The "high goods are all this century.
standard MOL. devaluation followed by high.
crisis, withdraw MeNE interest required moneylenders that, whole was losing.' The because their this and Tory governments seen as restraint; and in SUDOULL best-known was done, 100 % was Wilson Table l and THATCHER'S strategy is not new.
pound part of a Treasury religion and has been so In 1925 Churchill insisted that Sterling should be put on the gold at the prewar rate oT $4.86 to the pound. The government promised to sell .OeTOT pounds at this rate, and if people started selling too many pounds they put up the interest rates.
Everyone admits this was too Benjamin Cohen, an American monetary economist, said in 1970;
*To maintain parity after 1925 Britain had to tolerate high levels of at each hint of foreigners were likely to London.
Capital flight was a constant threat... the high levels of domestic unemploywere eloquent testimony, as were the exceptionally high rates of keep leaving London.
Although the city was still probably deriving a net income gain it is likely on balance, the country as a Gross profits of banks in the UK are now nearly half the profits of industrial and commercial companies Familiar? But it hasn't just been All Labour have defended the pound to the death - liberally. The sterling crisis of 1949 found the 1945 Labour government on its last legs; in 1967 the devaluation crisis forced the Wilson government to 1976 monetarism first came to Britain, when a run on the pound forced Healey to seek IMF Who benefits? Why do Britisn governments have these policies? The beneficiaries are the 1. 2.
A74 Base, 1913 = 100.
finance companies and banks. High interest rates mean that foreigners keep money in London, and so bank profits rise with their volume of trade Gross profits of banks in the UK since 1979 have risen to over £17bn • nearly half the profits of and commercial panies.
This isn't the end of the story.
High interest rates benefit all lenders of money against owners of productive capital. In 1980 industrial and commercial companies handed over £10bn interest payments shareholders and banks, government forks OUL amount to moneylenders. could double spending on both health and'education.
The result is a growing number of parasites living off the others. Nearly one tenth of all personal income in Britain is not earned. If unearned income were abolished, local authorities could cut all rents and rates to zero.
But it isn't just finance houses who benefit. A high pound means it is cheaper for owners of pounds to buy Table III Rates of return: manufacturing companies 60 62 61 66 68 70 72 74 76 76 80 * 161 Exports + Imports 0000000000 Exports + Production THE SIGNIFICANCE OF ExPORTS, U.K., 1811-1937 Ratio of Exports to Imports and to Industrial Production, in physical terms.
Table || CULL Germany U.S.A.
EMPIRE COUNTRIES India Australia Canada to South Africa and the New Zealand similar This cash AGREEMENT COUNTRIES Argentine Sweden Norway Denmark labour of goods abroad than for foreigners to buy goods here.
First, overseas investors who can buy plant more cucapry overscas this includes British multinationals as well as banks. overseas has gone up from f2334bn in 1977 to £10,367bn in 1981. £35bn or more has left the country in this way since Thatcher came in. By the end of 1980 profits from this source were nearly 25 per cent of all net profits.
porters and traders, particularly of raw or primary materials, which are now falling in price. Giant companies like Unilever built their empires by importing cheap food At 1975 prices distributive and service industries after subtracting leasing from 3450m in 1976ment in manufacturing 1981, per manufacturing.
on houses.
So who industries like dividends than it makes in The rats are leaving.
Interest and dividends could nearly double education from one sector don't have class of Britain term. You Be totally parasitic, living off labour of people overseas. IMPORTANCE OF THE U.K. AS A SOURCE OF IMPORTS, 1913-1937 Share in U.K Exports, 1913 % 8.1 5.58 15.2 5-51 13.2 13.38 64.2 6.56 51.8 4-53 56.8 2.06 59-7 4.31 31.0 1.60 1.20 15-7 This benefits two further groups.
and Private investment A high pound also benefits im- has risen - than invest- to £4550m in come cent above that in This investment, largely wasteful, could double government spending percent suffers Thatcherism? Well, first of all, manufacturing and exporters in general. Their profits have been tiny and production 'mini-empire' has contracted by up to 40 per cent in metal production.
Manufacturing is now paying more in profits.
cent.
the But from the capitalists point of of capital. view, this is only a shift of wealth to They suffer the dole Manufacturing accounts now for less than half the profits of the capitalist place payments.
However, it is disastrous for the economy in the long or even medium can't have a national economy which does nothing but import food and export capital. It would The City would like to do this but ALCULLY there are two good reasons it can't. First, the countries it invests in have a Share of U.K. in Imports 1937 7-5 10.0 8.0 42.4 31.5 40.0 42.6 15.0 18.2 43-1 42.6 48.- 50.2 17.6 20.7 17•3 19.0 21.2 24.6 14.7 37-7 growing habit of not paying. Second other investing countries like Europ and America elbow them aside.
These two processes lie behind Britain's long-term decline - but it's been going on much longer than Thatcher, who is taking this logic through to is ultimate conclusion. By 1913 Britain was already importing more than it exported (see Table I).
If unearned income were abolished the proceeds could pay to cut local authority rent and rates to zero It made up the gap with invisible trade - earnings on overseas investment and commerce - but whereas in 1913 nearly 15 percent of natural inobtained in this Britain now began to lose its share of financial and commercial markets. At the turn of the century 50 of all trade was carried out in pounds; by the Thirties this was down to 24 per cent.
In 1931 Britain took advantage of the slump, which hit Germany and the USA the hardest, to consolidate a by forcing the Commonwealth nations to trade with it in preference to others. Table II shows the success of this policy; while trade with the USA fell from 15.2 percent of US imports to 6.6 per cent between 1913 and 1937, trade with Canada fell only from 21.3per percent to 18.2 per These arrangements too were part of a deal which included the use of the pound sterling to finance trade. In some cases this was quite blatant; Britain would lend money on condition countries concerned bought British goods, forcing them to pay for the relative inefficiency of British exporters by using Britain's ownership Now this policy brings decreasing dividends, and the trade deficit has to be made up in other ways. Oil has therefore assumed an unbelievable the balance of It accounts for nearly a quarter of all exports.
Thatcher, and her class, are floating along the last stretch of a creek which British imperialism has been sailing up for years. But in consequence the steps that will have to be taken to get out of the mess we are in CHOROUS, • up to halt the economy is now dedicated to virtually unproductive ends.
Socialist Challenge 21 January 1983 pag
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SCALE spending on health and