Ken Tarbuck comments on Tom Nairn’s article The Fetish and the Menace OM NAIRN’S article in the last issue posed very correctly the dilemma facing the Labour Government and the Labour Left. His conclusion, that the Government must break with imperialism abroad if it is to carry out its modest programme at home, is one that needs emphasising. Obviously the roots of imperialism must be struck at here in Britain. | However, the target of his attack is rather misplaced. In my opinion it springs from his outof-date analysis of the condition of the British economy. He was at pains to single out ‘the City’ for attack, and posed a dichotomy between that ‘venerable institution’ and British industry. Today this is far too simpliste am assessment—it would have been more appropriate forty years ago. Tom Nairn’s thesis is built round some rather questionable assumptions. Writing about the trend from industrial to financial accumulation, he says, “The secret of this magic lay in the labour of hordes of men in far away lands, and its corollary lay in the decline of the British industrial economy .. . Out of this possession, the final form of British industrial power, there arose a chronic disequilibrium of the British economy: the sacrifice of industrial capital to financial capital became a way of life.” This needs much comment. The phrase ‘labour of hordes of men, etc.’ conjures up a picture of British capital exploiting millions of colonial workers and peasants. This is only a partial picture. A considerable proportion of late 19th and early 2oth century British overseas investment went to the lands of white settlement, the U.S.A., Canada, Australia and New Zealand. Moreover much of this capital exported had a directly reciprocal effect on British exports of goods. His argument is also based on the assumption that British industry was starved of capital because of capital exports; this, too, is highly dubious. The disequilibrium of the British economy arose from its early dominance of the world market, from its position of semi - monopoly. Britain’s decline is partly traceable to this; her early position of power meant that the British industrial infrastructure was built up by the 1870’s, so that when competitors began to emerge on the world market, the
British stock of capital was relatively old in the technological sense. But much of it was still highly profitable. Another factor to be considered in relation to pre-1914 Britain was the structure of the capital market. Industry right up to 1914 was dominated by private and family concerns who did not go to the Stock Exchange. They financed themselves.
It could be argued that rentiers had to go in for foreign investment because of the lack of opportunity at home. This throws a very clear light on the urge towards foreign investment, and it does make clear Britain’s imperial role at this stage. This arose out of the need to protect the City and find new areas of investment even if these were only to be used in the future. Most of this agrees with Tom Nairn’s article, but offers different reasons. However, World War I was a watershed in many ways; and after that date his thesis becomes less and less tenable. It was in the twenties and thirties that the modern structure of the economy began to emerge. The decline of the old staple industries: iron and steel, coal and cotton textiles, is a familiar story; the decline brought misery to the depressed areas. But alongside this process was the spectacular growth of new industries — motor cars, electrical goods, aircraft, chemicals, ets. This was the rise of the consumer durables. Moreover there was a decline in rentiers’ overseas investment; they moved into British equities. The important thing is that Britain’s industrial. structure was substantially modified in these years; not only because of the change in products, but also because of the rise of the public companies, with the accompanying concentration and centralisation of capital. British industry became increasingly monpolised and oligopolised. The family firms faded from the picture via mergers. J. H. Dunning, writing in the April 1964 Lloyds Bank Review, estimated that in 1913 40% of British foreign investment was in railways, 30% in government, and only 15% in industry, finance or commerce. By contrast in the decade 1951/61 fourfifths. of private overseas investment “took the form of business capital for the establishment and operation of
March 24, 1965 -— THE WEEK
overseas enterprises and branch
plants.” What this means is that,
apart from government investment,
it is mainly British firms who are
interested in exporting capital today,
and it is here that Tom Nairn’s
thesis falls down.
What we have to ask is how and
why this change comes about. It
arises from two contradictory ele-
ments. Firstly because of the
oligopolised condition of British in-
dustry; there is no viable price com-
petition.
The second aspect of this contra-
diction arises because of competition,
on the world market. The manifesta-
tions of this can be summarised as:
1. The need for vertical integra-
tion; ie. the need to secure raw
materials or distributive outlets.
2. Transport costs.
3. The need to overcome import
tariffs and quotas imposed by foreign
countries.
The Common Market has given a
big boost to number three in the
last few years. In this struggle, the
need for the giant firms to invest
abroad is paramount, indeed for
many of them the need to export
capital is more important that the
export of goods. This can only be
sustained by a healthy balance of
payments.
The whole matter is tied up with
the inflow of capital, as well as the
export of capital. Estimates put the
gross capital private exports from
Britain between 1946 and 1959 at
well over £4,000 million. Where did
all the money come from? The
sources can be roughly summarized
as follows:
1. Dollar loans and grants from
the U.S.A. and Canada, and inflow
private investment capital.
2. Sterling Area gold production.
3. Colonial territories, their dollar
surpluses and other Sterling areas
deficit with the dollar area.
4. Accumulation of colonial Ster-
ling area balances in London.
It should be noted that the tremend-
ous outflow of British capital has
been maintained, at least partially, by
the sale of large chunks of the British
economy. The main areas of invest-
ment have been North America,
Australia and Europe.
What conclusions can be drawn
from the above? I think it reasonable
to deduce that the maintenance of a
healthy balance of payments and the
stability of Sterling are not solely the
concern of the City. For the giant
oligopolies to survive in international
March 24, 1965 More thoughts on the City ... competition it is necessary to export large quantities of capital and build up their overseas subsidiaries. To enable this to continue it means that large sums of foreign capital must be attracted to Britain, on a long or short term basis. Therefore the position is no longer the City v. the Rest; the situation is much more complex than that today. There can be no doubt that the policies pursued to maintain the position of Sterling has militated against the overall growth of the economy, but this does not mean that it has slowed down the growth of the giant firms. On the contrary over the last decade this process has been speeded up. The stop-go economy of the Tory government can be laid at the feet of the fetish of Sterling, but it has a very real basis in reality, and = not so irrational as it is sup- This brings me back to Tom Nairn’s article. The issue is this: the problem cannot be posed as a choice between home and foreign inyestment, or of curbing the activities of the City. Very often the same people and the same firms are engaged in all these activities today. Given the present structure and ownership of industry there is very little room to manoeuvre when it comes to achieving a balance of payments. The defence of Britain’s imperial position is today far more than the defence of the City. It is the defence of all the interests of the British monpolists, because of the fusion of industrial and financial capital.
Industrial Democracy — A Correction N common with several other journals we have described the school on Industrial Democracy and Workers’ Control (to be held on 7th/ 8th May) as being sponsored by the London Co-operative Political Committee. In fact, this weekend Conference is being organised by the periodical Voice of the Unions. The Political Committee of the London Co-operative Society has agreed to provide a speaker on ‘Cooperation’ at one session, and to contribute towards the cost.