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UK Never had it so good

Marxist Analysis · 2026-05-13

Core Argument

The article argues that the apparent economic success of the British economy under New Labour — low unemployment, low inflation, steady growth — is a superficial and misleading picture that masks deep structural weaknesses. Michael Roberts contends that the UK economy is not genuinely prosperous but parasitic, dependent on financial and rentier activities rather than productive industry, and that beneath the headline figures, workers face intensified exploitation, stagnant living standards, rising inequality, and an impending economic downturn. The central thesis is that British capitalism's reliance on foreign investment, financial services, and a property bubble makes it uniquely vulnerable, and that New Labour's "success" is a temporary, fragile illusion sustained by spin rather than substance.

Theoretical Grounding

The analysis is grounded in the Marxist critique of political economy, particularly the distinction between productive and unproductive labour. Roberts draws on the classical Marxist understanding that genuine economic health depends on productive industry — manufacturing, technology, innovation — rather than financial speculation, retail, and rentier activity. The article implicitly deploys the concept of fictitious capital in its treatment of the housing bubble, where rising property prices create the appearance of wealth while actually deepening inequality and diverting investment from productive uses.

The argument also sits within the Marxist tradition's critique of the state under capitalism. New Labour is treated not as a neutral manager of the economy but as the political agent of British capital, pursuing policies — the opt-out from the 48-hour working week, the destruction of social housing, the reliance on inward investment — that serve the interests of the capitalist class at the expense of workers. The article's focus on productivity differentials between the UK and its competitors reflects the Marxist concern with the rate of exploitation and the competitive dynamics of the world market.

The analysis is consistent with the broader Marxist tradition's insistence that official statistics — particularly unemployment figures — systematically understate the real condition of the working class. Roberts's critique of the "bogus" unemployment rate is a direct application of Marx's concept of the reserve army of labour.

Conjunctural Relevance

The article was written in July 2005, at a moment when the global economy was still recovering from the 2001-2002 recession and the US housing bubble was inflating. The UK appeared to be outperforming its European competitors, with growth rates exceeding those of France and Germany. Roberts identifies several specific conjunctural features:

  • Productivity crisis: UK manufacturing productivity at 67% of US levels, with France at 85%, despite British workers having the longest hours in Europe.
  • Deindustrialisation: Manufacturing trade deficit of £25 billion, compared to a £2 billion surplus in 1982; 25% of manufacturing output now from foreign-owned companies.
  • Housing bubble: Property prices rising at 16% annually; first-time buyer age rising from 29 to 34; lowest new house construction since 1924.
  • Dependence on inward investment: 19% of all investment into Europe going to the UK, but US companies cutting European investment by 25%.
  • Stagnation: GDP growth of just 0.1% in Q1 2005, with the previous quarter static; annual growth of 1%, the weakest in a decade; industrial output falling at 7.4% annually.

Roberts also notes the IMF's scepticism of Gordon Brown's 3-3.5% growth forecast, predicting instead 2.5%, and warns that a US recession would drag the UK down further.

Where the Argument Continues

This article is an early contribution to a theme that Roberts and the IDOM tradition have developed extensively over the subsequent two decades. The argument about the UK's dependence on financial services and the property bubble anticipates the 2008 financial crisis, which Roberts analysed in depth in subsequent articles on the global slump. The critique of New Labour's "spin" and its failure to address inequality connects to later IDOM analyses of the austerity era, the Corbyn project, and the post-2008 stagnation of the British economy.

Readers should consult:

  • Michael Roberts's later work on the UK economy, particularly his analyses of the 2008 crash and its aftermath, available on his blog The Next Recession and on marxist.com.
  • IDOM articles on the global tendency of the rate of profit to fall, which provide the theoretical framework for understanding why the UK's productivity crisis is not merely a national problem but a symptom of capitalism's systemic contradictions.
  • Against the Stream episodes covering the British economy, particularly those from 2008-2010 and 2016-2020, which trace the consequences of the dynamics identified here.

Connections

This article should be read alongside:

  • Marx, Capital Volume II, on the distinction between productive and unproductive labour, and the circuits of capital.
  • Marx, Capital Volume III, on fictitious capital and the credit system.
  • Engels, The Condition of the Working Class in England, for the historical precedent of British capitalism's reliance on super-exploitation.
  • Andrew Glyn, Capitalism Unleashed, for a non-Marxist but empirically rich account of the same period.
  • David Harvey, The Enigma of Capital, for the theory of accumulation by dispossession, which illuminates the housing bubble dynamics Roberts describes.
  • IDOM's series on the British labour movement, which situates the political implications of this economic analysis within the struggle for a revolutionary alternative.

Key Quotes

  1. "The British economy is a parasite on the rest of productive capitalism."

  2. "For that very reason, British capitalism's dependence on the rest of the world's capitalists, it has done well in the boom years. But it also means it will do badly in the lean years."

  3. "The worst feature of continued tinkering with the inequalities and injustices of British capitalism must be housing. ... We are now in a massive property bubble that will eventually burst, but in the meantime it is creating more and more inequality in wealth and income."

  4. "The rich 10% are turning themselves into a rentier class. Left to the market, the housing needs of the average Briton will never be met. Public ownership and national planning is essential, just as it is for public transport."

  5. "Poverty, inequality, instability and stagnation are the Four Horsemen of the Economic Apocalypse. They remain brooding over the British Isles. And they will crush the optimism of the New Labour spin doctors."

  6. "The reason that we need so many more workers is that the productivity of the existing workforce in the UK is so poor. It's not that the British don't work hard enough. ... Since, under the pressure of British big business, New Labour opted out of the 1998 EU directive to limit most workers to a 48-hour week, nearly 4 million Britons are working longer than this."