Steel Recession to Slump
Core Argument¶
The article argues that the steel industry is not merely experiencing a cyclical downturn but is undergoing a structural crisis that threatens to transform a recession into a full-blown slump. The central claim is that the crisis in steel is a concentrated expression of the broader contradictions of global capitalism — overcapacity, falling prices, and intensifying inter-imperialist rivalry. The author contends that the response of capital — consolidation, protectionism, and state bailouts — will not resolve the crisis but merely displace it, while workers will be forced to bear the costs through job losses and attacks on living standards. The piece concludes with a confident assertion that the only way out is working-class resistance.
Theoretical Grounding¶
The analysis is grounded in the Marxist theory of capitalist crisis, particularly the tendency for the rate of profit to fall and the periodic crises of overaccumulation. The steel industry's chronic overcapacity — with global capacity at one billion tonnes but production falling to 830 million tonnes — is a textbook case of overaccumulation: too much capital invested in means of production relative to the possibility of realising surplus value through sales. The collapse of prices (hot rolled steel falling to less than $200 a tonne, comparable to bottled water) reflects the pressure of competition driving down prices toward costs, squeezing profits and forcing capitals to devalue.
The article also draws on Lenin's theory of imperialism, particularly the analysis of inter-imperialist rivalry. The US response — tariffs of up to 40% and demands for massive state subsidies — is presented not as a departure from free-market orthodoxy but as the logical outcome of capitalist competition when faced with crisis. The piece situates itself within the tradition of Trotskyist analysis that sees capitalist crises as opening opportunities for revolutionary intervention, while rejecting reformist illusions that the state can manage the crisis in workers' interests.
Conjunctural Relevance¶
The article was written in July 2005, but the conjuncture it analyses is 2001-2002, in the aftermath of the dot-com crash and the South East Asian financial crisis of 1998. The data is specific: world steel production for 2001 estimated at 830 million tonnes against capacity of one billion; US production down 11% year-on-year; 25 US steel companies bankrupt since 1998; British output in October 2001 down 22% year-on-year; Corus operating at 75% capacity.
Geopolitically, the article captures a moment when the US was pursuing aggressive protectionism under the Bush administration, while European and Japanese capitals were pursuing consolidation through mergers (Arcelor, NKK-Kawasaki). The South East Asian crisis is identified as a key trigger, having diverted steel exports into the US market and intensified competitive pressures. The piece anticipates that the crisis will deepen and that workers will be forced to fight, though it offers no specific analysis of the balance of forces within the labour movement at that time.
Where the Argument Continues¶
The article is relatively brief and does not develop several lines of argument that would be necessary for a fuller analysis. It does not examine the specific dynamics of the British steel industry in detail — the role of Corus (now Tata Steel), the history of privatisation, or the relationship between British steel and European integration. It also does not explore the political economy of the US steel tariffs in depth, nor the response of the European Union and the World Trade Organisation.
The argument continues in the broader corpus of In Defence of Marxism and Socialist Appeal articles on the steel industry and manufacturing crisis. Readers should look for later pieces on the 2008 financial crisis, which deepened the dynamics described here, and on the long-term decline of British manufacturing. The theoretical framework is developed further in articles on the tendency of the rate of profit to fall and on the theory of crisis more generally, as well as in Against the Stream episodes covering trade policy and deindustrialisation.
Connections¶
This article connects to several key Marxist texts and traditions:
- Lenin, Imperialism, the Highest Stage of Capitalism — for the analysis of inter-imperialist rivalry and protectionism as a response to crisis.
- Marx, Capital Volume 3 — particularly the chapters on the tendency of the rate of profit to fall and the counteracting tendencies, which underpin the analysis of overcapacity and price collapse.
- Trotsky, The Transitional Programme — for the strategic orientation toward working-class resistance and the rejection of reformist solutions.
- Ernest Mandel, Late Capitalism — for the analysis of long waves and structural crises of overaccumulation.
- Other In Defence of Marxism articles on the 2008 crash, the crisis of manufacturing, and the political economy of trade wars.
Key Quotes¶
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"What threatens to turn recession into slump is the US determination under growing pressure from home steel makers to introduce tariffs and import controls with duties of up to 40% on imported steel."
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"With American productions down 11% on the year to last July, 25 steel companies have declared bankruptcy since 1998 with the rest of the industry in a financial crisis described as 'going from dire to disastrous'."
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"Heavily graded hot rolled steel used for white goods plummeting to less than $200 a tonne — similar to the price of bottled water."
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"The economies of India, Japan, South Korea and Taiwan are all being adversely affected by the global slowdown, particularly in the IT segment. This is translating into weaker demand for steel for investment and durable goods."
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"All this means that steelworkers throughout the world will have to fight every inch of the way to defend jobs and incomes."
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"Any spark could lead to a concerted fight back; we remain confident that workers in Britain and internationally will rise to the challenge."