Back to 1960
Nicholas Davenport
In his important article last week Ronald Grierson objected to the use of the words 'mixed economy' because they suggest a false harmony or togetherness — because they present a smoke-screen to the real conflict between private enterprise and the interventionism of the Whitehall machine which is enlarging the public sector.
While agreeing with him that private enterprise "and the market forces on which it relies are vital to the wealth-creating process," I think it is important to use the words 'mixed economy' seeing that they are quoted officially by the Prime Minister and the more moderate members of his Government. In fact I would like to rub some left noses in the muddy words: too many Labour politicians are trying to run away from their meaning, The Labour Party was, in fact, officially committed to a mixed economy by its new 'Statement of Aims' of March 16, 1960. This was the compromise reached after the row between Gaitskell, who want ed to remove the Marxist Clause 4 from the party constitution, the sentimentalists who wanted to retain it as a sacred cow, and the Marxists who wanted revolution now. There was much lofty phrasing in the preamble about "the fundamental dignity of man" and the "classless society" and much condemnation of "the selfish acquisitive doctrines of capitalism" and "the pursuit of material wealth," but the statement went on to say that the party stands for "the protection of workers, consumers and all citizens against any exercise of arbitrary power." It did not occur to them at that time that the exercise of arbitrary power by the trade unions could hold "consumers and all citizens" up to ransom and that trade unions could also be activated by "selfish acquisitive doctrines."
This 1960 'Statement of Aims' went on: "(The party) is convinced that these social and economic objectives can be achieved only through an expansion of common ownership substantial enough to give the community power over the commanding heights of the econ omy. (Vide Lenin) Common ownership takes varying forms, etc. etc. . . . Recognising that both public and private enterprise have a place in the economy it believes that further extension of common ownership should be decided from time to time in the light of these objectives and according to circumstances with due regard for the view of the workers and consumers concerned."
This 'Statement of Aims' should have made the Labour Party stand firmly on the social democracy of a mixed economy in which private enterprise would work profitably alongside a clearly defined public sector. But it has failed to do so. The public sector has continually been enlarged without "due regard for the view of the workers and consumers concerned." For example, the Labour Party inserted in its election manifesto the nationalisation of the aircraft, ship-building and ship-repairing industries and is carrying this state take-over through without even a majority vote for it in the country. We saw recently in the press pathetic advertisements from the Bristol Channel Ship-repairers Ltd saying, "Please Mr Benn. Don't take us over. Our workers don't want you. We are all working happily and profitably together." But Mr Berm turned a blind eye. He stands by the Marxist-Leninist slogan that the state must take over "the com manding heights of the economy." So do the hard left fanatics of the Labour Party. But in so doing they break the terms of their 1960 'Aims' which clearly stated that they must not enlarge the public sector without due regard to the views of workers and consumers.
The truth is that neither workers nor consumers, if they are non Marxist, are now prepared to see a take-over by the bureaucratic machine in Whitehall of the "com manding heights of the economy."
They sense that government expenditure is already out of con trol and would become hyper-in flationary if there were any more nationalisation, even of North Sea oil, to finance. They also sense that Whitehall has not got the talent to run commercial enterprise. Lord Ryder is not ubiquitous. Clause 4 — the socialisation of all the means of production, distribution and exchange — is not now considered practicable even by such a romantic idealist as Mrs Judith Hart. You cannot finance communism with a sinking £, a mounting state borrowing requirement and a heavy deficit on the balance of payments.
Of course, a socialist government feels that it must intervene when industrial investment sags, but its attempt to improve and speed up investment decisions by "planning agreements" and by some get-together between the NEB and the life and pension funds has so far had the reverse effect, having upset the confidence of the members of the CBI. Fortunately, the letter written by the Prime Minister to the chairman of the British Insurance Association, saying that he would never attempt to force their members to invest in projects they felt to be unsound, has convinced these great investment institutions that Mr Wilson intends to turn the Labour Party away from its recent revolutionary urge and back to the mixed economy of the 1960 'Statement of Aims.'
I believe that it is the growing conviction in the City that Mr Wilson, Mr Healey and Mr Foot intend no further damaging attack upon the private sector which is responsible for the remarkable strength of the market in British equity shares. How else can one account for a market which refuses to go down for long under the impact of bad economic news? From an index figure of near 315 it Climbed in eleven days to near 345. Of course, it has several hurdles to jump in its race from a trading to a bull market. The first was surmounted last week when the Chancellor avoided reflation of the economy in his measures to "alleviate unemployment." Of their total gross cost of £175 million some £55 million will be saved on unemployment benefit and of the balance of £120 million only £40 million falls in the present financial year.
The second hurdle is the further rise in the cost of oil imposed by the members of OPEC. The compromise of a 10 per cent advance seems to have been discounted already by the market.
The third hurdle is the Labour Party Conference. Can Mr Wilson out-manoeuvre the wild men and the revolutionaries? They will come to the conference raving mad at the absence of any reflation of the economy. They will be more resentful than ever before of Mr Wilson's preference for moderation, for going back to the 1960 mixed economy, and not destroying the private sector, for not upsetting our creditors abroad, for curbing government expenditure, in other words, for behaving like a
good moderate and national prime minister. We may all feel that Mr Wilson is far cleverer than his. enemies but this final obstacle to a bull market will not be removed until we hear the comrades at Blackpool singing the 'Red Flag' on departure with more than their usual sense of hypocrisy and sham.
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