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Tony Cliff
& Colin Barker

Incomes policy, legislation and shop stewards

Chapter Four: George Brown’s plan and George Brown’s planners

A capitalist plan

An incomes policy is a central ingredient of George Brown’s national economic plan. There is no space in the framework of the present book to deal adequately with the plan. We shall try only to point out its clear capitalist nature, the fact that its basis consists in raising capital investment (i.e. profit) compared with consumption (i.e. wages).

The National Plan is not obligatory, merely advisory. It is indicative. On the one hand it is a coordinated national market forecast, and on the other hand it tries to coordinate the activities of different industries within a total economic perspective.

The plan was composed as a result of assembling the replies to a questionnaire sent to firms and trade associations (none of whom would dream of telling the world that they would fail to raise production swiftly or that their export performance would be inadequate): “Industries were asked what 25 percent national growth from 1964 to 1970 would mean for them”. [1]

Thus the industries’ estimates used in the plan were not forecasts of what they expected to achieve, but hypothetical statements of what they could achieve given certain assumptions.

However, whether the plan is realised or not – and on the basis of the first 18 months of the Wilson Government, with production almost stagnant, one must be very gullible to believe Brown’s hope that it will – its success depends above all on the close collaboration of the capitalists with the government. As was stated in connection with another plan, that in France:

The first and indispensable condition for successful economic planning in the context of modern capitalism is confidence on the part of the business community in the seriousness of the government’s intentions, as stated in the plan. [2]

The large corporations, who are interested in planning as a means of reducing the uncertainties of investment and of achieving the orderly development of their markets, exercise their pressures too. The plan reflects, in large part, their ideas – or at least a compromise between their wishes and those of the officials responsible for government economic policy. [3]

The planners make no secret of their belief in the iron law of oligarchy. [4]

George Brown’s planning organisation is also, as we shall see below, dominated by representatives of big business.

To help realise an indicative plan, i.e. a non-obligatory one, which relies on changing the environment in which big business works, on persuading it to act as the government wants, there is no other way than that of giving financial inducement – to big business above all, seeing that their profits (and hence investment) rise relatively more quickly than wages (and hence consumption).

And this is the central theme of George Brown’s plan. The priorities of the National Plan are made only too clear: “Investment lies at the heart of the plan”. [5]

The plan visualises the following rise in investment over the years 1964-70:

• Chemicals – 1964 £190 million, 1970 £300 million. [6]
• Iron and steel – 1964 £58.85 million, 1970 £100 million. [7]
• Mechanical engineering – 1964 £124 million, 1970 £170 million. [8]
• Electrical engineering – 1964 £49 million, 1970 £65 million. [9]
• Electronics – 1964 £26 million, 1970 £37 million. [10]

Fixed investment in manufacturing rose by 2.4 percent a year from 1960 to 1964. The Tories’ “Neddy” plan wanted to raise this to 4 percent for the years 1961-66. But George Brown’s plan wants to get it up to 7 percent a year! [11]

On the other hand, the Neddy plan promised an annual increase in consumption of 2.8 percent per head of the population. But George Brown’s plan promises a rise of only 2.4 percent a year between 1964 and 1970. [12] This target is only very marginally above the actual results for 1960-64 – a 2.2 percent rise. The following table shows how very low Brown’s targets for consumption are:

And what about good old Clause Four? The plan visualises the running down of the public sector compared with the private. Thus the plan for railways prophesies “substantial progress ... in implementing closure proposals”. [14] So employment on the railways will continue to go down swiftly, from 449,000 in 1960 to 390,000 in 1964, and to only 227,000 in 1970. [15] Similarly, in the mines the labour force will continue to decline, only at a more accelerated rate. From 1960 to 1964 the number of miners went down from 670,000 to 583,000, and this number is to be drastically cut to 409,000 in 1970. [16]

Other branches of state industry are to be axed too. Thus fixed investment in electricity, which rose annually by 13.2 percent in 1960-64, will rise by only 3.2 percent from 1964 to 1970. [17] Taking gas and electricity together, the figures tell the same story: 10.8 percent from 1960 to 1964, but 7.3 percent from 1964 to 1970. [18] The same tendency for public industry to be subordinated to private industry is shown in the changes in demand for capital engineering goods in the two sectors. The average annual percentage increase for private industry will rise from 5.4 percent in 1960-64 to 8.7 in 1964-70, but for public investment the figures show a reverse trend, from 9.9 to 4.4 percent. [19]
 

Pensions

During the 1964 election campaign Wilson, Brown, Callaghan and Co promised that if they were elected they would give old age pensioners a pension equal to half pay. Remember? Well, forget about it again. The plan states, in the most cynical and inhuman manner, “An income guarantee would not contribute towards faster economic growth”. [20]

Of course, George Brown is quite right – a higher pension wouldn’t contribute towards economic growth, for old age pensioners don’t produce a thing. Actually, it would be better still to pay them a lower pension – the old people would get very cold without any fires at all, and they would have less food, and so we’d be rid of them that much faster, and the burden on the economy would be less ...

The plan goes on to state:

From the studies so far undertaken, it is clear that radical changes in the pension arrangements are bound to take some time to carry out if they are to be soundly based to meet the needs of coming generations and if care is to be taken that the cost can be met without damage to the economy. Although, therefore, work is proceeding on a new pension scheme, it will not have any significant effect on expenditure up to 1970. [21]

So there we are. The pension arrangements would take such a long time to work out that only “coming generations” – in other words, babies who aren’t even born yet – can hope to benefit from them!
 

Defence expenditure

“Defence expenditure had been planned (by the Tories) to continue at about the same proportion of the national product”. [22]

But Labour are much more radical than the Tories – they plan to cut the defence budget from 7 percent of the national income to 6 percent, and to limit it to £2,000 million at constant prices. [23] Over the years 1964-70 they plan to raise total defence expenditure by about 6 percent, or about £115 million. [24] Scrap Polaris? Bring home the (expensive) troops from abroad? There’s never a whisper of any such idea throughout the plan.
 

Profits and wages

There is one aspect of economic life about which the National Plan is strangely reticent. Throughout the plan there is a mass of rich detail on so many subjects. We are told, for instance, how much we are going to spend on beer, tobacco, travelling, entertainments and so on in different years in the future. But in all the wealth of detail there is not one single figure from the first page to the last on either profits or wages, or on the level of profits in relation to the level of wages. This omission is most revealing.

According to the plan there is to be a deliberate shift from consumption to investment. This can only mean that the plan rests on the unstated assumption that there will be a shift from wages to profits. That is why an incomes policy is so important to the plan. For the real significance of the incomes policy as a wages policy is that it is a very straightforward policy of wage restraint, in the interests of higher profits. In this way, it is assumed, Britain will have a little economic “miracle” like the German, French, Italian and Japanese “miracles” we described in the first chapter.
 

A democratic plan?

George Brown’s plan was drafted on the basis of discussion with the management side of industry and on information supplied by business. Not even the Labour MPs, let alone the rank and file of the labour movement, were consulted about it. The first time the plan was discussed by the Parliamentary Labour Party was on the morning of 3 November 1965 – the eve of parliament’s reassembly after the summer holidays, and some six weeks after the plan was published.

It’s not surprising, of course, that the labour movement was not consulted, for Brown’s plan is based on the subordination of consumption to capital accumulation, on the sacrifice of wages to profits, and on the neglect of the old age pensioners. George Brown’s plan is a plan for the capitalists, not a plan for the working class, and as such it will have to be rejected and resisted by trade union militants and socialists.
 

The planners

To run a capitalist plan and its twin brother, a capitalist incomes policy, who could be more suitable than a bunch of business people? Look at the list of members of the National Board for Prices and Incomes (* denotes part time member):

The Rt Hon Aubrey Jones (chairman)
Former Tory MP.
Chairman Staveley Industries Ltd.
Director Guest, Keen and Nettlefolds Steel Co Ltd.

The Rt Hon Hilary Adhir Marquand (joint vice-chairman)
Labour MP 1955-60.
Former director International Institute for Labour Relations, Geneva.

Mr Duncan Dewdney (joint vice-chairman)
Managing director Esso Petroleum.

James Mortimer Peddie (Baron Peddie)
Director CWS Ltd.
Director Co-Operative Insurance.
Director West Norfolk Fertiliser Co.
Director British Luna Lamp Co.
Director Co-Operative Building Society.

Peter Edward Trench, CBE*
Former director National Federation of Building Trades Employers.
Director National Building Agency.
Runs his own firm of industrial consultants.

Robert Willis
Member General Council of the TUC.
General secretary (joint) National Graphical Association.

Jasper Frederick Knight*
Director Iron and Steel Board.
Director Chemical and Industrial Investment Co.
Director (Financial) Unilever Ltd.
Director Union Provident Trust Ltd.
Director Unilever NV (Dutch part).
Director Unilever Savings Bank Ltd.

Ronald George Middleton, DSO*
Partner in the legal firm Coward, Chance and Co.
Deputy chairman J.H. Sankey and Son.
Director Philip Morris and Co Ltd.
Director Sisalkraft Holdings Ltd.

Dr Joan Mitchell*
Reader in economics at Nottingham University.

It is nothing new, of course, for a Labour government to hand over planning to representatives of big business, as the experience of the 1945-51 government showed. Then big business itself administered the controls over business, as Rogow and Shore showed in their excellent study, The Labour Government and British Industry (Oxford, 1955). The following selection is drawn from their work.

The Chief Planning Officer, 1947-51, was Sir Edwin Plowden, a director of British Aluminium and two other companies. The Capital Issues Committee consisted of seven bankers, stockbrokers and industrialists plus one Treasury official, who, being the secretary, took no active part in the proceedings. The chief industrial adviser to the Board of Trade was Sir William Palmer, chairman of the British Rayon Federation. Most of the advisers and commodity directors of the Ministry of Food were representatives of business interests, paid by their firms. Unilever alone filled 90 posts in the Ministry of Food, 12 of them senior posts! A director of the Iron and Steel Federation headed the Steel Rearmament Panel of the Ministry of Supply, and the personnel of the various metals controls were drawn largely from the Non-Ferrous Metals Federation. The same story was equally true of leather, matches (the match controller even had his offices on Bryant and May’s premises!), paper, footwear, hosiery, furniture, tobacco, alcohol, cotton, timber, newsprint, meat importing, clothing, sweets, nickel, tungsten, sulphur, etc, etc, etc. As long as business thought that controls were useful, business controlled the controls.

And when the capitalists had had enough of controls, they were extremely well placed to end them:

Pressure to de-control industry, put upon the government by its advisers, was a factor of importance in the controls “bonfire” of 1948-50. It was an unusual week in 1951 when the newspapers and periodicals did not feature a detailed criticism of the policy. [25]

The former controller of meat and livestock in the Ministry of Food attacked the bulk purchase of meat, the former London regional director of the Ministry of Works attacked building controls, the chairman of the Milk Marketing Board criticised government milk policy, the chairman of the Cotton Board criticised cotton policy, etc, etc.

Other parts of the present government’s planning agencies tell the same story – business runs the planning:

The only difference between this table and the situation between 1945 and 1951 is that the people are a bit more mixed up between industries. Naturally, other members of the councils are directly concerned with the particular industries. And if the chairman isn’t actually from the particular industry, it is clear from the list that there is no fear that any of these “planners” are likely to be hostile to business and its interests.

Probably the key appointment is that of Chief Industrial Adviser to the Department of Economic Affairs. This post has been filled by Mr Fred Catherwood, managing director of British Aluminium, who has been lent to the government for a period of two years by his company. His salary has continued to be paid by British Aluminium while he is in official employment. His main task so far has been that of organising the official side of the still embryonic industrial bodies, the Economic Development Committees (“little Neddies”).

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Notes

1. The National Plan, p.4.

2. A. Shonfield, Modern, p.134.

3. A. Shonfield, Modern, p.139.

4. A. Shonfield, Modern, p.138.

5. The National Plan, p.55.

6. The National Plan, Part II, p.65.

7. The National Plan, p.72.

8. The National Plan, p.93.

9. The National Plan, p.102.

10. The National Plan, p.107.

11. The National Plan, p.57.

12. The National Plan, p.162.

13. The National Plan, p.165.

14. The National Plan, p.129.

15. The National Plan, Part II, p.204.

16. The National Plan, p.38.

17. The National Plan, p.57.

18. The National Plan, p.57.

19. The National Plan, p.102.

20. The National Plan, p.204.

21. The National Plan, p.204.

22. The National Plan, p.182.

23. The National Plan, p.7.

24. The National Plan, p.15.

25. A.A. Rogow and P. Shore, The Labour Government and British Industry (Oxford, 1955), p.66.

26. R. Bailey, Neddy and the Planning Process, Westminster Bank Review, November 1965.

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Last updated on 6.10.2003