This document is a statement on Britain, an analysis which was agreed
unanimously at the national conference of Socialist Appeal in April.
The statement constitutes an analysis of the deepening social,
political and economic crisis of British capitalism. This perspective
applies the method of Marxism to these developments, seeking to uncover
the trends and processes within, and serves as a guide to action for
all those workers and youth who want to struggle for a socialist
transformation of society.
Events in Britain have had a
protracted character since the coming to power of Blair in 1997. However, it
would be a grave mistake to believe that things will simply trundle along in a
similar fashion in the next period. The contradictions have deepened everywhere
and the pressures are piling up.
The world market is more dominant
today than at any other time in history. More than in any other period, we live
in an epoch of world economy, world history and world politics. This is of
profound significance. If we are to understand what is likely to unfold in
Britain, we have to understand British perspectives in its world context. The
processes affecting every country are determined in the final analysis by the
world situation. This must be kept firmly in mind.
As we have explained fully in our 2006 World Perspectives document, we
have entered the most turbulent period in world history. Upheavals in the past
have tended to affect one or more continents, whereas today every sector of the
world is affected by shocks and instability. One shock after another –
economic, political, military, etc – is shaking the system to its foundations.
The world situation is characterized by extreme instability, which is a
reflection of the impasse of the capitalist system on a world scale. The world
has been plunged into a maelstrom of conflicts, wars and terrorism.
Beneath the surface, revolutionary
conditions are maturing. Revolutionary developments are implicit in the whole
world situation. Everywhere we look we see an enormous ferment. At different
rates, and in different ways, this will find its expression in the
consciousness of the masses and be manifested in all kinds of social and
political crises and explosions.
Since 1974, we have entered a new
phase of capitalist development, where booms do not, as in the past, lead to a
general rise in living standards, but are now increasingly achieved at the
expense of the working class. Social inequality has become a chasm everywhere,
with obscene riches at one end and extreme and increasing poverty at the other.
In all countries the share of profits in the national income has increased to
record levels while the portion dedicated to wages has fallen.
The process of concentration of
capital predicted by Marx has increased to unheard of levels through continual
mergers and asset stripping. Today, some 500 international monopolies account
for 45% of world output.
The present boom has a sickly
character, with most of the advanced economies limping along. There is modest
growth in America, but it is based on huge deficits. Only in China has there
been large-scale growth for fifteen years, but even here there is the growing
threat from overproduction, protectionism and chronic pollution. A recession in
China, which is being predicted by bourgeois economists, will have serious
implications for the world economy, especially when the US economy is running
out of steam.
Today, capitalism, as a world
system of production, is incapable of developing the productive forces as it
did in the past. The nation state and private ownership of the means of
production have become enormous fetters on industry, technique and science.
Despite the current boom, living standards are under attack in all the advanced
countries, while in the underdeveloped world living standards are falling.
The serious strategists of capital
are increasingly concerned about what the future holds. Despite the record
profits being made, economic development is largely based on credit,
speculation and asset stripping. Much activity is based on fictitious capital.
This reflects the parasitic nature of present-day capitalism. This, in turn,
prepares the basis for new and severe crises on world stock markets, which,
given the fragile nature of the boom and the warnings of a recession in the USA
and China, can tip the whole world onto a recession.
An article in the Financial
Times showed the real mood on the boards of directors of the big banks and
monopolies: "‘Our thesis is that excess liquidity in the global economy has
allowed banks to create more and more derivative products from a stock of debt
and equity. This is banking alchemy, the ability to turn a given asset into new
money-making opportunities several times over,’ says Simon Maughan, an analyst
at Blue Oak Capital. ‘The current boom in banking revenues is thus a liquidity
bubble, like many others throughout history, and the major question is when it
will end. That is, if it hasn’t already’."
Another recent article in the FT
entitled "The world must prepare for America’s recession", was warning of the
dangers in the US economy, the biggest and most powerful economy in the world.
This article explained that growth was weak, consumption was falling, sales
were falling and investment in equipment was on the decline. "As consumer
demand is slowing, profit-rich companies are not finding good investment
opportunities to increase capacity, and are thus returning such profits to
shareholders in an unprecedented buy-back bonanza… Indeed, the recent housing
bubble has led to a glut of housing stock, consumer durables and lingering
excess capacity in the rest of the economy."
The enormous trade and budget
deficits of the US economy are reaching untenable proportions. Bush has now
demanded from Congress increased spending on defence, as a consequence of the
financially draining wars in Iraq and Afghanistan, which will send the deficits
up even higher. As elsewhere, due to cheap credit, corporate and personal debt
has reached astronomical levels. But the increase in interest rates over the
past year is beginning to affect the housing market and consumer spending
generally. The whole of the US economy is in a fragile state. How long foreign
capitalists will continue to pay for these deficits is not possible to predict,
but this situation cannot be sustained indefinitely. The boom may last another
year or two longer, but a collapse is inevitable at some point. The
contradictions are piling up, one upon another. It will have a much greater impact
than the bursting of the dot.com bubble.
Even without a world economic
crisis, the world situation has never been so precarious and volatile. The wars
in Iraq and Afghanistan have simply added to the instability, and not only in
the Middle East. If it takes place, US aggression against Iran will only serve
to intensify this instability worldwide.
Imperialism
In Iraq the imperialists are
staring defeat in the face. Already more than 3,000 US troops have died in
Iraq, greater than the number killed in 9/11, together with countless Iraqi
deaths and injuries. Bush has now announced "the Surge", the dispatch of a
further 21,500 American troops to Iraq. But no matter how many troops they pour
in, they cannot win.
On the ground the situation has
gone from bad to worse. "Iraq has reached advanced social breakdown, with
ethnic cleansing on a regional, neighbourhood and even street-by-street basis",
explains the Financial Times. "…the
number of killed in the capital alone has rocketed to more than 100 a day,
while on average an attack occurs against Anglo-American forces every 10
minutes…"
Even in the White House, there is
growing awareness that the coalition forces have been defeated in Iraq.
However, to withdraw now would have grave consequences for US imperialism.
Whatever they do now will be wrong. There is huge and growing opposition in the
United States to the Iraq war with only 25% supporting the Bush’s decision to
send in more troops.
The war has caused splits in the
Republican Party and led to a sharp fall in their popularity. As a consequence,
the Republicans are facing defeat at the next Presidential elections. However,
the Democrats will behave no differently. Hilary Clinton, who is the favourite
to succeed Bush, voted for the war and will act in the interests of US imperialism.
The worldwide impasse of
capitalism has reflected itself not only in imperialist aggression in the
Middle East, but in the unfolding revolutionary crisis in Latin America. The
chain of world capitalism is tending to break at its weakest link. The
epicentre of this Latin American revolutionary wave is in Venezuela. It is a
further confirmation of Trotsky’s Permanent Revolution that the
national-democratic revolution in the modern epoch crashes up against the
barriers of capitalism.
The Presidential victory in
December and the measures announced by Chavez for the nationalization of
certain strategic industries represent a further step forward. It will provoke
even greater resistance from the oligarchy and the imperialists. But there is
enormous and growing pressure from the masses to go much further and complete
the revolution. We must be alert to sharp and sudden changes in the situation.
British imperialism’s role in
supporting the adventures of US imperialism in Iraq and elsewhere is having far
reaching consequences inside Britain. The huge demonstration at the beginning
of the Iraq war of 2 million people in London, the biggest demonstration in
British history, was a reflection of the profound discontent in British
society. The impact of the invasion and occupation is far from over. To date,
over 100 British soldiers have been killed. Blair, nor the New Labour
government, can escape the stench from the lies and deceit used to justify the
invasion of Iraq. It will be Blair’s everlasting legacy.
Blair has faithfully served his
master in the White House. He has stated that Bush’s new surge into Iraq "made
sense". This grovelling support for US imperialism simply reflects the abject
dependency of enfeebled British capitalism, incapable of playing any independent
role on a world scale. The decision to maintain Trident, at a cost of over £20
billion (plus nearly £2 billion a year in running costs), is again part of this
dependency. Britain’s "independent" defence system is dependent upon US
technology. Blair’s military interventions in Iraq and Afghanistan are an
attempt to boost Britain’s role and prestige as a world player and faithful
ally of US imperialism. However, this prestige is simply an enormous drain on
the weakened British economy, imposing further cuts on social spending. The
reduction in British troops in Iraq is in order to place more troops in
Afghanistan. It is to jump from the frying pan into the fire. Nobody in
history, including the British in the past, has ever succeeded in conquering Afghanistan.
This Nato/British/US attempt will fair no better, creating greater opposition
at home. Already the families of dead British soldiers are speaking out more
boldly about British foreign policy.
British capitalism is now too weak
and feeble to play this world role. The days of the British Empire have long
gone. The British armed forces are completely overstretched. They haven’t got
the forces to fight in two medium wars on two fronts. General Sir Richard
Dannatt, the new army chief, has urged the government not to "break" the army
over its twin engagements in Iraq and Afghanistan. He is simply facing up to
realities on the ground. According to Anthony Cordesman, the experienced US
military analyst: "The British have essentially been defeated in Basra." They
are being forced to withdraw from street patrols. It wasn’t so long ago that
the British were patrolling with soft hats and boasting how well received they
were compared to the Americans. How times change. With intensified fighting in
Afghanistan, any additional military adventures will only serve to break the
dispirited British army.
These imperialist conflicts have
had a considerable impact in Britain. The failure to find weapons of mass
destruction, the continuing presence in Iraq and Afghanistan, Blair’s fawning
over Bush, the rising death toll, the daily pictures on our TV screens, has
produced, as in the US, a massive anti-war feeling. Some 100,000 people
participated in the recent anti-war demos in London and Glasgow. The Iraq war
is a major reason why there has been a fall in popularity for Blair and the
government. If Brown succeeds him, despite the rumours of his initial whispered
"opposition" to the intervention, he will continue with Blair’s foreign policy.
The continued occupation of Iraq will further erode support for the Labour
government and has major implications for the outcome of the next general
election with Cameron, in opportunist fashion, taking a critical stance against
the war. In power, the Tories would act no differently to Blair.
Apart from the war, developments
in Britain appear to be unfolding rather slowly. The Labour leadership has
continued to move further to the right. Trade union membership has continued to
dwindle, with just over six million affiliated to the TUC. Over this time,
there have been no major class battles. In fact, days lost in strike action
last year are the lowest since records began in 1891, although this does not
tell the full picture. At times, it has seemed as if events have been unfolding
in slow motion.
However, the apparent successes of
New Labour are beginning to unravel. The removal of Blair will open the
floodgates of criticism and discontent in the rank and file, which has been
building up for years. Gordon Brown, whose politics are not fundamentally
different from those of Blair, will not be so lucky as was his rival. He will
be faced with a world economic downturn in which the weakness of British
capitalism will stand cruelly exposed. He will have to make deep cuts in public
spending that will provoke outrage in the ranks of the Party and resistance
form the unions.
Decline in industry
The key question is the relative
decline of British capitalism over a long period. The extreme short-sightedness
and parasitism of the degenerate British ruling class has led to the collapse
of Britain’s industrial base. The "workshop of the world" has been reduced to a
shadow of its former self, outclassed in nearly every field by its foreign
rivals. Large swathes of manufacturing industry were closed under Thatcher.
Coal, steel, shipbuilding, the car industry were all reduced to a frail
skeleton of their former strength.
Manufacturing is now in terminal
decline. As a proportion of the total economy, manufacturing has shrunk from
23% in 1990 to 14% in 2005. The number of manufacturing jobs has collapsed from
5.2 million in 1986, to 3.3 million last year. Almost 8,000 jobs were lost in
manufacturing in January this year alone, as the bosses shipped their companies
abroad in pursuit of cheap labour.
The takeover of British Steel by
the Indian company Tata speaks volumes about the state of British capitalism,
undermined by decades of under-investment and shortsightedness. Rover, the last
British-owned mass carmaker, was finally dismantled by Chinese creditors in
2005. Britain now exports 1.3m cars a year under American, French and Japanese
brand names.
Side by side with the destruction
of British industry, the parasitic finance sector has grown and achieved an
absolute dominance. From the 1980s onwards, the City of London became
increasingly the hub of international financial trading. The service sector
also grew rapidly. Large numbers of state-owned industries were privatised at
knockdown prices. British capitalism has become more and more converted into a
parasitic rentier economy, like France
before the Second World War, an economy based on banking, insurance and service
industries.
Despite this, Blair and Brown have boasted of
Britain’s alleged economic successes. In reality, this is a hollow boast.
Average annual economic growth since 1997, at 2.8%, has been slightly above its
post-war trend, despite slowdowns in 2002 and 2005. If the world economy holds
up, this year the British economy is likely to grow by 2.5%, hardly the
"economic miracle" that Blair and Brown talk about. It is not a reflection of a
robust British economy, but the huge growth in a sea of personal and corporate
debt, which we will return to later. Given the strength of sterling, last year
Britain was second only to America as a destination for foreign direct
investment, lured by the prospect of making easy money.
Where is Britain Going? A Marxist Analysis of Britain Today – Part 2
Where is Britain Going? A Marxist Analysis of Britain Today – Part 3
Where is Britain Going? A Marxist Analysis of Britain Today – Part 4
