by Tom Nairn
the vital, regressive element within it, the gross impediment stuck in the path of all Labour’s aspirations by the traditional structures of financecapital, by the position and function of sterling and of the City in the international finanacial market. Labour’s thought was oriented entirely towards the problems of stimulating industrial growth. Characteristically, it conceived of them as “national” problems soluble by good will on all sides. Its essential tactic in the face of the financial crisis was a negative one: the determination not to deal with it by sacrificing economic growth once again. This has been revealed, surely, as quite inadequate. There have been many catalogues of the consequences of Labour’s failure before this‘ test. In spite of its wishes, the government was coerced into taking measures likely to have some depressive effect on the economy (like the 7% Bank Rate), and hence into compromising its main programmes; it has therefore also been forced to place an everincreasing emphasis upon incomes policy, as the solution to all its problems, when it remains entirely doubtful whether such a policy can be formulated and whether — if it cou'd — it would in fact resolve the basic economic problem; by putting the economy in pawn to international finance, it has in effect inhibited itself for some time from taking any of the necessary drastic measure to re-dimension the pretentions of the Pound and the City, and ensured the return of the crisis. As regards what the government should have done, and must do in future to overcome the contradiction, debate is possible on the means. Should it have devalued the pound? This would have dealt a major blow at the City, at the “sterling area” and the world-wide use of sterling as a “reserve currency”, and to that
extent would have been salutary; but
it might also have affected the stand-
ard of life of the working class too
greatly, as well as creating an
immense political storm Labour
might have found it hard to weather
with its tiny parliamentary majority.
Should it have opted for “concealed
devaluation”, by granting export
subsidies as well as imposing its im-
port surcharges? This might have
avoided some of the political storm;
but otherwise, would it not produce
all the negative effects of devaluation
(on living standards) without its pos-
itive ones (the official debacle of
sterling)? Or should it have chosen
to impose strict government controls
on all capital movements and thereby
— since the City’s international role
depends upon its freedom of opera-
tion — caused “the disintegration of
the sterling area” (The Economist)?
As regards the end, no debate is
necessary. Labour has to act with
the deliberate purpose of destroying
the incubus of high finance and its
damning link to the general financial
world. By universal consent, the
British economy is not strong enough
to bear the burden of this relation-
ship. Up till now, the pious hope has
been that if one waited just a little
longer it might miraculously become
strong enough to support it again, so
that the best of both worlds would
be obtained; the fruits of old-style
imperialism together with a newly
dynamic industrialism. The Labour
government must recognise that this
miracle will not happen; and that
therefore the fulfilment of its indus-
trial and social programme (and of
any imaginable socialist programme)
will depend upon boldly doing the
opposite of what has been done by
every government for half-a-century.
That is, upon the sacrifice of finance-
capital and its interests. That is,
upon the liquidation of the major,
and peculiarly British, heritage of
imperialism. There can be no doubt
March 4, 1965 — THE WEEK