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From Militant, No. 535, 16 January 1981, pp. 8–9.
Transcribed by Iain Dalton.
Marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
Andrew Glyn analyses Labour’s alternative economic strategy
The main elements of the Alternative Economic Strategy [AES] are the official policy of the Labour Party and have been since 1972. Yet there is insufficient discussion on it.
It suits the Right to have the AES kept as vague as possible so that any alternative to Thatcher’s policy, such as relaxing monetary control or reducing the severity of spending cuts, can be concocted from the AES, while shuffling aside the anti-capitalist parts like selective nationalisation.
Some on the Left argue that the failure of the last Labour government to carry out the AES was simply a reflection of lack of grass-roots control over the PLP, and that this has to be remedied, partially, at least, by Conference decisions on party democracy. Now, they argue, the main task is to unite against the Tories and not engage in “sectarian” discussions as to whether the programme itself is adequate.
The ultra-left even argue that any discussion of an alternative political programme is a diversion from local struggles against Tory policies.
In one way or another all these points of view display a dangerous contempt for the activists who see the need for a convincing and radical alternative to Thatcher, which comes to grips with the crisis in British society and the power structure which has to be overcome.
In this context ‘The AES’ published by the Conference of Socialist Economists (CSE) and the Labour Co-ordinating Committee, is thoroughly welcome as the clearest and most comprehensive version of the AES yet published. It is also distinguished from other accounts by the fact that it attempts to analyse the problems which implementation of the AES would encounter.
Indeed, substantial parts of the book are devoted to meeting criticisms from the left – bits of it read like a dialogue with a Militant supporter!
In essence, replacing a capitalist economy with a socialist one means replacing production for profit by production for need. The socialist case for the AES is that the best that can be achieved at present is to “reduce the role of profit in the economy”. (p. 45, our emphasis)
But is reducing the role of profit really a more immediately attainable objective which would be “transitional” (in their phrase) to abolishing it completely?
Abolishing the role of profit requires the nationalisation of all the commanding heights of the economy. How then does the CSE group propose that its role can be reduced?
The most striking feature of their presentation of the AES is the low priority to nationalisations. They half accept the criticisms of the idea that selective nationalisation (one profitable firm in each key sector) will allow “the behaviour of private sector firms to be moulded by competition from publicly owned firms.”
They add that “workers in a company faced with bankruptcy because of a public firm receiving subsidies or operating with lower rates of return will be just as vocal in opposing ‘unfair competition’ from the state” (pp. 71/72)
Their main idea seems to be that nationalisation of “dominant profitable firms… provides the opportunity for new forms of successful public ownership, allowing new relationships between workforce and management and provides hope for improvement in areas where there is a popular perception of failure.”
But just how could these nationalised firms operate successfully according to the criteria of production for need when they are operating in competitive industries which will “subject them to the logic of capitalism even more directly than the existing public monopolies”?
Forced to admit that a nationalised tail will not be able to wag a capitalist dog, all the group can hope for is that “political determination” will allow the tail to wag according to its own laws (which might indeed disorientate the dog which unfortunately is physiologically impossible).
Again, they give little priority to nationalisation of the banking system, simply saying that it “could allow a greater control over the allocation of credit” (p. 76), presumably accepting the argument that it would give firm control over industrial firms left in private hands.
This, of course, is the crunch question for supporters of the AES. The CSE group sees planning agreements as the crucial weapon and describes them thus:
“an agreement negotiated annually, but for a five-year period which would cover the main strategic decisions taken by companies on investment levels and location, employment, price policy and the like. It would be negotiated between management and government with the trade unions playing an important role.
“The government would have available a variety of sanctions and incentives to enforce the agreement including allocation of selective aid and discretionary tax relief, control of funds channelled through a National Investment Bank… public purchasing policy, planning permission and permission for price increases ...
“a final sanction of nationalisation in cases of obstinate non-co-operation would be available.” (p. 77)
The Group makes it quite clear that it sees planning agreements as cutting directly across the criterion of profitability. Projects will be drawn up according to “non-market or social criteria” (i.e. need); finance will be provided from government sources (so the capitalists cannot plead lack of funds); and the role of profit as giving the incentive to invest can be at least “to some extent supplanted… by using appropriate sanctions and non-profit incentives.”
But actually these “sanctions and non-profit incentives” are not “non-profit” at all. They are based on the threat to capitalists that if they do not invest in a particular place then the government will do something to them, refuse to buy things from them or, in the last resort, nationalise them which will cut their profits much more than the particular investment project.
The capitalists, being rational “profit maximisers,” will take the option which is most profitable, or rather least unprofitable, accept the new “rules of the game” and do what the government says.
But will they?
They have a third option, of course, which is to “Subvert attempts at planning and to resist attempts at the imposition of social control… It is not difficult to see that any measures taken to deal with this problem through the exercise of more direct control by the government or the trade unions would simply harden the opposition of Capital and could result in an all-out investment strike.” (p. 73)
Now, if the CSE Group believe this will happen, which is not too clear, they are actually admitting that it is impossible to “reduce” the role of profitability. The whole basis of their strategy collapses.
The Group thinks that overcoming capitalist opposition is possible given sufficient mobilisation around and support for the strategy. But this process would surely not leave industry in private hands. Workers could only defeat economic sabotage by widespread strikes and occupations of the factories. Does the Group really envisage the factories being handed back to the bosses in return for a “No investment-strike” agreement?
This review has concentrated on the central question of whether the capitalists could actually be regimented and directed under an AES; whether, in effect, they could be made to carry out their operations according to “socialist criteria”. It is the central question because if they could, then many objections to parts of the AES would lose their force.
Import controls would be “Planned-trade” in reality and not in name; industries would be restructured, living standards would not be cut in the context of expanding production, and retaliation could be met by appeals to the labour movement abroad on the basis of the anti-capitalist programme being implemented.
With take-home pay and public spending being increased, a planned growth of incomes worked out by the trade union movement would be necessary as part of an overall planning and not wage cuts under another name (the Group produces the amazing figure that between 1948 and 1976 there were 14 years in which incomes policies operated and over these periods real take home pay fell by 2%, whilst in the periods without incomes policy it rose by over 45%).
But planning agreements and so forth would not give a Labour government the control necessary to make realities of ‘planned trade’ and a socialist plan for incomes policy.
Any strategy for socialism will encounter opposition from the employers, using not only their economic power but also their control over the state machinery. But the weakness of the AES is that by deliberately leaving the economic levers so firmly in the hands of the capitalists, it will allow them to undermine the benefits from a planned expansion which the Group quite correctly stresses.
We cannot accept the argument that it is actually impossible to build up mass support for a programme of taking over the commanding heights of the economy as the only way of supplanting production for profit by production for need.
As the CBI is fond of telling us, profit has become a “dirty word,” and quite rightly so in view of the misery and suffering inflicted on the mass of people in its name.
By showing the impossibility under production for profit of essential demands , such as full employment and an £80 minimum wage, and by explaining how they could be guaranteed under a socialist plan, enormous support could be built up for depriving the capitalists definitely of their economic power.
The AES does not measure up to the tasks set for it.
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