The Jenkins Offensive

...Jenkins' strategy, in other words, is the only conceivable strategy for a responsible British government...

...Will the government keep its own nerve for two more years of austerity...

...Labor's only hope at the next election will be to present itself as a decisive and authoritative government, capable of taking the long view and ignoring temporary unpopularity...

...the Labor Government did it in 1966...

...There are two reasons for Jen-kin's success with the public...

...Most front-bench speeches on economics in this Parliament have been pedestrian...

...Still, a mistake was made...

...In the present circumstances, this assumption is to some extent an act of faith...

...Over the past eight years of steadily worsening economic sickness—as fitful attempts to eliminate the structural causes of Britain's balance of payments problem alternated with brief consumer booms that merely made the problem worse—the British people have learned to their cost that the economic malaise can only be cured by drastic surgery...

...Britain, after all, has had a balance of payments deficit for five years in a row, with an accumulated total deficit of approximately $4.8 billion...

...The best way to carry conviction in this role is to behave decisively and authoritatively in the three years before the election campaign starts...

...Yet its real weakness was not so much that it was oversimplified as that its full implications were never properly understood...

...More important, the proposals embodied in it—which mean, among other things, that for David Marquand, a Labor mp, contributes frequently to these pages...

...The fundamental cause of Britain's poor economic performance, it asserted, was the doctrinaire unwillingness of a Tory government to impose its own will on the free market...

...Hence the welcome his speech received...

...The government cannot expect adequate support from the people, or high morale in the Parliamentary party, unless it manages to give the same courageous and decisive stamp to the rest of its policies that Roy Jenkins has given to its economic policy...

...But deeper factors were also at work, and if the complexities of the current political scene here are to be unraveled it is necessary to plumb these depths with some care...

...If the Common Market countries are not prepared to do this, the volume of world trade may contract, and the necessary increase in British exports may not be forthcoming...

...These are now the crucial questions in British politics...

...It has since become fashionable to deride this concept of economic planning as naive and oversimplified...

...It is now up to the rest of the government to follow suit...

...Can the government maintain sufficient support in the country to carry these policies through...

...BRITAIN'S NEW ECONOMIC STRATEGY The Jenkins Offensive By David Marquand london Tuesday March 19, 1968, may or may not go down in British history as the day the foundations of this country's economic miracle were finally laid...

...when they have not been pedestrian, they have usually been irrelevant to the central issues...

...Not surprisingly, these expectations were disappointed...

...Once Britain had a new government, committed to planning and growth, these weaknesses would be eradicated...

...The final encounter, while painful, was less painful than a further postponement...

...To some extent, no doubt, the derision is justified...

...While the Common Market countries are able to coast along on the British and American deficits, however, they have no incentive to agree to this change, and every incentive to continue to conceal the real nature of the problem from themselves with complacent attacks on the fiscal irresponsibility of the Anglo-Saxons...

...They can only succeed if the Common Market countries are willing to run down their surpluses...

...It is based on the assumption that the one serious obstacle to a substantial increase in British exports lies within the British economy itself—that provided sufficient resources are switched from domestic consumption to exports and import substitution, last year's balance of payments deficit of $1.2 billion oan be turned into an annual surplus of $1.2 billion...

...In the field of social welfare, major piecemeal advances have been made—but without rationalizing the cumbersome structure of a welfare state which grew up haphazardly over 50 years of spasmodic accommodation to changing circumstances...

...But in the months before the next election, this well-tried expedient will not be available...

...Jenkins's budget speech—two and a half hours of sustained and elegant argument—was a delight to listen to...

...If k succeeds, Britain will at last esoape from the vicious circle of balance of payments crisis and retarded growth that has dogged it for over a decade...

...and this mistake meant that from the sterling crisis of July 1966 until the devaluation of November 1967 the government had, in effect, no economic strategy at all...

...Hence the impoverishment of the backward regions, the sluggishness of nepotistic management, the inadequate level of investment...

...An actual fall in personal consumption has not taken place in this country since 1951...

...In the long run, the only solution to the current economic problems of the Western world is a massive increase in world liquidity...

...This would simply perpetuate the existing imbalance in world trade, and make it that much easier for -the Common Market countries to continue the anti-social policies that have done so much to undermine the world's financial system...

...For the lack of a coherent economic strategy from July 1966 to November 1967 was mirrored by the lack of both a coherent social strategy and a coherent foreign policy...

...Sooner or later, they knew, they would have to come face to face with the instruments of torture in the next room...

...Will the morale of the Parliamentary Labor party hold firm in the face of prolonged unpopularity, low poll ratings and continued by-election defeats...

...On the contrary, the Jenkins strategy carries with it enormous political risks...

...Since then, the age of mass consumption has dawned and the British people, like their neighbors, have become accustomed to the notion that their living standards should rise automatically year by year...

...One thing, though, seems certain...

...Indeed, from the moment the incoming Labor ministers arrived in their offices this proved to be the greatest single constraint on economic policy...

...In the first place, his budget speech revealed a rare combination of political artistry and political courage...

...This is not to say that Jenkins' strategy is bound to work...

...Both are trying to eradicate their deficits...

...Although the government's economic policies are now reasonably coherent, the same cannot honestly be said of its social and foreign policies...

...In fact, until Roy Jenkins rose in his place on March 19, the government did not seize the opportunity devaluation presented to formulate a coherent economic strategy for the rest of the decade...

...If it fails, the reasons for the failure will lie outside this country, in circumstances beyond the control of any British Chancellor...

...The distribution of loaves and fishes as the way of winning the next election is therefore ruled out...

...It is true that Jenkins has done his best to protect the poorest sections of the community, and that the heaviest cuts will fall on the purchasers of luxury goods and on the owners of investment income...

...In theory, devaluation should have changed all this...

...What Labor backbenchers were cheering was the fact that, for the first time in three and a half years, the government had made it clear that it had a coherent strategy rather than a ragbag of temporary and unconvincing expedients...

...Even if Jenkins' strategy succeeds beyond his wildest dreams, the living standards of the British people will have improved less between 1966 and 1970 or 1971 than in any comparable period after 1951...

...But the existence of these dire possibilities does not invalidate Jenkins' policy...

...This mood was, of course, reflected in the Parliamentary Labor party, and was partly responsible for the outburst of cheering that greeted the Chancellor's speech...

...there will be no loaves and fishes to distribute...

...On the public platform, and even in the academic seminar, Labor supporters talked as though the mere advent of a new government, pledged to abandon the "stop-go" methods of the Tories, would in itself remove the balance of payments weakness plaguing Britain since the mid-'50s...

...But it seems certain to go down in the annals of the British Parliament—both as the day on which the hitherto untried Chancellor of the Exchequer, Roy Jenkins, first established himself unequivocally as a politician of the front rank, and as the day when the Parliamentary Labor party found itself cheering to the echo the news that taxes were to be raised by a record-breaking $2.16 billion...

...The Conservatives did this in 1955, 1959 and 1964...

...Even in narrow electoral terms, the government is likely to be judged by its success in grasping these two nettles...

...Since the early '50s, British governments have concentrated their political energies on producing a vigorous consumer boom in the months immediately before a general election...

...The Labor party won the elections of 1964 and 1966 on the combined ticket of economic growth and indicative planning...

...Astonishingly, however, no Labor politicians or theorists seemed to have worked out the balance of payments implications of Labor's commitment to a high rate of growth at home...

...For the previous five years, if not longer, by far the most serious obstacle to a high rate of growth in Britain was the persistent balance of payments weakness...

...Nevertheless, an overall cut in personal consumption of 1 per cent is bound to mean a perceptible fall in the living standards of most Labor supporters—at a time when many Labor supporters are already disillusioned as a result of the deflationary policies of July 1966...

...ROY JENKINS the first time in 17 years personal consumption in this country is likely to fall—are the fruit of the boldest economic strategy we have seen in Britain since the days of Sir Stafford Cripps...

...This does not mean that the applause now ringing in Jenkins' ears will continue, or that the government's political problems are over...

...In partnership with industry and organized labor, this new and radical government would work out what rate of growth the country could achieve, and then insure by the sophisticated use of a whole series of interventionist weapons that industry and organized labor lived up to the commitment they had made...

...and its intellectual lucidity makes it a delight to read...

...Since devaluation, their mood has been that of a patient kept hanging about in a dentist's waiting room...

...Britain and the United States both face the same problem...

...and a few of the arguments which led to it have turned out to be more powerful than some of us expected—notably the argument that a devaluation of sterling would damage the monetary mechanism of the entire world...

...Instead of imposing physical controls on imports or changing the exchange rate of the pound sterling, the government introduced a whole series of deflationary measures to damp down domestic demand—thus sacrificing economic growth to the parity of sterling in precisely the way that successive Tory governments had done...

...The new Labor government was greeted by a record balance of payments deficit...

...Unfortunately, however, the government took three years to realize that Britain's balance of payments problem was far too deep-seated to be dealt with indirectly, by the classical methods of domestic deflation, and that a decisive change in the basic parameters was needed...

...For Britain to refrain from the attempt to earn a surplus, on the grounds that if it is to earn one its more prosperous neighbors on the Continent will have to reduce theirs, would be an act of suicidal folly...

...and it is still too soon to say how they will be answered...

...The mistake was an honorable one...

...The second reason for Jenkins' current reputation here follows from the first...

...In economic affairs, Jenkins has shown the way...

...In foreign affairs, the charge that Britain has lost an empire without finding a role remains as valid as it was when Dean Acheson first made it...