|SocialismToday Socialist Party magazine|
Issue 166 March 2013
Britain’s economic decline
Going South: Why Britain Will Have a Third World Economy by 2014
By Larry Elliott and Dan Atkinson
Published by Palgrave Macmillan, 2012, £14.99
Reviewed by Jon Redford
LARRY ELLIOTT and Dan Atkinson’s latest book, Going South, provides a description of the "long, steady decline" of British capitalism. It argues, largely by analogy, that this decline is reducing the status of Britain to that of a developing nation. This argument is clearly a sobering thought, although during the course of this 362-page survey the argument is snipped at by caveats.
As well as providing a useful summary of the decline of British capitalism, this book suggests the shape the economy will take by 2014. In short: what Britain could look like after nine years of crisis and austerity. The economic situation, of course, will provide the backdrop for the likely general election in 2015, unless there is a breakdown of the coalition before then.
By 2014, the authors predict, Britain will be "a country that cannot live with debt yet cannot live without it. It is a country where the trend in the balance of payments is getting steadily worse, and which has the income inequality of the United States, without any of America's economic dynamism. It is a country where the oil wells are drying up and all the state assets worth anything have already been flogged off. It is a country where long-term unemployment is having a scarring impact on the young for the second time in 30 years, leading to outbreaks of unrest each summer. It is a country where the trend rate of growth has fallen to around 1% a year, yet the UK is curiously prone to higher inflation than other nations. It is a country in deep crisis".
They compare the "beginning of the end" of the British empire on the eve of the first world war in 1914 to its resultant ‘wasteland’ of 2014. Rooted in the English civil war, which laid the foundations for the development of a capitalist economy, they briefly survey the conditions which were necessary to implement technological advances and drive the industrial revolution. They describe the turn towards colonial markets and the subsequent competitive outstripping of British industry by Germany and the US, along with the decline of the British empire after the first and second world wars in terms of naval power and colonial possessions.
Later chapters describe the relative resurgence of industry during the post-war period underlining, however, the inability of British industry to fully take advantage of new markets, to rationalise industries or to develop leading companies. Support by the state in supplying funds and markets to the ‘winners’ is also noted as a key part in the success of pharmaceuticals and car production.
An annoyingly non-committal chapter on Margaret Thatcher "suspends judgment", although it does go over the role her government played in attacking trade unions and unleashing the finance sector. The bonanza provided to the banks by privatisation is noted, followed by a description of the rise of the finance industry, deregulation and an eventual reliance on credit to boost demand: "Around three-quarters of the growth in the boom years that preceded the financial crash came from financial services, the housing market, the construction sector, public spending and retail. All of them are struggling in an environment where household incomes are falling, banks are not lending, and the government is cutting spending".
The book is useful in that it places the rise of the neo-liberal capitalist economy against the backdrop of the decline of manufacturing and the breakdown of the post-war boom, instead of as an aberration of policy. The argument that this amounts to a ‘de-developing' or submerging economy is compelling when looking at the fate of hollowed-out British manufacturing and the subsequent weakness of key areas of the economy with a reliance on finance, services and diminishing wages of the working class: "by 2014 the UK will not have run a trade surplus in manufactured goods for more than three decades".
In addition, Elliott and Atkinson attempt to argue that this - alongside the growth of bureaucratic arrogance, rising unemployment, the vacuous character of politics, the nervous encroachment on civil liberties and so on - amounts to a nation that is starting to look like many ‘developing’ nations around the world. They highlight the dysfunctionality of the capitalist class and ruling political elite in the face of this decline and crisis, as well as Britain's dependence on foreign investment, food and energy. Yet, a key part of this process does not even get a mention: the absence of a working-class party and movement to challenge this decline and the present political situation.
Chapter nine is a list of areas of the economic ‘wasteland’ which Elliott and Atkinson consider would be worth investing in. This includes cattle and farms, because of food insecurity and poorly stocked supermarkets, oil and other imported energy supplies, and face-to-face methods of communication. After the doom-mongering of the previous eight chapters, this reads like economists fantasising about the apocalypse and assessing which investment decisions would yield the highest results. It is a testament to the parasitism of the capitalist system that this can be seen as a silver lining!
A handful of suggestions are put forward once the need for a development model has been outlined. Broadly, two models are proposed. One is the Scandinavian, social-democratic model of high welfare spending, high taxation and low inequality – although this has largely been abandoned by recent governments implementing neo-liberal policies. The other is to turn Britain into a 'special economic zone', where any regulation of business is stripped away and the conditions of the working class are degraded blatantly in the interests of big business, in an effort to attract foreign investment.
The Greek government’s plans for the 'redevelopment' of its economy – beyond the immediate bloodletting imposed by the troika (the European Commission, European Central Bank and International Monetary Fund) – set out a similar growth model. Elliott and Atkinson, however, all but rule out a social-democratic model due to the "lack of willpower" and the "lack of an external threat" along the lines of that faced during the second world war. Their argument is reduced, therefore, to growth through the destruction of working-class wages and conditions, a completion of the neo-liberal project once the store cupboards have been stripped bare through privatisation and debt.
That will be the case unless a movement of the working class is built to replace the capitalist system with democratic control of the economy by the majority of the population instead of a tiny minority. Some of the tasks of a socialist Britain would be the genuine redevelopment of the economy not through the massive exploitation of the working class but through a democratically planned economy alongside other socialist states.