collaboration wth the employers. The problem is that this could deliver some advantages in 1945, but it cannot do so now.
What is the proof of this?
The first fact we have to grasp was explained in SC two weeks ago: that he une ones were bicoarcu to the welfare state ever helped develop it.
The world capitalist economy was ripe for expansion for many reasons.
The working people of continental Europe and Japan had had their organisations destroyed by fascism and war. The rate of exploitation rose savagely amidst conditions of nearstarvation in Germany and Italy.
leading world imperialist power. In General Marshall unveiled a Europe on a scale never seen before. This did cause some confusion among the Communists: for example, in 1947 the Communist Party of Great Britain away at our Empire preferences - the salesmen of General Motors and Du Ponts and General Electric in British munist leader Earl Browder was busy explaining that 'this is the only way in which Europe can become the effec tive market which is needed for the economy's survival on a BICH democratic Europe is capable of buying and selling on the world market and paying its bills, in a fashion and America, into a single world order.' America can pay Europe's bill — not into a junior partner of American imperialism. In September 1948 Britain $1,263m loan and immediately lent a quarter of it to the rest of Europe. Between 1945 and 1967 Britain's overseas holdings were again to Ellbn, American tutelage Britain, through the Commonwealth, retained a 'pocket empire' into which the great bulk of this investment went. Half Britain's exports went to the sterling area.
• A 'long wave' of economic expansion ensued based on large-scale inin new machinery, particularly in nuclear and heavy electrical engineering, and in oil-based in Profits were high enough, and trade expanding fast enough (8.6 per cent per year from 1950 to 1970), that Britain's volume of trade increas ed even though its share declined to 10 per cent by 1970. • Government spending to carry inThe Nationa/ government of 1937.
Standing from left, Sir Philip Cunliffe-Lister (Con), JH Thomas (Lab), Lord Reading (Lib), Neville Chamberlin (Con), Sir S Hoare (Con); sitting, P Snowdon (Lab), Ramsey MacDonald (Lab), Sir M Samuel (Libl, Lord Sankey (Lab) dustry through threatened slumps was introduced, producing creeping, but galloping inflation capital stocks were still being built up.
Every single one of these underlying conditions for policies has either vanishing fast.
The American economy can no longer finance the world monetary order established in 1946 collapsed in 1971 when change rates were abandoned and the USA started trying dollar. The IMF's packages and the threat of financial collapse, in the last analysis, reflect the fact that no single capitalist coun try can accumulate capital on a scale sufficient to finance expansion for the rest of the world.
Working class organisation has built up its strength again and in no industrial country does capital feel confident that it can undertake largelong-term investment on the sort of scale needed to start a new The long-term effects of persistent government spending has been to prevent the normal mechanism of capitalist slumps getting rid of outdated and inefficient capital. Table II shows the effect this has had, in Britain, on the rate of profit.
Table IV Inflation and growth, 1955-80 (per cent)
1955 average growth 3.1 average inmation This is not the result of rising wages, which are still a relatively fixed proportion of the value of output.
It is caused by a rise in the quantity of capital over which these profits must be distributed, as figures now duced OV the government These figures do not exactly measure Marx's 'Organic Capital but they do, refutably, show that profit rates are falling because of the accumulation of capital and not because wages are too high creeping two or three per cent, intlation rate of double figures or even six-seven per cent are completely unacceptable.
Table IV shows how inflation in Britain has risen steadily as government spending was used to ward off slumps, to the impossible levels of the tion are absolutely unacceptable to capitalism: SHO capitalist other than a satellite or dependent COALITIONS past benches in coalitions tional salvation' The disaster. In the working in.
accepted by - to une stewards' movement.
because be demanded of an welfare government, capitalists.
First, fixed extion. to devalue the just allows 'austerity unemployment (which it finances Ency won L Second, domestic have just outlined.
calculate in 1978, "sanitising' that the 'rate of return' £100 invested level of 12 transfer 1965- 1975 are 5m workers in 1.6 proshow.
Composition quite inflation of one, These levels of inflahave happened before. The most famous in Labour Party historv was when kamsar MacDonald crossed the government 1931 depriving Labour Party of government by joining with the Conservatives and Liberais in a government or na result was a political election of 1931 Labour got only 52 seats and 30 per cent of the vote. But it was also a social and economic disaster for people. Unemployment was still in double figures by 1937 and only the war brought relief.
But this was not the only coalition the Labour Party has taken part In 1915 the Labour Party formed a wartime coalition. Nearly a million lives were lost in the fruitless slaughter and the 'industrial peace trade union leaders caused terrible privation - leading formation of the shop Ruling class leaders were so tereconomy sustained by outside funds can tolerate them over an extended period and continue to expand its inBut these facts show what would SDP-Labour not just by Thatcher's immediate base of support, but by all government spending would have to be subordinated to the overall goal of keeping down inflaEven the Treasury's computer Peter Shore get down LO 'only million by the end of five years: this is a wildly optimistic figure, because it assumes that world trade will not fall will) and that will remain stable (which however, the price of spending would be a truly gigantic assault on workers" wages, to keep up profits which are declining for reasons A simple equation is involved here which anyone can Profits of manufacturing industry which will take a pre-Thatcher year, were £9.9bn. Of this f3.9bn was used up replacing old capital, leaving £6bn. Capital stock in that year was estimated at E100bn, so - profit per - was 6 per cent.
Now suppose wages are to fall so as to bring profits up to their 1960 per cent. This means a of £6bn from workers in manufacturing to capitalists. There manufacturing; every worker would thus have to take an average wage cut of over £1000!
We can look at the same problem by studying the notorious balance of payments' problem with which Shore is wrestling, and asking what the ef as the Oracle at Delphi and used by today's media priests for the same needed an incomes policy. It said that if he didn't have one, the balance of payments deficit would be twenty five finished its term of office brought the pound, and the govern Wha policy sufficiently draconian to cu £25m off consumption. Otherwise, there could be an immediate and Britain's long-term commitment to the pound, the effects would hit imrified that they called a hasty e tion in 1918 before the sold could Libe Conservative coalition in of which dismantled all the machir set up during the war to control dustry — and with it the last rem ing shred of justification for Lab participation.
From 1940 to 1945 Labour part of a second wartime coali which right wingers Bevin and N rison wanted to continue after war, even if Labour won a majo in the elections.
Why did it come out of 194 much better than 1918 or 19 Because, as explained in SC num 275 (7 January), the Tories wer basic political agreement with w they proposed.
But the most recent experie was in April 1976 when, altho Callaghan still ran a Labour gov ment, he had to rely on Liberals port - the so-called Lib Lab pa Part of the price was the packag austerity measures which Labour the 1979