20 years ago ‘globalisation’ was the latest fashionable term to describe the all-pervasive forces of a rampant capitalism. It was said to be a new stage of capitalism in which multinational companies and financial institutions, attached to no particular nation state, moved their capital around the world in search of the highest returns, and in so doing created a truly global market and global capital. At the time FRFI explained that, far from being new, globalisation was a return to those unstable features of capitalism which characterised imperialism before the First World War. It had begun to recreate the very conditions which produced those dramatic shocks to the international capitalist system that led to the revolutionary developments in the first decades of the 20th century. It reflected a deep crisis of the capitalist system that would soon lead the most powerful capitalist countries into a renewed struggle over world markets and global spheres of interest, into brutal wars in less developed parts of the world, into a new process to redivide the world according to economic power.1
Until the late 2000s, Martin Wolf, chief economic commentator at the Financial Times, was an enthusiastic advocate of neo-liberal globalisation. In 2002, the deepening crisis of the capitalist system forced him to raise the question whether the global expansion of capitalism had come to a halt and was about to be reversed. Will the second era of global capitalist integration, he asked, end like the first, which went into reverse between 1914 and 1945, after inter-imperialist rivalries led to war and socialist revolution in Russia? Wolf’s answer was no. Conditions he assured us were very different this time.2 Today, 14 years on, he is no longer convinced.
The vote by a small majority, 51.9% to 48.1%, to take Britain out of the European Union (EU) will have historic consequences for the trajectory of British imperialism, particularly if, as new Prime Minister, Theresa May, ruefully insists ‘Brexit means Brexit’. However, more than a month after the EU referendum vote it remains unclear what Brexit actually means and abundantly clear that next to no contingency planning by the Cameron government or the Brexit camp was in hand to deal with it. After the referendum result was announced, the leader of the Leave campaign, Boris Johnson, somewhat horrified by its totally unexpected outcome, said that there was ‘no need for haste’ to start exit negotiations with the EU. And May has made it clear that she will not invoke the EU’s Article 50 clause this year, which is the pre-condition for starting formal exit negotiations with the EU.1 David Yaffe reports.
Before the referendum, the IMF laid out a bleak scenario for Britain’s economy should the British people vote to leave the EU. It foresaw a ‘negative and substantial’ hit to the British economy, permanently lower incomes and the relocation of financial services and jobs from London and other UK financial centres to European cities such as Frankfurt and Paris. This prognosis looks almost certain to be borne out over the coming months and years. The immediate aftermath of the vote to leave saw $2 trillion wiped off global stock markets, with the pound falling to its lowest level against the dollar for 30 years. While some stockmarkets, including the FTSE 100, soon bounced back, other economic indicators pointed to serious problems ahead. Mark Carney, Governor of the Bank of England, took steps to calm the markets by releasing a further £150bn of lending by relaxing regulations on the banking sector. He indicated that he would consider cutting interest rates from their already record low level and use whatever monetary policy tools he still has available to support the British economy.
International economic crises are a recurring feature of the capitalist system. Over the last 35 years FRFI has reported on the Latin American debt crises of the 1980s, the Mexican debt crisis and IMF bailout of 1984/85, the global stock market crash of 1987, the Japanese stock market crash and recession of the 1990s, the 1997 Asian crisis, the 1998 Russian debt default and the Brazilian bail out, the 2001 Argentinian debt default, and the stock market crash (dot com collapse) of 2001/02. Finally we are still in the throes of the ‘great recession’ precipitated by the financial crisis of 2008/09, and which, after seven years, is said to be entering its third phase of turmoil, that of the crisis in the ‘emerging market’ economies.1 David Yaffe writes.
Britain faced stagflation in the mid-1970s, a recession in the early 1980s, with three million unemployed and the loss of 25% of manufacturing industry, and a recession and housing bust in the early 1990s. The 2007-08 financial crisis led to Britain’s sharpest economic downturn and the slowest recovery on record.