Editorial: The Budget

At Budget time there is always a certain amount of excitement among the workers, rather like that about the result of the Oxford and Cambridge boat race—and with about as much justification. Always there is that mixture of hopes and fears—will beer and cigarettes go down? Will overtime be freed from income tax? Will purchase tax be reduced? Sir Stafford Cripps managed to please and displease nearly everyone, a bit on here, a bit off there. Beer and tobacco up a little, income tax down a little, purchase tax up on some things and down on others. The other principal features of the Budget were the capital levy which will raise about £100 millions from 140,000 of the very rich, the reiteration of the policy of freezing wages at their present level except where special factors justify an increase, and a refusal to freeze profits or to tax them more heavily. On this last point Cripps contented himself with a warning that if companies do increase their dividends to shareholders this year he will consider imposing a limit next year.

Speaking for the. Conservative opposition, Sir John Anderson, a former Chancellor of the Exchequer, criticised certain features of the Budget, particularly the special levy, but otherwise be welcomed Sir Stafford Cripps’ “realistic and honest approach.” The Manchester Guardian (April 7th, 1948) praised it as “a strong, honest, and radical Budget,” and remarked of the capital levy that it is “in fact a stiff individual profits tax winch falls where it should, on the large personal capital.” That newspaper’s City Editor (April 7th, 1948) went further and showed that it is not even very stiff:–

”The levy on capital will not be severe even for those holding very large amounts of capital. Assuming an investment yield of 5 per cent. the tax would amount to 2½ per cent. on a capital of over £100.000.”

We may sum up by saying that if the workers find that the Budget makes little difference to their position so do the capitalists, and this is true of all Budgets no matter whether the Government is Conservative, or Labour. It explains why the Socialist refuses to get excited about Budget prospects.

What the working class get out of the capitalist system is the wage or salary they receive for selling their energies to the employers (including the Government and the administrative Boards which are Ihe employers in nationalised undertakings), and wages follow fairly closely the rises and falls of the cost of living. This is not an automatic process of adjustment, but takes place through the pressure and counter pressure exerted by the employing class and the workers in strikes and lockouts. When prices are falling unemployment is usually heavy enough to enable the employers to force down wages. When unemployment is at a very low point, as at present, it is easier for the workers to struggle for higher wages and thus try to maintain their standard of living in face of recently rising prices. Those who urge the workers not to take advantage of the present low unemployment to press for higher wages may discover at no very distant date that the opportunity will have passed. Unemployment will be the order of the day; or, as the City Editor of the News Chronicle puts it (April 10th, 1948), ”with the country probably over the inflationary hump and perhaps set on the, road to deflation with the help of the recent Budget.” Mr. Arthur Horner, Communist secretary of the Miners’ Union, apparently is among the short-sighted. According to the Daily Worker (April 6th, 1948) he said at Leicester, “he miners had not taken full advantage of the law of supply and demand of labour. If they had wages would have been much higher.”

When Cabinet spokesmen oppose higher wages they do so because their immediate and predominant responsibility, by virtue of being the Government, is to keep the capitalist system functioning in the only way that capitalism can function, that is by enabling the capitalists to make profits. The Labour Party grew up on the mistaken belief that under Labour Government there would be great possibilities to raise wages by cutting into profits. Rather late in the day some of them, certainly Sir Stafford Cripps, have come up against the, harsh truth that those who administer the capitalist system have very limited freedom of action—on all important issues they can depart little from the practice of their Conservative predecessors. Official figures on the proportion of the national income which goes as salaries, wages and rent and profits, etc., bring this out clearly. In 1938 wages accounted for 39 per cent., salares for 24 per cent., and profits, rent and interest for 37 per cent. In 1947 wages accomited for 44 per cent., salaries 20 per cent., and rent, profits, etc., 36 per cent. (See Economist. April 10th, 1948, p. 596.) In each case the figures are after meeting income tax.) It will be observed that the percentage going to wages and salaries together, i.e., 63 per cent. in 1938 and 64 per cent. in 1947 has hardly changed at all, likewise the percentage to rent, profit, etc.—37 per cent. in 1938 and 36 per cent. in 1947.

This is the dilemma of all Labour Governments, but no such dilemma faces Socialists. Socialism is not a scheme for redistributing wealth and income inside capitalism, but a system of society to replace the capitalist system