The Decline of the United Kingdom: the End of its Empire in a European Context
Brexit-the Long Goodbye
The „traumatic” result of the British referendum in June 2016 on membership of the European Union continues to reverberate. Irritated, the heads of state of the European Union immediately insisted the United Kingdom would have to adhere to the stringent conditions of the Lisbon Treaty’s Article 50, which stipulates s a period of two years for a country to complete the process of revoking its membership. The United Kingdom is having difficulties imposing its negotiating position and many states, Germany included, have said that the UK cannot expect better treatment outside the EU than it enjoyed inside.
In order to reassure the „Brexiters”, the British Prime Minister has confirmed that the result of the referendum will be honoured, and that „Brexit means Brexit”. But still no-one has any idea what Brexit actually entails, least of all the Brexiters. The anti-Brexit camp then started issuing dark warnings to workers about how their condition will deteriorate if not protected by EU labour legislation (as we are now!), and the Prime Minister retorted with a few perfunctory comments, posing as the protector of the poor; which convinced no-one.
The economic, commercial, financial, political, diplomatic, military, regulatory and institutional links that constitute the European Union, to be dispensed with or renegotiated, have not only not been tackled but have not even been listed. The triggering of Article 50 was therefore postponed, only finally taking place on March 29.
What is certain is that the vote to leave has set in motion all kinds of dislocations inside the traditional party machines. The Conservative Party leadership hastily nominated Theresa May; Jeremy Corbyn sacked members of the Shadow Cabinet and faced a new struggle for the Labour Party leadership. The arguments of both the Remainer and Brexiter camps on sovereignty, immigration, etc, have stayed substantially the same-and they are all in any case meaningless from the perspective of the working class in a world where capitalism is the sovereign power.
Theresa May’s supposedly new „One Nation” policy is equally vacuous, while the suggestion that there could be an „Empire 2.0” blatantly harks back to the policy of Imperial Preference advocated by Joseph Chamberlain at the end of the 19th Century in defence of British imperialism and colonialism, which were even then already in decline. It is clear that the decisions on how to proceed and what type of Brexit it will be have not yet been taken.
Although the pound has been devalued, with some knock-on effect on the rate of inflation, so far there have been no major economic consequences, thanks largely to the intervention of the Bank of England lowering the interest rate to ward off recession after the referendum.
Europe after the Second World War
We made an initial assessment of the Brexit vote in the last Communist Left (no. 38/39) in the articles „Against the European Union Referendum!” and „The Tottering Framework of Capitalism”. And here we continue our examination of the events which led to the present situation. In the second article we referred to the domestic and international events which in 1970-74 led to the fall of the Heath government, which was overwhelmed by strikes, in particular by the miners. The petrol shortage, which forced industry to introduce a three-day week and cuts to the electricity supply, contributed to the image of a country that was out of control. It was in these circumstances that the Heath government had hastened to join the European Economic Community.
By joining the EEC the United Kingdom certainly didn’t put a stop to the long decline of the UK economy; but it did provide an opportunity for the monetarists, in particular that loathsome variety gathered around Thatcher, to „restructure” the national economy. This represented a shift from the post-war Keynesian justification for the state planning of investments towards the opposite position, exalting the principles of the „free market”. What finally appears today as an abandonment of monetarism doesn’t signify a return to orthodox Keynesianism, but rather to a mishmash of the two ideologies.
In the period of Keynesian orthodoxy, the world had recently emerged from the Second World War. The USA was economically and militarily the dominant power, and the whole of Europe the spoils of war, with social upheaval a constant threat. A new panorama of capitalism had opened up.
The British Empire was over, its formal liquidation and the final acceptance of its inevitable demise only a decade away. New geo-political realities had been established, even if there were many in the ruling class deluded enough to think that Great Britain was still a global power able to take on all comers, and that a British Prime Minister could still draw lines in the sand marking out British spheres of interest. The Suez crisis of 1956 confirmed the reality of Britain’s decline and accelerated the process of decolonialization.
The new reality was a Europe divided between the imperialist powers of America and Russia; a division imposed by means of economic as well as military force. Early on America was the only atomic power and had overwhelming supremacy, even if Russia was still able to muster a huge number of boots on the ground. Later on, in the so-called Cold War period, which was characterised by its ploys and counter-ploys, by the nuclear arms race, by proxy wars (Korea, Vietnam), by the McCarthyist and Stalinist purges, by the NATO and Warsaw pacts, the two sides often seemed like grotesque reflections of one another in some vast distorting mirror.
With Europe divided in this way, the possibility of a threat to peace from a re-emergent Germany was removed. Indeed the Morgenthau plan, backed by France, which proposed the de-industrialization of Germany and its return to an agricultural past was rejected once and for all. Besides, the reconstruction of Western Europe had become both a geopolitical and an economic necessity for the Americans. For continental Europe there was the Marshall Plan; for Great Britain there were only loans, whose harsh terms demonstrated the reduced influence Great Britain now had on the world stage.
All this is ultimately reflected in the modern European Union.
The United Kingdom was bankrupt; the risk of social upheavals was significant. The 1942 Beveridge Report had set out a series of objectives for the post-war period that would be „worth fighting for”; in fact it was just propaganda to sustain the morale of the troops in time of war: issued by His Majesty’s Stationery Office, millions of copies were distributed, and especially among the armed forces. Nonetheless, no parliamentary majority could possibly ignore the expectations that it raised. The Americans were horrified; when Beveridge was invited to the United States to attend a series of conferences he was declared an „undesirable alien”.
Following the election of a Labour government, which made the Beveridge Report its own in the United Kingdom, and the implementation of the Marshall Plan in Western Europe, both Labour and Conservative governments embraced Keynesian political economy as a means of increasing „effective demand” to prevent economic collapse.
By contrast in America, where consumption was increasing, Keynes was branded as a „communist”. It was only retrospectively that Roosevelt’s New Deal would be recognized as Keynesian, and Roosevelt himself had only managed to get it through Congress In the thirties by convincing the Southern Democrats that the idea was based on the Mussolini’s policies in Italy. Right up to the moment America entered the Second World War, the State Department regularly sent researchers to Italy to learn about good practice in the efficient management of State and private enterprises.
The International Monetary Fund and the World Bank were set up on America’s terms, rejecting any of proposals from Keynes that would have allowed America’s economic policy to be subjected to outside interference. The IMF and WB became tools which America could use to impose its economic policies, to varying degrees, on all other countries.
The United States did, however, adopt other policies inspired by Keynes, even if this was never openly acknowledged. Whereas Keynesian economic policies had already been adopted by the mid-seventies in Europe, in the United States the accession of Lyndon Johnson to the Presidency, following the assassination of Kennedy, provided the right moment to increase government expenditure and reform the welfare system (with Medicare and Medicaid) bringing it into line with Europe.
Yet despite the claims of Johnson’s „Great Society”, in the midst of the Civil Rights movement and its demands, it was once again necessary to obscure the reality of the dominant role played by state intervention in the US economy (though in particular by the vast spending on the Vietnam war and other imperialist interventions) and disguise the causes of poverty. The 1965 Moynihan Report fulfilled that purpose, by as good as saying that anyone who needed welfare was lazy, criminal, immoral, mentally deficient or subhuman…
The Keynesian remedy of state intervention in the economy, or rather the intervention of the economy in the State, is a real necessity for capitalism in crisis. It is not simply a „policy” (and much less a „left-wing” one) that capitalism has voluntarily decided to adopt. Indeed it is not an alternative to the direct oppression of the working class by means of ruthless austerity, by coercive measures against the trade unions, or by bloody repression using the armed forces of the State. It is not „a step towards socialism” as the Social Democrats would have us believe. It doesn’t automatically mean an increase in social and welfare benefits for the working class.
Rather, Keynesian economics calls for State involvement in the economy by footing the bill for infrastructure projects (in some cases using the unemployed as cheap labour) and nationalizing essential industries that have become too unprofitable for private capital. A key element of this perspective is the printing of paper money to pay for these investments and stimulate a flagging economy. This creates inflation and consequently reduces the standard of living of the working class. Here once again capitalism reveals its true nature, fully reflected in the policies of the Social Democrats (such as the Labour Party) which try to impose wage restraints and introduce anti-trade-union legislation. All of it leads to austerity and coercive control of the working class by other means.
The New Global Crisis
The Keynesian school was therefore also very useful to British capitalism during the post-war reconstruction. It helped maintain social peace and provided a more influential role for the trade union bureaucracy.
But British industry’s real problems were its lack of investment and its need to „restructure”. British capitalists continued to use the old industrial plant left over from the war, with its outdated machinery and intensive use of labour power. Meanwhile, their more advanced European competitors, who had seen their industries razed to the ground during the war, had been compelled to rebuild them using the most modern techniques. In particular the increased efficiency of German industry allowed its bosses to compete effectively while granting (relatively) better conditions to their workers, who were in short supply. The so-called „Wirtschaftswunder” (economic miracle) occurred not in spite of, but because of, the destruction of capital and the need to restart the process of accumulation.
In the United Kingdom, harsh workers’ struggles brought down the Labour government (1964-70) and Barbara Castle’s anti-trade-union legislation In Place of Strife had to be shelved, though immediately re-introduced under the subsequent Heath government (1970-74). The devaluation of the pound under the subsequent Wilson government, in a brutal attempt to get the working class to foot the bill for the crisis, failed to obtain the economic benefits that the British ruling class had hoped for.
As the British economy stagnated in the late sixties and seventies, the British working class tried to combat austerity with a wave of strikes. The re-election of the Wilson government in 1974, which was already promising a referendum on staying in the EEC, did not resolve any of the fundamental problems which were facing the British bourgeoisie. The post-war consensus was about to end.
The United Kingdom was bankrupt. Sterling dropped below $1.70 and Chancellor of the Exchequer Denis Healey was forced to abandon a flight to the IMF’s September 1976 meeting in Manila and drive from Heathrow to Labour’s angry Blackpool conference,1 where he announced that „the country” had to live within its means. By December he and Prime Minister Callaghan had forced through enough spending cuts to secure a UKP 1.9bn loan from the IMF (in return for UKP 2bn worth of cuts!) to tide Britain over and appease the markets. This marked the end to the post-war consensus around Keynesian economic orthodoxy, and the emergence of a new consensus, around the new orthodoxy of monetarism!
This demonstrates once again that there is no genuine opposition to be found in the economic programmes of the parties of capital; all of them change strategy whenever capital requires it, and elections have little or no impact. Thatcher pursued the monetarist policies initiated by Healey and Callaghan, as did the Blair and Brown Labour governments. The so-called „alternative strategies” presented for example by the Bennite Left, which wanted to prop up British industry by imposing import controls, were never going to happen. They only succeeded in disorientating the British proletariat at moments of heightened class struggle.
The Thatcher government only stood out because it was more open in its attacks on the working class, creating in the process the myth that the Callaghan government had been too soft on working class militancy and too lax in managing public finances. Having fought the 1979 election under the slogan „Labour isn’t working” the Thatcher government then openly used „a dose of unemployment” to force workers to accept whatever they could get. A few decades and at least a generation later, British workers have suffered a series of defeats. However, while at times they may seem prepared to just accept the few breadcrumbs they are offered, there are mounting signs of resistance, as shown by strikes and protest actions, most recently by railway workers.
Thatcher’s line, continued under successive Labour and Tory administrations, was to try and keep the country solvent by promoting the City, the financial services sector, tourism and niche „creative” sectors etc. Making the City of London the EU’s main financial trading hub was a core part of this strategy while entire industries such as shipbuilding and steel manufacturing went to rack and ruin if they could not generate sufficient profits. They consoled themselves with the idea that „forging steel can always be done somewhere else”. In fact what occurred was a general running down of Britain’s industrial base. What was really keeping Britain „solvent” was unsustainable levels of credit expansion, leading to mounting public and private debt and recurrent crises.
By now even „neo-liberalism” seems to have run its course in the aftermath of the 2008 financial meltdown.
The Brexiters, who now appear to be in the ascendant, advocate Britain’s withdrawal from the European single market and customs union, the re-forging of trade links with „the Commonwealth” (with echoes of Joseph Chamberlain’s Imperial Preference) and tough immigration controls which, they dishonestly claim, will help create „British jobs for British workers”. (Though the rhetoric might be different, similar „solutions” are still being touted by the Bennite anti-globalization left.) In this sense, rhetoric and false promises have been far outrunning practical realities. Expectations have to be held in check and some British political commentators are suggesting that in calling the election, Prime Minister May is hoping to return politics to „business as usual”. Which means: dashed hopes and more austerity.
No-one really knows what precisely will happen to the economy or what the government’s line will be now the Brexit vote has been triggered and an election called. However, one thing is certain: the outcome of the election, whatever it is, will bring no benefits for the working class. It has been called in an attempt to build a consensus within the British bourgeoisie behind its Brexit strategy, and to strengthen its hand in dealing with any resurgence in working class militancy.
The ruling classes never reveal their true practical intentions and what lies behind them, especially when they themselves lack a clear consensus about what to do or how to do it. Instead, the British ruling class will stumble from crisis to crisis. Its policies will be dictated not by party manifestoes and even less by the so-called „will of the people”, but by the needs of the capitalist economy, and specifically, to keep the working class in check.
Tory or Labour, Brexit or no Brexit, the ruling class is planning further attacks on working class living standards. All of its parties will try to fool us into believing that the solution lies in the defence of the „national interest” (in or out of the EU)-but as we have seen, for the working class the national interest always translates into „living within our means”.