Editorial: Two budgets (1952)

Editorial from the April 1952 issue of the Socialist Standard

Budgets are the concern of the capitalists, not of the working class, though it suits the Labour Party, like the other reformist parties, to pretend otherwise. The workers are not poor because of the Budget, but because the capitalist class own society’s means of production and distribution. It was admitted by the Economist (25th December, 1943) that:—

"1,800,000 persons, who are 7 per cent. of the adult persons in the country, own 85 per cent. of the private property and draw 28 per cent. of the individual incomes of the country."

The Economist said that their readers would be surprised to team this. Why they should be surprised was not explained; this inequality has been a feature of social life in Britain and the rest of the world throughout the capitalist era, and is equally true now despite all the talk of redistribution.

The capitalist State has to meet the cost of its civil service, armed forces and re-armament programmes and all the rest of the organisation necessary to the capitalist system. It does this through taxation the burden of which falls on the shoulders of those who alone can bear it, the propertied class. The wealth the workers produce belongs to the capitalist class and what the workers receive as wages and salaries is far below the value of what they, the workers, produce. That is how the workers are legally robbed and why they are poor. Rises or falls of prices, rises or falls of taxation and changes from one form to another, do not affect the fundamental position of the working class—at most they have temporary effects. White capitalism continues, the only sound policy for the working class is to struggle at all times to the fullest extent that conditions permit, to raise their wages and resist downward pressure.

During and since the war, under the abnormal conditions then existing, and with unemployment at a very low level, successive governments used the system of food subsidies in order to discourage the trade unions from pressing for higher wages. It was linked with high taxation on drink and tobacco, and, from 1946, the grant of children’s allowances to level the condition of the workers. The whole scheme was a device to lessen the movement for a general rise of wages and to divide the married workers against the unmarried. With it went the incessant demand of the Labour Government that the workers should refrain from "unreasonable” wage claims. Now that the fierce struggle against foreign competitors is hotting up again in the markets of the world, the policy is being modified because it has served its purpose. It was merely a wartime interlude in the running of capitalism, which is now getting back to normal pre-war conditions.

Against this background it will be seen how nonsensical is the Labour Party case against the Butler budget. They call is a “rich man’s budget,” as if any budget could be anything else. Mr. Douglas Jay, Labour M.P., speaking in the House of Commons on 17th March, accused Mr. Butler of "robbing the poor to pay the rich”—as if the details of any particular budget were of any importance by comparison with the ceaseless exploitation of the working class \\hich went on unchanged during six years of Labour government.

They charge the Tories with raising the cost of living, forgetting that while they were in power it went up about 40 per cent. They say that he is against wage increases, as of course he is, but forgetting the years in which they also preached "wage-restraint.” They denounce him for reducing food subsidies, but forget that it was Sir Stafford Cripps who decided not to permit any increase in the subsidies even though that meant a rise of the cost of living; a flat departure from the statement of his predecessor, Mr. Dalton, who in 1945 said:—

“I have decided to hold the present cost of living steady until further notice, even if this means an increase in the necessary Exchequer subsidies." (Hansard, 23rd October, 1945. Col. 1877.)

It was on that occasion that Mr. Dalton admitted the purpose of the subsidies as being "to restrain any disproportionate increase in wage rates,” and paid tribute to the "steadiness and good sense which the trade unions and their leaders have shown during the war in this regard.”

In April, 1951, when Mr. Gaitskell, as Chancellor of the Exchequer, repeated the decision not to increase the food subsidies, he admitted that this decision would mean a further rise of food prices and indeed the official food index figure rose from 131 in April, 1951, to 143 in October.

Other Labour Party critics charge the Tories with tenderness towards high profits, and one misguided Labour journal Forward, in its issue for 23rd February, 1952, chides the Tories on the ground that company profits repented during January, 1952, were up by £10,000,000. What it overlooked was that the company reports issued in January, 1952, related to profits made under the Labour Government in 1951!

Now that the Labour Party is in Opposition it will wage the sham fight about the details of running the capitalist system, but there was every justification for the jibe of the Liberal leader, Mr. Clement Davies, that if Mr. Gaitskell had been in Mr. Butler's place his Budget would have been "much of a muchness.” All budgets, no matter who introduces them, are designed to promote capitalism, not to undermine or abolish it.

Mr. Butler’s budget of 11th March had been preceded on 6th March by the budget report of the Russian Finance Minister, Mr. Zverev. They differed by five days, and little more.

The Russian Budget

The Russian Finance Minister’s budget report was reproduced in full in Soviet News (12th March, 1952) published by the Russian Embassy in London. It makes interesting reading particularly as evidence of the similarity of capitalism's problems and their treatment in the two countries.

They both have their re-armament problems; naturally both offered as instruments of “ defence,” not of "aggression.”

In 1952 the Russian Government plans to spend "for the defence of the country” 113,800 million roubles (£10,346,000,000 at the Russian official rate of exchange of 11 roubles to the £).

The amount of money to be raised from State loans in 1952 is set at £3,864 millions, and the estimated expenditure on the lottery prizes and interest to bondholders (“to pay out winnings to the population and interest on loans”) is estimated at £800 million. This latter figure relates, of course, to the interest, etc., on the total amount of loans outstanding, not merely to the additional loans to be raised during the year; at the average rate of 4 per cent. it implies that the total amount of bonds outstanding in 1952 will be about £20,000 million.

Turnover Tax (similar to the British purchase tax) brought into Budget revenues in 1951 the amount of £22,500 millions, an increase of 4.9 per cent. over 1950. It is to be increased this year by another 4.9 per cent. 

Mr Butler stepped up the taxes on profits by means of the Excess Profits Levy. His opposite number in Russia, Mr. Zverev, is going to do the same.

“Total profits in the branches of the national economy will amount to 88,100 million roubles in the current year as against 74,700 million roubles in 1951. The rise in profits makes it possible to leave a substantial part of them at the disposal of enterprises and Ministries for expanding production. At the same time, the profits tax paid into the State Budget will be increased and the share of this tax in the State Budget revenue will rise from 10.2 per cent. in 1951 to 12.2 per cent. in 1952.”

“The profits tax paid by State enterprises will be increased by 14,000 million roubles, or 29.2 per cent. more than last year. . ."

Conservative and Labour Party speakers are always urging the workers to produce more and lower the cost of production. Mr. Zverev’s report contained numerous remarks of the same kind. He reported that in 1951 “the labour productivity of workers in industry rose, by 10 per cent. compared with 1950.” But he was not satisfied with this and asked for more. His report also contained many complaints about industries which had failed to keep down their wages bill and operate sufficiently profitably:—

"It should be said that certain Ministries, enterprises and economic organisations are for from making full use of available potentialities for the further reduction of production costs, cutting trade outlays and making the work of economic organisations more profitable.”

“One of the main requisites for the further reduction of production costs is also the improvement of the organisation of labour at enterprises and the frugal expenditure of wage funds. Not all enterprises, however, live up to those requirements.”

For example, he complained that the Ministry of Paper and Woodworking Industry “permitted the mills to cover the over-expenditure of the wage fund,” and the Leningrad engineering plant of the Central Textile Machinery Administration of the Ministry of Machine and Instrument-making Industry “did not fulfil its production plans last year and overspent 13,500,000 roubles on wages.”

Time and time again he came back to this theme of not spending too much on wages, improving the control of “labour per unit of output,” and watching over “the expenditure of wage funds” and of “the timely and complete receipt of payments into the Budget.” Numerous branches of industry were named as being among those which illegally “overdraw the wage funds.” Others were charged with allowing expensive machinery “to stand idle a great deal,” thus adding to production costs, and many State farms were criticised because they “do not yet have a sufficiently high productivity of labour.”

We are told by Communists that in Russia the trade unions have control over the fixing of wages. What they do have (a very different matter) is the right to discuss the way the “wages fund” is allocated to different grades of workers; but of course the real control resides with those who fix the total amount of the wage fund for each enterprise, that is the Government and its agencies. How true this is can be seen from the Finance Minister’s report. Not once does he even mention as a possibility that the workers or the unions might have pressed for a bigger expenditure on wages. In each of the dozen cases that he refers to he tells the managements firmly that once the Government has fixed the wage fund they have got to stick to it and devote their energies to cutting down production costs and increasing the workers’ output.

British capitalism’s financial wizards and productivity experts would feel very much at home if transplanted to Mr. Zverev’s department.

It is only necessary to add that the Budget Report was unanimously approved. The session ended as follows, according to the Soviet News account:—

“Stormy, prolonged applause. All rise. A prolonged ovation in honour of Comrade J. V. Stalin resounds in the Kremlin Palace.”

It seems to have been like the Tory cheers for Mr. Butler.

The Socialist comment on British and Russian budgets is simplicity itself. The aim of the working class should be to end private and State capitalism and bring the means of production and distribution into ownership by the whole community as the basis of Socialism. While the workers continue to neglect this real issue and devote their attention instead to capitalism’s budgets and taxation they will remain a poverty-stricken exploited class and the exploiters will continue to be safe in the enjoyment of the privileged position that capitalism bestows on them.