The evolution of British imperialism (Bilan, 1934)

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We are publishing here the first of two articles on British capitalism from Bilan, the theoretical organ of the Italian communist left in the 1930s. ‘Evolution de l'imperialisme anglais', signed Mitchell, appeared in Bilan 13 and 14, December 1934 and January 1935. The motivation for studying the situation of British imperialism is stated at the beginning of the article: the necessity for the proletariat to have a precise understanding of the major imperialist forces leading it towards another world war, and the specific reasons for the decline of British imperialism as part of the general decline of the capitalist system as a whole. Many of the elements given in Mitchell's essay are still enormously important for any analysis of the real state of British capitalism today. We thus intend to follow up the Bilan articles with other contributions which will enable us to update and concretise the rich historical insights that they contain.

In our study ‘Crises and cycles of capitalism in agony' (republished in International Reviews no102 and 103), we tried to show the significance of the general crisis of bourgeois society. We aimed to make it clear that capitalism in general and the imperialist groupings in particular are now obliged to follow the decadent historical course that has been mapped out for them. Because the irresolvable contradiction between the ‘socialist' form of production and the capitalist mode of distributing products no longer allows capitalism to continue with the development of its productive forces, it is clear that all the expressions of its activity from now on are simply various aspects of its need to adapt to the conditions that history has imposed upon it. Since these are very far indeed from representing steps towards the strengthening or stabilisation of capitalism and a revival of its progressive role - such a perspective has now been definitively excluded - these expressions, these ‘recoveries', are leading the system, through the exacerbation of its contradictions, towards imperialist war or revolution. Now that a series of proletarian defeats has stifled the second eventuality, the political and economic course being followed by capitalism can only be a material preparation of the economic apparatus, and the ideological preparation of the masses, for imperialist war. The road towards this is uneven and incoherent, since it can only reflect the different degrees of development of the various imperialisms and their readiness for conflict. In order to throw off the chains that bind it to the approaching carnage and oppose it with its own revolutionary solution, the proletariat must make an immense effort aimed at discerning and analysing the enemy forces that confront it.

British imperialism is one of the most powerful of these forces, one of the two or three poles of attraction for the secondary capitalist formations. But the powerful group which dominated the world prior to the 1914 conflict is now being undermined by the microbes of decomposition; and although the decadence of Britain is just one aspect of the decadence of capitalism in general, the classic form it has assumed and the considerable weight it exerts within the world economy makes it a particularly interesting case to examine.

The rise of British world supremacy

While Britain was the birthplace of industrial capitalism, it was not in fact the first capitalist nation. In the history of primitive accumulation, of mercantile capital, the product of commercial and colonial pillage, it was preceded by Spain and above all by Holland.

But after the opening up of the great ocean routes, England's key position by the Atlantic favoured its rise to maritime and colonial supremacy. The bourgeois revolution which Cromwell carried through in 1649 in the interest of the already-powerful class of merchants and manufacturers, allowed the latter to extend their commercial networks across the globe (this took them the best part of a century). The Navigation Act of 1651, by assuring the British Isles a monopoly in maritime transport, laid the basis for its naval power. At the same time, the adoption of protectionism, vital for the defence of its nascent industry (and which soon provoked a response from Colbert in France) made Britain the greatest manufacturer in the world.

In sum, Britain's prosperity, which blossomed in all its arrogant pride up until the end of the 19th century, was fed by three essential activities by the bourgeoisie: first, its universal role as a merchant class which, as Engels said, "is the class, which, without playing the slightest part in production, knows how to conquer its general management and to economically subjugate the producers; a class which makes itself the indispensable intermediary between two producers and exploits both of them". It was this parasitic function which assumed a considerable importance in the British economy and we should not lose sight of this.

Next, its industrial activity, which was able to embark upon a dizzying ascent thanks, on the one hand, to the support of a considerable sum of merchant capital accumulated over nearly two centuries of pillage and exploitation of the indigenous and colonial masses; and, on the other hand, to the immense possibilities both for realising surplus value and for capitalising it by placing it in the vast colonial domain won by despoiling the Spanish, Dutch and French colonies. The four corners of the world thus kept British coffers full to the brim. Finally, there was its function as the world's banker.

The cement of the British Empire was its fleet, merchant or naval. This was an indispensable instrument in its capacity to rule over a huge scattered domain which lacked any geographical, economic or political unity. Equally vital was the dense network of its banking apparatus, spread like a net over the whole globe; finally, there were the contractual links of its loans and investments, subjugating the debtor peoples to the City of London, the world's lender. In 1932 this golden chain was worth more than the equivalent of the total national income of the same year, or 3 billion 700 pounds sterling, 3/5 of which were invested in the Dominions and the colonies and the remaining 2/5 abroad, representing almost double the investments of French imperialism, which were mainly placed in Europe.

A domain three times more extensive and with seven times the population of France, with nearly one third of the population of the globe, boasting immense resources of grain, cattle, wool, rubber, metals: this was the field in which British imperialism was able to grow. But this geographical milieu's lack of homogeneity was accentuated by the very sharp differentiation of its constituent parts: on the one hand, former colonies for population, now become Dominions and highly evolved capitalist states in themselves but whose solidarity with the Metropolis was becoming increasingly tenuous: Canada, Australia. On the other hand, colonies for exploitation, such as its possessions in Africa and India - countries which remained backward and where the indigenous bourgeoisie (as in India) far from representing a force capable of moving towards its own emancipation, has made itself the servile instrument of British capitalism in order to subdue a starving proletariat which can only attain its own liberation by linking up with the proletariat of the advanced countries. We should also add the ‘independent' states like the Scandinavian countries, Portugal, Argentina and other so-called ‘sterling' territories: zones of influence and operation for British imperialism.

The financial apparatus was very different from the banking system of French imperialism: the latter, more centralised, more closely linked to production (less however than German or American finance capital) confined its principal activity to exports of capital by states. British banking capital, began its concentration during the Victorian era and this was only just completed on the eve of the war. It reduced the number of banks from 104 in 1890 to 18 in 1924, but it still retained a decentralised character: the five great London banks alone possessed between 1,500 to 2,000 branches spread over Britain and the rest of the world, and, linked to numerous other banking establishments, made up a network of incomparable breadth. But an important characteristic of this colossal apparatus was the fact that it was not greatly interested in direct industrial participation and long-term loans, limiting itself to short term loans and the financing of the wheels of production indirectly, through loans on commodities. Banking income was thus much more a function of the circulation of commodities than of their production: the surplus value which these revenues expressed was produced outside the direct control of the banks. It is a fact that British finance has for a long time ceased to be interested in the industrial and agricultural sphere in the Metropolis, contenting itself with gleaning profits from merchants and colonies and from the capital exports derived from accumulation in industry. It thus serves a powerful bourgeoisie with an aristocratic origin, detached from production and whose interests are in sharp opposition to those of the industrial bourgeoisie. This is explained by the fact that organically, British bank capital is lagging behind that of France, Germany or the USA; the process of fusion of industrial and banking capital was never pushed so far in Britain; its character as ‘finance capital' was never so pronounced. This lag, while it can explain the relative stagnation of the productive forces, can itself be explained by the existence for nearly a century of a highly centralised productive apparatus which was the motor for the prodigious accumulation of British capital and which allowed it to make use of credit for its expansion.

The structural particularities of finance capital constitute both a weakness and a strength: a weakness, because, due to its intimate links with the mechanisms of world trade, it suffered from their perturbations; a strength because, cut off from production, it retains a greater elasticity of action in periods of crisis.

Decline of the ‘workshop of the world'

Such was the imperial field of expansion which the metropolitan economy could rely upon, and which enabled it to reach the peak of its power at the end of the 19th century. How then could its machinery come apart to the point where today it can only function to the extent that the Empire keeps it going with the surplus value extracted by an even more ferocious exploitation of the colonial peoples? To answer this we have to make a very brief analysis of its evolution.

Cobden and his Manchester League, by abolishing the Navigation Act, protection rights and the Corn Law, around the middle of the 19th century, established ‘Free Trade', the pivot of British economic policy. The bourgeoisie, equipped with a solid productive organisation, with abundant resources in coal and minerals, could profit from its privileged situation and accumulate huge amounts of capital as long as it retained a quasi-monopoly in the field of manufacturing. Through the export of its transformative industry, incomes derived from freight and investments, it could overcome the deficiencies of an economy dependent on the outside world for 5/6 of its food needs (the agricultural population is today 6% of the active population whereas in France it is as much as 40%).

The sectors which supplied the essential of British exports were coal, iron and steel, textiles, precisely the ones which were to be the most affected by the decline of the economy and the hardest hit by unemployment.

The structural organisation of the coal industry, although based on the existence of rich seams of carbon that were easily accessible and close to the sea, concealed a ‘congenital' weakness that resulted from the mode of appropriation in the mines. The latter belonged to the owners of the land, who demanded a rent, a "royalty", in exchange for the right to exploit the coal underground. Furthermore, important seams of coal made up the frontiers between different properties; they thus remained unexploited and were definitively lost. A backward technology also increased the price of bringing coal to the surface. At the same time, the development of the coal industry in continental Europe and the US, and the growing use of other sources of energy - hydro-electric, oil etc - led to Great Britain definitively losing its preponderant position in world coal exports, ceding this to the US and falling into third place. But, more importantly, this regression undermined one of the main pillars of its economic armoury: export cargo. Coal constituted the main outgoing cargo that the British fleet distributed to the four corners of the earth, bringing back food and raw materials. The reduction of this cargo considerably cut down the competitive strength of the fleet and the income derived from merchant activity.

The power of the iron and steel industry, which reached its culminating point in the middle of the 19th century, was thus inevitably and strongly affected by the world-wide rise of the capitalist mode of production and the rapid and formidable development of other centres of iron and steel production. Already in 1897 Joseph Chamberlain had tried to react against this threat to the whole of British industry, projecting the creation of an imperial ‘Zollverein'; but the Dominions - themselves capitalist states - would not go along with it. In 1923 Baldwin failed in a similar attempt.

There is no doubt that British heavy industry entered into its phase of decline when we note, for example, that German cast iron production, which was only 2/3 of British levels in 1892, succeeded in doubling itself by 1912. In 20 years, Germany had progressed by 320% and Britain by only 32%. The retreat in British production in relation to world production also manifested itself clearly. For cast iron, 13% in 1913, 7.8% in 1929, rising to 8.4% in 1933. For steel, 10.2% in 1913, 8% in 1929 and 10.5% in 1933. The relative improvement in 1933 is explained by the fact that, sheltered by the 33% protection imposed on imports in 1932, steel producers managed to replace lost external markets with a monopolised national market. The necessity to maintain a monopoly also prevented them from finding a place in the continental steel cartel, and thus from enlarging their exports which, in 1933, remained essentially stationary. We are now seeing an attempt to face this difficulty through export subsidies appropriated from the income derived from domestic sales.

But where the situation proved particularly grave was in the cotton industry which had been the leading source of exports.

Between 1770 and 1815, Britain held a monopoly over the cotton market and through its advanced technology was able to inundate the world with its textile products. Through the mass ruin of native Indian artisans it was able to develop its exports in the subcontinent, after going through the great crisis of 1847 and having pushed the cost onto the proletariat, which was reduced to famine levels. The Lancashire magnates reached the summit of their power around 1860. The saturation of the market in India (its main client) and Australia, the American Civil War, led to the debacle of 1862-63 and threw the cotton industry onto the road of decline. Later on, other factors further aggravated the situation: Japanese competition for the Asian markets, US competition in South America, the growth of the Indian textile industry which, in 1913, had 6 million bobbins, and 9 million in 1933, and which in 1905 worked 50,000 looms and 154,000 in 1926.

The structural weakness of the Lancashire industry, losing ground to better equipped competitors, was above all expressed through the existence of a number of small and medium enterprises which were extremely specialised and constituted a major obstacle to a stronger centralisation. Furthermore, the speculative fever of 1919-20 resulted in overcapitalisation and multiplied the bank charges which weighed heavily on prices.

In the process of concentration and centralisation of cotton enterprises, Britain today is clearly behind Japan, which is the most direct threat to its position in Asia. In 1932, the number of Japanese enterprises was three times lower, with three times as much capital as that of the British factories. Britain, which had been the first to mechanise its looms - since in 1789, it already had steam power - had twice the number of looms as the Japanese in 1932, but they were only 5% automated whereas Japan's were 50% automated: it had five times more automated looms than Britain.

These differences could only result in a considerable reduction in Britain's markets. In relation to 1913, the fall in the overall export of cotton textiles was 41% in 1926-29, 63% in 1930, 79% in 1931. Exports to India represented 45% of the total in 1913 and they fell to 25% in 1931. The scale of the collapse in production can be measured by looking at the levels of utilisation of productive capacity. In 1930-31, for every 1,000 bobbins installed, those in Lancashire processed 36 bails of cotton, while in Japan it was 357 and India 275. In certain British factories, 50% of machines lay idle and 60 to 75% of workers were unemployed.

The decomposition of this industry, once the pride of the British economy, has now reached the stage where a re-organisation of the spinning sector is on the agenda: it will mean the withdrawal of around a quarter of existing looms from the sphere of production. Capitalism is resolved to destroy materialised labour, productive forces that are useful to humanity but harmful to the bourgeoisie, because they can't function as Capital. Destroy what the proletariat has produced and at the same time intensify its exploitation, because in the textile industry the problem of the productivity of labour, clearly ‘insufficient' in the face of Japanese competition which has a workforce of 85% women as opposed to 65% in Britain, 4 ordinary looms per man in Britain against 8 in Japan, which also pays wages in...rice!

Furthermore, the reaction of the Lancashire employers was already expressed in 1929 with the great lock-out, during which they vainly tried to impose the ‘more loom' system, or an increase in the number of looms per worker. On the other hand, in 1933, the failure of the general strike allowed it to push through a reduction in wages. The proletariat in the textile sector is more under threat than ever.

The growth of the unproductive sector

Coal, iron and steel, textiles, were thus the three sectors most hard hit by the decomposition of the British economy, as well as by the chronic depression which, for the last 13 years, following the brief phase of artificial prosperity of 1919-20, gnawed at the productive apparatus like a cancer and made high and mighty Britain the classic county of endemic unemployment: a million men constituted the army of unemployed which British capitalism, even during the post-war revival, had definitively ejected from the sphere of production. In 1934, this figure had already doubled, while in certain branches of industry, levels have more or less gone back to what they were in 1928-29. The effects of a ‘salutary' rationalisation and intensification of labour, condemns two million proletarians (13% of the working population) to permanent unemployment, since the British economy has now reached the limits of its capacity for absorbing new workers and because it can now only throw thousands of others out of the labour process.

In 1928, the year of the economic high point, unemployment among British miners stood at 25%. For all the declining industries put together, unemployment rose from 17% in 1929 to 33% in 1932 and 28% in 1933. For manufacturing industries in general, the percentage was respectively 8, 25 and 15. For the consumer industries, it was only 6, 13 and 11 percent. A particularly significant fact which underlines the growing parasitism of the British bourgeoisie: from 1920 to 1930, it was the industries producing food, furniture and luxury domestic equipment which expanded the most. In 1861, Marx had already pointed out that the number of domestic servants was practically equal to the number of industrial proletarians (see Capital volume 3). This relative and absolute growth of the unproductive population - servants, lackeys etc - was one of the consequences of the general process of capitalist accumulation which engenders, on the one hand, a gigantic development of the productive forces, a considerable elevation in the organic composition of capital (less pronounced however in Britain than in Germany or the US), resulting in the increasing productivity of labour; and, on the other hand, the export of capital.

The changes that took place in the distribution of the economic functions of the active population in the 80 year period between 1851 and 1931 clearly express the structural evolution taking place within the British economy; thus the percentage of men occupied in the industrial sphere went from 51% in 1851 to 42% in 1931. In agriculture, the regression was much more striking: the abolition of the Corn Law accelerated the penetration of capitalist production into this sector, further aided by the existence of a strongly capitalist form of landownership. In 1920, there were only 300,000 landowners, whereas in France there were ten times this number. In Britain, 8,000 of these landowners owned half the land between them, and most had replaced crops with cattle. As a result the percentage of men involved in agricultural work fell from 24% in 1851 to 7% in 1931. The proportion of productive workers of both sexes (workers and small farmers) went from 59% in 1920 to 52% in 1930, and the number of workers in commerce, transport, domestic service, and offices went up from 40.21% to 47.2%. The industrial proletariat went from 33.4% to 30.9% and domestics alone went from 8.1% to 10.1%, giving a proportion of three workers to each domestic servant. Such a social relation should not surprise us if we refer to the figures for the export of capital, expressing a considerable enlargement of the British bourgeoisie's extra-metropolitan activity, enabling it to live more and more on surplus value produced outside of its direct control, and to draw from it a revenue that was up to 5 times higher than what could be derived from external trade.

This can be explained easily through the collaboration of British imperialism with the leaders of the trade unions and the Labour Party and thus the deep influence of bourgeois ideology in the minds of the workers, translating itself into an extreme weakness of the political consciousness of the proletariat.

A profound alteration of the internal balance of the active population of the metropolis is thus one of the aspects of the parasitic decomposition of British imperialism. The revisionists of marxism rush to claim that this once again confirms that Marx was mistaken in predicting a growing process of proletarianisation resulting in general pauperisation. De Man in particular, in the columns of Le Peuple in Brussels, has tried to demolish the perspective traced by Marx and to justify his Labour Plan and the shifting of the centre of gravity of reformist policies towards the middle classes.

These expert falsifiers of marxism hide one fundamental aspect of this prediction: that the increase in the ‘unproductive' but exploited population, even though reaching near saturation point, is still based on the mass of surplus value produced, a part of which is used for the upkeep of this population; and that, consequently, given the relative and absolute diminution of the proletariat, this mass of surplus value can only be maintained through the intensification of the exploitation of this proletariat, which must necessarily lead it to become aware of the historic role it is called upon to play. We think that such a conception is much more imbued with the ‘spirit' of marxism than with its ‘letter'. Mitchell

To be continued