Economic limits of insular socialism
Nicholas Davenport
This being proverbially the silly • season one might expect stockbrokers, seeing their turnover dwindling, to emulate the workers of Stoke-on-Trent and "clock off" at 2 in order to go sun-bathing. But they are holding on to their telephones and awaiting grimly the Prime Minister's speech on Wednesday. Can he persuade the labour movement not only to back up the TUC plan for a £6 limit on wage and salary increases but to support the government policy of cutting public and local expenditure, increasing unemployment and tightening belts? .
The Times last week gave space to an anti-government diatribe by Paul Foot who writes for the Socialist Worker, the weekly organ of the revolutionary International Socialists. It was a powerful article. It expressed his growing despair as a socialist at a time of "unprecedented capitalist collapse." "Almost every day," he said, "new evidence is published of the lunacy and cynicism of the profit system Capitalism is shipwrecked. It can only be floated again by huge government grants, unemployment and wage control." He accus.ed the Labour government of being the helpless puppet of a capitalist system which gets it to come to its rescue as soon as the £ sterling is in danger. Socialism, in his opinion, can only come when "the masses have confidence in themselves to disposses the owners of the means of production and run a new society in which production is planned to meet the people's needs." This was fine material for the Times.
There is no doubt that capitalists made ghastly mistakes, madly speculating in property and company mergers, when the Tory government grossly enlarged the money supply — this sort of thing has happened many times before in speculative orgies during a boom — but when the workers take over the means of production, as they do when they organise a sit-in, they find that it is useless unless they can make ends meet and sell what they produce at a profit. (Let us call it a "surpIns" if profit sounds a dirty word.) The recent case of the sit-in of the typewriter factory (discarded by an American conglomerate) is a good example. Typewriters are not every one's needs and if you have not got a good :design which can sell at an attractir price here and abroad it is absurd to nationalise the factory and pour in government money to keep a few hundred natives employed. Far better train them to do other jobs.
The case of the Norton-VilliersTriumph motor cycle factory is more poignant but more telling. Government money had actually been injected by Mr Benn to help set up a workers' co-operative after a sit-in at the Meriden factory but it had become impossible to break the Japanese domination of the world motor cycle market. So the Government has now pulled out and is closing the factory. Paul Foot quotes, a shop-steward wlio accused the Labour government of tearing up their commitments and "putting us on the streets". Actually the British motor cycle debacle is the sad story, first, of a bad post-war management failure the result of a lack of co-operation between the equity-risk investors and the board of directors — secondly, of the failure of both Labour and Tory governments to set up a committee of inquiry into the best use of the skilled labour and plant which, pre-war, had given us the motor cycle trade of the world. Nationalisation of a factory will not correct the commercial mistakes of twenty years. One must sympathise with the shop-steward but even if he could design a machine which would appeal to foreign buyers I doubt whether he could undercut the Japanese on his scale of wages. We are world traders but we can't take on world trade at a loss. Not even Soviet Russia would underwrite an uneconomic Socialist Britain.
These elementary economic facts seem to have been appreciated at long last by the less revolutionary members of the Labour Party. The Trade and Industrial Sub-Committee of the Expenditure Committee of the House of Commons, which has a Labour majority of five out of nine members, has just issued a report condemning the Ryder recommendations, adopted by the Government, for bailing out the busted British Leyland.. Mr Duffy, the Labour chairman of this sub-committee, is quoted as saying that "We are left with the feeling that Lord Ryder and his team had thought of money rather as confetti." (This referred to the Ryder proposal to pump in £1400 million of government money over ten years and a further £800 million out of future profits, if there are any). "They rushed their fences, they indulged in questionable assumptions, and we don't accept their conclusions." The Committee's main criticism was that if the company did not achieve a much higher level of output and sales than Lord Ryder forecast it would have to shed labour — 50,000 to match Japanese productivity. In order to reach the Ryder target of profits it would have to be "more profitable than any large European motor manufacturer has yet been." The committee seem to suspect that IVIr Benn had decided to put government money behind Leyland before the Ryder report was commissioned and that Lord Ryder simply supplied the ammunition the Government wanted. The Committee was very sympathetic towards the dismissed managing director. Mr John Barber, who was paid £42,000 a year and could expect compensation of £378,000 on a contract with nine years to run. Most workers would say that this was treating money like confetti but net of the savage top marginal rate of tax it is not many thousands more than a long-term worker would receive on redundancy.
I hope that the Prime Minister
will not disguise the harsh economic facts in his speech to the nation. The £ sterling is not a scarecrow put up to frighten the workers into wage restraint. We are heavily in debt abroad and we bave to pay foreigners for nearly half our food and much of our raw materials. If they see that we are marching towards national bankruptcy — as we would be if we go on nationalising uneconomi6 projects — they will not lend us another dime. The public sector is already too large. The monstrous regiment of public clerks is becoming a drain on our resources. The private sector must be made more profitable and if the workers will join in the management through participation on the boards, so much the better for industrial relations. As readers of this column know, I would give them a share in the capital profits of growth through holding units in a public unit trust.
Until these grave issues are decided — and no one expects them to be decided on Wednesday — we shall remain in a "trading" market on the Stock Exchange, hovering between 275 and 325 on the TF index. At the moment of writing it is 303.5.
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