Class struggle and the origins of finance capital in Britain, 1870–1920

Abstract

Marxists often link the emergence of finance capital to developments in the categories of capital, such as flight to money capital, sometimes associated with changes in the organic composition of capital. While not disputing the importance of transformations in capitalist categories, this paper examines the causal role of working-class agency in the emergence of finance capital. The paper addresses finance capital in Britain, giving due consideration to a variety of causal factors cementing its dominance. It then considers the role of labour unrest in developing a working class in itself, gravitating towards and away from political expressions (syndicalism, social democracy) in pursuance of its immediate economic struggles. The overall argument is that the emergence of finance capital in the parasitic form it took in Britain was fundamentally a response to the power of a working class in itself. Parasitism became the default trend to control the working class and prevent any potential movement towards a working class for itself from gaining hegemony.

Keywords:

• Finance capital
• class
• class struggle
• exploitation
• parasitism

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No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

1 Hilferding, R. and Bottomore, T.B., Finance Capital: A Study of the Latest Phase of Capitalist Development (London: Routledge & Kegan Paul, 1981).

2 Lenin, V.I., Imperialism, the Highest Stage of Capitalist, A POPULAR OUTLINE, 1916, https://www.marxists.org/archive/lenin/works/1916/imp-hsc/

3 Ibid., p. 181.

4 Ibid., p. 9.

5 Marx, K. and Engels, F., Capital: A Critical Analysis of Capitalist Production (Ware, Hertfordshire: Wordsworth Classics of World Literature, 1889); Marx, K. and Engels, F., The Process of Circulation of Capital: A Critique of Political Economy (London: Electric Book Co., 2001).

6 Ticktin, H., ‘Towards a Theory of Finance Capital’, Critique, no. 17 (1986).

7 Useem, M., The Inner Circle, Large Corporations and the Rise of Business Political Activity in the US and UK (Oxford: Oxford University Press, 1984).

8 Hannah, L., The Rise of the Corporate Economy (London: Methuen, 1976).

9 As is often pointed out by many historians, the merger boom during pre-war years involved many of the old staple industries such as textiles, shipbuilding, brewing, tobacco, etc. (see Hannah, op. cit.).

10 Overbeek, H., Global Capitalism and National Decline, The Thatcher Decade in Perspective (London: Unwin Hyman, 1990).

11 Stanworth, P. and Giddens, A., ‘The Modern Corporate Economy: Interlocking Directorships in Britain, 1906–1970’, The Sociological Review, 23:1 (1975), pp. 5–28. https://doi.org/10.1111/j.1467-954X.1975.tb00515.x

12 Witley, R., ‘Commonalities and Connections Among Directors of Large Financial Institutions’, Sociological Review, 26:2 (1973), pp. 305–326.

13 Whitley, ibid., p. 368; and see, Lisle-Williams, M., ‘Merchant Banking Dynasties in the English Class Structure: Ownership, Solidarity and Kinship in the City of London, 1850–1960’, The British Journal of Sociology, 35:3 (1984), pp. 333–362. https://doi.org/10.2307/590970

14 Ingham, G., Capitalism Divided? The City and Industry in British Social Development (London: Macmillan, 1984).

15 See, for example, Anderson, P., ‘The Figures of Descent’, New Left Review (N.L.R.), no. 61 (1987). Anderson, P., ‘Origins of the Present Crisis’, N.L.R., no. 23 (1964). See also van Helten, J.J., ‘Mining Share Mania and Speculation: British Investment in Overseas Mining, 1880–1913’, in Cassis, Y., La City de Londres, 1870–1914 (Paris: Belin, 1987).

16 van He1ten, in Cassis (1987), op. cit.

17 Ticktin, op. cit., p. 14.

18 Bankers Magazine, 55 (1893), pp. 563–565, cited by Cassis, (1987), op. cit.

19 See Lenin, V.I., Imperialism: The Highest Stage of Capitalism (1916). Lenin was correct to view this aspect of finance capital as imperialistic; however he largely ignored its other more important aspect – its parasitic aspect. Although he did allude to it, he left it unexplored.

20 Capie, F. and Collins, M. ‘Banks, Industry and Finance, 1880–1914’, Business History, 41:1 (1999), pp. 37–62. doi:10.1080/00076799900000201

21 Hilferding and Bottomore (1981), op. cit., specifically chapters 7 and 14.

22 Hilferding’s conflation of finance capital as solely a fusion of banking with productive capital comes out clearly in the following quote: ‘An ever-increasing part of the capital of industry does not belong to the industrialists who use it. They are able to dispose over capital only through banks, which represent the owners. On the other side, the banks have to invest an ever-increasing part of their capital in industry, and in this way become to a greater and greater extent industrial capitalists. I call bank capital, that is, capital in money form which is actually transformed in this way into industrial capital, finance capital.

23 Hannah, op. cit., p. 22.

24 One of the main problems of empirical research is that it can infer no causal relationship, merely a ‘strong association’. This is why theory is so important. The Marxist theory of capitalism is a more than adequate context for transforming the strong association into a necessary development. Another problem is said to be the fact that empirical research is often arbitrary both in the selection of data it includes and/or that it excludes. Finally, there are various restrictions imposed on the extent of sampling and available data.

25 Silverwood, J. and Berry, C., ‘The Distinctiveness of State Capitalism in Britain: Market-Making, Industrial Policy and Economic Space’, Environment and Planning A: Economy and Space, 55:1 (2023), pp. 122–142. https://doi.org/10.1177/0308518X221102960

26 Elbaum, B. and Lazonick, W., ‘The Decline of the British Economy: An Institutional Perspective’, The Journal of Economic History, 44:2 (1984), pp. 567–583.

27 Roberts, M., ‘UK rate of profit and British economic history’ (2015). https://thenextrecession.files.wordpress.com/2015/09/uk-rate-of-profit-august-2015.pdf

28 Wilson, J.F. and Thomson, A., ‘British Management and Organization up to the 1940s’, in The Making of Modern Management: British Management in Historical Perspective (Oxford, 2006; online edn, Oxford Academic, 1 September 2007). https://doi.org/10.1093/acprof:oso/9780199261581.003.0003 (accessed 12 October 2023).

29 Elbaum and Lazonick, op. cit.

30 Cronin, J.E., ‘Strikes 1870–1914’, in Wrigley, C. History of British Industrial Relations, 1877–1914 (Brighton: Harvester Press, 1982).

31 Cronin, J., ‘Strikes and Power in Britain, 1870–1920’, International Review of Social History, 32:2 (1987), pp. 144–167. doi:10.1017/S0020859000008403

32 Ormsby-Gore, W., Tory MP and Banker, Hansard (1912) ‘Syndicalism’ Volume 36: debated on Wednesday 27 March, https://hansard.parliament.uk/commons/1912-03-27/debates/ef51df59-c3f5-4bc1-8dea-ab8a149cc3d0/Syndicalism

33 Trotsky, L., ‘Where is Britain Going?’ (1925). https://www.marxists.org/archive/trotsky/britain/wibg/ch01.htm

34 Cronin, op. cit., p. 81.

35 Musson, A. E., ‘The Growth of British Industry’ (London, Batsford, 1978), pp. 246–247.

36 Ibid., p. 248.

37 Ibid., pp. 246–247.

38 Ibid., p. 245.

39 Hinton, op. cit., p. 22, in Wrigley, C., A History of British Industrial Relations, 1877–1914 (Brighton, Harvester Press, 1982).

40 Cronin, op. cit., p. 85.

41 Cronin, op. cit., p. 85.

42 Robbins, K. The Eclipse o f a Great Power – Modern Britain 1870–1975 (Longman, London and New York, 1983), pp. 57–58.

43 Ibid., pp. 56–57.

44 Allen, R.C., ‘Engels’ Pause: Technical Change, Capital Accumulation, and Inequality in the British Industrial Revolution’, Explorations in Economic History, 46:4 (2009), pp. 418–435.

45 Mathias, P., The First Industrial Nation: The Economic History of Britain, 1700–1914, 3rd edn (Routledge, 2001).

46 See, for example, Hinton’s account, op. cit.

47 Ormsby-Gore, op. cit.

48 J. E. Cronin, op. cit., p. 74.

49 For a detailed account of the rise of new unionism see Pelling, H., A History of British Trade Unionism, 3rd edn (London: Macmillan, 1976).

50 Marx, E.A., ‘The Working Class Movement in England’ (1895). https://www.marxists.org/archive/eleanor-marx/1884/working-class-england/ch01.htm

51 According to Cronin, op. cit., p. 86, union membership almost doubled in the period 1888–1890 while the number of, mostly successfully executed, strikes rose from 517 to 1211.

52 Vincent, E., The Discontent of the Working Classes, in Macay, T., A Plea for Liberty (Loughborough University, 1974), pp. 213–14, cited in Saville, J., Trade Unions and Free Labour, in Flinn, M.W. and Smout, T.C., Essays in Social History, pp. 253–254.

53 See for example, the article 1919: The Critical Year, by C. Wrigley (1980), in his pamphlet, The British Labour Movement in The Decade After the First World War, Department of Economics, Loughborough University.

54 J. E. Cronin, op. cit., p. 90.

55 J. E. Cronin, op. cit., p. 90.

56 M. Bentley, ‘The Liberal Response to Socialism’, in Brown, K.D., Essays in Anti-Labour History (Macmillan, 1974), p. 49.

57 For a concise empirical history of the conflict between capital and labour in Britain, see Sheldrake, I., ‘Industrial Relations and Politics in Britain 1880–1989’, Pinter (1991).

58 The Minister of Labour 1920 is cited in Cronin, J. Labour and Society in Britain, 1918–1979 (London: Batsford, 1984).

59 Cronin, op. cit., p. 27.

60 Cronin, op. cit., p. 31.

61 Hinton, op. cit.

62 Hinton, op. cit., p. 15.

63 Elbaum and Lazonick, op. cit.

Additional information

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Peter Kennedy

Peter Kennedy is a tutor in crime, harm and the state, in the Faculty of Arts and Social Sciences at The Open University. Email: [email protected]