BRITAIN, in terms of Gross National Product per head, ranks 22nd in the world economic league. Yet 80 years ago Britain appeared to be the world's most powerful capitalist power, and just 30 years ago easily one of the big five. What happened? Why has the British ruling class allowed its industrial base to be progressively wiped out?
As everyone knows Britain was the first industrial power and in the 18th and 19th centuries became, through the combination of industrialisation, sea power and the slave trade, the world's major imperialist power.
Such was Britain's domination of the world economy and the extent of the empire, that by 1860 Britain produced 53 per cent of the world's iron, 50 per cent of its coal and consumed half of the world's cotton output.
Industry
With 2 per cent of world population Britain had about 45 per cent of the world' sindustry, and nearly 60 per cent of that in Europe. British ships brought raw materials from all over the globe to the giant ports of London, Liverpool and Glasgow -and exported back British manufactures.
Yet already by 1860 Britain's domination was under threat. The fruits of being the first could only last so long; and in the mid-19th century the ruling class made a fateful strategic decision which would hasten its historic decline.
The battle over the Corn Laws was the centrepiece of the fight between the champions of free trade and the partisans of 'protection' and imperial preferencé'. Free traders elieved that Britain's industry was so strong that a world regime without substantial import taritis British industry everywhere.
The free traders won and the Corn Laws were abolished. The net result was that while Britain championed the free trade approach, countries like the United States and Germany built up their industries behind sign are was By the late 19th centurit was obvious that Britain's industrial supremacy was under seige. And the conflict between the major imperialist powers led directly to the first world war, where Britain made the historic decision to ally with the United 25 Oct, 1992 No. 30 Fool Britannia? Thatcher States against Germany. The cost of two world wars finished off Britain's empire.
But the legacy of the empire and growing industrial decline produced a very particular type of capitalism, and a very particular type of ruling class. Be the size of the empire and because of Britain's sea power, London became the financial and trading centre of the world.
Thus already in the late 19th century British capital had developed a much wider spread of international investthan any other serrator= 5::: greater weize. di commen and financial interests, as opposed to industrial manufacturing interests.
The second world war dealt the final death blow to empire. No hope and less glory - the visions of Empire tumble into the mire of Maastricht Britain payed for the war via Lend Lease, in effect huge subsidies from the United States. But US president Rooseveltdrove a hard bargain. The empire was sold off to American domination. Paradox The post war economic boom continued to disguise extent of Britain's decline. The paradox was that while British capitalism, continued to decline relative to the US, Germany, Japan and France, in absolute terms of the economy expanded as it did in every capitalist power.
This disguised the real extent f the impending crisis. Its scope started to become ap parent when the pound was devalued by Chancellor Roy Jenkins in 1967, and especially after the onset of world reces sion in 1974-5.
Every world economic crisis involves a new division of labour between the major capitalist powers. In the crisis since 1974the United States and Britain have been losing out to Germany and Japan. The major story in historical terms is the decline of the US post-war dominance. But in absolute erms Britain's decline has been In part iris ras seer because of objective factors which the capitalist class has been helpless to stop. The creaking structures of British manufacturing have been no match for the rebuilt post-war industry of Japan and Germany. But consistently government policies and the dominant orientation of the ruling class have worsened the crisis.
The fundamental reason for this has been the relative strength of commercial and financial interests in the British bourgeoisie. Finance capital constantly strives to maximise short term gains on investment; the long term health of British capitalism' is a category which doesn't make sense to the individual capitalist deciding where to invest.
Thus instead of systematic investment in British industry huge amounts of capital have gone abroad, and as non-British industry has gained in strength, into financial and commercial operations.
The Thatcher era only worsened this process. By deregulating exchange controls and unleashing privatisation mania, financial speculation was let rip. The weight of commercial and financial interests in the strengthened.
Why does all this matter for British capitalism? Why does it matter that British industry is declining, so long as profits come back from British investment overseas, ana trom domestic service industries? What's so special manufacturing industry?
For the individual capitalist it doesn't matter a hoot where the protit on investment comes trom. But for the overall strength of a particular capitalism it does. In the end profits only come from surplus value, the creation of new value in the labour process. Most financial operations and many service 'industries just re-allocate surplus value already created.
Profits generated abroad may individual capitalists wealthy, but in general profits are re-invested Declining manufacturing reduces the size both of the service sector. and the surplus value available for investment in any kind of enterprise.
Compared with most international capitalism Britain is uniquely vulnerable to recession In world economy. Today world depression and domestic slump fuel another. Britain may be the first fully experience de-industrialisation.
The decline of British capitalism is in the end a spectacular example of the anarchy and irrationality of capitalist production. The search for profit in the end begins to undermine the foundations of capitalist production itself. This major tendency inherent in capitalism has been reinforced by a ruling class steeped in the arrogance of empire, sure of its world role, unable to grasp that a major réorientation was needed to secure even its own long-term future.
As Marx remarked, a ship of fools can sink simply because its captain and crew refuse to believe it possible, or take any steps to avoid it.