"The crisis of British capitalism" is a well-worn concept-but let us examine it again in the light of the present economic situation. The basis of the concept is that British imperialism has been increasingly subject to competition from rival imperialisms and has not been able to fully hold its own. The normal response of the individual capitalist to competition is to try to step up his faster and produce cheaper than his rivals. To do this he must attempt to maximise his profits and this in turn entails attempting to jack up the rate of exploitation. The same logic that can be applied to the individual capitalist can be applied to a capitalist nation as a whole. Its ability to compete in world markets will depend to a very great extent (though not solely) on the rate of growth of the country concerned and this in turn depends on the rate of capital accumulation. The next step in the logical chain is also the same-this entails a high rate of exploitation. The bourgeois economists say that in Britain too high a proportion of the *National Income" is consumed; that there is "too little saving and consequently inadequate investment. This amounts to the same thing.
Reasons for the Crisis To a very great extent the reasons for Britain falling behind in the world capitalist economy are beyond any possible control. It is not possible to shift large supplies of labour power out of peasant agriculture into the much higher productivity sector in industry because, of course, Britain does not have a peasant agricultural sector to run down. Thus from 1958 to 1968 British agriculture was run down from 5% to 4% of the labour force-Italian agriculture, by contrast, was run down from 35% to 24% and French agriculture from 24% • to 16%. This reflects the law of uneven develop• ment. "To a considerable extent conditions beyond the control of the United Kingdom were responsible for higher growth rates in other countries." (E. F. Denison, "Economic Growth" in Britain's Economic ProspectsR. Caves, ed.). Then it clearly becomes more important for the bourgeoisie to do all they can about things that they can control-or that they think they might be able to control. One such variable has already been mentioned: the rate of exploitation and ine rate of investment (of constant capital).
ek statisticians have been claiming for a Dong time that the arise of the national income between wages and prorits is rairly constant (i.e. there is a constant rate of exploita(Son over time). In order to step up the rate of investment it would be necessary to increase the share of profits in the National Income. It is clearly important then, when exactly the reverse process appears to be occurring-namely that a very high degree of militancy on the part of the working class is pushing in precisely the opposite direction towards a reduction in the rate of exploitation and consequently a reduc tion in the rate of profit-this, moreover, at what is anyway an extremely unfavourable time for the British bourgeoisie: in a recession that was designed precisely to slow down the rate of increase of wages.
Record Unemployment The reason for the record unemployment level at present in the economy is basically two-fold: (1) First of all, unemployed people-and those with less income generally-buy less of everything, including less imports, and thus high unemployment is supposed to cure a Balance of Payments deficit. In 1969 this policy seemed to Inaiviaudi rate or capital accumulation-to buoyant level of world trade. In 1970, although the Dock Strike makes it difficult to say for certain, it seems that the Balance of Payments is back at its 1964 level; with this difference: that in 1964 there was a boom and people and firms would be expected to buy imports. In 1970 there are over 600,000 unemployed. (2) The second rationale of high unemployment is to keep down the rate of increase of wages. The reason why unemployment might be expected to do this is two-fold. Unemployment weakens the power of the unions: clearly there is not enough unemployment for this. Unemploy ment also occurs when firms are laying off workers-obviously-and contracting output. Wages rise rapidly when employers try to get hold of more labour at low unemployment levels in order to expand output, i.e. they bid up wages themselves.
Thus the policy of inducing a high level of unemployment to save British capitalism's economic ills has apparently failed. It has failed in the face of a rising militancy on the part of the workers. This militancy seems, from a study of the strike statistics, to be almost solely on an economistic level.
As has been pointed out many times in the Financial Press, this militancy is at the shopfloor level and is pushing along the trade union bureaucracy in front of it. It is showing a contempt for established negotiating procedures which led the Times Business News to comment: "Repeatedly in the past couple of years managements have discovered-more managements than ever before and some without previous experience of industrial action-that to insist on correct procedures when the fat is in the fire generally makes the fire worse." (Thursday July 9). It is also a fairly general militancy that seems to be spreading-not long ago the press was agog at Lord Robens' triumph in the mines and at the falling number of strikes in that industry; thus it was full of praise for his book Human Engineering. Now Lord Robens is faced with a strike in the mines and a claim for 331/3%. He himself appears to want to give in to the miners to a certain extent.
What is the reason for this so-called "Wage Inflation"? A number of theories have been advanced and they bear importantly on what will happen in the future. The most important are that this militancy represents the "pent-up" aspirations of the working class after several years of Incomes Policy and that this militancy reflects the disappearance of the so-called "money illusion". (That is, feeling better off with greater money-wages and failing to see that prices have risen to offset this. The first theorythat this militancy reflects the dammed-up aspirations of the working class would seem to be backed up by the fact that the only othe successful post-war freeze-that of Cripps under Attlee's government-was also followed by booming wage rates. This may tend to suggest that the present situation will eventually abatesomething which the forecasters of the London Business School have suggested, although they admit that they are only guessing. At any event, the Incomes Policy which has just broken down was far longer lasting and therefore one might expect a bigger "back log" of demands coming through than was the case after 1951. But the fact remains that this phenomenon might die a natural death; no one really knows. The other theory is that people have got wise to the fact that it is no use accepting a 3% rise per annum if prices rise at 3%. They therefore put in for more than 3%. Current demands, which have often been fairly well met, are in the order of 20-30%. This theory allows for no natural death to the phenomenon; it really boils down to the fact that the working class are asking for what British capitalism cannot afford to give, and will continue to do so.
Given this situation, whatever its cause, why has the crisis not manifested itself more dramatically? The reason is that "inflation", as the bourgeois economists call it, is at present a world-wide phenomenon. In fact British wage rates are not increasing as rapidly as in many other countries. Nevertheless a number of circumstances combine to make the problem particularly telling for Britain. In particular, output and productivity are not expanding so rapidly in Britain as abroad. Rising productivity, by cheapening the value of labour power, tends to bring about an increase in the rate of profit. Consequently it offsets rising wage costs to a certain extent. Furthermore, in countries like Germany one would expect rapidly rising wage rates because of the tightness of the labour market; in boom conditions the number of vacancies greatly exceeds the number of unemployed and consequently employers themselves are bidding up wages. Now, it may be that the countries in the world that are in boom at the present, like Germany and Japan, will eventually go into recession and wage rates will cease to climb. This might leave Britain isolated and the crunch would then have to come. To repeat: the fact that other countries have rising wage rates has let Britain off the hook to a certain extent, but not completely. In some way or other, both in the short and long run, the British bourgeoisie have to raise the rate of investment.
How might they achieve such an objective? There are a number of ways, in fact. One would be to avoid a direct confrontation with the workers by cutting government expenditure (on the social services for instance) and using the savings thus gained to cut taxes on profits and other property incomes, thus improving the rate of profit after tax. This would be an attack on the workers' standard of living designed to give the bourgeoisie the wherewithal to spend on investment. But this on its own might not be enough because such attacks on the workers' living standards might well be countered by putting in for higher wage claims, thus putting the problem back to Square 1. The other solu tion implies a direct attack on the workers themselves. The more aggressive sectors of the Financial Press (who, of course, are not in office and are thus in the manner of backseat drivers) have no doubt what they want: they want wages to be frozen, the workers' militancy smashed and also a round of large price increases. To this end Michael Shanks called in the Times Business News before the Election for "A Swing from Wages to Profits" and the Economist advocated financing the port employers to help them smash the dockers. What of devaluation? Certainly this might heip the trade position to a certain extent, but the last devaluation seemed to make little long-run impact. It is also a measure that will not affect the underlying trends. It is not a cure-more of a temporary pain reliever. Moreover, once Britain enters the Common Market (if it does, that is) it will lose that option. Devaluation of the franc and revaluation of the mark played havoc with much of the carefully-laid plans of the Treaty of Rome and the European bourgeoisie will not want to allow Britain the right to continually take this option. It is interesting that Nicholas Kaldar, an economic adviser of the former Labour Government should be so alarmed at the prospect of Britain not being allowed to manipulate its exchange rate.
To try to work out what is going to happen is thus very complex and not a little in the manner of tea-leaf gazing. This article has attempted to bring out the main features of the present situation and it has been pointed out that all might not be black for the British bourgeoisie. But big class conflicts are certainly a very real possibility and this is all the more alarming when one considers that the present militancy does appear to have very little perspective other than an economistic one. At the present, the level of combativity of the working class is very high, but if its economism is not transcended, there may be some big defeats in store.
Brian Davey