Incomes policy
Sir: Spectator's Notebook (4 December) rightly devoted much space to Mrs That cher's intention not to `have a statutory incomes policy again.' Incomes policies have indeed proved ineffective and those coun tries, like West Germany, who have avoided them have been remarkably successful. It must however be emphasised that the German unions are basically social democratic, not socialist or communist as are large sections of the British unions.
The most important element in Mrs Thatcher's economic philosophy however must be the balance of bargaining power as between employer and unions. This is after all what a free market economy is all about. Without this ingredient a strict monetary policy would simply mean strong monopoly unions forcing members of weaker unions (even in totally unrelated industries) out of work. Unemployment only acts as a deterrent for small unions, who are anyway unable to insist on higher wages and over
manning. The TGWU, AUEW and NUM will continue to protect themselves from the economic consequences of their own intransigence, while others go to the wall. Mrs Thatcher is right to forget incomes policy (which always reminded me of a doctor treating a patient for measles by using paint to cover up the spots), but she is in danger of forgetting or underestimating the most important obstruction to her balanced market economy—the distorting effect of monopoly labour power.
R. E. B. Atkinson Mainz, West Germany
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