Two recent spoecnes oy mauussigy
Chancellor of the Exchequor, both illustrate Tory thinking on economic policy and their basic dilemma, Maudling's speech at the Mansion House just over a week ago announced the liberalisation of overseas borrowing by giving other countries much more fraedom to raise sterlings loans. He described this policy as an indication "of the Governme. nt's clear view of the need to sustain London's unique position as a financial centre." The re-emergence of an international longterm capital market in London will have a mumber of effects, Firstly, it will increase Britain's so-called invisible earnings, that is, earnings on interest rates, bank chargos ete. Secondly, it will be very profitable for those banking and financial institutions which indulge in this activity. Thirdly, it will roinforce tho pressure to keep the pound up to par. Any tendency for the pound to be under inflationary pressure will naturally deter those people who are financing operations with saterling.
Not all bourgeois opinion is sold on this policy. “riting in tho Financial Times of October 24th, Lombard, a regular columnist, wrote: “It is to be hoped.s.s.that the authorities will be careful not to allow thoir present onthusiaem for restoring London to its former pre-eminence as an international long term capital market to run away with them,.....if the short-term money is withdrawn in circumstances wheroin it cannot be oasily replaced, tha reserves wilt have to be drawn upon...Furthormore, there is not so much slack in the British economy that we can afford to ask it to shoulder big new responsibilities in respect of overseas financing as well as in respect of development at home..." Lombard is clearly worried about the general intorests of British capitalism suffering for the particular interests of one section. :
This problem of whether British capitalism should pay its wey by subordinating the economy to carrying out the gzsentiallyparasitic function of becoming one of the world's main banks, or whother the main emphasis should be on exports is, of course, a problem for the capitalists to work out. However the strategy of the Governnont will be determined to -a great oxtent by their choice and this will havo important repercussions for the Labour movement. 4 future Labour Government will face the legacy of tho policy adopted. The more Britain's economy is intozrated into and dependent on the ramifications of international finance the more pressure international financial circles will exert on the future Labour Goverment not to pursue policies which would he likely to 'undermine the pound! (that is increases in social services, ete.)
Mandling's spoech at Ghenley at tha wack end ig a logical follow on fron the Mansion House one. He said he wished to giva the nation: two warnings — on public spending and on incomes (read wages). Ile pointed out that Britain's export drive was being helped by rapidly rising incomes in such countries ag France and Italy, and that "We cannot rely on such help in the long run". Hoe could have added that both the countries he mentioned are taking steps which will hinder British exports. He might also have mentioned the import figures for September which, seasonally adjusted, are the highest ever. His fears of the danger of too rapid expansion and tho inability to apply an incomes! policy boil down to a fear of inflation, This would both 'damage ths pound’ and make Iritsin's export competitive position worse. Rapid expansion, without a wazes' policy, becuase of the realotive backwardness of British industry compared with its rivals, tends to increase imports values excessively.
Hence the Tory dilemma; -— if they fail to oxpand industry fast enough unemployment increases and their election prospects suffer, if industry: expan ds without control of wages and/or far-roaching rationalisation imports soar, tut it is difficult for them to apply an incomes policy unless unemployment is high, and so on and so on, If they try tho alternative policy of raising invisible earnings this entails slowing down ozpansion too and may mean a strain on the reserves. They are trying to hold the position until the Goneral Blection, it seoms doubtful whether they will succoed.
. Speaking at a conference organised by the National Housing and Town Planning Council] at Searborough on October 23rd, Dr. Bric HM. Sigsworth, Lecturer in Economic History at the University of York said: "1 tuilding programme of 500,000 homes a year would be called for if we were simply to clear unfit houses and those which will becomo obsolete during the noxt decade." The recent published Government Social Survey (thisho peinted out had been printed in 1962 but not made available until after tho publication of the Government's White Papor on housing) made nonsense of some of the figures in the White Papor. It showed, for example, that there wore 4.9 million houses in Britain with a life of 30 years or less.