1970s >> 1974 >> no-838-june-1974

How Much Has British Capitalism Changed?

Outwardly capitalism in Britain looks very different from what it was seventy years ago. No longer the centre of an Empire with a population of 400 millions, it is now a junior partner in Europe. Its navy, its trade and its currency no longer rule the world.

Equally great changes inside Britain reflect technical developments that have taken place in all the industrialized countries. Agriculture has shrunk from over 2 million farmers and workers to about 400,000, coal-mining from nearly a million to 300,000, textiles from 1½ million to less than half that number. The army of over two million domestic servants has largely disappeared, only to a relatively small extent replaced by the 730,000 employed in hotels and catering.

The motor-car has ousted the horse-drawn vehicle, new sources of energy have diminished the importance of coal, air transport has cut into rail and shipping. Among the industries that have grown is the metals, machinery and vehicles group, up from 1½ to 3½ million workers. The technical developments have equally affected the work itself. Even in occupations which bear the same names many workers are using materials, tools, machines and processes which did not exist seventy years ago.

In the structure of industry the trend towards concentration, foretold by Marx, which was going on in the latter part of the nineteenth century has continued, and indeed speeded up since joining Europe became an issue. In a long list of industries, though the number of separate companies may still be considerable, more than half the total output is controlled by a mere handful of them.

In brewing there are still 87 separate companies but the industry is dominated by half-a-dozen very large groups. The 2700 building societies of 1883 have been reduced to 450 “but the top 33 account for nearly 86% of assets” (Times 11 April 1974). The 207 private banks of 1884 had become 40 in 1904 and now the scene is dominated by the ‘big four” joint-stock banks.

One form taken by concentration has been the nationalization of several big industries, but nationalization has also changed its form. Up to the nineteen-thirties Labour Party policy was to apply the government-department system of control used by the Liberals and Tories when they nationalized telegraphs and telephones. This was then replaced in Labour Party plans by the Public Board form of administration (likewise borrowed from the Liberals). It was supported by the argument that it would free management from close government interference and free the government from involvement in disputes over wages, neither of which has happened. Now the Labour Party has moved towards the system of government shareholding and government directorships in private companies, based on the Liberal Government’s shareholding in Anglo-Persian Oil (now British Petroleum) before the 1914 war.

The powerful trend towards concentration produced another reversal of Labour Party policy. Traditionally they were “anti-monopoly” and in the early nineteen-twenties it was possible for a Labour Party spokesman, J. R. Clynes, Chairman of the Parliamentary Labour Party and a minister in the first two Labour Governments, to declare that they preferred a large number of small capitalists to a small number of large ones, something quite outside the realm of practical politics today. (Ironically Clynes made this declaration in the preface to a booklet with the title The Failure of Karl Marx.)

While technical changes in industry have affected all countries there is one respect in which British capitalism has got out of line. This is in the rate of growth of production. After allowing for price changes, production per head of the population is about three times the level of 1904 in USA and only double in Britain. While the annual rate of growth has been increasing, from 1.3% a year at the beginning of the century to 2.4% a year in 1960-66, many other countries have shown much faster growth. Mr. Michael Forres, Research Fellow of the City University, in an article in Lloyds Bank Review (Jan. 1971) concluded that “Britain, the richest country in the world up until 1900 in per capita terms, can well be described now as being the poorest country in industrialized Western Europe, excluding Italy”. Many reasons have been suggested, including low capital investment, but there is wide disagreement about it.

The rate of increase of production needs to be seen in a proper perspective in relation to both capitalism and Socialism. Even a sustained 2.4% a year would double production in under thirty years. But capitalism does not and cannot provide sustained growth. It depends on ability to sell the goods and therefore suffers from periodic depressions. And twice in this century world wars have taken half the workers out of producing means of life to producing means of destruction, not only of life but also of the means of production. And in peace time a large proportion of the workers are producing armaments, manning the armed forces or engaged in financial or other occupations necessary to capitalism but not to Socialism. If resources and human labour were redirected the output of useful goods and services could be doubled, and the rate of growth increased if society so desired.

The question to what extent inequality of income and ownership have changed since 1904 is difficult to answer because, as those who study the study still emphasize, reliable information is inadequate.

On the inequality of incomes Chiozza Money (Riches and Poverty, 1906) made a tentative estimate that in a population of 43 million in 1904 some 4 million persons received 48½% of the total national income and 38 million persons received the other 51½%. Figures published in Fabian Facts for Socialists (1944) indicated that by 1937 there had been a moderate lessening of inequality: “over two fifths of the personal income was appropriated by little more than one tenth of the total population.” Since then larger shifts have been shown in other estimates. Roy Jenkins (New Fabian Essays 1970, p.73) claimed that there had been “a great advance towards equality . . . in the past twelve years”, but another writer, R. J. Nicholson, in his examination of the available information concluded that the tendency towards greater equality ceased after 1957 (Wealth, Income, Inequality 1973, p.103). And C. A. R. Crosland, a Minister in the present Labour Government, has admitted that “even after six years of Labour rule Britain in the nineteen-seventies is conspicuous for its persistent and glaring inequalities” (Sunday Times, 10 March 1974).

On the ownership of wealth Chiozza Money estimated that in 1904 one-seventieth of the population owned far more than half the total and that “probably” nearly the whole was owned by 4,400,000 persons. A figure used in the Labour Party’s Election Programme 1918 was that 10% of the population owned 90% of the wealth.

Current figures are presented by the Inland Revenue Department, but they are not in a form clearly comparable with the earliest ones. In the House of Commons (5 July 1973) a question to the Chancellor of the Exchequer produced figures showing that 10% of the population owned 77% in 1960 and 72% in 1970, but this is not shown as a continuous trend. The figure was down to 73% in 1966 and up again to 75% in 1968. Also it is maintained by Professor Harbury of the City University that changes in ownership are “likely to have taken the form of the rearrangement of wealth within families rather than a switch from rich to poor” and that “the basic situation has not changed much since the 1920’s” (Financial Times, 28 Feb. 1974).

But all such figures have to be taken in relation to the Socialist case. While it is the declared aim of the Labour Party to bring about a more egalitarian capitalism this is not the aim of Socialists, and even if achieved it would not solve the problems of the working class. Capitalism is not more “capitalist” in Germany and France because income inequality is greater than in Britain, nor less “capitalist” in America because, as regards ownership of wealth, “it is the British distribution which is more unequal than the American — and quite substantially so” (Wealth, Income, Inequality, p.159).

The means of production and distribution are owned by the capitalist class not by the workers. The class relationship is not materially altered because many workers now own their own homes and the houses are better furnished. The class struggle has not disappeared and the need for Socialism is urgent, as it was seventy years ago.

Edgar Hardcastle

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