London: “What would be the use if people were to say: ‘The British are nice people, but they haven’t got any money?’” The question was asked by the late Per Jacobsson, former director of the International Monetary Fund, during one of the recurrent sterling crises of the past decade. I quote his candid remark, though, from a more recent source, namely a Fabian Society pamphlet by Mr. Michael Shanks: a prominent economic publicist and for a while a junior member of the Wilson administration. Mr. Shanks, who at the age of forty already has a staggering list of publications to his credit, served in the Department of Economic Affairs for over two years from the beginning of 1965, and in May 1966 became Coordinator of Industrial Policy, whatever that may signify. He did not last long (neither did the coordination of policy), and currently he functions primarily as the chief oracle of the (London) Times in matters economic. It is in part owing to his inside knowledge of the Whitehall machine that the public has in recent months been able to form some impression of what is really the matter with the British economy.
I start in this fashion because I want to make it clear that Mr. Shanks is both knowledgeable and outspoken. He is very much the energetic young meritocrat: former honorary treasurer of the Fabian Society (his lecture, “Is Britain Viable?”, from which I have been quoting, is labelled Fabian tract 378), former industrial editor of the Financial Times, former economics lecturer at Williams College, Mass., indefatigable traveler, broadcaster and writer; and to cap it all, father of four children, he appears to have the stamina of ten ordinary men. He also has a shrewd sense of timing. Thus he left his official post shortly after it became clear that the Wilson government had no idea what to do about the economy; and in his Fabian Society lecture of early November 1967 (now reprinted as a pamphlet) he came out boldly for devaluation at a moment when Treasury mandarins, City bankers, and most editors (including the Editor of the Economist) were busy strangling themselves with their Old School Ties. By a stroke of coincidence (if that is what it was), his recommendations were promptly adopted and a fortnight later his subversive lecture appeared in print. This is what one may call sensible timing. Mr. Shanks is currently established as the man who knew it had to be done, and his almost daily articles on economic policy now carry the authority of one who was both enough of an Insider to know the ship was leaking, and enough of an Outsider to say so before the Captain had ordered the crew to man the boats. As for the Fabian Society, it can claim the distinction of having supplied the British Cabinet both with its most distinguished ornaments and with its most ruthless journalistic critic.
Lest someone should mistakenly suppose that all this is being said in a carping spirit, let me add that nothing of the sort is intended. Mr. Shanks is one of the ablest commentators in the field, and his inexhaustible energy is fed by a very shrewd brain. He belongs to the little group of realists-Mr. Peter Jay of the Times is another, as well as being the son-in-law of Britain’s luckless ex-Chancellor, James Callaghan—who had few illusions about the Wilson administration, or for that matter about the exchange rate. One could mention others of that school, e.g., some well-known academics and others of less exalted status, e.g., Mr. Alan Day of the Observer: one of the few competent writers employed by that amiable but amateurish journal. And of course, towering above them all, there are the two Cabinet Ministers to whom everyone now looks as the government’s last hope: the new Chancellor, Roy Jenkins, and his intimate ally, Anthony Crosland, currently in charge of the Board of Trade. Those two—along with the Defense Minister, Denis Healey—enjoy the unusual distinction of being respected and feared by the Conservatives for their proven administrative capacity and their equally proven trenchancy in debate. If anyone can pull the government and the country out of the mess they are in, then surely it is these three. That at any rate appears to be the informed consensus, both here and abroad. If there are doubts, they relate to Mr. Wilson’s strength of character and his willingness to back these realists. Intellectually, the matter is settled. The proper diagnosis, one is told, has at last been made, and it is now up to the patient to swallow the remedies his doctors have prescribed for him.
At this point the writer is tempted to indulge in a minor indiscretion. Plenty of major ones have recently been committed (including the disclosure of Cabinet secrets in, of all places, the Times) so perhaps I may be forgiven for repeating what was said to me some years ago about Mr. Crosland by one of his friends and admirers (now himself a junior Minister). The conversation started from a remark to the effect that the distinguished author of The Future of Socialism clearly was not a socialist in the accepted or traditional understanding of the term, since he appeared to have little use for public ownership and not a great deal of faith in central planning. To the question why Mr. Crosland did not join the Liberals, since he was so plainly one of them, the reply was: “Tony is a professional and doesn’t want to spend the rest of his life in opposition. Besides, the Liberals are a lot of genteel tea-drinkers, and Tony is really quite tough.” I report this observation as being one of the few hopeful aspects of what in many respects must be judged a rather somber situation. Toughness is certainly going to be required in making the sort of decisions that have now become necessary, and even more so in making them stick. For all one knows, even Messrs. Jenkins, Crosland, and Healey may not be tough enough. They are certainly competent, far more so than most Tories (there are exceptions to that too), and if the Labour Party can stand the sight of these ruthless managerial types running what is supposed to be a socially conscious and softhearted administration, it is, I suppose, just barely conceivable that between now and 1970 there will not be another sterling crisis. I should put it no higher than that.
For the British economy is in a mess. How deep the mess is, only those professionals know who are in daily touch with the works managers and export specialists on whom the brunt of the coming battle is going to fall. Unless these men and their underlings can make something of the opportunity devaluation has offered them, the extra burden now being placed upon the consumer will be wasted. For of course devaluation will make everyone in Britain poorer: that is the aim of the exercise. Will it also make industry more export-conscious? That remains to be seen. If it doesn’t, not only will the Labour government be swept away in 1970, but a lot of other things will go by the board as well. Paris is already full of rumors of a second sterling devaluation before long. The French of course are mischief-makers—every sound British patriot is agreed on this subject. Unfortunately the mischievous French have in the recent past displayed an awkward habit of being right about the prospects of the British economy. They are currently being blamed in Whitehall for having given sterling the push last autumn, when they got the European Economic Commission in Brussels to release a pessimistic report on Britain’s trade prospects. But the Commission only spelled out what every economist in Brussels had been saying privately for months. Nor were the French alone in predicting an unfavorable British trade and payments balance for as far ahead as one could see: they were joined by neutral observers and by the rest of the Six. So it won’t do to put the blame on the General, or on his countrymen. Many of them, including some quite prominent Gaullists, would dearly like Britain to join the EEC, but they wonder whether so drastic a cure may not have a fatal effect on the patient: the patient being the British economy. This writer happened to be present when one of de Gaulle’s former Cabinet Ministers (who had resigned his post on grounds of principle) told a distinguished British audience that for his own part he, X., would be happy to see Britain in the Common Market, but that as one who had studied the matter while in office and in possession of all the data, he frankly doubted whether the British economy could stand the strain. The audience looked glum. It was not an agreeable experience for someone who, despite all the incidental drawbacks, has come to cherish his adopted country.
What then is it that fills so many different people with foreboding, and causes even the optimists—that is to say, the civil servants and economic experts who believe the reconstructed Wilson Cabinet can ride out the storm—to warn everyone in sight about the toughness of the measures which will have to be taken? Here perhaps we may go back for a moment to Mr. Michael Shanks and his analysis. He is, after all, a socialist of the Gaitskellite sort (the sort represented by the trio Jenkins-Crosland-Healey), as well as being a professional economist. Unlike the Conservatives, who cannot really want the government to succeed, he hopes and believes it can. Unlike the Liberals—e.g., the City editors, with the Economist in the lead—he does not merely want the Wilson government to succeed in its fight to make the country solvent: he wants it to stay socialist, or at least committed to the welfare state. What then does a man like this have to say?
The answer can be stated simply (we shall leave the technicalities until later). Writing just before the blow (and the pound) fell, Mr. Shanks had reluctantly come to the conclusion that devaluation was the only way out. He was blunt about what this meant for the ordinary citizen. “Devaluation will temporarily—I repeat temporarily—worsen the living conditions of our people. Only if it does this will it enable us to make the decisive shift of our resources from home sales to exports which is the necessary condition for an export-led boom—the only kind of boom which can be sustained without a return to stop-go.” Mr. Harold Wilson, addressing the nation on that memorable November 18, was somewhat less candid, but then his policy had just collapsed and he was understandably anxious not to underscore the disagreeable consequences. Devaluation, he said, meant that Britain had “got out of the strait-jacket” of an unrealistic and artificially frozen exchange rate. True enough, but he forgot to mention (a) that he and his colleagues had been busy defending this artificial rate for three whole years, sacrificing all else to this aim, (b) that the “strait-jacket” of indebtedness to foreign bankers had, if anything, been strapped even tighter, and that the said bankers had extracted a “letter of intent” laying down the British Government’s financial priorities for the year 1968. These priorities—to judge from the new Chancellor’s first major parliamentary statement—did not leave a great deal of room for the Labour Party’s pursuit of its traditional welfare-state goals. In fact, they left no room whatever.1
But why had things come to such a pass? Why, after three years of strenuous efforts, had the authorities found it impossible to stimulate that “export-led boom” which was constantly being dangled in front of the voters? Let us hear the explanation offered by the former Coordinator of Industrial Policy in the Department of Economic Affairs. After all, he if anyone ought to know:
By and large, exports are very unprofitable compared to home sales, even in today’s not exactly buoyant home market conditions. The result is that, despite every inducement, a large proportion of firms are not exporting at all, and in too many others exporting is regarded as a chore. . . . Result—British exports get a bad name (Shanks, p. 8).
You therefore offer the exporters a bonus in the shape of a new exchange rate, which automatically cheapens their goods (or raises their profits if they maintain the old selling price), and hope for the best. The snag of course is that, if the price is lowered, you have to sell more goods to get the same quantity of foreign exchange, let alone an increase. In point of fact, the most authoritative forecast currently available—that of the National Institute of Economic and Social Research, than which nothing in Britain carries more weight when it comes to forecasting anything—estimates that the results of devaluation will not begin to show before 1969! For the year 1968, the Institute (unlike the Government) actually forecasts another deficit, although a small one. The reason is not far to seek: “shifting our resources” from home to abroad is easier said than done—especially when it has to be done by a Labour Government fearful of causing unemployment by deflating the home market. All of which suggests that 1968 is going to be a very grim year indeed, with the fruits (if any) beginning to ripen thereafter.
So much for last November’s devaluation of sterling and the immediate prospects ahead. But how did the country get into this situation and why did the Wilson team waste three whole years trying to prop up an unrealistic exchange rate before reconciling itself to the inevitable?
There are short-range and long-range matters to be considered. Let us begin with the best known of the short-term factors: the role of sterling. This will involve citing a few rather boring facts and figures, but once they are out of the way, we can get back to the more congenial task of considering the problem as a whole (including the impact on Anglo-American strategy in what is tactfully known as “East of Suez”). Besides, even sterling is not altogether a bore: especially if you happen to be the government of Australia, and have just seen your foreign-exchange reserves reduced in value by one-seventh overnight. This sort of experience concentrates the mind wonderfully; the more so when it leads to rumors about a similar fate befalling the dollar before very long. (The fact that this particular notion is not very plausible may be lost upon Arab oil sheikhs or Indian peasants, who suddenly decide that gold is perhaps safer after all, even if it carries no interest.)
What then of sterling? The facts are not in dispute and are easy to come by.2 Ever since 1945—that is, since the end of a world war from which the United Kingdom emerged as one of the nominal victors—Britain’s net sterling liabilities to other countries have been around £3,500 million (some ten billion dollars at the “old” exchange rate, which in fact was not very old, since it dates only from 1949). About two-thirds of this amount represented reserves held by central banks or other official institutions of the so-called “sterling area.” This is a technical term that designates those countries which, by tacit or written agreement, had undertaken to keep their foreign-exchange reserves in sterling, instead of converting them into some other currency. Since Britain’s own reserves of gold and dollars were never since 1945 much above £1,000 million, it was clear to all concerned that a run on the bank would oblige it to close. That such a run did not occur was due in the main to sound political reasons, plus the knowledge that in the last resort the U.S. Treasury and/or the International Monetary Fund would probably come to Britain’s assistance. Moreover, the overseas sterling countries, by keeping their reserves in London, were earning a good interest rate—a circumstance now frequently stressed by editorialists who are uncomfortable with the notion that these clients have been hardly done by. It is, however, noteworthy that the countries in question had over the past decade been quietly switching out of sterling into gold or dollars as fast as circumstances permitted: that is to say, as fast as it could decently be done without precipitating an obvious run on the bank. Apparently then they had a premonition of what might happen, and tried to guard against it as best they could, though still leaving the bulk of their balances in London. By a paradox which will seem strange only to those who don’t realize how much depends upon informal understandings, Britain’s very real vulnerability acted as a safeguard against the threat of sudden large-scale withdrawals. The overseas countries knew quite well that if they tried to convert their sterling balances into gold or dollars, the Bank of England would have to shut up shop, or alternatively call for aid from the other members of the so-called Group of Ten: the U.S., Canada, the Six of the EEC, and Switzerland. These countries, the only ones to possess large reserves, were able and (up to a point) willing to help, but not enthusiastic about the thought of having to shoulder Britain’s sterling liabilities. To say the least, a run on the bank would have embarrassed them. Hence for many years no really serious run developed—until last November, when a number of unfavorable factors suddenly coincided, thereby causing a flight from the pound of much larger proportions than on previous occasions. The flight was not due to the overseas central banks, which on the contrary were left holding the devalued sterling baby; but it was not (as Mr. Wilson tried to make out in his rather disingenuous broadcast of November 18) due to “foreign speculators” either. Rather it arose from the fact that ordinary commercial traders who held large quantities of sterling (a currency which still finances about one-quarter of total world trade) had suddenly become nervous and were trying to get rid of it. This is what having a “reserve currency” means: a “reserve currency” is a currency which people will accept in lieu of gold. There used to be two such currencies, the dollar and the pound. Now, for all practical purposes, there is only one, the dollar. And if the wicked French have their way, there will shortly be none at all. But of course this is not to be dreamed of. It is unthinkable (like devaluation).
From this point on the discussion could branch off into a consideration of world monetary problems, the American balance-of-payments deficit (General de Gaulle’s favorite hobby-horse, but the U.S. Treasury seems worried too), and the chance that the U.S. authorities may have to choose between (a) abandoning the commitment to convert dollars into gold, (b) raising the purchase price of the metal, (c) “going off gold” altogether, or (d) intensifying the measures announced by Mr. Johnson on January 1st. These are technical problems, and those experts whom the writer has been able to consult seem undecided as among these various possibilities, though on the whole inclined to think that if the dollar lost its automatic gold backing, the European central bankers (with the possible exception of the French) would still go on hoarding it. What would happen if the U.S. Treasury refused to buy gold at any price is another matter. The metal would then be of use only to dentists (and would sell at about one-sixth its present inflated value). But this solution, although neat and logical on paper, would surely require the adoption of an alternative international medium, and one does not quite see the entire world assenting to this. There might of course be two monetary blocs: on one side the United States plus all those countries willing to accept dollars as a means of payment; on the other, the East European bloc, plus South Africa (the biggest gold producer), France, and the “gnomes of Zurich.” The resulting ideological confusion would be amusing to watch, and should furnish a splendid topic for the editorialists of Mao Tse-tung’s People’s Daily. But it is probably too much to hope that we shall actually see it happening.
Instead of indulging in these pleasant fantasies, let us return to the narrower but more urgent topic of sterling. Britain’s present difficulties affect the world because so large a proportion of its trade is still carried on in this currency. Before 1939, sterling was the medium in which international transactions took place. After 1945 it was still a medium, though gradually being overtaken by the dollar. Now there are influential people who argue that the time has come to free the pound from these responsibilities, thereby bringing it into line with the German mark, the French franc, and other perfectly respectable national currencies which do not aspire to a world role. This is a different matter from the problem of Britain’s overseas sterling indebtedness, but the two topics are connected, because the size of the debt, and the smallness of the reserves, have the effect of making sterling unsafe as a trading currency. Confidence in it has repeatedly been shaken, and is now possibly beyond repair. There are still those who see the situation in terms of reconciling Britain’s resources with its responsibilities by making a sterner effort to sell British goods abroad. The argument is simple: if the non-sterling countries (those whose central banks do not hold their reserves in London) are going to liquidate their sterling balances every time Britain runs into an external deficit (this is substantially what produced the panic last November), then either the pound must lose its traditional function—or the trade balance must be put right so that these constant payments crises come to an end.
Conceivably, however, this is a false alternative. It is arguable—it is indeed beginning to be argued by some quite respectable people—that the economy will never recover while it is weighed down with the burden of having to support an international currency. On this assumption, the real though drastic solution is to stop worrying about sterling’s international role altogether. The country could then afford to have a floating exchange rate, in accordance with its domestic price level and the ups and downs of its balance of trade. It could even afford to adopt such measures as the nationalization (to employ a polite term) of privately held dollar securities and their addition to the official reserves. This would not please the City, it would cause a great outcry about expropriation, and the present holders (who would presumably be recompensed in non-convertible sterling) would have an additional reason for detesting the Labour government. The advantage would be that Britain could then repay the loans contracted from the International Monetary Fund and buy back the more speculative sterling balances now held in London, thus eliminating the constant fluctuations produced by the inflow and outflow of “hot money.” This is what the Left would like to see done. It is not something the present government is likely to undertake. To be fair to Messrs. Wilson and Jenkins, it is arguable that before adopting such Draconian measures one should make sure that the alternative remedies have failed. It is after all just conceivable that Britain’s payments balance might begin to show a surplus if the government were willing to cut down on extravagances such as billion-dollar purchases of U.S. military aircraft. This of course means the end of imperial posturing “East of Suez,” but then Singapore is to be evacuated by the 1970’s anyhow, so why not make it clear now that Britain has decided to adopt a European role? For one thing, it would then be easier to get into the EEC (not that this is going to be an unmixed blessing economically).3
Cutting down on defense expenditure has support among the more realistic Tories, including the supreme realist of all, Mr. Enoch Powell, who is also the Conservative Party’s chief defense expert. Mr. Powell wants to get out of Singapore and into Europe. This would make possible major savings on the bill for U.S. aircraft—an attractive notion. It must, however, be recognized that in one sense the “European” argument is academic. There is no early prospect of joining the Six, and no chance of the Wilson government abandoning that fundamental reliance upon the United States which has been the only consistent line in foreign policy it has followed so far. The official argument at the moment can be summed up in the formula: devaluation has given us a chance to break out of the strait-jacket, and for the next two years all efforts must be concentrated on producing an export-led boom, while holding domestic costs down as far as possible. Since food prices will go up (by 10 per cent according to the best estimates) and other import prices will rise by up to 15 per cent, this means a cut in real wages. On the other hand, unemployment should fall to almost nothing if exports pick up, as they ought to do. Britain would then at long last have achieved the sort of “economic miracle” that Germany, France, Italy, and Japan have enjoyed, off and on, since the 1950’s. The snag is that (to quote the National Institute forecast already cited) “the economy will run up fast to capacity level and reach it well before the full redeployment into exports and investment has been achieved” (see the Times of December 6). This is polite language for saying that while the export drive gets under way, we shall be having another round of wage-and-price increases. If this were to happen the advantages of devaluation would have been lost, leading to another currency crisis before long. . . . And if that happens, even quite sober people here in London are beginning to wonder just how long parliamentary government can go on functioning. These fears may be unfounded. It is, however, significant that for the first time since the 1930’s, they are being voiced in public.
We seem thus to have come full circle: from politics to economics and back again; and indeed, when all the technical arguments are exhausted, one is left with some unanswered questions about the capacity of the political system to cope with the structural problems of British society. The problem can be narrowed down further: is the Labour Party—is any Social-Democratic party—capable of handling this sort of situation? The immediate answer appears to be: why not? After all, Sweden did it in the 1930’s, and the Swedish Social-Democrats have been in office ever since, thereby setting an example to their imitators, among whom Mr. Harold Wilson is certainly not the least conspicuous. But Sweden did not have Britain’s peculiar legacy of empire, with all the grand and expensive habits that go with it (such as paying for military, air, and naval bases in the Persian Gulf or the Indian Ocean). Neither was it plagued with the burden of an international reserve currency, and a banking community which has invested its hope and pride in its traditional world role. In Sweden it was only the unions and the industrialists who mattered. In Britain generals, admirals, and City financiers matter a lot more than they should. Moreover, it is arguable that neither the manufacturers nor the unions have yet had quite enough sense knocked into them by these recurrent crises.
What then of the Labour Party as a political organism? Can it stand the strain? Ought it perhaps to cut its connection with the unions (which have 130 representatives among the 350 or so Labour members of Parliament)? Should it drop its residual claim to being a socialist party? But what does its particular kind of socialism signify in practice anyhow? Certainly not a commitment to a radically different kind of society—one based on common ownership. No one ever suspected the Labour Party of being willing to undertake this sort of Long March into the future. When one hears it said that Labour should announce its commitment to a mixed economy, one wonders what such critics can be arguing about. After all, the whole Wilsonian experiment has assumed the continuance of a flourishing private sector.
There are people who will tell one that what has happened is that the Labour Party (like the Conservatives in the 1950’s) has been quietly taken over by the liberals; that it should now describe itself as a “radical, non-socialist” party; and that the socialist minority ought to secede and set up shop on its own. This kind of talk is backed up by the argument about the former Gaitskellites having got control of the key positions in the administration. There are two things to be said about this. In the first place, neither Harold Wilson nor George Brown fits the formula: they are Social-Democrats of a fairly traditional type, and the Party could not conceivably survive and win an election without them. Secondly, the Gaitskellites themselves are not “liberals,” if by a liberal is meant someone who believes that the market economy can cope with the problems of contemporary society. There are such people (although their number is shrinking) but Messrs. Jenkins, Crosland, Healey, and the rest are not among them. The Gaitskellite faction stood and stands for State management of the economy, meaning some sort of centralized direction of affairs. Its quarrel with the Bevanites was over public ownership, not over planning. Hence the argument that the real socialists should leave the Labour Party is senseless. The Left is neither more nor less “socialist” than the Gaitskellite faction. It merely happens to dislike America and to have some sentimental notions about the beauties of Afro-Asian nationalism: amiable fantasies which seem proof even against the evidence of the current bloody turmoil in Nigeria. For the rest, the Left favors “bringing the troops home.” What does all this have to do with socialism? The only people entitled to call themselves socialists are those who believe in the superior effectiveness of a planned economy over an unplanned one, and on this issue the Left is far from united. It is true that some of its leading figures are in favor of a siege economy, but when it comes to a choice between national planning and the sectional interests of the unions, the Left is not well placed to advertise its socialism. Its more vocal members are mainly concerned to press the claims of “the workers” at the expense of all other considerations. It can of course be argued that pressing the claims of the workers (or for that matter, of the unemployed) is the only proper occupation for people on the political Left. This amounts to saying that Labour ought to let the Conservatives misgovern the country. At heart this is what the Left would really like. Back in opposition it could proclaim its generous sentiments, and go on dreaming of the day when all these wretched economic problems will have ceased to matter. This assumes, however, not merely that Labour will lose the next election (an increasing probability), but that the Conservatives will thereafter prove capable of governing more efficiently. Anyone who has seen and heard Messrs. Heath and Macleod on television must have serious doubts on this subject. These two gentlemen do not strike one as being notably tougher or more capable than Mr. Wilson and his crew. Neither does the amiable Mr. Maudling, whose consumer boom in 1963-64 very nearly (but not quite) got the Conservatives returned to office, at the cost of squandering the country’s foreign-exchange reserves and laying the ground for the subsequent sterling crises. The Conservative Party largely reflects the tribal superstitions of the business community, just as Labour reflects the archaic mentality of the unions. Since what is wrong with Britain is that neither management nor the unions are very good at their respective jobs, this state of affairs does not augur well for the future.
None of which rules out the possibility of a drastic political reshuffle if things continue to go wrong. A new element has recently entered the situation in the shape of Scottish (and to some extent Welsh) nationalism. The next election may witness a nationalist landslide in Scotland and a concurrent drive to set up a regional legislature in Edinburgh though hardly (whatever the more enthusiastic Celtic separatists may think) the repeal of the Union and the formal separation of Scotland from England. Nationalist gains will be largely at the expense of the Liberals, whose remnants might thereupon be divided up between the two major parties. We shall then hear even more of the argument that Labour has ceased to be a socialist party. The answer is that it never was one. Labour was and is, and will doubtless remain, a Social-Democratic party, that is to say, a party committed to the mixed economy and the welfare state. Since this is quite acceptable to left-wing liberals, it is unnecessary to change the party’s name. But people are to some extent the prisoners of their own myths. If the left-wingers should imagine that something fundamental has changed, they may in fact secede and set up a genuinely socialist party, midway between Labour and the dwindling Stalinist sect. Something like this has already happened in two of the Scandinavian countries and there is no reason why it should not happen in Britain. The issue will be described as “socialism,” but will in fact be neutralism, since what holds the Left together is really the desire to get out of NATO, do away with U.S. bases in Britain, and terminate the spectacle of Labour Ministers (plus the inevitable Anglican clergyman) pouring champagne over the hull of yet another rocket-carrying Polaris submarine. A pacifist party of this kind, as a permanent opposition group, is a distinct possibility. It should, among other things, provide a political umbrella for the intellectuals of the New Left, not to mention the swelling legions of colored immigrants and their offspring (likely to number several million by the end of the century). What else such a party can do, at any rate in the 1970’s, I am not sure, but it will doubtless liven things up. Meanwhile Conservatives and Social-Democrats will take turns governing the country, just as they have been doing in Scandinavia for decades. This is irrespective of whether and when Britain eventually joins a federated or confederated Western Europe. The country’s basic structure does not depend upon such external arrangements, although an accelerated withdrawal from costly and untenable overseas positions will doubtless produce a few changes in outlook: more interest in continental Europe and a lessening of the present obsessive concern with the Persian Gulf or Southern Yemen. Oil of course is thicker than water (and almost worth its weight in gold). It is not, however, quite as thick as blood (I apologize to any biologist who may chance upon these lines).
Lest all this sound unduly cynical, let me quote an irreproachable witness who combines academic distinction with left-wing socialist sentiments: Mrs. Joan Robinson. For the benefit of the uninitiated I remark that, although as an economist not technically a Marxist, she is about as far left as one can go without being a Communist (she is in fact closer in sympathy to Mao’s China than are the majority of her fellow-socialists in this country). Well, here is what Mrs. Robinson had to say in a comparatively recent tract on Britain’s persistent structural problem:4
It seems to me that the people of this country are not in the mood for radical change. They prefer a loose-jointed, ramshackle economic system to one streamlined for efficiency and speed. They are willing to accept much that is irrational and unjust for the sake of preserving the continuity of our political institutions and the glorious flummery of Church and State.
But at least the rising generation resents privilege and snobbishness, and demands genuine equality of opportunity for everyone to use what talents he may have. They are perfectly ready to shed the last rags of empire and settle down to being a small country devoted to neutrality and peace. The transition to such a line of policy could not be quick and easy, but if the aim was clear, the way would be found.
For Mrs. Robinson, who on this issue represents the Labour Left (and a fair slice of the academic community), the desirable outcome of the present crisis presents itself in terms of “Swedish” neutrality. This is one possibility among others (there is also the “Atlantic” solution, not to mention the gospel of European federalism). The choice thus lies among Atlanticism, Europeanism, or “Little Englandism,” with the Left plainly favoring the last-mentioned. These are foreign-policy options which can be—and are being—debated on the customary political and economic grounds (will the U.S. swallow us up if we go into an Atlantic free-trade area? Can the French keep us out of Western Europe in the 1970’s?). But mark the note of resignation with which the most eminent living representative of the Fabian tradition judges her countrymen: they are not, in her opinion, ready for anything more drastic than “genuine equality of opportunity.” Mrs. Robinson, in other words, holds that the most the British will stand in the way of radical reorganization is Swedish-type Social Democracy. She ought to know. Most of her fellow economists seem to think that even this is a bit too much, and that the 1970’s may well see a temporary revival of free-market economics, Conservative rule, and Atlanticism in politics. At any rate these are the real issues. They do not have a great deal to do with what the New Left would describe as true socialism.
1 See Mr. Jenkins's reply to the debate in the House of Commons on December 5, and the relevant editorial and other comments in the Times on the following day. Mr. Jenkins on this occasion was handicapped by the caliber of his chief left-wing critic, Mr. Michael Foot, who (to put it mildly) is no economist. But if he had been assailed by the economic expert of the Left, Mr. James Dickens M.P., he would still have had to give more or less the same sort of explanation. Cf. Mr. Dickens's article in the Times financial section of December 6, 1967, which set out a socialist alternative to the Government's proposals: namely the confiscation of Britain's privately held “dollar portfolio” of foreign securities belonging to British citizens. This (as the editorialist of the Times business section promptly reminded Mr. Dickens) ignored the fact that Britain “depends on international trade and banking for its livelihood.”
2 See The World Today (published by the Royal Institute of International Affairs), London, December 1967.
3 A little noticed side-effect of last November's devaluation was the Australian government's decision not to follow suit, thereby bringing nearer the break-up of the sterling area. The decision could be explained in terms of the increasing “hardness” of the Australian currency since the discovery of big oil and gas deposits which promise to give Australia a healthy surplus on its payments balance. But the British government's reluctant decision to accelerate the withdrawal from the Far East probably also had something to do with it. Australia is moving into the American orbit, thereby easing Britain's path into the Common Market. The joke (if one can call it that) is that General de Gaulle should have chosen this particular moment to be even more negative about the British membership application. But then the General has his own timetable, which is not that of the run-of-the-mill politician. “When I am gone, the British will land in Europe,” he is reputed to have said. He is also reliably reported to have observed of his own country: “When I am gone, France will return to her vomit.” Like Bismarck (whom he resembles in other ways too) de Gaulle combines a mystical patriotism with a profound contempt for his countrymen, taken singly or as a collection of individuals who do not measure up to his idea of France. This makes it very difficult for commonsensible Britons like Mr. Harold Wilson to understand him, but just now this is not an urgent problem.
4 Economics: An Awkward Corner, Pantheon, 86 pp., $3.95.