Against the background of this increasingly fractious and unstable world situation, British capitalism is in a particularly parlous situation compared to other economically developed countries.
The 2023 Financial Times annual survey of economists found that more than four fifths of them expect the UK to fare worse than other G7 economies, with GDP shrinking for all or most of 2023.
The OECD predicts the UK will be the G20’s ‘worst performer’ bar Russia in the next two years.
There are immediate weaknesses in the British economy that are given by capitalist commentators as explanations – including being heavily reliant on gas with very limited storage facilities, the disruption of Johnson’s Brexit deal, having a high percentage of mortgage holders with time-limited fixed rate deals and, more broadly, having the highest current account deficit of any of the G7 countries; and the fourth highest of the 38 advanced economies that the IMF tracks.
A current account deficit shows by how much the total value of goods and services a country’s imports exceed the amount it exports.
Imports of course, become more expensive when the currency falls in value.
All of these immediate factors are, however, inseparable from the underlying weaknesses of British capitalism.
British capitalism has been at the leading edge of one thing – restoring profits by driving down wages! Prior to the current surge of inflation, in 2020, the median household income per person, in real terms, was lower than the US, Canada, Australia, Germany or France, and – unlike any of them – was already falling markedly.
According to the Institute of Fiscal Studies, real household disposal income is a third less than the pre-2007 trend.
Meanwhile the Sunday Times Rich List shows, for example, that during the pandemic the number of billionaires in Britain grew by 24%, and billionaires’ collective wealth increased by 22%.
Today’s anger at the cost-of-living crisis is being enormously fuelled by the preceding long period of wages being squeezed, while a few at the top accumulated unimaginable riches.
However, alongside an increase in the share being taken by the super-rich, there has also been an incredible slowdown in the growth in British capitalism’s productiveness.
From 2007 to 2016 increases in labour productivity (increases in how much each worker produces) have been virtually zero, growing at a paltry 0.09% a year.
The fall in the rate of growth, from the already very low pre-‘Great Recession’ level, is equivalent to an output shortfall of close to 20%.
Some capitalist economists have concluded that this is the worst productivity slowdown for 250 years – in other words since the dawn of capitalism! The historical justification for capitalism was its ability to develop the productive forces – industry, science and technique.
Today globally, capitalism is an increasingly sclerotic system, but in Britain it has been incapable of even the tiniest increases in productivity.
Capitalism developed first in Britain, and is particularly decrepit today.
Levels of investment have languished below other developed economies for more than forty years.
‘Green’ investment is sixth out of the G7 countries, with only Japan having lower levels.
Long-term planning has been jettisoned for making a fast buck – hence, for example, the lack of gas storage facilities.
Britain led the international trend to privatise previously state-owned companies, services and infrastructure with little thought to the importance of their efficient functioning for capitalism as a whole.
The results have been particularly starkly revealed in the recent period.
For example, the French government was able to force the main energy provider, EDF, to cap price increases at 4%, because it already owned a majority of the company (and has since moved to fully nationalise).
In contrast, consumers’ energy bills in Britain have increased by an average of 80%.
Meanwhile the government intervention to prevent them rising even further, limited as it is, has thrown an estimated £89 billion at the energy companies.
The increased dominance of finance capital globally also went further in Britain than other major economies.
Now, however, even Britain’s finance sector is falling behind its competitors.
Johnson’s Brexit deal has accelerated this trend, but it is since the 2008 financial crisis that decline has really set in.
In terms of market capitalisation the London Stock Exchange has slid to eighth place in the world.
While it is dubious how much real economic development it represented, prior to 2008 Britain’s finance sector appeared to contribute to slightly higher productivity increases, but that is no longer the case even on paper.
