Editorial: The balance of trade delusion

When the Labour Party fought and won the 1945 general election they promised prosperity. So, of course, did every other victorious party in every general election in the last 100 years. The Labour Party were not so rash as to promise prosperity at once—certain other things had first to be put right; the destruction of war had to be made good and production on a peace-time footing had to be raised to a level greater than in 1939. Later on their propaganda crystallised round the slogans of greater production for export and less for home consumption so that the adverse balance of trade cemld be overcome. We were, they said, importing more than we were exporting and could only do this through gifts and loans from America and that American aid would before long come to an end.

The government now reports that the export drive has been so far successful that there is no longer an adverse balance of trade, imports are now once again balanced by the exports of manufactures, coal, etc., and by such items as the payments paid by foreigners for the use of British shipping—the so-called “invisible exports.”

The government statement reads as follows :

“This further big reduction in the adverse balance ot visible trade during the fourth quarter of 1948 represents a notable advance towards national solvency, which remains the primary objective of the United Kingdom’s recovery programme. There is reason also to suppose that the improvement in invisibles, which rook place during the first half of 1918, has been maintained during the second half of the year. If this estimate proves to be correct, the United Kingdom must have approached very close to a position of overall balance—though not a dollar balance—in the international payments during the fourth quarter of 1948.” (Report of the Foreign Secretary and Chancellor of the Exchequer on “Economic Co-operation.” Command Paper 7654, March, 1949).

But “prosperity” is not to come just yet, there is still a snag, referred to above in the phrase “though not a dollar balance.” Too few of the exports are sold to the dollar countries to pay for the products and materials that have, to be bought in those countries. As, however, that problem, too, is on the way to being solved “prosperity” surely cannot be long deferred, it is only just round one more corner. But wait. Just as the big storm cloud is passing by, another little cloud comes up on the horizon. Just when the government is congratulating itself that production is big enough to provide all the exports needed, it finds that there is growing difficulty in finding anyone to buy British exports. As the Times City Editor puts it, “some of the most buoyant groups of exports are now coming up against increasing restrictions in oversea markets.” (Times, 12/3/49). That is why the government’s propaganda is now putting the emphasis not so much on more production as cheaper production. We shall be hearing more and more in the coming months that a mere increase in the amount produced is useless unless it is cheap enough to undersell trade rivals in the world market. The National Coal Board provides an example of what will happen. The Board has announced that unless the miners in five mines near Royston, Yorkshire, increase their output and produce coal more cheaply the Board will close the mines down. (Manchester Guardian, 12/3/49). Of course, the result of closing down these mines would be to reduce the amount of coal produced, at least for a considerable period, until new mines can be started, and that is what will happen in many other industries. Rather than produce a big output, part of which cannot be sold because it is too dear, the government and the private capitalists will reduce the total output if by so doing they can lower the costs of production. This, of course, will mean more unemployment and in a world where masses of the population lack even the essentials of subsistence this looks very silly. So it is, but that is how capitalism works. So we see that the Labour Government has not got away from capitalism, it is tied hand and foot by the conditions of the capitalist Britain and capitalist world in which it exists.

There are other clouds also coming up on the skyline. Export drives, as Sir Stafford Cripps used to say before he became a Minister, lead to increased international tension and that leads to an increase in armed forces and armaments. Already the government is committed to using up more man-power and more materials on the Forces and war equipment.

Need we point out that this has all happened before? During the nineteenth century other British governments likewise lamented the “adverse balance of trade” at certain periods and told the workers there would be no prosperity unless exports were increased. According to Mr. Sidney Bourne in an address to the Royal Statistical Society in December, 1876, there had at that time been a continual adverse balance of trade for several years. Like Sir Stafford Cripps in our own day Mr. Bourne thought that it would help to put things right if the “lower classes” would drink less intoxicants and if the rich would spend less on “pleasure and frivolous idleness.” In due course exports recovered, but that did not prevent another crisis five years later.

And what is the moral of it all? It is that only the abolition of capitalism and the establishment of Socialism will solve the problems of the working class. There is no salvation in Labour governments.