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Raymond Challinor

Incomes Policy and the Left

(Winter 1966/67)

From International Socialism (1st series), No.27, Winter 1966/67, pp.26-31.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

A group of economists, purporting to be Left-wingers, have been and continue to be staunch advocates of an incomes policy. The argument of this article is that their support for the Labour Government’s incomes policy was and is a grave error; and, that the whole context in which discussion about incomes policy takes place, leads to fundamentally anti-working class conclusions. Finally, within the capitalist system it is impossible to have a socialist incomes policy administered by the powers-that-be.

Among these economists, John Hughes and Ken Alexander wrote the first pamphlet, A Socialist Wages Plan (1959), which raised the idea of incomes planning for serious discussion within the Labour Movement. There they envisaged that the national income would cease being divided by the traditional method, the struggle of class forces. Instead they wished to devise a committee, representing government, employers and trade unions, to reach agreement among themselves on how to allocate the country’s wealth. It was hoped that, as the years passed by, the committee would gradually increase labour’s share at the expense of capital, a painless, peaceful, if slow, method of ultimately achieving the socialist goal.

At the time, the Hughes-Alexander plan encountered strong opposition. Eric Heffer observed that the authors ‘did not call for an increase in nationalisation and expanding public ownership as part of the policy.’ Hence, the basic structure of society would remain unchanged: ‘The economy is capitalist. Capitalist laws apply, and certainly will continue to apply, even in the event of a Labour Government, certainly if it merely buys shares in the various industries and fails to expropriate the owners. The British State is a class State, created by and for the British ruling class.’ It was therefore inconceivable, claimed Heffer, that the State would be so obliging as to fashion and implement an incomes policy designed to expropriate precisely that class whose interests it was there to defend. So Heffer regarded the Hughes-Alexander proposals as unrealistic and impractical. ‘We have had too many false dawns,’ he wrote. ‘I’ll settle for the old thinking based on class struggle.’ [1] Another critic, Michael Kidron, adopted a different line of attack. He thought the Hughes-Alexander plan for a 3 per cent annual rise in wages was extremely modest, comparing unfavourably with what was actually being attained in some capitalist countries. In Japan wages had risen by an average of 7 per cent a year, and in West Germany, by 8 per cent. Kidron could have added that the mere 3 per cent conceived by Hughes-Alexander closely resembled the figure for growth given by R.A. Butler, the Tory leader, when he talked of doubling the standard of living in 25 years in 1953-54. Aneurin Bevan ridiculed Butler’s ‘most modest and cautious’ estimate, ‘a tortoise crawl of 3 per cent per annum.’ He went on to warn trade unionists that Butler hoped, by creating the vision of a future land of plenty to curb present wage demands; Butler’s remarks were ‘a cold douche to those workers who think they ought to have a substantial improvement in their living standards now or very soon. In effect, he was saying to them, “It is over the hills and far away.”’ [2]

Bevan’s strictures apply with equal force to Hughes and Alexander. Indeed, probably more so. For, whereas Butler, a wealthy industrialist, is treated with natural suspicion by trade unionists, Hughes and Alexander are likely to receive a sympathetic hearing. When they call for moderation, support for the Government’s incomes policy and depict ultimate prosperity if the policy is permitted to work successfully, then there is a greater chance of workers responding favourably, curtailing their wage demands. Yet, although Hughes and Alexander embroider their writings with socialist phraseology, the kernel of their plan entails profoundly unsocialist priorities. The assumption that the State, big business and trade unions can collaborate on the distribution of the national cake, and that the trio’s melody will be pleasing to working-class ears, does not bear critical examination. To make this assumption involves making a mistaken analysis of the roles in society of social democracy, the capitalist class and the trade-union bureaucracy. Since the same error is committed by all ‘Left’ advocates of incomes policy, it may be worthwhile considering these three roles separately and in more detail.

First, the role of social democracy. Hughes et al place great faith in a Labour Government’s ability to transform the economy. They see their own function as that of pushing such a government as far left as possible. ‘Probing the limits of reformism’ is the fashionable phrase. But they do not ask: historically, is there any evidence, from any country at any time, that a Social Democratic government has significantly increased the working-class proportion of the national income? From every part of the world, wherever a Labour Government has been in power, the answer seems to be negative. In Sweden, where social democracy has had more than 30 years of uninterrupted rule, profit-margins are high and even the most mentally unstable Swedish capitalist does not have the least fear that the social democratic rulers will ever change the status quo. The same is true of Labour Governments in Britain. Actually, Hughes and Alexander, in their pamphlet, give abundant statistical data on how monopoly profits, and profit margins generally, soared during the Attlee Administration. [3] Yet, at the same time, real wages fell when Cripps introduced his wage freeze. [4] The next Labour Government provided few higher hopes. In 1957, Harold Wilson, then Labour’s shadow Chancellor, wrote a pamphlet, Remedies for Inflation. It was given the party’s official insignia of approval: published by Transport House, with a foreword by the leader, Hugh Gaitskell. Wilson makes it quite clear in the pamphlet that the next Labour Government has no plans to limit profits. On the other hand, he calls for ‘something approaching a Crippsian approach to the whole issue of wage restraint.’ [5]

John Hughes chose to disregard Harold Wilson’s repeated avowals of capitalist orthodoxy, and continued to hope a Labour Government would make great strides towards a socialist economy. In the manner of the 18th century French philosophes, progressive ideas had only to be expounded for Right Reason to prevail. Hughes did not analyse social democracy, to investigate the powerful forces within it that militate against radical change. Unwittingly, Hughes expresses the quandary of social democracy in the following way:

‘Labour cannot be satisfied in its democratic and social objectives unless it makes significant advances in organised social control over the economy; to a large extent this must be at the expense of the present power of massed capital. Yet, at the same time, the State must work with the private sector, must system-matically cooperate with profit-making industry in “managing” current output and the pattern of future development.’ [6]

He accepts that this necessitates ‘compromises to win business confidence.’ [7] Here we see the two aspects of Labour – reformism and conformism. The logic of reformism, as Hughes says, requires making significant inroads into ‘the present power of massed capital.’ Conformism, on the other hand, the consequence of acting within a capitalist framework, involves ‘compromises to win business confidence.’ Now these two things are mutually self-exclusive: either win capitalist confidence and have no reforms, or introduce reforms and encounter growing capitalist hostility. But the Labour Party has never been a revolutionary party. Its aim has always been small – not drastic – change. So, tied to capitalism and with no plans for a new system, a Labour Government adopts the road to conformity; as Wilson has shown in recent months, reforms are put in the deep-freeze when capitalist necessity dictates. This leads to Hughes’ second fallacy – about the role of the capitalist class. The wages pamphlet assumed that hard-headed businessmen were so naive, so lacking in understanding, that they would cooperate in the running of an incomes policy designed to whittle away ‘their’ incomes. But past experience shows how chary businessmen are to collaborate with a Labour Government even when it is basically working in their interests. The Attlee Administration flew the white flag – not the Red Flag – in the City of London, and, during the economic crisis of its latter years, attacked workers’ wages rather than capitalists’ profits. Yet, the business community showed a peculiar, sort of gratitude and deliberately aggravated the balance of payments problem. An official Labour Party policy statement admitted that ‘of £645 million of private capital which left Britain during 1947-49 only £300 million represented genuine investment in new projects. Some £350 million was “hot” money quitting Britain because its owners disliked the Labour Government’s policy of fair shares (?! – RC) or were engaged in currency speculation.’ [8] After 1949 the flow of money abroad became a torrent. Businessmen sent a further £315 million overseas and stockpiled, often unnecessarily, to the sum of £610 million. Thomas Balogh, who quotes these figures, commented:

‘The next Labour Government will not have at its fingertips those levers, inadequate even though they were, which it held between 1945 and 1950. It then inherited an almost intact war economy, hardly distinguishable from a fully planned system: this legacy of existing wartime controls far offset in value the handicaps due to war damage and losses. Even so, the means which the Government possesses to discipline and direct private enterprise were far from completely effective. The control over capital issues did not prevent investment from differing widely and wildly from estimates. The powers taken under the 1946 Act over the banking system proved grossly inadequate. The Court of the “nationalised” Bank of England was more hostile to the purposes of Labour than its “private” predecessor. Mr Gaitskell’s instructions to restrict credit could be, and were, disobeyed with impunity, and necessary cuts in imports could not be enforced for months. In 1951, conclusive proof was given that the enemies of Labour still held the economic power to produce, for Labour, a political crisis ... The fall of Labour was brought about largely by a speculative flight of capital and equally speculative purchases, for stock, of imported goods. Government controls were inadequate to forestall or prevent this attack due to lack of “confidence.” There is no need to talk in terms of capitalist “conspiracy;” the instinctive response is quite sufficient to upset a Labour Government.’ [9]

Mr Balogh, now economic adviser to the Wilson Administration, continued prophetically:

‘The next Labour Government will be infinitely more vulnerable. The process of “liberalisation” begun before 1951– the stoking of the bonfire of controls lighted, so ill-advisedly, in an effort to secure press popularity – has been pursued with gusto by the Tories.’

Another instance of business hostility to the Attlee Administration was chronicled by John Hughes himself. He showed that the steel barons tried to wreck plans for steel nationalisation. Top management refused to assist in turning the industry over from private to State hands: ‘a political strike ... for the specific purpose of sabotaging an Act of Parliament,’ the Minister alleged. [10]

As John Hughes says,

‘steel nationalisation raises sharply the problem of the resistance by entrenched industrial power groups to measures which directly challenge their power and threaten to put it in the hands of bodies responsible to the community. The hidden premise of much Labour Party thought on the matter has been that such groups will acquiesce in their loss of power when confronted by a government with an electoral mandate for change. Now, although Labour leaders condemn as unconstitutional any industrial action by workers directed against government policies, it is by no means clear what will be their reaction when confronted with such action by a business power group. Apart from the formal, constitutional issues raised by such action, steel nationalisation is very revealing for understanding the political power of monopoly capitalism, and for the light it throws on the reaction of a Labour Administration to such a challenge.’ [11]

Later, Hughes added,

’The history of steel nationalisation seems to suggest that we cannot glibly dismiss the doubts of those who believe the British industrialists might use their industrial power and political influence to prevent the loss of that power,’ [12]

although, he added, the steelowners knew they would get away with it because of ‘the weakness displayed by a Labour administration in tackling such a major power group.’ [12] The steel article was written in 1957 when Hughes was much more Left than today. To justify his present position, he must explain why he thinks capitalists as a whole will now behave differently to the steelowners in 1950. Is there any chance capitalists would assist in implementing an incomes policy that resulted in them being out of pocket? Inescapably, one is driven to the conclusion that a gradual transformation of society, the slow diminution of profits, is not even a remote possibility. Finding their wealth threatened, capitalists would indulge in unconstitutional action, sabotage and, if necessary, turn to fascism. [13] R.H. Tawney was correct when he said you can peel an onion, leaf by leaf; you can’t strip a tiger, claw by claw. But, what is more surprising in the Hughes-Alexander schema is their vision of trade-union leaders as intrepid tiger-tamers, people anxious to make drastic changes in society’s structure. Surely the gentlemen of Congress House are pillars of The Establishment, the quintessence of respectability, who would never wish to see the profit-making system harmed? As Britain develops towards State capitalism, they become increasingly part of the State apparatus. An intermediary between management and men, their essential role is to keep production going at all costs and, where possible, speed it up. From the ruling class standpoint, the trade-union bureaucrats play a vital role as industrial peacemakers and also as purveyors of capitalist ideas to the workers. To think otherwise is tke third major mistake in the wages plan.

To sum up, the Hughes-Alexander-type incomes policy is unrealistic. It is impossible to envisage a committee composed of government officials, businessmen and trade-union leaders amicably agreeing to redistribute the nation’s wealth more equitably. The government would not propose it; the businessmen would not allow it; the trade-union leadership would not want it.

* * *

But it is not simply that the Left economists who supported an incomes policy were wrong or muddle-headed: a number of significant consequences flow from their position. Without exception, they initially supported George Brown’s economic policy. None of them foresaw that, as the economic crisis deepened, the Wilson Administration would try to solve the country’s problems at the expense of the working class. In the columns of Tribune, they acted as invaluable allies of George Brown, protecting his Left flank. Ever since Wilson’s return in 1964, this journal, along with others, argued that workers must prepare defensive positions, ready to defend their shop stewards’ and other rank-and-file organisations from a combined attack from the employers and the State. From the beginning we did not doubt that a Labour Government would preserve capitalism. The prevalence of widespread illusions about Wilson’s role in the class struggle, the goodwill and loyalty workers often showed to him, made him particularly dangerous. In contrast, incomes policy supporters visualised an alliance between trade unionists and the Labour Government achieving considerable progress. Writing about what they described as the incomes policy’s ‘positive character,’ Barratt-Brown and Royden Harrison said:

‘Just 100 years ago, Marx, in his inaugural address to the International, hailed the 10 Hours Bill and the Cooperative Movement as “victories of the political economy of labour over the political economy of property.” The scene is once again set for a decisive victory for the political economy of Labour.’ [14]

In this jubilant frame of mind, Barratt-Brown and Harrison saw George Brown’s Declaration of Intent as, ‘among other things, opening the way, especially at enterprise level, to a major challenge to management prerogatives.’ [15] Another of this group, Dr Henry Collins, argued that the Labour Government’s effectiveness depended on its gaining trade union support. [16] Consequently, he tried doing his own, personal bit. He sought to get the usually progressive Fire Brigades’ Union to back the Government’s economic policy, but he got a dusty answer from militant firemen. [17] Thwarted, he turned his attention to the Declaration of Dissent, a pamphlet published by the five technicians’ unions. Here, Collins chided them for their militancy. Appealing to them to back Wilson, he said:

‘While much can be achieved through industrial action, it is only through planning and socialist legislation that it is possible to make inroads into capitalist privilege.’ [18]

So, presumably, Collins believed Wilson’s Government might make inroads into capitalist privilege. He went on to liken the five unions’ approach to that of Enoch Powell and warned that the alternative to an incomes policy would be mass unemployment. [19] (In fact, they do not now appear to be alternatives but concomitants). More recently, Dr Collins has commended Callaghan’s ‘Breakthrough Budget’ and favoured a six-month incomes and prices freeze slightly before Wilson introduced one, [20] and John Hughes attacked Tribune for criticising the National Plan. [21]

* * *

The full character of such attitudes becomes apparent when they are placed in the context of the Government’s prices and incomes policy. It takes a peculiar blend of naivete and self-deception to believe this policy has the remotest connection with Socialism. John Hughes et al have immense skill in blinding themselves to the mounting evidence of its intrinsically capitalist character:

  1. The Prices & Incomes Board’s terms of reference. Government spokesmen have repeatedly emphasised they see nothing wrong with profit-making. Every official utterance has avoided the slightest hint that the policy is aimed at redistributing incomes from Capital to Labour. Tacitly, it is accepted that the present pattern of the distribution of wealth, where one per cent of the population owns 42 per cent of the wealth, will continue indefinitely. Whilst the Labour Party, in Clause Four of its constitution, embodies the principle on which a socialist incomes policy would be based, the Wilson Administration operates as if this Clause did not exist. The incomes policy is not designed to give workers by hand and brain the full fruits of their labours.
  2. The Composition of PIB. The Board’s 9 members are overwhelmingly hostile to workers’ interests. Its chairman is an ex-Tory MP, Aubrey Jones, former chairman of Staveley Industries Ltd and Director of Guest, Keen & Nettlefolds Steel Co Ltd. He has publicly stated that the Board thinks that, to increase industrial efficiency, it is necessary to obtain a greater degree of inequality. [22]
  3. The Conduct of the Board. So far, all its efforts have been directed at keeping wages down, particularly the most poorly-paid workers, like bakers and railwaymen. Never has the PIB taken action against profit-levels. Surely this type of behaviour speaks for itself. In a fight, if a third man seems always against you, and never against your adversary, it is legitimate to conclude he has lined up with your enemy. The PIB is this third man: It has squarely placed itself on the side of capital and against labour in the class struggle.
  4. The Effects of the Incomes Policy to date. In 1965, the first year of the incomes policy, workers’ real wages declined. An International Labour Organisation report shows that only in Britain and three other countries – Ireland, Hungary and South Korea – did workers’ purchasing power diminish. Elsewhere, in every industrial country, workers grew more prosperous. [23] Likewise British industrialists grew more wealthy. The Financial Times index shows that declared dividends rose by 12.8 per cent.
  5. Likely future effects of the Incomes Policy. The present freeze is designed to tilt the balance in favour of profits and against wages. Frozen wages are lost forever; profits are simply stored away, to be paid later. But this attempt to keep down wages, far from a temporary expedient associated with the current crisis, seems to be a long-term objective of the incomes policy. Extrapolating from statistical tables in The National Plan, some have deduced that the Government wants the workers’ share of the national income permanently reduced. [24]

But the incomes policy has other implications. It is not merely designed to affect the distribution of wealth, but also to alter relations at the point of production. Aubrey Jones himself made the absurd claim that in industry ‘supreme power is no longer at the top but at the bottom.’ [25] The Board wants to restore the unchallenged authority of management and lessen the power of workers. This involves attacking shop-steward committees and other rank-and-file organisations. Yet, Hughes and Alexander support this approach, and it follows from their analysis. For an incomes policy requires the centralisation of decision-making. To allow workers at this or that factory to interfere with the plan would ruin the plan. So the powers of stewards’ committees to extract wage concessions, above those agreed at national level, have to be eliminated. This is an obvious corrollary of the incomes policy, as clearly understood by economists of the bureaucratic Left as by Aubrey Jones: only when all wage increases arise through nationally conducted negotiations will trade-union leaders’ power over their members be secure. But ‘Left’ economists encounter opposition when they put this line. [26] Frequently, nationally agreed wage rates are very low; it is the local factory agreements that bring them up to a tolerable level. Moreover, national trade-union leaders are often unresponsive to pressure; rank-and-file militancy has little influence on them. It is the shop stewards that spearhead the struggle for increased pay. Yet ‘Left’ economists, consciously or unconsciously, add their mite of support to the campaign against them. Barratt-Brown and Harrison may complain, ‘It is no part of our intention to throw out the shop steward with the wage drift.’ [27] But the two are inseparably linked. Most of the shop stewards’ influence is derived from their ability to achieve monetary gains; stripped of this they are virtually powerless. Another move to curtail shop stewards is to restrict their rights to raise grievances about working conditions. At present most unions prudently have rights of consultation over speed-up or new working arrangements. They are thereby able, at least, to limit exploitation and usually to keep factory life tolerable. But Hughes and Alexander want these safeguards bartered away for a little extra money:

‘Where trade unions bargain away the protective devices and restrictive practices that have set limits to productivity improvements in many industries (”bargaining away the rule book” as it has been somewhat critically called), they are entitled to expect considerable tangible improvements in the wage bargain.’ [28]

What this means, in practice, can be seen at Fairfields’ shipyards, Glasgow, where Ken Alexander sits on the board of directors. A new agreement, signed in May, abolishes all direct representation of Fairfield workers. They can take no action over victimisation, job-protection, bad conditions, speed-up, etc. On the men’s behalf, the unions have committed them not to indulge in stoppages, overtime bans, go-slows, or ‘other limitations on production.’ The shop stewards are participating in work-study, productivity classes, production committees, and have aligned themselves with the management in a drive for increased output. The convenor stated publicly that he sees himself in his new post, not as a workers’ representative, but as a link-man between management and workers. With all their defences dismantled, as Peter Bain quite correctly points out, ‘the Fairfield workers can expect to see their interests increasingly ignored.’ [29] Alexander himself testifies unwittingly to this fact. In his pamphlet, quoted above, he talks about considerable wage increases to compensate for ‘bargaining away the rule book.’ But the Fairfield men got no such compensation. He told this year’s Scottish TUC summer school that wages at Fair-field’s shipyard were ‘lagging behind increases in productivity.’ This, he said, was necessary for the firm’s survival, but he hoped the disparity would be corrected in two years’ time. [30] Apparently, Ken Alexander seeks to guide industrial relations in this country along the road taken in the United States. The Fairfield set-up looks remarkably like the description some American socialists provide of the situation in some factories there:

‘The trade-union apparatus acts as the bodyguard of capital. Conducting all negotiations with management, processing all grievances through its elaborate grievance procedure, it sits at the bargaining table in a hierarchy of posts parallel at every level with that of management. In an American plant the shop steward or the committeeman represents not the workers, but the union apparatus. He is bound by the elaborate contract governing all issues of production which the union leadership sign in return for wage increases, pension plans, etc. The committeeman is responsible to the union and to management for the carrying out of this contract.’ [31]

John Hughes also appears to favour this type of development. He is a great advocate of package deals, the long-term contracts fashionable in the States. If British unions fail to adopt this kind of arrangement, Hughes says, it ‘would be damaging to forward planning of the economy.’ [32] (Alas, he does not explain whose economy.) But what is likely to happen, as long-term contracts spread throughout British industry, is probably a further spread of the American pattern. The introduction of long-term contracts in the US received universal acclaim from capitalist and union hierarchies. C.E. Wilson, president of General Motors, hailed the five-year settlement as allowing the company ‘to run our own plants,’ and as ‘the union’s complete acceptance of technological progress.’ Union leader Reuther hailed the settlement as a ‘tremendous step forward ... stabilising labour relations.’ But what it meant to the workers was described by a General Motors’ employee. In the early days, before this type of arrangement, he says that

‘if a worker had an argument with the foreman, the foreman would try his best to settle it. The foreman never wanted the worker to call the steward. He knew the steward would defend the worker. The workers used their strength against the company, even if it meant going out on strike. The union leaders were forced to go along with them. They depended on the strength of the workers. The feeling of solidarity was close and felt by the average worker ... (However) today, the steward spends practically all of his time in the office on supervision, or walking around with his arms around company officials. They have hardly any time to talk to the workers unless it is election time. They agree with the company on most of the differences between workers and management. When a worker has a difference with the foreman today, the foreman will say, “Call the committeeman.” He knows which way the committeeman will act.’ [33]

As capitalist production relations grow more tense, unions become increasingly involved – not in expressing workers’ views – but in controlling and disciplining them. They are essential to capitalist survival, a second foreman for whenever production breaks down. Long-term contracts further this assimilation. Union officials interpret and enforce the contract; less initiative remains with the shop-floor. It is also beneficial to the manager because it permits him to estimate labour costs reliably.for years ahead. On the other hand, it leaves the workers without protection should technological changes occur, or if the cost of living should rise dramatically. Nor are they assured their wages will keep pace with the rise of wage-levels in other industries. [34]

Bureaucratic economists are not worried by this possibility. Indeed, it fits in well with incomes policy doctrine. Essentially, this requires decisions to be made at the top, by leaders of both sides of industry, while the workers remain docile. Consequently, John Hughes et al. write to influence policy-making at the top. They see the working class as an object to be manipulated.

* * *

The errors of the ‘Left’ economists stem from a misconception about capitalism. They regard planning and State control per se as progressive. They welcome the tendency in every capitalist country for the State to play a growing part in the economy. It supervises and co-ordinates investment, supplementing private with public where the former is inadequate. It takes over and runs industries whose inefficiency and technological backwardness impairs the functioning of the whole of capitalism. It helps to discipline the workers. The State is now the most permanent and powerful influence in capitalism – the system could not survive without it. When Barratt-Brown and Harrison write,

‘Enoch Powell and the employing class understand how fatal it is to capitalism to treat incomes, not as subject to market forces, but as the proper object of social planning and control,’ [35]

they are making a grave mistake. Enoch Powell may hanker for a return to an earlier phase of capitalism, but not the ruling class as a whole. Industrialists, in fact, understand it would be fatal not to have incomes planned and controlled. Major companies plan their investment for years ahead. Naturally, this is extremely hazardous: millions of pounds are committed to projects that might easily be wrecked by unforeseen developments. It lessens the risk considerable if one important imponderable– labour costs–can be reliably estimated. Hence an incomes policy becomes a necessity for capitalism. Far from being a lever, as Hughes et al fondly imagine, for slowly transforming the present economy into a socialist one; it is a central control for maximising exploitation.

This can be shown in another way. It is only possible to conceive of incomes policies with one of three objectives:

  1. to redistribute wealth from labour to capital;
  2. to retain the status quo, so classes get the same share of the national cake as at present; or
  3. to redistribute wealth from capital to labour.

The first is unacceptable to socialists since it increases inequality and diverges further away from a classless society. Likewise with the second, sometimes euphemistically referred to as a ‘planned growth of incomes.’ If we envisage, for the sake of argument, that incomes were to double in a given period, then, the man with a million pounds would have two millions while the old age pensioner, now with £4 a week, would have a princely £8. So the second policy would only serve to magnify existing inequalities. Socialists of widely differing views would find this quite indefensible. As Bernard Shaw once pointed out, ‘The moment you begin to think of our present sharing as a fixture, you become a fossil. [36] The third alternative is impractical under capitalism for three reasons. First, the ‘commanding heights of the economy’ are in the hands of Capital and it would not hesitate to use its immense power if ever its interests were threatened. Second, profits are the life blood of capitalism. Gradually diminish them, and the system is slowly strangled. Investment tapers off, out-of-date machinery is left unreplaced, and the country’s competitive position in world markets declines. Third, Britain’s position in the world would become impossible if it gradually tried to lessen profits. The maintenance of sterling as an international currency requires that short and long term capital be attracted to Britain. This can only be done by maintaining the profit-making system. No investor is likely to invest with an international banker who discourages profit-making.

For these reasons, the third type of incomes policy – the only one socialists can support – can never be implemented within a capitalist system. The kind of gradual, bureaucratic transformation beloved by Hughes et al is a chimera. There can be no substitute for a complete change – public ownership with workers’ control – carried out all at the same time. The class struggle is the only means to attain this end.


1. Eric Heffer, Socialist Review, Mid-April 1959. Michael Kidron, Ibid., February 1960. Both reprinted in the book, A Socialist Review, London 1965.

2. Aneurin Bevan, Tribune, 4 February 1955.

3. John Hughes and Ken Alexander, A Socialist Wages Plan, pp.60-65.

4. Allen Flanders (Wages under a Labour Government, Socialist Commentary, January 1958) suggests that real wages fell: 1948 –4 per cent; 1949 + 2 per cent; 1950 –2 per cent; 1951 –2 per cent.

5. Harold Wilson, Remedies for Inflation, p.14.

6. John Hughes, An Economic Policy for Labour, New Left Review, March-April 1964.

7. Ibid.

8. Challenge to Britain, Transport House, 1953, p.6.

9. Thomas Balogh, Pitfalls for a Labour Government, New Statesman, 19 December 1953.

10. G. Strauss, House of Commons Debates, 19 September 1950.

11. John Hughes, Steel and Power, New Reasoner, Autumn 1957, p.7.

12. Ibid., p.19.

13. Peter Shore, MP, Wilson’s ex-personal private secretary, gives an interesting insight into capital’s pressure on the 1964-65 Labour Government. In his book, Entitled to Know, he writes: ‘The Government had to sustain itself, with its tiny majority, against an embittered Opposition, a largely hostile press, and a wholly alienated City – prepared to use blackmail and veto decisions that it disliked.’ (My emphasis – RC)

14. Michael Barratt Brown and Royden Harrison, Tribune, 8 January 1965.

15. Michael Barratt Brown and Royden Harrison, Tribune, 5 February 1965.

16. Henry Collins, View, Summer 1964, p 15.

17. Henry Collins, The Firefighter, October 1964, and Roy Martindale’s rebuttal, Ibid., December 1964.

18. Henry Collins, Tribune, 15 October 1965.

19. Henry Collins, Tribune, 6 May 1966.

20. Henry Collins, Tribune, 24 June 1966.

21. John Hughes, Tribune, 1 October 1965.

22. Aubrey Jones’ Sidney Ball lecture at Oxford, reprinted in The Observer, 11 December 1965.

23. The Guardian, 20 January 1966.

24. T. Cliff and C. Barker, Incomes Policy, Legislation and Shop Stewards, pp.49-59. Also T. Cliff, Labour Worker, mid-November 1965.

25. Aubrey Jones, The Observer, 11 December 1965.

26. See for instance, J.E. Mortimer (DATA) in Tribune, 15 January 1965. Disagreeing with Michael Barratt Brown and Royden Harrison, he wrote:

‘Why should it be regarded as desirable to restrain wage increases which result from local agreements in manufacturing industry? Nationally negotiated basic rates are frequently disgracefully low. The employers insist on keeping them down. When workers at factory level press for higher rates, based on productivity, profitability, comparability, or the increased cost of living, it is the job of us who are trade-union officials to help them. This, after all, is what workers expect from their unions.’

27. Michael Barratt Brown and Royden Harrison, Tribune, 5 February 1965.

28. A Plan for Incomes, p.35. It is noteworthy that Hughes and Alexander wrote this pamphlet on the conclusions drawn by a Fabian discussion group under the chairmanship of Charles Smith, right-wing secretary of the Post Office Engineers’ Union.

29. Peter Bain, Labour Worker, 25 May 1966.

30. Reported in The Week, 29 July 1966.

31. Grace C. Lee, Pierre Chaulieu and J.R. Johnson, Facing Reality, a Correspondence book, p.19.

32. John Hughes, British Trade Unions in the Sixties, The Socialist Register 1966, p 96.

33. Quoted by Raya Dunayevskaya, Marxism and Freedom, pp.262-3.

34. See Tony Topham, Package Deals in British Collective Bargaining, International Socialist Journal, September-December 1964, for an excellent exposure of long-term contracts. Also Labour Worker, 1 February 1965, for Geoff Carlsson’s bitter attack on The Engineers’ Package Deal, an agreement which John Hughes considers ‘contains some instalments of social justice.’ (The Socialist Register 1966, p.94.)

35. Tribune, 8 January 1965.

36. Bernard Shaw, The Intelligent Woman’s Guide, p.38.

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