Incomes derived from personal labour and incomes derived from ownership cannot and ought not to be lumped together as though they were all of similar social justification. One of the aims of the trade union and labour movement should be to re-distribute both income and wealth in favour of those who make a personal contribution by their labour to industry and commerce. Another of its aims should be always to protect the sick, the unemployed, the pensioners and the widows. An improvement in real income for working people does not constitute a justification for higher profits. Wages are the subject of negotiation and can, therefore, be controlled. If a wage or salary claim is foregone or if a claim is turned down an effective brake on wage and salary incomes is imposed. Profits, on the other hand, are not subject to negotiation. PROFITS The aim of the private owner of a business is to maximise profits. This he may achieve, first, by maintaining
prices at the highest market level and, secondly, by reducing production costs. So far, no ‘effective long-term method of controlling profits has been evolved. Indeed, there is no such method so long as the greater part of industry and commerce remains in private hands. It would be folly to foster the illusion that shareholders in general will do otherwise than judge their investments according to profit expectations. Two things can, however, be done. The new Labour Government have undertaken to do both. The first is to exercise a restraining influence on prices. This the Government propose to do through a price review body. This body will, nevertheless, be able to examine only a few of the thousands of prices which operate in the economy. It will have some effect, but its influence will be limited. The second method is to tax profits and capital gains. The Government have indicated that a new corporation tax, to replace the existing profits tax, and a new capital gains tax are to be introduced in the 1965 Budget. Much will depend on the nature of the two new taxes. It is not yet possible to say whether they will be satisfactory.