What has happened to the Crisist

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Every government minister is full of talk of the reward for two years of wage controls, the stable future ahead, if only ..

The 'if only' is a bit of a drawback. If only the British worker does not wreck it all by demanding too much money. If only, some kind of pay policy can be made to hold. If only these spending cuts can be imposed and more jobs There are other clouds on the horizon. Yes, the unemployment level is on the high side (at 1.4 million). No, industrial output hasn't yet reached a level higher than it was during the three day week. But (we are given to understand) these are only details. So what is the truth?

GAP NEVER WIDER

Inflation has fallen from a peak of 23% at the end of 1975 to give the possibility of reaching 13% by the end of the year. Forecasts of what will happen to it next year vary wildly.

At the same time the gap between pay and prices has never been wider. In the six months to the end of June 1977 incomes fell in relation to prices by 32% (a fall in real incomes equivalent to 7% in a year).

Their living standards have fallen by more in the period inflation has been falling, than it did while inflation was rising.

Unemployment is still rising. It is now expected to top the 1.6 million figure and stay there even if Margaret Thatcher and Keith Joseph are not given an opportunity to slash hundreds of thousands more jobs.

SINGLE INDICATOR

For two years the government has directed its whole propaganda towards inflation. Wage controls have been justified in respect of their ability to reduce it, and the coalition government's locus on inflation has been reminiscent of the Labour government's preoccupation with the balance of payments in the 1960's.

An economy cannot be measured by a : single indicator. Whereas a workers state can be judged in terms of the living standards of the working class, capitalist economy is successful in its own terms, according to the rate of profit employers can extract. "ANTI-INFLATION POLICY"

It is this which has been the real task, first of the Labour government alone, and lately of the Lib-Lab coalition.

Inflation in some respects has been damaging to profits (particularly as Britain's inflation rate has been higher than its competitors) but the first task of "'anti-inflation policy" has been not to cut prices, but to protect profits.

If Healey had wanted to stop inflation he had a simple remedy. He could have made price rises BOOKS BY TROTSKY The Transitional Programme.

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illegal. The effect of this on profits (without a total ban on wage rises) would have been fatal.

The consequences of such a step for capitalism are so far reaching that an all out price freeze is not an option for any government which wishes to manage capitalism rather than to destroy it. (For the Communist Party therefore to ask a Labour-Liberal government to outlaw price rises is akin to asking them to put a stop to capitalism.

The anti-inflation policy is a fraud. It is not designed primarily to reduce inflation but to increase the rate of profit, through attacks on the working class. These attacks encompass wage controls, massive cuts in public expenditure and monetary control which will guarantee more redundancies.

Most new investment now being put into effect is to replace old plant and equipment with less labour-intensive production, either through gradual speed-up or wholesale sackings.

The 'new dawn' is not going to bring an end to any of this. The effect on inflation has come about partly through the low demand of a sluggish economy and partly through the attacks on wage levels, almost as a side effect of the attack on living standards.

In real terms industrial output is now only 2.7% higher than it was at the beginning of 1970, nearly eight years ago.

it is still tar below the level of the three day week and shows only the taintest signs of increasing.

The 16% inflation figure is still staggeringly high and only seems acceptable compared to the 23% rate reached at the end of 1975 The demand for a sliding scale of wages to match inflation is not therefore diminished through a fall in inflation which could well turn out to be short lived.

Indeed the decline in living standards has merely highlighted the need for a policy which will protect living standards against inflation.

Tha sricin fno Dritinh monitalino Healey at Labour Party Conference far from being over, is deepening. Capitalism in one country is as unthinkable as socialism in one country and the international crisis is getting worse.

The recovery in the leading capitalist economies has just not taken place. The leaders of these countries still talk about a 'boom' That boom was confined to the United States for a three month period which is now over and in Thatcher leading capitalist countries the of growth is getting worse.

In some countries output is actually falling but in all of them the trend is getting worse.

International unemployment has also risen sharply: Between September 1976 and September 1977 unemployment in Britain rose from 12 million to 1 1 millian PHOTO: Andrew Wiard. Report.

Callaghan In the same period it rose in France from 900,000 to 1.3 million, in Italy from 776,000 to 1.7 million, in West Germany from just under 900,000 to just over 900,000, and in Belgium from 223.000 to 259 ,000. One in 20 of the Common Market workforce is now out of work.

International inflation has increased and while world commodity prices have fallen world food prices have risen, by about 20% in the first half of this year.

The crisis of capitalism will take many forms. It has not been resolved because the attacks on the working class have succeeded in partially alleviating just one of its symptoms.

PHOTO: Andrew Wiard, Report.

CP leader McClennan-calling for price controis.

The strength of the pound is to a large extent a result of North Sea Oil which brought a sharp cut in fuel imports and so improved the balance of payments.

The boost from the oil is real enough but how long it will last is almost completely unknown.

It could run out altogether by the year 2,000 and be declining fast from 1979 onwards, or, if new discoveries are made, it could continue to give the economy a shot in the arm for much longer. It does not, however, alter any trends.

The propaganda about the economy is just that. Profit levels in real terms have oniy just begun to show appreciable rises.

For this reason the government is committed as firmly now to holding down the living standards of the working class as it was at the beginning of Phase 1.

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PRODUCTION PHOTO: Labour Weekly