Thursday, January 30, 2025

Anyone still backing Britain?


Winning the global race for growth?

"I'm Backing Britain" was a brief patriotic campaign, which flourished in early 1968 and was aimed at boosting the British economy. The campaign started spontaneously when five Surbiton secretaries volunteered to work an extra half-hour each day without pay to boost productivity and urged others to do the same. The invitation received an enormous response and a campaign took off spectacularly; it became a nationwide movement within a week. Trade unions were suspicious of, or even opposed to, the campaign, considering it as an attempt to extend working hours surreptitiously and to hide inefficiency by management.

The campaign received official endorsement by the Prime Minister, Harold Wilson, but it found that being perceived as government-endorsed was a mixed blessing. The Union Flag logo encouraged by the campaign became highly visible on the high streets, and attempts were made to take over the campaign by Robert Maxwell, who wanted to change its focus into an appeal to 'Buy British', but the campaign's own T-shirts were made in Portugal. After a few months without any noticeable effect on individual companies or the economy generally, interest flagged amid much embarrassment about some of the ways in which the campaign had been pursued and supported.

It has come to be regarded as an iconic example of a failed attempt to transform British economic prospects.'

https://en.wikipedia.org/wiki/I%27m_Backing_Britain



'Britain’s factories suffered the deepest slump in orders since the first Covid lockdown and are braced for worse to come as demand from customers in the UK and overseas withers.

Businesses are slashing investment amid rising taxes and red tape, according to the Confederation of British Industry’s survey of the manufacturing sector.

“Manufacturers have entered the New Year in a grim mood. Confidence has evaporated over the last three months as orders have dropped,” said Ben Jones, economist at the business group.

“A fall in domestic deliveries comes amid widespread concerns over the impact of the increase in National Insurance contributions, minimum wages and changes to employment law on firms’ operating costs.”

Much of the global manufacturing sector is struggling with German industry gripped by high energy prices, weak demand and stiff competition from Chinese car manufacturers, while China itself is also battling against an economic slump caused in part by a property crisis.

As a result British factories have few orders from overseas.

“Export prospects appear worse than at any time since the pandemic, reflecting a slowdown in overseas demand and reports of ongoing difficulties securing supply contracts with customers based in the EU,” said Mr Jones.

He called on the Government to inject fresh confidence into the economy.

“Several firms noted concern that negative sentiment risks becoming self-fulfilling,” said Mr Jones.

“The government can play a role in re-booting confidence by sending clear signals of intent on policies that could support the manufacturing sector, notably delivering an industrial strategy that helps the UK win the global race for growth, matching skills to economic needs, and accelerating our energy transition and resilience.”

The share of businesses reporting falling orders outweighed the proportion with rising demand by a margin of 20 percentage points, the worst since July 2020.

Expectations for the coming quarter are even worse, with the net balance anticipating growth in orders falling to minus 32pc, the lowest since April 2020, at the start of the first Covid lockdown.' The Telegraph

The below is from the    March 1991 issue of theSocialist Standard

'Since its evolution out of feudalism, the capitalist system of society has ensured that there has been a long-term expansion in the productive capacity of the world. TVs, computers, weapons capable of mass wreckage at one stroke—all these things that were once unthinkable have become basic features of life, at least in the more developed areas of the planet where capitalism has been dominant for many decades, and in some instances, hundreds of years.
Although capitalism broke through the fetters placed upon production by the feudal system and has expanded the forces of production to an unprecedented degree in the years since, the expansion of productive capacity and output under capitalism has never proceeded in a straight line. Notions of steady growth and constantly increasing well-being owe more to the rhetoric of politicians than the actual reality of capitalist development.

As a system, capitalism grossly underuses the technology and potential for production that it has helped develop. On one level, this can be seen by the growth in employment of people who are not engaged in intrinsically useful activity—bankers, accountants, insurance workers, armed forces personnel and so on. But even when capitalism can be said to be working at “full capacity”, with expanding output, growing productivity and booming sales, a period of “under-use” is always around the corner.

Falling output
Capitalism in Britain has reached just such a turning point. The last few years have seen fairly steady growth, with rising productivity and increased investment in those expanding sectors of industry that were making the headlines in Thatcher’s last years in office—particularly microelectronics and information technology. Much of that growth and expansion has now been halted.

This has not, of course, prevented the present government from arguing that the downturn in economic performance is just a "blip”. Only in November 1990 was John Major (when Chancellor) prepared to admit tentatively that Britain is in recession. The government currently defines a recession as being a situation when there is a negative growth rate for two successive quarters, but this “official" definition hardly matters to the thousands being thrown on to the dole queue or the thousands of others forced into bankruptcy.

Britain, in common with a number of other countries, is now in a situation where industrial production is falling and unemployment is rising. Although the official unemployment statistics have been doctored to the extent that they have become virtually meaningless as a measure of the actual level of unemployment in Britain, they do at least indicate trends—and the current trend is up. Manufacturing production has been falling since April last year and in the three months to November fell by 2.7 percent compared with the previous three-month period (Independent on Sunday,  27 January).

So far as governments and politicians are concerned, falling rates of growth and high levels of unemployment are signs that something has “gone wrong". When things start to go wrong for capitalist governments they often look for a scapegoat— like some hapless (ex-)Minister whose irresponsibility and recklessness is blamed for having brought the period of growth to an end. In Britain this role has been allocated to former Chancellor Nigel Lawson, a man previously described as "quite brilliant" by Thatcher and Major. But governments taking the credit when output is expanding and unemployment is low, and finding a scapegoat when things get rough is based on the mistaken assumption that the capitalist business cycle results from the policies they pursue. They may like to think that they are in control of the economy and that when things go wrong they can put them right again with the correct policies, but this is a fantasy.

Over—expansion
What governments fail to realise is that an economic recession is not an example of capitalism “going wrong" because of some dreadful ministerial error. Economic recessions with stagnating production, growing unemployment and a further slide into poverty are entirely normal—and necessary—features of capitalist development. This is because of the inner logic of the capitalist system's drive towards expansion.

The conditions for the development of an economic recession are present even when the capitalist system is in a period of boom, or relative prosperity. One thing that is immediately noticeable is that the operations of capitalism are not planned at the level of the whole economy. Decisions about investment are made by thousands of competing enterprises operating independently without social control or regulation. This means that when business is booming and when profits and growth rates are high "over-investment" by some enterprises will inevitably occur. In pursuit of future profits they expand their productive capacity beyond what the market which they are producing for can absorb.

A particular industry over-investing and expanding its productive capacity beyond the limits of market demand in this way is the usual cause of an economic crisis and subsequent depression. If capitalist growth was to be achieved in a controlled manner, eliminating booms and slumps, then growth would have to be balanced in each sector of industry. But the growth of an industry is not linked to the demands of other industries—its growth is determined by the expectation of profit, and this inevitably leads to a disproportion in investment and a disproportionate expansion between the various branches of production.

When an industry has over-produced for its particular market, this will have a knock-on effect for firms operating in other sectors of the economy. For instance, if an enterprise is no longer able to sell the commodities it has produced on the market at a profit, production will be cut back thereby slowing output. This will provoke a chain reaction as the enterprises' suppliers will no longer be able to sell all their products either, which will in turn affect their suppliers and then their suppliers' suppliers, and so on. Such an overproduction for selective markets therefore only has to appear in a few key industries for a crisis to break out and spread—reducing overall growth rates and increasing unemployment. And it all arises out of the general anarchy of production inherent in the capitalist system.

Boom—slump cycle
After a period of generalised stagnation and high unemployment, capitalism will be able to move out of the slump phase of its trade cycle. Although a recession has devastating consequences for the working class, no slump is permanent and once many of the weaker capitals have gone to the wall—with their assets being sold off cheaply to their competitors—the prospects for investment and expansion improve again. Capital depreciation, coupled with reduced interest rates caused by reduced demand for money capital, and lower real wage rates in a recession, mean that the prospect for making profits improves and industries begin to expand once more, taking on more workers. The cycle then begins all over again. As Marx pointed out in the last century:

The factory system's tremendous capacity for expanding with sudden immense leaps, and its dependence on the world market, necessarily gives rise to the following cycle: feverish production, a consequent glut on the market, then a contraction of the market, which causes production to be crippled. The life of industry becomes a series of periods of moderate activity, prosperity, over-production, crisis and stagnation. (Capital.  Volume I. page 580, Penguin edition).

Now that capitalism has become a world system the "sudden leaps" of production referred to by Marx are not nearly as immense as they were in the capitalist system's historical ascent when whole continents of the Earth still had to be brought into the "factory system" with its wage-labour and capital relationship. Indeed capitalism, having raised the forces of production to a level where a society of abundance is feasible, has outlived its usefulness for humankind, and its cycles of boom and slump are a testament to its inherent inability to utilise resources efficiently. Capitalism can only advance so long as there are periods of regression when workers are made redundant in increasing numbers. when growth stagnates and when poverty spreads—not merely in the "developed" areas of the world but in the weaker capitalist states also, where the effects of the capitalist trade cycle are often felt hardest.

Most importantly of all, there is nothing that politicians can do to eliminate the boom-slump cycle—it will be around as long as capitalism itself. Capitalism cannot be efficiently planned as anarchy of production and uneven development are at the very heart of the system. All attempts at planning capitalism have ended in disaster—most notably in state capitalist countries like Russia and China where production seems to be in an almost chronic state of stagnation and where unemployment has. at least until recently, been masked by overstaffing.

The only way to take the abundant resources of the Earth and use them in an efficient manner is to establish a system of society based on common ownership and democratic control, where articles of wealth will be produced solely for use and not for exchange on a market with a view to the profit of a minority. Only then will crises, booms and slumps be a thing of the past and only then can production be geared to satisfying the needs of the inhabitants of the Earth.'

Dave Perrin

https://socialiststandardmyspace.blogspot.com/2020/03/crises-booms-and-slumps-1991.html




No comments: