CHRISTINE THOMAS reviews a recent book by FT journalist Philip Stephens charting the post-war demise of British capitalism – and the despair of the class he represents at its prospects post-Brexit, in a crisis-ridden international capitalist world disorder.
Britain Alone: The path from Suez to Brexit
By Philip Stephens
Published by Faber & Faber, 2021, £25
Britain Alone is basically a history of British foreign policy since world war two. Philip Stephens’ narrative is, in his own words, “book-ended” by two major historical turning points – the 1956 Suez crisis and Brexit, from which he attempts to draw some parallels.
As would be expected from a Financial Times journalist, the book is written entirely from the viewpoint of the ruling class, and the capitalist system is a given. On Brexit, Stephens makes no attempt to hide his own views, which reflect those of the majority of the capitalist class in Britain – that leaving the European Union (EU) represents a damaging blow to their economic interests. Although he makes passing references to anti-war protests at the time of Suez, Vietnam, and the 2003 Iraq war, as well as various strikes over the post-war period, the organised working class is assigned no real agency – it is, at best, a bit player with a walk-on part. Nevertheless, the book is a useful backdrop to current debates about ‘Global Britain’: what British capitalism’s international role will be post-Brexit in an unstable world of economic crises and competing economic blocs, in which the US-China super-power rivalry has become increasingly dominant.
One of the main themes running through the book is the mismatch between global pretensions and economic reality. Britain entered the second world war as the world’s largest creditor nation with an empire comprised of 700 million people. By the war’s end, in 1945, Britain had become the biggest debtor globally, in hock to the USA, and faced with growing mass movements in the colonies for self-determination that would eventually lead to the dissolution of the British Empire.
It was a pivotal moment in global relations. In the western capitalist world the US was now the unrivalled economic power, supplanting British imperialism. As the richest and largest economy, responsible for 50% of global economic output, US imperialism was able to assert its dominance in shaping international capitalist ‘rules’ and institutions. The Bretton Woods currency agreement, ‘multilateral’ institutions like the International Monetary Fund (IMF), the World Bank, the General Agreement on Trade and Tariffs (GATT), and the North Atlantic Treaty Organisation (NATO), were all fashioned to serve the interests of capitalism globally, but also to maintain the USA’s economic, military and geopolitical hegemony within the capitalist bloc.
The post-war balance of forces
Starting in 1947, until the collapse of the Stalinist states in Russia and Eastern Europe from 1989, US capitalism’s worldview was underpinned by the need to defend its economic and political interests against the threat of the Soviet Union, which had also emerged strengthened from the war. Notwithstanding the massive overheads of a degenerated bureaucratic state, the ruling Soviet bureaucracy had been able to mobilise the resources of the planned economy to defeat the Nazi invasion, with the battles on the Eastern front constituting the largest military confrontation in history. The Soviet bureaucracy then moved to eliminate capitalism in most of Eastern Europe and establish regimes in its own image. As Stalin had told Josip Tito, the leader of the Yugoslav partisan resistance and post-war president, “whoever occupies territory imposes on it its own economic social system. It cannot be otherwise”. The world was now divided into two major blocs based on rival economic systems dominated by the USA and the USSR.
What was British capitalism’s role to be in this new post-war global order? Britain was seriously diminished as an economic power. During the war its balance of payments deficit had increased by 15 times. US GDP was now five times greater than that of Britain. In 1946, the US granted $3.75 billion in credit and agreed to extend British debts from Lend Lease – the scheme through which the US had supplied Britain with the materials needed to fight the war, and which were not fully paid off until 2006. The quid pro quo was that sterling would become fully convertible as a currency within a year and restraints would be lifted on US exports to the Commonwealth and the colonies. The crumbling of the empire, which began with independence for India and Pakistan in 1947, would open up vast new markets for US capitalism to exploit and secure important strategic bases for pursuing its geopolitical interests.
Stephens describes how sections of the British ruling elite were slow to come to terms with Britain’s declining economic and military might, including capitalist politicians from both the Tories and the Labour Party. After all, Britain had come out of the war on the winning side. Winston Churchill had taken a seat at the Yalta conference in February 1945 alongside US president Franklin D Roosevelt and Joseph Stalin as the ‘big three’ carved up the world into respective spheres of influence. The general consensus was that within a few years of the end of the war British imperialism would have returned to its pre-war great power status. The ‘special relationship’ with the US, a phrase first used by Churchill in 1944, would mean that Britain would remain an essential partner on the global stage.
The first signs of ‘overreach’ came with British military withdrawal from Greece and Turkey. Attempts at maintaining sterling as an international trading currency to rival the dollar were thwarted when the Labour government, led by Clement Attlee, was forced in 1949 to devalue the pound by a third. The 1967 devaluation under Harold Wilson’s Labour government, the cap-in-hand turn to the IMF for a loan in 1976 under James Callaghan, and the pound’s ejection from the European Exchange Rate Mechanism on ‘Black Wednesday’ in 1992 during Tory John Major’s premiership, all had a similar symbolic effect as far as British capitalism’s global standing was concerned, strikingly advertising its underlying economic weaknesses. But from the British ruling class’s point of view it was the Suez debacle in 1956 that first brought home most forcefully the changed post-war world balance of forces in the capitalist West.
The Suez debacle
In July 1956, Egyptian nationalist leader Gamal Abdel Nasser nationalised the Suez canal in retaliation at the refusal of the US and Britain to finance the building of the Aswan High Dam. The nationalisation was viewed by the majority of the British ruling class as a serious threat to their economic interests and prestige in the Middle East and beyond. One wing of the Tory party, representing a section of the capitalists that looked to restore Britain’s ‘imperial glory’, was in favour of military intervention. The hardliners had the backing of the prime minister Anthony Eden and chancellor Harold Macmillan.
Faced with resistance from governments internationally including the US, as well as public opinion at home – reflected in a sizeable opposition within the Tory party itself – Eden and Macmillan secretly colluded with Israel and France (which accused Nasser of supporting the National Liberation Front fighting for Algerian independence from French imperialist rule) to fabricate an incident that would lead to invasion. The military intervention succeeded in defeating Nasser’s troops but was politically a disaster. In Britain, thousands had taken to the streets in opposition – the biggest protests since the end of world war two – and the Tory party was seriously split. Moreover, US imperialism had forced an end to the intervention and a humiliating retreat through financial ‘sabotage’ and ‘blackmail’ – creating a run on sterling and threatening sanctions against British capitalism. Facing re-election, it was not in the political interests of US president Dwight Eisenhower to back the Suez military intervention. Neither did military adventures aimed at bolstering empire coincide with the broader economic and geopolitical interests of US imperialism.
Suez confirmed that for Britain the age of empire was over. It was, according to Stephens, “a vainglorious attempt to prove that… Britannia could still rule the waves”. The US now replaced British imperialism as the dominant power in the Middle East. The transatlantic ‘special relationship’ was revealed to be an extremely asymmetrical one in which British capitalism played a subordinate role, dependent on US imperialism both economically and militarily. But the fiction of an equal or ‘special’ partnership has continued to be promoted by all British governments as a means of bolstering the power and prestige of British capitalism on the global stage. Stephens writes about the myth of the ‘independent’ nuclear deterrent, a prestige symbol which has, in reality, been totally reliant on US technology and delivery systems, with the US, not the British, finger ultimately on the trigger.
More recently, the much-fanfared dispatch of the aircraft carrier HMS Queen Elizabeth to the South China Sea, meant to enhance the UK’s standing as a Pacific and global power post-Brexit, was purely symbolic. Because of defence cuts, ten out of eighteen planes on the carrier were American and 250 of the 1,600 crew were US marines. However, although the relationship between British and US imperialism has been primarily a subservient one – and at times almost slavish as when Labour prime minister Tony Blair acted as US president George W Bush’s ‘poodle’ during the 2003 war on Iraq – on occasions national economic and political considerations can take precedence. This was the case when Harold Wilson refused president Lyndon Johnson’s entreaties to send UK troops to Vietnam, under enormous pressure from the anti-war movement in Britain which was making itself felt within the Labour Party, then still a conduit for representing the political interests of the working class.
Suez, writes Stephens, was also a catalyst on the road to a closer economic relationship for British capitalism with other European states. The legacy of empire, the existence of the Commonwealth, and the emphasis on the transatlantic relationship with US imperialism, meant that Tory governments initially turned their backs on post-war discussions on European economic integration and the signing of the Treaty of Rome in 1957, which formed the European Economic Community (EEC). But British economic output and productivity were lagging behind both Germany and France, who were overtaking Britain in sectors such as aerospace, advanced engineering and cars. By 1960, gold reserves covered less than one-third of what was owed to other countries. British capitalism needed the then 200 million-strong European Common Market for its goods and to enhance its power in the global arena.
However, scarred by the experience of Britain’s unilateral declaration of a ceasefire in Suez under US pressure, French president Charles De Gaulle twice vetoed Britain’s application to join the European capitalist club, in 1963 and again in 1967. For De Gaulle, the EEC was not just about binding a re-emergent German capitalism into a framework of ‘European cooperation’ to avoid future wars but also a means of standing up to US economic and military power internationally, and Britain was considered too close to US imperialism. But from when Britain did eventually join the EEC, in 1973, a ‘twin pillar’ orientation to both US capitalism and Europe underpinned the foreign policy of the British ruling class – until Brexit.
A very different era
There are undoubtedly parallels to be drawn between Suez and Brexit. The Suez crisis symbolised Britain’s new diminished position in the post-war global order, representing a watershed moment. Brexit also marks a decisive rupture with decades of post-war British foreign policy. As Stephens points out, much of the language employed by the right-wing Tory dominated official Leave camp during the EU referendum in 2016 echoed that of sections of the ruling class in the immediate post-war period, who sought to defend Britain’s sovereignty and enhance its power and prestige on the international stage by nostalgically returning to a period of extensive ‘global reach’. However, British withdrawal from the EU has taken place against an international backdrop that is clearly very different even from the era of Suez.
Suez shone a spotlight on the decline of British imperialism relative to US imperialism, but the post-Suez period – until the 1973-75 world economic crisis – was generally one of global capitalist upswing that resulted in a certain political stability. The 2007-08 financial crash graphically exposed that today we are in an era of profound capitalist crisis.
In the sphere of world relations, or geopolitics, the disintegration of the Stalinist bloc and the restoration of capitalism in the Soviet Union and Eastern Europe ushered in not the ‘end of history’ but an unstable period of inter-imperialist rivalry. The existence of an alternative economic system to capitalism in the post-war period had mostly contributed to mitigating the competing interests amongst the various capitalist states internationally. With that ‘unifying’ factor removed, rivalries and tensions have broken out in much sharper form both between and within capitalist economic blocs.
In the initial period following the collapse of Stalinism, US imperialism was the world’s sole super-power. Although it remains the most important economic and military power internationally, its global might has been undermined by the disastrous interventions in Afghanistan and Iraq, the legacy of the financial crisis, and the rise of China as an aspiring global superpower. In this multi-polar world, second-tier powers such as Russia and, to a lesser extent, Turkey, have also asserted their interests regionally and further afield, adding to global instability.
Although Stephens only superficially deals with these shifts in global power, he correctly places Brexit within what he calls the “most uncertain time since 1945”. It was not in British capitalism’s general interest to leave the EU, but Brexit is a consequence of that ‘uncertain time’: of inequality, austerity and insecurity; of working-class people feeling ‘left behind’ and fearing for their future in the aftermath of the 2007-08 global financial crisis, coming on top of years of unrestrained neoliberalism and globalisation; of their feeling unrepresented and abandoned by the political elites, including a Labour Party meekly implementing austerity at local level, and with Jeremy Corbyn unwilling to take the measures needed to reverse that process or to consistently put forward an alternative workers’ Brexit to the ‘hard’ or ‘soft’ capitalist Brexits on offer. While some seized on the referendum as a means of venting their anger and frustration, others wanted to believe the rhetoric of the capitalist Leave-supporting politicians who promoted the mirage that breaking with Europe would lead to a better and more secure Britain.
The crisis of capitalist political representation
The crisis in the Tory party over Europe is itself a reflection of the new unstable world unleashed, first by the collapse of Stalinism, compounded by the consequences of the financial crisis, and now by Covid. It’s not just the working class that faces a crisis of political representation but the capitalist class itself.
Of course, the capitalist class has never been a homogeneous bloc, and differences and tensions between various sections – industrial and financial, those orientated to the global economy and those more linked to the domestic market, for example – have always found their reflections within bourgeois parties, although also mediated by the political interests of the capitalist politicians themselves. While those divisions can be relatively contained as the economy is going forward, as was the case post-Suez, in an era of decline and periodical crises they can erupt to the surface, tearing those parties apart.
The Brexit referendum was a manoeuvre by David Cameron to placate the Eurosceptic wing of the Tories and to try and keep a seriously fractured party together. It was never expected to deliver a ‘yes’ vote. But not only did Leave prevail, the Brexiteers around Johnson ended up seizing control of the party by appealing to the nationalist instincts of a layer of the Tory party’s membership: just 92,153 voted for Johnson as leader – a majority of whom, according to a YouGov poll, were prepared to sacrifice both the United Kingdom and the party itself on the altar of Brexit. The contrast could not be more stark with the post-Suez Tory party, which had around two million members and was a stable political vehicle for promoting the interests of the majority of the capitalist class at home and abroad. Now, it is an extremely unreliable tool, with an unrepresentative populist English nationalist clique at the helm, faced with steering a course in the uncertain landscape of a post-Brexit world in turmoil.
Stephens writes that the Tory Brexiteers had “no organising vision” for Britain’s relationship with the world, embracing a “cacophony of often contradictory ideas”. That lack of vision and preparation has been clearly exposed by Johnson’s signing of the Northern Ireland Protocol, recklessly disregarding the economic and political consequences of a border in the Irish Sea, in a desperate attempt to ‘get Brexit done’ and shore up his social base. Now he is faced with the possibility of increased sectarianism in Northern Ireland, while unilateral decisions to waive aspects of the Protocol, or threats to ditch it all together, risk a trade war with the EU and the further undermining of British capitalism’s standing on the world stage.
On the economy and on foreign policy Johnson is trying to reconcile the often divergent views of those Tories who promote a smaller state, low taxes and unregulated free trade, with those favouring a more interventionist and protectionist approach to the economy to support vital supply chains and ‘strategic industries’ and to ‘level up’, with the latter more vocal during the Covid pandemic. But the idea that, unfettered by the EU, a ‘Global Britain’ can compete on equal terms as an international player in a multipolar and increasingly bipolar world is as fantastical as British capitalism reclaiming its imperial greatness in the aftermath of the second world war.
Post-Brexit Britain in the global order
Even before Brexit, British capitalism was falling behind its EU competitors with regard to productivity and investment. Between 2010 and 2018, for example, of the G7 economies only Italy had a lower average investment in research and development. Now those long-term weaknesses of the British economy are being exacerbated by leaving the European single market on a capitalist basis.
To a certain extent, the immediate economic consequences of Brexit have been partially obscured by the Covid crisis, but recent figures have revealed that from 2016-19 exports of services from Britain were £113 billion lower than they would have been had they followed previous trends. And this was during the period when, negotiating a withdrawal agreement with the EU, Britain remained within the single market and the EU customs union. Whereas Britain had been the principal platform for companies doing business with the EU, for two years running France has overtaken Britain as the main destination for inward investment in Europe.
The image promoted by Johnson – of a ‘sovereign’ Britain traversing the globe signing trade agreements with other nations that would have been impossible when shackled to the EU, and that these will give a significant boost to the post-Brexit economy – is once again a triumph of hubris over reality. The much-hyped trade deal with Australia, the first that wasn’t just a ‘rollover’ deal from the EU, is expected to add at best just 0.02% to British GDP over 15 years. Vaunted by Johnson as a “springboard” to the Pacific and the “unheralded opportunities” of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), in reality Britain already has free trade deals with most of the countries involved and the Department of Trade itself estimates that any deal with the CPTPP would add only £3.3bn a year. Despite the rhetoric at the G7 summit in June this year of an ‘indestructible’ relationship between the US and Britain, US president Joe Biden is in no hurry to sign a trade deal. As far as the US’s strategic interests are concerned the Pacific region is the priority, and in Europe, German capitalism is the key economic power.
British capitalism will be increasingly buffeted by the stormy seas of the competing interests of stronger nation states and economic blocs. With US imperialism’s global dominance potentially threatened in the medium to long term by the technological and military development of China, Biden is seeking to form an anti-China alliance with European and other countries. But ‘taking sides’ can conflict with the economic and strategic interests of the capitalist classes of the different nation states of Europe, as is the case with Germany, for whom China is its biggest trading partner. Inevitably this will intensify divisions within the EU and increase tensions between European states and the US.
The Johnson government is faced with the same dilemma. It caved in to US pressure and banned Huawei equipment from the UK 5G mobile network, but the Tory party is deeply fractured over what its stance towards China should be. The recent government defence review attempted to face both ways by describing China as a “systemic competitor”, but also promoting “deeper trade links and more Chinese investment in the UK”. Those tensions could intensify if US pressure increases on Britain to back its economic and foreign policy with regards to China.
For Stephens, Brexit represents “a great leap into the unknown”. The EU “acted as a multiplier of British influence” and, by leaving, the country has “lost political and economic leverage in negotiating with the rest of the world”. Britain now has “to start again”. But beyond lamenting the new reality of “Britain alone”, or even “England alone”, he offers no way forward. Despite his pro-EU stance, Britain re-joining the club is clearly not a serious option for Stephens and is not raised at any point in the book. The fact that an authoritative Financial Times journalist can only bemoan what has happened without providing an alternative is indicative of the profound crisis facing British capitalism and its long-term decline – a second-rate power in a crisis-ridden international capitalist system.
The former UK ambassador to Washington, Sir Christopher Meyer, has commented that projecting an inflated image of Britain as a sovereign global power “does as much harm as good”, as it “raises expectations”. He was referring to the so-called ‘special’, ‘indestructible’ relationship with the US. But his comments have a wider relevance with regards to British capitalism’s role in the global order post-Brexit. In a world of economic crisis and unstable and disruptive international relations, the discrepancy between image and reality is one more destabilising factor that can sharpen divides within the ruling class, and lead to rapid changes in consciousness amongst the working class. As a result, that class will increasingly move from the sidelines that Stephens allocates it in his book, to the centre stage of the struggle against the entire capitalism system.