There is no need for Wilson, Heath and Thorpe to vie with each other in finding the most scarifying adjectives to describe the depth and extent of the crisis. The almost daily flood of official statistics, gleefully seized upon and emblazoned on the front pages and screens of the mass media, is constantly reminding us of the mess. Our own daily experiences in coping with life provide even better evidence. In a way which is probably unparalleled in the entire history of British capitalism, all the indicators point simultaneously towards an unprecedented, all embracing economic, political and social crisis.
Unemployment is rising monthly, vacancies are declining, and ministers, economists and pundits alike speculate on whether the million unemployed mark will be reached by the spring or the autumn, while some, like the Sunday Telegraph economic experts on December 1, forecast a figure of 1 million. The figure of nearly , officially registered unemployed always a gross underestimation of the real number, variously estimated to be between a quarter and a third higher, thus bringing the present total to nearly one million is being presented as tolerable and acceptable.
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Investment is at an all time low, even for Britain, which has chronically had the lowest investment rate of all industrial countries, and the latest forecast of the CBI is that investment prospects will continue to decline below recent levels. Output is below last year and the most optimistic forecast is not to expect any real growth for at least the next few years.
Nor is this gloomy catalogue all. It must be seen in the context of a world capitalist crisis moving rapidly from recession to slump. In the words of The Economist of December 6, In general, America is leading the world into the slump, with each successive forecast worse than the last. William Simon, Treasury Secretary, admitted that this recession was likely to be the longest since the war.
In Germany growth is only being sustained by exports, and this at a steadily declining rate. In Japan, stocks are at record levels despite the production slump. That is why it is so essential for the Labour Movement to be clear about what the Social Contract really is and what the consequences of relying on it would be.
There can be no serious discussion about the relevance of the Social Contract to the present serious crisis unless we are absolutely clear what the Contract is. No amount of verbiage can disguise the simple fact that it is an undertaking by the TUC to restrain workers from using their bargaining strength to achieve wage and salary increases which they feel necessary, justified and attainable. Instead, affiliated unions in national claims and workers at the enterprise level are expected to restrict claims, both with regard to amounts and frequency.
The General Council will keep the developing situation under review, and will expect unions in difficulties in conforming to the spirit of this policy to inform the General Council of'the circumstances and to seek their advice, or to respond to an invitation to discuss the situation with them. These norms were reiterated in a circular letter sent out by Len Murray, its general secretary, to all affiliated unions on November 21, Neither of these points were contained in the original document, as may be seen by comparing excerpts from the circular, quoted below, with the June statement:.
The importance in general of a month interval between principal settlements is one which the General Council still wish to emphasise. Another important recommendation contained in the statement Collective Bargaining and the Social Contract relates to low pay. The General Council counts on unions to continue to operate within the guidelines of the social contract, to seek advice when in doubt about the application of this policy to their circumstances or respond to an invitation to.
There can, therefore, be no doubt that the Social Contract is an instrument for exerting pressure on trade unions and groups of workers to frame claims, not in accordance with their freely determined views on what they should be, but within a framework determined by others. This is the very negation of free collective bargaining. Nor can there be any doubt that the intention and effect of the Contract is to keep wages down.
And it is not all that long ago that the movement was crystal clear on that score. In the past the left were united, and in the forefront of the principled fight to reject all forms of wage restraint or incomes policy — whether voluntary or statutory. Unfortunately that is not the case today. I do not question the sincerity and genuineness of these left leaders. That is why it is so essential to develop the dialogue in an effort to convince them that they are mistaken; that in advocating the Social Contract they are causing incalculable harm to their members, the economy, and helping the right wing core in the government to betray the Spirit of the manifesto.
Of course inflation is a serious problem. No one is more aware of it, or more anxious to end the soaring prices of goods and services, than the working people. They suffer most from it and they have no assets to cushion them from its effects. Their only protection against inflation is. The Social Contract would deprive them of their only defence against inflation. There are two major and related flaws in the argument that inflation makes the Social Contract necessary. The first is that it begs the crucial question.
For unless it can be demonstrated beyond any reasonable doubt that wages are a basic, even if not the only, cause of inflation, then wage restraint, the core of the Social Contract, is irrelevant to a solution of inflation. It is therefore worth while devoting some space to the causes of inflation to demonstrate the irrelevancy of wage restraint to its solution.
Inflation can-not be ascribed to any one cause, unless that single cause is the ever deepening crisis of the present stage of capitalism. For it is a fact that inflation is a phenomenon prevalent in every capitalist country, though the rate may vary, even in those capitalist countries where trade unions do not exist at all, eg. Spain, Brazil and, until recently, Portugal and Greece. Indeed, when it suits Heath and Wilson to divert blame from themselves, they have on numerous occasions declared that inflation is a world problem; wrongly, of course.
For it is not a world problem; it is a capitalist problem. There is no inflation in the USSR, China and most socialist countries, as the following except from an article by Colin Williams, Moscow correspondent of the Morning Star , makes clear:.
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One kilo of meat costs today two roubles, a kilo of sugar 92 kopeks, a kilo of potatoes ten kopeks — the same as they cost in This can be applied to the whole range of foodstuffs and the same applies to other consumer items. In fact, if there has been any trend — if we exclude luxury items like furs, caviar and spirits — it has been downward. At the same time there has been a constant expansion of the education system at all levels, of the non-contributory health service.
The present inflation in the capitalist world is caused by the cumulative effect of a number of factors common to all capitalist countries. Then there are a whole number of factors inherent in the policies of all post-war British governments, Tory and Labour alike, which are responsible for our inflationary rate being higher than in some capitalist countries, though still lower than in Japan and Italy. I will list them, not necessarily in order of importance. It is important to realise that it is the cumulative total effect of all these factors that is responsible for our unprecedented, persistent inflation, and that it is illusory to think that tinkering with one or another cause in isolation can bring inflation down to any acceptable level.
Low investment means low productivity and higher unit costs of production and higher prices. Contrary to the conventional wisdom, any signficant increase in productivity can only be achieved by higher investment and improved technology, not by more sweat and intensified exploitation of the workers.
High interest rates are not only a disincentive to investment, and therefore indirectly inflationary as shown above, but also directly push up costs. By increasing the cost of capital — a vital factor in prices — they push up the cost of living and increase hire purchase prices, mortgages, rents and rates. It is the combination of all these factors, added to the general world capitalist ones, which is responsible for the British inflationary rate being higher than in many other countries. What I am arguing is that, by and large, wages have been chasing prices, and some sections of working people have at times after bitter struggles eg, the miners in succeeded in improving their real wages and living standards and opened the way for others to achieve similar advances.
No doubt these wage increases were passed on in higher prices by the employers to maintain profit, and often made the pretext for getting more profit. The real question of whether the Social Contract will have any relevance at all to the problem of inflation is whether wage increases have been a major cause of inflation. The answer must be an emphatic no. At most they are a very marginal factor, and then only because the employers were allowed to put the wage increases on to prices.
For it is not the level of wage increases that is relevant to prices but the uni-t costs of labour. And the facts are that, low as the rate of productivity is in Britain for reasons I outlined above , if you take the last years as Professor Phelps Brown, the leading capitalist authority on wages in Britain, did in a pamphlet published for Aims of Industry not exactly a friend of the workers , wages have risen only in line'with productivity, ie, unit costs of labour in real terms have not risen at all and therefore can-not be considered an inflationary factor.
Or, if you think years is too long a period, then I would refer you to the Sunday Times of September 29, , which examined the statistics over the last decade, , and reached conclusions which are even more devastating for those who describe wages as an important cause of inflation: Thus, if we take the last decade, covering the period of the most rapid inflation, earnings have risen more slowly than the rate of productivity and could not have been the cause of rising prices.
With the evidence piling up that, whatever else may be the main cause of inflation, wages are certainly not, and therefore incomes policy or wage restraint is no cure, some of the top academics and theorists who have put forward incomes policy as the remedy for inflation are beginning to have second though-ts. At least one of them, the well-known Cambridge Professor Wilfred Beckerman, a former adviser to the Wilson Government, had the courage to admit his past error:. I have now changed my mind on both these points Nor is the acceleration of domestically generated inflation a uniquely British phenomenon.
Although there are still differences between individual countries with respect to their inflation rates. Finally, it is worth quoting an extract from the TUC -Labour Party Liaison Committee document on the relationship of wages to inflation and a strategy to deal with inflation. For it is this document that both the TUC and the government claim laid the basis for, and gave birth to, the Social Contract:. It has not been the farm worker. Likewise it has not been workpeople and their families who have been responsible for rising rents.
Moreover, the level of wages and salaries in Britain is no more than about average for industrial countries — and their' rate of increase for the last decade has been below the average. The employers are as well aware of these facts as anyone. The fact that they are putting the heat on the unions and government to keep wages down, and their welcoming of the Social Contract as an instrument to achieve this objective, has nothing to do with stemming inflation, but everything to do with increasing profits. And yet the Social Contract projects and elevates this least relevant factor — wages — as the main target for attack in dealing with what is indeed a major problem — inflation.
But from now on they will be the main cause of inflation. Since then, more and more it has been acknowledged that at that time it was prices which gave the twist to the inflationary spiral, with wages, statutorily controlled though they were, struggling to keep pace But, just as we emphasised a year ago that it was prices and rents that were forcing up wage claims, so we warned even then — as we have warned in two elections — that as world prices other than oil began to moderate, the inflationary threat here in Britain would come more and more not from external prices but from our own incomes and wages.
In public and private industry now, it is wage costs which threaten to provide a new inflationary twist. And, if that is so, then the whole case for the Social Contract as essential to tackling inflation, as the precondition for implementing all the other pledges in the manifesto, falls to the ground. In arguing for the wage restraint element of the Social Contract, which it is not denied that it contains, great emphasis is laid on the pledges made by the government, some of which have already been implemented as part of its obligations under the Contract.
Of course, all these measures are welcomed by the whole of the Labour movement. But it really is a bit of sharp practice to present them as the government carrying out its side of the bargain. The Industrial Relations Act was effectively killed by the mass struggles of the working class. It is ironic that the workers who fought so heroically and successfully to get rid of instruments whose main purpose was to prevent them from using their organised strength to fight the wages struggle, should be expected to show their gratitude for the formal recognition of their demands by giving up the fruits of their victory.
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The ruling class would have no need for the Industrial Relations Act or the Pay Board if they could rely on the Social Contract to achieve the same objective — the inhibiting of strikes and industrial action by workers to improve their real earnings. To use this as a justification for the Social Contract is unworthy of the General Council and the government. They know full well that this demand for elementary justice has been campaigned for, and the Labour movement won for it, long before the Social Contract was even a gleam in the eyes of either Wilson or Len Murray.
The introduction of increased pensions from last July was an implementation of the letter, but certainly not of the spirit, of that pledge, for by the time the pensioners started to receive the increase it had already been eroded by inflation. Neither of these arguments will stand up to any serious examination. When these pledges were undertaken, the Shadow Cabinet were well aware of the sort of crisis they would find if and when they became a government.
Everybody knows that, and certainly the spending priorities will have to. We are saying, at this conference, that the crisis that we inherit when we come to power will be the occasion for fundamental change and not the excuse for postponing it. That is what we are saying in this debate today. To wait for the solution of the crisis before these measures are tackled is to confine them to the dustbin of history, as happened to previous Labour programmes and pledges for precisely the same reason.
Societies are the result of compromises, and social contracts provide the framework for how people and governments interact. Individuals who live within a social structure gain protection from outsiders who may seek to harm them. In return, they must give up certain freedoms like the ability to commit crimes without being punished , and they should contribute to making society stable, wealthy, and happy.
The idea of a social contract has a long history dating as far back as Ancient Mesopotamia. However, it was not until the Enlightenment of the 17th and 18th centuries that social contract theory gained widespread attention from philosophers and historians. The Enlightenment was a time when intellectuals began to question established views relating to religion, science, economics, and government.
Social contract theory challenged both the moral and political elements of traditional sources of power in Europe. In fact, morality and politics were seen as linked. Rulers were to govern fairly, and people were supposed to help improve societies. Three Enlightenment thinkers are usually credited with establishing a standard view of social contract theory: They each had different interpretations of social contracts, but the underlying idea was similar.
Thomas Hobbes held a dark view of humans, which was likely influenced by the chaotic political events he witnessed in England during his life. Hobbes believed that in nature, individuals had to do whatever was necessary to survive. But he also believed that people were still likely to fight even if they lived together. Therefore, a contract was necessary. In Hobbes' view of the social contract, people were not capable of living in a democratic society. A powerful, single ruler was needed.
If everyone did his or her part, society could function relatively smoothly. You are likely familiar with John Locke's philosophy without even realizing it. His ideas are expressed in the American Declaration of Independence. He argued that people deserve life, liberty, and property. This trio forms an essential part of social contracts. Governments need to protect individuals' lives, ensure they are free to prosper, and enforce a system of laws that rewards efforts to improve society economically.
Locke's contractual theory of government outlines his ideal for a modern society. People had to willingly do things like pay taxes and serve in the military, but in return, the government had to listen to their desires and provide for their needs.
The Social Contract
Locke challenged the idea that a king was to rule unquestioned. Kings might still rule, but the people had a say in how they went about doing so. For Locke, governments were created to ensure that wealth and property were protected. In a primitive state of nature, this would be impossible.
Dangerous competition would be the norm and a cooperative society could not exist. Jean-Jacques Rousseau wrote, 'Man is born free, and everywhere he is in chains. They took advantage of their subjects and made life difficult. In order to check the authority of these monarchs, ordinary people needed access to education.
They could then defend themselves against abuses of power and maybe even participate in government. If people learned what a truly fair society should look like, they could take steps to make life better for everyone. Rousseau wanted to rewrite the contract. He believed that everyone could cooperate and that human nature was not as bad as Hobbes believed. The 18th-century Scottish thinker David Hume believed that social contracts were not needed because everyone was born equal.
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Social contracts came to exist only because governments kings, conquerors, emperors, and so on attempted to subjugate people. In other words, only in cases when greedy and power-hungry rulers wanted even more power, did they need to justify their control over others. In an article entitled, 'What is Enlightenment,' written in , Immanuel Kant summarized the problems we still face today.
He wrote, 'Argue as much as you will, and about what you will, but obey! People should be free to express their opinions without fear of persecution. However, if people rise up in anger and violence, nothing can be accomplished. Kant shows exactly why social contracts are so difficult, even today. People have different needs and different goals. Some people are selfish, while others are kind. Creating a government and a society is a challenge that remains incredibly problematic.
Various thinkers, beginning with the Enlightenment and continuing through today, have proposed their differing ideas of social contract theory. Social contractarians those who support the theory believe that living together in a society is better than living alone in nature. What they mean is that if people come together and cooperate, society can take steps towards creating fair and equal environments where all individuals benefit.
To accomplish this goal, compromises, or some kind of social contract , is necessary. All classes of society have to give certain things up in exchange for safety, prosperity, and happiness. If either the government or the people violate the conditions of the contract, a new one is needed. Those that reject the theory argue that neither governments nor individuals are capable of making compromises. For these thinkers, no matter how many times a contract is rewritten, the same problems will arise.
The ideal balance between laws and freedoms, and between competition and cooperation, has yet to be discovered. The question we have yet to answer is: To unlock this lesson you must be a Study. Did you know… We have over college courses that prepare you to earn credit by exam that is accepted by over 1, colleges and universities. You can test out of the first two years of college and save thousands off your degree.
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