The Spectator
Breathing-space for a sick man
When a very sick man reaches a critical condition, emergency treatment is called for, and there will be little disposition to quarrel with the measures hastily adopted. There will, however, be concern as to how he got into his crisis and what is to be done to nurse him back to health; and the treatment of his convalescence may well depend upon the diagnosis of his disease. Thus, there is little point in cavilling at the Prime Minister's emergency three-to-five months freeze on most wages and many prices. No one, least of all Mr Heath, will dispute that such measures are only justified by the seriousness of our economic plight; and no one, either, will seriously dispute that their adoption signifies a major defeat for the Government in its conduct of the nation's affairs. Mr Heath has suffered the same failure as Mr Wilson; and there will be a kind of poetic justice if he becomes known as the second Mr Wilson, for it was his presumed ability to fill that role which was the chief cause of his defeating Mr Maudling in the contest for the leadership of the Conservative Party.
The high hopes with which Mr Heath set out to govern the country after his election victory two and a half years ago are now dead. These are not, however, the greatest casualty: high hopes are often better dead. What has been lost, apart from the sense of direction, is the opportunity to determine whether the British economy can develop and grow without a statutory prices and incomes policy. We still do not know whether Tory freedom works. This is to say, further, that we still do not know whether a characteristic Conservative policy can, in this country at this time, be pursued. Can a Conservative government do what every Conservative has said it can do, that is, produce economic growth without the social and political and economic necessity for constant legislative and bureaucratic interference in the processes of supply and demand? We still do not know the answer. It is not in question that, through redistributive taxation, welfare policies can and should and will use the resources of a comparatively free society to produce a comparatively equitable one. What, however, has very much been in question is, whether a free society can produce more cake than a socialist one. The present disaster, acknowledged in. the necessary freeze, is that we are no nearer now than we were two and half years ago to knowing whether the policies on which Mr Heath was elected will work or not. Since that election, it seems that we have learned nothing and forgotten nothing.
From a national point of view it would have been far better had the Prime Minister used his first two years in office — usually a Prime Minister's most potent time — to do what he said his party would do: shake out industry, let inefficient managements and companies go to the wall, let lame ducks perish, and reward the energetic and the skilful and the enterprising. For a while, it looked as if this was indeed what he and his team would do. But then there came the Rolls-Royce rescue operation — possibly, exceptionally, defensible on technological and strategic grounds — and the ridiculous piece of geriatric care that is keeping the Upper Clyde shipyards half alive and half dead when from everybody's point of view they would be better dead and buried. We have had vast largesse to the regions through the socialist Industry Act, The Government collapsed in face of the miners' strike. It is true that it clobbered the postal workers; and that it enacted its Industrial Relations Bill; and that it is forcing the museums to charge entrance fees. But the record is weak. The Government kept sounding as if it was abOut to confront the unions, but never did. It devalued by floating — itself sensible — but since then it has both propped up the float and agreed that it should be temporary. Generally, the Government's record, when it has not been one of vacillation, has been one of determination only to somersault and to capitulate. Except for the first few months, at no time whatever has it demonstrated the courage of its convictions. Its present decision to freeze has the appearanee of firm government, but the reality behind the appearance may well be infirmity of purpose brought about by an inability or a reluctance to diagnose the trouble and prescribe the cure. It only remains to be seen whether the reshuffled Cabinet, in which the key appointment is that of Mr Walker in the place of the failed Mr Davies, will use the brief time gained by the freeze to consider how the country, once more, has drifted into economic crisis, and whether any other remedy exists than the mixture as before.
The Prime Minister has made much of his claim that his freeze, unlike Labour freezes, is not taking place in the presence of a balance of 'payments crisis, but is, instead, introduced when the economy is expanding. The absence of a balance of payments crisis is a consequence of the floating pound: had we not devalued and floated we would have had a balance of payments crisis, and if Mr Heath and Mr Barber obey the injuctions of their Common Market colleagues, we may yet have such a crisis, if we revert to a fixed parity at an overvalued level. It is true that there are signs that the economy is expanding: but it would be astonishing were it not, given the vast amount of pump priming the Government is doing. Indeed, the expansion of which the Prime Minister boasts is itself part and parcel of the inflationary process the freeze is designed to suspend.
It may not prove to be fatal, as Mr Powell has argued it will be, "for any government, party, or person to seek to govern in direct opposition to the principles on which they were entrusted with the right to govern "; but there is no doubt whatever that the Prime Minister, in introducing his freeze, and, what is more, in promising to follow it with statutory controls, has abandoned the economic policies on which he was elected. The root cause of inflation has been, and remains, excessive public expenditure. No effort is being made, the museums apart, to reduce it: instead, every effort is being made to spend more. No effort is being made to force industry into becoming more economic: instead, every effort is being made to keep inefficient operations going. No effort is being made to encourage profitable growth at the expense of the unprofit able: instead, the profitable enterprise is made to subsidise the unprofitable, and the usefully employed worker is, in effect, made to subsidise the uselessly employed. The present tragedy is not that Tory freedom is seen to have failed, but that it has not been given the chance to fail or to succeed.
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