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Fourth International, March 1947


Review of the Month

The Economic Breakdown of Great Britain


From Fourth International, March 1947, Vol.8 No.3, pp.69-70.
Transcribed, edited & formatted by Ted Crawford & David Walters in 2008 for ETOL.


Great Expectations

If any capitalist country in Europe seemed certain of a prolonged and uninterrupted period of industrial activity, that country was surely England. Was there anything left undone to assure every condition necessary for stabilizing her economic life on capitalist foundations? Wall Street propped up England’s tottering financial system with credits of more than 4 billion dollars. This line of credit was drawn upon far more rapidly than was originally envisaged.

At home the mass of the English people were cajoled, deceived and driven by the Laborite flunkeys of capitalism to carry out to the letter the economic program of the ruling class.

Exports were pushed up to figures above those of 1938, a period of relative prosperity. Imports were cut to the bone, far below original estimates. These cuts in imports came at the expense of primary necessities that would have alleviated to some measure the plight of the population already on the verge of exhaustion from the strain of war years. For the sole purpose of preventing capitalism from dying in England, the workers and the people as a whole were asked to tighten their belts a few more notches and compelled to accept scantier rations and harsher living conditions than in wartime. But for the capitalists the times remained lush.

Scarcities of fuel and raw materials and shortages of manpower seemed to be the only limits upon expanding production. Exports boomed; profits poured in. If there were any signs of nervousness in the London stockmarket, these came not in response to conditions at home but rather from fears lest the postwar boom in the United States terminate in another “untimely” bust, which would unfailingly drag down England with it.

Sudden Paralysis

The English capitalists had vivid recollections of the post-World War I era when the economic catastrophes began each time in the United States (the crisis of 1920-21; the crash of 1929). Furthest from their minds was the thought that their own economy was threatened with a breakdown. Yet this is precisely what happened.

In the space of a few days England’s economic life became paralyzed. A country which only yesterday was suffering from an acute labor shortage (while maintaining a huge army), witnessed virtually overnight the greatest army of unemployed in its history – more than 5 million. More than a million and a half found themselves forced to apply for the dole.

Most astounding of all is the official explanation for this sudden paralysis. The blame was placed on cold winter weather. The profound thinkers who enriched the science of economics by seeking in sun spots the explanation for booms and crises have been at last outstripped by geniuses who proffer metereological maps by way of explanation.

It turns out that English capitalism which ruled the world for centuries and which still remains the second strongest capitalist power has become too frail to withstand the blasts of a blizzard.

But what brought about this rather unexpected delicate condition?

Again, to believe official explanations, the root cause is the shortage of coal. Yet the coal crisis in England has existed for years. Why hasn’t it produced a similar breakdown before?

If anything, the condition in the coal industry has hardly worsened in the last period. The capitalist “planners” with the unstinting aid of their Laborite flunkeys set as their target for home requirements – 188 million tons, with a projected export quota of 8 million tons. (In her heyday, before World War I, Great Britain produced more than 225 million tons of coal, exporting as much as one-third of her output. Average exports of that period amounted to 50 million tons a year, leaving around 175 million tons for home consumption.) The actual production was 182.8 million tons for 1945 and 189.3 million tons for 1946. This is not too far away from the target figures. Besides, since only 4½ million tons were exported in 1946, there was more coal left last year for home consumption than has been the case in recent times.

A Chronic Condition

Moreover, the condition of the coal industry is such that the most authoritative bourgeois experts have for a long time discounted any radical improvements in the near future. Thus, in connection with the impending transfer of the coal mines to “national ownership” under the National Coal Board, the authoritative London Economist flatly stated on November 23, 1946:

To expect the Board to make much difference to the coal position in the coal year 1947-48 would be unreasonable. It will take several years before its efforts towards greater efficiency and output in industry bear fruit.

Yet there were no cries of alarm in the face of this perspective of continued stagnation of the coal industry.

That the breakdown of England’s economic machinery goes far deeper than severe winter weather or the fuel shortage by itself, is tacitly admitted by government spokesmen who now warn that it will take “several months” to ameliorate the situation. American analysts and observers are far more outspoken. Thus correspondent John Allen May sums up conservative opinion in this country when he writes that England’s “industrial situation is not a question of immediate remedies, even if conditions were favorable” (Christian Science Monitor, February 11).

It is unquestionable that the entire “industrial situation” is indeed involved here. And we can get an approximation of what this situation is by inspecting at closer range the condition of English transport, which is more characteristic of the existing state of affairs than the chronic coal “crisis.”

It is no longer a secret that the English railroads have collapsed. This collapse, however, has been blamed on the weather and on the fuel shortage. This is not exactly the case. There are other and far deeper causes.

Last year, months before the collapse, the London Economist, November 16, 1946, warned: “Shortages of coal, timber, steel and power this winter are being supplemented by a shortage of railway transport.”

How ‘Shortages’ Develop

The nature of this “shortage” was rather fully clarified by a report issued at the time by the London, Midland and Scottish Railway (LMS). This major road admitted its inability to maintain its tracks. Its locomotives were failing and the rolling stock was deteriorating at a rate far beyond the capacity of the repair shops. Although handling much heavier traffic, the LMS operated with less rolling stock than before the war: 175,000 freight cars were awaiting repairs, along with hundreds of locomotives.

Citing this report the Economist grimly noted: “This is a picture of incipient breakdown, and there is plenty of evidence that the LMS is by no means the worst placed of the three steam (railway) lines,” and then went on to add:

These were the conditions prevailing before the winter weather. There is every prospect that a further deterioration will occur, even if the weather is reasonably kind.

“Incipient breakdown,“ “further deterioration” – that was the condition of the main branches of English industry long before the snowstorm started blowing. Obsolete in some of its sectors, worn threadbare in many others, England’s industrial machinery, strained to its limits in wartime, was in dire need of reorganization and replacements. It had to be overhauled and in many instances renovated from top to bottom. The English capitalists, however, were not too greatly concerned about this unpostponable task. Their primary concern, as always, was with profits. And here was indeed a golden opportunity to squeeze out maximum profits from existing plants, no matter how antiquated or dilapidated. It was with this objective in mind that they plunged the country into an export boom, demanding sacrifices and still more sacrifices from the English people. The official Laborite leadership, betrayed the trust of the people who voted them into power, and played, as they still do, the game of the monopolists.

No Grounds For Optimism

It is still impossible to estimate just how deep-going and lasting the breakdown is. Some capitalist observers in this country, including the New York Times, are quite pessimistic. For example, Saville R. Davis estimates that even with the active aid of the United States “the economic squeeze (in England) won’t be fully overcome for another five years” (Christian Science Monitor, February 12).

At all events, one thing is clear: there are no grounds whatever for optimistic prognoses concerning the prospects of English capitalism.

Ninety-nine years ago Karl Marx and Friedrich Engels pointed out in the Communist Manifesto that the capitalist system was self-destructive, leading inexorably to catastrophes that must drag the most advanced peoples to lower and lower depths.

Commenting on the remarkable accuracy with which Marx and EngeIs predicted this future development of capitalism, Leon Trotsky wrote in 1938:

As against the Manifesto, which depicted commercial and industrial crises as a series of ever more extensive catastrophes, the revisionists asserted that the national and international trusts would assure control over the market, and lead gradually to the abolition of crises. The close of the last century and the beginning of the present one were marked by so tempestuous a development of capitalism as made crises seem only “accidental” stoppages. But this epoch has gone beyond return. In the last analysis, truth proved to be on Marx’s side in this question as well. (90 Years of the Communist Manifesto)

The English people are once again learning on their backs the suicidal nature of capitalism. Even before the current situation has been ameliorated, the Laborite traitors in the government are rushing “warnings” that further sacrifices will be demanded.

Life Verifies Prediction

Perpetuation of capitalism in England is possible only on progressively lower levels. The prospects in England are dimmer and dimmer for a return to the living levels of 1939, let alone the levels achieved before 1914. This tendency, too, as Marx and Engels pointed out, is inherent in capitalism:

A heavy barrage has been fired at the proposition in the Manifesto concerning the tendency of capitalism to lower the living standards of the workers, and even to transform them into paupers. Priests, professors, ministers, journalists, social democratic theoreticians and trade union leaders came to the front against the so-called “theory of impoverishment.” They invariably discovered signs of growing prosperity among the toilers, palming off the labor aristocracy as the proletariat, or taking a fleeting tendency as universal. Meanwhile, even the development of the mightiest capitalism in the world, namely, US capitalism, has transformed millions of workers into paupers who are maintained at the expense of federal, municipal or private charity. (Leon Trotsky, 90 Years of the Communist Manifesto )

Today we are witnessing on the European continent, and in England as well, the pauperization not alone of unemployed but of whole layers of the population.

It is not necessary to explain to the English people that they cannot emerge from the situation in which they find themselves without heroic exertions and sacrifices. They understand this only too well. The whole point is that they are now sacrificing in order to perpetuate the old order. They expressed their desire and will to strike out on the socialist path when they voted the Tories out of office in 1945. But they have been duped by the official Laborite leadership who, instead of abolishing capitalism, continues to patch it up.

All the Attlees and the Bevins cannot long sustain this insolvent bankrupt. The bankruptcy of English capitalism must entail the bankruptcy of the Laborites in office. The English workers now squarely confront the alternative: They must either break out of the straitjacket of Laborite gradualism, or be dragged down, despite untold sacrifices, to the most abject economic and political enslavement.

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Last updated on 12.2.2009