Ted Grant

Freeze—profits grow, wages lose

A socialist plan means higher wages and lower hours

Source: Militant, no. 19 (September 1966)
Transcription: Francesco 2009
Proofread: Fred 2009
Markup: Manuel 2009

The measures of the government to impose a “total freeze on wages and prices” for six months follow on the same lines as those of the Conservative government, except that the measures of the government are even more severe. The amount taken out of consumption amounts to £1,500 million. Prices will not remain stable, measures introduced by the government will themselves result in an increase in prices. Meanwhile the profits of the employers will continue to rise as usual. While “dividends” will remain frozen, they will pile up till the end of the period of the freeze. “Bonus” shares issued by the more profitable concerns will disguise the extent of the extra profits made.

At the same time, the endemic crisis of British capitalism will be further increased. Government expenditure on capital equipment will be cut, while there will be a cut of £150 million in government military and overseas expenditure on investments. This will not solve the crisis even if carried out.

“Plan” abandoned

The “modernisation plan” has become an object of mirth to the Tory politicians and the capitalist class. One reason why the capitalists were not too averse to seeing a Labour victory at this election was to cover the idea of a “socialist plan” with ridicule.

The squeeze measures will result in a fall in investment in manufacturing industry, it is estimated by the Confederation of British Industry (CBI) by 7 percent in 1966 and 7 percent in 1967. The so-called national plan called for an increase of 7 percent in investment every year up to 1970. So that all the lavish hand-outs to big business have not solved the problem of the British economy in any way. The balance of payments crisis every two years is caused by the interests of the City of London bankers and speculators, the manufacturers who invest abroad, and of course the £500 to £600 million spent in defending the interests of those same bankers and capitalists.

The imposition of a 10 percent increase in surtax, while irritating the surtax payers—and it does not bring surtax to the level which existed before Tory governments slashed the tax—cannot by any stretch of the imagination be compared to the burdens being imposed on the working class, and to some extent on the middle class as well.

Wilson, Callaghan and Brown dreamed of running capitalism better than the capitalists and their representatives the Tory Party. They seriously believed that capitalism could be “planned.” The result for the labour movement is the disastrous squeeze dictated by the capitalists and caused by the world and national market conditions which dominate the economy. Their acceptance of the dictates of big business, while trying to give some sops to the working class and labour movement cannot satisfy either. There cannot be a middle way between the working class and the capitalist class. The profits of the capitalists are extracted from the unpaid labour of the working class. The old saying is that it is impossible to serve two masters, it is even more impossible to serve two opposed classes.

The Financial Times of the 7th of August correctly observes in an editorial written from the point of view of their class:

“The belief that it is on occasion right to seek to achieve social objectives by interference with market forces is to some extent shared by all political parties. But, as Mr. Wilson and his colleagues are now painfully discovering, there are very definite limits beyond which one cannot go without causing serious economic damage…under the most unfavourable economic circumstances the attempt is made to reconcile the irreconcilable.”

Reduced consumption

They then point out that the incomes freeze is deliberately intended to reduce consumption (of the people as a whole, the capitalists will not be affected). But of course, like the Confederation of British Industry, they object to prices being frozen, because this will cut into profit margins and affect the ability of “industry” i.e. the owners of industry, to reinvest the extra money gained from the labour of the workers.

From the viewpoint of a capitalist economy this is correct. No amount of penalties can affect the workings of a capitalist economy for very long. Employers and workers “violating the freeze are liable to fines of £100 on a summary conviction, £500 on an indictment of someone failing to observe the obligations, and unlimited fines on both unions and employers who induce a body to make a breach.”

All these measures have been tried in Holland where they have had a wages freeze for a number of years. They have failed in their objectives both as regards prices and wages. A black market has been established.


The building of the Labour Party as a mass force in Parliament was given an impetus in support from the trade unions and working class by the reactionary Taff-Vale 1906 court decisions. Now the Cabinet is reversing the procedure.

These latest measures are unprecedented for Britain. They have not been introduced even in war-time by any capitalist government. One has to go back to the Middle Ages for a precedent of legislation forcibly holding down wages! And this has been introduced by a government which won the election because of the support of the organised labour movement, the trade unions and constituency parties!

But just as it is impossible to prevent market forces asserting themselves from the point of view of the capitalists, so it is impossible to prevent the labour movement and the working class from resisting these attacks on their standards of living.

Already it is in the balance whether the government can gain a majority at the TUC and Labour Party conferences for their policies. Cousins and the T&GWU are opposed. The NUM, USDAW and many others including “white collar unions,” have rejected the incomes policy and freeze.


When unemployment, which has already increased slightly in July, begins to rise up to the expected 600,000, then the opposition of the workers will become manifest. A section of the left wing Labour Members of Parliament have voted against the policy. But Wilson has a case when he argues that on the present economic system the alternatives offered by the left opposition MPs are no solution. Cousins argues for increased productivity. But with present world conditions this will mean increased unemployment.

Other capitalist governments are introducing similar measures and threaten to catch the “English” sickness in the economy. They are increasing productivity and beginning to meet resistance from their own workers. Sweden, the “model” for relations between the classes was recently at the point of a threatened general strike. Increased modernisation means. increased expenditure on capital equipment and after a period, a fall in the rate of profit. Hence the attempt to hold down and decrease the share of the working class in what they produce in all the capitalist countries.

Independence for unions

Cousins has objected to the attempt of the Labour leaders to make the unions part of the capitalist state machine. Those union leaders supporting this process will soon be compelled to come out in opposition by the pressure of their members.

Woodcock, the general secretary of the TUC, and Cousins, have come out for more workers’ participation in the management of the nationalised industries and of private industry. This is an indication of the mood they expect to develop within the working class in the coming period.

But mere words in isolated speeches mean very little. It is a question of mobilising trade union branches, shop stewards’ committees and constituency parties as a start. It is a question of a mass campaign of explanation to the working class that British capitalism is diseased. It needs a surgical operation, the taking over of the “commanding heights of the economy” with compensation on the basis of need only. Then with the banks, insurance companies and private monopolies nationalised, it would be possible to organise the resources of the nation democratically, and get the “incentive” for a great increase in production by lowering hours and increasing pay. The mass of the people could discuss the entire plan, with the working class as the leading force. This is the programme Labour’s left must adopt.