An alternative economic policy

Sir: I can't quite understand the trouble you-are taking over the problems of an economic policy for Britain. These problems were solved four years ago, and even then it was emphasised how 'boring' the subject was becoming. Here are the main points with regard to what is wrong and the cure there- of. Not enough attention has been paid to them, for they repay detailed study:

`British economic policy is remarkable in a single respect: it is a crashing bore.... It is boring in a straightforward sense like the endless repeti- tion of infantile burbling is boring. It just goes on. It is just a repetition. And it has no meaning or purpose.

.. Crisis milestones in the post-war period are.

1947, 1949, 1951, 1955, 1957, 1959-61.

'All, without exception, were responded to by the same old method of restriction, accompanied by a monotonous chorus of ministerial platitudes,

echoed in the City, about the need to "stiffen our economy," "cut the cloth." and so on. Meanwhile,

first the Soviet Union, then Germany, then Japan (soon it will be China) ejected Britain, the erst- while leader in industrial development, from the second, third and even fourth position in produc- tion....

. . It has now led us, tails between our legs, to apply humbly for admission to the Common Market "accepting fully all its implications," when we scorned it with contempt only four years ago.

`It is quite true, of course, that if our workmen were content with a wage corresponding to the negligible increase in productivity to which this

inanity has condemned us, we should get by with- out balance of payments crises. We would, however,

only find ourselves becoming progressively poorer and weaker, relative to an expanding world. Economic policy which is content to register this relative decline by retarding wage increases is contemptible morally as well as technically.

'Yet the present struggle over the wage-pause is self-defeating to all. It will—because the success of the Government's stand depends on a cutback in production and investment—eventually lead to further pressures on the pound, and thus increase

the extent of devaluation which now appears in- evitable. If the basic problem is not resolved, even devaluation will be no more than a temporary palliative. ...

'We must transform Britain into a high-invest- ment, dynamic economy. In order to achieve this,

the economy needs a jolt, Consumption must be cut, or at least kept level, while at the same time investment should be given an exceptional stimu- lus. . . . We would have to come to some specific agreement with the trade unions on wages. . . . 'In order to assure this agreement, and to over- come the gravest defect of the price-mechanism, namely its inability to generate sufficient savings and investment and to secure their most effective use, we obviously need a national plan for deploy- ing our resources. By showing a 5 to 6 per cent a year, or even higher, rate of growth is consistent with stability and balance in external payments, such a plan could alter the present scepticism of entrepreneurs. . . No doubt such a plan, in order to be viable, needs a devaluation. But if agreement can be reached its extent might be moderate.

`The agency charged with planning must be a Government department with ultimate responsi- bility placed squarely on the shoulders of the Prime Minister and his Cabinet....

'Nor should the agency be directed by a

dilettante planner malgre lui.... The present Civil Service, in the Treasury and outside, is wholly in- capable of performing the task....

'I have been fundamentally opposed to our join- ing the Common Market. But the reforms out- lined above are essential if we are to stay out....

Only if all hope of getting on to our feet by our own efforts has been lost would 1 contemplate any jolt into dynamism which the Common Market would bring from German competition. After all, if we were to be swamped rather than stimulated (as so many areas were, Scotland and Southern Italy, for instance), 1 rely on the robust common sense of Parliament (not much in evidence lately) to take us out of the Common Market—Rome treaties or not. By that time, perhaps, there will appear a resolute leader—such as we have not had since Lloyd George—someone strong enough to reform our methods and personnel of decision making.'

(Unequal Partners, 1963, Vol. II, pp. 267-270, Dr Thomas Balogh, Economic Adviser to the Prime Minister, italics added.)

Simple, isn't it, when the economic 'expert' points the way? And we have, too, a leader (in some ways) very like Lloyd George.

T. W. Hutchison

116 Oakfield Road. Birmingham 29