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The spirit of 1945

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The spirit of 1945

  1. 1. The Spirit 0f 1945 and where did it go?Contribution of ideas to Ken Loache’s filmRalph BlakeFinancial Analyst former head of research & strategyGoldman Sachs International 1
  2. 2.  UK industry needed to meet::  basic needs of whole UK population  Materially support the war effort task Private industry had little capital and organisation after 30s depression State planning and organisation need to fulfil the role Capital came from USA  The equivalent of £200 billion of today’s money lent by US government State control, regulation and borrowed finance was made in the common good Industry subject to state control during the WWII 2
  3. 3.  Was a key policy of the Independent Labour Movement Success in transforming Soviet Union meant it had affinity with some sections of working class One of Labour’s key 45 demands  Industry in the service of the nation -  Houses for the people  Price controls on food & building materials  NHS  Cradle to grave welfare state  War dividendNationalisation and theUK labour movement 3
  4. 4.  At the end of the war apart from the USA & UK most of the world’s industrial capacity had been raised to the ground or dismantled UK had to help meet the supply of manufactured goods to meet the world demand  little private capital after 30s & war  Private industry fragmented Nationalisation provided subsidised:  Materials, energy, transport and infrastructure By 1952 the UK was producing 25.4% of the world’s manufactured goods How did it fall to 2.9% by 2009?1945 UK industry had to bestate controlled & funded 4
  5. 5.  Coal Utilities Gas Steel Transport Only steel renationalised by Tories but nationalised again in 1967 to subsidise materials to industry Later wave of nationalisations to deal with crisis of 1970s Rolls Royce British Leyland British Aerospace British ShipbuildingWhat was nationalised andwhat was reversed by Tories? 5
  6. 6.  Rest of the world builds up it’s industry with more investment and lower wages UK industry profitability falls from 16.5% in 1950 -54 to 9.7% in 1970 on lack of investment  Economist coined the classic phrase “Profits first. Investment later”The UK losses it’s lead asthe world catches up 6
  7. 7. • a 30 year period of global expansion ends abruptly in 1974 • Over production of goods • Over accumulation of profits • Falling rate of profits • And mass over capacity • Led by the car, shipbuilding and aerospace industries • Labour tries to save failing industries by nationalisation • But capitalism needs to reduce capacity and increase profits rates to compete with rest of world • Enter ThatcherThe end of the boom 7
  8. 8. • privatise• New owners will rationalise and return rate of profit• The did the latter but not the former• Rate of profit never competitive because of low investment and higher wage rates• Manufacturing has flown East where there are higher rates of profitThatcher’s solution 8
  9. 9.  Not on the basis of competition on the world market But on the basis of meeting the common good  Cheap or free integrated public transport  Socially affordable sustainable housing  Cheap renewable energy Any economy needs these to function they would use some of the potential of our some 5 million unemployed adults and young Through a national investment bank instead of bank bail outs A fair redistributive tax system instead of austerity Take oil under public ownership and control Close tax avoidance Generate demand in the economy to create jobs in the private sectorCan UK industry be rebuilt? 9
  10. 10. Unlike Soviet & 1945 modelPeople’s industries would genuinely serve the democratically decided needs of whole populationThe industries would be participative and run by the people that work in them to meet the needs of the whole population they would be protected from private competitionIndustry under common control& common planning 10