Athens Meeting 18-20 November 2005, Contribution of CP of
Britain
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From: SolidNet, Monday, November 28, 2005
http://www.communist-party.org.uk ,
mailto:office@communist-party.org.uk
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International Meeting of Communist and Workers' Parties
"Current Trends In Capitalism: Economic, Social And
Political Impact. The Communists' Alternative"
Athens, 18-20 November, 2005

State Monopoly Capitalism alive, vulnerable and dangerous

It is the usual practice to open any discussion of
contemporary capitalism with statistics on the scale of
world financial transactions and the size of transnational
companies compared to nation states. This contribution from
the Communist Party of Britain will do the reverse and
stress the dependence of capital on its own national
capitalist state structures even though Britain's
capitalist economy is in fact the most transnationalised of
all the major capitalist economies.

This contribution will argue

That monopoly capitalism in Britain is more than ever
dependent on the redistribution of surplus by the state

That this transfer is at the expense of all sections of
working people, of small producers and the peoples of lands
under imperialist domination

That the increasing scale of the transfer needed to sustain
monopoly profit has met growing levels of resistance,
internally and externally, and is now causing acute
political and social contradictions

That capitalist state power in Britain is strengthened, not
weakened, by the transfer of democratic governmental powers
over capital to transnational institutions such as the
European Union.

That, more generally, the growing political challenge to
this loss of democratic powers at the level of the nation
state has brought a new period of political vulnerability
for state monopoly capitalism

That the struggle between the major imperialist states to
secure sources of superprofit for their own finance
capital, and to reduce the level of their internal
political contradictions, is resulting in a new and
dangerous period of international conflict one in which
Communists have the opportunity and responsibility to lead
much broader and politically far-reaching anti-imperialist
alliances

State monopoly capitalism in Britain

Britain has the third highest number of companies in the
top 500 global companies by capital value after the US and
Japan. In total 36. Their composition has much to tell
about the nature of British capitalism. Nine, one quarter,
are banks. Another nine are privatised utility companies
(energy, telecom, transport, services). A further two are
pharmaceutical companies and significantly dependent on the
National Health Service for their markets. Four are in
overseas oil and mineral extraction including the two
biggest BP and Shell. Two are tobacco companies also
dependent on external supply. The remaining ten control the
highly monopolised British retail trade, media and food and
drink production. There are no British companies in the
top 500 in any branch of engineering, computing, aerospace
or chemicals. The nearest such company is British
Aerospace, no longer in the top 500, which now derives more
of its income from the US Defense Department than from the
British Ministry of Defence.

According to the 2005 UN World Investment Report Britain
has the highest index of `transnationality' of any major
economy. In 1981 overseas holdings were equivalent to 29
per cent of GDP. By 1991 they were equivalent to 74 per
cent. In 2002 they had reached 160 per cent of GDP. Levels
of external ownership have followed roughly in balance.

The biggest investor in Britain is the United States over
twice as much as the next biggest, Germany, and three times
that of France. When it comes to direct investment (as
against shares and bank lending), the US dominance is even
bigger: three times that of Germany and four times that of
France. Britain's own investments are also concentrated in
the US, twice that of any other country though the total
invested in all European countries is double that invested
in the US. Total British investment in Asia (including
China) represents only 5 per cent of its US investment and
3 per cent of its European investment.

The great bulk of British external investment is not in
manufacturing but in banking, energy and services. In the
case of oil and banking there are very close links with the
United States both as a market, a field for investment and
also as owner of shares (over a third of shares in BP are
US owned).

Britain's own industrial economy is characterised, compared
with all other major economies, by low productivity, low
research and development and a poorly skilled and
casualised labour force with the longest working hours in
Europe. Over the past eight years Britain has lost almost
30 per cent of its manufacturing jobs (Germany has lost
only 2 per cent) and Britain's trade deficit for goods is
proportionately even higher than that of the US. In terms
of its remaining strengths in manufactured exports these
very largely depend on an externally owned (mainly US)
sector in computing and IT producing for the European
market. Uniquely among advanced industrial nations 20 per
cent of Britain's R&D is overseas funded almost entirely
concentrated in this externally owned high productivity
sector and to a lesser extent in defence.

How, then, does Britain survive apparently as a highly
profitable and growing economy?

There are four main sources:

External investment income of which the biggest share comes
from banking and oil and gas (and the biggest single
element from the US). In 2005 this is running at 3.5 per
cent of GDP and over 16 per cent of total profit income.

An increasing flow of income from the state to private
companies in services though direct subsidies, risk-free
contracts and control over privatised pension savings
[through the 1990s the profit levels for privatised
utilities ran at double the level of those in
manufacturing]

A credit bubble and sharp increase in household debt.
Between 1990 and 2000 household debt averaged 100 per cent
of annual household income. In 2005 it is 160 per cent of
annual income. The main causes are a collapse in saving and
unprecedentedly high housing costs.

The international operations of the City of London which is
the main world centre for trading in equities, derivatives
and foreign exchange. Two thirds of the banks (and bank
capital) are non-British, the bulk American.

All these sources of profit are highly dependent on state
control and regulation.

Some derive from foreign policy and military alliances
notably the links between US and British oil and gas
companies and military contractors. Some depend on
privileged access to the US economy based on such
alliances. Some depend on financial deregulation by the
British state and the creation of privileged conditions for
external finance capital, mainly American. Some depend
directly on the state. The privatisation of public
utilities and occupational pensions over the past twenty
years has brought very fast capital accumulation in banking
and service companies (now making up half Britain's
companies in the global top 500).

It is these banks and service companies that are the
biggest exporters of capital and who, along with US
companies, are the most aggressive proponents of forcing
open banking and public services in the EU and in
WTO-dependent countries as well as further privatisation
of health, education and social services in Britain itself.

The current dynamics of capitalism on a world scale

In sum, therefore, Britain's economy is very weak. The
profitability of British finance capital is highly
dependent on British state policies and in turn on the
parasitic relationship with the United States.

This leads us to ask about the sustainability of the
currently fast economic growth in the US and of its wider
dominance over the world economy.

US profit rates were at historically high levels through
the 1990s. In 2000-2 profit levels dipped and there was a
major correction on the US stock exchange that eliminated a
significant element of capital valuation. Today the ratio
of profits to capital valuation is back at roughly the same
level as the 1990s despite levels of international,
governmental and household debt that exceed even those of
Britain.

What are the sources of this profitability? o answer this
question we need the same type of rigorous analysis of
comparative rates of exploitation and of capital
accumulation that typified the work of the best Marxists in
a previous age. In particular we need information on the
factors which Marx identified as offsetting the tendency
for the rate of profit to decline: cuts in costs of
subsistence goods by which the relative rate of
exploitation can be increased and cuts in the replacement
value of fixed capital. Today there is all too little of
such concrete analysis. It is something the international
communist movement needs to address.

It does, however, appear that the factors that sustained
such profitability through the 1990s and early 2000s are
currently under significant pressure

The relative costs of subsistence goods, food and energy,
were sharply reduced on a world scale through the 1990s
with dreadful consequences for producers in many countries.
This process appears to have reached its limit and, in the
case of energy, to have been sharply reversed.

In the US itself the absolute rate of exploitation seems to
have increased through 1990s and 2000s in terms of reduced
share for wages and the social wage within total GDP.

In terms of the replacement costs of productive capital
there is little information except that US R&D is now
allocated quite disproportionately to military use (over 60
per cent currently as against 6 per cent in Germany and 4
per cent in Japan). This is likely to have detrimental
effects in the long run.

It is also clear that US policy involves increasingly
high-risk strategies:

Bush's implementation of the Project for a New American
Century from 2001 requires unilateral, military solutions
to the control over external resources, above all over
energy supplies. The resulting military interventions have
proved very costly in terms of previous alliances and
resources

The doubling of the US defence budget since 1999 has been
critical for maintaining profit levels and investment but
at the cost of very high levels of government debt and
borrowing

The maintenance of this debt and of consumer spending in
the US is dependent on running up historically
unprecedentedly high dollar debts to other countries,
especially in Asia. These debts in turn have caused major
problems for the management of US interest rates.

Finally it is clear that there is an increasingly desperate
search by US finance capital to identify sources of
superprofit. This is illustrated by the highly speculative
activities of unregulated hedge funds that now manage a
significant share of US banking capital. There is also the
drive to corporate tax avoidance and therefore any
responsibility for the costs of labour reproduction. In
both the EU and WTO US and British capital are seeking to
use these institutions to radically increase the rate of
exploitation in all sector, to reduce levels of taxation on
corporate profit and displace social costs onto the labour
force, small business and the peoples of subordinate
economies.

All this is in turn now reflected in increased political
instability most notably in the popular rejection of the
EU constitution and the Services Directive and the failure
of Bush's attempt to re-impose a `free trade' area on the
Americas.

Communist Alternatives

In conclusion, finance capital is more than ever dependent
on the state. It is a dependence that has in Britain
brought sharply increased levels of inequality, the
intensification of work, the loss of trade union and social
rights and a drastic erosion of the welfare state. In
absolute terms this has been felt most sharply by the
elderly, the unemployed and by ethnic minorities (who have
double the level of unemployment in Britain). However, in
terms of the loss of privileged access to pensions and work
benefits, it has also had significant impact on the
salaried strata that had often previously supported big
business policies.

The result has been a profound democratic crisis. The
transfer of key democratic powers to the EU was meant to
offset this crisis and thereby strengthen the grip of
neo-liberal pro-monopoly policies at the level of the
British state. The consequence has, however, been
increasingly to identify the EU with the interests of big
business and to strengthen the demand for the use of
parliament against it.

This crisis could have two outcomes. It could be used to
mobilise support for xenophobic, authoritarian and directly
racist policies and to create a new right-wing base for
monopoly capital. Or it could be used to create a
progressive, democratic alliance, led by the organised
working class, to win unity against monopoly capital and
its neo-liberal policies.

This is the challenge facing the CPB and the Left in
Britain.

The CPB launched its Left Wing Programme last year. It is
designed to win such broad support. Its main elements are
the reversal of the privatisations of the past period, the
restoration of trade union rights, the restoration of the
key elements of the welfare state, the establishment of an
adequate state pension as of right, the winning of gender,
ethnic and age equalities, the return of key democratic
powers over the economy from the EU to Britain's parliament
and the end of Britain's nuclear weapons programme and its
occupation of Iraq. It also calls for the restoration of
controls over capital movement and the export of jobs.

The Left Wing Programme in not itself a socialist
programme. It seeks to unite around a set of immediate
objectives. If they were won, they would simply take back
government policy to what existed in the 1970s. Yet
politically they would also transform the balance of class
forces. British monopoly capital is not as it was in the
1970s. Its higher dependence on the state in terms of
privatised services, pensions' finance and markets - makes
it far more vulnerable. The simple restoration of such
limited pro-working class policies would set in motion the
need for further change: action to sustain the economy in
the interests of the great majority and action for further
social, political and economic democratisation.

How far has this fight for a Left Wing Programme proceeded?
At this year's trade union conferences, and also at the
British Trades Union Congress, all the key elements of the
Left Wing Programme were adopted as policy not so much the
result of the efforts of our party but because they reflect
a much wider trend of anti-neo-liberal opinion.

The task now is threefold:

To ensure that these separate policy positions begin to be
understood as a whole as a coherent alterative to
neo-liberalism

To develop mass campaigning led by trade unions and trades
council generally and not just in isolation and to win a
new generation of activists to understand the significance
of the Left alternative

To block the further implementation of neo-liberal policies
by the current Labour government and for the trade union
movement and Left to use their position within the Labour
Party to defeat the pro-imperialist leadership.

Some progress has been made. At this year's Labour Party
conference the Blair leadership was defeated on its
proposals for further privatisation in health and education
and on its opposition to the restoration of trade union
rights and adequate pensions. A revolt by Labour MPs has
inflicted the first ever parliamentary defeat on the
government on its anti-terror laws. It is likely that
revolts on issues of health and education privatisation and
on the renewal of the Trident weapon system will be bigger.

But the most important task has scarcely begun. This is for
the trade union movement and the Left jointly to actively
mobilise struggle on specific issues, but around general
principles, and build wider alliances.

In this process active internationalism will be critical.
Contacts with other movements of anti-neo-liberal struggle
across the world are needed to transform attitudes and
defeat xenophobia and racism. Most important of all, they
can help build confidence and optimism: an understanding
that the forces of neo-liberalism and monopoly capital can
be defeated and that practical alternative exist. But such
internationalism must have the right focus. It must be
based on an understanding that the international balance of
forces can only be changed in the first instance by
restoring democracy, defeating pro-imperialist forces
within specific countries. Slogans, such as those of the
trotskyite Socialist Workers Party in Britain ("no nations,
no borders, globalise resistance"), represent a dangerous
diversion. For this reason it is currently all the more
important to strengthen active cooperation between
Communist and Workers Parties and to ensure the
international projection of a Communist perspective.

J Foster
11 November 2005