UK economy: can it last?

It has been all good news for the UK economy over the last few months, with unemployment falling, inflation subsiding and industrial output growth accelerating (see my post, Of course, it’s not been good news for the average British household, as real incomes continue to fall, with new jobs concentrated in lower wage sectors and part-time or temporary contracts (often ‘zero hours’) –see my post,

But capitalist investors have liked the look of the recovery: house prices have boomed (but mainly in ‘international’ London) and the British pound has strengthened against the euro and the dollar.  But a strong pound and an economy recovering ‘unproductively’ is not a recipe for sustained economic growth in the productive sectors of industry. If the prices of British exports rise because of a strong pound, British manufacturing will be priced out of world markets. And they have not been doing well anyway.

This could explain why Britain’s relatively small manufacturing sector seemed to slow down in May (latest data) after its recent spurt. Manufacturing output is still well below 2008 pre-crash level.

UK manufacturing output

The underlying ‘health’ of British capitalism, at least in its productive sectors, remains frail. The latest quarterly figures (Q1 2014) for the profitability of non-financial companies, just released, although rising from lows in 2013, show that profitability is still well below pre-Great Recession levels.

Indeed, the peak in the 2000s for profitability was in 2007, at 14.2%. But even after the huge credit boom, profitability was below the 1997 peak of 14.5%. The decline from 1997 to a low in the depth of the Great Recession 2009 was 10.9%, down 21%. It’s now just 11.9%, or up 10% from that level. But it is still 18% below 1997.

If we use the long term data provided by the UK’s statistics office, we find that UK non-financial corporate profitability fell sharply in the 1960s to a low in 1975 (the 1970s profitability crisis, then recovered after the worldwide 1974-5 recession, before really taking off in the ‘neoliberal’ Thatcher era. As in the US (and elsewhere), UK profitability peaked in 1997 and has struggled since. Currently profitability is no higher than in the early 1990s and the direction is down, or flat at best.

NRR long

The story fits more or less the story of profitability and crisis that the data in other countries reveal.

I had a look at the even longer term data for the UK provided by Esteban Maito in his paper, Maito, Esteban – The historical transience of capital. The downward tren in the rate of profit since XIX century.  Maito’s data show that there has been a secular decline in the profitability of British capital since the 1850s (the apex of British imperial superiority).


But Marx’s law of the tendency of the rate of profit to fall does not operate in a straight line. The post-1945 period has been one of inexorable decline. The neoliberal period saw a relative recovery or stabilisation, which has been over since the end of the 1990s, leaving profitability still near its historic low. And the recovery in profitability since the mid-1970s was nothing like that achieved by the Great Depression and a world war. That’s the sort of thing that British capitalism needs to get the trend in profitability to reverse: Depression and war.

I am talking on this subject at the UK SWP’s Marxism Festival in central London this Friday at 3.45pm:

33 thoughts on “UK economy: can it last?

  1. Maito’s paper is interesting. But its difficult to take it too seriously when it includes a rate of profit for China when it was not a market economy. How do you have a rate of profit in a centrally planned economy without profits?

  2. Another thought, in his paper he excludes wages and salaries from his calculation or in other words the bulk of circulating costs of production on the grounds that you need to divide the annual totals by turnover. This is not correct. The annual totals are aggregates from the total number of turnovers, so should be included in a calculation of the rate of profit.

    1. Again absolutely agree. Most measures make this mistake misunderstanding Marx here. Carchedi and I plan to publish on this shortly. We agree with you bill on this important point and have adjusted measures accordingly

      1. On Boffy’s point, which I don’t think is assisted by the slab quotes btw, there is a difference between the annual value product and the value annual product or in other words the annual value produced plus previous value added and the annual value produced without it.
        As Boffy points out depreciation, which is basically what we’re talking about is not a revenue, but it can be included in the calculation of the rate of profit, as depreciation is measured in the national accounts.There will obviously also be some constant circulating capital i.e. raw materials produced in previous years, but consumed in this year, but we can assume that in practice this is not a large part of the total and that in any regard what is consumed this year from the previous year is balanced by what is not consumed this year for the next year.
        On China it needs to be included but only for the period in which it was a market economy, i’ve produced some deflators that show this transition, which will be published in an article for the RRPE shortly. There are also problems with valuing the fixed capital stock of the planned economies – or more precisely not valuing it. There was essentially no organic composition of capital in these economies before the market was established and only a very low one after.
        I think the bigger problem with establishing a world rate of profit is finding a common numerator.

      2. Bill,

        No its not mainly wear and tear of fixed capital – which by the way is different from depreciation – nor is it accounted for by the materials carried over from one year to another. This is not what Marx is talking about. What he is talking about is the constant capital consumed by Department I.

        His basic argument can be thought of like this. Assume Department I is a single big firm, like say a coal and steel firm. The firm produces coal, some of which it uses itself to power steam engines to pump water from the mine, and some of which it uses to produce steel. At the same time, it produces steel, some of which it uses as pit props and so on. It exchanges coal and steel within the company, therefore, and this coal and steel it uses itself, forms part of the value of the coal and steel which it sells to Department II, which can likewise be thought of as a single firm producing consumer goods.

        Now, how much of the value of Department I’s output is actually traded. Clearly not all of it, because the largest proportion of its output has been used internally to produce the coal and steel Department I itself requires. But, its only the traded part of the value of Department I’s output that is recorded as being revenue, or expenditure. The coal and steel it produces and uses itself is never sold, because its used internally. Because its never traded, it does not show up as either wages, profits, interest, rent or taxes, nor does it show up as being bought or sold, i.e. as the expenditure of any capital, because it never has been.

        If there is simple reproduction, Marx sets out in Capital II, it is only that portion of the output of Department I, that is not required for its own reproduction that is traded. This amount is equal to the variable capital and surplus value component of the value of Department I.

        It is traded, and thereby appears as revenues (wages and profits) of Department I workers and capitalists. They spend this revenue buying consumer goods from Department II. Department II, uses this revenue to buy constant capital from Department I. Because I(v+s) is the value of the output of Department I available to be traded, Department II is above to use these revenues from Department I, to exactly buy the tradeable output of department I.

        The remaining portion of the value of Department II output is the value of variable capital and surplus value in Department II. Consequently, the revenue equivalent of these components are thereby just adequate to buy that value of output.

        So, although in looking at final output the purchases of constant capital by Department II are accounted for, because its traded, this value of constant capital is really just the equivalent of Department I revenues I (v+s). Meanwhile, the only element of Department II output then to be accounted for is its own revenues, v + s. So, the total value of output accounted for in the national income and expenditure data then is only, as Marx says, what constitutes the consumption fund i.e. the equivalent of the revenues wages, profits, interest, rent and taxes that are used to purchase that output.

        It does not include the vast amount of constant capital that is never traded because it exchanges inside Department I, to simply reproduce the constant capital consumed.

      3. I didn’t say it was wear and tear, I said it was depreciation. That includes wear and tear and obsolescence. By increasing the turnover time the average quantity of depreciation embodied in each unit of output is lower as obsolescence is spread across a larger quantity of output, and so in effect the organic composition of capital goes down. This is reflected in the national accounts which are aggregates, so the quantity of depreciation is the same in terms of obsolescence (not of course wear and tear which increases) but the quantity of wages and surplus value relative to it have increased, so the rate of profit goes up.

      4. Bill,

        The reason I made the distinction is that Marx sets out in Capital I and II, that depreciation does not enter the value of commodities, only wear and tear does. The distinction he makes is that wear and tear is a function of use, whereas depreciation is a function of non-use, and time.

        Depreciation is simply a capital loss to the capitalist. The exception to that he says, which he sets out in Capital II, is in agriculture. There he says, because of the seasonal nature of the production, it has to be he case that elements of fixed capital lie around unused for long periods, and so depreciate as as a result. Because, this is a necessary cost of agricultural production, the farmer has to be able to recover this cost as part of the price of their output. But, he makes clear that this is an exception to the rule. Its sort of like the necessary waste involved in production.

        In relation to the general question the situation resolves itself to this. It comes down to the fundamental postulate of bourgeois economic theory, upon which the National Accounts figures are also based. That postulate goes back to Adam Smith, and is that the value of output is reducible to factor costs, or factor factor incomes – wages, profits, rents, interest.

        So, if the value of output is then equal to the value of the incomes of those factors involved in its production, if the total output is sold (Expenditure Data) this must also equal the total of those incomes (Income Data). So, the value of total output is equal to these incomes, the incomes get spent as revenue, and thereby consume all of the output.

        For Keynesians, because they correctly reject Say’s Law, this is modified. Their theory is still based on the idea that total output equals total income equals total expenditure, but because they recognise that not all income may be spent, i.e. there is saving, the equality is restored by making this saving equal to investment (inventories).

        But, what is the problem here? It is that Marxists know that the value of commodities is not equal to factor costs, i.e. incomes. It is equal to not to v +s but c + v + s. Marx points out in the Chapter on “Simple reproduction” that the proposition is correct if you take total output as being only the total output of the consumption fund, i.e. the output of Department II.

        This is the basic set up he describes.

        Department I

        c 4000 + v 1000 + s 1000 = 6000

        Department II

        c 2000 + v 500 + s 500 = 3000.

        Marx’s point here is that the national accounts would only show the 3000 as output value. Here, The workers of Department 1 are paid £1,000 in wages, which they use to buy commodities from Department II, and the department I capitalists use their profits to do the same. £2,000 of income becomes £2,000 of expenditure. The other £1,000 of expenditure to buy up the rest of the output of Department II, comes from the workers and capitalists of Department II, itself.

        It appears that this expenditure covers the expenditure of Department II of £2000 for constant capital, because this value is incorporated in the value of the final product.

        So, there is £3,000 of output, £3,000 of income, and £3,000 of expenditure. But, Marx points out that this omits two-thirds of the actual total value of output, which is 9000 not 3000. It omits it, because this value is never traded, but is simply used to reproduce the value of constant capital consumed.

        This is why Marx says that the Physiocrats were more advanced in this respect than Smith, because they started the tableau Economique with last year’s harvest. The reason he says this is more advanced is because it is the last yea’s harvest, which provides the physical fund for constant and variable capital, which is simply reproduced out of this year’s production.

        If we take a grain producer that has 1000 kilos of grain, 800 kilos may be required to cover the payment to the workers (the Physiocrats assumed these wages would be paid in kind) and 200 kilos are used as constant capital for the next year’s harvest. The Physiocrats called these advances avances annuelle, which Marx says is what circulating capital is.

        But, in terms of the actual output in the following year, it would appear that the value of production is only what is paid to workers and to the capitalist farmer. So, if the rate of surplus value is 100%, the new production would be equal to 1600 kilos, the amount paid out as revenues to the workers and capitalist. But the total production, would be 1800, because 200 would have gone to cover the constant capital produced last year, and used this year.

        800 would have gone to replace the 800 paid to workers from last years harvest, and 800 will have gone to the capitalist as profit.

    2. Bill/Michael,

      Its obviously wrong to exclude wages and salaries. But, the main element omitted is actually the circulating constant capital. This error has flowed down through bourgeois economics and economics data since Adam Smith’s mistake in that regard identified by Marx.

      As Marx points out in Capital II, the annual output data is actually only the value of the consumption fund. Marx says, in criticising Smith’s error,

      “Now Adam Smith’s first mistake consists in equating the value of the annual product to the newly produced annual value. The latter is only the product of labour of the past year, the former includes besides all elements of value consumed in the making of the annual product, but which were produced in the preceding and partly even earlier years: means of production whose value merely re-appears — which, as far as their value is concerned, have been neither produced nor reproduced by the labour expended in the past year. By this confusion Adam Smith spirits away the constant portion of the value of the annual product. This confusion rests on another error in his fundamental conception: He does not distinguish the two-fold nature of labour itself: of labour which creates value by expending labour-power, and of labour as concrete, useful work, which creates articles of use (use-values). The total quantity of the commodities fabricated annually, in other words, the total annual product is the product of the useful labour active during the past year; it is only due to the fact that socially employed labour was spent in a ramified system of useful kinds of labour that all these commodities exist; it is due to this fact alone that the value of the means of production consumed in the production of commodities and reappearing in a new bodily form is preserved in their total value. The total annual product, then, is the result of the useful labour expended during the year; but only a part of the value of the annual product has been created during the year; this portion is the annual value-product, in which the quantity of labour set in motion during the year is represented.”

      In other words, if we take the two departments, and assume simple reproduction, the value of constant capital included in Department II, is equal to Department I (v+s), this is how the total social exchange takes place. The other element of the annual product is then Department II (v+s). But, as Marx says, this omits Department I c, which is does not produce any revenue to be accounted, because it is internally exchanged.

      Given that rising productivity means that it is c that rises most, omitting it is a major problem, but also given that rising productivity also means that its value could be reduced significantly also causes a major problem for calculating the rate of profit.

      On the annual figure for wages etc. its precisely because the annual figure IS an aggregate of the separate turnovers during the year that it has to be disaggregated to get an annual rate of profit. Calculating the profit against the total laid out capital for the year basically gives you the profit margin not the annual rate of profit. As Engels sets out in Capital III, Chapter 4, and as Marx sets out in Capital II, in a series of chapters, the annual rate of surplus value, and annual rate of profit can only be calculated by taking the annual figure of profit and measuring it against the total advanced capital for one turnover period. Given that a turnover period is less than a year, it can never be right to calculate it against the annual figure for wages etc.

      The problem is that we do not have the data for how many times the average circulating capital is turned over during a year.

  3. Michael,

    I was listening to your comments on CNBC today in relation to Espirito Santo and European banks. If I heard you correctly, you said your research showed EU banks with debts of around $200 bn. I think that way underestimates the real figure. I don’t kn ow if you saw the report in Moneyweek about a year ago, which stated that Deutsche Bank alone has debts hidden off balance sheet via various derivatives equal to the entire global GDP!

    ES is partly owned by a parent company in Luxembourg, and I pointed out at the time of the Cyprus collapse, that Luxembourg’s exposure is far higher than that of Cyprus.

    In my estimate pretty much all global banks are insolvent, and ES is just the latest manifestation of that reality. They are really dead men walking that are only giving a semblance of life due to astronomically inflated balance sheets, on the back of massive mounts of fictitious capital.

    I was surprised at your suggestion, therefore, that these banks would have to be rescued – again – by the state. To rescue these global banks by an injection of capital, would require either money printing on such a scale as to create global hyperinflation, or else would require austerity measures on a much larger scale than anything so far seen.

    Surely, we should follow Marx’s advice. he said none of this fictitious capital adds anything to real value or real wealth, and that when its blown up it simply results in some capitalists losing money, and their assets passing into the hands of others who use them more wisely. I think a massive devaluation of assets would be most welcome.

    Take UK property, I estimate that it needs to fall by around 80% to get to fair value. Even Tory Housing Minister Nick Bowles has said that if the price of chickens had risen by as much as houses over the last 30 years, you’d be paying £47 for a chicken – as opposed to £5-6.

    What all the money printing has been about is keeping those fictitious capital bubbles inflated to protect the banks. If property prices fell to realistic levels, it would blow the banks balance sheets out of the water. We should let them go bust, and devalue these asset price bubbles. We should demand only that the state protects depositors – something that is not likely to happen with ES. Then workers should take over the banks themselves at their rock bottom prices.

    1. Hi Boffy What I said was that the banks had likely losses of up to €200bn from non-performing loans. This would wipe out much of their capital base. The banks’ own debts (bonds, interbank loans and derivative exposure) are of course way higher. I think the state will try to bail out these Euro banks that are getting into trouble. But as you say what is really needed for capitalism is to cleanse itself of this debt. That means a major recession again to devalue these fake assets. These banks should be liquidated and replaced by democratically run and publicly owned banks that take deposits and make loans to people and small businesses as part of a plan of production. I have discussed this on numerous occasions in my blog. In my CNBC thing, I just said what I thought the Portuguese or Italian govts would do.

      1. Michael,

        Thanks for that clarification. I personally think that even the non-performing loans figure is much higher. From my experience and knowledge of Spanish property, for example, I think that Spanish banks still have not properly accounted for realistic valuations or defaults, let alone the future likely falls in those property values. In Britain, as I said, I think property prices will fall by 80% by the time the shouting’s over, and no banks are capitalised for that.

        In the US even, where recapitalisation has been far greater than Europe, I don’t think they are properly capitalised for the $1 trillion plus of student debt, and so on, or for their exposure to EU banks.

        I’d be interested to hear what your thoughts are about the likely link between these loans, and their other debts. I don’t think that its necessary that there has to be a new major recession for these masses of fictitious capital to be liquidated. The Stock market crash of 2000, for example wasn’t brought about by a major recession, though there was the overproduction of fibre optic cable.

        It seems to me that simply a rise in interest rates, is all that is necessary to collapse these bubbles.

        Obviously we disagree over the form of taking over the banks. We already have state owned banks, and I don’t see any difference between them and privately owned banks. The chance of the capitalist state giving workers control over them is zilch, and unfortunately workers are too weak to force it on them. Workers taking them over is both the better alternative, and the only likely likely means by which workers would get control of them.

  4. Hi Michael,

    Why did you decide that attending an SWP sponsored event was a good thing to do, in the face of, for example: ?

    Do you have a take on last year’s events in the SWP? I haven’t seen you write about that *crisis* but many on the left feel strongly about what attendance at their events signals.

    1. I have followed the SWP’s issue of last year as best I could. But I won’t comment on the issue and how it was handled on this blog. This was an SWP sponsored event but involves many outside the SWP and also invites speakers from all sorts to discuss issues from a Marxist perspective, in my case, Marxist economics. As best as I can, I shall not discriminate between groups that are within the labour movement.

  5. Michael,

    Do not cave into the witch hunting that is going on against the SWP. You were absolutely correct to attend.

    Where I draw the line is with those leftists who apologise for Israel, or imperialist war mongering. Those people should be discriminated against.

    1. Edgar,

      If Michael doesn’t want to comment on the SWP subject in his blog, we can respect that, and we shouldn’t use his “abstinence” as an opportunity to reintroduce the discussion by calling those opposed to the SWP’s actions triggering the uproar “witch hunters.”

      Cut out the back-dooring, please.

      After all, that might lead someone less scrupulous than I am to characterize your remarks as “Zionists apologists out, Rape apologists in.”

  6. I didn’t do any back dooring I was responding to Richards comment. Richard was interrogating Michael on his appearance at SWP’s Marxism festival, as if he has to answer to anyone.

    Your comment about rape apologists is not only utterly ignorant, morally reprehensible (opportunistically using rape to score points) and in bad taste but also typical of the witch hunting that is going on.

    Firstly you need to prove rape took place, which hasn’t been proved and no charges have been made. remember rape is a serious offence in England. Secondly you need to demonstrate why the whole of the SWP should be tarred with the same brush?

    1. Michael says he doesn’t want to discuss it on this blog. Richard made no evaluations. He asked what Michael’s opinion was. You brought up witch-hunting. I’m more than happy to discuss this in detail somewhere else. Not here.

      1. Maybe you have trouble reading or something but Richard asked if Michael thought it was a good thing to attend and linked to an article and informed Michael that *many* on the left feel strongly (many feel strongly that he should attend btw). So a clear call to boycott and a bit of ‘polite’, ‘soft’ pressure but still rather sinister for all that.

        The fact you don’t think Richard made any evaluations tells us quite a bit I think, you didn’t actually need to say anything, the nature of your comment would indicate some bias.

      2. Right, asking if it’s a good thing, and linking to an article are “sinister.” Pick a place where you want to discuss SWP and the sinister attempts to suppress it, and I’ll be there.

      3. Yes, it is sinister. But if you had kept your mouth shut this discussion needn’t have taken place.

        I wouldn’t want to discuss this with you has your comments a;ready indicate where your bias lies.

      4. If you had kept your mouth shut, the discussion wouldn’t have taken place. You’re the guy who jumped in with the “yeah, don’t participate in the witch-hunting.”

        Of course you wouldn’t to discuss this with me. I have no bias in this. Others call some rape-apologists, others call others witch hunters. My views align with neither. I do think, however, that the SWP was incredibly stupid, thinking it could investigate, as a matter of party discipline, an accusation of felony assault.

      5. Thanks for confirming that a little knowledge is dangerous and that you are pretty ignorant about the issues. I admire that your ignorance doesn’t stop you from reaching conclusions! But don’t tell me this isn’t bias.

  7. The elephant in the room in all self titled Marxist economists are the effects of labour migration to labour rates as advanced capitalism started to go east in the early 70’s due to the costs of the Vietnam war which triggered the breakdown of the post Bretton Woods financial system.

    The companies that could not physically go east started to import workers en masse and massively lowered wage rates at the same time as massively increasing indebtedness. Deindustrialisation in the West is becoming the norm and the Chinese having been recipients of western technology are involved in massive copyright fraud which will collapse eg the German economy.

    The old recession hasn’t gone away its just that the capitalist nation states have stepped in to honour the debts of private banks. These banks are now being centralized on a massive scale and by the end of this year 85% of all Eurozone banks will be controlled from Brussels. When the next wave of financial meltdowns occur each country in the EZ wont have more than 4-5 banks forcing one more mergers until we are left with …one.

    Either which way monopoly capitalism is losing both its customer base (by lowering the standard of living across the EZ) and its financial base is being centralised across different countries with different histories and languages and work cultures. By allowing those who have perfected the art of bankruptcy in the 20th century to run the EU in the 21st, total bankruptcy once more is on the cards….

    Britain on the other hand just prints money, creates hyperinflation for overseas investors in property and the indebtedness of the banks if property was accounted for would be massive but a false sense of security exists as it has the EU model with American financing and appears to be permanently in ‘boom’ even when billions are spent subsidising wages or bailing out banks. As such it its business as usual, nothing learned nothing new gained as if Northern Rock never happened.

    1. Facts please, about the “massive import of labour” in the 1970s as opposed to the 60s.

      Facts please, what 85% of banks will be “controlled” from Brussels” since a single regulatory authority has been rejected numerous times.

      Facts please, what “deindustrialization” in the “West”? What percentage of industrial output does the US, the EU, Canada, and that honorary westerner Japan, account for?

      Right, the Chinese are involved in massive copyright fraud that will collapse good old Deutschland. National Bolshevism is alive and well I see. Where is there this “copyright” fraud? Is China printing German books and dumping them on the world market? Perhaps you mean technology transfers; the kind that the bourgeoisie, readily or not, agree to for a bit of the old readies?

      Facts please, what hyperinflation in Britain? What is the current rate of inflation in Britain?

      There may be another financial collapse coming, but it won’t be because banks are “controlled” from Brussels; no more than it will occur because banks AREN’T controlled from Brussels.

  8. The EU as a whole has expanded to encompass 500 billion citizens and is aiming to expand all the way to India creating a global free trade zone.

    Over a 40 year period at least 40 million have been added to the EU via various routes ie from non-EU sources. The Guardian states 32m in 2009.

    The UK for instance has had the largest arrival of non-UK citizens for over 2,000 years numbers range from between 5-10m people.
    For Greece the numbers were 2.3m new arrivals in 2004 as produced by the state security services ie equivalent then to over 60% of the domestic labour force.

    Copyright infringement remains top for USA despite pursuing a hard policy of economic nationalism supporting its own industries (auto, banking) against all the WTO it promoted essentially for all other countries not for itself.

    Click to access Priority%20Watch%20List.pdf

    WTO US trade disputes with China….

    The EU’s WTO representative gave a talk at the LSE whereby he stated ECB will take control of 85% of the EZ banking institutions in 2014 that’s where I got the info from. But this link states the same.

    Property prices in the UK-London as opposed to almost every other commodity have gone through the roof over the 4 decades of the neo-liberal era in relation to average wages, flats will soon be selling for a £1m whereby starting salaries for public sector workers are below £30k.

    Banks are in debt to the tune of billions for an array of instruments of financial engineering. The centralisation of banks throughout the EU ie the liquidations of thousands of them in each country is centralising banking just like in the auto industry there used to be many more independent players but now there are few. The mass destruction of unionised jobs in the advanced West destroyed wages and no amount of financial engineering can avoid that fact. Everyone is in debt, students in particular start off indebted for life and in Detroit which in the 50’s had one of the highest standards of living in the USA people now grow vegetables to survive. By reducing say 15 banks in each country to 4 you create the conditions for the next big collapse as technology replaces workers and not enough high paying jobs are created to sustain a ‘western lifestyle’ and as Marx said the tendency once China joins the great manufacturing nations on earth is for western jobs to end up paying Chinese wages as opposed to the other way round.

    Marx on Emigration
    Look at England. The last new market which could bring on a temporary revival of prosperity by its being thrown open to English commerce is China. Therefore English capital insists upon constructing Chinese railways. But Chinese railways mean the destruction of the whole basis of Chinese small agriculture and domestic industry, and as there will not even be the counterpoise of a Chinese grande industrie, hundreds of millions of people will be placed in the impossibility of living. The consequence will be a wholesale emigration such as the world has not yet seen, a flooding of America, Asia and Europe by the hated Chinaman, a competition for work with the American, Australian and European workman on the basis of the Chinese standard of life, the lowest of all – and if the system of production has not been changed in Europe before that time, it will have to be changed then.

    “If China,” says Mr. Stapleton, M.P., to his constituents, “should become a great manufacturing country, I do not see how the manufacturing population of Europe could sustain the contest without descending to the level of their competitors.” (Times, Sept. 3, 1873, p. 8.) The wished-for goal of English capital is no longer Continental wages but Chinese.

  9. Well, if the EU encompasses “500 billion people” then it has expanded off planet, beyond our solar system, and outside our galaxy.

    You mean 500 million, and yeah that’s what happens when the bourgeoisie see an advantage to exploiting in common pools of labor. So what?

    40 million in 40 years from non EU sources? So excuse me, how does that relate to migration into the “developed” countries of Europe in the thirty years after WW2 and before 1974? 1 million/year got your knickers in a twist? An amount that is equal less than 1 percent of the total population each year, and that doesn’t include returns, deaths, etc

    I’d simply refer you to the June 26 article from the Financial Times that shows population growth in the UK from new births outstripping immigration, although you’ll probably attribute that to the previous immigrants who, you’ll be claiming next, “breed like rabbits.”

    But in the last 50 years, the total UK population has grown by 19%. Does that sound like hordes of migrants flooding in?

    Please you sound a lot like the Cameron govt. that suppressed the report that showed immigration did not damage the living standards of British workers; did not displace British workers. See the FT articles of March 5, 6 and January 15 2014.

    Re copyright infringement– first you claim it would destroy good old Deutschland, not that the US is seeking redress and has filed complaints about such practices. Secondly, who cares? Why would any worker care if one set of bourgeoisie steal patents from a different sector of the bourgeoisie? What interest do workers, as a class, have in maintaining PRIVATE PROPERTY of industrial technology? Thirdly, where is the evidence of Germany’s looming or actual impairment by China’s practices? Fourthly, who cares if the German bourgeoisie are threatened by the Chinese bourgeoisie?

    All you are doing with this argument, as you are doing with you immigration argument is playing to xenophobia, and in its crudest versions, with the old “yellow hordes” peril.

    The single supervisory mechanism does not give the EU nor the ECB “control” of 85% of the banks. The ECB will have the ability to make certain stipulations. The ECB will no more have effective control of banks than the US Fed has of Goldman Sachs, BofA, JP Morgan Chase, etc. and no more than the BIS through its Basel 3 requirements will be able to control the machinations of banks anywhere.

    The increase in property prices is NOT hyperinflation. Inflation in the UK has been below 3% per year since the turn of the century, with the figure for 2013 dipping to 2%.

    Yes, the centralization ( in a sector) and the concentration (to owners) of capital is a well known and irreversible facet of capitalist development. So what? We’re not here to reverse that, and express nostalgia for the 1960s or 1950s. We’re not here to restore capitalism to some left-wing version of the neo-liberal “golden age” mythology when the “market” ruled sans regulation.

    Yes, the development of China’s capitalism has, does, and must encounter the limits to its fragmented small scale agriculture, and just as surely, that confrontation will create tremendous upheaval, and a revolutionary opportunity. But how do you evaluate that prospect? Why, it’s nothing but more the “yellow peril” bullshit.

    This national chauvinism has no place in Marxism, but it has every place in racist reaction designed to maintain the power of capital.

    Sign with UKIP and be done with it.

  10. 500billion is a typo.

    Up until 1973 we had ‘full employment’ or the closest thing that can be had to that with around a few hundred thousand between jobs.
    Those that came to the European nation states came with specific contracts they didn’t arrive to impose the ‘race to the bottom’ or were Bolkenstein directives part of EU policy whereby one group of workers could undercut another openly and within existing national wages and conditions that were won over a 150 year period.

    Now we have structural and sustained mass unemployment and subsidies provided for it to keep it massive.

    You then state that in the last 50 years the UK population has grown by around 20%. Of what? If that is of 60million that would equal 12million and if they are over 18 which they invariably are that would imply another 1/3 added onto the labour force ie in direct competition with existing labourers. An oversupply of labour leads to a lowering of wages like an oversupply of goods leads to a lowering of their prices unless of course you are going to revert Marxist economics and argue the EXACT opposite ie that an endless amount of new labour constantly inreases labour value. So why did the corporations go to China? They wanted a new holiday ;location?

    If the corporate media like the FT states that British workers haven’t been displaced by mass immigration then it must be true like the other truths the FT states that capitalism works, communism sucks, free movement is a benefit to all ad nauseum. Cameron hasn’t reduced immigration into the UK he has continued it massively.

    My argument regarding Germany was that after having swallowed up E Germany and nearly going bust they pushed for the Euro which then destroyed the EZ, to prop up their exports they assume they can survive by high labour technology exports to China.. They cant because China like Russia in the pre-war era strips the technology and makes copies. So the globalist strategy of focusing exclusively on non-EU exports and pushing for mass importation of labour to reduce domestic labour costs is unravelling right before your very eyes. Workers have an interest in maintaining high paying union jobs not exporting in them to low wage non-union third world countries. You have no problem with either as you support fully the transnational capitalist order.

    All the countries that have joined the EZ bar Germany cannot print money, hence they have lost monetary control. Their banks have been merged or shut down. Greece no longer has an agricultural bank. When you cant print money you cant loan either and when banks are no longer local then what is good for local conditions goes out of the window and only the interests of large transnationals are to be served by all these measures. Hence you also state you have no care as to what the EU is doing which is essentially the reason you alibi transnational corporations just like in the pre-war era the destroyed petty bourgeoisie of Germany focused solely on the demands of workers and sided with corporate fascism to crush them.

    You then argue there is no hyperinflation in property prices and inflation is 2% per annum at a stroke 3%. 25 years ago on a public sector starting salary of £10k a one bed flat could be bought for £35k. In the same area a starting salary of £25k you would need £250k ie a its gone up by a multiple of x10. That does not include all other costs eg council tax, transport, insurance, parking permits, road tax etc nor other costs such as petrol or transport costs on buses, trains etc.Flats in certain parts of London go for £140m. What was the highest priced flat in London 25 years ago? So that isn’t hyperinflation. Its inflation at 2-3% per year! You gotta be kidding but then again when you say anything to justify anything anything goes.

    If corporate centralisation is an irreversible facet of capitalist ‘development’ then why are you here? You clearly support globalisation both the export of jobs to China and the importation of cheap labour jobs into the EU and you have no problem with it. Marx on the other hand understading the laws of capitalist development spotted a century and a half before it occurred that should China become a great manufacturing nation living standards in the West would take a dramatic dive. But hey why bother with dead Marxists when we have living ones who overturn all the laws of capitalism?

    1. And you are just 6 sentences away from coming out as a full bore national socialist.

      First, the attack on workers standards precedes the expansion of the EU, and the so-called flood of immigrant labor. You still have not addressed the differential between immigration rates for whatever period you think you are addressing, and 1946-1973, or the rate between 1974 and 1980, the rate between 1980 and 1992, those during the “uptick” 1993-2000; that between 2001-2007; and that for 2008 to the present day. So what were the rates for these periods.

      Up until 1970?- well what changed? The rate of profit took a big tumble; overproduction caught up with profitability. That wasn’t caused by immigrant labor. What has produced the movement of immigrant labor? The devastation brought about by capitalism. Pre-Nafta, Mexico, for example, passed legislation making it legal for the villages to “alienate”– offer for commercial sale, the “common lands.” Subsistence agriculture, what remained of it in Mexico was destroyed.

      That destruction did not cause the decline of wages in the US, it did initiate a migration to El Norte, but that was also the period when wages for industrial workers actually recovered a bit from the assaults of 1974, and 1979-1992.

      Immigration did not cause the US bourgeoisie to launch an assault on US workers wages in 2001, no more than it caused an assault in the 1980-1982 double-dip recession. But you don’t finger capitalism as the initiator of this process; no you blame the “foreigners;” those nasty, brutish immigrants, who take the jobs that……….that as studies have shown the “native” work force be it US or UK WILL NOT TAKE; DO NOT WANT. The so-called substitution of cheaper immigrant labor for “home” workers occurs not as a result of immigration, but as an effect brought about by capital’s need to drive the price of labor-power below its cost of reproduction.

      You want to blame migrants for the de-unionization say of meat-packing jobs in the US? That’s just bullshit. The hiring of immigrants occurred after the unions had capitulated, across, the board, to Armour, Swift, etc.

      The FT was reporting on the conclusions of the reports that the Cameron govt. HAD SUPPRESSED because it didn’t support, and actually refuted the conclusions, it, the Tories, wanted to draw from the previous MAC report.

      You don’t call for the overthrow or the abolition of the EU; for the cancellation of the debt; for the opposition to the IMF/EU programs imposed on Greece, or Portugal, or Ireland… not a word do we hear about that. All we hear is how the EU is preventing local banks from printing money and bestowing the money benevolently on the well-meaning, well-deserving “native capitalists” who will, of course, hire “native workers.” You and Golden Dawn share more than a few points in common.

      Corporate centralization and concentration is an inevitable fact of capitalist development. I don’t support anything, not a thing, the bourgeoisie do. Anywhere. Anytime. I don’t support a single shred of so-called capitalist development. No more than I have an illusions about the benign nature of “local capitalism;” or the virtues of local banks; or the charity of local corporations vs. transnational corporations.

      You want to argue on behalf of some ridiculous petit-bourgeois notion of “localism”? And rail against “foreigners” “immigrants” and “international bankers”?

      Gee, that all sounds familiar– where have we heard that before? from every ignoramus with a soft-spot for the swastika.

      So go right ahead an line yourself up to the right of the Tories; but don’t pretend your brownshirt bullshit has even the slightest tinge of red to it.

  11. National socialists were corporate fascists, ie monopoly capitalism bailed out and its difficult to be a supporter for the something you have repeatedly argued for.

    The expansion of the EU which now encompasses 500 million people has free movement enshrined in it as one of the four pillars of the EU. The largest movements both intra-EU and into the EU occurred when the SU collapsed ie over the last 25 year period. Whilst average wages have been pinned to the floor housing costs have gone through the roof. The system has of course attempted to change accordingly introducing interest only mortgages, mortgages that span 40 years, part buy part rent, housing association properties etc but combined with all the other costs, exhorbitant service charges, council tax, transport etc one if starting out today is less well off than 25 years ago. That equals to a massive drop in living standards by all measures without even mentioning that jobs are no longer secure as they were up to the mid-70’s

    The massive increase in immigration coupled with a reduction of jobs and lets not forget that the SWP argued in 2002 that there was no immigration into the UK (on the verge of the biggest wave for 1,000 years) can only be sustained via constant house building, property refurbishments (essentially the last heavy industry of the UK) and the mass importation of labourers to sustain this for the parasitic Buy to Let, overseas investors and estate agents as well as the 100 odd jobs to service this industry. But a system whereby constant flat building whereby 50% of new builds are added on to the housing benefit budget could not sustain itself into perpetuity at one point it would collapse and it did in 2007-08.

    I originally stated that the Vietnam War led to the collapse of the Bretton Woods post war system and the 1973 oil crash forced Nixon to go to China and cut deals in shipping whole industries there to arrest the collapsing rate of profit. This is one side of the argument and you repeat it to me. The OTHER SIDE is that the industries that couldn’t go to China, agricultural, fast food etc started to import labor massively. I never commented on the reasons or the causes. I stated this is what has occurred. Globalisation has two sides. To comment on one whilst IGNORING the other serves a purpose. What purpose is that is the issue.

    I didn’t comment on immigrants nor did I make references to meat packing in the US. The mass importation of labour as a process affects wages and conditions just as much as the export of jobs to low wage non-unionised locations in the far east affects union jobs back home. If they didn’t the bosses wouldn’t go nor would they import labour. You want to have your cake and eat it and argue that jobs can go to China, but jobs that are imported into each nation state have no effect whatsoever. Its all about ‘choice’. The locals don’t want to do backbreaking work so they don’t. The bosses just import labour. End of.

    So who did the agricultural labour in Greece for 5,000 years before the Bangladeshis arrived en masse? Aliens? Any economist knows that if the price of a job is too low you wont find anyone to do it. But if you live on a field and in a barn like an animal and you export the Euro back home (due to its global overvaluation) you may find people to do that type of work. So lets forget 150 years of labour struggle the question at stake is …doing the work, not the price of labour. So who are your defending? The gangmaster or the agricultural worker?

    The First International under Marx was set up to stop bosses using labour to undercut labour just as in a strike workers can also be scabs. That doesn’t imply they are to be supported in scabbing because their kid is ill or cant eat. Supporting generalised scabbing ie setting up non-union work the world over is what you give cover to with your arguments. They are a million miles away from the closed shop and workers rights. Marx organised meeting with workers who were brought into the UK to undercut labour rates raised money and told them to go back paying their fare. Your mantra is the exact opposite. Arrive, undercut and prosper, the FT says so, so it must be true!

    Due to the liberalisation of capital control and then the liberalisation of the labour markets didn’t the price of housing go up or does inflation remain at 2-3% so how come flats sell for £140m. What happened to your non-Hyperinflation theory argument on property prices for London? Did it fly back to Mars?

    I haven’t also commented on the EU or debts as this isn’t a party political broadcast so your points are irrelevant to the topic of discussion.

    I have also been labelled as being a member of UKIP, Golden Dawn possibly the BNP, Britain First and if I was alive in WW2 a member of the SS. You are entitled to your opinion, good luck with it.

    You argued there is no centralisation of banking in the EU, you claimed what is going on in the EU is no different from the FED etc. In other words Europe is the USA. If the economic centralisation of Europe was that easy if it could become a mini-USA it would have. Unfortunately this is the 3rd attempt at creating a Capitalist United States of Europe. And like the previous two attempts it is unravelling and imploding. You seem to want to take yourself out of the conflict pretending you are above it. Who cares about local producer, who cares about the local factory. who cares about local banking, who cares about the EU, who cares about the pressure on public services, housing costs transport costs etc. Your mantra is who cares. Clearly you don’t. You have made peace with the system a long time ago and are happy with what you see before your very eyes. It only denotes your class position. Abstention in the face of a corporate dictatorship by transnationals is the hallmark of someone who supports the processes.

    Good luck in the future. The argument reached its natural end.

  12. Dear Rob, 

    I do not know what is going on. My Yahoo mail does not work well these days. I seem to have lost your address.  I am sorry for bothering you, but I have a request. A couple of days ago, you posted a graph, based on the work by Maito Esteban (I read his article and I think that it is great). The graph show the rate of profit in the UK since 1850.  I am going to give a short course in the fall on political economy, that is, if I find enough students. It’s adult education. A short explanation about the courses are being printed in a book and then people can sign up. If enough people sign up, I can give the course (see for more information). I was wondering if I could use your graph as an illustration. What do you think?  Things are getting a tiny better for me. I am going to teach a course on political economy at UCC in September, to regular students – this was my old job. I am  still not a lecturer again, but I am working on it. It is difficult. 

    Please let me know what you think.  With best regards, 


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