Crisis is bringing Britain to its knees as an imperial power

It’s an ill wind ...

When the world has been in the deadly grip of western imperialism for well over 100 years, and the tentacles of the system have spread into every corner of the globe, one can see how correct Lenin was when, in his 1916 pamphlet Imperialism, the Highest Stage of Capitalism, he described imperialism as parasitic, decadent, and moribund. It is a power rotting from the inside and bound to collapse.

Although, like the Phantom of the Opera, imperialism has been keeping itself alive by sucking the blood of the countries of Africa, Asia and Latin America, exacting heavy tribute in the form of interest on debt, dividends on investment and unequal exchange, still the inexorable process of decay from within has been silently progressing throughout all these decades.

One hundred years ago, writers on economics, were already noting that Britain was on its way to becoming a rentier state, ie, a parasitic state living off income derived from investments and lending, rather than on production. At a time when Britain could still lay claim to being the ‘workshop of the world’, Schulze Gaevernitz noted that:

Great Britain is gradually becoming transformed from an industrial into a creditor state. Notwithstanding the absolute increase in industrial output and the export of manufactured goods, there is an increase in the relative importance of income from interest and dividends, issues of securities, commissions and speculation in the whole of the national economy. ”[1]

Even he would have been astonished to see what has happened to British manufacturing since those days. By 1960, manufacturing had fallen to a paltry 35 percent of GDP. By 1999, it had reached 19 percent. And today, it stands at … 13 percent.

What is the fate of the working class in this parasitic economy?

Lenin wrote: “Hobson gives the following economic appraisal of the prospect of the partitioning of China: ‘The greater part of western Europe might then assume the appearance and character already exhibited by tracts of country in the South of England, in the Riviera and in the tourist-ridden or residential parts of Italy and Switzerland, little clusters of wealthy aristocrats drawing dividends and pensions from the Far East, with a somewhat larger group of professional retainers and tradesmen and a larger body of personal servants and workers in the transport trade and in the final stages of production of the more perishable goods; all the main arterial industries would have disappeared, the staple foods and manufactures flowing in as tribute from Asia and Africa …’ ” [2]

In other words, the working class becomes parasitic to a certain extent, albeit the pickings it receives are a great deal smaller than what goes to the masters and are unevenly distributed, so that large numbers can barely subsist on what is provided to them.

Since the UK is a rentier state par excellence, and to an incomparably greater extent even than was the case 100 years ago, its survival as such depends on its ability to be able to collect its dues.

The world has become divided into a handful of usurer states and a vast majority of debtor states. ‘At the top of the list of foreign investments,’ says Schulze-Gaevernitz, ‘are those placed in politically dependent or allied countries: Great Britain grants loans to Egypt, Japan, China and South America. Her navy plays here the part of bailiff in case of necessity. Great Britain’s political power protects her from the indignation of her debtors.’ ” (Op cit)

The world economic crisis, however, has dealt a severe blow to the very basis of the UK’s parasitic existence. What the crisis did, first and foremost, was reduce the capital of the rentiers, insofar as millions of debtors proved to be uncreditworthy and, one way or another, defaulted on their debts. This happens periodically, as capitalism inexorably makes the poor too poor to buy everything that the capitalists need to sell them, even on credit.

To make good the losses, at least in part, billions of pounds were transferred from the public purse into the banks, the investment vehicles of the imperialist financial oligarchy, while the squeeze is being put on the working class masses to make good the shortfall from their meagre resources. But precisely because their resources are meagre, however hard they are squeezed, they can yield very little, except over time.

As a result, everything that is paid for from the public purse, including even services that mainly benefit the bourgeoisie, has ceased to be affordable. Cutting welfare, as well as education and health services, to the bone is not enough – cuts also have to be made to the state apparatus: the armed services, the propaganda services, the police, the Inland Revenue, etc.

But how can British investments be safeguarded if the armed services are cut back? This is a question that is causing considerable consternation in ruling circles; a consternation that is reflected in the bourgeois press.

Military spending cuts

In October, the government published its Strategic Defence and Security Review, in which it announced it was to cut military personnel by 10 percent, reducing army numbers from 96,000 to 89,000; the navy from 35,000 to 30,000 and the RAF from 44,000 to 39,000 – an overall reduction of 17,000 service personnel. In addition, it will scrap 40 percent of artillery and tanks and cut 25,000 civilian jobs in the defence ministry.

This includes the immediate scrapping of the UK’s only aircraft carrier, the Ark Royal, along with the entire fleet of Harrier jump jets. It will be 10 years before the UK has another aircraft carrier back in service, and even those ordered might have been cancelled but for the fact that it would cost more to cancel the contracts than to go ahead with them at this stage. Due to be completed in 2020, at least one of the two carriers now being built will be sold off after just three years in service.

In addition, the government has put off the decision regarding replacing its Trident submarines until 2016. It is quite likely that the whole idea will be abandoned as unaffordable.

In all, the cuts to the military that were announced in October amounted to some £3.2bn, ie, 8 percent of the UK’s current £40bn annual military budget – although it will be noted that this is a great deal less than the 10-20 percent that the government originally planned to cut.

For all the innocents currently being bamboozled into thinking that getting a Labour government back in at the next election would improve matters, let them take note that the oh-so-left-wing Ed Miliband is also wringing his hands at the size of the military cutbacks, saying that Cameron’s revised defence policy is “simply not credible as a blueprint for our future defence needs” (of course, he means ‘offence’ needs). In other words, Miliband would devote more public expenditure to the military and therefore less to providing essential services to working people. Please take note!

As it happens, the military cutbacks announced in October are but the tip of the iceberg, and it is now becoming apparent that, under what is called Planning Round 2011 (PR11), there are further cuts in the pipeline, to be effected as soon as Britain withdraws from Afghanistan.

According to the Daily Telegraph, “the financial crisis engulfing the Ministry of Defence (MoD) is now regarded as so severe that, following Britain’s withdrawal from Afghanistan in 2015, the size of the Army will be reduced to ‘circa 80,000’, according to one senior defence source.

This would make the Army the smallest since the reign of George IV, when troop numbers were drawn down after the end of the Napoleonic wars. ” (‘Army facing huge cuts after withdrawal from Afghanistan’ by Sean Rayment, 20 February 2011)

The same newspaper detailed some of the hardware that will quite probably be scrapped:

While the Navy suffered the worst cuts out of all three services in SDSR it could face losing another Type 23 frigate, a Royal Fleet Auxiliary tanker or supply ship.

Operations in Afghanistan could come under threat if the fleet of Reaper and Predator unmanned drones that spy and attack insurgents are chopped. The move would save an estimated £100m.

Another candidate for cuts is the new armoured reconnaissance vehicle to replace the ageing Scimitar light tanks. An estimated £100m this year and £500m in four years would be saved if the MoD cancelled the Future Rapid Effects System Scout project. ” (‘Armed forces face further cuts’ by James Kirkup, 6 March 2011)

The net effect of all this is that the UK will no longer be in a position to mount any independent campaign like the Falklands war, but will be reduced to no more than a sidekick of other imperialist military powers. In fact, so bad are the equipment losses that Britain would, according to certain military bigwigs, be disadvantaged in war against Libya for the very good reason that, over the past few years, Britain has supplied Libya with sophisticated military equipment that Britain itself can no longer counter, especially since the recent scrapping of the £4bn fleet of Nimrod MRA4 reconnaissance aircraft (spy planes), which had never flown.

The Daily Telegraph reported that “A former Nimrod pilot, still serving in the RAF, said the aircraft would have been ‘perfect’ for monitoring the situation [in Libya] from a safe distance using its electro-optical sensor. Its electronic intelligence and secure radio systems would have been ‘invaluable in minimising risk’ … ” But it was not to be! (‘British forces would struggle to mount even a small scale military intervention as the cupboard for resources was “threadbare”, senior officers have said’ by Thomas Harding, 26 February 2011)

There is apparently an ‘unfunded black hole’ of orders for military equipment due to be paid for in the next few years that have not been budgeted for. The amount involved is said to be in the region of £38bn (almost equal to the whole of a single year’s ‘defence’ budget). Much of the deficit is no doubt owed to the US armaments industry, which is unlikely to prove in the slightest bit understanding about cancelled orders or late payment!

At least one order is with Lockheed for three new F35B jump jet fighter aircraft, which will be useless until Britain’s new aircraft carriers are ready, and even then will be poor value, as the new carriers work with conventional aircraft that are both cheaper and more militarily effective. The cost that has to be paid for these white elephants is £389m – it remains to be seen if our US allies will be amenable to modifying the order.

So desperate is the government to effect cuts that there is a major element of disorder in its military retreat. For instance, among the military personnel fingered for redundancy are some 100 student pilots in the RAF, some of them only a few hours away from becoming fully qualified, and whose training up to the present is said to have cost an estimated £300m.

A problem is likely to arise because there will be nobody available to replace pilots killed by the Afghan resistance. As the Daily Telegraph put it: “There are fears that the sackings will lead to a shortage of helicopter and transport pilots on the front line in Afghanistan”. (‘Quarter of RAF trainee pilots to be sacked in defence spending cuts’ by Thomas Harding, 14 February 2011)

And, despite Cameron’s attempts to allay the fears of his US ally (and British troops on the ground) that the cuts won’t affect operations in Afghanistan, the loss of the Harrier jump jet will deprive British operations of air cover and is bound to make the occupation troops more vulnerable.

In spite of all the cuts, Britain will still be the country with the fourth highest military expenditure in the world (after the US, Russia and China). It would seem, however, that in the modern world, fourth place gets you nowhere.

Reduced tax revenue

The British government’s struggles to hang on in the premier league are not helped by the fact that tax revenues, despite tax increases, are on the decline. The main reason for this is the impoverishment of the working-class masses, who are suffering mounting unemployment and lowering wages, all of which, incidentally, adds to the cost of welfare, even though welfare is being savagely cut!

Meanwhile, the bourgeoisie is, as ever, doing everything it can to dodge its share of the tax bill, with several British ‘household names’ removing their official residences abroad and setting up schemes which make it appear that profits made on sales of goods manufactured or sold in the UK have in fact been ‘earned’ abroad, in countries like Switzerland, where very low rates of corporation tax prevail.

An organisation called UK Uncut, formed to protest against the government’s public-sector cuts, says that widespread tax avoidance schemes by corporations and the wealthy cost the exchequer up to £25bn per year. Household names they have exposed as multi-million-pound tax dodgers include Vodafone, British Home Stores, Boots, Cadbury, Arcadia, Walkers Snacks and Johnny Walker.

Vodafone, for instance, failed to pay £7bn it owed to the Inland Revenue. After long-drawn out negotiations, the Revenue agreed to accept £1bn in settlement (although only after Mr Dave Hartnett, the HMRC chief, put his foot down with his underlings)! On learning of this little concession to a rich company, Nick Cohen of The Observer wrote:

Once, ‘only the little people pay taxes’ was the slogan of convicted fraudsters. Now, it sounds uncomfortably close to becoming the mission statement of Her Majesty’s Revenue & Customs. ” (‘How Vodafone made tax dodging respectable’, 14 November 2010)

Why are we not surprised to learn from Daniel Martin of that “The agreement between HMRC and Vodafone came after negotiations – between revenue officers and John Connors, Vodafone’s head of tax. Until 2007, Mr Connors was a senior official at HMRC, where he worked closely with Mr Hartnett.

So degenerate have the British imperialists become that they are no longer even willing to pay the forces on which they rely to collect their debts, much less to fork out for the services the working masses need in order to survive to serve another day.

All of which is proving the truth of Mao Zedong’s well-known aphorism that imperialism is a paper tiger. He was specifically talking about US imperialism, but his remarks ring just as true for British imperialism:

Now US imperialism is quite powerful, but in reality it isn’t. It is very weak politically because it is divorced from the masses of the people and is disliked by everybody and by the American people too. In appearance it is very powerful but in reality it is nothing to be afraid of, it is a paper tiger. Outwardly a tiger, it is made of paper, unable to withstand the wind and the rain. I believe the United States is nothing but a paper tiger …

When we say US imperialism is a paper tiger, we are speaking in terms of strategy. Regarding it as a whole, we must despise it. But regarding each part, we must take it seriously. It has claws and fangs. We have to destroy it piecemeal … If we deal with it step by step and in earnest, we will certainly succeed in the end.

Strategically, we must utterly despise US imperialism. Tactically, we must take it seriously. In struggling against it, we must take each battle, each encounter, seriously. At present, the United States is powerful, but when looked at in a broader perspective, as a whole and from a long-term viewpoint, it has no popular support, its policies are disliked by the people, because it oppresses and exploits them. For this reason, the tiger is doomed.

(‘US imperialism is a paper tiger’ by Mao Zedong, 14 July 1956, Selected Works, Vol 5)


[1] Gerhardt Schulze Gaevernitz, Britischer imperialismus und Freihandel zu Beginn des zwanzigsten Jahrhunderts, Leipzig: Duncker, 1906, quoted approvingly in V I Lenin, Imperialism the Highest Stage of Capitalism, 1917

[2] John A Hobson, Imperialism, a Study, London: Cosimo, 1902, quoted in V I Lenin, ibid