Pay policy BC
Andrew Alexander
'Without precedent' was the rapturous comment I heard a Labour MP make about last week's Treasury-TUC accord. The poor fellow, like so many other MPs, was genuinely under the impression that the Government's pact was the culmination of a bold and essentially modern approach to dealing with inflation.
It is a pity that MPs, who are always complaining that they need research assistants (at public expense) to fill in their ignorance about nuclear research, aerospace and the like should be indifferent to their own abysmal ignorance of more basic matters like simple history. Wage and price regulations are literally as old as an antique China case. Sir Harold Wilson's childish assertion in 1966 that his prices and incomes Act was the toughest thing outside wartime should really have read: 'the toughest measure since the Statute of Artificers of 1563'— though it might not, one feels, have notably improved the reception for the Act on the Labour side.
In fairness, MPs do not have a monopoly of this ignorance. Editors, leader writers, city journalists and other opinion-formers seem neither to know that inflation has an established history (which shows that the trade unions have nothing to do with it) as has the concept of stopping it by price and wage controls (which shows how futile and irrelevant such controls are).
The Chinese introduced a system of food price regulations back in 1122 sc. Officials decreed how much was to be planted and what the subsequent price was to be. It was a sort of Marketing Board arrangement with what today's politicians would euphemistically call 'teeth'.
The Athenians had a system too. Officials called sitophy laces were the equivalent of that dim bureaucrat Sir Arthur Cockfield and his price inspectors. The big problem was grain, of which Athens was a heavy importer. And like Sir Arthur, the sitophylaces made a virtue of fixing the price too low.
The result was that no one would sell grain to Athens and prices of what there was went higher than ever. The death penalty was then introduced for merchants who overcharged—a piece of barbarism indeed. Later the penalty was even extended to the sitophylaces (not such a bad idea). Eventually the controls were abolished.
Diocletian's system, at the turn of the third century AD, involved a system of price controls which extended to over 700 items. Wages were also fixed for every trade and profession. And the death penalty was available to deal with offenders. However, Diocletian, who seems to have been the model for modern British rulers, continued to debase the currency while trying to hold down wages and prices. So inflation got worse and the price and wage controls became increasingly unrealistic and harmful. Lactantius, writing in 314 AD, explained: 'The people no longer brought provisions to the market place as they could not get a reasonable price for them. This increased the shortage so much that at last, after manY had died by it, the law was laid aside.' A more localised version of wage controls appeared in England in 1550 when the Common Council of London laid down the wages of building workers in the City, even to the extent of prescribing the length of the lunch break.
The end of the eighteenth century saw two notable inflations activating notablY silly attempts to cure them. The American continental dollar, issued in abundance to finance the War of Independence, becarns quite valueless. The reaction was a law ficing the price of various commodities. The near-starvation of Washington's armY st Valley Forge is sometimes portrayed as 3 patriotic ordeal. It would be better described as ordeal by price code. The celebrated law of the maximum' bY which the French Revolutionary Gover11ment tried to prevent the inflation resulting from its massive issue of assignats was &I inevitable initial failure. The result was S yet more complicated 'law of the maxim° which has a familiar ring about it. There, were proper Margins for wholesalers an proper margins for retailers and allowances for transport costs at so-much-per-league' That too failed, because the assignats %veil still pouring off the printing press. The laW was eventually repealed. Robespierre, one, of the law's chief proponents, was carric" to the guillotine amid derisive cries df. among other things, 'There goes the dirtY, Maximum'. Which would seem to sugges` that the Paris mob was economically rather sophisticated. Would bystanders in Britain, if Mrs Shirley Williams were dragged off t° an abrupt end, shout after her: 'There g0e,,s the dirty Price Code'? I wish I could thilm they would. Where the experiences of these historic& examples (and there are many more) diverge from that of Britain so far is that, in thAe earlier cases, common sense has reassert itself and the law has been repealed or abandoned. There is no sign of price controls n.r wage regulations being abandoned in Brill; am. The Conservative stand on the vvbel.,s issue is one of the dampest features of 11, damp modern history. Mr Whitelaw declare,' that the wages pact is 'not the whole answer 's Sir Geoffrey Howe insists that an ineonler
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policy 'has a role to play'. Mrs Thatclife herself has been heard to assert that s, does not have to commit herself on matter' like this long before a general electiels Literally, that may be true. And no one lo obliged, either, to commit himself °Is the issue of whether two plus two eelli3d four until totals actually have to be 3eir!fie up. But the fact remains that most Pe°v have made up their minds about this simple proposition and are prepared to air their views if pressed. Britain has now had only about ten years out of the last thirty free of government interference with wages and prices. One Might have hoped that even if our M Ps are 8,Piog to remain determinedly ignorant of Me underlying trends in human history (While they claim to be so busy learning abPut DRAGON and MRCA)ithey might at least have learnt from the post-war years.
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