Capitalism is ungovernable AGAINST THE STREAM

Against The Stream · 2026-05-21

Core Argument¶

The central thesis is that Britain's current political crisis — the rapid turnover of prime ministers, the collapse of the two-party system, and the widespread media discussion of "ungovernability" — is not a matter of incompetent leadership or bad luck. It is a systemic crisis of British capitalism itself. The episode argues that the underlying cause is a century-long process of deindustrialisation and financialisation, which has left Britain with a hollowed-out productive base, crippling public debt, and an economy dependent on speculative finance and the City of London. This structural weakness means that every subsequent global shock hits Britain harder than its competitors. The political paralysis arises because the ruling class needs to attack working-class living standards to restore competitiveness and attract investment, but cannot do so without triggering mass unrest and electoral collapse. The crisis of governance is therefore a symptom of the crisis of capital accumulation.

Theoretical Grounding¶

The analysis draws on several key Marxist concepts:

Combined and uneven development: The episode uses Trotsky's concept to explain how Britain, as the first industrial power, suffered from the "disadvantage of being at the forefront." Its early industrialisation created a heavy, outdated capital stock, while newer capitalist powers like Germany and the US leapfrogged ahead by building modern industries on "virgin soil." This is explicitly linked to the same dynamic now playing out between Germany and China.
The tendency of the rate of profit to fall is present implicitly: the declining competitiveness and productivity of British industry reflect a falling rate of profit in the productive sectors, which drives capital to seek refuge in financial speculation rather than productive investment.
Fictitious capital: The mountain of public debt — £110 billion in annual interest payments alone — is analysed as a massive transfer of wealth from the working class to the bondholders. The episode quotes Marx's observation that the national debt is "the only thing that's properly nationalised under capitalism."
The state as a committee of the ruling class: The Labour Party is described as "the B team of British capitalism," and the episode shows how the state is caught between the objective demands of capital (cuts, deregulation, attacks on wages) and the need to maintain electoral legitimacy.
The critique of reformism: The episode explicitly rejects reformist solutions — Modern Monetary Theory, taxing the rich, borrowing to invest, or debt default in isolation — arguing that any attempt to bend the laws of the market without breaking with capitalism itself will be met with a "strike of capital" or hyperinflation.

The analysis sits within the Trotskyist tradition, drawing on Trotsky's writings on Britain's decline and his concept of the "crisis of leadership." It is consistent with the RCI's broader theoretical framework: the rejection of reformism, the insistence on the need for revolutionary leadership, and the analysis of the current conjuncture as one of terminal crisis for global capitalism.

Conjunctural Relevance¶

The episode is grounded in very specific recent events:

The May 2025 local elections, where Labour lost 1,500 council seats out of 2,500 defended (60%) and lost 38 councils, including Labour strongholds like Birmingham and Sunderland. Labour was also "absolutely smashed" in Wales, which it had dominated for 100 years.
Keir Starmer is described as the most unpopular Prime Minister in recent history, likely to be the sixth prime minister to fall in ten years since the Brexit vote.
The episode draws parallels across the Western world: France has had five prime ministers since 2022; Germany's government collapsed a year and a half ago; the US presidency is "one rolling crisis."
The specific mechanism of the bond market is examined through the Liz Truss episode, where "unfunded tax cuts" triggered a fire sale of gilts, crashing the pension market and the wider economy. The "bond vigilantes" are shown to be exercising direct political power — openly discussing who should lead the Labour Party.
The episode connects Britain's vulnerability to the Iran war, the pandemic, and the Ukraine war, arguing that each global shock hits Britain harder because of its deindustrialised, import-dependent economy.
On the left, the episode notes the rise of the Greens under Zack Polanski and the popularity of MMT and "debt is a construct" arguments, which it subjects to sustained critique.

Where the Argument Continues¶

The episode deliberately leaves open the question of how revolutionary leadership is to be built. It ends with Trotsky's formulation from The Transitional Program — "the crisis of mankind in the final analysis is a crisis of leadership" — but does not develop the organisational or programmatic implications. This thread is taken up in other Against the Stream episodes and in the broader RCI corpus:

Episodes on the strikes in Minnesota and the Italian general strike would develop the analysis of working-class struggle as the necessary counterpoint to capitalist crisis.
The critique of reformism and MMT is developed in other episodes dealing with the Green Party and left reformist strategies.
The analysis of combined and uneven development between China and the West is a recurring theme in Spectre of Communism episodes.
The theoretical grounding in Trotsky's writings on Britain — particularly his analysis of the degeneration of British capitalist leadership — is referenced but not elaborated; this would be found in Trotsky's Where is Britain Going? and his writings on the British labour movement.

Connections¶

Trotsky, Where is Britain Going? and The Transitional Program: The episode explicitly draws on Trotsky's observation that 19th-century British leaders could "think in terms of centuries and continents," while later leaders degenerated into short-sighted careerists.
Marx, Capital Volume 1: The quote on accumulation of wealth at one pole and misery at the other is directly invoked.
Marx, The Eighteenth Brumaire of Louis Bonaparte: The episode quotes "Men make their own history, but they do not make it just as they please" — a key text for understanding the relationship between structural determination and political agency.
Engels, Anti-Dühring: The formulation "freedom is the recognition of necessity" is used to argue that understanding the laws of capitalism is the precondition for breaking with them.
Other Against the Stream episodes: The episode references previous discussions of Mitterrand's France, Allende's Chile, and the 1970s Labour government as examples of reformist governments crushed by the markets.
Kitson and Michie, Britain's Industrial Performance Since 1960: The academic study cited for the decline of manufacturing employment and productivity.

Key Quotes¶

"Trotsky actually pointed this out in his writings on Britain... He said that in the 19th century, Britain was at its heyday... it produced leaders who were capable of thinking in terms of centuries and continents. But he said already by the time he was writing, you had these kind of more dexterous, skillful leaders like Lloyd George, but even they were struggling to contain all the crises."
"You can't do social democracy on 1% growth. It was okay these kind of reformist governments... they could govern in a period where capitalism was booming, where the pie was getting bigger. But now the cupboard's bare."
"Annual interest payments alone stand at 110 billion pounds. This is not actually debt repayment. This is just interest payments. It's going to the pockets of the bankers. That's the point."
"Marx said that the national debt is the only thing that's properly nationalised under capitalism. And it's a massive transfer of wealth from the working class again to the capitalists."
"The capitalists are capital personified. Capital is money trying to make more money... They're not going to be sentimental or patriotic about that. If Britain looks like it's going to not give them the return that they can get elsewhere, they'll demand the higher rate of interest."