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CHAPTER I
ENGLAND’S DECLINE

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Capitalist England was launched by the political revolution in the Seventeenth Century and the so-called industrial revolution at the end of the Eighteenth Century. England emerged from the epoch of the civil war and Cromwell’s dictatorship, a little nation, with hardly 1,500,000 families; it entered the imperialist war in 1914 an empire, embracing within its boundaries one-fifth of all mankind.

The English Revolution of the Seventeenth Century, of the Puritan school, the hard school of Cromwell, prepared the English people, particularly its middle classes, for their approaching world function. After the middle of the Eighteenth Century, the universal might of England is indisputable. England rules on the seas and on the world market which is its creation.

In 1826, an English conservative publicist depicted the era of industry as follows: “The age which now discloses itself to our view promises to be the age of industry.... By industry alliances shall be dictated and national friendships shall be formed.... The prospects which are now opening to England almost exceed the boundaries of thought, and can be measured by no standard found in history.... The manufacturing industry of England may be fairly computed as four times greater than that of all the other continents taken collectively, and sixteen such continents as Europe could not manufacture so much cotton as England does....”[1] The tremendous industrial preponderance of England over the rest of Europe and over the rest of the world was the basis of its wealth and of its unprecedented world position. The industrial century was simultaneously the century of Great Britain’s world hegemony.

From 1850 to 1880, England was the industrial school for Europe and America. But this very fact undermined its special monopolistic position. With the 80’s, England begins perceptibly to weaken. New nations, particularly Germany, enter the world arena. Simultaneously, the capitalist primacy of England begins for the first time to reveal its unfavorable and conservative aspects. Powerful blows are delivered by German competition to the doctrine of free trade.

The crowding out of England from its position of world ruler thus begins to appear clearly as early as the last quarter of the Nineteenth Century, giving rise, at the beginning of the present century, to a condition of internal uncertainty and ferment in the upper classes, and profound molecular processes, basically of revolutionary character, in the working class. Mighty conflicts of labor and capital played the chief part in these processes. Not only the aristocratic position of English industry in the world was shaken, but also the privileged position of the labor aristocracy in England. The years 1911-1913 were a period of unparalleled class battles waged by mine workers, railroad workers, and the transport workers in general. In August 1911, there developed the general strike on the railroads. In those days the vague specter of revolution hovered over England. The leaders exerted all their strength to paralyze the movement, under the slogan of “patriotism”; this was at the time of the Agadir incident, menacing war with Germany. The Prime Minister, as we know now, summoned the labor leaders to a secret conference and called upon them to save the fatherland. And the leaders did all they could to strengthen the bourgeoisie and in this way prepare the imperialist war.

The war of 1914-1918 interrupted this revolutionary process and stopped the growth of the strike wave. Ending in the destruction of Germany, it seemed to restore to England the rôle of world hegemony. But it soon became apparent that instead of retarding the decline of England, the war had actually accelerated this decline.

In the years 1917-1920, the English labor movement entered into an extremely stormy phase. Strikes assumed immense proportions. MacDonald was signing manifestoes from which he now recoils with shudders. Only at the end of 1920 this phase terminated with “Black Friday”, when the leaders of the Triple Alliance of coal-miners, railroad and transport workers betrayed the general strike. The energy of the masses, frustrated in the economic field, turned to the political sphere. The Labor Party seemed to spring up overnight.

What is the cause of this shift in the external and internal situation of Great Britain?

During the war, the enormous economic preponderance of the United States was developed and revealed in its full proportions. The emergence of that country from the stage of an overseas provincialism suddenly forced Great Britain into the second place.

The “cooperation” of America and Great Britain is at present the universal expression of the more and more pronounced outdistancing of England by America.

This “cooperation” may at any specific moment be directed against a third party: none the less, the fundamental world antagonism is that between England and America, and all other antagonisms, perhaps more bitter at the present moment, and more immediately threatening, may be understood and evaluated only on the basis of the Anglo-American antagonism. The Anglo-American “cooperation” thus prepares war, as an epoch of reforms prepares the epoch of revolution. The very fact that England has entered the path of “reforms”, i.e., concessions forced from her by America, will clarify the situation, and shift it from the stage of cooperation to that of opposition.

The productive forces of England, particularly its living productive force, the proletariat, no longer correspond to the position of England on the world market. Thence the chronic state of unemployment.

The commercial, industrial and naval hegemony of England has in the past almost automatically assured the bonds between the various portions of the Empire. The New Zealand Minister, Reeves, wrote before 1900: “Two things maintain the present relation of the colonies with England; first, their faith in the generally peaceful intentions of England’s policy; second, their faith in England’s rule of the seas.” Of course, the decisive factor is the second. The loss of hegemony on the seas proceeds parallel with the development of the centrifugal forces within the Empire. The preservation of the unity of the Empire is more and more threatened by the diverging interests of the dominions and the struggles of the colonies.

The advances in military technology seem to militate particularly against Great Britain’s security. The growth of aviation and of the instruments of chemical warfare have completely annihilated the immense historical advantage of England’s insular position. America, that great island, bounded by oceans on either hand, remains inaccessible. But the most important living centers of England, particularly London, may be reduced in the course of a few hours of murderous bombardment from the air, at the hands of a continental power.

Having lost the advantages of an inaccessible isolation, the English Government has been obliged to engage more and more directly in purely European matters, and in European military agreements. The overseas possessions of England, its dominions, are not at all interested in this policy. They are concerned with the Pacific Ocean, the Indian Ocean, in part with the Atlantic, but by no means with the Channel. This divergence of interests will expand, at the first clash, into a yawning abyss in which the bonds of empire will be swallowed up. Foreseeing this condition, the British policy is paralyzed by internal friction, leading to an essentially passive attitude, and consequently to an aggravation of the Empire’s world problems.

Military expenditures, at the same time, must consume a greater and greater part of the diminished national income of England.

One of the conditions of “cooperation” between England and America is the repayment of the gigantic British debt to America, while there is no hope of England’s ever obtaining a repayment of the debts incurred by the continental states. The economic alignment of forces is thus further shifted in favor of America.

On March 5, 1925, the Bank of England raised its discount rate from four to five per cent. following the action of the New York Federal Reserve Bank, which had raised its rate from three to three and one-half per cent. In the City this served as a harsh reminder of its financial dependence on its transatlantic cousin. But what else could they do? The American gold supply amounts to about $4,500,000,000, while the English does not exceed $750,000,000, i.e., about one-sixth as much. America has a gold currency, while England is merely making desperate efforts to reestablish one. It is therefore natural to find that when America raises its discount rate from three to three and one-half per cent., England is obliged to fall in with a rise of from four to five per cent. This measure reacts to the disadvantage of English trade and industry, by rendering more costly its necessary supplies. In this way, America is showing England her place at every step, on the one hand by the methods of diplomatic pressure, on the other by measures of a banking nature, always and everywhere a pressure of America’s gigantic economic preponderance.[2]

At the same time, the English press uneasily observes a “gigantic progress” in various branches of German industry, particularly in the German shipbuilding industry. The London Times writes on March 10: “It is probable that one of the factors which makes for the ability of German yards to compete is the complete ‘trustification’ of material, from the mine to the fitted plate, from the financing bank to the sale of tickets. This system is not without its effect on wages and the cost of living. When all these forces are turned into the same direction, the margin for a lowering of costs becomes very considerable.” In other words, the Times here notes that the organic advantages of the more modern German industry are again being revealed in all their strength, as soon as the industry of Germany obtains an opportunity to give an outward sign of life.

Of course, there is reason to believe that the orders for ships were given to Hamburg shipyards with the special object of frightening the trade unions and thus preparing the ground for exerting pressure upon them for the purpose of lowering wages and increasing the length of the working day. It is hardly necessary to point out that such a maneuver is more than plausible, but this by no means weakens our general observations on the inefficient organization of English industry and the large overhead expenditures resulting therefrom.

For fully four years the number of unemployed officially registered in England has not been less than 1,135,000; this number usually fluctuates between 1,250,000 and 1,500,000. Chronic unemployment is the most crying expression of an unsatisfactory system; also, it is its Achilles’ heel. The unemployment insurance, begun in 1920, was considered at the time a purely temporary measure. Yet, unemployment has been constant; the insurance has ceased to be insurance merely; the doles given to the unemployed are by no means covered by the sums paid in for the purpose. Unemployment in England is no longer the “normal” reserve army, decreasing and increasing by turns, constantly changing its membership; it is now a permanent social stratum, born of industry in its prosperity and left without ground to stand on in its decline. It is a gouty induration in the social organism, owing to poor metabolism.

The Chairman of the F. B. I. (Federation of British Industries), Colonel Willey, declared early in April that the earnings of industrial capital in the past two years had been so low as not to encourage industrialists to develop their industries. The plants do not yield greater dividends than securities with fixed interest (national loans, etc.). “Our national problem is not a production problem, but a sales problem.” Now how is a sales problem to be solved? Of course, by producing more cheaply than others. But this requires either a radical reorganization of industry, or a reduction of taxes, or a reduction of wages, or a combination of all three. A lowering of wages, which would hardly result in a great decrease of production costs, would meet with stubborn resistance, for the workers are already fighting for higher pay. It is impossible to lower taxes, for the debts must be paid, the gold currency restored, the apparatus of empire maintained, and besides, 1,500,000 unemployed must be supported. All this goes into the price of the product. As for reorganizing industry, that is possible only by introducing fresh capital. But low profits are forcing free capital into government and other loans.

Stanley Machin, Chairman of the Association of British Chambers of Commerce, recently declared that the solution of the unemployment problem could be found in emigration. The amiable fatherland calls upon a million or more of its toilers, who together with their families, count several millions of citizens, to submit to being bundled into boats and borne off to other countries. The complete bankruptcy of the capitalist system is here admitted without circumlocution.

We must consider the internal life of England, in connection with the above described prospect of a sharp and ever-increasing decline in Great Britain’s world rôle, for, while that country still retains intact its possessions, its apparatus and traditions of world rule, the nation is in fact being steadily driven into a secondary position.

The destruction of the Liberal Party crowns the century-long development of capitalist economy and bourgeois society. England’s loss of world hegemony has led entire branches of English industry into a blind alley, and has dealt a mortal blow to independent industries and small trading capital, which are the basis of liberalism. Free trade has been driven into an impasse.

In the meantime, the internal stability of the capitalist system was to a great extent determined by the division of labor and responsibility between Conservatives and Liberals. The breakdown of Liberalism also expresses all the other contradictions of bourgeois England’s world situation, and likewise, the source of the system’s internal instability. The Labor Party, in its upper ranks, is politically very close to the Liberals, but it is incapable of restoring to English Parliamentarism its former stability, for the party itself, in its present form, is merely a provisional stage in the revolutionary development of the working class. MacDonald’s leadership is not more secure than Lloyd George’s.

Karl Marx counted at the beginning of the 50’s on an early elimination of the Conservative Party, and on the fact that the further course of political evolution would take the form of a struggle between Liberalism and Socialism. This prediction was based on the assumption of a swift growth of the revolutionary movement in Europe and in England. Just as in Russia, for example, when the Constitutional-Democratic Party, under the pressure of the revolution, became the sole party of the landowners and the bourgeoisie, English Liberalism would have absorbed the Conservative Party, thus becoming the sole party of property, if the revolutionary advance of the proletariat would have grown in the second half of the Nineteenth Century. But Marx’s prediction was made on the very eve of a new period of immense capitalist development (1851-1873). Chartism completely disappeared. The labor movement assumed the form of trade-unionism. The ruling classes were enabled to express their contradictions in the form of a struggle between the Liberal and Conservative Parties. In the parliamentary pendulum, swinging from right to left and from left to right, the bourgeoisie had a means of enabling the opposition tendencies of the working masses to express themselves.

German competition was the first serious warning to British world hegemony, and inflicted the first serious injuries. Free Trade encountered the superior German technique and organization. English Liberalism was only the political generalization of free trade. The Manchester School had occupied a dominant position since the time of the bourgeois Election Reforms of 1832, and the abolition of the Corn Laws in 1846. For half a century after this time, Free Trade was an unalterable platform. Accordingly, the leading rôle fell to the Liberals, the workers trailing behind them. With the middle of the 70’s, poor business sets in; Free Trade is discredited; the Protectionist movement begins; the bourgeoisie is conquered more and more by imperialist tendencies. Symptoms of decay in the Liberal Party already became apparent under Gladstone, when the group of liberals and radicals with Chamberlain at the head raised the banner of Protectionism and joined with the Conservatives. Beginning with 1895 business improved, retarding the political transformation of England, and at the beginning of the Twentieth Century, Liberalism, being the party of the middle bourgeoisie, was already broken. Lord Rosebery, its leader, came out openly for imperialism. However, the Liberal Party, before its final elimination, was still destined for another period of power. Under the influence of the manifest decline in the hegemony of British capital, on the one hand, and of the powerful revolutionary movement in Russia, on the other hand, the working class in England became politically invigorated, and, in its insistence on the creation of a Parliamentary Labor Party, brought grist to the mill of the Liberal position just when it was needed. Liberalism again came into power in 1906. But in the very nature of the case, its success could not be of long duration. The political action of the proletariat leads to a further growth of the Labor Party. Up to 1906 the number of Labor Party representatives had increased more or less uniformly with the increase of the Liberal representation. After 1906, the Labor Party began to grow obviously at the expense of the Liberals.

Formally, it was the Liberal Party which declared the war, through Lloyd George. But actually, the imperialist war, from which England was not able to rescue the time-honored system of Free Trade, was destined inevitably to strengthen the Conservatives, who were the most consistent party of imperialism. This finally prepared the conditions that brought the Labor Party to the fore.

The organ of the Labor Party, the Daily Herald, ceaselessly ruminating on the question of unemployment, draws from the capitalist admissions quoted by us in the previous paragraphs the general inference that since English capitalists prefer making loans of money to foreign governments instead of expanding their own industries, the English workers have nothing left for them but to produce without the capitalists. This inference, speaking in general, is correct; but it is not offered as a means of arousing the workers to drive out the capitalists, but only in order to spur the capitalists to “progressive efforts”. We shall observe that this is the basis of the entire Labor Party policy. With this purpose the Webbs write their books, MacDonald delivers his speeches, the Daily Herald editors print their daily articles. And yet, if these terrible warnings have any effect on the capitalists, it is precisely in the opposite direction. Every sensible English bourgeois knows that behind these mock-heroic threats by the leaders of the Labor Party lies the real danger from the side of the profoundly discontented proletarian masses, and for this reason our wise bourgeois infers that he must not tie up any more resources in industry.

The bourgeoisie’s fear of revolution is not always and under all circumstances a “progressive” factor. Thus, there can be no doubt that the English economic system would obtain immense advantages from a cooperation of England and Russia. But this would presuppose a broadly conceived plan, large credits, the adaptation of a very large portion of British industry to the needs of Russia. The obstacle to this consummation is the bourgeoisie’s fear of revolution, the capitalists’ uncertainty as to the morrow.

The fear of revolution has hitherto driven English capitalists along the path of concessions and readjustments, for the material resources of English capitalism have always been unlimited or have at least seemed so. The impact of European revolutions has always been clearly expressed in the social development of England. They have always led to reforms, so long as the English bourgeoisie, owing to its world leadership, still had in its hands great resources for its maneuvers. It was in a position to legalize the trade unions, to abolish the Corn Laws, to raise wages, to extend the suffrage, to introduce social reforms, etc., etc. But now, in view of the present radically weakened world situation of England, the threat of revolution is no longer capable of driving the bourgeoisie forward; on the contrary, it paralyzes the last remnant of industrial initiative. The thing now needed is no longer a menace of revolution, but revolution itself.

The factors and circumstances enumerated above are by no means accidental or temporary in character. They all move in the same direction, that of systematically aggravating the international and internal situation of Great Britain, imposing upon that situation the character of historical inevitability. The contradictions undermining the social structure of England will necessarily be aggravated as time goes on. We are not prepared to predict the precise rate of this process, but it will be measured in any case in terms of a few years, at most in half-decades, certainly not in decades. The general outlook is such as to oblige us first of all to put the question: Will it be possible to organize a Communist Party in England, which shall be strong enough and which shall have sufficiently large masses behind it, to enable it, at the psychological moment, to carry out the necessary practical conclusions of this ever-sharpening crisis? This question involves the entire destiny of England.

[1]Quoted by Max Beer: History of British Socialism, vol. i, p. 283.
[2]Since these lines were written, the English Cabinet has resorted to a number of measures of a legislative and financial character to assure the transition to a gold basis which is represented as a “great victory” for English capitalism. As a matter of fact, nothing could express the decline of England more sharply than this financial achievement. England has been obliged to accomplish this costly operation under the pressure of the sound American dollar and the financial policy of its own dominions, which were more and more basing their transactions on the dollar, thus ignoring the pound. England could not accomplish the leap to a gold basis without immense financial “assistance” from the United States, and this means that the destiny of the pound falls into a state of direct dependence on New York. The United States is thus supplied with an instrument of powerful financial reprisals. England must pay a high rate of interest for this dependence, a rate which must be imposed on her already suffering industries. In order to prevent her gold from being exported, England is obliged to decrease her exports in goods. She cannot at present refuse to shift to a gold basis without hastening her own decline on the financial world market. This ruinous combination of circumstances produces feelings of acute discomfort among the ruling circles of England, and is expressed in bitter but impotent wailings in the Conservative press. The Daily Mail writes: “In passing to a gold basis, the English Government is enabling the Federal Bank (practically under the influence of the United States Government) to bring about a money crisis in England at any moment.... The English Government is subordinating the entire financial policy of the country to another nation.... The British Empire is becoming mortgaged to the United States.” “Thanks to Churchill,” writes the conservative Daily Express, “England falls under the heel of American bankers.” The Daily Chronicle puts the matter still more strongly: “England is actually brought down to the level of a forty-ninth state of the United States.” It would be impossible to put the thing more clearly! All these harsh revelations, which show that there is no hope and no future, are answered by Churchill, Chancellor of the Exchequer, with the statement that England has no other recourse than to bring her financial system into agreement “with reality”. Churchill’s words mean: We have become immeasurably poorer, the United States immeasurably richer; we must either fight America or submit to her; in making the destinies of the pound depend on the American banks, we are only expressing our general economic débâcle in terms of the gold basis; water will not rise higher than its level; we must be “in accord with reality”.
Whither England?

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