The crisis in Britain

mauro.jr at iol.it mauro.jr at iol.it
Wed Aug 30 12:59:39 MDT 1995


The Crisis in Britain
The situation in UK
The British Government is boasting, and has been boastingï for more
than 2 years that "the recovery is hereï'. It points to booming exports,
lower inflation, slightly falling unemployment and weak credit growth
to underline the point that this is a more substantial "recovery"
than any in British post war history What they can't explain is why
the mass of the population including the working class don't believe
them. For them the only reason for this bizarre phenomenon is that
"the feel-good factor has not yet arrived".
All this ignores the real situation. This reality was fully revealed
by the findings of the Joseph Rowntree Foundation Inquiry. This is
hardly a radical body since the inquiry team was headed by Sir Peter
Barclay and included the head of the Confederation of British Industry(CBI)
 The basic findings of the Rowntree Report are that
- the gap between the rich and poor is the greatest since the Second
World War
- since 1977 the number with an income less that half the average
has trebled
- the richest 10% of the population owns half the countryïs wealth
- the poorest 50% of the population owns 8% of the national wealth.
These findings apparently came as a shock to the inquiry team but
it is no shock to anyone with their eyes even minimally open. Despite
all the fake statistics massaged by almost 30 changes in the system
of calculating who qualifies for the title "unemployedïï the system
has 'functioned" on massive, long-term unemployment for almost two
decades. Even by Government figures 32% of unemployed men and 21%
of unemployed women have been out of work for twelve months or more
(figures which are four times higher than the equivalent percentages
in the USA). This massive expulsion of workers from the labour force
has not "priced workers back into a jobïï as the Tories promised.
What has happened instead is that profit margins have risen whilst
more have gone on the dole. British Steel is now a profitable firm
but 90% of its old workforce were sacked. It was not so much a "restructuri
g" as a destruction of the industry. Even the most successful privatisation
of all, the forerunner of all privatisations, British Telecom (BT)
has failed to achieve the Governments hopes. Privatised and deregulated
in order to be free to play a fuller role on the world stage BT fell
from 5th to 6th place in the telecommunications world players league!
Still, with œ2.31 billions profits it was by far the most profitable.
The sacking of 16,000 workers to achieve this superb result was of
course of minor significance.
ln fact the British economy is is a classic crisis situation where
investment is low because the actual level of economic activity is
fairly stagnant. In 1993-4 BT was not alone. British firms had a 40%
increase in cash surpluses but given the uncertainty about the future
this was used neither for investment for the future nor to cut prices
to increase market share. Why build up capacity if a new downturn
is just around the corner. Profits can remain high without new investment
simply by increasing exploitation of the remaining workeris and laying
off "surplus" staff. The consequence of this is that British manufacturing
output has risen only 3% between 1978 and 1992 compared to Germany's
30% and Japan's 65%.
The Labour Party has constantly screamed that the City of London has
not invested in industry but in fact it has never historically done
so. It has always preferred international activities (insurance, merchant
banking etc.) to the poor (at least in the short-term) returns from
investing in manufacturing. Over the last twenty years the banks have
financed only 3% of investment in manufacturiing. The other 97% comes
from internally generated funds of the various manufacturing firms.
lndeed with the deregulation of the City the problem has been in reverse.
Manufacturing firms no longer invest in their own manufacturing base.
In 1993 only 13 British companies appeared in the list of the world's
top 200 spenders on Research and development. Even they invested only
2.29% of their sales compared with the world average of 4.85%. Instead
British firms use surplus funds to speculate on international currency
markets or invest in US (or any other) Government securities. No wonder
that in the 1980s profits in manufacturing rose 6% but dividends to
shareholders rose 12% against only a 2% rise in total investment.
Parasitism is thus endemic to British capitalism.
None of this is so new. Speculative activity is the sign of a global
overproduction of capital in which to invest. This is not to say that
globally there are not millions of needs to be satisfied but that
there is insufficient profit to be generated from trying to satisfy
them. This is what Marx meant when he said that capital itself becomes
a barrier to its own self-expansion. There is no shortage of capital
around but there are shortages for profitable uses of that capital
and the capitalist are more concerned with defending existing capital
values and profit rates than satisfying human need. This problem is
not confined to Britain but is part of a global crisis caused by the
end of a cycle of accumulation. This crisis has now lasted twenty
years. During this time it has been managed but not solved. All kinds
of new strategies have been tried to recapitalise industry from privatisati
n of state industries at giveaway prices to deregulation of industry
and investment. The results have been less than specatacular with
a series of minicycles of boom and bust but growth rates globally
have remained low. In the Thatcher years, despite all the boasts of
having turned the British economy around, growth rates average only
two thirds of the previous forty years.
For the British working class there has been little evidence of restructuri
g ot industry more a destruction ot jopbs in industry. In the last
12 years 4 million full time jobs have gone to be replaced largely
by an increase in low paid insecure part-time work. One in every four
adult males is today jobless. And even with this growth of an increasingly
impoverished working class the crisis continues. Throughout the Seventies
Government ministers and capitalists talked about the workers who
demanded wage increase to match inflation as "pricing themselves out
of job". After years of real wage cuts and the lowest level of strikes
this century (and that includes World War Two!) this excuse to explain
the high level of unemployment has long sounded hollow.
The truth is that capitalism is forced to expand or die but expansion
has to be profitable. Capitalist enterprises cannot simply be profitable
in the sense of making a money profit. The firm has to be profitable
enough to lower the cost of its commodities below those of its rivals.
ln the last few years growth has remained stagnant but profitability
has increased enormously. This has been achieved by expelliny workers
from the labopur force (as our example of BT showed but we could have
picked a host of other examples in the private and public sectors.)
The truth is that continuous long-term unemployment is a necessary
condition for continuing capitalist functioning at this point. For
those who remain in work there has similarly been a rapid decline
in working conditions. They often have to work overtinle to rnake
up fol a poor basic wage and the rise in productivity has been achieved
by progressively more appalling working conditions. This has recently
reached obscene levels in privatised British Gas where the Cahirman
Cedric Brown, after awarding himself a pay rise of £ 750,000 has told
the workers that they can only have a pay rise if they take a cut
in holidays!
Unemployment is not caused by new technology. The problem is the way
that technology is applied. Capitalism long ago created the conditions
for all of us to work less and all of us to make meaningful contribution
to producing for society's needs. In any sane society the work would
be shared by all the workforce. But capitalism is not a rational system.
It is governed by a law of value which demands that production is
for profit rather than need. The Tories have insisted for the last
fifteen years that the market is the most efficient decision-maker
on needs. But in fact this has largely been  ideology since  the market
is politically determined. Nowhere was this clearer than the  1992-3
campaign against the coalminers. The pits we were told were unprofitable
but they  had only become so because the Government has rigged the
energy supply market in  favour of natural gas and nuclear power rather
than coal. Not surprisingly this provided the  case for the further
closure of "uneconomic" pits.
Is their a solution? In capitalist terms no. The Labour Party is now
talking (again!) of a  "socially responsible capitalism" on the German
(or even, Japanese) model where the state  takes on a greater role
in directing and planning national economic goals and where firms
 don't just pay out super-profits as dividends to shareholders but
invest at higher levels. But  this fails to note that the crisis is
as bad in the European economies as it is in Britain. If  Germany
has 8.1% unemployment as against the British 8.5%: (these are both
official  understatements of the real figures) it is difficult to
see what the difference is for the working  class in either country.
The truth is that Labour has no credible alternative programme to
that  of the Tories. Labour seeks to simply be a little more redistributive
in tax terms and for the  rest it will be the mixture as before.
To the left of Labour the Trotskyists all scream for nationalisation
and greater equality  which they claim the Labour Party has betrayed
and which they know defend in the name  of "socialism". But socialism
is not about nationalisation of capitalist industry or fairer  distribution
of money. It is about the destruction of the law of value, of the
profits system  and money. lt is not about a Big Brother nationalising
industry but about the workers  taking over the industries and producing
for needs and not financial targets. This is the  only real long-term
solution to the impasse of capitalism today.



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