Long-term economic perspective¶
Core Argument¶
This chapter argues that the long-term economic trajectory of British capitalism is one of terminal decline, a process whose basis was long ago analysed and foreseen by Marxism. Britain’s historic wealth and global dominance were products of the rise of capitalism in an era without serious rivals. Drawing on Trotsky’s Where is Britain Going?, the chapter contends that these very advantages have now become crippling disadvantages. British technique fell behind that of Germany and the United States. Unable to compete, the British capitalist class—particularly the monopolists—deliberately sabotaged technical development, entrenching themselves, like the French empire, on vast resources and their own backwardness. Operating within the semi-closed system of the sterling bloc with assured markets, British capitalism lacked any incentive for large-scale rationalisation, which would have increased production without corresponding markets.
The war, the chapter asserts, has destroyed this privileged position forever. The “vampire economy” of Britain, which extracted tribute from its Empire and semi-colonies through foreign investments, has been fatally undermined by the loss of those investments during the war. The unfavourable balance of trade, once a weapon of British imperialism, now threatens the masses’ standard of living and the very existence of British capitalism. The system’s greatest former stability has become its greatest source of instability. More dependent than ever on world markets, Britain’s economy will be even more violently affected by future slumps. The chapter predicts that Britain will be compelled to launch a struggle for markets with greater ferocity than German imperialism under the Nazis. The character of British trade has fundamentally changed: coal exports, once the staple, have collapsed to almost nothing, and Britain now cannot even meet its own coal needs. Meanwhile, the industrialisation of formerly backward areas—especially the Dominions and Empire—means Britain no longer exports the same types of goods, transforming both its exports and its industrial structure.
In the long run, this makes Britain more vulnerable than ever to world market fluctuations. Exposed and unable to protect itself behind a closed imperial system from competition, above all from America, Britain is forced to abandon its policy of maintaining antiquated equipment and must modernise to compete with American production. Yet the chapter concludes that all such measures will be in vain. It is too late to catch the American colossus. Senile British capitalism cannot rejuvenate itself or capture new positions in a world market shrinking relative to world productivity. The long-term outlook for British imperialism is one of certain catastrophe.