Michael Kidron

Bad Medicine

– but only if the workers swallow it

(30 November 1968)

From Socialist Worker, No. 99, 30 November 1968, p. 1.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

The European financiers squabble, but they are united on one thing – that the labour movements must pay to stave off a further crisis


IT’S NOT THE END, nor is it anywhere near the end. But the system did lurch noticeably last week, and it looks as if this time it was a lurch to remember.

Political Europe was wrenched into line with economic realities. German capitalism is once again king, acknowledged as king and conscious of it.

‘In the long run this crisis means a lot more gravy for the stock market’ – a leading London stockbroker.

From now on it will rule Europe, sweeping French industry – and in particular France’s nuclear industry – under its control, cooling its former ardour for Britain's entry into the Common Market, even testing the ground for an East-West accommodation in Europe once Czechoslovakia has been firmly rolled under the Russian ice-pack.

But so has the working-class map of Europe changed. From now on, and despite the clashed to be expected soon in France, it’s the German working class that will be expected to bear the strain of its rulers’ limitless political and economic ambition, to pay the price of competing with a United States 10 times Germany’s economic size, or a Russia five times as strong.

It is on the German working class’s continued acquiescence that the stability of the European system now rests.

It’s a shaky enough foundation. Years of full employment and rising wages have bred a self-confidence in them that should terrify their regime.

For as the French workers have shown by reducing de Gaulle from strong man to sick man of Europe in under six months, no capitalist country can command any confidence once the workers have withdrawn their support.

And ’confidence’ is the issue. In the seven days before the crisis $1,000 million left France to hole up in German, Swiss and other foreign banks.

It was a purely financial collapse. Production was not sagging.

On the contrary,the French authorities were expecting a huge increase of 7 per cent in national income this year, and major markets like Germany and Italy were expanding strongly.

It was the third such financial crisis in the West in a year. It’s unlikely to remain the last for very long.

Years of boom have hurled the western economies into dependence on one another, opened up their markets to one another, made the easy flow of capital between them seem necessary.

The volume of trading in equity shares on the Stock Exchange has so far reached an all time record of £7.6,000 million compared to £4.5,000 million for the same period in 1967.

But these years have not resulted in common control over national economic policies. On the contrary, as each national capitalism tried to offset its international dependence by planning, it automatically made economic relations between the national units more arbitrary, more chaotic, more unforeseeable.

No wonder ‘there is now’, as The Times points out, ‘a very large mass of money with no permanent national home and ... there is less confidence in national currencies than we have known at any time since the war’.

The crisis of confidence goes very deep. Economies that five or 10 years ago were working flat out, offering security and ever-expanding material gain to their workers, are now going slightly slack.

Some of this is due to the slow but steady drift in the importance of arms spending throughout the West – the market in destruction, once so enormous, has been narrowing.

Some of it is due to the loss in employing-power of the still massive arms spending that goes on, as the technology of death becomes mere and more intricate – more skill-using but also more hand-losing.

Both trends look as if they are going to continue, at least for now. And the result will be more lurches in the system, a sharpening of class tensions, more leverage for a socialist programme in the minds and hands of workers.

What now for us in Britain? Jenkins cried ‘calamity’ last week and demanded sacrifice.

Yet somehow the cry was greater than the demand: £250 million more out of our pockets next year – still total incomes are expected to rise by three times as much; a pegging of unemployment at the current level – but it won’t be higher; a slowdown in economic growth – but only from 3 to 2½ per cent.

‘A handful of senior partners will this year make more than £250,000’ – senior partner in firm of London stockbrokers.

The bark was there all right, but there was nothing like the four-times-more-fearsome bite of six months ago.

The discrepancy is interesting and important. Partly it was a Labour show for foreign bankers. Partly it came from their real fear that too much harshness will lose them the next election.

But mostly it was an attempt – one more attempt – to stop up the holes in their leaking wages policy.

Unit trust advertisements this year have attracted approximately £230 million of the public’s money on to the stock market (compared to £84 million in 1967) and unit trust holders have seen the total value of units rise to £263 million compared to £94 million in the same period of 1967.

British capitalism can’t afford last year’s 2 per cent rise in real wages despite the freeze. Competition in world markets is too fierce for that.

At the same time they can’t afford too much lost production and higher costs through massive deflation and unemployment. Somehow the workers must be kept working and yet be frightened into accepting a wages straitjacket.

It is this that explains Jenkins’ half-empty but resounding deflationary package. Coupled with Powell’s racist diversion; and, more ominously, coupled with the moves taken by some of the Largest trade unions – the engineers in particular – to professionalise factory wage bargaining and reduce shop stewards to becoming social secretaries, it can be dangerous medicine.

But only if we swallow it.

Last updated on 12 October 2020