Political commentary
No highway
Michael Harrington
I argued last week that the fundamental decline of Britain as a Great Power was historically unavoidable. It is natural for us to be a power of the second rank, compared with the United States and the Soviet Union, in terms of economic and military potential. This means that we ought to be on more or less the same level as countries like France and Western Germany. The fact is, however, that we are weaker than they are, and the discrepancy appears to be growing rather than diminishing. Compared with the French President and the German Chancellor, the British Prime Minister nowadays seems a seedy, rather tatty figure, always asking others to bail him and his country out of trouble — and tending to whine if they do not.
This is a sad and humiliating situation. Palmerston and Gladstone and Disraeli must be squirming, if not turning, in their graves. Is this too historically unavoidable? Or is it the direct result of our own mismanagement?
One would be hard put to make out much of a case for the first proposition. True, the British economy is uniquely dependent on world trade, and is therefore especially vulnerable to world economic forces. When oil and raw material prices go up dramatically, we can get hit — for a time. We just have to adjust to a new pattern of costs and prices. But this cannot explain the persistence of a British rate of inflation almost twice that of comparable industrial countries, the low productivity not to mention profitability, of British industry, and our incredibly bitter and bloody-minded industrial relations.
These things must have domestic origins. They are the chief factors in the bad performance of the British economy, and it is this bad economic record that may make us a power of the third rank—if it has not done so already. So in truth we are the authors of our own fate.
Yet no one can maintain that the British are particuarly stupid as a nation. Our record in inventiveness and pioneering is second to none. Nor are the requirements for a more effective economic performance difficult to describe — at least in broad outline. We can see what a successful British economy would be like. There would be a high rate of investment in new industrial equipment leading to a steady rise in labour productivity. Unions would be aggressive about wages, as are unions in the United States, but they would in no way obstruct innovation nor would they insist on ludicrous manning levels. They would realise that such practices hold back the growth of wages and create artificial manpower shortages in other industries. The government, in its taxation policies, would favour high profits and high overall return on capital, i.e. taxes on profits and investment income would be much lower than they are now — and they would stay that way. Moreover, tax policy would favour the accumulation of wealth. At the centre of economic policy would be the aim of protecting the value of money, so that, roughly speaking, the money supply would grow at the same rate as the Gross National Product.
If the British economy had these characteristics, it is safe to say that it would grow more rapidly than it has done, and perhaps as fast as the economies of our continental neighbours. Maybe we could start to make up the ground we have lost over the last twenty years. Why then, cannot we organise our affairs in this way? How can we get there from where we are? The questions are easier to put than to answer. And probably it is impossible to give an 'answer that is free from ideological bias.
The socialist answer, expressed crudely, would be, I imagine, that British capitalism has failed. It is inefficient, it will not invest, and so it cannot provide for the growth of real wages and full employment which working people want. What is more, working people are no longer prepared to put up with the old structure of authority in industry. So nothing can be done without the co-operation of unions. And this requires a big say for unions in industrial decision making, and a government policy which takes full account of union susceptibilities. Central to such a policy must be the preservation of employment.
What sort of answer should we aim to provide from the right? At the moment there is no coherent Tory policy for industry and the economy in general. Of course the Tories 'are opposed to nationalisation, but there are no plans, as far as I know, to return any part of the public sector back to the private sector. Tories are in favour of making it possible to make big profits again and to get a return on your capital again. But Tories are divided about what their central purpose ought to be. We have the Tory Reform Group, in which Mr Peter Walker is the central figure. They seem to have a peculiar horror of what they call laissez-faire' capitalism on which they blame unemployment. It is hard indeed to see what our present rising unemployment has to do with 'laissez-faire,' for insofar as the thing ever existed it was killed at the beginning of the 1930s — by the Tories.
On the other side we have the Selsdon Group, the Joseph-Thatcher sponsored Centre for
Policy Studies, and other people who take a similar view. They are not concerned to get back to the Victorian age, even if that were a possibility. They do see, however, that the control of the money supply is central to the conquest of inflation, that whatever else you do, you cannot stop inflation unless you bring the money supply under control, and that some temporary rise in unemployment is a consequence which has simply to be endured.
Here, one might say, there is nothing especially 'right-wing' about what is called 'monetarism.' It is a technical economic doctrine which might be either true or false. In truth, `monetarism' is technically consistent with a socialist economic and social policy. The difference is that the `right-wing' monetarist would control the money supply by massive cuts in public expenditure — making tax cuts eventually possible — whereas, presumably, the socialist would aim to balance things by cutting personal consumption instead of state expenditure, by increasing the weight of taxation. To a degree, this is what Healey has done. However, in view of the fact that what one might call the Heath-Walker element in the Tory Party no longer seeks to dispute the important place that control of the money supply must have in the struggle against inflation, this particular debate .rn ay not be so important as it was, say, a year ago. It is on capitalism, or the free market economy, that the debate now centres. Are the Tories to try to recreate a really thriving capitalist society in Britain, or is the function of Toryism to limit, delay, and qualify a socialist impulse which will remain the central theme of our public life? The latter is probably more consistent with the political practice of the Conservative Party since, roughly speaking, the time of Baldwin. The trouble is, if the forY Party carries on in this way then we are going to end up as a socialist society, and the socialist solution to the problem posed earlier will, willy filly, be imposed upon us. My own conviction la that this solution will solve no problems, will not and cannot make us again an efficient and aggressive economy and society. On the contrary, the probability is that the fountainhead of all material progress, the free-wheeling and inventive individual mind, will be driven away from our country.
Yet, it must be conceded the obstacles against moving in the opposite direction are formidable. Politicians, even the best of them, want office more than anything else. And the fact is that a Tory government which was determined to re-create a British economy that would have the characteristics of success would run up against all sorts of obstacles. It is well and good for Mrs Thatcher to extol the virtues of the old puritan capitalist ethos. But translating these values into concrete political programmes which a government could actually carry through is another matter.
For the `right-wing' policies would mean more rather than less unemployment for a time (unless, of course, and there is a chance of it, the Labour, Government does the job for us) and a quite different attitude towards job security, profits and economic equality. The whole moral climate of the country would have to change — and there is no sign of it yet. Plainly, there is no open highway to success. But changing the moral climate is obviously the main task of those who share Mrs Thatcher's principles and values. We need to make our kind of governMent the kind of government that can win elections. It is our only hope of getting Britain out of the third division and back into the second. Nor is time on our side,
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