standstill. Until such time as the workers recognise that their interest demands Socialism, the party that succeeds in persuading the electors that it can both please the workers and conciliate the capitalist will be the party that wins elections. The Labour Party succeeded in doing this, and is now carrying out its pledges, or some of them; but how many of the Labour voters who were attracted by the promises of more work, higher wages, social security, houses, etc., studied and understood the other half of the programme, the half that was directed to the capitalist class? How many of them observed that if wages rise and other things remain unchanged, then profits must fall; and that if profits go on at the old level (or increase), wages can only be prevented from falling if the total output of industry is increased? There has been plenty of Labour Party propaganda designed to make the workers believe that a Labour Government would reduce the wealth of the rich in order to help the poor, though this was not stated explicitly in the literature got out for the purpose of the general election. Workers can already see what is happening. War-time earnings, enlarged by overtime and various temporary bonuses, are now falling, and the changes introduced in the income tax, while decreasing somewhat the amount knocked off wages, also reduced Excess Profits Tax levied on companies, and reduced the total amount of tax levied on surtax payers. Mr. Dalton, Chancellor of the Exchequer, made two revealing statements in his Budget speech. While declaring that many surtax payers are idlers, he went on to announce that his Budget reduced their income tax. 

“The truth, in fact, is . . . that a large number of the surtax payers do nothing at all. They subsist on very large investment interests. Many of these have been inherited through many generations in the past, sometimes along with noble names, sometimes not. As a consequence of this, there is, in the total surtax income, a great quantity of completely unearned income, conglomerated in huge lumps around people who have inherited it, obtained it by luck, or other means." —Hansard, 19 Nov., 1945. CoL 152.

“ I repeat . . . that in terms of income, next year everybody will be better off, including surtax’ payers . . ." —Hansard. 28 Nov., 1945. Col. 1358.

The principal feature of the Labour programme at the election was the pledge to nationalise certain industries. In some vague way never clearly explained this was supposed to benefit the workers. It will, however, be noticed that since the Government entered office, the theme of numerous speeches by Cabinet Ministers has been that the compensation terms would be "fair" or even "generous" to the capitalist investors, while to the workers the Labour leaders' reiterated appeal is for harder work, austerity, and greater production.

This contrasts oddly with some of their speeches and writings during the war. Two examples, both from Cabinet Ministers, illustrate this. In 1942, Mr. Bevin, now Foreign Secretary, but at that time Minister of Labour in the Coalition Government, made a speech in which he said:— 

"At the end of the war we should be able to buy goods only for goods. The rentier, comfortably living on interest, would certainly be gone. It will mean that we shall have a nation at work, and that will not be an unhealthy thing."

—Daily Herald, 16 July, 1942.

Then there is Mr. Shinwell, now Minister of Fuel and Power. In his book, “When the Men Come Home” (Gollanz, 1944, page 41), he laid down the principle “that any physically and mentally fit individual who fails to make a useful contribution to the work of the community shall not be fed, clothed and housed at the expense of those who do work."

How are Mr. Bevin and Mr. Shinwell, and their Cabinet colleagues, progressing with their healthy doctrine that there should be no non-workers, comfortably living on interest, clothed and housed by the labours of those who have to work? It is only necessary to look at the nationalisation schemes to see that, far from abolishing interest receivers, the principal achievements for which this Labour Government will be remembered is that the “rentier, comfortably living on interest,” is being vastly increased in number and their position consolidated. The so-called epoch-making change brought about by the Labour Government is merely the transformation of some capitalist investors holding company shares, into holders of Government bonds. It was a development already making headway under the Conservatives before Labour came into power. Here are some examples of that nationalisation or State capitalism, wrongly described as Socialism by the Labour Party. The Central Electricity Board has over £50 million of stock outstanding and pays interest each year to the stockholders amounting to over £2¼ million. Port of London Authority, £34 million of stock, paying £1⅓ million interest. Metropolitan Water Board, £58 million, interest £1,790,000 a year. London Passenger Transport Board, stock, £112 million, paying interest of about £4½ million a year.

Then there is the buying out of owners of coal royalties, just completed, with payments of £66 million, available for investment elsewhere. This was a measure backed by the Labour Party though not introduced by them.

Since the Labour Government came into office the Bank of England has been taken over and the stockholders are to receive £58 million of Government stock on which the interest at 3 per cent, will amount to £1¾ million a year.

The Daily Express City Editor (20 Nov., 1945) gave the following rough estimates of the total cost of the Labour Government’s nationalisation schemes:—

Taking interest at, say, 3 per cent., this will involve payments by the Government of about £60 millions a year to the stockholders in exchange for the dividends they are at present receiving on their shares in the various companies. They will on the whole receive a lower rate of interest than before, but will get in return the greater security of bonds backed by the Government. 

As far as the workers are concerned, their position as wage slaves, exploited to maintain a propertied class in luxurious idleness, will not be altered. The State to an ever increasing extent will be the medium through which the exploitation is carried on. The accumulated wealth of the country (the means of production and distribution) will still be concentrated in the hands of the same small minority of individuals, the capitalist class, who own it at present. 

Edgar Hardcastle