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Nigel Harris

The Socialist case
against Import Controls

(May 1980)

From Socialist Review, 1980 : 5, 18 May–14 June 1980, pp. 18–20.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

* * *

Let’s start with the experience of the past.

In 1931 the British government broke with its past policy of ‘free trade’, which allowed free entry of imports and free movement of British capital. In its place full scale ‘protection’ was introduced to limit severely imports, especially in what were then known as the basic industries – coal, iron and steel, shipbuilding and textiles.

In 1929, two years before the introduction of protection, employment in these industries was 2.3 million workers. Ten years later, after eight years of protection, employment was 1.8 million. Total unemployment in the country, running at 1.5 million in 1929 (or 12.2 per cent of the labour force), reached its peak after the introduction of protection at 3 million in 1932–33 (or 23 per cent of the labour force). In the basic industries, the rate of unemployment was double the average level for the country as a whole, and remained very high throughout the thirties.

If we take one example, textile and clothing manufacture, it seems employment declined during the period of protection (by 28 per cent between 1923 and 1938), and increased with more or less “free trade” after World War II. Thus, employment was around one million in the 1920s, declined through the 1930s, rose in the second World War to reach 840,000 in 1946, and then increased to 1,089,000 in 1950. It declined again to 840,000 during the 1950s, and then rose again to 1,086,000 in 1965 (when employers were complaining of shortage of capacity!)

Or take another example. Agriculture is the most heavily protected activity in all advanced capitalist countries. In this country, the protectionism of the 1930s and the Second World War period was never dismantled after the war. These are the figures for agricultural employment:

A superficial reading of these figures might even lead you to believe that free trade creates jobs, while import controls destroy them. In fact, such a reading would obscure the real cause of the changes in employment in pre-war and post-war Britain.

The whole world was affected by an unprecedented slump in the 1930s and participated in a world boom from the 1940s through to the early 1970s. Unemployment shot upwards in the 1930s and import controls could do nothing to stop that. It fell in the 1940s and 1950s and was not prevented from doing so by the successive dismantling of import controls. It has been rising again the last 10 years, especially since the world recession of 1974–5, and import controls cannot and will not prevent a further rise. To argue in terms of ‘import controls’ versus ‘free trade’ is to ignore the real causes of the crisis, internationally and in Britain – the capitalist organisation of production. It is to suggest an attempt at tampering with the system which will not work but which will deflect attention from any real struggle to revolutionise society.

Import controls do not simply leave capitalism as it is. If adopted on any scale they push production backwards, and make the crisis of the system worse.

This is because capitalism has developed the world economy to a point where the forces of production in one country are, inextricably linked to the forces of production in others. The more advanced an economy is, the more it is dependent on trade with others. The more backward an economy is, the more the mass of the population can be relatively self-sufficient – at an extremely low level of living (and what goes with it, a high rate of infant deaths, of deaths to women in childbirth, of disease and disability). The myth of self-sufficiency in an advanced capitalist country is essentially ‘reactionary’: that is, it harks back to a more primitive stage of development.

No single country, not even the giant United States, can produce within its national boundaries anything like the right combination of output to sustain the domestic standard of living. Every country must exchange what it can produce most cheaply for what can be produced most cheaply in other countries. To cut or to weaken the links which make such exchange possible is to impoverish the individual national economies.

The call for import controls is a call to cut back those links and to produce such impoverishment just so that some capitalists can increase their relative strength as against others. If the current protectionist pressures are successful, the end result will be, as in the 1930s, to break the world economy up into competing trading blocks, to push backwards the world wide forces of production and to make the economic crisis worse.

Of course, the present links that bind international economies together are organised, as are those economies themselves, along capitalist lines. They involve all the cheating, oppression, bullying and savageries of the system. They reflect the fact that the present level of economic development internationally has been attained within an increasingly irrational and anarchic capitalist framework. But you cannot overcome that by calling upon the group of capitalists of the country in which you happen to live to cut off their links with capitalists elsewhere, so pushing backwards the world-wide level of economic development.

The way out of the world crisis is a reorganisation of the international organisation of production along socialist lines. That cannot be achieved without a revolutionary process, which liberates the forces of human production from the archaic, crippling, nationally based capitalist relations in which they have grown up. That liberation will involve revolutionary upheavals that begin within national boundaries and spread out from these. It cannot be furthered by linking up with particular capitalists to reinforce the archaic, national capitalist structure which cripples production.
 

The Extent of Interdependence

Most people do not see how dependent production and employment in one country is upon what takes place elsewhere. For example, in Britain some people complain that “we should keep our own. oil for our own use and not sell it to foreigners”. It is a childish argument. First, it is not “our” oil at all, but the property of the giant companies, British and foreign-owned, who pump it out, and do so solely on the basis of profit. Second, even if the North Sea oil belonged to the British State, it could not meet the needs of the British economy. The complex of grades and types of oil products – everything from lubricating oils to kerosenes – used in Britain does not at all match the quality of crude taken out of the North Sea. Every oil producing country has surplus and deficit grades, depending on the type of crude it has in the ground, and only trade can swap the excess heavy oils in one country for the excess light oils in another. And oil is a fairly simple commodity.

Again, take the example of three industries that perpetually complain about being crushed by imports in Britain – textiles, clothing and footwear, and vehicles:

Generally, when imports rise, so also do exports. Thus, between the first half of 1975 and the first half of 1978, British imports increased 14 per cent – but exports increased 23 per cent. It was not simply the result of increased oil exports from the North Sea. The British share of the manufactured exports of the advanced capitalist bloc increased – from 8.8 percent between 1968 and 1974 to 9.4 per cent in 1977.

British exports are some other country’s imports. Selective cuts in British imports will then provoke the governments of those countries that import British goods to retaliate with selective cuts – then the crisis of those British industries affected by imports is spread to those British industries that export. Furthermore, countries prevented from earning revenue by selling to Britain have no funds to purchase British exports. Beggar thy neighbour might sound good on the surface for British capitalists but finally it impoverishes people at both ends of the trade relationship.

The impoverishment directly hits British workers. For they are not simply producers, they are also buyers. British textile mills do not produce cheap mass consumption goods; they are specialized in high value goods, much of it for export. If they were obliged to produce for mass consumption in Britain, where they have severe disadvantages, the prices would soar, the prices of shirts, underwear and the rest. As a result, working class families would have to pay out far more for basic clothing – and would be able to spend far less on other items. And the result of that would be increased unemployment in industries producing for mass consumption, goods other than textiles. So far as working class consumption is concerned, cheap imports raise the standard of living. Without them, inflation, is accelerated, unemployment increased – the slump is made much worse.

There is another element involved. Imports prevent British capitalists charging the highest prices possible. If they do this then foreign capitalists will scoop the market and bankrupt them. If imports, are banned, this control will disappear, and prices for workers in Britain will rise even more than they would otherwise.
 

The Main Cause of Job Losses

Of course, increased imports do lead to the lay-off of workers in industries affected. But imports are by no means the most important source of sackings. A British government survey of 24 industries most affected by imports found the job losses of 428,000 distributed in the following proportions:

Thus, just over half the job losses resulted from the deliberate decision of employers to substitute capital for labour. The struggle for profits ensured that employers sacked, regardless of any other considerations. And such sackings would continue – and indeed increase – if businessmen were protected from foreign competition.
 

Blaming the Third World

The argument for protection frequently has a powerful thread of racialism in it, as well as chauvinism. Most imports into Britain come from Europe and the United States, yet it is always Japan or the Third World countries which are accused of “destroying British jobs”. This is especially true in textiles. Yet, it is the main European textile manufacturers, themselves in decline, who threaten British millowners in the lines of production that Britain specializes in, just as British textiles threaten European textile business in their home markets. Right at the moment, the millowners are up in arms about textile imports from the United States – synthetic fibres and carpet imports. By and large, British mills are not competing at all with imports in the cheap clothing sectors, so they are not threatened by it. Third World manufacturing imports take only 3 per cent of the British market. And for every £1 of imports, Britain supplies to the Third World nearly £4 of exports. The textile industry may suffer from imports, but the engineering industry gains by exports. In the United States, where there are continual complaints about imports from the backward countries, one job in 20 depends on making exports for the Third World.

In the British case, for the first half of the 1970s, if we subtract the jobs lost as a result of imports from those created by exports, then Britain gained on balance a net increase in jobs of 3,000–4,000. And, to repeat, the imports to Britain provided backward countries with part of the earnings with which they could then purchase British exports.

In any case, talk of “imports” as if these were produced by “foreigners” is misleading. About 30 per cent of world trade is not “imports” or “exports” in the ordinary sense, but the internal transactions of international companies (the multinationals). Nobody knows the real value, because internal transactions are not valued in the ordinary way. In the case of Britain, about a quarter of both exports and imports are movements of goods between units of multinational companies. In this case, any reduction in “imports” produces an exact equivalent reduction in “exports”.
 

Who Gains?

For British workers, then, ‘protection’ or import controls can only be a disaster, producing higher levels of unemployment and far higher prices than would otherwise be true. For small business, protection usually means their destruction at the hands of big business, now, by an act of state, created as monopolies.

Who gains? In a severe slump, big business is able to purchase the survival of its profits at the cost of everyone else. Its control of the domestic market gives it great bargaining power abroad with other national monopolies, and, in the 1930s, led to the creation of international cartels that agreed not to compete and divided up the whole world market into spheres of influence. Without the same degree of competition, prices were higher both at home and abroad – and the world’s peoples were poorer as a result. Protectionism in the 1930s held down the world economy in slump. It was the first act of economic warfare that culminated in the real warfare of 1939. Insofar as each national working class accepted the economic warfare of their ruling classes, they brought real warfare that much closer.

The political debate about protectionism should not hide the fact that the world is already well on the way to protectionism. The leading states have, on a piecemeal basis, taken continuing steps to ban the imports of particular countries, impose quotas or prohibitive tariffs. For all its blather about “free markets”, Mrs Thatcher’s government has not resisted the trend; it has imposed restrictions on imports of textiles and fibres from the United States, on steel imports from selected countries (making cars more expensive, for example), on footwear, on consumer electronic goods, and many more. But it is still piecemeal, and supposedly “temporary”.

All states try to cheat on the rules of world trade, but all are wary of general protection because they know that it would replace one disaster by general catastrophe. But dangerous precedents are set by creeping protection, and by the trade warfare now in train (for example, the battle between European steel exports to the US and US textile exports to Europe).

Protectionism is not about the protection of British workers at all. It is about the protection of British profits, protection of the ruling class, at the expense of both the British working class and the world’s productive system. It shows the despair in the ruling order for they know that protectionism will make slump much more catastrophic even if it also secures their power. That power is embodied in the slogan: only British capitalists have the right to exploit British workers!
 

Internationalism

Protectionism raises in a stark and unavoidable form the contradiction between those who believe in a world working class, in the aim of a world workers’ republic, and those who in crisis, always side with their own national ruling class – thus making competition and conflict even more severe. It is usually the national trade union leadership who, in a political crisis, side with the employers against the demand to break a world order of national states.

Take a concrete example. On Mexico’s side of the border with the United States there are enclaves of US business known as In-Bond Plants. Here, American business manufactures goods for export to the US market, using cheap Mexican labour. The American trade union federation, the AFL-CIO, has constantly denounced this activity. Not because the trade union leaders are outraged at the grotesque exploitation of their fellow workers in Mexico, but because “Mexico is stealing American jobs”. The reaction of a serious trade union ought to be to defend its members, and to do so by recruiting all those employed in the given trade – that is, by helping to organise the workers of the In-Bond Plants, using the resources of the US labour movement to fuel the struggle of Mexican workers to achieve parity of wages with comparable workers in the United States. In that way, the attempt of US business to play off one group of workers against another would be neutralized.

By bleating about “American jobs”, the AFL-CIO aids and abets US business in exploiting Mexican workers. It shores up the power of the US ruling class, at the cost of both American and Mexican workers. It makes that reaction even more extreme by being the leading campaigner for the expulsion of Mexican workers from the United States itself. Protectionism and tight immigration controls go together, and together they destroy the possibility of the working class defending itself against the depredations of capital. Worker fights worker, and capital, as they say, laughs all the way to the bank.

If the British textile unions are so worried about Korean competition, let them use the power of their trade union organisation to help Korean workers fight back. If British Leyland workers are so scared of Japanese car imports, let them bend all efforts to help the organisation of Honda, of Mazda, of Toyota. Capital is international and it can only be beaten internationally. National loyalty, loyalty to the local ruling class, is a disastrous weakness in that contest.

 
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