2. The Industrial Power
An investment of £2,000 million was the figure recently suggested as necessary for the setting up of an international scientific research centre in Berlin. In the same newspaper the British Electricity Council announced its intention to spend £947 million on generating stations in the next four years. The British Motor Corporation spent £10 million in launching one model—the Austin 7/Miniminor.
In themselves, these three examples have no direct connection with the emergence of the “Common Market.” They are, however, pointers to the scale of modern capitalism. Huge investment and massive production plants are the order of the day. A small sheet steel mill would be economically and technically ridiculous in 1962. Modern plastics, too, such as polythene or nylon, must be produced in vast automatic plants. It is the same story with petrol refining, aircraft production, coal mining, chemicals, shipbuilding, rocket research, and so on; and this matter of size is the real force that has brought the European Economic Community into existence.
E.E.C. is a perfect demonstration of Marx’s statement that capitalism is neither a stable nor a permanent social system. It is driven to expand under the compulsion of inexorable economic laws, gearing up science and engineering to the ever-increasing demands of capital, and forcing human and social relationships into new and arbitrary patterns.
In Europe, particularly, the pressure on national boundaries and sovereignties has been intensifying since the first World War, when Europe started to fall behind America in the race for industrial production and exports. The retention of national units seriously weakened the European capitalists in their struggle for a share of the world’s trade; and since the second World War, which can be seen from one point of view as a German attempt to unite Europe under its rule, it has become obvious that, individually, the European nations are puny and backward by comparison with the American and Russian federations.
E.E.C. is, in fact, very far from being a “good idea ” formulated by European politicians; it is a belated and reluctant acknowledgment of the expanding scale of investment, production and trade.
Steel
Significantly, (he first step in the industrial unification of Europe was the setting up of the European Coal and Steel Community in 1952. Coal is still by far the most important industrial fuel, and steel the overwhelmingly dominant metal. Furthermore, the holdings in both industries were already concentrated in a few large blocks, making negotiations relatively simple.
The occupying Allies had limited German steel output to 11m. tons a year. When the restriction was lifted, W. German production rose rapidly to reach 34m. tons in 1960, bringing the total for the Community to 73m. tons. Their exports are co-ordinated in a cartel known as the Brussels Entente handling two-thirds of the world’s steel exports— formidable competition for the British Steel Federation!
Nevertheless, in these boom years for steel, British exports have doubled in the past ten years, and the industry has gone ahead with large development plans at Corby and Margam and Llanwern. A large fraction of this increased capacity is for sheet steel in anticipation of a continued increase in demand from the motor industry. These “strip” mills arc barely an economic proposition at under a capacity of a million tons a year. Building a new one is therefore a big step, but unless it strides at this rate the British industry must fall out of the race. The real testing time will come when the boom is over. Then the weight of the Brussels Entente will be decisive.
Unless the British Iron and Steel Federation can break into the European group it can be out-produced and out-priced. Even if it does, the proposed merger between Phoenix and Thyssen in Germany would dominate the group. Indeed, the British steel industry might even be prepared to submit to re-nationalisation in order to wield sufficient power.
Coal
It is a starker version of the same picture with regard to the older and less efficient coal industry. Already a number of Belgian coal mines have been closed down as being uneconomic in competition with German coal. In this country the average rate of profit from coal mining was so low that there was never any real alternative to nationalisation. The National Coal Board, like the true capitalist concern that it is, is to close 15 Scottish pits, involving 5,000 men, next year as part of the attempt to wipe out its £21 million deficit for 1960. It has closed a large number of pits which are unprofitable by modern standards, and the total deficit for Scottish mines is now estimated to have reached £100 million. Contrary to popular belief, the Coal Board does not exist to produce coal, but to produce profits; and so it must cut its losses.
It must do more than this: until now it has been protected from serious foreign competition (even the Steel Company of Wales was prevented from importing cheap American coal); it must reverse the steady shrinkage of exports if it is to survive. They dropped from £61 million in 1950 to £28 million in 1960, largely through uncompetitive prices. By cutting the labour force (by 20,000 in 1961) and by a costly programme of capital investment (£97 million in 1961-2) productivity has been raised from 3-2 tons per manshift in 1950 to over 4-1 tons last year. The National Coal Board claims that it is introducing automatic machinery faster than is being done anywhere else in the world, and that real automation, in the form of robot coal-cutting machinery which seeks out the coal for itself, will be operating in a British mine before the end of 1962. In a Commons debate on the coal industry on October 24th, 1961, the Minister of Power, Mr. Wood, said that: “It was too early for him to forecast the precise effect of membership of the Iron and Steel Community, but it was felt that it would benefit both the NCB and the consumer. This would automatically confer benefit to those working in the industry.” (The Guardian, 25/10/61.)
The attitude of British coal miners towards this statement is not easily available; but, since their numbers have dropped from over 1,000,000 in the 1920’s to 560,000 in 1961, it is doubtful whether they feel so optimistic about Britain’s entry into the “Common Market,” because, whatever else it involves, it certainly means more ruthless exploitation of every man.
Gas
On November 7th, 1961, the Financial Times published a four-page supplement on the Gas Industry, showing that like the National Coal Board its production and sales had risen while its labour force had been cut by 20,000 in ten years. The Chairman of the Gas Council, Sir Henry Jones, wrote of “gas established again as a growth industry” in spite of the fact that the number of gasworks has been cut from 1,050 in 1949 to 378. During this period gas production has remained fairly constant at about 2,200 million therms per annum, which means that the whole industry has been made considerably more profitable under nationalisation.
The fact is that many new possibilities have opened up for the gas industry in recent years. It has maintained its strong links with the coal industry, especially with the introduction of the Lurgi process of complete gasification of coal without leaving coke. In addition, however, it is becoming more and more tightly wedded to the oil companies. Apart from the gasification of heavy fuel oil, such as is being carried out by the South Eastern Gas Board at the Isle of Grain works, American oil companies are offering shipments of cheap liquified petroleum gas and of naptha. The British Gas industry, however, has at present concentrated on its decision to import shipments of natural methane from the Sahara. This touches the question of E.E.C. very closely because the French are reported to be undertaking the construction of a pipeline from Algeria across the Mediterranean to provide gas for a grid-system throughout the E.E.C.
For the British industry one of the main advantages of being linked to such a system would be the ironing out of fluctuations in demand during the day and, to some extent, during the year. France and Germany already have large underground storage facilities for manufactured gas so that summer production may be saved for heavy winter consumption. In one way or another it looks as though the capital invested in the British gas industry could show considerably greater profit and expansion by being linked with Europe.
Electricity
The British Electricity Authority is the most profitable of all the nationalised industries, having made a gross profit of £18 million in 1960-61; but there is further profit to be made by linking itself with the continent to meet future increased demand.
Apart from its own considerable expansion and storage schemes, the Annual Report of the Electricity Council mentioned the fact that “. . . the cross-channel link with Electricité de France would be coming into commission soon. Because of the difference in the incidence of peak demand in the two countries, 160MW of load could be transferred in either direction with savings to both parties.” This is an arrangement which has been carried through independently of negotiations among politicians about E.E.C. and demonstrates that, however British hearts may feel about loss of national sovereignty and all that, the industrial ties with Europe are strengthening every day.
Ample proof of this last point is given in a report from Turin by Gordon Wilkins in The Observer, November 5th, 1961:
“More British cars may have Italian built bodies as a result of discussions held here this week. One leading British body designer told me it may even prove economical to import Italian-made bodyshells into England, especially if Britain joins the Common Market . . . Pininfarina are making the convertible bodies for the new French Peugeot 404. Bertone are sending coupe bodies to Germany for N.S.U. and B.M.W. Vignale, who have been building a Triumph TR3 body for the Italian market, are planning a TR4 coupe for export. The agreement between Rootes and Carrozzeria Touring for assembly of their cars in Italy may be the forerunner of others. . . . Ghia are doing bodies for the Austin-Healey Sprite, and the latest registration figures show how much the British Motor Corporation have gained by having the A40 built under licence by Innocenti.”
In the same way, Alfa Romeo build the Renault Dauphine under licence, while “Italy’s enormous Fiat interests have car-assembly plants in Belgium and Germany, and expansion plans amounting to hundreds of millions of pounds will put them in all six nations” (Readers’ Digest, July, 1961).
In the metal-using industries motor car manufacture today makes by far the greatest use of mass production and costly automation. It is true that a few small specialist firms still persist among the giants; but million-pound firms like Standard have been shown to be too small to remain independent in the mass market amongst the large federations. Their average rate of profit is too low. Only ruthless standardisation and wider and wider markets can make profitable the immense outlay of constant capital. Now, in Europe national tariffs are preventing the giants from coming properly to grips with one another, as they must, for the dividing up of the market; and so they add their weight to the breaking down of these barriers.
A Crisis
Commentators on the emergence of E.E.C. have said repeatedly that industrial companies will have to “think big” to meet the new situation. Like most of the talk in the press and broadcasting, this masks the real picture. They imply that E.E.C. offers new opportunities for expansion. The truth is much more sombre. Certainly, the Common Market began while Europe was still booming; but if there had been unlimited markets for all there would have been no need for a Common Market.
The truth is that the average rate of profit has been steadily falling, owing to the enormous rate of capital accumulation (these huge investments in production plants that have been mentioned); and the European Common Market is not a fraternal gathering but a battle ground. The survivors in this new phase of European capitalism, therefore, will be the ones who are already big.
In the fields dealt with, however—coal, steel, gas, electricity and motor cars— the majority of small competitors have already been ousted in each European country: they are not available to be sacrificed when the competition becomes merciless. As early as October, 1961, the Daily Express, which has always put out propaganda for Empire and against Britain’s overtures to E.E.C., began to make great play of the fact that the current boom in Europe was falling off, insisting that therefore Britain should not join.
But these are precisely the conditions under which Britain will be forced to join, in order to give its giant capitalist undertakings chance to survive by overpowering weaker giants in Europe. Of course, there is no certainty that British capital will come out of it less bruised than its competitors, and this is the reason for all the uncertainty and haggling. The greatest giants of all, the major oil companies and the largest of the steel and chemical firms, can only gain in the long run. But, of course, they are already international organisations. The emergence of the European Economic Community is the political admission of the economic fact that a sufficiently great change in quantity has become a change in quality.
The icy winds of competition occasionally referred to are spoken of lustily as though they are to be a tonic for our health. Members of the working class hearing such windy talk on television ”reports” may even be persuaded that it will be a ” good thing ” if some of the industrial “inefficiency” is to be “weeded out.” They can only be thus tempted into forgetting their own position as workers as long as they persist in believing that all this production is carried on in capitalism for the purpose of supplying people’s needs.
The Socialist knows that it is not so. He also knows that whichever capitalists turn out to be the winners in the growing struggle, workers can only expect to suffer in the upheaval and to be more thoroughly exploited in the future, whether they call themselves Britons or “Europeans.”
S. STAFFORD