HOW THIS BOOK CAME ABOUT

One evening in January, whcffthe House ofC6mmons was sitting late, a dozen Members began talking about the crisis. We found that we all agreed about the need for a more drastic Socialist policy if we were not to drift into disaster. During the Spring those talks continued,and this book is the result.

In its final form it has been written by only three of us-Dick Crossman, Michael Foot and Ian Mikardo - and they take responsibility for the detail and form of its arguments. But, nevertheless, this book is a joint pro- duction of all of us.

We offer this book to the Labour Movement in the hope that it will provide some ideas for the Margate Con- ference and after. We don't pretend to have covered every single aspect of Britain's problems and their solution. We know that many of the suggestions we put forward will be unpopular in some quarters. But we are convinced that the Movement is in the mood for plain speaking. Our" Red Paper" tries to Carryon where the Government White Papers left off.

LONDON. April, 1947. KEEP LEFT By a Group of Members of Parliament

GEOFFREY BING (Hornchurch) DONALD BRUCE (Portsmouth North) ,R. H. S. CROSSMAN (East Coventry) HAROLD DAVIES (Leek, Stafford) MICHAEL FOOT (Devonport) LESLIE HALE (Oldham) FRED LEE (Hulme) BENN W. LEVY (Eton and Slough) R. W. G.MACKAY (N.W. Hull) J. P. W. MA.LLALIEU (Huddersfield) ...... IAN MIKARDO (Reading) ERNEST R. MILLINGTON (Chelmsford) STEPHEN SWINGLER (Stafford) GEORGE WIGG (Dudley) WOODROW WYATT (Aston) ,

May, 1947 NEW STATESMAN AND 10 Great Turnstile, London, W.e.1 - j

CONTENTS

WHAT WE ARE UP AGAINST II THE JOB AT HOME 14 III DEMOB. 26

IV THE JOB ABROAD ... 30 V TWENTY THINGS TO DO NOW 45 CHAPTER I WHAT WE ARE UP . AGAINST 1. The Problem

IMAGINE the Labour Conference meeting two years hence, in 1949. Imagine, too, that the following headlines appeared in the newspapers: STILL ABOVE 3,000;000 -I "NO EARLY HOPE FOR ENDING SHORT TIME," SAYS MINISTER RATION SCALE NOW DOWN TO 2,000 O\.LORIES AMERICAN CONGRESS DECIDES LOAN ISSUE TO-DAY These examples may sound like scare-mongering. Perhaps they are. But if some things happen and some other things do not happen, then those headlines may be no more than a faithful description of the trouble we shall face two years hence. We are living to-day in the midst of a coal crisis, a food crisis, a raw materials crisis, a manpower crisis, a trade crisis, a dollar crisis and more besides. All these different crises or problems interact on one 'another. But perhaps the simplest way to sum them all up and reveal the precise nature 'of the peril which confronts us is to take the dollar crisis. For several years past, this country has not paid its way in the world. That is to say, we have not paid for the essential 'food and raw materials which arrive at our ports every week with goods and services produced in this country. It was impossible to produce those goods and fight the war at the same time. Workers were called up for the Services, industries had to be turned over to war production. How, then, did we obtain the goods we needed from abroad? We did it by borrowing from other countries. Britain has been living on borrowed money or borrowed goods, whichever you like to call it. First of all, we sold our foreign investments-or a great part of them. That was money which we had stored in foreign countries over the previous hundred years by the process of sending them goods for which we received no immediate payment . We built railways and harbours in foreign lands , sent them locomotives, machines and other products, and instead of receiving goods in exchange we piled up nest-eggs abroad. Before 1939 we received the interest on these foreign investments in the form of goods; they accounted for a good part of the essential commodities we Imported. In 1939, 1940 and 1941 we could not afford to go on merely drawing the interest. We wanted imports so badly, imports for which we could no longer pay with equivalent exports owing to the change-over to war production, that we had to use the capital as well. We raided the nest-eggs. But the sale of foreign investments only kept us going for a short while. It became clear that if no-one would pay for the imports we wanted and could not pay for ourselves, we should lose the war. It was then that President Roosevelt introduced Lease-Lend; in effect, America gave us imports and left the reckoning till the end of the war, on the understanding that much of the payment would be wiped out altogether. But ,even that was not enough. We had to borrow from one country after another ' 4 KEEP LEFT

Canada, India, Egypt and dozens of other countries besides. They provided goods and chalked it up on the slate. The sums they lent are called sterling balances. Finally, at the end of the war, we were still unable to pay our way. Our export industries had been cut down drastically and it would take some time to build them up again. The Government calculated that it would still need to borrow for four or fiveyears more. Therefore we got the loans from America and Canada. We are partly living on those loans to-day. In 1946, for example, the country had to pay £1,400 millions for goods purchased from or used abroad. .The sum which we earned by our exports or other means was £950 millions. This left us with a debit balance of £450 millions. Most of the debit was made up by drawing on the American and Canadian loans. About a third of all the imports brought to our shores in 1946 came on borrowed money. How long are- these loans going to last? That is obviously the fact which must govern the thought of those in' charge of the nation's affairs. No definite answer to the question is possible. The economists differ, and the answer will partly depend on the actions we take at Margate and the Government takes in the next few months. But it is vital to give some sort . of answer to the question. Only then shall be know the measure of the tasks ahead of us. At the beginning of the 'year there were £950 millions of the American and Canadian loans left. The Government estimates that £350 millions is the right amount of the loans which we should spend this year. That would leave us with £600 millions at the beginning of 1948. Assuming that the tendency was to spend less of the loans each year owing to the recovery of our 'own industry, they ought to last us on this calculation until the end of 1949. Unhappily, there are some features of the situation which make the prospect less hopeful. First : there are difficulties concerned with what the economists call trade with hard currency countries and the convertibility of sterling. We need not discuss these technical terms now. They are important, however, and there are many who believe that on account of them we shall . have to spend up to £150 millions more of the loan this year. -Even more important is the assumption underlying the calculation that we shall need to spend only £350 millions of the loan this year. We shall keep it down to that figure if, and only if, we are able to make a huge increase in our exports. Ever since the end of the war, the Government has been striving with might and main to build them up. Tens of thousands of workers have returned to the export trades. Rigid control has been maintained over the goods produced so that they could be sent abroad instead of being used at home. A big start was made as a result of all those efforts. By the end of 1946 exports had been built up to a point 10 or 15 per cent. above the pre-war level. But if we are to keep the drain on the loan down to £350 millions or thereabouts we must push the level of exports up to 40 per cent. above pre-war this year. That is the assumption underlying the Govern- . ment's estimate. It is a tremendous task. It becomes all the bigger when we remember that before the war we were exporting coal in large quantities. No hope of doing that exists this year, which means that a heavier burden still must fall on other trades. To reach the target, exports of manufactured goods must exceed the pre-war level by 65 per cent. WHAT WE ARE UP AGAINST -

Is it really possible to achieve these increases? Early this year there were signs that the spurt in the export drive was' slackening. Then came the fuel crisis. That is estimated to have lost us some £100 millions' worth of exports. If we are to make good that loss and to reach the target laid down by the Government, then exports in the second half of 1947 must be produced and sold at a level one-third above the peak level attained at the end of 1946. However well we'do, we are hardly likely to achieve that aim. Suppose that exports for the whole year were kept up at the rate of 10-15 per cent. above pre-war (which would still mean making up in the second half what we have lost owing to the fuel crisis in the first half). That would mean that the GOvernment's target had not been reached and we would have to use instead some more of the loans. On this calculation another £100 millions would have to be called upon. But even now we have not reached the end of the possible adverse factors. The Government's estimate of £350 millions of the loan to be spent this year is based on an import programme which they have planned. The appalling floods, with the consequent loss of livestock and arable land, will mean that we shall have to import more food and feeding-stuffs than we had calculated. Moreover, last year we drew upon our stocks of food and raw materials to the extent 'of £150 millions; it is urgently necessary that we should try and replenish them. Now let us make a little addition. £100 millions to meet the first "hard currency situation"; £100 millions to make up for our exports falling short of the target; £50 millions to cover the accidents of floods and restocking. These are not likely to be over-estimates, especially the last. They make a total of £250 millions. Add that to the' figure of £350 millions which formed the original estimate of the amount of the loan to be spent this year. The total comes to £600 millions. ' If we spend £600 millions of the loans this year, that will leave us with £350 millions in January, 1948. In other words, we would be reaching the end of the loans about a year from now. Now let us make another calculation. Suppose, when the loans run out, we are selling our exports at the level we attained at the end of 1946, the level of 10-15 per cent. above pre-war. On that basis it is calculated that there would still be a gap of £255 millions between what we are importing now per year and what we could afford to pay for with our exports (including, of course, such services as get paid for; like carrying other nation's goods in our ships). That gap does not tell the whole story. . After 1950 there are two other charges we shall have to take into account. First, the Americans will want us to start repaying the loan, and second, other countries will want us to start paying back what we borrowed during the war. Repayment to the Americans will cost some £40 millions a year, and payments to other nations are expected to be about the same per year. Another £80 millions will have to be added to the £255 millions. But even the £255 millions, as a deficit in our foreign trade, would be bad enough. It would be the equivalent of cutting all the tobacco, all the machinery and one quarter of the food we are now obtaining from America. Now we can begin to see what we are up against. We have to close that gap. By the time the loans run out, we shall have to do one of three things or a combination of all three: ' KEEP LEFT

(1) We shall have to cut imports. ' Nobody wants to do that. Indeed, what we really want to do is to increase imports instead of cutting them. In 1947, we shall only be importing about 80 or 85 per cent. of what we imported in 1939. Instead of cutting we would like to import more food, more machinery and more consumer goods as well. We can cut tobacco and films without suffering mortally and we shall discuss that point later as one of the .contributions that might be made to help us out of the crisis. But, even so, if we have to get over the crisis by cutting imports we would also have to cut necessities as well as luxuries; for instance, machinery to re-equip our factories , raw materials to supply them or food to maintain our none too abundant rations . That is the first alternative, and it is not a pleasant one. (2) The second possibility would be to borrow-some more from the Americans. There is no certainty , of course, that they would lend more to us. They are holding an election in 1948; it will not be easy for either American party to commit itself to a new British loan. But even if they would lend to us it is not an agreeable prospect. It would sap our inde- pendence and postpone to some distant date the time when we could be claiming to stand on our own feet. Of course, it is possible that American private investors, other than the Government,might lend us money to cover particular deals in commodities for which they wanted to find an immediate . market. That might be a less objectionable. way of getting over a difficult period. - But it would not be on anything like the scale of the previous loan and we would be wiser not to count on it. (3) The last and .the best policy is to build up our exports to the targets fixed by the Government, targets which would enable us to close that gap of £255 millions. How are we to do it? All the great issues of modern British politics are involved in the answer to that question. Have we got enough men (and women) in the mines, factories and fields to produce the goods? If not, where are we to get them? Can we afford to maintain such large numbers in the armed forces as we have to-day? If not , can we make economies in the Service use of man-power and changes in our foreign policy which would allow those forces to be reduced? Are we making the best use of all our resources? If not, what new decisions must we make? Is the country properly roused to the tremendous tasks which face us? If not, how can we awaken a new spirit and a new determination? 2. What We Inherited (a)-From the Tories The Britain that went to war in 1939 was a Britain which had never recovered from the war of 1914 to 1918. That fact is sometimes denied by the Tories and forgotten by others. When 'we refer to the matter we are often told: "Oh, you're just attacking the Tories ." But all the evidence which has com out since confirms the view that, even if there had been no war, Britain would now be confronting an economic crisis. Already before 1939 Britain was not paying her way in the world. We were living on our fat ; in other words, our foreign investments. The war has deprived us of of these precious reserves. But the real problem we have to solve has deeper roots in the past. ,iI WHAT WE ARE UP AGAINST ,; 7 ): ., Between 1850 and 1913 Britain's industrial expansion continued un-; . checked. No obvious threat appeared from capitalist development in . countries. In fact, Germany and the United States had already come on the': scene as challengers to our supremacy, but the expansion in world trade was so great that we did not feel the impact of the new competition. All_tb.is · was dramatically changed after the first World War. Relatively to other :; great Powers, our trading and economic position declined. ,,-, Moreover-s-and this is probably ll.l0reimportant-capitalism all over 'the ; world was revealing new characteristics. The 1929 slump was different," After previous slumps, the system recovered and touched new peaks of productive power. This never happened after the slump of 1929. Right up till her entry intoWorld War II, American production in mining and manu- facturing never reached the pre-1913 level. Similarly, world trade was never built up ,to the old standards. In most countries, including Britain, recovery ,from the worst slump years was dependent on rearmament. The _whole economic situation was unhealthy; capitalism was in crisis. For us in Britain, who had been most sorely hit by the first war and who were most dependent on world trade, the warning should have been most obvious. In fact, of all the great Powers, we showed the least ingenuity and resilience in the face of the new perils. Our leaders of industry and the successive Governments which reflected their outlook vainly hoped and prayed for a return to the unclouded days of 1913'. They did little or nothing to put our house in order. They wasted twenty years and it is that waste, as much as the devastation of the last six years, which we have to make good to-day. The same decline, in a greater or less degree, afflicted all the main indus- tries on which our life as a nation was based. In coal, textiles, shipbuilding , agriculture, iron and steel, the story was much the same. In each industry each year fewer persons were'entering the trade. The miner said to his son, " Don't go down the pits." The textile worker said to his son or daughter, "Keep away from the mills." The landworker said to his son, "Clear off to the towns." . The shipbuilder said to his son, "Don't go to the shipyards , or they'll treat you as they treated me at Jarrow. " And while the worker's faith in his trade was broken: the capitalist also was losing his pre-1913 self- confidence. He refused to invest enough of his money in these essential trades and looked for quicker profits in the new luxury industries which were being started around London and Birmingham; or he sent his money abroad. He looked for safety to price-fixing schemes, protective tariffs, cartels and combines. ' " Safety First" was Baldwin's motto at the 1929 election. It was the motto also of many of Britain's biggest industrialists. And in that hankering after the past, that playing for safety, that refusal to recognise that we could only by revolutionary measures escape doom as the most intensively indus- trialised world trading power, Britain courted the danger which threatens us now. The worst example, of course, was coal. In 1913 a little over 1,100,000 miners produced 287 millions tons of coal. By 1938 the number employed had fallen to 749,000 (it is now little more than 700,000) and the output had fallen to 227 millions. What is even more important, the efficiency of the industry, in comparison with other countries, declined at an even more rapid KEEP- LEFf

rate. In the-Ruhr, in Poland, in Holland and in many other countries besides, : ruthless programmes of re-equipment and reorganisation were put through :,whjch resulted in spectacular increases in output per manshift. In Britain, out- : put permanshiftincreased by 14percent. between 1913and 1938. Comparable :.- fi&\lres for other countries were as follows: Belgium, 43 per cent.; Czecho- »slovakia, 45 per cent.; the Ruhr, 72 per cent. ; Upper Silesia, 66 per cent. ; 60 per cent. ; United States, 31 per cent. ; Holland (where, incident- , ally many of the mines were nationalised), 114.per cent. I Those figures are as damning an indictment of the coalowners and the Governments which sustained them as any curse ever uttered by the miner who was driven to work in the pits for two pounds a week."Conditions in Britain," said the expert Reid Committee, which reported just before the end of the war, " are comparable with those in the Ruhr and in Holland, and afford no explanation of the much lower output per manshift obtained in Britain." The explanation was perhaps to be found in the Report of an earlier ' Commission. The Samuel Report of 1925 stated: "We cannot agree with the mineowners that little can be done to improve the organisation of the industry and that the only practical course is to lengthen hours and to reduce wages." If Britain, between the two wars, had made an increase in efficiency comparable to that achieved in other countries , we would be producing to-day with our present man-power 80,000,000 tons more coal. Ifwe had that extra 80,000,000 tons there would be no crisis. . This same defeatist outlook prevailed over a great part of British industry. Here, for instance, is the judgment of the writer of a recent book who has been studying the evidence produced by the Working Parties set up by Stafford Cripps to inquire into various industries. "In industry after industry it has been found that there is a striking absence of up-to-date machinery and modem buildings. The main causes of this state of affairs are :-(1) During the inter-war years Britain's industrialists tended to dissipate the profits they made in.good years on high dividends; (2) in bad years they turned for safety to restrictive and monopolistic devices-tariffs and inter- national cartels, price maintenance agreements, quotas , financial amalgama- . tions, etc.: by the mid-thirties effective competition had disappeared from large sectors of British economy; (3) British Industry 'was outstandingly deficient in obtaining trained scientific and managerial man-power. In the United States it was rare to find any reasonably large plant where the executive had not received University training in the techniques they were handling. In Britain it was exceptional to find plants where they had received any such preparation. (4) Throughout the inter-war years unemployment was high; British labour was cheap and abundant, and under these circum- stances there was inevitably managerial indifference towards machinery or plant layouts which might have saved labour." * It is impossible in the space available here to recite all the grim and shameful facts industry by industry. The important consideration, from the point of view of our present difficulties, is to recognise the real charge against the Tories. Not only did they never succeed in providing full employment. Not only did they leave great masses of our people undernourished in crowded slums. Not only did they fail to provide the greatly improved systems of social security which we have introduced a year after the war. All *Britain -and her Export Trade, by Mark Abrams. Pilot Press. WHAT WE ARE UP AGAINST of us can remember those failures. But the Tories committed an even worse crime against our nation. They let a large part of industrial equipment fall into disrepair. They stood by inactive while one industry after another became more and more inefficient compared either with what was being done in other countries or with what was easily attainable here. The result is that we have to undertake our presenttasks with inefficient industries, indus-, tries which can only be brought up to date after some years and at enormous cost. The argument may be most quickly summarised by-looking at the figures for re-equipment now demanded in almost every industry. £150 millions for the coal mines, £168 millions for the steel industry, £40 millions for the cotton industry, £250 millions for transport, £700 millions for electricity; the list could be vastly extended. Partly those sums are needed to make good our inability to re-equip during the war. Even more, they are-the bills for Tory defeatism between the two wars. They are the price this nation must still pay the Twenty Wasted Years. (b)-From Hitler Then came the war. The losses which it inflicted upon us are enormous. While the fighting was on they were partly concealed. To-day and for some years to come, we must still pay heavily for our vast expenditure of wealth during those short six years. Let us see'what the loss amounts to. First, the war meant a prodigious loss in our export trade. In 1938, it was still flourishing. By 1943 exports were down to a third of what they were in 1938., Before the war some 1,300,000 workers were employed manufacturing goods for export: during the war that number was reduced to 400,000. While Britain was fighting for her existence, she lost her trade. Next, there were our losses at sea. Before the war we helped to pay for the goodswe imported bycarrying other nationsgoods in our merchant ships. Our merchant fleet was one of our most precious possessions. Before the war we possessed 22 million tons of merchant shipping. During the war half of it was sunk. We have done our best to make up for that loss by new building. Even so, we have to-day less than three-quarters of the tonnage .we had before. In other words, even if all our old customers abroad were to charter British ships again-which they may not do-we are deprived to-day of at least 25 per cent. of the income we used to gain from shipping services. Next, we must add the sale of our foreign investments already referred to earlier: To pay for arms and food and other imports which we could no longer pay for with exports, we sold large amounts of our foreign securities, including nearly all our dollar securities. It is not easy to get the full figure ofthese.investments which we held in other countries. What we do know . is that-the income on foreign investments for 1945 was less than half what we received -in 1938. Instead of some £200 millions of imports paid for by this means, we received less than £100 millions. If our foreign investments are regarded as the savings of previous generations, we can say that we spent the nation's inheritance for the purpose of saving the nation. Next, while we were losing the money (or .goods) which other nations owed us, we were piling up huge debts to any nation which would lend to us. Countries within the Empire and outside lent us money. In India, Burma, 10 KEEP LEFT

Egypt and Palestine, more debts were piled up as payment for roads, airfields, railways, local labour, etc. These debts are the sterling balances referred to above. By June, 1945, they had reached the colossal total of £2,723 millions. Of course, we were tremendously helped by Lease-Lend. Lease-Lend meant that we got essential supplies of arms and food without having to pay for them. But Lease-Lend also let American goods into new markets, many of them formerly ours. American aircraft firms were able to manufacture transport planes, while our industry was entirely turned over to the manu- facture of military planes. British industry, weakened by war, had to surrender pre-eminence to her great peace-time competitor; the U.S.A. To pay for the American doctor, sick Britain had to pawn the furniture , sell her business and mortgage her home. Then, of course, there was the sheer physical damage. Apart from houses (nearly half a million destroyed or made uninhabitable), there was the damage to industrial plant. At current replacement costs, that figure is reckoned at £1,450 millions. Tired generating plant, old-fashioned foundries, obsolete spinning machines, under-mechanised mines, and worn railway tracks-these, as we have seen, were legacies left us by the Tories. The war, by ·preventing all maintenance, made the situation still worse. If to-day the generating plant is unable to carry the increased load necessary for peace-time industry, if the. foundries cannot cope with the demands of the expanded motor industry, if the spinning machines won't enable the British worker to show as big an output as the American worker, if our mines are lacking mechanised cutters, the blame must be shared between the Tories and Hitler. We failed to rebuild and refashion our industry between the wars. We could not rebuild when the bombs were falling. Such is a brief account of our losses in the war. They are not merely figures in a financier's ledger or an industrialist's estimate of the value of his capital equipment. They touch the lives of all of us every day. They are the reasons for the short rations of food and the shortageof goods in the shops. Once our country was rich, although the riches were so unfairly shared that the majority of the people never tasted them. -We have lost those riches through the years we wasted and the years we fought. Obviously, it would take time to recover from these trials. But, even to start on the job, a Revolution was needed. The nation voted for that Revolution in July, 1945. 3. What the Government has Done How far have we got with the job? It was natural that everyone should expect some relief from his burdens and cares once the bombs stopped.falling - and when the submarines ceased to strike'atour vital supplies. It was equally natural that most people should forget or overlook the immense difficulties with which the Government had to contend. But in a little under two years the Government already has a record of real achievement. When Labour took office, it was faced with the double task of re-tool- ing the national workshop for a new type of output whilst at the same time keeping the old machines going to meet our immediate needs. It had to face on the one hand the short-term task of changing from a war to a peace economy, stopping -up the worst leaks in OUTindustrial machine and WHAT WE ARE UP AGAINST 11 ) getting rid of the worst of our social injustices, and on the other hand the long-term task of laying the foundations for a Socialist Britain in which high economic efficiency and full social justice would be combined. . "Let Us Face the Future "-the document that inspired Great Britain todiscard the Tories-described how the Government was going to tackle, and has in fact tackled, this double task. Amongst other things, it listed for nati onalisation those industries, like fuel and power, .transport and central banking, which, because they are " common services" to all other industries, govern our whole economy. Amongst these were included industries whose inefficiencies could not be put right without a change of ownership: coal, for reasons we have already seen; road transport, because of wastefulness through lack of co-ordination; railways, because ,of capital starvation.. This nationalisation programme has been carried out vigorously, and needs to be continued to embrace every industry which has a hold over our national economy or which cannot be made efficient in private hands. The former group includes heavy chemicals and some non-banking forms of finance, such as insurance, and the latter include the iron and steel industries and the manufacture of some things, like motor-vehicles and certain electrical components, which need much more design-standardisation than they will ever get under multiple ownership. Some of these projects will have to be postponed until we get a' new mandate from the electorate. . But iron and- steel is scheduled for treatment next session. The determination of the Government to go forward with this plan will be the proof of its resolve not to be content with half-measures in the renovation of British Industry . It will, incidentally, involve a challenge to the citadel of capitalist power in this country . That is why this close-knit irresponsible monopoly is so busy seeking to parade before the public as a kind of benevolent industrial equivalent of Dr. Barnardo's Homes. The measures of nationalisation so far undertaken have already achieved results. In coal, for instance, the long decline in the numbers of men working in the pits has been spectacularly reversed. By the end of December,1946, the number of men on the colliery books had fallen to 692,000; on 8th March, 1947, it had risen to 701,600. Weekly eoal output, which had fallen (excluding holidays periods) to 3,410,000 tons, turned upward once again to 3,706,900 tons in January, and 3,777,300 in February, despite the blizzards. The new spirit which nationalisation brought to the pits began to work the miracle. . Because the purchase and installation of machines take time, the full results of the Coai Board's modernisation policy are yet"to come. But the Govern- , ment's determined action has ended an unhappy period in the industry and has given a new life to the miners, to the mines, and therefore to the country. The Conservatives accuse the Government of failing to tackle first things first. What could be more "first " than coal? Aftercoal, the country 's most vital need was for electric power, the nationalisation of which is now proceeding. In the last quarter of 1938, 2,405,000 kilowatt/hours of electricity were generated per month; in the corresponding period of 1946, the figure was 4,014,000.. But we were getting that quantity of electricity out of plant whose capacity was little, if any, larger than in 1938. At once, therefore, the Government set about the construction of twelve great new power stations . Altogether, the Central 12 KEEP LEFT

Electricity Board has been instructed to spend £450,000,000 in 'the next five years. Again, the results of this action cannot be seen immediately, since it , takes at least three years to build a power-station. But there can be no doubt that the extension of our generating capacity to at least 30 per cent. above the level which the Tories considered sufficient before the war is of vital importance to the running of the country. That" first thing," too, the Government has put first. _ Efficient industry demands efficient workers, and workers cannot work unless they have both houses and food. The moment it took power, the Government set about providing houses-and houses, moreover, for those who needed them most . Before the war, although the vast majority of the people in this country possessed property worth less than £100, and therefore could not afford to buy their own house, Tory governments persistently allowed the needs of those who could afford to buy to be met first. Through- out the inter-war years, though those who wished to rent a house formed the overwhelming majority , they obtained a bare third of the houses built. The Labour Government at once stopped that. Four-fifths of the house s built since 1945 have gone to that majority who cannot afford to buy. And in less than two years the Government has brought relief to tens' of thousands on the waiting lists of the local authorities. In July, 1945,'700,000 families were without homes of their own, and the experts said that no government could possibly provide these homes in under five years. Indeed , after ,the ' last war, the Lloyd George Government, in two years, succeeded in providing only 1,500 homes. The Labour Government, by 31st January,-1947, provided a total of 164,225 new houses and , in all, a total of)44,487 additional homes. Food is as essential as houses. The Government's job in a world of acute . scarcity was not only to secure for Britain her fair .share of the world's supplies, but also to see that this share was evenly distributed among her people. One way of maintaining Britain 's supplies was to make certain that British agriculture, which for years had been at best a depressed industry, and at worst a dangerous-speculation, should be put on a sure and efficient footing. The Government, by its policy of providing assured markets at fixed prices, has come near to doing something which no government has ever achieved before-making farmers reasonably contented. Now that they know that whatever they produce can at once be sold at fair prices, they have an incentive to high production such as they have never 'had before. Moreover, because of the powers which the Government is now acquiring, through the Agriculture Bill, to dispossess any farmer who fails to make good use of his land, the nation for the first time has a guarantee that the agricultural land of the country will be used for the benefit of the country. An equally important problem in the supply of food has been that of importing from abroad what we cannot produce here. The Government has lived up to the finest traditions of the Labour Movement by refusing to demand more than our fair share while others are starving. But it has made sure that this country secured every scrap of food to which it was entitled. The moment an allocation was granted to Britain by the Combined Food Board or by its successor, the International Emergency Food Council, British buying agents went scouring the world for supplies. For the first WHAT WE ARE UP AGAINST 13 time since Joseph conducted his operations in Egypt, the Labour Government has successfully introduced common sense into world food trading. Under the wheat agreement with Canada, it has agreed to purchase minimum quantities of wheat for the next four years at stated prices. As a resultof this agreement, not only does the Canadian farmer no longer have to gamble on the future, but the .British consumer knows for certain what minimum supplies he will be able to obtain. This is only one of several agreements which ' have been made with the great Dominion producers to replace speculation by reasonable certainty. . . At least equally important has been .the job the Government has done ' in ensuring that the supplies actually acquired were fairly shared. Of course, the country as a wholeis not yet getting all the food it wants. But who will argue that the share of each family is not reasonably fair? By every means in its power-by rationing, by making permanent the food welfare schemes, such as free milk for schools, and by the deliberate direction of increased quantities of food into the old " special" areas, which for years have been getting far less than their requirements-we have achieved a distribution scheme whichis without rival in any country in. the world. Here is just one example of how the policy has worked. Before the war, Britain consumed annually 767 million gallons of milk. To-day, it is con- suming 1,132 million gallons. Yet each person is rationed to two pints a week: How is it that many of us feel that we are short of milk at a time when the country as a whole is consuming nearly 50 per cent. more? The answer is that before the war the people of such places as Wallsend and Jarrow consumed on the average only one-tenth of a pint a day. They could not afford any more: they were rationed by poverty. To-day, under Labour rule, they are getting two pints a week like everyone else. Milk is certainly a "first thing." Labour has put it first. . The Labour Government has done many other things, both large and small, to bring some easement to those who have the hardest lot to bear in our country. Jim Griffiths' great Social Insurance scheme provides a better protection for those .wh-o suffer all kinds of adversity than we have ever had before. It takes time to build up the administration for this gigantic new service. But here, again, the Labour Government had an urgent idea of those whom it must help first. Family allowances began to be paid last year, despite all the prophecies that we would not be able to afford it. The Old Age Pensioners got their increase; they figured among Labour's priorities, after having been kept for so many years at the end of the queue. Aneurin Bevan's Health Service will be coming into operation in 1948., It will provide the best medical treatment for poor as well as rich. Not only' will it prevent countless family tragedies; it will also make a direct con- tribution to the nation's productive power. Wilfred Paling brought a new humanity to the Ministry of Pensions, with the result that thousands of ex-Servicemen, disabled in the war, whose pension claims had been rejected, are now receiving pensions, and at a better rate than they had expected. Finally-to take one more example from many which could have been cited-the Government has gone ahead with the raising of the school- leaving age. Reformers have talked about it for generations. The Tories have promised it for the last ten years. The Labour Government does it. It does it, moreover, in the face of fierce opposition. This is not th.e act of 14 KEEP LEn

a government which fears to face the future. This is, indeed, a vote of confidence in Britain's recovery as a highly skilled, civilised people which knows that its children are its most precious possession. No government in British history has done more for the children in so short a space of time. The well-being of the children stood very near the top in our list of priorities, and theTories still say we got the priorities all wrong.

No Socialist critic of the Government's policy can fail to set his criticisms against this background of achievement. Compared with what was done at the end of the last war, in the face of 'far less formidable difficulties, the Government has made a much smoother transition to peace and has initiated at the same time a whole series of urgent and essential reforms. But the crisis of our nation is far more .shattering and searching than that which we faced, or rather failed to face, after 1918. Therevolution in Britain's status in the world is more dramatic. The question which this book poses is whether we have yet been audacious enough in fighting our way out of the crisis. We do not seek to describe all the new plans in each field of government which need to be undertaken. We confine ourselves chiefly to the most urgent and the most practicable, and we shall take them in this order : (1) Labour and Management; (2) Defence and Demobilisation ; (3) Foreign Policy. '.

CHAPTER II THE . JOB AT HOME 1. Real Planning or Bogus Planning? Is there too much Socialism or too little? The Opposition and their newspapers have campaigned steadily round the battlecry that the Government has been planning and reorganising too , far and 'too fast. That is a charge that deserves to be examiried; and it can ' be examined in only one way-by examining what policies the Tories put forward as an 'alternative to those of the Government. , It Isn't very easy to discover what are the alternative proposals of the Opposition, because the Tories are much quicker to criticise what the other fellow is doing than to say what they would do themselves. But out of the welter of purely destructive criticism, a few practical suggestions have emerged. Most of them amount to no more than ' the mixture as before'- a return to the bad old days. Mr. Lyttelton calls for a cut in surtax, pre- sumably because he believes that the 85-shillings-a-weekfarm labourer will ' work harder for knowing that the £5,OOO-a-year landowner is getting a bit ' extra. Sir John Anderson calls for a reduction in death duties, presumably because he wants to call in the dead 'to redress the balance of the living. Both of them demand deflation, presumably because they like to see low wages and continuous unemployment, and because they know that the simplest way to get rid of shortgages for the well-to-do is to drive out of the consumers' markets some of the purchasing-power of the working _class, rna JOB AT HOME 15

Other Tories want the trades unions to give up all their hard-won rights, so that Mr. Lyttelton and Sir John can get their deflation without tears. Many want to postpone the raising of the school-leaving age so that we can get more juvenile labour, though none of themfyetl) has proposed taking their argument to its logical conclusion by ending schooling at the age of twelve, or even less. Some of them want to put the profits back into commodity speculation by doing away with bulk buying, even though this will break our price-structure and put us at the mercy of our suppliers. All this, in short, amounts to the familiar Tory recipe of more work, dearer food, lower real wages, more profits, and less social reform. It is not enough, ' however, for Socialists to reject these proposals with understandable impatience. We must put forward positive alternatives. It is:true, of course, that there is no one magic panacea, but there are a dozen possible approaches to the problem, all of which are open to objection, but all of which must, none the less, be tried. All those approaches lead in the direction not of slowing up the Government's present programme, but of speeding it up and intensifying it. In short, present difficulties are not"the result of socialist planning: they are the result of not enough boldness and urgency and too much tenderness for vested interests. You can't make socialist omelettes without breaking capitalist eggs. , The main theme running right through this book is that we need, in all our planning, a greater sense of urgency than has been shown over the last couple of years, and a realisation that the economic struggle we've got on our hands can't be waged with the leisureliness of a phoney war. In the first few months of 1940 we tried to make war on the cheap: Britain dined and wined and went to the races as though war were a temporary and minor break in our normal pursuits. It was .only after Norway that we realised that we had to roll our sleeves up and go without the luxuries. Yet, in 1946, we doubled our relative coal consumption on railways in order to provide empty seats on trains, we made electric heaters and taxis plentiful, and we spent some of our shrinking store of dollars on tobacco, films and chewing-gum. It is only now that the Government is tentatively seeking some cuts in luxury goods from abroad, and even now action in this field is not nearly as thorough as it might be. . _ We hear too 'much of the difficulties,and not enough about the necessities. We are told, for example, that tobacco is a difficult Commodity to ration, because the rations of non-smokers would create a black market. But that would' happen only if the non-smoker were offered no alternative to taking his tobacco ration, and it wouldn't happen if the Personal Points of adults (adjusted in total quantity) were made available for sweets and/or Virginia cigarettes and tobacco. Beyond that, one could sell soft-currency cigarettes , and tobacco off the ration, and build up the same public taste for the tobacco that doesn't cost dollars that there is in every other country in the world, including America, where they import tobacco from Rhodesia and Turkey . . Apart from their intrinsic wastefulriess under present conditions, luxury imports are a source of irritation to people who have to go short of some necessities. Some of them, we know, cannot be avoided, because they have been taken as a part of a conditional sale-for example, the Belgians insisted on our taking some of their azaleas before they would supply us with steel. But this sort ofthing doesn't by any means account for the whole of our luxury 16 KEEP LEFT

imports, some of which have a political flavour, like the Azores pineapples which do less to refresh Britain than to keep Portugal sweet. Even in those cases where luxury imports were forced on us, nothing was done to explain this fact to the people until as recently as March 23rd, when it was mentioned, almost in an aside, in a speech by a junior Minister. Needed: A Minister of Economic Affairs The recent setting-up of an overall planning mechanism shows that, for more than a year and a half, we have been without an adequate overall planning mechanism. Even now, there is room for some doubt whether this task is beingtaken seriously enough. Such a planning mechanism, to be successful, needs to be able not merely to co-ordinate the work of the depart- ments of State but also to reconcile conflicts of view between them, and even to override them when the need arises. For this purpose, it must be headed by a Minister who can give the necessary time to the job, and who has a position and prestige above those of the departmental Ministers. We haven't got that yet. But even more important is the relationship between the overall planning machine and the individual departments of State. This is a problem in . management which is by no means confined to the business of government: . it is the standard problem of every organisation which has both planning and executive functions. In individual businesses, the relationship between .. staff" departments, who determine the methods, and" line" departments, who put the methods into operation, has been the subject of continuous and intense study over the last fifty years or more. All that study has led to conclusions which are violated by the new planning mechanism announced by .the Prime Minister a few weeks ago, which -is based on the principle of . departmental autonomy, This is simply trying to eat your cake and have it, to plan without interfering with preconceptions; and its result is not to integrate the planning machine into the executive machine, but to make it a superstructure which adds to the weight without supplying a compensating . increase in power. Departmental autonomy never works in practice, as any managing director knows who has had to resolve conflicts of view between the sales manager, the works manager, the personnel manager, and the accountant'; and as the Prime 'Minister discovered when, in the fuel crisis, he had to set up a special organism which overrode the ' normal inter- departmental machinery. . .Democracy Does 'Not Mean Trying to Please Everybody This tenderness to the vested interests of the departments is paralleled by the Government's relationships with the rest of the country-with.business men, workers and consumers. These relationships have been based on the premise that for the Government to take any decisions at all without getting the agreement of everybody affected by them is somehow totalitarian and undemocratic. The Government is sometimes accused by its opponents of relying too far on its mandate from the electorate. In fact, precisely the opposite is the case. The Government has tried to get from the people affected a separate reinterpretation of its mandate in respect of almost every detailed administrative action. Democratic leadership doesn't consist of hoping to please all the people all the time, and of trying to get decisions made by mass meetings. Democracy. works by the process of getting electoral THE JOB AT HOME 17 agreement with a policy, analysing each administrative problem involved in carrying the policy out, making a decision, explaining to the people both the facts of the problem and the reasons for the decision, and then putting the decision into effect and relying on your people to back you. , To interpret democracy in a way which makes leadership impossible is ' to make a mockery of the concept of democracy. Faced with a great economic fight calling for firm and effectiveleadership, you can't say to your people, " We are giving careful consideration to fighting on the beaches, we are consulting both sides of industry about fighting in the factories, we hope the agriculturists will co-operate in fighting in the fields," and so on. Real leadership means telling your people what's involved, and then taking it for granted that they're with you. If you're wrong, you'll soon find out at the polls. Public Relations DO Matter. . Our concept of democracy relies on having not merely a politically intelligent people, which mercifully we have, but also a politically informed ' people, which unfortunately we have not. It is not Mr. Attlee's fault that he is not a photogenic, colourful personality: indeed, in some ways that's a source of strength to him and to the work of the Government, which never functions so well under the prima-donna type of Prime Minister. Never- theless, it's going to the other extreme to make a virtue of this defect. Correct political decisions are like justice: theymust not only be, but must also appear to be; and they can't appear to be if, because they are -never told, people are led to speculate on the facts and reasoning that lie behind them. The most startling failure of the Government in this field of public relations was its first attempt to mobilise the forces of organised labour for the battle of production last year. A Production Drive was announced. It was to begin by a meeting to which were convened, at considerable trouble and Government expense, all the members of the National Executives of all the trades unions affiliated to Congress, so that they could be told what the production task was and what was required of them to achieve it. That this was to be a Council of War was evident from the fact that it was a strictly private meeting with the Press excluded (though one newspaper did carry a full report of the proceedings). The trade union leaders, seventeen hundred of them, turned up at Central Hall that morning with heads high and shoulders squared and the light of endeavour in their eyes. They didn't know what the Government was going to ask of them, and what sacrifices they would have to ask their members to make-but it was their Government, and they were prepared to back it to the hilt, however tough the demands turned out to be. They waited " like greyhounds in the leash, straining upon the start." The meeting began, in an atmosphere tense and expectant. The Prime Minister made a short and charming speech of welcome: the delegates gave him a rousing ovation, turned to their neighbours and said: "So far, so good. Now we get down to business." Then came the Foreign Secretary, who gave his views on world and home affairs in a speech of which he'd said every word in public before and has repeated every word in public since. A few questions were answered, and then the .puzzled delegates dispersed to lunch. "But, maybe," they said, "that was just the warm-up; we shall get the real "stuff, and our battle-orders, this afternoon from our good old friend and colleague, George Isaacs." , 18- KEEP LEFT

They didn't. All they got from George Isaacs was an excellent speech on manpower of which he'd said every word in public before and has repeated every word in public since. A few more questions; and then seventeen hundred men, puzzled and disillusioned, went off to catch their trains, like schoolboys who have played truant to go to a test match and found the wicket under water. This account of a so-called secret meeting which was never secret illus-

I trates the point that policy and propaganda must march hand in hand. The argument used by some Ministers against a proper public relations pro- gramme-that what is wanted is not publicity .but results-is misleading . It's not a case of bringing home the bacon or telling the world: the need is to bring home the bacon and tell the world. It's not democratic to -make decisions without saying why; but equally it's half-baked to ask for heroic individual effort from the people without the lead of heroic measures by the Government. A clear, hard-cut decision can easily be dramatised ;' indeed, it dramatises itself. But only a Tchechov ora Shakespeare can dramatise indecision, and even they, though they can make of it a tragedy or a comedy, could certainly nof transmute it into a clarion call. 2. }?our Ways to Get the Men to the Right Jobs .Before a battle a general may deliver an exhortation to his troops, but he won't expect that to provide him with a victory unless he has made sure 'of deploying his units so as to get the greatest force in those sectors of the line where he most needs it. In exactly the same way, we shall not win the Battle of Production unless we make sure ofdeploying our manpower not in a haphazard or in the most convenient way, but in the way which gets the men to the essential jobs. . It is this which is the major strategic operation for which there is no substitute. Unless it is carried out, it is idle to hope for the tide of battle to be turned merely by getting another five or ten per cent. of work out of each individual productive worker . The reason why' productive workers have, up to now, not reacted very sharply to the slogan" extra effort now means better living sooner" is. that they know that the maldistribution of labour makes it only a half-truth. Their standard of living does not entirely depend on the rate at which they-work. With some reservations connected with the terms of international trade, it is, of course, true that the living-standard of a nation as a whole varies with its output per head. But in this context, 'output per head ' means output of every able-bodied adult. So long as there are sources of income without work (such as rents, interest, profits and speculation), and so long therefore as some persons who should be available for work are either partially or wholly non-producers, the numbers of these ' drones ' must affect the ratio between total output and real wages. Against this, anti-socialists argue that rentiers are only a'small proportion of the whole community, that government controls are tending to decrease their even further, and that steeply progressive taxation redistributes to the 'workers a large part of their unearned income. All these three contentions are true, but they do not invalidate the point that the existence of unearned incomes upsets the proposition that the worker's real wages can only, and must, move directly in accordance with changes in his output. THE JOB AT HOME 19

The wealth of these 'drones' may be quite a small part of the total national economy, but the effect of its existence on the morale .of the worker adds greatly to its importance . . The ·simple fact is that the worker . has not benefited, and knows he has not benefited, in proportion to increases in his output as a producer. ' Moreover, even if it were true that increased output means increased income for the nation as a whole, the same rule does not apply within single industry. It is becoming increasingly common to throw the onus of raising living-standards 'through increased productivity on only the operative worker in only the manufacturing industries. This procedure overlooks two most important facts: (a) that direct manufacturing operatives represent only a minor part of the nation's working force; and (b) that there are other sources of increased efficiency which are potentially much more fruitful than 'speeding up work on the bench. Of every five workers in this country, only two work in manufacturing trades and three in non-manufacturing trades. These non-manufacturing trades include some industries (like betting, middleman enterprises . and advertising) which add little to the national wealth. Others (like transport, insurance and wholesale and retail distribution) are wastefully organised; and others (like mining and quarrying agriculture and the armed forces) still rely predominantly on the expensive and irreplaceable human muscle for their motive power. It is clearly wrong, therefore, to pretend that the possibility of increasing money wages without inflation lies only or primarly in improving the work of the more efficient minority. Turn now to the problem of moving manpower from the inessential industries to the essential ones, and from where it is not used productively to where it can be so used. We achieved this end during the War com- paratively easily by the systemof direction. When after the War we abandoned that system, for very good reasons, over most of our industry, too many people assumed that there was no substitute for it, and that we should have to leave the movement of workers to the free play of competition, offset, to a very small degree, if at all, by an occasional ministerial exhortation. This is just not true. There are, in fact, four concrete measures which could be taken immediately to guide the flow of workers into the essential industries. The First Way: Control of Materials The first of these measures is an extended and tighter system of materials controls designed to divert materials, and hence employment, from . inessential to essential purposes. This method was attacked by Mr. Lyttleton in pious horror on the ground, apparently, that it was using the threat of unemployment in the national interest instead of, as in the past, in the interest of private profits. But, in point of fact, intelligent direction of raw materials need not involve the old merciless form of unemployment at all, because raw materials would only be restricted in respect of industries when and where there were alternative and more important and accessible industries needing manpower. It would be idle not to recognise that the diversion of materials is only a partially effectivetool for diverting employment. To carry it out completely would involve tracing the allocation of materials from contractors down to 20 KEEP Llwr two or three levels of sub-contractors and watching not merely what products were made from the materials, but also the uses .to which they were put. But difficulties can be-at least partially overcome, since allocations are already being made in the case of some materials, for instance, coal and steel. There are a number of extensions of the method, for example, the paper for pools promoters, which could be putInto effect quickly and ' easily, and which, together with the other means proposed below, would make some contribution to solving the problem. The Second Way: Negative Direction of Labour The second method proposed is a device which has not been very widely discussed, and which may be described as a negative direction of labour. This means preventing inessential industries from increasing their existing staffs without licence. All engagements would be registered, as during the War, with the Labour Exchanges and the Appointments Board, who would be provided with a list of industries to be debarred from recruiting fresh personnel until further notice. The normal average drift from an industry (which in some cases is as' high as three-quarters of 1 per cent. per week) is such that, if replacements were suspended , the numbers employed would automatically dwindle where it was thought desirable to reduce them . This is not unprecedented: the National Health Service Act has established the commonsense principle in respect of doctors that the national interest shall decide where there are vacancies and where there are not . There is good reason for extending the same-method ill order to reduce, for instance, the numbers employed in the gambling industry. The Third Way: Differential Real Wages The third of the four tools of labour-eanalisation is a policy of differential real wages as between essential and inessential trades. So far, almost all the discussion that has taken place on differential wages has been concerned with money wages and not real wages. The extent to which the Government should intervene in the fixing of money wages is severely limited; but it would not be nearly so difficult for the Government to enable certain classes of workers to get more for their wages. Two methods, in particular, suggest themselves at once: differential supplies of consumer goods, and differential taxation. . The first of these is easy to advocate, and much more difficult to apply. It raises tricky questions of where to draw the line, and inevitably involves some anomalies. But the principle has already been accepted and applied in Great Britain in many separate matters, from bread rationing to the supply of houses . The one thing that is dangerous is to make piecemeal concessions, because every Separate concession creates more dissatisfaction than it alle- viates. But there is no reason why differential rations should not be developed here, as in every other couritry in Europe. Differential taxation would be difficult to apply but direct in its effects. It is no startlinginnovation: we have an example in the existing differentiation ' between earned and unearned income. This particular differentiation could, and sho uld, be much wider: indeed, there is no reason why all the reductions in direct personal taxation over the next few years should not be made exclusi vely by increasing the earned-income allowance. This would have the THE JOB AT HOME 21

secondary effect of shrinking still further the rentier class, whose existence, as we said above, is one of the morale-brakes on workers' effort. .In addition, even within earned incomes one could apply differential rates according to industry and/or occupation, varying the differentials, according to the industrial needs of the nation. ' These measures might well help to reduce the resistance of the "group (a decreasing group) of trade union leaders who are opposed to a national wages policy. That resistance is understandable, because for years when there has been a superfluity of labour the workers have been at the mercy of a free market, and scant mercy they had from it. Now, when the situation - is reversed and the cards are in their hands, it is a hard thing to ask them to forgo their ' overdue advantage. The remarkable thing is the restraint which they have already displayed by refusing "in the national interest to press home this advantage as well as they could, The Fourth Way: A National Profits Policy The restraint which trade unionists have shown over the last two years is the more remarkable because there has been all this talk of a national wages policy without a word being said about a national profits policy. This is the .fourth of the measures we propose for increasing the relative attractiveness of the essential industries-differential profits to match differential real wages. To a limited extent, this will be automatically achieved by switches in employment, and the task can be completed by differential taxation of profits. The first stage is to increase sharply the difference between the tax on profits put back into the business and the tax on profits distributed.* This will have two secondary effects: firstly, it will accelerate the recapitalisation and mechanisation of our industry-a point to which we shall return later, and secondly it will compensate for the inflationary effect of a rise in real wages in the essential trades without a 'corresponding reduction of other wages. In addition, there might be special differentiations, with regard to both distributed and undistributed profits, as between one industry and another- for example, as between a foundry and a football pool. This would ensure that, as workers moved to the essential trades, the capital for their machines and equipment would move with them. Foreign Labour Cannot Solve the Main Problem We have devoted all this space to the problem of the distribution of man- power because we believe that the key problem in manpower is in fact distri- bution and not an overall shortage. There are a few cases, such as foundries, where the importation of foreign' ready-made' (that is, fully -skilled) workers wouldbe an immediate help. But in general terms the large-scale import- ation of foreign workers doesn't help very much, because the foreign worker, employed on the only terms possible in a democratic socialist community, consumes as much of what he produces as the native worker. How to Get Women Back into Industry One increase which could and should be made to our total working force lies in the attraction of more women into industry. This requires threethings to be done. The first of these is the acceptance of the principle of the rate for job, even though it may have to be applied in stages and over a period. * Since this was written. the Budget. has introduced such a differentiation, though not widely enough. . 22 KEEP LEFr

The second is setting up many more creches accessible to the factories, and restoring to the Local Authorities the 100 per cent. Exchequer grant which they enjoyed during the War. The third is to set up come-when-you-like- go-when-you-like workshops for the very many occupations, like light electrical assembly and some of the needle trades, where hand methods and the absence of flow production make this possible. There is nothing sacro- sanct about our working hours of 8 a.m, to 5 p.m., and there are a lot of married ' women who will work from 9 a.m, to 3.30 p.m.-that is, from taking the children to school to calling for them and doing the shopping on the way home. 3. Making Our Industry Efficient One reason why·exhortations to workers don't always register is that they have seen far too many examples of a speed-up in production resulting only in bigger stockpiles. They know of far too many unbalanced stores in which nil stocks of some lines are coincidental with unusable surpluses of others-:- and they wonder why they were pushed so hard -to speed up the manufacture of those surpluses. Apart from the fact that the total number.of workers in the manufacturing industries is only two-fifths of all workers, the ratio of the number of actual productive workers in the manufacturing industries to that of other workers .in the same industries has, over the last few years, shown a marked decline. The numbers of planners, shop loading and progress personnel, works office and stores clerks, time clerks, wages and bonus clerks, rate-fixers, manage- ment staff, personnel department staff, cost clerks, buying-office personnel, etc., per operative worker on the bench or the machine, has risen sharply. This is not necessarily a bad thing; but it cannot be denied that, just as the non-manufacturing trades are in general less efficient than the manufacturing, so, within the manufacturing trades themselves, the administrative and ancillary departments are more wasteful .of labour than the operati-ve departments. One result is that saving in the consumption of materials is sometimes more than offset by increases in the consumption of paper, and that reduced movement of raw materials, work-in-progress and finished products is more than offset by increased movement of documents and persons carrying, and working with, documents. Nor is this form of labour-waste confined to the lower strata of admini- stration. Indeed, the operative worker generally sees more clearly, because he suffers more directly from, the defects of executive and sub-executive staff. It is easy to imagine the 'reaction of a worker who has had his job speeded up when he finds that a few days of the higher rate of output are followed, generally because of defects in materials requisitioning and .shop loading, by a period of idle time. . The Worker must be on the Inside of Management It may, of course, be argued that the workers are generally in no position to judge factually the .efficiency of management and administration, and that their views on this subject are inevitably coloured. For example, it may fairly be said that lack.of balance and hold-ups in production, resulting in shortages of materials and parts and in idle time, are sometimes due not to managerial THE AT HOMB • 23

inefficiency but to causes over which the management have no control; and it may also be fairly said that an administrative officer who may appear to the shops to be a drone is often doing a highly valuable productive job. This is true ; but if no explanations are given to the operative worker he cannot be blamed for drawing his own conclusions, and if those conclusions happen in a particular case to be false, they still have an adverse effect on his pro- ductive power because they lower his will to work. One has only-to instance the spectacular changes in the output of a shop which have sometimes resulted from a change of foreman without any change Whatever in tooling or operative methods. ' A conclusion which must be drawn from these facts is that there are great possibilities of increased output in correcting defects not of technical method but of personnel relations. The explicable but unexplained Period of idle time is only one example, of which many others could be quoted, of the ways in which managements fail to mobilise worker-goodwill through not taking workers into their confidence by telling them not merely what is to be done, but also why it is to be done. Management Needs Concerted Action, not Bits and Pieces All these are matters to which the Government has given a great deal of attention. But that attention has resulted in setting up too many independent mechanisms. There is, the Organisation and -Methods Division of the Treasury, and Organisation and Methods Sections in the major ministries, which do excellent work in improving administrative methods, but whose findings are confined to the Civil Service. There is the Production Efficiency Service of the Board of Trade. This has a nation-wide team of management advisers who have, however, no powers of entry and have to wait for a firm to ask for their help, and therefore don't help the most inefficient. There are the two Government-sponsored finance corporations, which have special interests and skills in higher industrial management. There are the Develop- ment Councils to be set up for a number of industries under'the Industrial Organisation Act. They will, however, be redundant with one another and ' with other organisations in many of their functions. There are a number of _ industrial professional associations of varying quality, and a number of firms of industrial consultants, also of varying quality. And, finally, though with unconscionable delay, there has been set up a British Institute of Manage- ment to cover the whole field. Its constitution and powers, however, are circumscribed in order not to offend the existing institutions and the existing 'firms of consultants-a major example of that tenderness to vested interests to which we have already referred. /' What needs to be done is to weld all these separate organisations into a single unit , so as to spread as widely as possible the work and ideas of the specialist personnel available, and then to give that unit terms 'of reference and powers which will enable it actively to intervene in industry instead of merely sitting on thetouchline shouting advice to the players. To do that may involve treading on the corns of some of the officers of some of the professional bodies, and it may involve taking some of the profits out of industrial consultancy; but neither of these should be major considerations. Rationalisation and Standardisation The British Institute of Management, reconstituted in this way and given teeth, could at once set about effecting the most urgent improvements in 24 KEEP -LEFT

industrial*' management in this country. The first of these derives from the fact that, inmany industries, the majorityof productive units are of sizes . fixed by historical accidents and hence much larger or smaller than the optimum size. There are many trades in which the rationalisation of production between different factories would give.startling results. In other industries the problem is not the rationalisation of manufacture but standardisation of the end-product-tooling up for longer runs of smaller numbers of models. We can't, in normal markets, compete with the U.S.A. in motor-cars partly because we spread our much smaller output over a larger number of models. If every manufacturer insists on his own design of wheel-hub, they all pay more for them and nobody is any better off. We shall never make a 14 h.p. motor-car of really good value until we stop making an Austin 14, a Ford 14, a Humber 14, a Morris 14, a Standard 14, and a Vauxhall 14, which differ only negligibly in price, performance and general characteristics. The same applies in other industries, for example, in electrical fittings, in which the humble light-switch is made in over a hundred and fifty models. In mass-production terms, this is reducing the doctrine of consumers' choice to absurdity. Such measures as have been taken, in the past, to economise labour through standardisation have nearly always been initiated from outside the industry concerned, and it should be the business of the Institute of Management rapidly to accelerate this process. Replacing Out-of-Date Plant Standardisation will underline the necessity for a more policy of replacing obsolescent plant. In many industries the bulk of the machinery was already twenty years out of date in 1939. Much obsolescence is due simply to the owners' greed, 'reinforced by the niggardly provisions for' obsolescence in the budgets of Tory Chancellors of the Exchequer; and the suggestion we have made for wide differential taxation as between capitalised and distributed profits will help to put that right. But that isn't the whole story. Many old machines remain not because there wasn't money to replace them, ,but because many managements simply don't know how to calculate the factors which provide the criterion of when a machine should be replaced. To teach them this calculation is'one of the more simple tasks awaiting the Institute of Management. British industry . needs -to double its horsepower-per-head in the next ten years, and that particular ten-year plan should be one of the priority tasks of the new Central Planning Authority, which could freely use the Institute of Management on , this work . Industrial Democracy the 'Key to Increasedjj'roductlon The change which would most quickly increase production would' be a wide and wholehearted extension of industrial democracy. Far from being • ideological.' (whatever that may mean), this isrecognised by thoughtful industrial managers as a severely practical contribution to increased produc- tivity. Long before it began to act, as it eventually would, positively as an incentive, it would increase .worker-morale by the elimination of many • disincentives.' Industrial democracy is not so much a matter of machinery as of attitude. The joint production committees set up during the war operated in THE JOB ,AT HOME 25

factories in the 'letter, but in only a few in the spirit, of the agreement 'setting , them up. _Nevertheless, it would give a tremendous fillip to organisedr.labour if the joint production committee system were extended (in many 'f'iictories revived) on a statutory basis. - An .Act making them compulsory in aU but the smallest establishments, and giving them functions and powersmuch wider and more closely defined than those in the war-time agreement (such as access to accounts and cost figures), and-most important of all-tying them in with the regional and national joint industrial committees would electrify the nation's working force'. -Moreover, it would provide sadly- needed machinery through which the decisions reached by the Government in top-level consultation with FBI and TUC would filter down to the shop floor, where they really matter . This would supplement the excellent beginning which has been made in the nationalised industries of mining and civil aviation, in which newand effective techniques of management-worker co-operation are rapidly taking shape. The Revolution in Agriculture There is one industry in particular which cries out for the application of scientific management, .and that is,the one industry. where. it has been least applied-agriculture. The introduction in recent years of new farming methods, and particularly the growth of specialisation, have put the farming Unit in the same position as the factory unit was put by new methods and machinery-in the position of needing to be of a size justifying the,division, and making full use, of specialised.functions. So long as farming required only a farmer, that farmer could .operate a large unit or a small one with almost equal efficiency; but now that farming requires also a cost accountant, an agricultural chemist, a marketing expert, a veterinary surgeon, a milk scientist, and a maintenance engineer the difference in efficiency between the unit which can operate by functions and the one which is too small to do so has become very wide. In no other industry, in fact, are there such disparities of size, productivity and profitability between one establishment and another. We have already described how the new Agriculture Bill-a marked. and indeed startling, advance on anything previously attempted in the farming industry-not orily sets out to create stability in the industry by guaranteed prices and assured markets, but also gives the Government full powers, and sets up most of the necessary machinery, to correct the industry 's defects in efficiency. and particularly the disparities we have just described. But in addition to this, some fresh ideas are wanted from other sources. The Pottery Working Party said that the pottery industry had a high level of craft skills, but needed to import management and administrative skills from other 'industries; and this ' is as true of farming. Doubtless many farmers would resist. Doubtless they would plead, as every other industry has pleaded in tum, that they are a 'special' case. because of the imponderable factors of climate, yield and stock behaviour. But a partnership between the Management Institute, on the one hand, and; on the other hand, the Agricultural Research Council, the Agricultural Improvement Council and the National Advisory Service. would provide a combination which could carry confidence and reduce resistance to . innovations. It could provide. too, for a wide extension of pooled advisory and equipment services, for rationalisation of the smaller units, and for joint action in marketing and distribution: Measures of this type could so increase 26 KEEP LEFT

the productivity per agricultural-worker as to justify, in terms of the national .wealth, a rapid increase in the number of workers, now less than a tenth of the total working force, c;ngaged

We have described, within the limits of our space, a few of the measures, both short term and long term, which need to be taken to deal with the threefold 1947-49 problem of dollars, manpower and productivity. Those measures need not in the least prejudice, or even slow down, the programme of socialisation to which the Government has set its hand. The Tories and the Federation of British Industries argue that nationalising the basic industries and increasing our immediate productivity are conflicting tasks: this is one of the typical either-or over-simplificatlons which are their habitual substitute for thinking .a problem out in basic terms. In fact, these two separate tasks are not conflicting but complementary, and the nationalisation of the common services, of capital-starved industries and of those whose defects cannot be remedied without a change ownership is an essential step towards increasing national productivity, whether in the short term or in the long run. The simple fact is that the leaks must be stopped and a new roof built at the same time. CHAPTER III DEMOB. The dispute in Parliament on the Conscription Bill has made many people imagine that the principle of National Service in peace-time was the important issue between the Government and its critics. This was not the case. Only a minority .of M.P.s, who opposed conscription on conscientious grounds, objected to National Service as such. A much larger number were concerned with the proposed size of our peace-time forces and the handle which conscription would. give to the Chiefs of Staff for keeping far more men under arms than w e could afford. That is why the main controversy raged round the period of service-18 months or 12 months. But the National Service Bill deals only with the call-up after 1st January, 1949. The really urgent problem is to speed up the rate of demobilisation in the next 18 months. Here much remains to be done. First, however, a word of well-earned praise. One of the greatest achievements of the Government was its smooth handling .of the demobilisa- . tion of four-and-a-half million men. At the beginning there was dissatisfac- tion which flared up into the near-mutinies of the R .A.F. and oneor two incidents in isolated Army Units. But there has been none of the muddle and none of the unfairness that marked the end of the 1914-1918 war, when soldiers marched with their bayonets out down Whitehall and mutinies were frequent. Priority for demobilisation was partly decided then by the amount of influence a soldier could bring to bear. This time nepotism has played no part. Demobilisation has proceeded on an orderly plan with the maximum amount of justice for individuals that any vast machine can contrive to introduce into its workings. The only exceptions were the release under Class B of those who were due to return to key positions in industry. Otherwise the inexorable rule of age plus length of service operated. . The issue of demob. clothes and gratuities and the return to civil life were all arranged efficiently, even though in January, 1946,over 100,000were DEMOB. 27

being demobilised every week; But after this peak period the figures began to drop. : 220,000 in June ; 145,000 in August; 75,000 a month for the last three months of 1946, and just over 30,000 a month for the first quarter of 1947. ' Obviously the Government could not demobilise ,everyone down to the 1939 level of perilous weakness. But it is reasonable to ask why the brake was. put on so early. Even after the huge releases of the previous eighteen . months, there were still 1,427,000 men in uniform at the start of thisyear, with 450,000 civilians doing nothing else but provide them with munitions and equipment. . The Government justified these numbers on the grounds that the after- math of war had left many problems to be settled and had burdened us with many commitments. Moreover, the Peace Conferences have not gone as , well as they hoped . But are these arguments strong enough when considered with the Government's own declaration that our greatesthandicap in reconstruction isthe shortage of manpower ? Six hundred thousand men is the basic deficiency for industry, according to the Ministry of Labour. While demobilisation was going on rapidly, critics of the size of the armed forces confined their demands to speedier release. Once the peakhad passed, they were brought up against the magic word ' commitments ,' behind which the Minister of Defence has built his defences. Secrecy compelshim not to reveal what our commitments are. They are referred to vaguely with the design of baffling the critics, as well as any potential enemy. But a little research into the problem produces some remarkable results. In the five . years before the war the total number of men in the forces never wentmuch above 450,000. The Army maintained a force of about 215,000. The Navy, when it was up to strength, had 135,000. The R.A .F. had 100,000. These forces were responsible for providing a reserve at home and for garrisoning the entire British Empire. There were not enough, it is true, but they did the job, and the addition of another 100,000.men would have made them completely adequate for their task. But to-day we have nearly a million men more, and even 'at the end of , March, 1948, the Government plans to have an increase over pre-war of nearly 700,000 men-all this in the sacred name of ' commitments.' How- ever, despite the Government's secrecy about their commitments, areason- able guess can be made as to how many troops they absorb . Reliable estimates put the figures in the Spring of 1947 for the occupied countries as follows : Germany, 120,000; Austria, 18,000; Greece, . 15,000 ;Italy, 60,000 ; North Africa, excluding Egypt, 30,000; Japan, 3,000. The total, therefore, is 246,000 for areas with new commitments arising out of the war. So the remainder , three-quarters of the extra million, must be in countries where Britain has kept troops for generations. . That is indeed the case; in 1935 we only had 2,000 soldiers in Palestine, and even during the disturbances of the Arab terrorists the number never rose beyond 5,500. Now there are something like 120,000. In the same period the garrison in Egypt has advanced from 10,000 to six times as many. In Malaya the number has gone up from 3,000 to 15,000. At home there were never more than 110,000 men in the Army, and to-day there are atleast 380,000. One curious feature is that the troops in India and Burma are now slightly less in number than they were before the War. That means that 28 KEEP LEFT nearly all the extra forces are distributed between England and the Middle East. In other words, it now takes three men to do the job that one did before the War-at a time when the Government is talking about bringing 100,000 foreign workers into the country this year. Even -the most cursory analysis of the disposition of our troops proves that it is not additional commitments that demand this gigantic Army. The explanation is quite different. High on the list comes inefficient organisation. A close second is the Government's attitude to the Chiefs of Staff. The high-ranking officers who advise the Government are living in a soldier's paradise. They state their requirements in men, money and materials; the Government pares them down a little, and the soldiers sit back, more or less contented. The third factor, which is partly mixed up with the second, is the belief that a large striking force in the Middle East and big reserves in Britain will add weight to argu- ments at the peace conferences and tip the balance in our favour when diplomacy fails. It may seem strange to advance the charge of inefficiencywith a victorious Montgomery at the War Office. But Montgomery is the man who would 'never start a battle in the War unless he had an overwhelming preponderance of men and munitions at his disposal. That is a fact well known to anyone who served under his command. He was not a general like Wavell, who mopped up nearly 200,000 Italians with a tiny Army of 30,000 men. He believes in the mathematical certainties of victory. This was the right policy for war-time. It won the battle of Alamein and it won us the battle of Normandy. But, when projected into peace-time, it is dangerous. . The standing Army at homeis a case in point: 380,000 now as against 110,000 before the War. One military explanation is that it is essential to retain reserves at home for forces abroad. That was the case in the 'thirties, and we had a reserve then which is now non-existent. In those days there was an Army Reserve of 180,000men. The chief element in it was ex-regular soldiers with the second part of their twelve years' engagement to complete. They were fully trained, and they were assigned to units and depots, and knew exactly where they had to go and what they had to do if they were called up in an emergency. The system under which they were liable for service was a simple device. On leaving full-time service they were given an amount ranging from 9d. to Is. ·6d. a day in return for liability to recall in answer to a Royal Proclamation. Those receiving the highest payment were in Class A of the reserve and could be called up without a state of emergency being proclaimed. Use was made of them on numerous occasions between the wars, in Palestine and other areas. In addition,there was a Territorial Army which could be relied upon to supply anything up to 200,000 men. The two reserves taken together allowed us to drop the Army at home to the figure of 110,000 men. The absence of them demands the maintenance at home of the additional 270,000 who could be working in industry instead of blancoing their belts. It is no answer to say that the millions of the demobilised are the modem Army Reserve. Once a man has passed through the release centre he is lost for all practical military purposes. · He can be got hold of again only through the cumbrous machinery of the Ministry of Labour, with its paraphernalia of call-up papers. If the War Officehad been alive to the necessity of saving DEMOB. 29

manpower it could have instituted, at the end of 1945, a system whereby suitable men, due for demobilisation, could have been offered a similar contract to the regular soldiers going on the reserve before the War. By that means a reserve as large as any militarist could want would have been avail- able at very little cost. It might have been necessary to pay as much as 2s. a day, but that would have been nothing compared with the saving in man- power that it would have brought. Pre-war, the reserve of 380,000 men cost only £7 million a year. To-day the expenditure would have been less than 1 per cent. of the Defence budget of this year. Wastage of manpower in the Army at present is notorious. There are Ordnance depots, Record offices,Pay offices,schools, training establishments, Engineer services, all cluttered up with thousands of men doing civilian type jobs. Civilian employees are being sacked to make way for soldiers. Methods of work in these establishments are antiquated. The whole basis of these semi-civilian services should have been overhauled as soon as the War ended . But it has not been, and the high-ups rejoice that they still have large numbers of soldiers for these jobs, who are easier to order about than civilians. When we leave India in June, 1948, we shall lose the use of the Indian Army, which provided a substantial reserve in the Far East. Nothing has so far been done to enlist other Empire troops to help us out. The Indian Army, whatever the motives for its formation, was a great 'educative insti- tution . It taught hundreds of thousands of Indian peasants to read and write. The same thing could be done for West and East Africans as well. The pay and the conditions would be ,an attractive inducement to join up, and although they might not be able to replace British troops outside Africa, they would definitely ease the burden on our manpower. All along the line there are instances of the failure of the Chiefs of Staffs to ,grapple with the problem of manpower. They will never do so until the , Cabinet specifically lays down how many men they can take from industry. We already know how many we can spare, because the Government have insisted emphatically that industry is short of 600,000 men. If that figure is subtracted from the number at present under arms, it leaves 800,000. That.is the target at which we should be aiming for March, 1948, instead of 1,085,000. The Government have recognised already that 700,000 or thereabouts is all we can hope to keep in the services after the next '18 months . They have recognised it by saying that no man called up after January 1st this year will serve for more than two years, and that no-one serving before that date will be demobilised after anyone called up in 1947. This decision will, by the beginning of 1949, automatically reduce the size of the armed forces to something in the neighbourhood of 700,000. There are 150,000 men with four years' service to-day: they will be out. There are another 100,000 with three or more years' service: they will be gone, too. At the beginning of 1949 the only replacements available will be, apart from a small number of volunteers, the call-up figure of 175,000 a year. With that number it is impossible to maintain forces of more than 600,000, because there -will not be sufficient replacements. So it is for a two years' period only that the Government can count on swollen forces. But if there is one thing on which everyone is agreed, it is the extreme unlikelihood of a war within the next two years. 30 KEEP LEFT

In effect, Britain at the moment has these large forces in order to keep up appearances. She is maintaining something which is beyond her means, and every other Power knows it. It is not the numbers in uniform that decide prestige in the world . It is the strength of industrial poteritial. The Americans have demobilised so fast that their Army is now half the size of ours in proportion to the population. But their prestige remains unaffected . The next two years is a danger time for our own industry. It is not a danger time when war and peace hang in the balance. Nor is it a time at which .we should keep 600,000 more men in the Army than we can afford . That is why the Government should announce that they will demobilise an extra 300,000 in addition to the 340,000 release already planned by March. 1948. CHAPTER IV THE JOB ABROAD 1. As Others See Us Our prestige as a nation depends less on what we think of ourselves than on what the world outside thinks of us. In the nineteenth'century we could afford to be insular, because our navy ruled the seas. Now, before deciding on our foreign policy, it is wise to take a look at ourselves from outside, say from Washington or Moscow. The Russians and Americans both know that one of the chief causes of world disorder is the decline of British Imperial power. We used to be the greatest creditor nation, lending money all oveV the world and receiving a rich return on our investments. To-day , along with all the nations of Europe except Switzerland, we are a debtor nation, embarrassed by huge debts to the very nations, such as India and Egypt, which we used to exploit. The City of London used to be the financial centre of the world. Now its power has passed to New York, and we must expect the same sort of treatment, when we ask for financial help, _which we meted out -to our debtors in the past. The treatment which our negotiators received in Washington, when we asked for the American loan, was humiliating, but no more so (as Mr. Bevin has pointed out) than that which Socialist New Zealand received between the wars at the hands of the City of London. Everyone outside Britain recognises that Britain's financial supremacy has gone for good, and with it the basis of British Imperialism. Once we could afford all sorts of extravagances in our foreign policy. Now they are beyond our means. The British Isles Indefensible in Atomic War Everyone outside Britain knows that, however many men we maintain in the armed .forces and however many millions we spend on the Service budgets, the British Isles are no longer defensible in a major war. Here, again, the foreigner sees things more clearly than we do. We feel ashamed of admitting it for fear that the admission would betaken as a sign ofweakness. But actually a realistic acceptance of an obvious fact would at least convince our allies that we had come down from ' Cloud Cuckooland and have our feet on solid earth. Let us remind ourselves of a few simple strategic facts. In a war against America, these islands would be starved into submission within a few months and the Commonwealth would disintegrate . In a war against Russia, nothing THE JOB ABROAD 31 could long delay the advance of the Red Army to the Atlantic coast. Within a few weeks all our main ports and cities would beunder continuous rocket fire. If the Russians used the atom bomb, that would merely speed up the destruction of our war-potential and the withdrawal of the Government to Ottawa. But, you ask, why are you talking about war? There is no real likelihood of a war for many years. The time when America could have launched a preventive war against Russia is long past; and the failure of the-Russian I 1946 harvest, added to the appalling damage caused by the German invasion, has made it quite impossible for Russia to risk a major war against an America armed with atom bombs. War is surely inconceivable forfive, if not for ten, years. We-should use those years for building' peace and .not for war preparations. There is no answer to this. Two powers only could start a major war to-day, and both have overwhelming reasons fornot doing so. Yet the fact remains that, in a period of desperate manpower shortage, we shall still have over one million men under arms in March of next year, the majority of them in these islands, Germany and the Middle East. Once again let us look at ourselves from outside. This display of military might impresses no-one, when it is combined with a fuel crisis such as we suffered last February. It is as hollow as the Maginot Line which bluffed the French into a dream of ' security,' but did not bluff the Germans. By preparing for war and refusing to come to terms with Germany, before the Nazis came to power, by wasting her manpower in a huge conscript army and her resources on vast Service budgets, France succeeded only in destroying her own economic strength and making inevitable a war in which she collapsed before Britain and America/were ready to assist her. French policy between the wars is a terrible example of the fate which awaits any country trying to play an imperialist role beyond her real strength. To-day our position is like that .of the French in the 1920's. We have to choose between the same alternatives. We must not let Tory jibes make us choose as wrongly as the French did.

2. Tory Policy: Britain an OutpCJSt of America These two facts, that we are now a debtor country and that our war- potential in these islands is indefensible against either America or Russia, demand a complete rethinking of our' foreign and defence policies. Aily government, Socialist or Tory, would have to face them sooner or later and find some answer to the problems which they'pose. Let us first consider the Tory answer, as propounded by Mr. Churchill. Mr. Churchill has made it clear that if he were in power he would be opposed to a 'policy of scuttle.' He would seek to restore British rule in India and Burma. He,proposes that we should withdraw from Palestine only because he believes that we should retain Egypt as a military base from which to reassert our authority in the Middle East. . This is a formidable imperial .programme, and Mr. Churchill realises that we could not achieve it unaided. But he knows that America shares his fears of Russian aggression and believes that she can -be persuaded to.. bolster up the British Empire-and Europe as well-as a bulwark against , Bolshevism, . 32 " KEEP LEFT _

if Britain, Mr. Churchill argues, holds on to the Empire and supplies the armies for its defence, America cannot afford to let us go bankrupt now, anymore'than she could ·afford to see us go down in 1940. This was the real meaning of the famous Fulton Speech, in which Mr. Churchill first put forward the proposal for an Anglo-American alliance, In order to fend off the menace of Communism and to deter Russian aggression, he believes that America can be persuaded to assist Great Britain with loans and to . provide most of the capital for the reconstruction of Western Europe and for the development of such valuable resources as the oil of the Middle East. Faced by the overwhelming strength of an Anglo-American alliance, armed with"the atom bomb, the U.s.S.R. would then be compelled to withdraw her forces withih her frontiers and to remain peaceful. Anglo- American force would then become the real sanction behind the United Nations. The Fulton.policy has now become the officialforeign policy of the U.S.A. The American Chiefs of Staff realise the political impossibility of a preventive war. They know that it takes a Pearl Harbour to make the American people ready to fight. Before America is attacked, there is little chance of conscrip- tion in U.S.A., or of persuading the Administration to maintain large American forces overseas. Americans have no stomach for overseas service inpeace-time. The American strategists are interested therefore to secure a system of forward defences against Russia, manned by non-American forces. In the Far East they are busy developing Japan as a bulwark against Communism. In Europe, since France is 'unreliable,' they must look to Britain and Germany. They realise that, if war actually broke out, Europe could not . be defended for long against the Red Army. But they hope -that Russia will be deterred from making war by the strength of these forward positions. If war does come, they will have to be evacuated after a fighting withdrawal and then liberated in the closing stages of the war. So, too, in the Middle East. This area contains some 42 per cent. of the- world's proven oil reserves. The American oil interests are anxious to exploit them in peace time so as to husband America's domestic oil for an 'emergency.' In a war, Persia, Irak and Saudi-Arabia could not be held for long against the Red Army, since the Russians would be fighting,on"short lines of communications and the Americans across thousands of -miles of ocean route. But this does not destroy the strategic importance of the Middle East from the American point of view. By controlling the area in peace time, the Americans could at least hope to put the oil wells out of action before the entry of the Red Army. Even more important, by maintainingin Greece and Turkey ground and air forces which threaten the Russian oil wells at Baku, they could hope to deter the Russians from making trouble here or anywhere else. Moreover, they can argue that the greater the number of points from which Russia can be threatened-Britain, Germany, the Middle East, Japan, Korea-the more reluctant the Russians will be to take the risks of aggression anywhere. From the point of view of American strategy, therefore, a British Govern- ment which followed Churchill's advice and tried to hold down the Empire by maintaining huge forces overseas would be a most useful ally. But what should we get out of it ? THE JOB ABROAD 33

To realise the criminal folly of Mr. Churchill's policy we have only to imagine what would have happened ifhe had won the election. Determined to restore British rule in India and Burma, he would·have reinforced our armies. By now we should have had two major wars on our hands. Deter- mined, as he has frankly stated, to keep British troops in Egypt in defiance of the wish of every Egyptian, he would have aroused a wave of anti-British feeling in the Middle East which could have easily been exploited by Russia for her own ends. For all these military adventures he would have required armed forces this year of at least two million men. This would have meant the end of any attempt to re-equip our basic industries or to maintain an export drive. The only hope for Britain would have been to become a pensioner of America, earning its living by fighting America's wars overseas. And as a result of all this a third world war would have become absolutely inevitable. So much for the Tory foreign policy. 3. -The Fallacy of Collective Security Against Communism Ifwe feel inclined to blame the Americans for fighting to the last English- man, we should recall our own attitude to France between the wars. Then we were the island Power which refused to tolerate conscription in peace-time ; and it was the French who were expected to maintain a huge conscript army and to take the brunt of the first German attack. We should not be surprised that the Americans are tempted to exploit us as we in the past have exploited the French and other European peoples. Moreover, the Americans argue that their aim is not to fight the Russians but to prevent a war by organising , collective security against Communist aggression.' Here they have the support not only of Mr. Churchill but of many sincere members of the Labour Movement, who remember the Cham- berlain policy of appeasement and are determined to learn from the mistakes of the 1930's. We could perhaps have destroyed Nazism without a world war, if the League of Nations had united to halt Hitler's aggression, Does not the same argument apply now to Soviet Russia? Is it not the duty of the two great democracies, Britain arid America, to rally the smaller Powers in defence of the principles of the United Nations and of democracy itself? Has not President Truman given a magnificent lead which should be wel- comed by the Labour Movement? Ifhe had not acted last March, would not Russia have captured control of Greece and Turkey? Will not Germany go Communist ifwe do not form a solid front with the U.S.A. ? These are questions which are widely asked within the Labour Movement. The trouble is they cannot be answered with a simple yes'or no. ' To begin with, let us get rid of the analogies between .Stalin and Hitler. Nazi Germany could cure unemployment only by rearmament and survive only by conquest. Whatever we think of Communism, the U.S.S.R: has no similar economic motives for expansion. As we have seen, the Russians have every reason for many years to avoid war and concentrate on recon- s truction at But they also have good cause to suspect the intentions of the Western 'Powers which invaded Russia in 1918,permitted Hitler to re-arm, and then tried to divert his attack against 'the U.S.S.R. If America, supported by the LabourGovernment, organises' collective security' against Russia and uses 34 -KEEP LEFI

dollar loans to prop up anti-Communist regimes around her frontiers, the Communist leaders can draw only one conclusion. They ,will assume the worst and stand stubbornly on the defensive until their scientists have made sufficient atomic bombs to redress the balance of military power. ' This 'sort of ' collective securitY' is a counsel of despair, Its advocates assume an unbridgeable gulf between the .Western and the Eastern Powers and argue that the only way to stop Communism spreading is to organise the world against Russia. In the short term this means ruin for a Europe divided into rival spheres of influence: in the long run it means a third world war. Moreover, it makes a mockery of the United .Nations. We rightly protest against Russia's methods of achieving security by setting up satellite governments in her border states and organising a Communist bloc in .the peace conferences and in U.N.O. · But -, collective security against Com- munism ' is a polite name for the same process in reverse. Already American dollars are being used to bolster up anti-Communist regimes in Turkey and / China which have as little to do with democracy as the Rtissian-controlled governments in Bulgaria and Roumania. Between the Communist and the anti-Communist blocs, real democracy is being mercilessly squeezed out. The most tragic example is Greece. Our feeble attempts to create a demo- cratic Socialist regime in Athens failed miserably; and the Greeks are now' divided into a Right ready to accept American money and a Left which wants to impose aCommunist-controlled regime. It will be argued that, in dealing with a totalitarian/power like Russia, we cannot be too squeamish in our methods. In countries under American control, civil liberties at least are permitted, whereas the Communists intro- duce a ' police state' and falsify the elections as was Seen recently in Rou- mania and Poland. No Socialist wishes to conceal his hatred for the methods of the police state. But we should be ready to denounce them equally whether they are found in Poland or in Palestine, in Spain or in Northern Ireland, in the Southern States of America or in the Union of South Africa, Totalitarian methods are not the monopoly of Communists; and the question we have to ask ourselves is whether 'collective security against Russia' is the best' way of fighting totalitarianism and of promoting demo- cracy and Socialism. . . The answer is clearly no. By accepting the American lead in a world alliance against Russia, we shall merely ensure that every.small people has to choose between 'the bleak alternatives of anti-Communism and Com- _munism. We shall sharpen the conflict instead of healing it ; and, the sharper the conflict, the less time both the Right and the Left will have for democracy and Socialism. Democratic 'Socialism is possible only in a country which is united ,on fundamentals and free from outside interference. In South Africa and many

r::ceht s== war of religion ;' in Palestine by the triangular struggle between British, Jews and Arabs. In Eastern Europe it is not only Russian influence which makes real democracy impossible at present. The defeat of Hitler brought with it THE JOB ABROAD 35 aviolent social revolution in all these countries-with the ' exception of Czechoslovakia-and the class war still dominates their politics. That is why elections in Eastern Europe are a farce to-day and will remain so until a social order , has been established which is accepted by the mass of the . The .way to make it certain that democratic Socialism can never be 'achieved in Eastern Europe is to superimpose on, the class struggle the struggle of the Great Powers-the Anglo-Americans supporting the Right, and 'Russia the Left. The fact that Russia and America seem determined to adopt this policy is no reason why we should follow suit and deceive ourselves with phrases like' collective security.', The task of British Socialism must be, wherever possible, to save the smaller nations from this futile ideological warfare and to heal the breach between the U.S.A and the U.S.S.R. But we cannot do this if we ourselves have taken sides either in a Communist bloc or in an anti-Bolshevik axis. It would be a betrayal of British and of European Socialism if we meekly accepted Communist leadership . But it would be equally fatal to accept American leadership in exchange for dollars. . In all this we have' a special responsibility to the American people. We ound during the War that"Britons and Americans can work together more easily than any other two peoples, Now America, wedded to free enterprise, has swung to the Right when the rest of the world is going Left. Both the Democrat and Republican party machines are dominated by .Conserva- tives-i-short-sighted, reactionary, but supremely -self-confident. American liberalism is weak and divided. But in the American Labour movement, and indeed, in both of the .main political parties, there are still strong progressive elements desperately anxious to curb imperialist tendencies and to prevent a head-on collision with Russia. They would respond to 'a lead from Socialist Britain. The Labour Government must give them that lead in Europe and in the Middle East. It must boldly stand up to the U.S. Administration and put forward its own Socialist proposals at every conference. It must set an example in British foreign .policy of genuine social democracy. But it cannot begin to do this if Britain has become the junior partner and the advance outpost of an American-dominated system of •collective security against Communism.' 4. Labour's First Two Years: a Balance-Sheet So far we have learnt only what a Socialist foreign policy should not be. A Socialist Government cannot accept either Mr. Churchill's plan for defending the British Empire by making it useful to the Americans, or the variant of it propourided last March in President Truman's message to Congress. However attractive it may be at first sight, 'collective security against Communism' is a betrayal of Socialist principles. The Communists may claim that, in stating this, we have implicitly accepted their condemnation of Mr. Bevin's foreign policy as 'an under- the counter coalition with the Tories.' But this is not even a half-truth. The real criticism of the Government's foreign policy is not that it has been Tory but that it has been only half-heartedly Socialist. In the Far East, for instance, where it was immediately confronted with acute crises in Indonesia, Burma, Malaya and India , the Government has 36 KEEP LEFT

acted with courage and carried out a sOCialistpolicy. Its sincere efforts to give independence to the subject peoples in the shortest possible time have earned admiration everywhere-not least in America, where they have strengthened the liberal critics of the Administration. There is now a reasonable chance that an independent India jmd Burma will either opt for staying within the Commonwealth or at least establish commercial relations on a basis of real friendship with Britain which will prove of the greatest value in future years. Nor should we forget the sincere efforts to establish U.N.O. on firm foundations. The Prime Minister has frequently stressed that the basis of the Government's foreign policy is the United Nations , and a great deal of solid but unpublicised work has been done on the various specialist com- missions. such as the Mandates Commission and the F.A.O . But here the Government has been confronted with an appallingly difficult problem. When Labour took office the world was already divided . into two blocs, an Anglo-American arid a Russian bloc. Whereas throughout the War Britain and America had pooled their resources and worked together more closely than any two allies in the history of war, the relations between the Anglo-Americans and the Russians had been virtually non-existent. We , had supplied the Russians with a considerable amount of war material, but they had refused the many overtures made to them suggesting that they should co-operate with us as we co-operated with each other. In fact, two separate wars had been fought against Germany, and at the end there were two separate victors. Moreover, no firm agreement about war aims or peace terms had been achieved during the War. Unconditional surrender was merely a formula to disguise the fact that the only point of agreement between the Great Powers was that Germany and Japan should be defeated. When Mr. Attlee and Mr. Bevin went to Potsdam they discovered that the mutual suspicions of the war years had continued after victory. They had to start from scratch in trying to find a basis for peace. ADattempt was made by Mr. Bevin in the autumn of 1945 to find a basis for Anglo-Russian understanding. ,But the Russians seemed to assume that a Socialist Government in Britain was simply the junior partner in a capitalist alliance against Communism. As if to prove this, they launched a diplomatic and propaganda offensive against Britain, including a blatant .attempt to exploit Persian politics in order to disrupt our hold on the Anglo-Iranian oil-fields. They also seemed determined, through puppet governments, to impose.Russian control on Eastern Europe. This Russian diplomatic offensive, which began in the winter of 1945, was accompanied by an extremely non-co-operative attitude in the peace negotiations. Second only to the treaty of friendship with Germany in 1939, it was Molotov 's most disastrous diplomatic folly. Ifhe relied on American isolationism and hoped to undermine the British position while America sat back and did nothing, he made a fantastic miscalculation. What he achieved was to drive Britain and America into a defensive alliance and split Europe and the world into contending pro-Communist and anti-Communist factions. Not until the middle of the New York Conference in November, 1946, did THE JOB ABROAD 37 the Russian attitude appear to change. But by then enormous damage had been done. In the debate on the King's Speech a group of Labour M.P.s called attention to this situation. They did not try to pretend that it was all the fault of the British Government. On the contrary, they stressed the grave responsibility of Russia. But they argued that, whatever the reason for it, Britain had been driven into a dangerous dependence on the U.S.A. By relying on "American support against Russia, the Government endangered its .relations with democratic forces in Europe, and permitted them to be squeezed out by the division of every country into a Communist and an anti-Communist bloc. In Greece, for instance, we were gradually pushed into the position of supporting reactionary and semi-fascist forces. In Spain we seemed to prefer the maintenance of the Franco regime to any change which might involve "the risk-however remote-of a Communist coup. In the Middle East-in glaring contradiction to our Indian policy-we tried to maintain our imperial position and to prop up reactionary governments in defiance of the demands of the Arab peoples for complete independence. In so doing we involved ourselves in an attempt to hold down Palestine by force which, whatever the meritis of the ewish or the Arab case, was in clear contradiction to Socialist principles. Even more important, despite our desperate need for manpower at home, we maintained huge forces overseas and hundreds of thousands of men and women in our armament factories. Many of these criticisms are still valid to-day, though the signing of the Anglo-French alliance is a welcome sign that the Government may now be trying to redress the balance. The trouble is that our foreign policy, like our domestic policy, is not a harmonious whole. It seems to be a collection of policies, some Socialist and some very far from Socialist, as though it were formulated not by a single team but by several Ministers working on their own. Our defence policy, equally remote from strategic realities and Socialist principles, bears no relation to the needs of the Board of Trade. Our attitude in the Middle East conflicts with our attitude in India. But through the confusion runs one single and disturbingly consistent note-a readiness to follow American strategic thinking and consequently to-accept commitments, far beyond our economic strength , which may increase American security but certainly decrease our own. No-one denies the extraordinary difficulties with which the Government has been faced. For some years at least, whatever we may do to redress the balance, Britain will be dependent on the New World for a large part of its essential foodstuffs as well as for machinery to re-equip our industry. Since it was quite impossible to face a further drastic ration cut, the Government probably had no choice but to accept the American Loan in the Winter of 1945. Even on purely economic grounds, therefore, it is quite .futile to attack the Government for not breaking suddenly with America and throwing in its lot with the U.S.S.R. Whether we like it or not, we and the other nations of Western Europe are still dependent on America. The ""real issue is the terms on which our relations with her should be based. Shall we become the financial dependencies and strategic outposts of .the New World, or regain our independence so that we can deal with the U.S.A. and U:S.S.R. i s equals and as friends? - 38 KEEP LEFT

5. We Are Europeans Now We have seenthat the industrial life of these islands is militarily indefen- sible against an attac k by either the U.S.A. or the U.S.S.R . The same applies -to France. The French are .bound to the U.S.S.R. as closely as we .are bound to the U.S.A. It depends on France and Britain, therefore, whether Europe shall be divided into two parts , one controlled by Russia and one by America, or whether, united through an Anglo-French alliance, it can form the keystone of the arch of world peace. Fr ance and Britain are now partners in a common fate. We are both ' Great Powers' with colonial empires. In times past we both used to fight major wars from our own resources; now we are both unable to do so. The Channel has ceased to matter, and, strategically, we British have become Europeans whose prosperity and security depend on that of the rest of Europe. Working together, we are still strong enough to hold the balance of world- power, to halt the division into a Western and an Eastern bloc, and so to make the United Nations a reality. But ifwe permit ourselves to be separated from France, and so from the rest of Europe, and if we take cover under the 'mantle of America, we shall not only destroy' our own -and Europe's chances of recovery, but also make a third world war inevitable.

The Unity of Europe A Socialist Britain cannot prosper so long as Europe is divided. The goal we should work for is a federation which binds together the nations now under Eastern ' domination with the peoples of Western Europe, But this goal is a long way off. For the present it would be wise to concentrate on less spectacular forms of European collaboration designed gradually to remove the Iron Curtain. . The most important of these is trade. - In normal times,' Eastern Europe has a large surplus of agricultural products and .raw materials. To reduce our present economic dependence on the New World, we must do everything possible to facilitate an exchange of British manufactured goods for the foodstuffs, timber and other products of Poland and 'the Danubian countries, as well as the Scandinavian States. In the past, Britain's trade with Europe has been greater than with any other part of the world. Even-in 1946, of British exports amounting to £76,000,000 about £30,000,000 went to Europe. During the American slumps of 1929-32 and 1937-38, our trade with Europe and the Common- wealth stood up to the blizzard - comparatively well. If we could work toward s an economic union of European States, we should be able once again to stand up to an American slump. .. The development of European trade should be easier because nearly every country in Europe is now planning its economy on Socialist lines. The French Monnet plan is only one example among many. These various . nationa l plans should be carefully co-ordinated to avoid competition in export markets and to provide long-term agreements for agricultural producers. Nor should we regard Russia as being written our trade . account. THE JOB ABROAD

With the aid of Russian timber, our building programme could be immensely assisted: without it we may face bottlenecks for years. Russia 's reluctance to trade with us is not due to a shortage of timber. Indeed. it is known that re-afforestation went on throughout the war in Siberia. though much of the timber is difficult of access owing to shortage of manpo wer for felling and lack of transport. It is also true that Russia needs timber to repair her own war damage. But the amount which we need. particularly for housing and mining, could probably be supplied if Russia were willing. Her reluctance is due to her fear of an Anglo-American line-up against her. She has refused so far to trade with us unless we provided credits which are quite beyond our means. Anglo-Russian trade therefore depends upon political rather than economic considerations. .

European Unity or " Multilateral Trade " The objectionto close economic co-operation with Europe is that it runs counter to the principles of ' multilateral trade 'which we accepted along with the American Loan and which our representatives have been discussing in the I.T.O. Conference at Geneva. Ideally. of course, everyone wants. world Free Trade . But is Britain justified in staking everything on an ideal which no nat ion. least of all America ,is willing to acceptwhen it conflicts with its own interests? Genuine multilateral trade demands. firstly, that the World Bank should be operated boldly as well"as wisely ; secondly. that the rules of the International Monetary Fund should be interpreted according to the spirit as well as to the letter. Thirdly , it depends on setting up and operating the International Commodity Boards. proposed at the World Food Conference and the F.A.O. ; and fourthly. on an all- round reduction of trade barriers- and on each nation maintaining a full employment policy at home. Finally, multilateral trade will not develop unless the U.S.A. is prepared to lend dollars without attaching political tags. Can anyone reasonably say that he expects ' all these conditions to be fulfilled? If the answer is ' no,' then the objection to close co-operation with Europe-which really means multilateral trading with our neighbours instead of with the whole world-is Iargely removed. Nor should we be too scared by the displeasure of American business interests. We hear a lot about the strength of creditor nations. but there is also some strength in being a debtor nation and by far the world's biggest customer. We have to import in order to live: but the nations we buy from have to export in order to live. Even the U.S.A. cannot do without the British market: if the Administration tried to; they would soon hear about it from their cotton growers and tobacco growers-and from Hollywood. Moreover, there is one condition attached to the American Loan on which we must start negotiations immediately. We agreed, unless exceptional conditions arose, to treat certain types of currency as freely convertible from July, 1947. After the difficulties and disasters of the last few months, it is beyond our strength to shoulder this new task. The exceptional conditions. . which were envisaged as justifying the abandonment of the arrangement. have in fact arisen. We should frankly say this to the Americans and make it clear that this change must be postponed. If we are not prepared to accept tI.Us change of outlook in our trade policy. 40 KEEP LEFT

we shall be forced to rely on another and yet bigger American There are two objections to this policy. Firstly, another loan would not make sense. If there is to be another blood transfusion, it would have to be a gift this time. Secondly, whatever the Administration in Washington may . desirec .Congress-e-now Republican and considerably anti-British-must give its consent . It is most unlikely to payout huge sums in order to put British Socialism on its feet. The conditions, therefore, of a new loan might be much stiffer than any of us (except perhaps Mr. Churchill and Lord Hinching- brooke) would be prepared to pay. So much for the policy of organising our export trade solely to suit the Americans, Another objection to multilateral trade is, of course, Imperial Preference. In the past Labour has opposed Imperial Preference because its effect was to exclude cheap goods from reaching the British consumer. To-day the situation is different. With many of the world's markets closed to us, we must defend the area to which we have access-namely, the Commonwealth. In other words, Imperial Preference is a most valuable bargaining counter which we dare not sacrifice until the Americans make tariff reductions which enable both us and the Commonwealth to enter the American home market. But though Imperial Preference is disliked by the Americans, no European Power feels the same objection. Some of them have similar systems of-- Empire Trade, and all of them are vitally interested in uniting to protect themselves against any American attempt to export unemployment in a slump. If, as Mr. Churchill advocates, we should try to live under American patronage, then Imperial Preference must go. But if our aim is European unity, we can simultaneously strengthen our ties with the Commonwealth. Since the War we have been hypnotised by American commercial and industrial power and have forgotten the traditional orientationof our economy towards Europe and the Commonwealth. The closer our links with them, the more eager will America be to offer favourable terms of trade.

A New Defence Policy Our defence plan should follow a similar pattern. We cannot expect that the tension between Russia and America will be reduced in the immediate future, and we shall probably have to plan on the assumptionthat no agree- ment between them is likely for some time either on the control of atomic disar{l'1ament. It will be an uneasy and dangerous

In these conditions one thing is clear. No European nation will be any safer for taking shelter in either an anti-American or an anti-Russian bloc. The security of each and of all of us depends on preventing the division of Europe into exclusive spheres of influence. It is here that Britain, working as closely as possible with France, can take the lead. Our immediate aim should be a joint Anglo-French declara- tion formally abjuring Staff conversations either with the U.S.A; or with the U.S.S.R. We should make it clear that our joint defence plans will be framed within a regional European security system, according to the terms of the United Nations' Charter, and be designed to deter aggression either by Germany or by arty non-European Power. Such a declaration would do THE JOB ABROAD 41 " something to reduce the Russian suspicion that Western Europe is being used for the preparation of war against the Soviet Union. We should try to expand the Anglo-French Alliance into a European security pact, and announce our readiness, along with other European nations, to renounce the manufacture and use of atomic bombs and to submit our armed .forces and armament factories to inspection of U.N.O., irrespective of whether Russia and America reach agreement on this subject or not. This involves no sacrifice of security for us, since our security depends not on winning the next-atomic-war, but on preventing it. A United Europe, strong enough to deter an aggressor, but voluntarily renouncing the most deadly offensive weapon of modem warfare, would be the best guarantor of world peace.

Germany The greatest obstacle to European unity is, of course, the German problem. Both Russia and America secretly fear German unity. Russia fears that a united Germany could be used as an anti-Communist bulwark against her. America is equally afraid of a Communist Germany. France, not unnaturally, is obsessed by her own weakness vis-a-vis a united Germany. The only chance of breaking this deadlock is a British 'initiative. To be .effective, this initiative must be primarily concerned with European unity. History has shown that Europe can either be united under German domina- tion, or else Germany must be reconstructed in the service of Europe. Here France has a reasonable demand which must be met. She voices the fears not only of herself, but of every country which has been invaded by the German army. Socialist Britain, therefore, can countenance no plans which seek either to restore a strong anti-Communist Germany or to make Germany a satellite of the Soviet Union. On the other hand, we cannot for long continue to sustain the effort to make the Anglo-American fused zone a going concern. At present we are trying to stimulate an artificially high rate of exports from Western Germany to pay for the foodstuffs and raw materials which it must import in order to pay its way. It is obvious that these German exports must in the end be a serious danger to our own export trade and to that of the rest of Europe. . The conclusion is obvious. The problem is insoluble so long as Europe remains divided. Our primary aim, therefore, must be to find a way of reconciling the French demand for security with the economic necessity for an end of zonal administration in Germany. To condemn the Potsdam Agreement and attempt to fix a level of production for German industry is not sufficient. Potsdam must be replaced by an agreement compatible with Europe's needs. Such an agreement can be based only on the integration of German economy into that of her neighbours. As we have seen, every European state is now developing its own national plan. The plan for German recon- struction must be fitted into these national plans and into the five-year plan of Soviet Russia, and they in tum must be co-ordinated with each other. The goal must be to make, not Germany, but Europe a going concern, and 42 KEEP LEFT

to substitute for reparations a flow of goods and services fromcurrent output. Germany can 'work her passage' safely only by being set to work for the reconstruction of her European neighbours and the U.S.S.R. It should be possible, for instance, as a measure to prevent the revival of German militarism, to limit the reconstruction of the German steel industry and to get the extra capacity by building steel mills in the neigh- bouring countries to be serviced with German coal. Part of the steel should then be used by the German engineering industry . for the production of finished goods. The German chemical industry might be limited in a similar way. The result would be not the rebuilding of a strong Germany, but"the creation of an economically united Europe in which German skill and industry can play their part without arousing fears of German aggression. Such a plan will probably be opposed by America, which must provide a major part of the finances for German reconstruction. The Americans have already objected that they cannot pour money and raw materials into Western Germany to supply a flow of reparations for the U.S.S.R. Obsessed by fears of a Communist Germany, they prefer to keep Germany and Europe divided in order to check Russian expansion. This is a policy which the Labour 'Govem ment must resist at all costs. A divided Germany may be strategically satisfactory to the U.S.A . . But for Socialist Britain it means a reduced standard of living and permanent insecurity. Here, again, one of the Government's major tasks is to give a lead to the liberal forces in America who realise that a United Socialist Europe is essential not only for the good of Europe, but for the prosperity and security of the U.S.A.

6. Britain and the Empire It may, be objected that by accepting our destiny as part of Europe we shall 'betray the Empire.' But the Commonwealth is not an exclusive association, and in the last War it ceased to be a strategic unity. Strategically Canada, for instance, is now part of the New World, and its defence plans and armaments are completely integrated with those of the U.S.A . More- over, the' lifeline of Empire,' which used to run through the Mediterranean . and Suez to India, Singapore and Australia, is a strategic anachronism. As Socialists, therefore, we should emphasise not the dubious military value of. Commonwealth Defence, but the economic and cultural ties which bind us more closely to the Dominions than ever before. They give to each of us a common purpose in preventing the splitting of the world into two blocs and in making the One World of U.N.O. a reality. Thus the true defence of the Commonwealth, as an association of free peoples, depends on the unification of Europe, which cannot be achieved if Britain stands aside or becomes a junior partner in an American security system.

The Politics of Oil From the first we should have treated the peoples of the Middle East in exactly the same way as we treated the peoples of India and the Far East. THE JOB ABROAD 43

What the Government actually did was to seek American assistance in forming an anti-Bolshevik bloc of reactionary Arab states in order to secure the oil-fields of Persia, Irak and Saudi-Arabia against Russian aggression. As a result, our negotiations with the Egyptians reached a deadlock. The Egyptians were naturally unwilling to accept the principle that Egypt must be involved in any dispute between Britain and 'Russia, In Palestine, too, an obsession with the Bolshevik menace is the only explanation of the vacillation and indecision of the Government's policy. The oil of the Middle East is a legitimate British interest. But a large British Army in the Middle East does -not in the long run ·make our oil supplies any safer or ward off the Communist menace. Indeed, detested by the Arabs as a symbol of Western imperialism, our armies have exposed the Middle to a disruptive propaganda offensive from the U.S.S.R. To protect the oil-fields, it has been necessary to bolster up the Greek and Turkish Governments, to hold down Palestine with a huge army and a large part of the navy, and to maintain yet another army at Suez. But, meanwhile, the pressing need for dollars compelled the Government last December to sanction a commercial oil deal which makes Standard Oil the dominant economic power in the Middle East. When Standard Oil has carried out its ambitious plans for developing the new oil-fields in Saudi-Arabia, America will be the Great Power with the largest interests in the area. But Britain is still carrying the whole political and military burden. . By leaving to America the job of propping up the Greek and Turkish Governments we have done little to reduce that burden. But we have enormously increased the danger of friction with the U.S.S.R. America now controls the Dardanelles and the airfields from which Baku can be directly threatened. It is as though the Russians were subsidising a Communist government in Mexico. If matters are allowed to drift, the seeds of the next war will grow fast in a hotbed of oil. Britain alone can kill them by a bold Socialist initiative. The first step must be to end the suspicion shared by the Russians and the Arab peoples that the Labour Government is trying to underpin British imperialism with American capital. We should announce a time-table as we have done in India, for the withdrawal of our troops from the whole area, including Greece, Palestine and Egypt. The peoples of the Levant and Middle East have as much right to genuine independence as the peoples of India and Burma; and they are quite as capable of settling their differences and managing their own defence. We need their friendship in order to obtain our oil supplies, and they need ours in order to develop their natural resources. But it must be the friendship of equals and not of an imperial power with subject peoples. Having proved the sincerity of our Socialist intentions, we should try to negotiate a settlement of the Great Power conflicts. Instead of blankly opposing Russia's demand for the Dardanelles, we should propose that both the Dardanelles, which vitally concern Russia, and the Suez Canal, which concerns the Commonwealth, should be regarded as international waterways whose defence can best be entrusted to the United Nations on the model of the Trieste Agreement . We should also propose a Four-Power Treaty 44 KEEP , LEFT ·

guaranteeing the integrity of Persia and the Arab States and an agreement for the equitable development and distribution of the oil produced in the .area. The British Government did in fact seek an oil agreement with the U.S. Government in 1945, which might have provided the basis for an oil agree- ment with the Soviet Union. But .as it was not ratified by .the American Senate-or Standard Oil-the project appears to be dropped. It should be r revived and pressed. Such a policy would help to resolve the tragic problem of Palestine. The only chance of Jewish-Arab co-operation is the winding up of the Mandate and the withdrawal of British troops and officials. We should recommend to U.N.O. that this should take place after a partition of the country. under international guarantees and.in conformity with our pledges to the Jews. The Importance of Africa Once we give up the attempt to hold the Middle East by force, we can concentrate our manpower and resources on the African development which should be our main colonial responsibility in the next twenty years. Already an imaginative beginning has been made under the Labour Government. The development, for instance, of a large area in East Africa for the growing of ground nuts should ensure -that we shall never again be short of fats. Together with France and Belgium, we bear the responsibility for the major part of the African Continent. We should make every effort to co-operate closely with them in many similar schemes. As well as reducing our depen- dence on the New World for foodstuffs and raw materials, they would provide - the economic basis for African self-determination. The African peoples should also be encouraged to provide the manpower for the defence of Africa. It is not an exaggeration to say that the future of European Socialism depends on the success of our combined colonial policies in the African Continent. Up till now American, British and European democracy have been tacitly based on racial discrimination, and the reactionary ideas of White ascendancy . We have talked vaguely about the brotherhood of man and equality of races, but we have done little to put them into practice . This is what gives to Communism the enormous attraction which it exerts on the peoples of Asia, Africa and the Middle East. The Communists violate many principles of democracy, but racial equality is a reality nowhere outside - the U.S.S.R. If there were ever a conflict between America and Russia, America would have a vast material ascendancy but Russia could rely on the support of the millions who now feel that White democracy does not apply to them. -This is yet .another reason why Socialist Britain cannot tie herself exclu- sively to America. We have the opportunity in Africa to make good

The policy which we advocate means renouncing the idea that our security depends on America. It means accepting the accomplished fact that the defence of the Middle East, as well as of India, Burma and Malaya, is no longer a responsibility .of the British people. But it would have the advantage of making possible a reduction of our armed forces to a total of some 600,000 men. Indeed, a break with old-fashioned imperial tradition is absolutely necessary if we"are to bring our foreign commitments into a true relationship with our economic strength and with our Socialist principles. Only in this way can we play our part in V.N.O., not as members of an American bloc but as the builders of a united Europe and a world Govern- ment based on racial equality . Only as a Socialist power can Britain regain her strength and exert real leadership in world affairs.

CHApTER V TWENTY THINGS TO DO NOW We've tried to face the real problem. 'Out of the general argument , have come practical suggestions. Here is a summary of things which we can do now. Some the Government have already started; some can be put through at once; others will take longer ; all are not equally important. But taken 'together they form our challenge to action.

The Job at Home 1. Overall Economic Planning.-Turn the central planning authority. into a full-scale Ministry of Economic Affairs, with a high-level Minister who is free from other duties. Abandon the doctrine that departmental ministers must have full autonomy' . 2. Tell the People.-Don't imagine you tell all the people when you issue a White Paper or answer a question in Parliament. Don't be afraid of Party controversy. This is a Socialist revolution, not a National Savings Week. 3. Real Economic Independence.-Expand Commonwealth trade reia- tions. Assume there won't be another American Loan , and work for a European export-import area strong enough to bargain on equal terms. 4. Do Without the Frills.-Cut imports of luxury food-stuffs and goods: ration hard-currency tobacco. 5. More Manpower.-Import foreign .workers only when they have , ready-made' skills which we really need, e.g., foundry workers. Get the 46 KEEP LEFI' women back into industry through the rate for the job, more nurseries, and setting up come-when-you-like-go-when-you-like workshops for suitable occupation. 6. Get the Men to the Right Jobs-without direction of labour. (a) Extend and tighten the control of raw materials in favour of essential industries, (b) Cut the inessential trades by withholding from them replace- ments to make up for labour wastage. (c) Make the essential industries more attractive by giving their workers more consumer goods and by lowering taxation on both wages and profits in the essential industries. . 7. Rationalisation and Sta ndardisation.-In addition to savings effected through nati onalisation, cut out managerial, design, planning and tooling wastages by making private industry, in appropriate trades, 'rationalise production and standardise products. 8. Efficient Management.-Stop blaming the workers exclusively for low productivity. Recognise the deficiencies of management, and set up a single -effective organisation with powers to correct them. Establish official operation-study and rate-fixing teams. 9. Industrial Democracy.-Pass an Act to make joint production com- mittees compulsory , to define andextend their powers, and to link them with the regional and national production boards. 10. Demobilisation.-Reduce the Armed Forces by 640,000 instead of 340,000 by March, 1948.

The Job Abroad 11: No Truck with Churchill.i--Kill the Tory idea of bolstering up the British Empire with American dollars and fighting America 's battle with British soldiers. 12. One world, not hostile blocs.-Work closely with the Commonwealth and with France to prevent the 'division of the world into hostile blocs and the division of Europe into an American and a Russian sphere of influence. 13. Friends not satellites of America.-Do everything possible to reduce our economic dependence on the New World so that we can co-operate with the U.S.A . on free and equal terms. Work on the assumption that we are in a strong bargaining position as a debto r country which is the greatest importer in the world-but don 't get any further into debt. 14. Socialist rivalry with the U.S.S.R.-Undermine Russian suspicion of Social Democracy by repudiating President Truman's proposals for' collec- tive security against Communism.' Oppose Communism not by allying ourselves with reactionary forces, but by' helping to put something better in its place, in particular by really -treating\the coloured peoples as equals and not as servants of white civilisation. TWENTY THINGS TO DO NOW 47

15. Our European destiny.-Aim to develop the Anglo-French Alliance into a European regional security system under U.N.O., which is feasible only when our independence of America is believed. For this purpose begin by- Renouncing Staff conversations with non-European Powers; Renouncing the manufacture of Atomic Bombs; Submitting at once to U.N.O. inspection. Germany and Europe.-Make it clear that Britain is.not prepared to go on paying half the cost of the fused Anglo-American zones. Our aim must be a united Europe in which Germans can playa useful part without menacing our security. Work for a Germany politically united and self- governing, but economically integrated into the -planned economies of her neighbours and forbidden to develop a self-contained and wholly German heavy industry. 17. Middle-Eastern oil.-Take the initiative by- Announcing a time-table for the withdrawal of British troops from Greece: Palestine and Egypt. Proposing that the defence of the Dardanelles and Suez should become a U.N.a. responsibility. Beginning the discussion of an Oil Agreement between Britain , France, Russia and America which need oil, and the Middle-Eastern States which produce it. . 18. Develop the African colonies.-Concentrate, in co-operation with France, on the development of our African colonies so as to create the conditions for African freedom and to decrease European dependence on America . 19. Continue the good work in the Far East.-Continue in India, Burma and Malaya to work for the speediest independence so that our trade relations can expand with free and friendly peoples. 20. Seize the opportunity for leadership in ·the United Nations which a Socialist Britain is offered.->The world wants neither Russian nor American domination. Recognise our own strength and use it wisely to tip the balance against war and lead the way to world government through really United Nations. Published by New Statesman and .Nation, . 10, Great Turnstile, London, W.C.l, and printed by St. Clements P r ess, Ltd., P or tugal Street; Kingsway, London, W.C.2. I