Over the past century, the capitalist state in Britain has increasingly been subordinated to the needs of finance capital rather than to those of the capitalist class as a whole. Indeed, the British state today creates a substantial proportion of the economic demand, bond-trading business and overseas investment opportunities on which finance capital depends for its profits.
Although Britain has tens of thousands of small firms, the dominant position in each sector of industry and services is usually held by no more than five or six big firms. They control the technology, monopolise access to export markets and use their market power to subordinate the smaller firms which act as suppliers, subcontractors and distributors.
These monopolies, whether public limited companies or private equity ventures, are invariably controlled by financial institutions. Banks and insurance companies own the dominant blocks of shares and use their power to buy and sell in order to extract maximum short-term profit.
Those who own and control the big financial companies, and through them control the major non-financial monopolies, thereby constitute the core of the Britain’s ruling capitalist class. This relatively small group of finance capitalists organise the economy to maximise monopoly profits at home and imperialist ‘super-profits’ around the world. They largely dictate the key domestic and foreign policies adopted and implemented by the British state apparatus, whose structures and top personnel interlock with those of the capitalist monopolies.
Thus the Thatcher government’s de-control of capital movements and financial markets enabled the City of London to become the world centre for deregulated speculation in currencies, stocks, shares and financial derivatives.
After three decades of ‘neoliberal’ economic policies, the British economy is more dominated than ever by banking and financial services. Meanwhile, four million manufacturing jobs have been lost and many new jobs in the service sector are low-paid, temporary, part-time and insecure.
Increasingly, the City’s power and influence is shared by United States (US) finance capital. Until the late 1980s, most of the dominant financial institutions in the City of London were British-owned. Now, the majority of the investment banks (including their private equity funds) are US-owned. A smaller number are German, French or Swiss, alongside the remaining British investment banks. National ownership became clear during the banking crisis, when each state saved its own country’s banks. Middle East and Far East state-run sovereign wealth funds also own a growing proportion of stocks and shares in Britain, as they do in the US.
Large sections of British industry have also passed into the hands of overseas transnational corporations (TNCs), notably in energy, steel, cement, chemicals, ports, airports and the mass media. The private sector services undermining the National Health Service (NHS) and Royal Mail are mostly in foreign ownership. Most of Britain’s high-technology production in computing, electronics, machine tools, cars and consumer durables is conducted by externally-owned TNCs.
British-owned monopolies are now restricted to a fairly narrow range of areas: finance, oil, gas, mining, retail, pharmaceuticals, telecommunications, food and tobacco and arms manufacture. These areas reflect the colonial and neo-colonial orientation of Britain’s economy. In most cases, the bulk of their investment is outside Britain, earning super-profits on the back of cheap labour.
In fact, the British capitalist class owns more economic and financial assets outside its home territory than the capitalist class of any other country except the US. A large proportion of its new investment – in some years more than half – is carried out overseas, through TNCs and the City of London, rather than in Britain, .
A top priority of the British ruling class is to ensure that finance capital’s profit-making capacity does not suffer as a consequence of the post-2007 economic and financial crisis.
This means that the burden of narrowing Britain’s public budget deficit must be made to fall mainly on public services, public sector workers and the mass of working class taxpayers, not on the wealthy and big business.
New profit-making possibilities in the public sector mean that health, education, social housing and even the prison system are being thrown open to private capital through privatisation and similar policies. Slashing workers’ pension entitlements in these areas prior to privatisation is an essential part of this process. So, too, is a new round of attacks on trade union and employment rights.
Narrowing the public sector financial deficit through huge social spending cuts is important if British state-monopoly capitalism is to maintain the credibility of sterling and the position of the City of London as a leading financial centre.
British finance capital intends to maintain its freedom to operate through the City with minimum regulation and taxation, helping to ensure that the growing challenge from other financial centres in Europe, Asia and the Middle East is minimised. At the same time, US finance capital is using its position in the City as the springboard for deeper penetration across Europe.
Internationally, Britain’s monopoly capitalists want to:
- Compete more effectively against rivals within the European Union (EU), especially in eastern Europe and the former Soviet Union.
- Continue expanding in US markets, strengthening British monopoly capital‘s stake in US foreign policy.
- Protect their investments from the threat of regulation and nationalisation in Latin America.
- Extend their interests in the ‘Greater Middle East’ region with its enormous energy reserves and vital trade routes.
- Defend substantial economic and political positions in Africa, against rival imperialisms and the rising influence of socialist China.
The British ruling class therefore wish to see British influence maintained and extended both within the EU and as a junior partner with US imperialism, acting as far as possible to reduce the potential for conflict between the EU and the US.
They regard it a top priority in the 21st century to participate in the extension of US military power and the North Atlantic Treaty Organisation (NATO) across the ‘Greater Middle East’ with its vital oil and gas resources and transportation routes; and into the regions surrounding Russia, India and especially China, in order to contain and exert pressure on emerging economic, political and military powers. Maintaining Britain’s nuclear weapons and a permanent seat on the United Nations (UN) Security Council are seen as essential to pursuing these strategic objectives.
In common with its counterparts in the US and other developed countries, British state-monopoly capitalism also seeks to place the main burden for combating global warming on the developing countries through unfairly distributed quotas which can then be undermined by carbon emission trading schemes.
In pursuing this ruling class strategy internationally and at home, it is clear that British state power remains integral to the interests of British monopoly capital.
This same strategy was reflected in the programme for coalition government drawn up by the Tories and Liberal Democrats in 2010. The coalition was the preferred option of Britain’s financial oligarchy after the election, as Labour in government would have been more susceptible to popular and trade union pressure on some important economic and social questions, despite the pro-monopoly, pro-imperialist orientation of the Labour Party leadership.