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My Lords, I hope it will not be thought impertinent of me as a very new boy in your Lordships' House to extend my congratulations to the right reverend Prelate the Bishop of Birmingham. I have recently passed through the ordeal of making a maiden speech and I know how pleased he must be to have got over that hurdle. He can certainly feel happy that both in matter and in manner he has made a most distinguished contribution to our debate.

We have in this Motion drawn in very wide if somewhat Pecksniffian terms a range of subjects which would allow one to talk about almost any social or economic question. I propose in a short time today to refer mainly to matters which are most in our minds—unemployment and industrial revival. We have been through all this before. Sixty-three years ago I went to Stockton-on-Tees to stand for Parliament. The unemployment figure was then 29 per cent. Last November I went there to a party of my friends—the unemployment is 28 per cent. That is a rather sad end to one's life, but that is what has happened.
Whatever my noble friend, who spoke so admirably in the best defence of the Government I have ever heard made, may say about the standard of consumption in those areas which are suffering from I this terrible unemployment, that is largely because 60 Toggle showing location of years ago the unemployed were kept on a Poor Law basis. Happily, they are now treated with much greater liberality. Nevertheless, the facts remain and the wheel has come full circle.
After the First World War the economic recession struck the world. That was four years after that war—in 1922. It lasted until rearmament and the Second World War. The problem was never solved—let us be frank about it. Everybody had all kinds of different views, which are now repeated today. Some of them objected—and I think rightly—to the return to the gold standard and the parity of the pound at 4 dollars 86 cents. I believe that the return to gold was a good idea, but not at that parity.
That development was forced upon the Government of the day—rather against the willingness of the Chancellor of the Exchequer, Winston Churchill—by the whole financial establishment; the bankers, the Bank of England, what are called the experts, and the writers in financial papers—all those great world commentators who always know what is best but happily forget later what it was that they recommended.
Then there was the same argument about expansionism or restrictionism. One of my oldest and dearest friends, Lord Keynes, represented—although not in the way he is now supposed to have done, but in a moderate form—an expansionist policy. That policy was opposed by the Government. One can almost hear the same phrases today in another place and in your Lordships' House that one heard 50 years ago.
After the Second World War, happily, a great industrial reaction did not take place. I rather expected it—I believe that many of us expected it. That it did not was perhaps because the Korean war gave a boost to the economies of Europe, or perhaps it was because of the generous act of Marshall Aid that allowed the nations of Europe to buy what products they needed from Britain. Anyway, that reaction did not come. We all said how clever we had been in avoiding that unemployment—we all did that. But when it goes against us, it is of course the inevitable forces of world powers, and so on. But it was all right then.
Ten years ago, it went wrong—not only here but all over Europe and throughout the capitalist world. Was it because of the sudden rise in the price of oil, which enormously increased the costs of manufacturing—with terrible results for the third world, which found it impossible to buy what it needed or to sell its own exports of raw materials? We do not know.
It is interesting to see how exactly the same arguments have been reproduced and the kind of action that has been taken. When this change struck the Labour Government, in the first case, they naturally followed what I believe are called neo-Keynesian policies; that is to say, permitting a reasonable amount of reflation—putting money into the infrastructure and all the rest of it. In having to put so much more money into the system, the Labour Government had to invent a restrictive policy of restraint on wages and on prices, to try to prevent this money from producing impossible inflation. They Toggle showing location of were not successful. As we know well, price policies and wage control policies do not succeed; they just create a great dam which, when it bursts, creates something worse than existed before. When that Labour Government went out of office matters had become very bad. The pound had declined to some terrible figure—to two dollars or something of that order. At any rate, it was a very low figure, and the Government were driven out of office.
Next, the Conservative Government came to power and they revived the restrictionist system, which meant cutting off all possible expenditure, raising bank rate to 18 per cent. interest by way of encouraging manufacturers, I believe, and then gradually—and one must give them this great credit—sacrificing almost everything to perhaps the first need (I am not saying it was not) of stopping runaway inflation, which would have ruined us and destroyed the whole social structure of our people. That is what they have done, but it has been at a very high cost. And now the argument goes on—backwards and forwards.
May I ask your Lordships—and I shall venture to keep the House for only a few minutes more—to consider another country which had the same problems; a country whose people are very similar to us and from whom I am proud to claim that I am half-descended. I mean by that, the United States of America and the American people. Four or five years ago, when the rather depressing reign of President Carter came to an end, the Americans were very much in the position that we are in now. Their economy was depressed. Unemployment was very high—terribly high. It stood at one person in eight. The economy was falling and there seemed to be not much hope.
Then President Reagan did a very wise thing—he dismissed all the academic economists in Washington. President Reagan said to himself, "This is absurd—let us look at the realities. Let us not talk about juggling with money but let us consider the realities of the creation of wealth". That is what we must do today. Happily for President Reagan, and unhappily for us, the monetarists were the first to be exiled. They were of course received with that courtesy with which we always receive refugees. They settled in Oxford, they settled in Cambridge, they settled in Whitehall—and it is rumoured that they even settled in Downing Street. They have done infinite harm because they have diverted our attention from what is really happening.
What is really happening is that the third industrial revolution is on its way. The first industrial revolution was based on coal and steam and brought great strength to the 19th century—with all its weaknesses as well. The second industrial revolution began at the end of the last century, when we changed from coal and steam to oil and the internal combustion engine; to the motor-car, the aeroplane, and the container ship. That was a complete revolution, affecting all forms of production and transport.
I was interested to ear my noble friend quote Mr. Gladstone's words to the effect that one of the chief objectives of government was to reduce taxation in order to allow the money to fructify in the pockets of the people. I am not surprised at that; I have long realised that the great figures in my old party have long I ago given up Toryism and have adopted Manchester Toggle showing location of Liberalism of about 1860. Apart from that, all this is completely out of date.
What have the Americans done? They have tackled the problem at its best. They have been the protagonists in invention, in development and in exploitation of the new technologies. They have done that on an immense scale. What is interesting is that, at the same time as all that is going on, they have reduced unemployment by means of the new wealth created. They have made 5 million new jobs altogether. The old plants do not employ more people. General Motors do not employ more people. Of course not. They employ fewer people because they have largely gone automatic. It is the new plant, the new methods and all that goes to build them, the new wealth built round them and the new service industries that have sprung up round them. Nor is this only in the field of atomic physics. Extraordinary biological developments are also going on which will revolutionise the whole structure of the world. And we are somehow out of it.
Of course, many of our leading, able industrialists are taking a full part, but not most of them. They are hardly conscious of it. We speak about the depressed areas, the north-east coast, shipbuilding, iron and steel and coal. Will they ever come back? No. That kind of shipbuilding is finished. It will in future be the container ship, with which we were so slow to press forward and which our harbours foolishly, in most cases, reject.
I ask your Lordships to reflect for one moment. Let us suppose that, by the wave of a magic wand, in one night all our plants and industrial production could be brought up to the level of the best. What would be the result? Another 1 million unemployed? I would say another 2 million unemployed. The industries would all become capital intensive and would all employ less labour. There is only one hope. Either we can sit by and do nothing, when we shall become just an obsolete country which is a nice place for tourists, but obsolete, or we must take part—a leading part—in what is happening and cannot be altered. The first industrial revolution was not brought about by governments, it just happened. It had terrible and harsh results when it took the loom and the wool from the cottage and put people into factories. There were terrible results when, under the aegis of men who were good Christian men but dominated by dogma and who allowed no interference by government, children worked for 12 hours in the factories or 12 hours underground. There were bad results, but in the long run, by the end of the century, this was the simple test: real wages and salaries had doubled and, in many cases, trebled. In other words, the standard of living of the mass of people was enormously improved.
The second industrial revolution, aided by two wars, had similar dramatic effects and the third, which is bound to come, is creeping forward. One question is: are we to be in it or to wait until we fall behind? My noble friend, who made such an admirable defence of the Government, spoke of some of the good signs. Exports have increased by some percentage in the past few months. Of course, if you halve the value of your money, you ought to be able to export. I am not very much impressed by that. More seriously, this industrial revolution is going to happen and the question is whether we are going to be in it.
Toggle showing location of I think we can learn quite a lot from the United States. I was amazed when I was there some four or five years ago, at the end of the last Presidency, to find that this bouyant people were defeatist, had lost heart and hardly believed in themselves. They were very self-critical and were allowing themselves to be knocked about. Now their natural bouyancy and determination to press forward with what is new and created has taken control. We are told that they have too much debt and that they spend too much money. How can you have production unless you borrow the money to produce? I do not believe in the theory that you must first produce and then borrow the money. That is not what my grandfather did. He borrowed the money and then produced.
Anyway, on this new theory that has somehow gripped us that we ought to be afraid of things instead of pursuing them with all the energy we can, the monetarists have left us only one alleviation of their austere regime. They have invented the one new law that there is no difference between capital and income. Under this law, apparently, you can spend all your capital on current account. In the old days we had above and below the line. This new law is of great help because it at least gives us some alleviation from a very rigid rule. Of course, it may apply to governments but I am not sufficiently well up to know. It certainly applies to individuals. Some of the nicest fellows I have known in my life have experienced this confusion between capital and income, but they usually ended up in rather dreary lodging houses.
This is now the test. Let us stop these futile, purely theoretical, academic and economic arguments. Let us get back to the reality; the reality as it happens before our eyes, is happening all over the world. Incredibly, it is happening even in countries like Taiwan and North and South Korea. One can see more modern forms of industrial production there than one can see in England. It is happening, and it must happen here. We must not be the slowest ship in the convoy. We must be the leader of the convoy or, at any rate, make an attempt to regain the leadership we have had for so long.
It is for the next generation—it will not be for me but for my successors—to make the decision. Should we just slowly and majestically sink—not perhaps drastically or tragically but go slowly down like a great ship—or shall we make a new determined and united effort, putting, as far as we can, party aside? There must be parties, of course, but there can be co-operation and even national governments. Let us do the latter and then historians of the future will not describe the ending of this century as the beginning of the decline and fall of Britain but as the beginning of a new and glorious renaissance.