Editorial: The Fruits of "Practical Politics" (1952)

Editorial from the October 1952 issue of the Socialist Standard 

The advocate of Socialism has varied opponents but on one thing they are almost all unanimous, that Socialism is not practical. They will concede that is is a noble conception and attractive but say that it fails to meet the needs of the world we live in today; it does not offer practical solutions to the urgent problems that must be tackled at once. These critics sweep aside as nonsensical the Socialist answer that there are no solutions to these problems short of changing the foundations of human society the world over. Let us then examine two aspects of the work of the "practical men” in this country, first their handling of the housing problem and second their endeavours to save us from war.

When the first world war began the Government and the chief Opposition parties agreed that the only practical thing to do in order to prevent rents from rising rapidly was to control them by Act of Parliament. The motives of those who supported this development were mixed. Some thought of it as a means of protecting the standard of living of the poor, while the Government had in mind principally the desire to discourage all-round strikes for higher wages, because this would interfere with the prosecution of the war. But they all agreed in telling us that it was a fine thing and should be continued, as indeed it has up to the present day though with loopholes and with permitted increases of rent in various circumstances.

They still claim that it was a fine thing; or at least they did until some of the consequences that they had not foreseen began to demand attention. So now a widespread call has been made, with backing in all three main parties, that something must be done. A “Reform” is needed—for the purpose of undoing the problem created by the first reform. For it has been discovered by investigators that almost as fast as new houses are being built old houses are falling to pieces because the rents allowed to the landlords of many rent-controlled houses do not make it worth their while to keep the houses in repair.

The results of an inquiry made by the News Chronicle ”lead to an estimate " that each year 200,000 houses—roughly the same number being built—become obsolete.” (N.C. 26/8/52.)

The local authorities have power (as the result of other social reforms achieved by the “practical men”) of demanding that repairs be carried out. So a new problem has arisen, of the owners of decrepit property finding ways of unloading their worthless property in order to escape liability. The local authorities take over some such properties, carry out the repairs and seek to levy the cost on the owners but are often unable to get "anything like the total amount” (Manchester Guardian 30-8-52).

The Manchester Guardian writer continues:—

“More adroit and less scrupulous owners succeed in conveying their property to men of straw who, for a consideration, will accept ownership of half a tottering terrace. One such, in Manchester, against whom the local authority, in theory, could make a considerable claim as the owner of a number of houses, is an inmate of a social welfare institution."

The same writer records that many of the houses "unfit for habitation” that continue to be inhabited because the occupants have nowhere else to go ” “are owned by small property owners, often the sons or grandsons of thrifty working men brought up to believe that bricks and mortar were a sound investment.”

But although the practical men have discovered that their original scheme has solved nothing and are calling for a new solution, they do not know what to do.

"Obviously,” says the Manchester Guardian, "the extreme dilapidation of much working-class housing in our industrial centres is not to be remedied by an adjustment of rents, still less by the removal of any restriction, which would merely add rack-renting to the burden of squalor and discomfort” And the writer ends his article with the remark: “To raise them would bring a swelling flood of complaints. How, anyway, can one raise the rents of property on which, since it has been condemned, no rent at all is just?”

We may leave the practical men who sought to solve the housing problem under Capitalism to reflect on the folly of their utopianism. Socialists told them, long before, that the housing problem, like the poverty problem in general, is insoluble within the framework of the capitalist system. In particular we would remind supporters of the Labour Party of their stupidity in thinking that you can improve a social system the driving force of which is the making of profit by cutting out the land and housing capitalists’ prospects of making profit.

How sensible is re-armament?

Let us now look at the problem of war. In a speech at Woodford Mr. Churchill congratulated the trade unions on backing re-armament and hoped "that our policy of keeping our re-armament within the bounds of national solvency will also commend itself to sensible men and women throughout the country.” (Times, 8/9/52.)

Here we have our "practical men” again, this time called " sensible.” Just how sensible is re-armament? To those who live in Britain and America and their allied countries it appears to be a sensible proceeding when the population are crying out for more and better food and clothing, not to mention habitable houses to live in, to devote labour and resources to the manufacture of weapons of destruction. Their justification for this odd view is that it has to be done because the Russian Government likewise is devoting fabulous sums to the manufacture of atom bombs, warplanes and all the other terrifying weapons of war.

But in Russia other “practical men"—as like their British counterparts as peas in a pod—are deluding themselves with the same specious argument.

They all (in both camps) admit that it is folly, but plead that it is necessary folly, caused only by the unreasonableness of the governments on the other side of the Iron Curtain. And all of them excuse themselves by saying that they are at all times ready to discuss at the round table “reasonable” proposals for the nations to co-operate.

Here the socialist intervenes once more with some real practicality in the form of facing the facts of the world we live in. The world is a capitalist jungle in which all the nations—for all are capitalist—struggle and arm and fight to preserve themselves from going under. They can do no other. The idea that nations in the capitalist world can co-operate on a friendly basis is purest utopian self-deception. Nations cannot co-operate for all are driven on by competition for markets, materials, strategic frontiers, etc. The only co-operation they can envisage is that induced by fear, the fear that drives them to huddle together in the rival camp.

Again the socialist insists that the only solution is to end the world jungle of Capitalism, but to achieve that it is necessary for the world’s populations to turn their backs on Capitalism and all its ways.

Is this practical? It is the only practicality for the human race. Is it immediately possible? Not until the socialist message has been widely accepted. And in this respect all the countries are in the same plight that the populations in the main fear and dislike the consequences of Capitalism but do not reject Capitalism itself. Mr. Churchill was speaking the truth when he claimed of the Tory and Labour parties that “ four-fifths of both parties agreed on four-fifths of what should be done.” They are still living in the world of make believe of thinking that what should be done is to try and reform Capitalism into something beneficial to the human race.

It is the task of the Socialist Party to win over the working class to the conviction that Capitalism should be ended and Socialism instituted in its place.

Housing in London (1965)

From the May 1965 issue of the Socialist Standard

The root cause of the housing problem in big cities like London is the capitalist system under which housing accommodation is bought and sold. For many years now the housing market has been subject to various controls but neither these, nor council houses, nor subsidies, alter the basic characteristic of housing under capitalism.

Once a city is established as such, the economics of capitalism ensure that the growth of demand for workers assumes a momentum of its own, for the great concentration of people in a city provides a vast market for so-called consumer goods and services. Even in times of depression the drift to the cities continues. But it is in times of full employment that the housing problem becomes acute because in such conditions the rate of growth of employment usually exceeds the rate of growth of housing. Inevitably this creates problems. This basically is what is happening in London today. As the Milner Holland Report puts it:

If the growth of housing does not match the growth o( employment there will be trouble of some kind.

Precisely, and they might have added that, given this basic situation, any measures applied to deal with it can only be palliatives. The Report is in fact a very useful document for exposing the futility of reformism on the housing question, though of course it was not meant to be.

Before going on to look into this, however, it will be useful first to clear up any misunderstanding that the words landlord and rent may create. The source of all Rent, Interest and Profit is the unpaid labour of the working class, using the term Rent to refer to the share of the proceeds of working class exploitation which those who own the land are able to extract from the capitalist class. It does not refer to house-rent which is a different thing altogether. House-rent is not a share of the unpaid labour of the working class but it is a price; in fact the price paid for accommodation.

In the 19th century it was correct to speak of a landlord class distinct and separate from the industrial capitalist class, and indeed between these two classes there was a struggle over taxation and the control of the state. This landlord class was composed of landowners pure and simple. Today the term is also used to refer to those who are engaged in the business of selling accommodation. These two types of landlord should not.be confused; the Labour Party and other demagogues frequently attack “landlords” just as, long ago, John Stuart Mill or Lloyd George tried to dupe the workers into doing the dirty work for the capitalist class in dealing with their enemies, the landowners.

As a matter of fact most of the so-called landlords today are not landowners at all. It is a fact that among the groups which the notorious Rachman swindled were those who owned the land on which his houses stood. The basic point here is this: the worker is exploited at the point of production. He is not exploited anywhere else—and no more by the private landlord from whom he purchases accommodation than by the shopkeeper from whom he purchases the other things he needs. He can be swindled by such people—and the Milner Holland Report does expose some swindles by landlords—but this is a different matter altogether and besides is not confined to working class buyers. The worker is exploited as a producer, not as a buyer.

Further, many members of the working class are themselves technically landlords as the table reproduced from the Report shows.

As can be seen the vast majority of private landlords in London only have up to two or three tenants while sixty per cent have only one tenant. These figures speak for themselves. They suggest that many private landlords are members of the working class letting a room or two to supplement their income from working—a point which should be borne in mind when the demagogues shout about “private landlordism”. It means that measures taken against private landlords in general, while perhaps bettering the position of some members of the working class, hit those others who supplement their wages in this way. This, incidentally, confirms that it is impossible to unite the working class on any reform issue because reform movements are not based on the class interests of the working class as exploited producers. Housing reform movements are no exception.

The Table also shows inequality in the ownership of housing accommodation. This inequality is not as great as might be expected. Another Table in the Report shows that “only about six per cent of all dwellings in Greater London are financed by capital drawn directly from the capital market.” This figure also speaks for itself: investment in private houses for rent is unprofitable. This has various results. The big capitalists stay clear of housing, which is thus left to small capitalists and people like Rachman. The Labour Party went to town over Rachman but they overlooked the fact that he was the product of the policies, such as Rent Control, they had been advocating against private landlords. It was these measures which contributed in no small way to making investment in private housing for rent unprofitable—thus opening the way for the Rachmans!

When the Rent Act of 1957 was being discussed Socialists were invited to oppose it,—in effect to support Rent Control. Besides pointing out that at best Rent Control could only be a palliative, we drew attention to the fact that there was evidence to show that Rent Control gave rise to its own problems, in particular to the neglect and decay of privately owned and rented houses, thus worsening conditions for some workers. In other words it made the situation worse for some in improving it for others. A typical reform. Rent Control is in fact a classic case of the futility of reformism, of running fast to get nowhere. The Milner Holland Report contains many similar examples of much-touted reforms and their miserable results.

On compulsory purchase of sweating landlords by local authorities:

Some authorities expressed the view when giving evidence to us, that compulsory purchase was no way of dealing with this problem. They pointed out that even if a compulsory purchase order was confirmed the owner received the full market value of his house as compensation, inflated in some degree by the very high rents which he was charging. With the proceeds of the compulsory sale he was then able to buy another house and charge the same high rents, thus defeating the whole purpose of the exercise.

Of local authorities refusing to use statutory powers to improve conditions:

. . . statutory powers, though in theory adequate to deal with overcrowding and the worst effects of multiple occupation, are virtually unused in some districts where the problem is most acute. This may be due to the fear that any action taken is likely to result in evictions to relieve overcrowding, to obviate the need for extra facilities, to make room for extra facilities, or simply as a reprisal against tenants whose complaints have prompted action by the local authority. The use of the available powers in a situation of acute shortage therefore tends to improve the situation in terms of dwellings but may shift the people suffering bad conditions into equally unsuitable accommodation elsewhere, or may even make them homeless . . . The choice is between two evils: on the one hand, allowing over-occupation to continue, and on the ether, insisting on improvements which at best cause distress, and at worst result in homelessness.

Of slum clearance making the situation worse:

The progress of slum clearance intensifies the competition for living space, since it must cater for numbers of households substantially larger than the number of dwellings to be demolished, and it may also encourage a further subdivision of existing households into smaller and more numerous units.

Other examples of the futility of reformism which can be gleaned from the Report are: of slum clearance getting nowhere as slums appear faster than they are cleared; of tenants' legal rights as mere scraps of paper for fear of eviction; of concentration on building new houses leading to the neglect of old homes; of tenants refusing improvements because they could not afford the higher rents which would result.

In conditions of shortage it is always the supplier, in this case the private landlord; who has the upper hand. What is happening in London is that in the competition for housing accommodation those who can't pay get the worse. Some don't get anything. At present there are 1,500 homeless families, some 7,000 people, in London and their numbers are growing. These are the lower-paid section of the working class, who have to put up with really bad housing conditions.

It seems likely that the next reform in this field will be a measure to try to improve the position of this section by giving them greater security of tenure or subsidising special housing for them. No doubt this reform too will have its catch: some other section of the working class will find itself worse off. To quote again the passage from the Report: “if the growth of housing docs not match the growth of employment there will be trouble of some kind". The only question is of what kind, and for which section of the working class. The point is, given the basic situation some people must suffer. The politicians are merely arguing about who this should be.

Overcrowding, high rents, homelessness intimidation and the other ills from which many workers suffer are a direct result of fact that demand for accommodation exceeds the supply. In large cities like London this must happen and is likely to be permanent. The Report itself says as much: “the housing problems confronting great cities . . . are of a long term if not permanent character”. The Report also, very appropriately, draws attention to the fact that this problem is not new. They quote from a similar report made by Charles Booth in 1901. Of course since then some housing conditions have improved in many respects but as the Report points out the problem “remains fundamentally the same."

Adam Buick

Letter: More about Rents (1972)

Letter to the Editors from the December 1972 issue of the Socialist Standard

The Editorial Committee is slipping. The reason why Glasgow people won their rent strike had nothing to do with house building having ceased. There had been housing shortage before the war, as indeed there still is, but the tenants did not and do not effectively challenge the landlords as they did in 1915 when the landlords tried to put up the rents; it seemed to them quite a natural thing to do since the butchers, grocers, etc. were all putting up their prices. People had to have food but, as they discovered, they did not have to pay the landlords; indeed, there was a decided advantage in not doing so, they had more money to spend in the shops. That is what forced the Government to step in and save the rent system.

If tenants could not be forced to pay rent in 1915 it is obvious they could not be forced to pay rent today if they stood together and refused to do so.

The Editorial Committee also assume that if tenants refuse to pay rent it will enable the non-landlord members of the capitalist class to reduce wages by that amount. Why? If, by combined action, the workers free themselves against the burden of rents they will find themselves strong enough to refuse to accept reduced wages; in fact, they would rapidly, having realised their strength, demand increased wages, finally making profit taking impossible and so ending the capitalist system. This is the reply to the last paragraph in the Committee’s reply to me; it shows them what the working class would achieve by first of all destroying the landlord class. Certainly, every household would be better off by spending money for themselves instead of giving it to the rent collector.

It is quite likely that I am about the oldest reader of “Socialist Standard” still alive. I started in 1907, I used buy it off “Hutch” ‘a member of the Tooting S.P.G.B., after that I got it in Charing Cross Road and now that I am a refugee on the South Coast I get it by post direct from Clapham. I have always read it to the great advantage of my faith in Socialism. It is only on this matter of rents that I have found the S.P.G.B. not agreeing to any working class struggle. I am well aware that, at the same time, they warn the struggle can’t succeed until all the workers of the World become Socialists which, of course, is absurd. For instance, in Bulgaria today the workers pay no rent or rates or suffer any deduction from their pay for pensions. Why? Because the Bulgarian State owns 80 per cent of all productive work, the present remaining 20 per cent is covered by a very small income tax.

Tom Braddock,

East Preston.

Reply:

The questions referred to here arise from the article Why Must the Rent Go Up ? in the Socialist Standard for January this year. Tom Braddock’s first letter disputing the Socialist Party’s attitude to rent control appeared, with our reply, in the July issue.

On the question of what happened in Glasgow in 1915 having “nothing to do with house building having ceased”, we quote from Housing Finance and Development by A. J. Merrett and Allen Sykes (Longmans, 1965). In the opening chapter they say:

“House building virtually ceased with the advent of war and rents began to rise, particularly in munitions-producing areas. This provoked an outcry such that in 1915 the government passed the first rent restriction Act — the Increase of Rent and Mortgage Interest (War Restrictions) Act, 1915. It froze the rents of all unfurnished tenancies (approximately 85 per cent of the total) below certain limits at the August 1914 level, and landlords were virtually forbidden to evict protected tenants save for obvious defaults such as non-payment of rent.”

This passage also makes clear that Braddock’s assertion in his second paragraph is untrue. It is correct only in the technical sense that — of course — tenants could not be forced to pay rent raised above the level permitted by their wages, i.e. to produce money they had not got. The alternative to the 1915 Act would have been for the government to let wages go up to meet increasing rents; instead, the Act restrained wage demands by keeping rents low — and provided also that workers, in Glasgow or anywhere else, were forced to pay them. Braddock appears not to realize that this “blow against landlords”, as he called it in his previous letter, was struck not by the workers but by the government in the wider interests of capitalism.

Second, our reply did not say that the non-payment of rent would enable employers “to reduce wages by that amount”. Wage cuts have not operated for a number of years. What happens nowadays is that pay increases endeavour to keep up with the cost of living, and where part of the cost of living is artificially held down by subsidies or controls the effect is to check the pressure for pay increases. Braddock must have read, of late, that the Labour Party wants the new rent rises postponed for just this reason: that the keeping down of rents is essential to make “an incomes policy” — that is, wage restraint — work.

Last — leaving aside the remarks about Bulgaria, which show more confusion than is possible to deal with in a short reply — Tom Braddock says the contention that the majority of workers in the developed countries must become Socialists or “the struggle can’t succeed” is absurd. It is nothing like as absurd as the urging that what workers should continue with is rent strikes and attempts to reform capitalism. This sort of “struggle” has been going on for more than a century without the workers’ position in society changing; and we are asked to support more of the same thing!

Editorial Committee.

Blogger's Note:

Not sure what happened with the fact checking for the Editorial Committee's reply to Tom Braddock's letter but the article Why Must the Rent Go Up ? actually appeared in the February 1972 issue of the Socialist Standard, not the January issue and Tom Braddock's first reply to that article appeared in the September 1972 issue of the Socialist Standard, not the July issue.

Letter: A Socialist Policy for Local Government Electors (1936)

Letter to the Editors from the December 1936 issue of the Socialist Standard

A reader of the Socialist Standard, Mr. T. Grenfell, of Bath, has asked us to say what we think of the programme on which he contested the Municipal Elections in 1934. It is, he says, his desire to appeal to the electors on the issue of Socialism and his election address was intended to be of a Socialist character.

The address is rather too long for the space at our disposal; we will, therefore, deal with some of its contents only. Before doing so it may be useful to state over again what part the capture of the local councils plays in the achievement of Socialism. First of all, Socialism cannot be achieved by a minority of Socialists trying to impose it on a majority of non-Socialists or anti-Socialists. The experience of Russia and of every Labour Government proves that the S.P.G.B. was correct when, 32 years ago, it laid down that elementary principle. It is necessary to have a majority of Socialists politically organised, and not in one country only but internationally. Next it is necessary for the Socialist majority to have control of the machinery of Government, including the armed forces. While the machinery of local Government is less vital than the machinery of central Government, control of it is of course of importance, even though the powers of the local councils are ultimately derived from the centre and can be modified in whatever way those who control Parliament desire. (In other countries the control of the central authorities over the local authorities is sometimes more direct, sometimes much less directly effective than in Great Britain.)

It will be obvious from the above that Socialists cannot have one set of principles for parliamentary elections and another set for local elections. The solution of the whole problem of the working class lies in the achievement of Socialism and it is essential, therefore, that the workers at all times and places should be told that their problems cannot be solved inside capitalism, either by the administrative action of local authorities under the powers granted to them by Parliament, or by Parliamentary legislation of a social reform character.

In the light of this let us look at some of Mr. Grenfell’s promises to electors.

First we notice that several things he undertakes to support cannot be settled locally because the power to control them is retained by the central Government. For example, he says that he stands for the “abolition of the Means Test,” and opposes “any interference with the rights of free speech and freedom of association of the workers.”

Actually no local council can decide these things.

No council can abolish the Means Test in defiance of Parliament's decision that it shall not be abolished. Nor can any local council prevent the operation of the Trade Union Acts which fetter the workers’ “freedom of association.” Mr. Grenfell is therefore giving the workers of Bath a wrong idea of the nature and powers of local councils.

More important, however, than this is that Mr. Grenfell nowhere points out that the workers' problems cannot be solved without the abolition of capitalism. Thus he fails to fulfil the prime duty of a Socialist. Instead, in effect, he fosters the illusions of social reformers. Whatever the reason for this may be, the consequence is that Mr. Grenfell’s poll of one-third of the total votes cast, must have been the votes of men and women who still believe in reformed capitalism and do not agree with the Socialist position. Mr. Grenfell, therefore, has behind him a reformist vote, not a Socialist vote, and reformist votes are useless for Socialism.

Still another defect is the acceptance of unsound economics. Mr. Grenfell demands that houses be provided “at rentals not exceeding 10 per cent, of the workers’ weekly wage.” This assumes that wages are determined in some way or other without relation to rents and other costs of living. It assumes that if rents are reduced wages will remain unchanged and the workers will benefit. This is a fallacy. The general levels of wages correspond, broadly, to the costs of living, and if rents or food prices fall wages fall also. It has often been pointed out in these columns that official enquiries showed that Viennese workers gained nothing from the almost entire abolition of rents in the years after the War. Wages fell correspondingly, and the gainers were the employers, who thus indirectly plundered the landlords.

There are other defects in the election address, but the above will show that it does not satisfy what is required of a Socialist election address.

Editorial Committee.

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

Letter: Rents: To Pay or Not To Pay? (1972)

Letter to the Editors from the September 1972 issue of the Socialist Standard

Like all other papers of what is known as the "left” you just now devote a good deal of attention to rents. In your February issue for instance there are two articles on the subject. In each of these you mention the 1915 rent controls. But you do not give the reason why the control was imposed in 1915. It was because in Glasgow and other towns in Scotland tenants not only refused to pay the increase but refused to pay any rent at all. As indeed some are doing in Northern Ireland to-day. The government in Westminster was terrified and in great haste passed the Rent Control Act making it illegal to demand increased rents. This of course was a great blow to landlords and they have by one means or another, with the assistance of all governments, been getting round it ever since as described in your first article “Why Rents Must Go Up”.

Unfortunately you have not learnt the lesson, if tenants of council or landlord living accommodation refuse to pay any rent at all or if those who are forced to borrow money to get a place to live in refuse to pay out rent charges no power can force them to do so if they stand united.

Having read your paper for many years I know your normal reply would be "What of it”, even if British workers do not pay capitalism will still exist and people in France, the USSR, China etc. etc. will still be paying rents. True enough but if the British worker can defeat the landlord and money lender in the matter of rents etc., it will not be long before others follow their example. After all you are not against the miners, you say, — “They should have the support of all other workers etc. etc.”

Let us see the SPGB taking up the fight for the workers on the rents issue and advocating "No rents or interest charges for lousy accommodation”.

Tom Braddock

East Preston.

Reply: 

The episode to which our correspondent refers was a consequence of housing shortage after the outbreak of the 1914-1918 war. House-building virtually ceased when the war began, and in the munitions-producing areas the shortage gave a special opportunity for profiteering in rents. In Glasgow, tenants in slum districts refused to pay increased rents and were supported by the militant Clyde workers. The outcry was a principal factor in causing the government to pass the Increase of Rent and Mortgage Interest (War Restrictions) Act, 1915.

It was, as Tom Braddock says, "a great blow to landlords”; this was one of the themes of our article Why Must the Rent Go Up? However, he is assuming that a blow against landlords is a blow against capitalism. In fact, a reduction in so large an item in working-class living costs is extremely welcome to the other sections of the capitalist class. Rent control has remained in force for fifty-seven years because it has helped keep wages down; a free market in rented housing would inevitably mean universal demands for higher wages. The present government and its predecessors have been as frightened of this as Braddock says they were of agitation in 1915, and have made concessions to landlords only because the alternative — already happening — was having large numbers of controlled houses deteriorating into slums.

As for the suggestion that the working class should now refuse altogether to pay rent or mortgage interest, Braddock does not tell us what would be achieved by this. He does not imagine, surely, that every household would then find itself better off by that amount every week? If he does, his reading of the Socialist Standard for many years cannot have been attentive.

Editorial Committee.

Labour's Futile Housing Reform (1973)

From the August 1973 issue of the Socialist Standard

Labour’s promise to take over all privately rented accommodation in London is a confession of the failure of its previous policies of rent control and improvement grams to solve the housing problem. And it too will fail.

Rent control had eventually led to housing conditions getting worse. Many landlords neglected to maintain their houses properly since the low rents they received didn’t make it worth their while. Faced with this problem the last Labour government came to accept the Tories’ policy of allowing rents to rise to enable landlords to make bigger profits. True, they did introduce a measure of re-control of rents. But this very same Act set up the now notorious “fair rents” machinery which the Tories had merely to extend to council tenants. It wasn’t long before people were complaining that this was benefiting landlords more than tenants — but then it had to if landlords were to make more profit.

Then in 1969 Labour introduced another Housing Act whose effect has nearly been as disastrous as what labour politicians used to call the “wicked Tory Rent Act” of 1957. This Act extended the so-called fair rents formula to some previously controlled tenancies, but it also provided for local councils to make “improvement grants” to landlords. The intention no doubt was that the sitting tenants would benefit in terms of better housing, even if they did have to pay more rent. But it has not worked like this at all. Property companies have bought houses off smaller landlords, obtained a grant to convert them into flats — and then let them off at much higher rents. Far from the sitting tenants’ benefiting they have had to find alternative accommodation. Whole communities of lower-paid workers, as in parts of Islington, have been driven out of their traditional homes by these “improvement” grants, swelling the number of homeless and aggravating the housing shortage.

The whole business illustrates the futility of piecemeal reform as a solution to the housing problem. It proves the soundness of the Socialist Party of Great Britain’s contention that the housing problem can never be solved as long as capitalism lasts. What is required is a complete change in the basis of society which will bring the means of production into common ownership under the democratic control of all the people. Only on this basis can production be planned with a view to satisfying people’s needs. Housing would then be no problem. The resources, human and material, to build enough decent homes for everybody have long been in existence. In Socialism there will be no class privileges or profit motive to prevent them being used to do this, as there is under capitalism.

This taxation business (1978)

From the July 1978 issue of the Socialist Standard

In the first issue of this journal The Socialist Party of Great Britain stated that it does not matter to the working class whether taxes are high or low, or whether they are direct, like present day PAYE, or indirect, like the duties on beer and tobacco. Other political parties and the trade unions greeted this with astonishment and unbelief; how, they asked, could anyone be so blind as not to see that workers would be better off with lower taxes? It is the purpose of this article to show that the statement was, and still is, a correct one.

Taxation is always in the news and it got special attention on May 8 last when a collection of opposition parties in Parliament forced the government to reduce Income Tax from 34p to 33p in the pound. The debate was being broadcast on Radio, which accounts for the MPs utterances containing more than the usual amount of humbug. With one exception, all those who spoke, whether for reducing the tax or for not reducing it, said that their sole concern was the wellbeing of “the nation”, but each side had the gravest doubts about the good faith of the others.

Mr. Healey thought the real intention of the Tories was to “grub up a few extra votes”. It seems that in his sheltered life he had never before encountered a political party so depraved as to frame its policy to catch votes. He made much of the Tory and Liberal admission that they favoured reducing direct taxation and increasing indirect taxation, VAT. What shocked him most was the Liberal John Pardoe’s view that there should be an even greater reduction of Income Tax. Did Pardoe not realise that the consequent “enormous ’’increase of taxes on beer and tobacco would raise the cost of living by as much as 3 per cent? (Under Mr. Healey’s guiding hand since February 1974, the cost of living has gone up by nearly 100 per cent).

An argument that did appear in several speeches was that reducing Income Tax would improve the workers’ "incentive to work”.

The one MP who stood aside from the general discussion was Enoch Powell. He made it clear that his group of Ulster Unionist MPs (who usually vote for the Labour Government) were simply using the occasion to bring pressure for the restoration of local government in Northern Ireland. Not one MP mentioned a certain forbidden ten-letter word — the word capitalism; but it is capitalism they were dealing with.

Capitalism is a complicated social arrangement, with many internal conflicts and contradictions. One consequence is that politicians, who need the workers’ support and votes, have perfected the art of presenting capitalist policy as if its real aim was to benefit the workers. It is not safe to accept things at their face value, which is the error made by those who tell the workers that what they need is lower taxes.

At first glance the case they make seems self-evident. If the PAYE deduction from wages goes up or if taxes put prices up surely the workers are worse off? And if PAYE or prices go down surely workers are better off?

The people who use this argument about price increases associated with higher VAT use the same argument about all price increases, whether related to higher taxes or not. (It is not necessary here to go into the question whether taxes on goods actually do simply put up their prices. For the present argument we can accept the belief that they do have this effect).

We can at once concede that at the moment when PAYE goes up or the cost of living goes up the workers are that much worse off: but what we should be concerned with is the longer-term, continuing, situation. And the fact is that, subject to variations due to other, quite different causes, the wages and salaries of the working class as a whole become adjusted to changes of PAYE and changes of the cost of living.

What really matters to workers is their “take-home pay” after deduction of PAYE and Social Security contributions, and what it will buy. It is this purchasing power that continually adjusts itself; not automatically, but through the struggles of workers inside and outside the trade unions, struggles influenced by the varying levels of unemployment. Government “wage restraint” propaganda and policies also play a part.

When purchasing power is reduced by higher tax deductions or price rises, workers react by seeking higher wages. When there are tax deductions or prices fall the workers’ resistance to pressure by the employers weakens. Earlier this year Mr. Healey held out an offer of lower PAYE as an inducement to unions to moderate wage claims.

There is plenty of evidence from past experience to show how take-home pay has adjusted to tax changes, and to changes in the cost of living.

First let us look at Income Tax. In the 19th century hardly any workers came up to the pay level at which tax became payable. During the Crimean War the government considered lowering the tax level so that most workers would pay tax. The idea was dropped for two reasons. First, the high cost of collecting large numbers of small amounts of tax would have been greater than the total amount collected. That is why, with inflation, Chancellors of the Exchequer periodically raise the taxable level to exempt low paid workers from tax. The second reason was that, because unemployment was then very low, it was realised that the workers would be able to get higher wages and thus maintain their purchasing power in spite of tax deductions.

Between 1938 and 1947, Income Tax changes brought far more workers into the pay level at which tax was deducted, and the proportion of pay deducted as tax had greatly increased. (In addition the cost of living had risen sharply). So were the workers worse off? A study of wages in Britain published by the American Department of Labour found that the purchasing power of take home pay had just about kept up with all the changes. A comparison between the purchasing power of present average earnings and that in 1938 shows that this upward adjustment has been more than maintained between 1947 and 1978.

Now for changes directly affecting the cost of living. In 1846 the industrial capitalists secured the abolition of the Corn Laws, thus enabling cheap food to be imported (at the expense of the landowners). It was presented as a boon to workers. Would not their wages now buy more? What the industrial capitalists really aimed at was that cheaper food would enable them to pay lower wages. (Later on when many manufacturers themselves wanted protection to keep out cheap foreign goods they presented it in the guise of “protecting the workers’ jobs”).

Between 1920 and 1926 the cost of living fell by 31 per cent, and PAYE was also reduced. Lucky workers? Not at all. Unemployment was heavy so that, in spite of attempted resistance through strikes, the workers were forced to accept an average reduction of wages of 32 per cent.

A special case of capitalist policy presented as something to help the workers was the introduction of rent restriction in 1915, by a Tory Minister in a coalition government. Because house-building had stopped on the outbreak of war in 1914, rents were rising. Rent restriction was imposed (at the expense of the landlords) in order to dissuade workers from striking for higher wages which would have adversely affected manufacturers as well as interfering with the war effort.

Rent restriction was adopted in many other countries and in the nineteen twenties the International Labour Office conducted enquiries into its effects. A typical finding was that related to Austria. It showed that in Vienna the rent paid by workers had fallen from 20 per cent. of wages in 1914 to barely 1 per cent. in 1923. So were the workers better off?

Most of the workers were in the same position as in Germany; they had practically no liabilities under the heading of rent, but the corresponding amount was not included in their wages. The actual gain was thus nil.

So we are on the solid ground of experience in asserting that taxation is not a working class issue, not forgetting that this presupposes that the workers continue the struggle to maintain and increase wages as far as conditions allow.

For the capitalists the position is quite different. Having exploited the workers to the fullest extent, having got maximum output at the lowest wage they can induce workers to accept they have to pay, out of their profits, the cost of maintaining the State apparatus, the armed forces and so on. The burden of taxation falls on them. It follows that as a class they have very good cause to keep government expenditure as low as possible so that taxation can be correspondingly low. The workers have no such interest.

There is another difference between the two classes. The capitalists have every reason to continue capitalism indefinitely, but workers who give the matter a little thought must conclude, with us, that it is in the interest of the working class to get rid of it.

Edgar Hardcastle

Housing reform examined. An illustration from Vienna. (1927)

From the December 1927 issue of the Socialist Standard 

The housing problem is—for the workers —neither new, nor limited to any one country.

It existed before the War and exists still, despite the much-advertised efforts which have been made by the post-war Governments all over Europe. In essence the problem is simple. The workers cannot afford to pay rents high enough to make the building of houses a profitable undertaking for the capitalist building concerns, and even when the municipalities or the Government step in they are faced with the choice either to let their houses at rents less than sufficient to meet the cost, have them unoccupied, or else overcrowded with two or more families. In the “New Leader” (October 21st) there appeared an article by an Austrian writer, Olga Misar, bestowing high praise upon the Austrian Labour Party for the housing policy which they have carried out on the Municipal Council of Vienna. They have built some 25,000 working-class dwellings and have thereby greatly reduced the pressure on accommodation which immediately after the War was probably worse than in any other European city.

The writer points out that whereas in pre-war days the Viennese worker had to pay away about 25 per cent. of his wages as rent, the present proportion is only about 2 or 3 per cent. A man with £1 per week wages, instead of paying 10s. rent, now pays only about 1s.

If this is true, does not the Austrian Labour Party fully deserve the praise which Olga Misar showers on them?

In fact, however, this is only part of the story. Other information is contained in an Austrian Labour Party pamphlet, “Die Wohnungspolitik der Gemeinde Wien (1926)” (Housing Policy of the Vienna Municipality), which very admirably illustrates the soundness of the Socialist opposition to the advocacy of reforms.

True, rents are proportionally less, but SO ARE WAGES. What has happened is as follows :

Seventy per cent. of the production of the Austrian factories is for export, but as Austria has few sources of raw materials or fuel, she must import them at world prices. Faced with the problem of exporting manufactured goods in competition with big and better equipped German, English and American industries, and lacking the capital to re-equip their factories on modern up-to-date lines, the only solution for the Austrian capitalists was to lower wages, and at the same time, if possible, increase the efficiency of their workers.

By the almost complete elimination of rent from the expenditure of working-class households wages could be and have been reduced without sacrificing the indispensable minimum of food, clothing, etc., necessary to maintain their working powers.

That this is a correct view of the situation is confirmed by a report published by the International Labour Office of the League of Nations. The report says :—

“The item of expenditure on rent in working-class budgets was reduced to practically nothing ; in July, 1923, it was barely 1 per cent. of the total expenditure of a working-class family, whereas before the war it might be estimated at about 20 per cent.

The change, however, directly benefited certain classes of workers only. But this applied only to unskilled wage earners in a few industries. Most of the workers were in the same position as those of Germany; they had practically no liabilities under the heading of rent, but the corresponding amount was not included in their wages. The actual gain was thus nil.

Industry, on the other hand, benefited, as in Germany, by the reduction in the cost of most labour by the full amount which rent represented in wages before the war.” (The Workers’ Standard of Life in countries with depreciated currency. International Labour Office, Geneva, 1925 P. 97.)

The nett result is that the efficiency of the workers has been maintained or increased by the added comfort and contentedness promoted by better and less-crowded housing accommodation than would have been supplied by private capitalist builders. And since this could not be carried through as a financially self-supporting scheme it has been financed at the expense of the Austrian landlords, by means of heavy house and rent taxes levied on landlords money was raised by the Municipality to build and subsidise working-class dwellings.

In short, the landlords have been plundered by the Labour Party in order to subsidise the export trade of the Austrian factory owners. The workers pay less rent, receive wages which are correspondingly less than before, and give better service.

The “successful” Labour housing policy is then just part of the sectional struggle between exporting and landowning capitalists.

Even so, there remains the question of the better housing accommodation. It will be said that this at least is a gain to the workers. True, but did it need a “Labour” majority to secure that incidental gain, and is the securing of it a justification for the policy of fighting for reforms of the capitalist system ?

It was in the interest of the manufacturers to have their employees well housed, contented and efficient. Henry Ford, Bournville, and Port Sunlight are instances of the care taken by more progressive capitalists to ensure that the home conditions of their workers do not militate against their efficiency as wealth producers ; and the activities of almost every government (including the Austrian Central Government) in the direction of restricting rents or of building or subsidising houses, show that they will not neglect their own interests as an employing class. Instead of allowing themselves to be used as the instruments of a section of the capitalist class, the party of the workers should concentrate on the very necessary and at present largely neglected task of demonstrating the impossibility of solving the poverty problem inside the capitalist system.

Edgar Hardcastle

Why the date is important (1964)

From the May 1964 issue of the Socialist Standard

The Prime Minister has spoken. In the hope that the interests of the Conservative Party will be best served by an election in the Autumn, he has settled for that and the news which has been so anxiously awaited by the M.P.s who hang on to slim majorities, and not so anxiously by those who sit on a fat lead, is out.

Ever since the Profumo crisis, there has been any amount of speculation about the timing of the election. Only a short time ago, some political experts were assuring us, on information from “reliable sources,” that polling day would definitely be in March. Others were equally confident that it would be in late May or June.

But there has also been a persistent story that the Prime Minister himself favoured a later date, in the hope that by then his party’s tarnished image would be looking a little brighter. At the same time, it was whispered, Harold Wilson was hoping for a June election and was working on the assumption that that would happen.

Both Labour and Conservative parties attach great importance to the date of the election; for some time they have based their electoral strategy on their forecast of the date.

In passing, we may comment that the time which Douglas-Home has chosen has a certain interest. Previous Conservative Premiers have often been masters at the political game and have excelled in calling elections at a time of maximum inconvenience to their opponents, and then fighting on a craftily conceived vote-catching gimmick. Baldwin was like that and so was Macmillan. But Douglas-Home has so far done nothing to suggest that his choice of polling day has been handled any more adroitly than the other political matters which he has bungled since he took office.

This is a point of no more than academic interest. While the working class are blind enough to acquiesce in a social system in which they are governed by leaders in the interests of the capitalist class, it is of little consequence whether the leaders are politically skilful or not. Home, up to now, is one of the nots.

It is important to realise why the parties have been in such a dither over polling day. The English political constitution allows the date of an election to be flexible. This would not matter very much if the people who determine the outcome of an election were of different material. In other words, if the working class were politically more mature, the election date would be of much less significance—their votes would go the same way in March as in October, or any other month.

But the working class are not politically mature. They vote in ignorance and in docile acceptance of whatever capitalism likes to dish out to them. Some of them support the Labour Party, although they oppose Labour Party policy. (Aims of Industry claim that 32 per cent. of Labour Party supporters are opposed to more nationalisation). And the same sort of thing can be said for some of the supporters of the Tory government.

If the evidence of the Gallup Poll can be relied upon, the voting intentions of the working class change almost week by week, apparently influenced by all manner of incidents in the daily round of capitalist crisis and confusion. In these circumstances, it is not surprising that the politicians attach such importance to the date of an election. If, for example, Macmillan’s government had collapsed last summer, they would probably have lost the election—for the same basically illogical reason that may win the election for Douglas-Home later this year.

In the United States, the pre determined date of an election means that the timing in itself does not have the same importance as over here. But this does not mean that there is any less posturing, any less dishonesty from the politicians, any less ignorance on the part of the working class. For some months before a Presidential election, some American government business almost comes to a standstill, as the two great parties concentrate their energies on the coming campaign — upon the careful statements, the devious attacks on their opponents, the loaded hand outs and promises to voters.

This sort of campaign is widely accepted by most of the people who have a vote to cast. In the same way, they expect a British Prime Minister to choose an election date to suit himself—the date on which, he thinks, the people who are foolish enough to vote for his party will outnumber those who are foolish enough to vote for the opposition.

This sort of cynicism does not damage the politician's image of a beneficent, honest man who would rather die than stoop to a low trick. It does not damage Home's image of a chivalrous aristocrat who longs to serve all of us slum dwellers and millstone mortgagees. It will not damage Wilson’s image of the blunt, sensible lad from Yorkshire who learnt all about life in the days when he could not afford to wear shoes. Yet these images should be damaged—indeed, should be destroyed by the evidence of the politician’s cynicism. That they are not destroyed is just another symptom of the political backwardness of the voters.

One of the most depressing facts about an election is that very few of the millions who cast their votes seem to ask what the politicians want power for. They are generally content to accept the cynicism and the vote hunting and the politician's own assessment of themselves as humane and clever men.

Both Labour and Conservative parties claim that they are opposed to each other. The Labour Party warn us that the Tories are hard headed, ruthless men of business who care not for the problems of the under-privileged nor now that Harold Wilson is in command —for the underpaid men of science. The Tories reply that the Labour Party is full of reckless dogmatists who will ruin the British economy for the sake of a theory and who will allow British capitalism to be bossed by flat capped trade unionists.

What truth is there in these claims? One of the issues on which Labour hopes to win votes is the rise in rents which followed the Rent Act. The figure of the rapacious landlord has always been a politically emotive one. Yet even at the time when the Act was first passed, it was apparent that a Labour government would have been compelled, to some extent, to free rents. Now from the other side, the Conservatives have stated that they are in favour of some measure of rent control. In the House of Commons on March 18th last Sir Keith Joseph, Minister of Housing, made this quite clear: 

. . . the Government do not intend, if returned to power, to propose, during the next Parliament, any further measure of block (rent) decontrol.

This shows how close the two parties are on this issue. There is nothing surprising about this. Housing is an essential part of working class expenditure and as such has a powerful effect upon wages. This means that rents are important enough to capitalism to ensure that the two big parties substantially agree on what should be done about them.

Then there is the favourite Tory bogey of a Labour party which will nationalise everything and drive all the employees out of business. This bogey has always been something of a laugh, especially when we recall what the last Labour government was prepared to do to keep British capitalism prosperous.

Now Sir John Hunter, chairman of the Central Training Council, has had his say on this, to the British Employers' Confederation;—

I do not subscribe to the view that a Labour Government will introduce legislation with little regard for the employers' views. On the contrary, I believe a Labour Government would listen attentively to the views expressed by employers’ organisations on one condition that those views are positive and expressed clearly, forcibly and without reservation. (Guardian, 19/3/64.)

Both the big parties, in fact, stand for capitalism—and so do other organisations like the “Liberals," “Communists” and “Independents,” who claim to be different. They stand for the social system in which war is established and persistent enough to be almost a way of life. They support the economic arrangement in which the mass of the people, who make and distribute the world’s wealth, live in a horror-land of plastic, prefabricated, powdered, poverty, while a few privileged people have an income which allows them the chance to live like human beings. (In the tax year 1961/62 there were just 92 people in this country with annual incomes over £100,000).

In face of their basic agreement over the continuance of this social system, the differences between the Labour Party and its Tory opponents arc quite insignificant. They are no more than differences over the details of administering a world so organised that it enables a few people to do very well indeed while the vast majority get hurt—sometimes literally so.

This is what puts the timing of the election into its perspective. What can we say about the voter who is subject to all the suppressions and frustrations of capitalism yet who will vote Labour in March, Tory in October, perhaps Labour again in January, and so on? Is there anything more foolish? More futile?

Whatever precise date the Prime Minister eventually settles for, he can rest assured that when the election is over and the next government is comfortably in the seat of power, when the newspapers are smugly congratulating everyone on what they call the exercise of democracy, he will still be Sir Alec Douglas-Home with all his property and investments. So will the rest of his class, up the top of the social tree. And somewhere down the bottom will be the people who, at any time and in all weathers, are content to keep them there.

Ivan

The Economics of Rent Control (1957)

From the April 1957 issue of the Socialist Standard

The Socialist’s task is to preach Socialism and work to bring a Socialist society into being. This involves understanding and explaining the nature of the present social system; that it is a class-divided system in which the workers, in their own interest, need to struggle on the wages field and to take any favourable opportunity to press for higher wages.

Social reformers, including the members of the Labour Party disregard (or explicitly reject) the class- struggle. They see instead a world in which, as they suppose, it is possible bit by bit to gain benefits for the workers and thus progress towards a new social system. It is a deceptively plausible argument; but it rests all the time on a great illusion. The argument runs like this, "Would it not be a good thing if on top of his wages the worker with children received children's allowances? And if his wages remained the same and food prices were reduced by Government subsidies? And if his wages remained the same and his rent were reduced by rent restriction and housing subsidies?" It looks good, too good. It is too good to be true. The catch in it is the assumption that these “benefits" are added to wages and that wages can look after themselves. In truth the reforms mentioned, along with others of the same kind, have had the effect of undermining and weakening the working-class struggle for higher wages—and they were designs for that purpose.

Advocates of children’s allowances urged their adoption to avoid a general raising of wages; incidentally setting the married against the single workers. Food subsidies under the war time Coalition and under the 1945 Labour Government were used to manipulate the cost of living index in order to mask the real rise in the cost of living and fob off wage claims. And rent control was devised for for purpose of discouraging foe workers from fighting for higher wages at a time when low unemployment gave them a favourable opportunity to do so. It, too, has divided the workers paying restricted rents from the others, in high rented houses.

The final answer to the whole argument of the reformists is the fact that it was the Labour Government (following foe example of Tories and Liberals before them) that pursued the policy of the “wage-freeze," thus knocking the bottom out of their own case. They demanded of the workers that, in face of a rising cost of living, they should be content with “social services" in place of wage increases: and asked employers not to give higher wages.

The late Sir Stafford Cripps, Chancellor of the Exchequer in foe Labour Government, defined this policy in a speech in the House of Commons on 27 September. 1949, when dealing with the White Paper on "wage restraint" issued foe previous year:—

"The White Paper must . . . be observed strictly, and it is only in the exceptional and genuine cases where some wage survives which, together with all the subsidies and social services, is insufficient to provide a family a minimum standard of living, that there can be any possible excuse for going forward for an increase" (our italics).

The occasion of the speech was the devaluation of the pound, which Sir Stafford had denied for months that he intended to enact but which he had just announced. He knew that this would raise the cost of living still further but again he warned the workers that they must not expect wages to rise:—

“Especially and specifically there can, in our view, be no justification for any section of the workers trying to recoup themselves for any rise in the cost of living due to the altered exchange rate."

So the reformists who promised social reforms and low rents and prices to be a form of wage increase, ended up by asking the workers to put up with higher prices and a wage freeze!

The Curious History of Rent Control

Anyone who judges the present dispute over rents merely by what Labour Party leaders say about the Tory bill to free large numbers of houses from control and to raise the rents of those still under control will gain the impression that it is a clear issue between Tories, who are against low rents, and Labourites, who favour them. Yet the history of rent restriction shows that this does not fit the facts. It was a Tory Government that reimposed rent restriction when the war broke out in 1939 and a Tory Minister of Health, Mr. W. H. Long, in a Coalition Government, who started it all in 1915. What has to be explained therefore is why the Tories who began it, later on wanted to wipe it out. The explanation is really quite a simple one. The Tories (and Liberals) introduced it in 1915 and again in 1939 to deal with a particular problem arising out of war and when that emergency was over and new conditions arose they saw no point in keeping it in existence. What the MacMillan Government is doing now, through its new legislation, is, though on a restricted scale, what the Tory Government wanted to do in 1923. In that year the Onslow Committee, set up by the Government, recommended that rent control be entirely abolished and rents left to the free play of supply and demand. It was to be carried out in three stages so that by June, 1925, the last vestige of the war-time legislation would have been removed and landlords would be legally entitled to get what rents they could, as had been the situation before 1915. But this was so unpopular that the Government got cold feet and decided to make minor relaxations only so a large proportion of working class houses still had controlled rents when, in 1939 (again because of war) rents were pegged at their existing level.

Parallel with legally restricted rents was the policy of Government subsidies to enable new houses to be built and let at rents below the amount required to cover the full cost. This, too, was not a Labour Party invention but was started in 1919 by the Liberal-Tory Coalition Government. Recently the Tories sharply reduced the amount of subsidies and Mr. Butler, who was then Chancellor of the Exchequer, announced that the intention was to abolish these Government subsidies entirely (House of Commons, 26 October, 1955).

Why the war-time Governments Restricted Rents

As soon as the war broke out in 1914 the building of new houses was curtailed, and later on brought almost to a standstill, because men and materials were wanted for the armies and munition making. The result was that rents began to rise along with the rise in toe prices of food and clothing and other necessities. As there was little unemployment and a great shortage of skilled workers, the members of trade unions began to press for higher wages. The Government (and the employers) wanted to prevent the workers, especially the skilled men who were very favourably placed, from taking advantage of the labour shortage by striking. The Government appealed to their patriotism, with the help of Labour leaders; promised to keep the cost of living down; and took the drastic step of making it illegal for landlords to raise rents above the 1914 level. At the same time they fixed maximum wages for many workers. This policy of “wage restraint” succeeded almost beyond expectation and throughout the war wage rates, particularly those of engineering craftsmen, were kept far behind the steady rise of the cost of living. The following comment was published in the Labour Year Book, 1919 (published by the T.U.C., Labour Party and Labour Research Department):—

“By the spring of 1915 the skilled engineers would have been able, if they had acted without consideration for the national position, to demand a monopoly price for their labour—a situation which had not occurred in this century since the Black Death of 1381. And just as the government of that day had met the situation by a statute fixing the maximum price that must be paid for labour, so in 191$ the government passed the Munitions Act, which had substantially the same effect. Compulsory arbitration and the Leaving Certificate clauses combined to prevent the engineer from getting better terms for his labour by withdrawing that labour, either collectively or individually” (p. 235).

The article in the Labour Year Book went on to point out that at the end of 1916 engineers wage rates were only 20% above the 1914 level. By the same date the cost of living had risen by 65%. And just after the end of toe war (in January. 1919), while all industrial wage-rates had, on average, risen to about 100% above the level of 1914, the cost of living had gone up by 120% in spite of the freezing of rents at the 1914 level.

This policy was followed again in the second world war though the true picture was obscured by the falsity of the Govemment's cost of living index. On a real estimate of the rise of the cost of living during the war large numbers of skilled craftsmen (as well as most clerical workers) had increases of wage rates below the increase of prices. “Wage restraint” was continued after the war by the Labour Government and Mr. Richard Crossman, Labour M.P. and member of the Executive of the Labour Party, afterwards admitted how restricted rents and other factors were used by the Labour Government to keep wages down.

“The fact is that, ever since 194$, the British trade unionist could have enjoyed a far higher wage packet if his leaders had followed the American example and extorted the highest possible price for labour on a free market.

“ Instead of doing so, however, they exercised extreme wage restraint. This they justified by pointing out to the worker the benefits he enjoyed under the Welfare State—food prices kept artificially low by food subsidies: rents kent artificially low by housing subsidies; rent restriction; and, in addition, the Health Service “ (Daily Mirror, 15/11/55).

Rent Control not a Working Class Issue

In 1915 the Labour Party supported toe Govemmenfs decision to peg rents at the 1914 level and the Labour Executive in its report to their annual conference in 1916. claimed that “assuredly this Bill was a very big step against certain class interests.” The implication was— and every Labour Party supporter firmly believes it still— that a victory had been gained by the working class against, the Capitalist class. It was nothing of the kind. It was a measure for the safeguarding of capitalism taken at the expense of one section of the propertied class, the landlords. It was not a victory for the working class though then, and since, it may seem to have been in the interests of those individuals who happen to live in a house with controlled rent. It was intended as a means of dissuading the workers as a whole from pressing for the higher wages they could have got, and in this it succeeded.

Not only is this shown by what happened to wages and the cost of living in Britain during the two world wars and under the 1945 Labour Government, but it was demonstrated also by experience in continental countries, including Austria and Germany.

Low Rents, Low Wages, High Profits

The effect of rent restriction on workers' wages was inquired into more than once between the wars by the International Labour Office. One of their reports was The Workers Standard of Life in countries with Depreciated Currencies. (ILO, Geneva, 1925). Dealing with Vienna it showed that, because the Government had prevented rents from rising,

“the item of expenditure on rent in working class budgets was reduced to practically nothing in July, 1923, it was barely 1 per cent, of the total expenditure of a working-class family, whereas before the war it might be estimated at about 20 per cent. The change, however, directly benefited certain classes of workers only. But this applied only to unskilled wage earners in a few industries. Most of the workers were in the same position as those of Germany; they had practically no liabilities under the heading of rent, but the corresponding amount was not included in their wages. The actual gain was thus nil."(p. 97).

The Report went on to say that the real gainers were the employers, because they were able to reduce wages to the full extent of the missing item, expenditure on rent. 

Of course the losers were the landlord section of the propertied class.

Tory and Labour both now favour Higher Rents

Though the landlords had to put up with the sacrifice of their interests during the two wars they naturally used all the influence they had to set rid of rent restriction and thus restore the value of their investments when war ended. A number of factors helped them, including the remorseless economic law of capitalism that if there is no profit there is no production. If investors cannot get something like the normal rate of profit on house property they don't invest money in house-building or in repairs. So both the Tories and the Labour Party are agreed that the mere perpetuation of rent restriction is not wanted and must go. In 1923 the Labour Party members on the Onslow Committee recommended that rents should be reduced below the level then permitted under the Acts but no Labour Party spokesman advocates this now. Their main new proposal is that all rent-controlled houses occupied by a tenant be taken over by local authorities, repaired and improved and, as the Labour Party frankly admits, “there will inevitably be some increase in rent." (Labour Party “Talking Points,” No. 15, 1956).

The Tories on the other hand intend to free a large number of houses and raise the permitted rent in others, with the certainty that many rents will go up and the promise that some of the existing very high decontrolled rents will come down. In their view the private landlords, sure of a higher return, will look after the condition of the houses. Both parties agree that the present situation, with a great number of slums, and other hundreds of thousands of houses deteriorating fast into a slumdom, cannot go on.

The Wages Front in 1923 and 1957

The Tories wanted to get rid of rent control in 1923 because it had served its war-time purpose of discouraging wage increases and because by 1923 there were so many unemployed that the trade unions were not in a position to win wage-claims by strikes. They dropped the plan then because it was unpopular and they needed workers votes in elections.

In the past few years the situation has been different from that of 1923. There has been little unemployment and the Tories tried to carry on after 1951 the Labour Government's policy of wage restraint, but with increasing lack of success.

Whereas under the Labour Government from 1945 to 1951 wage-rates lagged behind the rising cost of living, since the Tories came in in 1951 a more aggressive attitude on the part of the workers has played its part in causing wage-rates to rise faster than the cost of living index.

In these changed circumstances the policy of “wage-restraint” by persuasion from above is on its way out, and with it goes any remaining belief by the Government and the employers that it is worth their while keeping widespread rent control in being as a means of discouraging wage claims. Far too many workers are already in decontrolled houses (including the high rented Council houses) or furnished apartments, for the workers as a whole to be as much influenced in that direction as they used to be.

It may be asked what, in face of this situation, is the Socialist Party's policy for the rent and housing problem. ( The answer can be brief. The workers' housing problem will not be solved while Capitalism remains. It is as old as capitalism—the first legislation to solve it was over 100 years ago—and it will last as long as Capitalism, whether the Government be Tory or Labour. It is just a part of the problem of working class poverty, for which neither of those parties has any solution whatever.

Edgar Hardcastle