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The CBI-TUC talks with the Government

The Communist no 54, October 1972

"The capitalist system within which we have been operating is based on certain principles. The first principle is the maximum of freedom and of competition so that the highest reward should go to those who prove their merit in competitive circumstances. This has led inevitably to wide disparities in living standards and to the concentration of a large amount of wealth in a fairly limited number of hands. The justification for this has been: (i) that competitive conditions have produced major advances of human prosperity, and (ii) that a system which combines incentives for success with welfare provision for those who have not succeeded is morally and politically justifiable. By and large this pattern has been accepted, albeit subconsciously, by the great bulk of the people of the western democracies. But we must recognise that this has only persisted because the majority have not been prepared to use their potential economic and political power against the prosperous minority ... I believe that the fundamental situation is now changing. We have seen in the last two decades an arising consciousness of the power of organised labour. One can speculate at length on the reasons ... Whatever the compound of reasons it is the facts we must face ... I agree, therefore, that no final solution has been found to the problem either of restraining the totality of income growth or of settling the relativities between individual incomes. But I have no doubt whatsoever that we must return to the search as a matter of urgency. Unless we do this and unless we are prepared to cast aside all previous political and economic dogmas in order to meet a new political situation to which they have little relevance, we have no chance of success ... I do not believe that policies of conflict will or can work. I do not think we can now redress the balance between the monopoly power of labour and the interests of price stability by individual measures. We can do a few things here and there to make striking less attractive. I do not believe this reaches the fundamental problem ... I conclude therefore that in modern political circumstances a capitalist economy must be prepared to accept a far greater degree of systematic control over the level of incomes and prices than we have ever contemplated before." (Reginald Maudling, The Times,12.10.72)

On September 26th, the talks between the Government, TUC, and CBI culminated in a definite set of proposals by the Government to deal with inflation. They were

(l) guaranteeing a rate of economic growth of 5% over two years (underwritten by the Government's fiscal and monetary powers: tax cuts, public spending etc)

(2) keeping retail price rises to 5% over the next year (5% is the permissible maximum for increases generated by higher domestic costs. Once-and-for-all factors, like the introduction of VAT, or increases in imported raw material prices are assumed to bring this up to 6.7% per annum).

(3) limiting pay increases to £2 across the board per week for all workers (this includes management) over the next year (if hours are reduced, the amount of the increase goes down by 75p per hour of reduction). There are to be no exceptions though [sic. through? - PB] productivity deals - though a wage drift factor of 60p per week is allowed for (because so many other payments are calculated on basic hourly rates). These are a 9% increase overall though the lower paid will in fact get a higher percentage increase and the higher paid a lower one - thus narrowing the differential.

(4) In the first year a threshold agreement would operate after retail prices moved 1% above the 5% norm giving probably 20p per week more for each 1% increase in the retail price index above 6%.

What would happen to prices and incomes in the second year of the guaranteed 5% growth? This would be subject to the deliberations of continuing tripartite meetings. These meetings would be regularly convened from now on in any case to

(a) review the situation with regard to helping "the traditionally low paid industries to achieve greater efficiency as a basis for paying higher wages, and to help the position of low paid workers in other industries"

(b) receive reports of the "new machinery to be created to monitor retail price increases"

(c) hear from an organisation planned "to watch over implementation of the proposals (as a whole)." (Financial Times, 27.9.72) "The proposals are essentially political. They are to be seen as an offer by the Government to do a socially fair deal in exchange for the unions giving up the present free-for-all. They go even further than a once-off deal. This is an offer to the TUC and the CBI to take a really effective share in the formulation of economic policy from now on." (Economist, p. 12, 30.9.72)

"They (the Government proposals) are not only an abject admission that his (Heath's) election promises were a fraud, they are a confession that his policies over two years have been totally misdirected - his policies of fighting inflation by raising prices, and acting on incomes by deliberately staged confrontations with the trade unions." (Harold Wilson at the Labour Party Conference, FT, 4.l0.72)

The idea that the political representatives of the bourgeoisie and the working class should meet with the state to discuss inflation first appears on the political scene as more than a random notion in late June. Up until then, the employing class were willing to take the Government and Mr. Heath's 'new-style Conservatism' at its face value: to at least give their programme a fair crack at the whip. That programme was 'new-style' insofar as it rejected the Conservative approach evolved during the interwar and War period by Baldwin, R.A. Butler, H. Macmillan, Boothby etc. This was to accept that it was the job of the state to act as 'honest broker' in facilitating the forces of society (the bourgeoisie and the working class) in their new task of consciously regulating production and the relations of production (it was a new task because it was only in the interwar period that both sides came to see this as a definite job that had to be undertaken if production were to continue). This approach was followed in the Conservative Governments from 1951-1964. It was abandoned by the Party during their period of opposition because it was seen by the party leaders to have failed.

The material reality of the failure was the Labour Government's attempt to formalise and further develop this approach in the 1964 tripartite agreement on prices, incomes and productivity. The Conservatives watched George Brown's promised land of a growing national cake where all benefited sealed with the Declaration of Intent from the TUC, CBI and the Government in 1964 amidst much ceremony and smell of historic occasion. They watched as the god turned out to be an idol with feet of clay: the working class did not formulate its wage demands on the basis of the amount of the national cake which was actually available for consumption if the amount necessary for investment (i.e. growth) was also to be found. Instead, they saw the trade union leaders insisting that it was the right of the working class to make their wage bargains with no Government interference; the state had only been fettering the working class in its pursuit of its just demands all along. The working class could look after itself in the economic struggle; the state had no place there.

"At the time I am speaking of (Gladstone's childhood), the working man was forbidden by law to join with other working men for the purpose of giving value to his labour in the market. Capitalists were powerful, were individually powerful, and were permitted to combine as much as they pleased; but working men might not lay their heads together for their own purposes ... There is no doubt there has been very much done since those days to secure a fair remuneration for their labour. They are now, what they ought always to have been, as free as law can make them to sell their labour in the market at the best price it will yield." (WE Gladstone, The Workman and his Opportunities, 1889)

Faced with the working class's classic expression of liberal principle (the 1871 TU Act gave legal sanction to the working class's right to organise their side of the contract making - giving substance to the formal equality of the wage bargain) the Conservatives accepted it at its face value; and also took up a liberal stance: the state indeed had no place in bringing together employer and employee to consciously regulate production; the state's job was to permit the market to operate and it was the market which did all the regulating that capitalism required. Thus, the Conservatives' programme for dealing with inflation when they assumed office was to set a good example for private employers in making wage contracts. They reasoned that the present economic situation compelled employers to slow the rate of money wage increases and therefore the Government as employer of labour must do just that. The Government approached public sector negotiations as an employer who had his own economic interests to safeguard first and foremost. The Department of Employment Conciliation Service was told to cease conciliating in an inflationary way. The philosophy of the Conciliation Service from its inception in 1896 had been to promote industrial peace and develop orderly ways of settling disputes. But now industrial peace should not be pursued at the peril of the economic forces in the situation. Inflation was making it impossible for capitalism to function; therefore, the prime consideration was to reason with both sides until they too saw the necessity for moderating wage demands.

On the Tory accession to power, the "left" pronounced that Heath was taking us back to the days of laissez-faire and satanic mills. In fact, the Conservatives were simply following the political logic of the working class leaders and the working class to its inescapable conclusion. As the working class had now decisively rejected all attempts to consciously regulate production and the relations of production, it was only possible to return to the position where the forces in society met head on - the relative strengths of each had to be tested against each other and the "solution" appeared as the result.

The Conservative Government began by baldly stating the economic facts and drawing the conclusions from them: inflation must be moderated and therefore wage demands of more than 7-8% would be unacceptable to it as public sector employer. The first reaction of the trade union leaders and the "left" was frank disbelief; this was not negotiating but intransigence and pigheadedness. It should be noted here that the development of left militants' strategy in the late sixties was even more clearly in this direction. For the first time, trade union annual conferences were mandating their executives as to the exact amount of the increase required by the rank and file. There was to be no negotiating as to the figure, that would constitute a sell-out: it was either the demand in full or withdrawal of labour. The 'left' saw this strategy as one for control over the slimy bureaucrats at the top. It was crucial for the 'left' because they saw the reason for the failure of a revolutionary consciousness of the working class to appear as the trade union leaders' 'stranglehold' over the rank and file. If the hold could be broken, a revolutionary upsurge must follow. Thus, the Conservative Government (and the Engineering Employers Federation in the recent dispute) laid all its cards on the table at the beginning of the game because the trade unions had opened by revealing their hand.

The trouble for the Tories was that it was the working class who was winning. The Post Office strike was the one instance where the Government was seen by all to have enforced its 7-8% norm. The power workers' strike was claimed by the Government but anyone who looked at the Wilberforce Settlement carefully could see that the increases granted were far in excess of the norm. The Miners' strike came next. The Government put their cards on the table and then had to explain the 31% settlement away as a special case. The rail strike finally made the Government's position evidently untenable. It was in the immediate aftermath of the rail settlement that the first signs of the present tripartite meetings appeared. Private employers were having little more success than the Government in resisting wage claims. At present average earnings are increasing at 15% per annum. The Engineering Employers Federation fared best - settling a 45% wage claim for 7-8%. This is probably explained (l) by the "reactionary" nature of the EEF which still resembles those evolved by the employing class in the late 19th century. It chucked any employer who settled independently with the unions out of the federation; helped members in financial difficulty out with a levy from other members; was prepared to sit out strikes and occupations. (2) It could afford to sit them out because the engineering industry is experiencing a slump unprecedented in the postwar period. Few British firms are buying new machinery and British prices are uncompetitive and the product ill-suited in the international market.

Why had the Government and private industry failed to win this open conflict in the labour marketplace when they had economic reality oh their side? Just how real the need for British industry to increase its profit was was acknowledged by the FT ... and two IS sympathisers provided the FT with the occasion. "This trend (of the share of profits in the national income to fall: from a high of l8.6% (1951) in the postwar period to 12% in 1971) confirms the conclusion of several studies, that the real rate of return on capital invested in the UK has been dropping sharply. It has been pointed out often enough but too little has so far been done to spell out its implications. They have been spelt out most plainly, ironically enough, in a book recently published by two Marxist economists who believe that the squeeze on profits has been caused by the combination of a push by the unions for a faster improvement in living standards with growing competition in international trade. Their conclusion is that 'British capitalism has suffered such a dramatic decline in profitability that it is now literally fighting for survival.' Those who are not anxious to see a collapse of the present economic system would do well to consider this conclusion, and in particular the representatives of the TUC, the CBI and the Government ... The unions could now cease treating profits as a dirty word and inform their members - in the words of Sir Sidney Greene - that there is nothing wrong with profits so long as they benefit the community." (FT leader, 12.9.72) Socialist Worker's centre page spread of 26th August explains why no Government could curb profits in a Prices and Incomes Policy: "First there is a basic difference between wages and profits. Wages are part of the cost of production while profits are the residue left over after production and sale. This means that profits are both the engine of capitalist production and the gauge indicating its speed and efficiency. Profits form the fund out of which a company's investment has to be financed. To curb profits would mean industrial stagnation as owners of capital sought to transfer their money abroad. No government operating the capitalist system could attempt to limit profits without going on to attack capitalism itself. And one can hardly see the Tories doing that!"

At the present time it is a fact that the alternative to capitalism would be a break down of production and consequently of society. Until the working class is capable of organising production on a socialist basis and wielding political power in its own right, the bourgeoisie are correct in posing the choice as between capitalism and anarchy. The material basis for the working class organising production and administering their own state definitely exists: the fact that the Government and employers have had to climb down and meet wage demands which they can ill afford is evidence of that which is staring us in the face. It is the political consciousness of the working class which is insufficient, and the reason for that insufficiency lies in the conscious section of the working class, the 'left'.

When monopoly power is not an enemy of the people

First reactions of the Government and the bourgeoisie to the working class's victories were to attack the 'monopoly power' of the trade unions and demand that it be curbed. However, this campaign against 'the big' drew no response whatsoever from 'the public'. Why? Precisely because the 'public' are the trade unions. The working class can see no reason to alter the present form of the economic struggle whereby each section of the class goes to get all that it can from the employers. The working class will not support any attempt to defeat one section because it recognises that if one section is curbed by 'public opinion', all others become vulnerable to the same kind of pressure.

Leapfrogging wage demands, parity demands, and the maintenance of differentials are all crucial if the present free market system of the economic struggle is to work. The ability of each section to extract wage increases depends on its economic power. When the demands of one section conflict with another (e.g. the dockers and lorry drivers or registered and unregistered dockers or the boilermakers and the engineers) both sections fight it out. In practice such conflicts have been solved by the employers or the Government who have been unwilling to see production disrupted seriously by such disputes.

The principle that the lower paid (the weakest sections) should be better paid is accepted by the class as a whole. However, in practice this has meant that the lower paid are granted increases at the expense of profits or redundancies (with higher productivity) because the working class has insisted that differentials are maintained - each section has a right to make their own labour contract. The working class approach to the economic struggle is one of formal equality of opportunity. And as any Marxist knows the formal equal right is always given its material content by the substance of power. The most powerful sections of the working class have been able to drive the hardest bargains. This approach is being further developed and extended by the working class. Those sections of it who have previously been weak organisationally are now becoming better organised, better disciplined, better able to stand up for themselves and hold their own - not only against the employers but in practice against the other sections of the working class. The best example is white collar workers in engineering. It is undeniable that if the wages of white collar workers are low in a firm, it is better able to pay larger increases to its manual workers. Thus, the increasing militancy of the white collar workers reduces the amount available for manual workers and in turn forces the manual workers to become even more militant (heighten competition) to gain wage increases (the employer is less able and thus less willing to grant them). Nor has this increased militancy of the 'weaker' sections been challenged by the stronger parts of the working class. It is accepted that it is their right.

It is precisely the logic of this situation that confronted the bourgeoisie in late June. The 'monopoly power' of the trade unions was not going to be curbed by 'public opinion' because the working class supported the present system of competitive collective bargaining with the full solidarity of their class. However, if the present rate of money wage increases continued, British capitalism would

(a) price itself out of the world market. Since Britain depends on exports to survive this would spell economic disaster.

(b) The alternative would be to float the pound ever downward to keep British exports competitive. However, this would be unacceptable to the rest of the capitalist world as currencies are at present so interdependent that it would rock an already unstable international boat. And even if this course were possible it would mean that imports would become so expensive on the home market that manufacturing costs would increase steeply and the cost of living would rocket as imported necessities would also rocket. This would be unacceptable to the working class and also spell economic disaster.

(c) The profits of industry are already too low to finance increases in production (which after all are dependent on having capital to purchase new machinery and plant. The capital comes from profits).

Therefore unless the present rate of money wage increases [sic. 'unless the present rate of money wage increases could be curbed'? - PB], production and the society organised around production would collapse. The only alternative was to accept the monopoly power of the trade unions and attempt to consciously regulate it - not curb or repress it, but give the society some form of conscious control over it.

The bourgeoisie face the facts...and attempt to get the working class to do the same...

This is the task which Maudling outlined in the quote which begins this article. It is the material reality which has caused the Tory "dogmatists" to drop their former "principles" with nary a scruple and undertake the task. Maudling recognised that this time the Incomes Policy would have to be an Incomes Policy with a difference. Why? For the simple reason that the others had failed (The Economist points out that in "the past quarter of a century incomes policies of one kind or another have been tried in Britain in one year out of every two." 30.9.72, p.79). Maudling reflects: "You cannot solve the problems of a major social upheaval by economic mechanics alone ... I suspect that the problems we are facing are not economic but political. Economic factors operate within a political framework and the old orthodoxies of economics, however coherent and self-consistent, may not apply in a changed political situation. What determines the course of a country's society and its economy is fundamentally political power and how it is used." "Unless we are prepared to cast aside all previous political and economic dogmas in order to meet a new political situation to which they have little relevance, we have no chance of success." The main economic orthodoxy which Maudling argues against and which the bourgeoisie have had to jettison is that which states that wage increases can be contained by deflating the money supply or reduce [sic. reducing? - PB] global demand (Keynsianism in reverse).

These orthodoxies became very fashionable in the last five years (led by Milton Friedman and in the UK by Harry Johnson and Frank Paish - a reflection at the level of the intelligentsia of the Conservatives' reaction to the working class's actions). Enoch Powell is now its main political exponent here though most of the bourgeoisie including the FT and FT Economic Correspondent Samuel Brittan took up the arguments. It holds that if the funds are not available to the employer, the wage increase will simply not be paid. Maudling counters with the fact of the working class's power to get wage increases. "It is argued that responsibility rests on governments and if they will control their expenditure all will be well. I think both these arguments (monetarist and balanced budget) have now been exposed for the nonsense they are. You cannot deal with cost-push inflation other than by means directly relevant to its source. To restrict the volume of money only means in modern conditions that, while the socially powerful continue to expand their incomes, more and more of the less powerful lose their jobs altogether while the economy stagnates and investment collapses. Nor do I believe that there is any truth in the theory that more competition could provide the solution. The more competitive the economy the stronger the power of the unions. Squeezing the money supply does not encourage firms to resist wage claims, it forces them to give way."

The Government's proposals on inflation recognise these facts by allowing for a 9% increase in money wages and a 5% increase in retail prices (4% for prices of manufactured commodities). To the question of how money wages can increase faster than prices (resulting in an increase in real wages) the Government have replied with a guaranteed 5% increase in production ... instead of the traditional deflationary measures which economists have been wont to prescribe. "Many members of the CBI are wringing their hands at the prospect of a 4% price ceiling. They ought, instead, to be clapping: 5% growth for the economy as a whole will usually produce a somewhat faster growth in industrial production and manufacturing output ... Thus output in industry could well rise [to? above? - PB] 6% with little if any extra employment. Add to this a 4% rise in prices and the value of final output could be up by more than 10%. Against this, the cost of £2 a week all round would be an extra 9% on the wages bill. A difference of 1% may not sound much, but as profits are only a fraction of total value-added there is considerable gearing ... Economic growth is good for profits - and a far more important influence on them than simple price rises. As output rises, productivity goes up; as factories operate closer to capacity, unit costs come down. The desperate attempts of companies to retain their share of the national cake through price rises has been far less successful than that of the unions to have their cake and eat it ... The effect of a rise of 5% in real output might, have a magical effect on the share of profits in national income; they could conceivably go up from 12 to 16% on the basis of relatively crude calculations but only on the assumption that the Government did not intend some of the growth to go to consumers and wage earners. A better guess may be l4%." (Economist p. 77, 30.9.72)

It is not Keynsianism that failed in the '60s. The significance of Keynsianism is the conscious regulation of demand; what has been lacking is equally conscious regulation of wages and prices. Maudling points out that it is impossible to defeat a politically organised and economically powerful working class by attempting to impose the laws of the market. The class's political demands (for full employment and rising real wages) mean that the market must be regulated to produce both these. They are possible only if growth in production is also occurring for which adequate profits are necessary and therefore the need for regulation of wages and prices.

Changing politics to reflect the facts

The political orthodoxies Maudling refers to are not defined by him. I think they are the following:

(l) With one exception, Incomes Policies have been seen by the bourgeoisie and explained to the working class as temporary phenomena necessitated by exceptional circumstances (the 1949 and 1967 devaluations). The need for wage restraint is defined as limited in time after which the working class and employers can return to normal collective bargaining. When normality is duly decreed to have returned by the state and again produces the conditions necessitating another incomes policy, the same explanation is again used. The working class has become conscious that the "exception" is the rule and is not borne out by the material reality. However, it has been offered no other explanation of why it is essential to accept regulation of wages.

(2) The 1964 Declaration of Intent (and possibly the Coalition Government's intentions for the postwar period) were not explained as exceptions. However, the 1964 campaign relied on the ability of the TUC and a Labour Government (which it was presumed the working class would have faith in to look after its interests and therefore accept a lead from on faith) to determine the action of the working class by virtue of their being its leaders. Thus, the reasoning behind the Declaration (though identical to the present proposals) was never explained to the working class. It remained at the level of electioneering rhetoric about prosperity and a better society and never descended from those heights to grapple with the central material issue: that regulation of wages and prices would necessarily involve a substantial change in the present form of the economic struggle; the free, competitive collective bargaining between workers and employer and between sections of the working class would have to be consciously regulated by the participants. Therefore, the working class had every reason to accuse the Labour Government of betrayal when it was asked to abandon this form. (It should be remembered that the conscious regulation of incomes does not remove the power of the working class to gain real wage increases. As Maudling points out, it could not possibly do this. The working class's power is not dependent on Government fiat but derived from economic and political reality. It does put the exercise of that power into a consciously regulated framework which provides for its fruitful use, i.e. instead of wage increases forcing price increases without increase in production, wage demands are met with increasing production and an inflation rate which is the same as the rest of the capitalist world.) When the working class rejected the Labour initiative, the TUC leaders had to follow suit - otherwise they would have been replaced by new "rank and file" leaders. I am doubtful whether either the TUC leaders or the Labour Party were capable of explaining the economic and political reasoning behind the Declaration to the working class. They did not consciously keep the working class in the dark; they simply did not fully understand themselves the economic and political implications for the working class. To do that they would have had to be dialectical materialists.

The need for the working class to consciously regulate its own actions, or why a democratic, voluntary incomes policy when the state is a "bourgeois dictatorship"

Not only did the Labour Government not explain the reasons for the Declaration to the working class, it also did not allow for the development of an Incomes Policy in a democratic way; making the form of it concrete and negotiable so that it could be aired in public and become part of the normal business of politics, something to be bargained about and eventually culminate in state legislation if necessary as the final result of that bargaining process. Instead it seemed to believe that it would simply happen because the TUC, CBI and George Brown had signed a 'binding' and solemn piece of paper. This explains the bourgeoisie's scepticism about the chances of a voluntary incomes policy when the notion was first mooted in late June. FT leader after FT leader pinpointed the problem as being that the TUC even if it agreed could not be relied on in any circumstances [to deliver] the goods (a working class which would co-operate). It also explains why the proposals are in their present form. "The package deal Mr Heath proposes to unions and employers has one great merit. Its simplicity. On wages, there is no mumbo-jumbo about 'guiding lights' (Labour Government, vintage ca. 1968 - NS) or 'norms'. There is no intricate mixture of decimal points and vulgar fractions for Senior Wranglers and Junior Wranglers only. Everybody can understand a pay-rise ceiling of £2. It means, comparatively speaking, that lower-paid workers would benefit at the expense of the higher-paid. A welcome proposal from a Tory Prime Minister ... Somewhere - despite the tough and angry talk of the trade union leaders yesterday - there is the basis of a sane pay and prices bargain ... Otherwise ... Pay rises will not be worth the paper they are printed on." And "Mr Heath's pay and prices plan to beat inflation is being discussed and judged in every factory, every boardroom, every pub. And in every home. It should be judged fairly. The PM has left it perilously late to get round to hammering out a rational and essential prices and incomes policy. But at last ... He has listened to the TUC and employers. Sought their co-operation, in the national interest ..." (Daily Mirror, p. 2, 28.9.72)

This is evidently the stuff of developing the issue in a democratic manner —making sure its form is such that it can be discussed and bargained about. The Government have shown considerable finesse in holding a few concessions close to their fist - to be produced 'as a result of the TUC's demands for a better deal for the working class' at the next round of talks. These are the details of the better deal for pensioners and the limitation of dividends - and probably the reduction of VAT. The Government have understood that the process of winning 'public opinion' is not a matter of producing high sounding rhetoric but rather of dealing with the substance of issues and offering concrete concessions. Interestingly, it was the TUC General Secretary who followed the logic of this through. At the Sept 15 meeting, the usual rhetorical exchange of vague aims had taken place. None of the bourgeois commentators had expected anything different. But at that meeting "he (Vic Feather) leaned across the table towards the Chancellor, Anthony Barber, and told the Government to put its head on the block: next time we meet, he said, we must have concrete proposals ... The most interesting reaction (at the 26 Sept meeting) however, came from the railwaymen's leader, Sir Sidney Greene. He at once began to negotiate on the package, challenging figures here, seeking clarification there, and all the time seeking ways of persuading people 'halfway up the tree' (such as his own members) that they would not lose out." (Observer, p.l5, l.l0.72) It all sounds very much like normal negotiations at the plant or industry level - which it has to be if it is to make sense to the working class.

The TUC have to be able to go to the working class and say "we've got all we could out of them - by digging in our heels we have got these additional concessions, but we can't get any more." And the working class have got to accept their word and carry on producing. The risk of an unofficial strike and repudiation of the leaders' bargain still clearly exists. But the bourgeoisie are aware of it; after all, they have dealt with general strikes before.

The bourgeoisie have all been a bit taken aback by the proposals. Their full implications are still being worked out. What started out as just another set of tripartite discussions (normal enough for the postwar period) turned out to be exactly what Maudling had stated was necessary. The change took place not because Maudling is a power behind the throne; but he had decided the facts must be faced. Similarly the development of the talks over the past three months has been the 'leaders' of the society facing the facts and then going on to translate those facts into a political form which provides for capitalist production to continue and for the satisfaction of the demands of the working class. Up to now, the facts have not been pressing enough to force politicians to take these steps. Profits coasted, money wages increased, prices rose - these were quantitative changes. A qualitative change has now taken place and that fact has been faced up to. It remains to be seen how the working class reacts to the proposals and the explanation offered for their necessity.

The explanation has certainly been in the same terms as the old rhetoric: "I believe the British people have enough solid good sense not to commit economic suicide. Only self-destruction can prevent an unparalleled improvement in our national prosperity ... We are immensely admired and respected as a people for our tolerance and common sense. It was perhaps because of this that the leading Finance Ministers with whom I spoke in Washington believe that Britain is a country where it is possible to work out a sensible and fair voluntary arrangement to slow down the spiral of rising prices. I believe this too." (Anthony Barber, The Observer, p.1, 1.10.72) But the substance of the qualitative change and the need for that change to have a political expression has produced a form which gives the rhetoric some life. "We were asked to put forward a proposal - we've put it forward, we believe it's realistic we can't solve all the problems at once. What we have done is concentrate on two priorities (increasing real wages and limiting price increases - NS) and in this continuing discussion we can deal with the other problems." (Heath at Press Conference after 26th Sept meeting, FT, 27.9.72)

Vic Feather had hoped that the TUC General Council would recommend the proposals to its Executive Committee after the 26th Sept meeting without pronouncing on them one way or another until a 'considered, researched' view had been arrived at. The General Council felt unable to leave its flank unprotected. It rejected the proposals in their present form but declared its intention to continue with the talks and draw up counter-proposals to present at the next meeting. The substance of the talks had been accepted and the TUC are getting down to the serious business of bargaining - albeit with much trepidation about their exposed flanks. The right-wing leader Frank Chapple explained why that flank was vulnerable. "It was supposed to be a voluntary incomes policy, but who would be first to volunteer. My members certainly won't." [quotes not given in original - PB] However, the fact that the TUC are actually negotiating shows that they have accepted the need for the working class to participate in conscious regulation of incomes. Socialist Worker feels that it must expose and reveal the fact that differentials will be eroded. The lower-paid will benefit at the expense of the higher-paid. However, both the Daily Mirror and the trade union leaders are coming clean on this to the working class. This sacrifice is justified by the Mirror because it is "socialist" and by the left TU leaders because the Government will make additional concessions. Dividend restraint, rent control, curbs on property speculation are put forward by the TUC as the substantive issues around which to bargain. They signify the extent of the working class's political consciousness: what it thinks is worth demanding of the bourgeoisie. The reaction of the working class to the desirability of these demands remains to be seen. The three sides are assuming that equality of sacrifice (dividend restraint, end to property speculation) and security (rising real wages, pensions, more growth) are the issues concerning the working class and also that the working class accept the need to increase profits if production is to continue. Further issues of The Communist will take up these points.

It remains to deal with the 'left's' response to the tripartite talks. Socialist Worker states in one breath that the proposals mean that the wage increases given up will only go to line the pockets of the bosses; and in the next breath it states that without profits the system of production would collapse and is indeed collapsing. Now it is a fact (dealt with in Wages and Prices in this issue of The Communist [an article by Nina's husband, D.R.Stead - PB]) that the amount of profits which find their way into bourgeois consumption is miniscule compared with the amount going back into investment. It would indeed be surprising if this were not the case. The bourgeoisie are a minority of the population and a small minority at that. If most of the surplus value taken from the working class went in bourgeois consumption, capital accumulation would soon cease and with it production also. Socialist Worker comments that dividend restraint will anyway eventually find its way into bourgeois pockets in future. The Economist comments "Dividend restraint did little harm to anyone. Over the past few years companies have been hanging on to such profits as they had been making - before the Labour government's freeze, during it and after it. The percentage of profits that is distributed actually fell from 1968's 33.6% to last year's 31.3%." (p. 77) It seems that SW is reduced to a spurious assertion in order to induce the working class to be against profits. They are unwilling to make out the straight Marxist, Communist case for the superiority of socialism over capitalism in basing production on a conscious determination of the society's needs rather than their determination through the market. Perhaps this is because even if today's social needs were consciously determined not all of the national product would go in consumption by the working class - a portion of it to be consciously determined by the working class would be invested in order to increase the means of production (machinery, plant etc). IS [The International Socialist] are telling the working class that they are entitled to all the national product in the form of consumption when they fulminate against profits as such (their line: profits are bad because they are profits and also because they are consumed by the bourgeoisie). That is just a plain untruth. This kind of 'little white lie' is one of the reasons the working class's political consciousness has not advanced to adequately reflect its economic strength. It needs to be said that IS did not invent this line. They are merely echoing faithfully a good Labour sentiment that has been with the working class movement since the 1830s and was most systematically developed by the ILP. The sooner it is replaced by a statement of objective reality the better

One cheering thought is that SW readers could well recognise the bald contradiction between the above position on profits and the earlier quoted one which states that profits are the engine of capitalism. SW seem to like this idea because it means that the engine is grinding to a halt (the book by the ISers which SW has reviewed favourably). If capitalism is seizing up it must mean that the revolution is next on the agenda, reason IS, if only we form our revolutionary party in time. We beg to differ. It only means that the present alternative is between capitalism and anarchy. IS argue that Incomes Policies have always meant that prices slide up unnoticed while it is wages that are really held down. This is factually incorrect. Indeed it has always been prices that have held steadier in the past during incomes policies. Leaving IS to their religionary [sic - PB] socialism, we conclude by stating that the working class has an interest in demanding that the conscious regulation of wages and prices and the continuing agreements about growth rates, the lower paid etc be established in a thoroughgoing democratic way. This means not merely democratic schemes, but a development of the working class in understanding the significance of the above decisions for the functioning of the production process and the ways in which capitalism holds back the productive forces. The initial choice between anarchy and capitalism has already been made. The talks are proceeding. The second choice lies between an involvement in the economic struggle with competitive collective bargaining or the conscious use of its economic strength. If the bourgeoisie continue to make all the running in explaining the conscious use of their economic strength to the working class, the working class will still have advanced from its present position. But it will not be any nearer in its ability to take conscious control over production. That is the job of Communists to explain.

Nina Stead