In the City
Bullocking industrial revival
Nicholas Davenport
The Prime Minister was quick to contradict the silly press report that he was assuming an overlordship of the economic and industrial departments of his ministry, as Sir Harold Wilson had once done with unhappy results. I assume that he merely wished to emphasise that he was Prime Minister and First Lord of the Treasury. The City should be grateful that he is behaving as a prime minister should in the proper exercise of power, for there has been a great improvement since he assumed office. His words in the House of Commons are worth quoting: 'Thanks to the IMF loan' he said 'and the safety net` (which the City so foolishly pooh-poohed when Mr Harold Lever was sent to Washington to prepare the way for it) 'the frenetic appearance that we had before Christmas on the matter of sterling is now likely to disappear. Sterling is going to be much more stable over the next twelve months.' And how much less costly for the Exchequer. I might add, if the 'official' holders of the sterling balances elect to take dollar bonds at a much lower rate of interest than the 131 per cent they have been receiving on our Treasury bills!
To go back to Mr Callaghan's statement in the Commons: 'I wish now,' he added, `to focus the country's attention, not on the position of sterling, which is not a real issue at this time, but on the real question of how British industry is to become as productive, efficient and export-minded as possible.' The question does indeed become real when the Bullock Committee's report recommending that trade union men should be put on company boards is about to be published. A confrontation between the CBI and the TUC on this issue would put a fatal stop on Britain's industrial revival. No wonder Mr Callaghan intends to take the chair at the next meeting of the National Economic Development Council on 2 February in the hope of avoiding such a dangerous confrontation.
Consider the steps which have to be taken to make British industry more efficient. In the January number of Lloyds Bank Review there is an article by Mr C. F. Pratten, a research official at the Department of Applied Economics in Cambridge, which was apparently vetted by the Department of Employment. Mr Pratten recently made two new studies of comparative labour productivity, one for British and overseas factories of international companies, the other for Swedish and British companies. Exact comparisons are admittedly difficult because of differences in the product mix, but his first study revealed that compared with the UK labour productivity in the US
was over 50 per cent higher, in Germany over 331 per cent higher and in France over 25 per cent higher. The second study, covering fifty companies in each country, showed that productivity was 50 per cent higher in the Swedish companies.
These remarkable differences are not entirely due to the overmanning of machines in the UK, although in Sweden and Germany managements have the right to fix machine-manning. In Sweden the freedom of employees to strike without the support of their unions is limited. Such strikes are illegal—even 'official' strikes after a union has agreed to enter negotiations. In Sweden and Germany the managements do not usually dominate the boards, so that managing directors are more easily fired if they are incompetent. (This suggests that British management is less competent than German or Swedish.) But Mr Pratten stresses the fact that there is more resort to conflict in the UK than in the other countries partly because there are many more separate unions in UK companies, partly because the British TUC has less control over its members, partly because there is a long history of disputation over , wages and profits in British trade unionism. En both Sweden and Germany, he says, much more progress has been made in providing workers with formal channels for participation in decision-taking, so that they are more favourably disposed to improving company profitability and are more inclined to identify increasing profits with their own security of employment. If an alliance between trade union leaders and managers similar to that which exists in Sweden and Germany could be secured here, Mr Pratten concludes, a vast improvement in British productivity would result. But it is obvious that this is not going to be secured by introducing into company boardrooms oldfashioned, and often bloody-minded, trade union officials who have all subscribed to the historical Clause 4 of their party's constitution which pledges them to destroy the capitalist system.
I have received for review a report on The Survival of the Capitalist System from the Institute for the Study of Conflict whose director is Brian Crozier and whose ten council members command respect. It is a serious, provocative, well-written and objective report which I commend to Spectator readers. It is written by Russell Lewis who does well to call our attention to the jubilation of the Marxists over the qualitative change in the crisis of capitalism, over the 'failure', of Keynesian economics, over the incompetence of the capitalist ruling elite and over the loss of will, particularly In capitalist America. He points out that if worker participation is used as a weapon for carrying the ideological Marxist struggle into company boardrooms, as the more militant union leaders see it, there could be a real danger of industrial collapse, particularly in the highly technological industries.
Of course Mr Jack Jones and other fine trade union leaders will assure the Prime Minister that they wish to avoid ideological conflict with the CBI and will do their best to improve the productivity of British industry but they have their enemies and can be made use of by the subversives who see the Bullock report as a heaven-sent opportunity to disrupt the private sector and destroy the mixed economy. imagine that the Prime Minister will try to persuade Mr Jones not to insist on the main Bullock report, but accept the German system of a supervisory board with 50 per cent workels. elected by the men on the shop floor. This seems to be acceptable in Germany but whether it would work in this country IS doubtful, if the men are to be elected by the TUC apparatus, which is intent on destroying private enterprise. Much therefore depends on the February meeting of the NEDC when the Prime Minister will strive to get a consensus for his great objective—the dustrial revival of Britain. I cannot think that Mr Jones will agree unless his men get a share in the profits. Now you will understand why the market in equity shares is not yet a bull one. As I have explained before, the market has be" come much more volatile because it is now largely in the hands of the life and pensio. fund directors who have become so politic" ally sensitive, if not neurotic. They will mia?lit to see the Bullock pole-axed before corriol.tt; ting their funds to more British industrial equities.
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