The March issue of the AEU Journal contains a very interesting article by Paul Derrick the middle of February came the White Paper on the Machinery for a Prices and Incomes Policy. The National Board for Prices and Incomes is going to be a much more formidable body than either the Council on Prices, Productivity and Incomes or the National Incomes Commission; but already people are asking how successful is it likely to be in stabilising prices and incomes, whether it is likely to succeed where Nicky failed. The White Paper said it would have to consider giving the Board statutory authority if this was necessary; but price controls under the last Labour Government did not ensure the complete co-operation of the unions in the Governments Incomes policy. The White Paper does not say very much about increases in money incomes other than wages and salaries except that they would, “where appropriate” be referred to the Incomes Review Division of the Board. Oddly enough the government did not appear to be very enthusiastic about Mr. Peter Shore’s Emoluments of Top Management (Disclosure and Regulation) Bill which was tabled on 20th February. The Labour Party has long been talking about its Incomes policy applying to all incomes but the government seems to be curiously hesitant about the practical application of its own policies. Then again there are dividends. Dividends in January were 12.4 per cent higher than a year earlier; and many companies increased their dividends by very much more. On roth February, for instance “The Times’ reported that I.C.I. was increasing its dividend by 25 per cent —from Io per cent to 124 per cent —and that Television West and
Wales was increasing its dividend to
1074 per cent. On the same day its
main news item was that prices were
still increasing faster than product-
ivity; and on the following day Mr.
Callaghan declared that “this is not
a year in which we can afford large
wage or dividend increases.”
Dividends have increased more than
half as fast again as wages in spite
of everything; in an expanding econ-
omy profits inevitably tend to in-
crease faster than output, and taxes
on profits are to a large extent passed
on to the consumer in higher prices.
The moral that a socialist govern-
ment should draw from 17 years of
inflation is that an incomes policy
cannot be extended to profits and
dividends simply by taxing them. If
some sort of Incomes Equalisation
Tax should be devised and did pre-
vent profits or dividends increasing
faster than wages or output it would
be bound to undermine incentive in
exactly the same way as the Excess
Profits Levy of 1952.
The only way of devising an
effective incomes policy is to change
the whole basis of industrial owner-
ship so as to secure for workers by
hand and by brain the full fruits of
their industry upon a basis of
common ownership and therefore to
bring about the “most equitable dis-
tribution that may be possible” of the
national income. It is futile and
irrelevant to bring in temporary
legislation which delays the distri-
bution of dividends to shareholders.
This merely causes confusion, under-
mines incentive and leads to the
misallocation of resources. What is
needed is permanent legislation
which will permanently limit the
return as well as the liability of the
shareholder so that companies are
no longer run for private profit.
CND Easter March