WHY is Britain in this mess?
Why are the British people feeling the results in higher prices and reduced purchasing power? Why will the situation get worse, not better, if this system continues? How did it all happen, and what is the remedy?
This pamphlet will provide some answer to these questions in the form of an A.B.C. of modern economics. We shall see that the argument between present politicians has little or nothing to do with the case. Winston Churchill says it is all due to devaluation: Labour Party leader Hugh Gaitskill says it is due to the scramble for raw materials after Korea. The truth is that both these events are symptoms; not causes. They follow inevitably from the common policy pursued by the two sets of politicians. They have wrecked the world between them. Their only quarrel is how to share the wreckage. All the old parties are responsible for the real causes. They go deeper, and they go further back. They can only be remedied by scrapping the parties and the system. Neither the parties, nor the system, can meet this desperate situation which they have created.
Sequence of Events
Let us trace briefly the sequence of events, then we will seek the answer.
1. Britain was the first great manufacturing nation. As a result we had originally a monopoly of world trade. Our goods were sold in world markets without competition. In return we received food and raw materials at very cheap prices, because everyone wanted our manufactures.
2. It was inevitable that this situation could not last. Other nations also learnt to manufacture goods. We were then subject to intensive competition in world markets. Long before the war our export trade was steadily losing ground. British Union taught the people the dangers of this situation and suggested new Empire markets and supplies.
Economy Distorted
3. Meanwhile our whole economy had been distorted. We neglected our agriculture because we could buy food at dirt cheap prices abroad. We neglected our home market and concentrated on a swollen export trade. We built up great surpluses abroad by exporting far more than we imported. These surpluses became debts owed to us by foreign nations. We received interest on the debts in the form of more cheap goods, which further dislocated agriculture and the home market. Financiers were happy because they arranged these loans, or debts. But British industry and agriculture were twisted and deformed into an unnatural shape which served the foreigner with exported goods and the financier with imported interest. As a result Britain was tied to foreign competition on world markets, and British wages were pulled down towards coolie standards. Even worse; Britain was placed at the mercy of world chaos, and fluctuations in world prices and conditions could throw millions of Britons into unemployment.
Coolie Competition
4. The next event was that the financiers began to use the money power, which the productive power of British industry had provided, in order to finance with "British" loans the competition which was the most dangerous to Britain. Coolie labour in India, China, and Japan was supplied with modern machines by these "British" loans. As the wages in these countries were a fraction of British wages, their sweated goods were able to undercut British goods on every market of the world. Long before the war the system was failing. British Union asked the British people to turn their backs on world markets, sweated competition, and the whole chaos of capitalist conflicts and wars. We asked our people to build up their own Empire, eliminate sweating within its borders, and create both their market and their raw material supply within the wide, rich, and powerful area of this British heritage.
War for Poland
5. The politicians chose to escape from the failure of their system into a foreign war. They fought the Germans over Poland. The British people had no interest in Poland. But the British financiers had invested much money in Poland; notably in coal mines where Polish miners were sweated at a fraction of British wages to produce cheap coal in competition with the British miners. The escape of the old gang politicians into war led to a still worse disaster; not only for Europe, but, also, for the British people.
6. During the war we turned our backs on all our old customers. We produced not for foreign markets, but for war. During these years our customers had to look elsewhere for their goods, and they developed the habit of being supplied by other people. We might then have used the foreign debts owing to us for good purposes instead of bad. We might have used them to buy raw materials for British industry and any food we could not produce at home, while British industry got going again. But we had poured all these British assets down the drain of war. Only a fraction of these foreign debts remained: which had been created by British workers producing during generations much more than they were permitted to consume.
Yankee Dole
7. We had thrown away our foreign markets and had no foreign assets to carry us over the interval before we could start again. So, we turned to America for the Yankee dole: and the various forms of American aid began which made Britain a helpless dependent upon America. The enormous increase in American production during the war made this possible. This increase also contained a great danger for Britain when things became normal again. For America is a capitalist country which exports its surplus production to world markets: and Britain is still living under a system which makes it dependent on competitive exports in world markets. Britain under international capitalism or international socialism is an easy victim for the vast power of American production on world markets. For they have so large a home market that they can afford to cut prices on the small fraction of their export surplus. But Britain cannot cut prices on the large proportion of our production which goes to export within the diseased and distorted system which the old parties have created.
8. Nevertheless we were saved for the time being by several factors.
(a) Owing to the ravages of war all the world wanted as many goods as they could get at almost any prices. So the question of competition within the international system did not at once arise.
(b) Two of Britain's main competitors were temporarily out of the picture, Germany and Japan Hut this situation obviously could not last. Either the rest of the world had to keep these two countries for ever, or they had to permit, them to return to a normal industrial life. This must now mean intensified competition for Britain because our country has just fought a successful war to prevent Germany from building up a self-contained system which was independent of the cut throat competition of world capitalism.
American Aid
(c) Even under these favourable conditions we failed to cover imports with exports, and the gap in our "balance of payments" had to be bridged by the American dole. Even now we are still dependent upon America to finance our defence, and we may soon again be dependent upon America to finance our daily life.
(d) We devalued our currency. This gave us a temporary advantage in exports: it always does. When the pound is worth less, our goods cost less in foreign currency because they are produced by workers paid in pounds. This is an old trick, to boost exports. It has often been tried, but it never lasts long.
Rising Prices
Other countries now know the trick and many at once followed suit. Also, when the pound is worth less, raw materials from foreign countries cost us more in terms of pounds. This leads to rising prices, and the natural demand for rising wages. But wages always lag behind prices So a temporary boost to exports is obtained by a Labour Government through this old Tory trick of reducing real wages. Pensioners and others with fixed incomes suffer more from the swindle because they cannot get the same "rises" to meet higher prices.
(e) The crazy structure of the system was further helped for a time by the demand for raw materials which rearmament created. Many of these raw materials came from the Empire and the sterling area. So the Labour Government was able to cash in on the war alarm and to save themselves for the moment by selling raw materials at profiteering prices from the Empire which they had always wanted to "liquidate." So some Labour politicians were able to live a little longer by a series of accidents and tricks which could not possibly last.
Effect of Devaluation
9. Now the effects of devaluation and rising cost of raw materials are coming home to roost. The factors which temporarily saved the Labour Government are making things infinitely worse. Before devaluation the pound would buy four dollars' worth of raw materials. Now it buys less than three dollars' worth. Thus devaluation has been directly responsible for the rise in prices. Even if goods cost the same number of dollars as before, they now require more pounds to buy them. But the dollar itself is buying less because the world scramble for raw materials under the competitive international system has sent their prices rocketting up. So we are catching it both ways; raw materials cost more to the world in general and more to us in particular because of devaluation.
A New Crisis
A few months ago the Labour Government were bragging about the temporary results produced by their devaluation trick and their profiteering in those raw materials which were produced in the sterling area. Now they are sobbing their way into a new financial crisis and asking the people for more austerity to pay for their blunders. The principal sufferers are pensioners and retired people of all kinds who have invested small savings in "frozen" industries. (It is typical that Labour never suggests anything but paralysis in front of danger.) The next and by far the largest class of sufferers are all wage and salary earners, who have their real earnings reduced because prices rise while wages are held down. The last effort of the Labour Government is thus to keep itself going by the old Tory trick of reducing wages. So the Labour politicians end by betraying their own most loyal supporters in order to save themselves.
International Chaos
10. The real cause of this trouble is that we are tied to the international system of trade and thus made the victims of international chaos. The things now discussed by the parties are either symptoms or ineffective efforts to escape from the fundamental trouble. So long as we are tied to the international system, it does not matter a rap whether the system in this country is international capitalism or international socialism: or an unworkable mixture of the two, as at present. It is now proved that Internationalism will not work for reasons we pointed out years ago. The truth we spoke is now shown to be a fact; unfortunately by the sufferings of the British people and the loss of British greatness. We still have to sell our exports in open competition on the markets of the world in order to buy the raw materials for our industries, without which we cannot live. We have to join in the scramble for these raw materials on world markets. But we are handicapped in the Struggle because we have weakened ourselves to the point of death by unnecessary wars.
Pushed Around
The Government of Britain gets pushed around in the scramble by a country like America. England is made to look like a frail old woman being shoved about by a lusty young man. In fact the only way the poor old lady is able to live at all is that sometimes the young man is good enough to chuck her the price of a dinner. Such is the position to which the parties and politicians have reduced Britain, when she might have been at the "height of her glory. She can be again. Only 37 years ago, in 1914 - British goods commanded every market in the world; the export surplus was still being built up which has since been thrown away. Over four thousand millions of pounds were owed to us by foreigners which could have been used in any way we liked, but which in fact were lost in unnecessary war.
Empire Thrown Away
We were twice as strong as any other power in the world with our two power naval standard on the sea; we then had the lead on the sea which we could now have in the air. We possessed an Empire won by our fathers which was nearly a quarter of the globe and contained not only immense strength in man power, but every raw material which industry could desire. The tragedy was that Britain chose to tie herself down to the international financial system and to throw that Empire away. We in British Union spent five years in various gaols for trying to persuade the British people not to do it.
This in brief is the A.B.C. of modern economics. This is the story of the parties and the politicians. Never was so much thrown away in so short, a time by so few people and for so little - indeed for worse than nothing. It was not the British people but the small clique of ruling politicians who were responsible. The British people are beginning to pay for what these men have done.
11. What is the remedy for the ills of Britain? We have long diagnosed the disease: it is the international system of trade. Our diagnosis is now proved correct by the condition of the British people. Plainly the first measure is to change the international system of trade for a new system. We have to save Britain from the economic battle for raw materials and international markets, which always ends in recurrent war.
Before 1939 we proposed a limited, but then effective measure, which was to develop the Empire which we then possessed. That Empire contained everything we desired, and we then had the means to develop it by ourselves. The old parties chose instead the Brothers' War between Europeans. As a result we have lost a large part of the Empire, and have thrown away the means to develop single-handed what remains.
Finance and Man Power
What were the means? They were great financial resources and immense man power. The financial resources were the debts which were owed to us by foreigners on account of the export surplus which the productive power of British industry, and the hard work and self-denial of British workers, had sent abroad during several generations. The man power was to be found in those parts of the British Empire which we threw away: the oriental portions of British Empire. The financial resources could have been used for the temporary employment of that man power at good wages and under good conditions in such undeveloped areas as Africa.
That labour would have been only too glad to go there for a time in order quickly to earn enough for an early retirement to leisure and comfort. Some Europeans go to America with exactly the same idea of earning enough to enable them to go home and retire in ease at the earliest possible moment.
In 1939 we possessed both the financial resources and the oriental man power which could have done much of the pioneer work; quite apart from our own resources of vigorous and skilled manhood which the politicians chose instead to send to European battlefields. Now we have none of these resources which a great Imperial power might have used for the permanent benefit of the British people, if it had not preferred the loan and interest game of the financier, which always ends in war.
Foreign Assets Dissipated
The financial strength accumulated during generations has been dissipated in unnecessary war. We can no longer sell the foreign assets which many years of British thrift created. They are no longer available in order to buy machinery and to hire labour to open out our own possessions in Africa and thus to supply us with our own raw materials and markets in independence of international chaos. We sold these foreign assets in order to buy weapons to blow up German cities because, even with their more limited resources, the Germans were beginning to organise their own escape from the international financial racket which holds all the workers of the world in bondage. We used these re-sources first to ruin our own industries by the import of "interest" in the shape of cheap goods, and then to ruin German cities by the export of bombs. What follies and what crimes await the early verdict of history!
Man Power Lost
We no longer have the manpower because we shamefully neglected the economic welfare of the peoples of such countries as India, who were dependent on us to save them both from the savage feuds which rent their country and from the caste, or class domination, which oppressed the mass of the people. We were too pre-occupied with fighting wars against our European brothers in pursuit of political and financial vendettas to fulfil our imperial trust. When our neglect had reduced these peoples to such misery that they were a happy hunting ground for every noisy agitator, British Government scuttled out, leaving half a million people to be slaughtered in the blood feuds from which British power alone could save them. So we lost the man power, as well as the resources, when British Government betrayed the Empire peoples as well as the British people. Such is the record of greed, stupidity, and betrayal of every true interest of the peoples of the world.
Europe a Nation
That is why it is impossible to say "Britain First" any longer; in the sense that we can just "mind Britain's business" and ignore the rest of the world. We no longer have the means to save ourselves by ourselves alone. But we can say "Britain First" again in a new and even higher sense if Britain produces not only the thought and inspiration for the new and saving idea, but also the practical work and energy to make a start with it. The new system is Europe a Nation, and the new Idea European Socialism.
I will not describe again the method of European Socialism, because I did this very recently in three articles, which can now be obtained from Union Movement in pamphlet form. The purpose of this essay is to show how the new economics replace the old economics. We can still save the British people from the chaos of the financier’s international; which ends in the same death whether it is international capitalism or international socialism. We can do more than save the British people from the old peril: we can win for them a new and greater future than we ever dreamt before.
Challenge and Response
Adversity often makes us think again and think better: history is now written in terms of "challenge and response." It is true that we have lost our financial resources, and our imperial man power. Britain is lying weak and prostrate in helpless dependence on America. But a new brother’s union in Europe can do far more than the old imperialism could ever have done: and in a far better way. If Europeans unite in Europe a Nation, they will have the man power of all Europe available to develop the pooled resources of all the European countries in Africa and else-where.
This man power is much more skilled than any Eastern labour, and the resources are much greater even than those of the old British Empire. Britons, Germans, French, Italians, and all the other great peoples, working together in a union of brotherhood, can do far more than any of the old imperial powers with a relatively small band of Europeans commanding oriental masses. The genius of the European provides machines to replace mass: and we Europeans can produce the greatest concentration of skilled manpower in the world.
Productive Power
It is true that we lack financial resources: but a productive power so immense can quickly replace financial resources. After all, financial resources are merely the measurement of past production, and credit is merely a belief in the future power to produce. Once European production has got going it could quickly produce the equivalent of financial resources. Nothing could stop a united Europe getting through, even if America was not prepared to give financial assistance to get Europe "off her markets and off her hands” as I put it in "The Alternative"; not to mention her desire for a strong Europe as a bulwark against Bolshevism. No help from America would be accepted on the terms which the politically-kept men of the old parties are so glad to accept; that America buys up what is left of British Empire.
"Ourselves Alone"
With or without American assistance, we Europeans can do it: if necessary with the motto "ourselves alone." Bring two hundred and seventy million people, whose fathers have produced every great invention of the world, into direct contact with the most extensive natural resources of the world which are to be found in Africa. Can anyone deny that the result will be the highest civilisation the world has yet seen; once Europeans have won the will to unite and to act? Yes, it is true that Britain has lost financial resources, man power and all the old means to save herself. But Britain in Europe and with Europe can provide and share with all Europeans more skilled man power and more resources and strength than any of us ever dreamt of having before. United we stand, divided we fall. Workers of Europe unite, you have nothing to lose but - the racket.
Freedom to Achieve
This can be done. But can you imagine it being done by the old parties and the old system of the old men? Those who have destroyed can never be trusted to build. Anyhow they could not do it, even if they would. Their system cannot do the job; and men dyed in the wool of the old ways cannot do it either. We need a new system with new men and new ways.
That system will give the Government power to act by the declared will of the people. This is the only means by which the people can ever get done what they want done. But the system will give far more liberty to the individual than exists today; men will be free from want and from fear of poverty. Modern science can produce enough for all once it is released from the selfish greed of finance. Men and women will be freed too from all the restrictions and petty persecutions of modern government. It will be the duty of government to do what the people want done and to leave the people alone to enjoy the results. Men and women will be able to do what they like, provided they do not injure their fellows. And in the world of tomorrow there can he much that they like. To win that world means effort of mind and will: effort of mind to understand what is possible, and effort of will to make it possible. I ask you to begin by thinking of these things and asking others to think. Then, we Europeans will act and win together.
Oswald Mosley - 1951
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