Histomat: Adventures in Historical Materialism

'Historical materialism is the theory of the proletarian revolution.' Georg Lukács

Sunday, March 08, 2009

Paul Foot on Unemployment in Britain

From 'Why You Should Be a Socialist', 1977:

Employers and television commentators have a word for the chaos into which we are being plunged. They call it "crisis". "Britain is in a crisis", they say. "This is the worst crisis since the 1930s." They talk of the crisis as though it were a feature of the weather; as though it had blown up suddenly over a calm sea. Politicians, economists and businessmen often use the language of meteorology to describe the crisis. For instance, Michael Foot, then Minister for Employment, told the 1975 Labour Party conference:

"We are caught up in an economic typhoon".

In the House of Commons in October 1976, Mr James Callaghan, Prime Minister and a former petty officer said: "We shall weather the storm and bring the ship home to port".

These people tell us that the only answer is sacrifice. If we all make sacrifices, grin and bear it in the spirit of Dunkirk, then one day, perhaps, the typhoon will go away and the sun will come out once again.

Working people have been quick to respond to this call for sacrifice. They have agreed to wage limits for 1975, 1976 and 1977 which have cut their standard of living for the first time since 1950. Pensioners and the poor have made sacrifices. Public service workers have in many places agreed to the run-down of their services and the loss of jobs. There were less strikes in 1976 than any other year since 1953. But now, after the first year of sacrifice, the crisis doesn’t seem to be going away at all. It’s intensifying, And as it intensifies, people who shouted for sacrifice last year call for more sacrifice this year. In 1964, the Tory Prime Minister Sir Alec Douglas Home called on British workers "to work one per cent harder". They did – and it didn’t make any difference. In 1968, the Chancellor of the Exchequer Roy Jenkins called on British workers for "two years hard slog". They gave it, and found themselves with a Tory government demanding more sacrifices in terms of legally-imposed wage limits.

In the summer of 1975, Prime Minister Harold Wilson called on British workers to "give a year for Britain". They did, and now, with rising food prices, more unemployment and worse public services, they are asked to make sacrifices once again.

The first remarkable feature about these calls for sacrifice is that they scrupulously ignore the people who can most afford to make sacrifices...The truth is that we are not "all in it together". We live in a society which is divided into classes. It is split from top to bottom between those who have property and wealth on the one hand yet produce none; and those who have none, yet produce it all. The bare statistics of inequality in our society are almost incredible...But the argument doesn’t stop at inequality. It’s not just that there are a handful of very rich people who make money for nothing living alongside poor and hungry people.

The point is that the rich parasites control society. They decide what’s produced, when it’s produced, how it’s produced. They decide what services are run. They decide who works where and for what rewards. They decide how many houses are built. They decide all these things according to whether or not they make a profit: that is whether or not they expand the wealth, privilege and power of the minority who already have it...

Why do farmers sell their beef into cold storage rather than feed the hungry? Because the store pays higher prices, which the hungry can’t afford. Why do American farmers destroy food rather than ship it to Bangladesh? Because they have to keep the price up to make a profit, and the price can be kept up by creating scarcity. Better a profit from a small sale than a loss from masses of hungry people eating. As John Pilger demonstrated in a television programme in September 1976, they are spending more in America on the promotion of a new moist lavatory paper than is needed to provide every peasant in the whole of South American with the money he needs to produce the food for the hungry round about him. Why? Because selling moist lavatory paper in America renders more profit than expanding agricultural production in the underdeveloped world.

How was Centre Point, a 29-storey office block in London, built and left empty for more than ten years, while there are 100,000 homeless in the same city? Because building houses for the poor is not profitable; but office values rise so fast that you can always make a profit from selling an office block, even if it’s always been empty!

Why do drug companies spend more on promotion than they spend on research? Why do the government plan to rip up 2000 miles of rail track and build 1,000 miles of motorway? Why is there tax relief on company cars to the tune of £600 million a year? Why are half the hotel bedrooms in London empty? Why did the taxpayers pay for the Concorde when never more than 0.5 per cent of taxpayers will ever be able to fly in it?

Because of profit, profit, profit. Because the privileges and unearned income of a minority are more important than the lives of the majority...We must have more profits, continue the wealthy, because without profit there won’t be any investment and without investment there won’t be any jobs. And we, the wealthy, are the only people qualified to decide whether there should be any investment and what it should be...

The entire economy is bent and twisted to provide more profit for the class who have the wealth. All the exhortations and policies of government are directed towards this aim. As a result, profits are expected to be £12,000 million – four thousand million more than last year. But investment in industry and service will go up at most by £800 million. Where will the other £3000 million go? The Financial Times gives a clue when it says that much of the rest is going in "speculative investment overseas". Even more will simply be lent to the government at huge rates of interest. We can look forward to another round of property speculation or commodity speculation, or financial dealings. No doubt in two years, as we count the cost of another fruitless boom, there will be "inquiries" into companies which today are being recommended as "good investments".

The damage has been done however and will go on being done as long as freedom to use the resources of society is handed over to a handful of wealthy men with no social responsibility and over whom there is no social control.

The "men of initiative and dynamism" waste the surplus wealth which they seize as though it were "theirs". But their central crime is far worse than that.

They cause the economic crisis.

The employer, always wants to keep wages as low as possible. The lower the wages, the higher the profits. But low wages brings another set of problems to the employers. If wages are low, who is going to buy the goods which come out of the factory?

That’s the central problem for the capitalist. He can let wages rise as long as they don’t seriously interfere with his profits. But when wages do interfere with his profits, he prefers to close down his factory or sack large numbers of workers.

As a result, there’s even less wages around to buy goods from factories, so the slump careers on downwards. When wages have been forced down low enough, the capitalist starts investing again, and the wretched cycle starts again. But as investment and technology becomes more expensive, and each machine employs less men for more production, so each boom gets shallower and each slump deeper.

For a long time after the war, it looked as though the profit system had found a way out of its difficulties. For twenty-five years there was never as many as a million unemployed; and there was a gradual growth in production and the standard of living.

How did they do it? The answer is that "they" didn’t "do" anything. The enormous government spending on arms and military hardware ensured that millions of workers were being paid money for making goods which they didn’t have to buy.

The economist Keynes once argued that the only way to solve the central problem of the profit system was to pay large numbers of workers wages for digging holes in the ground and filling them in again. The trouble is that the people who control society will never agree to pay taxes for that. But they do agree to pay taxes for guns and tanks and bombs to fight off any other group or class which might want to come and take their wealth from them.

War spending, amounting to seven per cent of everything produced, was forced on the British ruling class after the war. It had never been anything like as high before in peacetime. And it helped to stabilise the economy and pay out money in wages for goods which workers were not buying.

But the same old devil re-emerged. Arms became more and more expensive. The state had to pay out increasingly huge sums to "maintain defences", but less and less of this money went in wages, more and more of it in missile technology. So the pumping out of large sums into munitions workers’ pockets slackened, and, as it slackened, the old boom/slump cycle re-emerged.

At the bottom of each slump, unemployment was always higher than before – 700,000 in 1967, a million in 1972; a million and a half in 1976 – and who knows how many next time – or how soon next time will be?

During the "good old days" of the 1950s and 1960s, the people with property were very confident. They allowed the growth of spending on social services. Similarly, they promoted "liberals" into their political party: the Tory party. They believed it when they said they wanted a "free and easy society". As long as it was easy to make profits, they liked things to be easy for everyone.

But when the profits became more difficult to make and when the society fell into crisis, the mask slipped. The liberals were packed off to the universities. Cuts were demanded in every form of public spending which did not produce instant profits. The unemployed were hounded as "scroungers".

From 'Can Labour bring jobs?', 1994:

Everyone agrees that unemployment is a bad thing and should be banned. All governments would like to ban it, but it has an irritating quality of not being susceptible to bans.

Indeed there is a pattern in the politics of this century which suggests that the more anxious politicians say they are about unemployment the more it flourishes when they are in office.

This is especially true of the Labour Party. The Labour Party, since it gets its votes from the working class, has an obvious interest in preferring work and wages to dole and poverty.

In the election of 1929 every other policy was subordinated to the single specific aim of reducing unemployment. Jimmy Thomas MP, the railway union leader, was adamant that all socialistic nonsense should be rejected in favour of the practical business of getting the one million unemployed back to work.


A Labour government was elected and Thomas became Lord Privy Seal with special responsibility for the unemployed. The unemployment figures tripled in two years and Thomas, perhaps logically, joined the Tories.

John Prescott cites the post-war majority Labour government as the model of how unemployment can be wiped out. It was wiped out during that government but so it was for the next 13 years or so – under a Tory government.

The first substantial rise in unemployment after the war happened under a Labour government – in 1967. Then in 1972 unemployment reached a million under the Tories.

Labour was furious. It patented a slogan: "Back to work with Labour." Under the Labour government which followed, unemployment soared to one and a half million.

The new Tory leader, Thatcher, became a champion of full employment. Then she got into office and we were back to four million unemployed.

The level of unemployment has never this century been set by the government. It has been set by the level of industrial activity, which in turn has been decided by the unelected people who own and control the means of production.

The "free market" has been left free to rise and fall as it suits its controllers. If government wants to insist on full employment, therefore, it must nationalise, control and interfere with the free market in a manner which John Prescott is not prepared even to contemplate.

Unless accompanied by a warning about the need to fight the priorities of capitalism all talk of a "commitment to full employment" is so much old fashioned moonshine.

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