Britain, the world’s first capitalist superpower, is now the puny relative of the heavyweight capitalist countries.
Like a little leaky boat caught in the backwash from an ocean liner, Britain is buffeted by the fortunes of the major powers - above all those of the US.
British manufacturing industry is in catastrophic decline. Manufacturing remains the base of any modern economy because it is primarily responsible for the creation of new value. In 1978 this sector employed seven million people, almost three times as many as in financial services. Today only 4.3 million are employed in manufacturing while the service sector employs 5.2 million.
Britain has become the sweatshop of Europe. The majority of the remaining manufacturing workers are working for overseas firms which are exploiting some of the cheapest labour in the European trading bloc. In 1999 Britain was producing more cars than at any time since the 1960s – before the pull-outs by BMW, Vauxhall and Ford – yet less than one-hundredth of its output was by British-owned companies. Britain is also the leading producer of TVs in Europe. But of the six companies that manufacture them, five are Japanese and one is Korean.
This leaves Britain exceptionally vulnerable to the vagaries of the world economy. As the 1997-98 world economic crisis graphically illustrated, when a company is in trouble it tends to close its plants abroad before those at home. The result was the closure of Siemens in the North-East of England, along with other major job losses, especially in Scotland.
The same point is demonstrated by the car industry where chronic overproduction has led to workers facing huge job losses at almost all of Britain's car plants. In a future serious economic crisis the flight of foreign investors to their own markets will be far more severe than even that which we have already experienced.
For while globalisation has transformed the planet, it has also come up against definite limits, especially the barriers of the nation state (such as tariffs, borders and currencies, etc). The nation state is part of the fundamental structure of capitalism and, as long as capitalism remains, it will never be more than partially overcome.
There is virtually no such a thing as a genuinely transnational company – that is, a company with no 'home' nation. The closest that exists is Shell, whose ownership is based in two countries, the Netherlands and Britain.
John Gray points out in his book, False Dawn: The Delusions of Global Capitalism, that the multinationals are not
In other words, the multinationals have a home nation to which they tend to return when times get hard. The weakness of British capitalism means that very few multinationals are British owned. The few that are reached prominence decades or even centuries ago. All but two of the top ten British multinationals are based on ‘old’ industry, in most cases raw materials such as oil.
Longest hours in Europe
In the 1970s the weakness of British capitalism used to be put down to the 'greedy workers'. Today few dare to raise this idea seriously. British workers work the longest hours in the European Union. The average British household now works seven hours a week longer than it did at the start of the 1980s. Longer working hours have meant that the average night's sleep in Britain is now down to seven hours, compared to nine at the beginning of the last century.
Regardless of the ever-increasing workload shouldered by working people, industry is in an increasingly decrepit state. The reality is that the ruling class in Britain no longer invests in industry. It is an increasingly parasitic class, driven by its own short-term interests. Productivity levels (the average amount produced per hour by each worker) languish behind the rest of the so-called ‘advanced’ world.
A recent study by the London School of Economics showed that if productivity levels in Britain were given a score of 100, France would score 133, followed by Germany on 129, with the US on 126. Francis Green, professor of economics at Kent University explained:
The capitalist class has always been driven by the need to make profits. Today, however, the long-term crisis of British capitalism has resulted in a ruling class which is, in the main, exceptionally short-sighted and driven purely by the best way to make a quick buck.
Overwhelmingly, productivity increases have come not as a result of new technology but from the increased exploitation of working people. Research and development in industry has been lower than the rest of Europe for 20 years. It has recently fallen even further, from 2.29% of GDP in 1986 to 1.94% in 1996. In 1999 investment in British manufacturing plummeted by a further 13.6%.
Yet in 2000, according to the government’s figures, Britain became the fourth-largest economy in the world in terms of income. This growth comes mainly from the finance sector and from massive investments of British capitalism abroad.
This has been fuelled by the huge profits from North Sea oil. Rather than these profits being reinvested to increase industrial capacity, they have been used to cushion the effects of Thatcher’s catastrophic policies of mass unemployment in the 1980s. And they have also been used by British capitalism to invest abroad, particularly in buying assets in the US economy.
"The world's biggest hedge fund" was how a recent report by the City firm, Smithers & Co, described Britain. In other words, it is just one big casino where the world's financiers come and gamble their billions. The report went on to say that Britain was uniquely vulnerable to a world recession because its
This remains true even though, at the time of writing, Britain has not yet been as badly affected by the current US downturn as other countries – ironically because the devastated manufacturing industry is such a small sector in the British economy.
The finance sector is in a position of overweening dominance over the economy as a whole. The City of London is second only to New York and Tokyo in its international importance. However, even finance capital is not actually dominated by the feeble British bosses. The London Stock Exchange (LSE) is under serious threat of takeover. The Guardian accidentally revealed how incompetent it believes British big business to be in an editorial:
For working-class people the pathetic weakness of British capitalism has already meant decades of increasing hardship. Unfortunately, in future economic crises, we will once again suffer the consequences of the British ruling class’s enfeebled state.