Ted Grant

Only one solution—Budget demonstrates the impossibility of capitalist “planning”

Source: Militant, no. 17 (June 1966)
Transcription: Francesco 2009
Proofread: Fred 2009
Markup: Niklas 2009

The budget introduced by Callaghan, has nothing to do with the principles proclaimed by the Labour Party, and all the present leaders of the Labour Party in the cabinet, for generations. It is a futile attempt to operate capitalist economics in a “new form,” so new that it harks back to the discredited 19th century capitalist economists Marshall and Pigou. This is supposed to be modern socialism! Instead of introducing real socialist measures, such as taking over the private banks, insurance companies and monopolies that control over two-thirds of the economy they are attempting to operate within the framework of capitalism, with disastrous results for the working-class and even for the economy.

According to the capitalist economists the new tax measures will result in increasing prices for the working people by at least 1 percent. Even the capitalist papers themselves, point out that there is nothing left of the so-called “national plan,” which was to make Britain productive and prosperous. Instead, we have the grim realities of capitalist economics, and lop-sided capitalist economics at that, in a desperate attempt to solve the economic problems. Taxes are to be made for all employees in the service industries, in an endeavour to create a pool of unemployed and at the same time change the relationship between those employed in manufacturing industries and in the service industries.

It is a law of capitalist economics that money will flow to those industries making the highest profits, in Germany the relationship between manufacturing and service industries is 10 percent more favourable to the productive economy than in Britain. Consequently this is a clumsy attempt to try and alter the relationship at the expense of the working people.

In a disguised way this is an even worse budget than that of Selwyn Lloyd and can have as disastrous consequences.

There are all sorts of anomalies in the taxes which space will not allow to give. But one example stands out: the candy floss industry qualifies for the subsidy, while certain export industries have to pay the tax.

The payroll tax is £375 million per year on the service industries while the manufacturing industries get a subsidy of £135 million. Supposedly for the purpose of increasing productivity these new taxes add new burdens of bureaucracy and tax collection on the economy in a complicated way. Housing will cost more, the building societies are threatening to raise the rates to 7.125 percent.

This Budget is intended to try and weaken the struggle to improve the standard of living while increasing the profits of many of the biggest of the multi-millionaire concerns. Wilson and Callaghan are basing their budget on the interests of the giant manufacturers and combines and not on the interests of the working class. The balance of payments will still remain as a menacing problem to the economy of the country.

The strike of the seamen for a decent living wage, which will undoubtedly have the support of all sections of the organised working class, takes place at a time when the budget introduced by leaders of the labour movement act in the direct interests of big business.

The following table of the giant monopoly concerns and the presents given them contrasts shamefully with the attitude of Wilson and the government to the demands of the seamen:

In pocket *Benefit (£m.)
ICI 2.25
BMC 1.8
GKN 1.7
United Steel 0.75
Out of pocket *Cost (£m.)
Co-operative movement 10.0
Rank organisation 2.2
Barclays Bank 1.8
Marks and Spencer (distributive side) 0,78
* Before tax
(Financial Times, 4th May 1966)


And the worst feature of these shameful measures prove the impossibility of “planning” under capitalism. Instead of resulting in the introduction of new machinery, in which the huge monopolies received a huge subsidy last year, as even the Economist calculates this so-called plan is an actual encouragement to the manufacturers to hoard labour.

The manufacturers will pay out 25s per man and get back 32s 6d. So it becomes nearly £20 a year cheaper to hoard workers for the manufacturers than to introduce new machinery! And Wilson, Brown, Callaghan and all the other leaders of the Labour Party have the ironical nerve to pretend to stand for “practical politics” instead of the utopian ideas of “socialism.” What practical men! Even the capitalist Economist of May 7th comments:

“The Economist has often argued the case for encouraging labour-saving in this country, by imposing a large payroll tax, the investment grants should certainly be made non-discriminatory, so as not to hit the service industries, who are at the same time kept deprived of any investment incentives so that they cannot replace with machines the surplus labour that they should now be shedding; plus an actual payroll subsidy amounting to some £135 million a year, to manufacturing firms, who are thus encouraged to use their labour even more wastefully, at the same time as they are the only people who are given an incentive to put in new machines to replace it.”

Of the 1.3 million new British employees, 142,000 only are in manufacturing. The attempt is to try and drive 1 million from the service industries and construction as explained above.

To “plan” an economy in this way is utter madness. Instead of marginal contradictory measures—bureaucratic measures—which in any case are nullified by the effects of the world market, what is needed is an assessment of the entire economy together with a state monopoly of foreign trade.

As things stand now the minimum deficit in foreign trade is expected to be £150 million.

Just one point in passing is the dirty blow received by the co-operatives where the dividend of many co-ops will be cancelled out by the taxes. This is not to offend the representatives of big business.

The reduction in popular consumption is now £240 million. The tax rates are 25s per man employed, 12s 6d per boy under 18 and 8s per girl under 18. The rebates to manufacturing industry are men 32s 6d, women 16s 3d, boys under 18, 16s 3d, girls under 18 10s 6d.

Yet if the wealth of Britain were organised, under a real plan involving the tens of millions of trade unionists, house-wives, small business people and so on, the problems of production with the co-operation of scientists and others would have been solved for the benefit of the people of Britain.

As it is, Britain is getting the worst of two problems. The working class movement, both Labour and trade union, is strong enough to take over the economy if a lead were given by the Parliamentary leaders and on the other hand the leaders’ attempts to operate on the principles of the capitalist market meet the inevitable resistance of the organised labour movement. This can only lead to the further decline of Britain as the “sick man of Europe.” The only means of salvation lies in the operation of socialist principles nationally and internationally.