WILSON'S WAGE FREEZE
By Brian Gormley
London
No one on the "eft" was surprised at the latest anti-union measures of the Wilson government, placing on the backs of the working class the full financial burden of maintaining a near-bankrupt British capitalism. The real puzzlement must have been among the millions of supporters who had voted Labour only four months ago in the hope of getting-a better deal but who were now face-toface with a compulsory wage freeze and the additional prospect of being fined £500 [US$1,400] or going to jail if they defy the freeze by striking.
The squeeze was immediate and, as such, welcomed by the ruling class. "Every hard-faced, union-hating employer in the country is delightedly breaking his deals and sanctimoniously praising Harold Wilson's brave measure," stated Clive Jenkins, head of ASSET LAssociation of Supervisory Staffs, Executives and Technicians], who was outspoken from the first in his opposition to the new laws. "Never," he continued, "have so many crocodile tears been mingled with so much money taken from so many by so few."
Having abandoned the socialist option very early in the game, the policy course of the Wilson government has long been established, if not in detail then - ‘in broad outline.
As the government explained it, they have been confronted with two choices: either induced unemployment or a wages policy that will confine incomes to a 3.8% annual rise, with increases tied to productivity growth. But with unemployment at a twelve-year low, competition among the capitalists themselves tended to bid up wages. The very fact that workers did not feel the pressure of unemployment strengthened their demands for a decent standard of living and enabled them to win important concessions. Even in those industries where poor settlements were negotiated nationally, it became possible for workers to make gains at a local level over and above the national contract, sometimes quite substantial ones.
It was this "wages drift" that an "incomes policy" was designed to stop. There was talk about raising the wage levels of lower-paid workers, but this was so much verbiage. The incomes policy became a major piece in the strategy of placing on the shoulders of the working class the main burden for taking the system out of debt. That is why from the outset, it was clear that the bill in Parliament would eventually contain strong compulsory teeth. And a necessary corollary to the bill was an increase in the unemployment level.
The policy that emerged represented a combination of two '"cheices" -- "deflation" implemented by a series of measures to
slow down an already "overheated" inflationary economy; and, in conjunction with it, laws making it a criminal offense to go on::.. strike.
There was a certain inevitability about the process. The Wilson policy was no mystery -- it could clearly be observed when the Labour party first took office twenty-two months ago. Inheriting a grave balance of payments deficit from its Tory predecessor,’ the Wilson government was immediately confronted with a run’ on. ‘the pound, alleged to. have been started by the promise to give increases to the old-age. pensioners. Wilson, after giving the proper asstxr— ances, received the assistance of ‘the international banking houses, primarily. the Americans, to the tune of £3,000,000,000. He had: put. British sovereignty into pawn. This became the keystone of all =~ ensuing policies, buying open British support for America's war of aggression against Vietnam and the systematic reversal of Labour policies in several fields.
tt would be wrong, however, to try to explain the actions of the. Wilson leadership as ‘though it was merely the victim of a bad situation, of financial and economic difficulties. Rather they’ should be seen as flowing logically from the “premises” of modern Social Democracy: that capitalism can gradually be replaced within the framework of the state and social structure pertaining to private ownership. In Europe, from Germany at the heyday of Social Democratic influence to its present revival, it has worked out. ‘in practice thus: the Social Democrats run the "mixed economy" to. the detriment. of the interests of the working class, moving further and further away from the professed socialist goal and serving only as a prop for an anachronistic economic system.
This was no easy task, even for the most loyal and dedicated servants of the Queen. The British economy is regarded as one of the sickest in Europe. It has a tradition of low growth rates and its distinguishing feature is its low-rate of investment. In the decade ending in 1965, average productivity growth was around the 2.5% mark, appreciably lower than most European countries. The problems of technological renovation are immense. First of all it has been delayed. because of certain historic factors -- early monopolization and restrictive practices, plus "protection" from. the world market, coupled with a working class unwilling to give up any of its gains. These will have to be overcome if British capi- -talism is to hold its own in world trade, a problem that becomes more difficult, especially. when its share of that trade is decreasing and other major Prading. nations are struggling to increase their trade surpluses. : ut -Labour ‘took office. in ‘1964 with the promise of a blueprint. for maintaining an expanding economy. Out.of this eventually emerged George Brown's National Plan for 4% yearly industrial growth. (The "left" in, the party shot holes in it with their criticism, a criticism that has subsequently been proved correct. )} Instead of redistributing wealth, the plan sought to finance welfare expenditures out of annual ‘growth. Now Labour is confronted with a
stagnating economy. With every upsurge in investment and demand choked off by the need to protect sterling, the growth rate will be postponed indefinitely, as has now been officially admitted.
Everyone knew that the squeeze was coming. It was only a matter of. time; and it. was freely predicted for the coming autumn in most. of the leading papers in London. Now that it has happened -evidently close to schedule -- it is interesting to speculate on what triggered. it off. The policy of the Wilson’ government was to maneuver one force against another, sometimes the left against the right and then vice versa, even to the extent of blackmailing the financiers a bit in order to gain-time for further maneuvers and waverings. Although on major questions the government always came down on the side of capital, the waverings appeared to reflect'a . struggle going on attimes inside the cabinet. What ended the vacillation? ©
The answer is to be sought in the seamen's strike. What was apparent in that experience was the total failure of the incomes policy as it had been formulated then. The workers just refused to play the game. The seamen showed that despite weak leadership, oo despite red-baiting by the prime minister, they were prepared . to _ struggle. oe
Instead of coming out.of the strike broken, or at least ~ | divided, as Wilson had hoped, the seamen ended up stronger, evén though with a rather limited victory, testifying to all who would listen that the incomes policy of the Labour government could be overcome. The danger for the government in the seamen's strike lay not in the gains established by the union but in the revelation © that the Wilson leadership was beginning to lose authority with the workers.
The next crisis came. shortly after the seamen's strike, on July 3, three days .after publication of the steel re-nationalization bill. Frank Cousins,.prominent leader of the most powerful union in Britain, the Transport and General Workers Union, which covers the docks. and many sections of lower-paid workers, announced that he was resigning his post. as minister of Power and Technology in the Wilson cabinet: to. better struggle against the incomes policy.
If the Wilson leadership. was unable to see the significance of this event, then certainly its special meaning was not lost on the bankers of the. City of London: or. the Basle-Washington-Paris axis of financiers. It opened up the possibility of an early open struggle between the government and key sectors of the union move= ment. Not that the prospect of a struggle was excluded from the strategy of the ruling class. On the contrary, the important question was. that it should take place under conditions most favorable to. capitalism.
i It was no doubt feared that within a couple of months , oppositional strength would increase; and the incomes’ “policy, which
up to then had remained more of a declaration of intent than a ~ solution being practiced, would be swept away in the tide of protest that was bound to appear at the Trades Union Congress in Blackpool. early in September and at the Labour party conference in Brighton a month later when disillusioned trade unionists and Labour party membérs would no longer be:under the Wilson spell as they had been. during the: past several ‘conferences. Sk! “The. time, therefore, was ripe for a “puling-class offensive. If delayed, the opportunity to squeeze the British working class ... would be lost for the time being or would prove more costly. The Wilson cabinet, which. cat first appeared to- be hesitant, needed a little push. a ve - va The first signi ‘Of the: crunch that was in store for the economy and the working class came: in the middle of July. A major run began | on an already weak pound which had been under constant . pressure from speculators. This set in motion the third major = financial crisis in-England iin less than two..years. Nora Beloff, political correspondent of the “Sunday Observer, reported July 31. that American pressure, and through it pressure from the "group of ten" major industrial countries, was put on the cabinet by Henry Fowler, U.S.. Secretary of the Treasury, who stopped over on his way back.. from the Hague to demand that a wage freeze and other. ‘strong. measures be enforced. ;
_* One alternative, devaluation, — was. eliminated. According to’ the July 24 Sunday Times, a struggle over this occurred in the . cabinet. George Brown, head of the Department of Economic Affairs , favored devaluation. "He wanted to get away from dependence on the Americans," the : ‘report ‘goes. It is now:clear that the, struggle was sharp and resulted in Brown tendering his resignation. The temptation to devaluate must have:béen strong; it is estimated that the. perennial crises of sterling have cost. the economy £1,000,000,000. But too much was at stake. The impact.on world trade would have been immense, accentuating the shortage of. liquidity. The dollar would "have most. certainly tumbled. and other currencies would have rapidly followed suit, resulting possibly in a major crisis of 1929 proportions: “throughout the capitalist world. ,
‘During this crisis, unlike past occasions, the ‘Basle. group of bankers were slow to give assurances that they: would. come to the , rescue. With powerful reserves at the ready, such statements in the ~ past. have served to give confidence that devaluation was excluded. i Phe- promises” given by Wilson that the bank rate would be increased from 6% to 7%, that there would be restrictions on the availability of credit and "hire purchase" Linstallment buying], were insufficient. Headier stuff was demanded. The banks needed guarantees that Wilson was willing to’come to grips with a recalcitrant working class which to date’ had been. far from willing to obey his strictures. It was now or never. The plans had been worked out and forwarded for. ‘approval to Washington, with the announcement. of a compulsory wage freeze, on the same day the British. prime minister visited President Johnson. The compulsory: part was to last six months, to be followed
by "severe restraint," affecting, it is estimated, “approximately , 12,000,000 workers out of a working population of "22 ,»O00 ,O000. "Johnson expressed his administration's approval of the policy.
No more voluntary attempts to carry out the incomes policy -~ that was abandoned as had been readily predicted when it was first proposed, in favor of using the threat of jail against trade unionists. A sugar coating was provided for the bitter pill of antiworkingclass legislation: the "freeze" was supposed to be extended to prices and dividends.
On this” ‘the August 6 ‘Sun reported: "Prices of thirteen items were increased yesterday in l, 1,400 branches of Boots the chemists [druggists] despite the wages and price freeze. Up to 3d 1US$.035] was put on the prices of three types of medicinal sweets. The 10 percent increase in purchase tax would have meant rises of less than —
Ke i urpose of the tax is to . limit spending -- so we are putting the prices up. We also intend . . to pass on the extra cost of the payroll tax when it comes in- September. '" Our emphasis. 7 7 >
On July 23 the Grocer's Gazette reported 79 increases in ; prices of groceries. Egg prices jumped 20%. There has been a large ’ increase in the price of bacon. The August 15 Financial Times: | estimated that over 1,000 price increases have gone into effect since the beginning of the year. Rents have gone up in Birmingham and several other large city governments have stated that they plan increases in rents also. LO
The "freeze" on ‘dividends was just for the ‘record. It means that the financial institutions and corporations will be allowed to accumulate special funds to-be paid out after the six-month period. Limited cuts took place’ in defense :expenditures, but the left-wing members of Parliament have’ pointed out that these cuts were already on the books. They argued that the £605,000,000 spent annually on supporting British troops abroad represented more than the whole deficit abroad and could be one substantial means for its elimination.
The government's left critics have also been quick to point out that British capital has substantial reserves invested abroad, sterling assets of £5,000,000,000 and that these should be taken over to help stabilize the pound. a
‘he pound is still weak at the moment and will ‘probably remain so- until’ it is more clearly determined how the present policies: will fare . in face of the class struggle.
The top brass of the Trades Union Congress, after some =: mutterings, acquiesced, but this was expected. Although there will be lots of verbal opposition from some leading unionists, with talk about fighting the legality of the "freeze" in the courts, nevertheless the bulk of the labor movement will quite likely accept. the wage’ freeze, at least for the six months, in the hope that eventually it will be lifted, or that they will be able somehow or other to
get around it, as they have done’ in the past. Where the militants are in good position in local plants, an: occasional wild-cat struggle can be expected.
The opposition, to be sure, will be larger than ever, but it is much more difficult.to remove legislation that.is already law than to prevent it. from being put on the dooks. At the end of the six months, when.the time comes to lift the ban, it is almost a. foregone conclusion that there will be ‘another run on the pound -and that an attempt will:be made to extend the freeze. It is then that major struggles can take place. 7 ~The bourgeoisie are not going to be satisfied with just a "standstill" on wages. They will want more blood. The Sunday Times, in a major editorial July 17, stated that the problem was not in~ - freezing wages, but in winning back from the workers what they had gained in the past four years. The next few months will be a waiting period to get the government over the hump. :
In announcing. the new antiworking-class measures on television, Wilson, firm of jaw, invoked the Churchillian image of blood, sweat and tears to get "England over the: hump.” Nothing more: clearly illustrates the utter political bankruptcy of the present Labour party leadership -- one does not have. to go back twenty years, or ten, to quote them against themselves,. but only to March.26, 1966 (yes 1966!) when Wilson stated at a Labour party meeting. in Manchester:
"The only : ‘method: the. Tories knew of fighting the crisis they brought on the country was deflation deading to unemployment < and short- time working. oo :
"These financial technocrats who dominate: the Tory party. haa no thought, no compassion for the families driven to live on Tory dole. Nor dia they think of the large number of families whose standard of living’ fell.because of the drop in their earnings. caused by deliberate policies which could only lead, and did lead, -to shorttime > working. : he "The Tories faced. with crisis, real or imagined, have only one remedy, ten men running’. after nine jobs.
. It has been remarked. that appealing £0 the "spirit of. Dunkirk" inthe British workers, whethér: done by:a Tory or Labour first. minister of the Queen, is poorly spent sentiment -- there is. no crisis atmosphere. The workers are in an-entirely different mood than during and immediately after the war when it was possible to: convince them of the urgency of a particular situation. They have not just gone through a long grueling war as when a previous Labour leader, Sir Stafford Cripps, imposed a wage freeze in 1948. Instead there has been a boom, with consumer spending at its highest. This is "swinging" Britain. Under the Labour government some concessions have been won -- it is estimated that increases in money wages were 8% -- unemployment has been at its lowest in 12 years. To be now .
told they will have to make sacrifices in order to save British capitalism-can bring forth only well-earned contempt from the. workers who have seen their "swinging" rulers wallowing in affluence.
How will the "Labour left," that large and somewhat inchoate mass in the’ Labour party, react to the measures that have been implemented? The Economist, usually one of the more perspicacious. spokesmen for British capitalism, editorialized August 6: "A fair. prophecy can be made about that: the left is in fact likely to squawk loudly and swallow softly, as it has done so many times before." This time, however, the optimism of The Economist appears. to be misplaced, because if there is anything new in the present political reality in Britain, it is the development of a permanent rump of Labour MP's, who, reluctantly and with great hesitation and soul-searching, persist in opposition to Wilson. Its membership =: fluctuates --= both in numbers and issues. It vacillates in classical centrist fashion. But it reveals a tendency that can mature in the months ahead. On the final reading of the prices and incomes bill, there were numerous abstentions by Labour MP's, and the government's majority fell from 95 to.58. The shuffling around of cabinet posts at the recess of Parliament was universally termed "a spectacular’ | smokescreen" to conceal the extent of the revolt.
The Blackpool and Brighton annual conferences of the Trades Union Congress and’ the Labour party respectively should reveal how: strong this tendency is. A staging ground will be provided for the winning of support and confidence from the activists in the Labour movement, and it is a foregone conclusion that the opposition will carry over from a criticism of the "wage freeze" to British complicity in the war in Vietnam. The bulk of the resolutions before. the Brighton conference of the Labour party dealing with the incomes policy are either critical or openly hostile. There are also a large number critical of the policy on Vietnam. .
An important feature. of ‘the new. situation inside. the Labour. movement is revealed in the significant reversal of roles by the various components that-make it up.. The crystallization of a tendency that began with the opposition of the hitherto solid rightwing Transport and General Workers Union on the question of unilateralism in 1961 has so developed that: it now poses the possibility of a new left emerging in the party with. strong links to the industrial working class. On the other hand, there has been a certain ossification of the constituency Labour parties, the traditional backbone of: the left, especially in Bevan's time, and this perhaps can explain the capitulation of some of the most prominent leaders of the left, their emasculation via ministerial appointments by Wilson, and their acquiescence and silence in the face of the crassest betrayals of Labour party policies during the period of stalemate with the Tories after the initial victory. Most of then. would complain that their support was not organized, that they were alone and vulnerable. 8202. %
But now with the Cousins resignation, the possibility has; opened for a new and more solid base for the left, and for this.
left to: grow in strength as it: starts to reflect the interests of some of the lowest paid workers, those who have been hardest hit by the squeeze, and as it links up with the five white-collar unions that are under the leadership of Clive Jenkins, the most radical sector of the union tiovement today: The: National Union of Railwaymen's executive committee, 22 out of 25, signed’a letter to*°Cousins saying they supported his stand. The National Union of Miners is already critical of the government. If the Amalgamated Engineering Union, which under Sir William Carron supports the government, were _ to‘ join the opposition, as it did last year at the party conference, it would mean a definite defeat for the government’ s policies. :
“It is here that the left will find new forces to join in struggle, with whom new perspectives can be worked out. In this new ferment it will become much easiér for revoltitionary socialists to work and find an audience, leading inevitably to greater democracy -inside the movement. It will be possiblé to-start to pose inside _the Labour movement the only real alternative to the chronic sick- --ness of British capitalism -- the revolutionary socialist transfornation of the whole fabric of the state and the economy with the» direct participation of. the mass of the’ ‘people.
August 20, 1966 »
_ PUERTO