Introduction to The Special Crisis of British Capitalism

Previous chapters have dealt with post-war developments in the advanced capitalist countries as a whole. The material in Chapter Two illuminated the role played by the leaderships of the social democratic and Stalinist parties in Western Europe, ensuring that capitalism was able to survive the critical early years after the war. This provided the political foundation for the long post-war upswing, dealt with in Chapter Five.

In the debates about likely international developments - whether the post-war economy was heading for slump or boom, how long the post-war boom would last, whether or not capitalism had learnt to 'overcome' cyclical crises, and so on - Ted Grant often drew on the immediate experience and the statistical data of political and economic developments in Britain, for obvious reasons. In these cases, the intention was, nevertheless, to illustrate those processes that affected the advanced capitalist countries as a whole.

But in addressing activists in the British labour movement it is also essential to point to those features and characteristics which, among the advanced countries, are peculiar to British capitalism. Within the general crisis of world capitalism, in other words, consideration has to be given to the special crisis of British capitalism.

In the years after the first world war, the writings of Leon Trotsky, and especially his masterpiece, Where is Britain Going?, had already laid bare the contradictions of British development. From having been the first and easily the most powerful of the industrial nations, by 1914, Britain's primacy was threatened by American and German imperialism. The first world war effectively ended Britain's pre-eminent position, placing her in hock to the fast-expanding imperialism across the Atlantic. This relative decline continued unabated during the inter-war years.

After 1945, although once again emerging from war as a nominal 'victor', the British economy continued its slide compared to America, later to Japan and West Germany, and later still to almost every other major capitalist economy. It was only the strength of the post-war boom - affecting all the capitalist countries - that increased the British economy (and living standards) in absolute terms, and thus for a whole period disguised a catastrophic relative decline. This collapse of British industrial competitiveness, on the world and even the home market, will mean titanic political convulsions in a period of world economic stagnation. If such events have been delayed, it has only been because of the very temporary boost given to the economy by North Sea Oil.

The extracts in this chapter are only a tiny sample of Ted Grant's writings that deal specifically with political and economic developments in Britain. They are an indispensible study-guide to any Labour Party or trade union members seriously examining the course of events since the war, and especially during the Labour governments of 1945-51, 1964-70 and 1974-79. The first item is an extract from a resolution presented on behalf of the leadership to the RCP conference in 1946. Like the other documents dealing with Western Europe as a whole, it corrected the previous perspective of the RCP, of an immediate economic crisis after the war. 'We anticipated that British imperialism would be faced with a crisis as soon as the war ended. However, the concatenation of circumstances has served to screen the disastrous results of the war for Britain…'

The resolution went on to outline a perspective for British capitalism of 'relative stability', which, at a later stage, would give way to 'a catastrophe greater than she has experienced in the whole of her history.' As we have already pointed out, the RCP leadership around Ted Grant were involved in an intense debate just to demonstrate to alleged Marxist 'theoreticians' that there was a boom of any kind in the immediate post-war years. But what was not apparent at that time was that the recovery would extend to become a prolonged upswing, beginning in the late 1940s and lasting two and a half decades. It is for that reason that the resolution draws a clear distinction between the short-term perspective of growth and the long-term perspective of decline and crisis, due to the chronic weakness of British capitalism.

The analysis of the 1945 Labour government is also very penetrating, showing the pressure of the labour movement, in forcing through reforms and nationalisations, but also showing the limitations of a government still essentially based on the framework of capitalism…'no fundamental measures against capitalism are being taken by the Labour government. We are in a classic period reformist illusions - a reformist government coming to power at a period of economic boom.'

Pointing to the massive compensation, the bureaucratic control and the fact that only run-down industries were being taken over, it describes the nationalisations as:

"a compromise with the bourgeoisie as a whole…as the best method of bringing about the necessary measures of rationalisation and placing the burdens on the shoulders of the masses. By means of state rationalisation they hope to gain efficient and cheap coal, electricity, steel, fuel and transport, in order more effectively to compete on the world market."

The RCP perspective of a collapse of the British economy, after the initial post-war recovery, was also linked to the question of the revival of fascism.

This was particularly true because there were already signs, by 1948, of a certain degree of disillusionment with the Labour government, especially among sections of the middle class. In by-elections throughout that year, the percentage vote for the Labour Party was down and the Tories' vote was increased, largely due to abstentions by former Labour supporters.

In a pamphlet entitled, The Menace of Fascism, What it is and How to Fight it, written by Ted Grant, the RCP explained the social basis of fascism, as a mass movement based on the middle-class and set in motion by the capitalist class to smash the labour movement. Faced with the danger of social revolution and the loss of power, the British capitalists, no less than their European counterparts, would be prepared to mobilise and finance fascist gangs to atomise the workers organisations.

The pamphlet describes how the British capitalists were sympathetic to Hitler and Mussolini before the war, and how they supported the nascent fascist movement in Britain around Oswald Mosley. Mosley himself, with the recent history of the war and his association with nazism, may not have corresponded to the specific needs of the ruling class in a crisis. But the form is secondary to the content. Even if Mosley was not to be the model then some other vehicle, more in keeping with 'British' tradition would be found to develop a movement of reaction.

The warnings of the Marxists in 1948 about the dangers of fascism contrasted to the lullabies sung by the workers' leaders and the 'liberality' of the Labour ministers who allowed Mosley's new 'Union Movement' to meet and organise. The attitude of the right wing then is not much different to their ostrich-like behaviour forty years on: faced with virulent fascist thuggery, a common response is, 'ignore them and they'll go away'.

The extracts of the RCP pamphlet published here are those that concentrate on the role of British capitalism in giving political support to German nazism and Italian fascism before the war, and on the possible development of reaction in Britain. Large sections of the original, dealing with the rise of these counter-revolutionary movements in detail and drawing extensively on Trotsky's writings, are unfortunately left out for reasons of space.

The third item is a discussion paper on Perspectives for Britain, written in 1977. There are literally scores of articles, speeches, documents and notes written by Ted Grant on political and economic developments in Britain throughout this period, but the 1977 document adequately sums up the general position of British capitalism in its long and debilitating decline. With a mass of statistical evidence in relation to productivity, investment, manufacturing exports, expenditure of health, education, welfare, etc etc, it catalogues Britain's decline relative to the other major capitalist powers.

After the election of the 1974 Labour government, the Labour leader, Harold Wilson, (followed later by James Callaghan) persuaded the trade union leaders to accept a form of wage restraint, the so-called Social Contract. In the interests of 'improving the economy', the rank and file of the trade unions accepted this, if reluctantly, even though it would result in a 'temporary' decrease in living standards. But after three years of wage erosion, in addition to cuts in public expenditure, there was no significant improvement in the economy and workers were not prepared to tighten their belts any further. The document anticipated the explosion of anger building up within the ranks of the trades unions:

"It will be impossible for any length of time for trade union leaders to hold back their members…if the union leaders will not lead official national strikes, over a period there will be a rash of unofficial strikes in many areas…what happened after similar periods of 'restraint' will be repeated on a higher scale…"

The disillusionment in the Labour government and the frustrations of organised workers did in fact burst into the open, as predicted, in the 'winter of discontent' in 1978-79, prior to Labour's defeat in the general election.

All the main features of the Tories' government since 1979 were forecast in this discussion document: the assault on the trade unions, the drive to slash public expenditure, the emphasis given to finance capital at the expense of industrial capital, and even the growing splits within the Tory Party. As a consequence of the Thatcher policies, there have been titanic clashes with the unions in mining, steel, printing, and so on. These have been the most bitter struggles since the war, the miners' strike, for example evoking what the capitalist press described as an 'insurrectionary' mood in parts of Yorkshire.

The furious reaction of the working class to the onslaught of the Tories has not led, as was originally expected, to an early collapse of their government. Other, unpredictable factors have intervened, like the Falklands war in 1982, the longevity of the world boom since 1982 (upon which the British economy has been able to ride) and the abject weakness of the trade union leaders in the face of attacks on workers' rights. These temporary postponements notwithstanding, the fundamental theme outlined in the document, that Britain is entering the stormiest period of her history, will be well demonstrated in the coming years.

It should also be noted that the 1977 document modifies some of the fundamental perspectives worked out at an earlier period. In the 1946 resolution already mentioned, the Communist Party was still considered to be a serious force in British politics. 'In spite of set-backs for the CP', it argued, 'at a time of crisis for the Labour government the swing of large sections of workers to the Communist Party, as a temporary phase, is inevitable.'

But as the later document makes clear, this original prognosis has had to be considerably modified because of the complete degeneracy of the CP, to become little more than a midle-class sect. Even the dwindling support for the CP among trade union activists, worth a mention in the mid-70s, is hardly a factor a decade later.

Similarly, the perspective for the development of fascism has been qualified. At the time the RCP produced its pamphlet on the question, it was thought that there was the possibility of a fascist movement being sponsored and supported by the ruling class as a counter-weight to the labour movement.

But the post-war experience of Italy, Greece and Chile shows that the social basis for fascism has been historically weakened by the decreased social weight of the middle classes, not least in the advanced capitalist states. Parallel to this, the power, strength and cohesion of the working class have been enhanced, and a mass movement of fascism could only develop after a whole series of major defeats for the workers' organisations.

In addition to this, the ruling class itself is less inclined than before to hand power over to unpredictable and uncontrolled movements of the 'enraged petit-bourgeois', after the experience of Hitler and Mussolini. Where there has been a turn to reaction in the modern epoch, there has been a tendency for the capitalist class to lean on the tops of the armed forces - for them a more reliable prop - to effect a military coup against the labour movement. In these circumstances, the noisy but largely impotent fascist movements are cast in the 'chorus', rather than in the leading role. Even then, the capitalist class would only turn to military-police regimes as a last resort.

Go back to contents page or go on to next section, Perspectives in Britain 1946

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