Editorial: How Capital Flourishes Under Labour Government

Forty-five years ago, just after the formation of the S.P.G.B. and just before the formation of the Labour Party, Chiozza Money, a Liberal economist, wrote a book that played a large part in political argument for many years. It was called “Riches and Poverty.” It showed how the country was divided into two classes, the smaller of which monopolised the ownership of property and enjoyed the luxury provided by large incomes. It was nothing new for Socialists but provided statistical backing for the Socialist case. It was also used by the reformist Labour Party; but with a very different purpose. The first Manifesto of the S.P.G.B. declared:—“Society is today divided into two classes with opposing interests, one class owning the means of life and the other nothing but their power to work.” Then, as now, the S.P.G.B. insisted that nothing less than the conversion of the means of production and distribution into the common property of society could achieve emancipation. The Labour Party however promised by means of social reforms, taxation, death duties (and by the now forgotten “capital levy”) to make gradual but increasing inroads into capitalism until, imperceptibly, socialism would be here.

We have had the reforms, the death duties, the increase of income tax and surtax, and three Labour governments, the latest of which has been in power with a Parliamentary majority for over 5 years. And Socialism has not been introduced nor is it in process of being introduced. We still confront the same ruthless, exploiting, war-producing capitalist system. The task of achieving socialism still remains to be done and the method set out in the first publications of the S.P.G.B. is still the only way.

Labour Party supporters will contest the Socialist charge that capitalism has not been essentially changed; but out of the mouths of their own spokesmen the futility of Labourism can be demonstrated. Here are two Labour Party statements on capitalist ownership, the first was made in 1918 and the second in 1949.

The first was made towards the end of the first world war, in the Labour Party’s Report on general policy called “Labour and the New Social Order.”

  “Meanwhile innumerable new private fortunes are being heaped up by those who have taken advantage of the nation’s needs; and the one-tenth of the population which owns nine-tenths of the riches of the United Kingdom, far from being made poorer, will find itself, in the aggregate, as a result of the war, drawing in rent and interest and dividends a larger nominal income than ever before.”
(“Labour and the New Social Order” Labour Party 1918, Page 19.)

Every one of those statements could be made again today; in particular the admission about the concentration of wealth in the hands of the small minority.

Let us now take a step forward over 30 years and read the admission made in the House of Commons on 18 May, 1949, by Mr. Glenvil Hall, M.P., Financial Secretary to the Treasury in the Labour Government:—

  “Of the 550,000 people who die each year only 10 per cent. own more than £2,000, but these 10 per cent. between them own 90 per cent, of the total property.”

So thirty years of change has produced no result whatever. Ninety per cent. of the wealth was owned by 10 per cent. of the population in 1918 and still is.

Of course the Labour Party is again promising to do something about it. Mr. Gaitskell, M.P., who is now Minister of State for Economic Affairs referred to it in March 1949: “Property is still very unequally divided, and that is a problem which has got to be tackled.” (Daily Herald, 9/3/49). He thought that still higher death duties might do the trick but he did not explain why all the earlier increases had failed to do so. Nearly a year later another writer, Mr. Douglas Jay, M.P., who has now replaced Mr. Glenvil Hall as Financial Secretary to the Treasury, made an admission that might help to enlighten him. Speaking at Battersea Mr. Jay said:—“There is little sign that death duties are doing more than holding their own against private accumulation of Wealth.” (Daily Express 17/1/50).

One mysterious belief of Labour Party propagandists has been that nationalisation helps to lessen inequality of wealth. In the past few years the nationalisation schemes have actually worked in the opposite direction. If the mines and railways had not been nationalised the heavy losses made in the years after the war would have drastically slashed the market prices of mining and railways shares and correspondingly reduced the big fortunes invested in those industries. As it is the shareholders, by being compensated with the many hundreds of millions of pounds worth of Government bonds at fixed rates of interest guaranteed by the Government, have been saved from the major part of the loss they would otherwise have suffered. Nationalisation or state capitalism helps to safeguard the wealth of the capitalist class.

Capitalism, which the Labour Party never understood. has made nonsense of their well-intentioned but misconceived programmes. The only cure for capitalism is its abolition. The only road to emancipation is that proclaimed by the S.P.G.B. nearly half a century ago.