One could almost feel sorry for the Tories; immediately after they hed tried to dress up the loss of a seat in Parliament and an average 6% swing against them in a series of by-elections as a comforting change in fortune, they received a series of blows on the economic front. We have already referred to the April trade figures, but more was to come: the announcement of the biggest jump in the cost of living index for two years, the sensational increase in beef prices, the wrangle over the cost of : maintaining British forces in Germany, and, then to cap it all, a plunge in the level of unemployment. Those naive souls who think a decline in the number of unemployed is a good thing economically will be disillusioned by the following quote from the Financial Times editorial of May 26th:
"Nobody interested in the British economy can feel more than half pleased with the latest unemployment figures....It is cheering from a human view that people have found work. But (our emphasis) for Neddy's target and the management of the economy, the unemployment total, like the latest export figures, spells trouble." The editorial later suggests that more viay "soon have to be done to restrain internal demand..."
The experts are full of gloomy forebodings: the balance of payments is expected to suffer from (a) a drop in the invisible balance becuuse of the higher interest rates on foreign holdings of sterling; (b) increased military expenditure abroad; and (c) a net outflow of capital caused by general election uncertainty. These are quite apart from the difficulties being caused by the increasingly 'protective' nature of the Common Market, and the export drive of the U.S. The cost of living index is expected to jump still further when the figures record the rising meat prices and the Budget measures.
Cen Labour draw unqualified comfort from these trends? The answer must be an emphatic NO! Basically these trends arise from deep-seated features of the British economy rather than from "Tory mistakes". A closer look at the figures for imports show that the main culprits in the 16% increase in the first quarter of this year {as compared with the same period last yeav) were manufactured goods. These rose by nearly 33% or an average of £130 million per quarter. Among the items showing the biggest increases were Iron & *teel, Non-ferrous metals, machinery and transport equipment, Only part of this trend can be explained by the 'stockbuilding! phenomena, and a large part of the explanation is the success that foreign capitalists are having in competing in the British market. This in turn underscores the relatively ineffident state of British capitalism as compared with many of its competitors. Another very important factar is that British imperialism is attempting to undertake 'responsibilities' out of proportion to its actual strength and position in the world of the 60's,
There are only two ways to tackle this problem: either the traditional capitalist one of 'rationalising' and 'modernising' the economy, which must be done at the expense of sections of the working class; or that of using socialist measures, which involve’ planning for and by the working class. The former method will inevitably lead to large-scale conflict between the employers and the workers, and eventually, the state machine and the workers. THs is the reality behind the discussion around an incomes policy. . There is no third way, and unless Wilson chooses the latter he will face disaster, Socialist policies are not merely desirable they are absolutely necessary.