The economic nationalists, of both right and left, claimed that Brexit/Lexit was vital, because they wanted to “get their country back”. One delusion, in that, of course, was that “the country” had ever been theirs to begin with, at some point. You can only get back what has been taken from you, and the reality is that “the country” had never belonged to the petty bourgeois reactionaries of either the right or the left. As a capitalist state, “the country” had always belonged to the ruling-class, the bourgeoisie. That ruling-class, which, originally, arose in the 15th century, as owners of industrial capital, and became dominant in the 18th century, by the end of the 19th century, had been transformed. It is no longer the owners of industrial capital, but the owners of fictitious-capital. It no longer depends on profits for its revenues, wealth and power, but on its ability to utilise its control of the state to extract interest, rent and capital gains.
The interests of that ruling-class, as Marx describes, are, therefore antagonistic to the very form of property - industrial capital - that brought it into existence, in the first place. The nature of industrial capital, its dynamic, forces it to accumulate, to use the profits it creates, via the exploitation of labour, and creation of surplus-value, to plough back into the accumulation of ever more capital, the building of additional factories, machines, production of more raw materials, and setting to work of more labour so as to produce more new value and surplus value. That is not, now, the interest of the ruling-class. Its revenues come from interest/dividends, rents and realised capital gains. But, all of those revenues are deductions from profits, and so reduce the ability of industrial capital to fulfil its mission, to continually accumulate.
As Marx notes, of course, this antagonism between the ruling-class, as owners of fictitious-capital, and industrial capital, which is, now, the collective property of the associated producers, i.e. the workers within each company, (socialised capital), must always be resolved, in the end, in the interests of the real industrial capital, because, without that industrial capital producing the surplus-value/profits in the first place, there can be no interest/dividends, rent or taxes to be deducted from it. If, the ruling-class owners of fictitious-capital, continue to use their political power to drain interest, rent, and taxes without there being a greater accumulation of real capital, and so, surplus-value/profits, the consequence is asset stripping, the selling off of real industrial capital, to finance those revenues, and the more that asset stripping occurs, the smaller the real capital base and ability to produce surplus value to finance those revenues. The ruling-class can try to delude themselves all they like, by printing money tokens via central banks so as to buy up fictitious-capital, inflate its price, and so, provide the illusion of capital gains, but, the delusion of those bubbles, eventually, is shattered, as the bubbles burst. That is what has happened over the last 40 years, and it is relevant to what is happening, now.
The ruling-class, their ideologists, and bourgeois media talk about “investment”, when what they are actually talking about is speculation/gambling. Its the difference between owning a race-horse, and betting on one. They mean by investment, not actual investment, i.e. the accumulation of additional capital, which produces new value and surplus-value, but the purchase of merely fictitious-capital assets, nowadays, not even with the purpose of deriving interest from them, but, primarily in the expectation that the price of those financial assets will be higher tomorrow than it is today, i.e. gambling on obtaining a capital gain. They believe that such capital gains are possible even without the real industrial capital, which underlies those financial assets, expanding or producing additional profits. Indeed, look at the times when those asset prices have risen most, for example, the 1980's/90's, and most recently during the lockdowns, when capital accumulation and economic growth was curtailed, and that is obvious. By contrast, in the periods when capital accumulation and growth was greatest, and profits grew along with it, in the 1960's and 70's, for example, asset prices, in real terms, actually fell.
All that was required for that was that the demand for these assets was greater than their supply. When that delusion resulted in those asset price bubbles bursting, as in 1987, 90, 94, 97, 2000, 2008, they simply sought to inflate those bubbles again, by printing more money tokens to use to buy those assets, and, at the same time, to use their control of the state to impose fiscal austerity to limit economic growth/real capital accumulation, so as to be able to divert more money into the purchase of those paper assets, rather than into real capital accumulation. We saw the ruling-class, during this period, use their position to prop up the share price of companies by using the pension funds of the workers in those companies to buy the shares, usually, then, resulting in those pension funds suffering huge losses, as the share prices crashed anyway. As I set out recently, Trump has done that, so did Robert Maxwell, and it was seen at BHS, and other companies. Maggie Thatcher did it on a huge scale, in the 1980's, via the privatisation of state owned industries, selling of council houses etc., and, now, Rachel Reeves is seeking to do the same thing, by having public sector pension funds buy up financial assets.
When, we hear talk about “investment”, in Britain, or anywhere else, its important, then, to realise that often this “investment” is no such thing, but purely the purchase of fictitious-capital assets. It is just gambling pure and simple, like betting on a race horse, or buying a lottery ticket. The point has been made by economist Angus Hanton, in his book, Vassal State: How America Runs Britain, who says that he questioned the ONS about inward investment, and they confirmed that they did not distinguish between the actual direct investment in real capital, and merely the purchase of UK shares, bonds and so on, by foreign companies, and individuals.
As I have set out elsewhere, because shareholders exercise control over companies they do not own, and because they only require around 30% of the issued shares to exercise control, in the end, it is these shareholders, as individuals that, thereby, gain control over other companies, even when it appears that it is a company, rather than individual shareholders that buy up the shares of other companies. It is the global ruling-class that comprises only around 0.01% of the population – forget about the 1%, the large majority of who are relative paupers, compared to them – that controls those shares and other financial assets, and, via control of the banks and finance houses, which control vast amount of money in pensions funds etc., exercise control over the vast majority of companies, across the globe.
So, although Starmer and Reeves have talked in grand terms about the “investment” coming in to Britain, whether from the US, or from elsewhere, in large part, that is bunk. Even former Liberal Leader Nick Clegg, who jumped ship after his opportunistic coalition with the Tories led to the disasters of Brexit, and austerity, and became PR man for Meta, has said so. The Guardian reports that,
“Huang, who was due to join Donald Trump at Wednesday night’s state banquet with the king, said he was taking an equity stake in Nscale, a UK cloud computing company, and predicted it would earn revenues of up to £50bn over the next six years.”
Jensen Huang is CEO of Nvidia. Note that the £500 million “investment” he is making, is not an investment at all. It is not £500 million of actual spending in Britain on new buildings, equipment, employment and so on, but is simply Nvidia buying up £500 million of shares in Nscale!
If some foreign company, such as Toyota, builds a factory in Britain, where none previously existed, then, yes, that is real capital investment. It employs additional workers and so on, and those workers produce real new value and surplus value. But, if a foreign company simply buys up a controlling proportion of shares in an existing company in Britain, that does not represent any new real capital investment. It does not mean any new factories, machines, employment and so on.
What it does mean is that the foreign company/shareholders get control over any new technology/ideas and so on that the British company had previously developed, and it means that the interest/dividends screwed out of the profits of the British company, now go to the foreign country, and can be used there. That is what Britain used to do, when it dominated the world economy in the 18th and 19th century, but now the shoe is on the other foot, as, for example Indian companies, such as Tata, are able to have control over British capital, and send the interest/dividends back to India. It is what the US tech bros are doing, here, using Trump's visit, the fact that Starmer and Blue Labour are disappearing up Trump's arse, as Britain becomes a third rate economy, now its outside the EU, to do.
That doesn't mean that no real capital investment occurs, but, since Brexit, there has been a reduction in the attractiveness of Britain for that real investment, as against, the purchase of shares, and existing property, to just extract interest, rent and to gain access to technologies, brands and so on, which, at any point can simply be transferred elsewhere. A look at the closure of steel plants, the Honda factory in Swindon and so on, illustrates the point that, as a result of Brexit, Britain has increased its costs of production, because of all the red tape and frictions Brexit has imposed on it, and so, is less attractive as a location for production.
Much talk has been given to the “investment” by US tech companies in Britain, attendant on Trump's visit, but much of that “investment” is of the type described above. In other words, not investment at all, but simply the taking over of a controlling share in existing British companies. Its a cheap way of acquiring the technologies developed. Some actual investment is promised, in the shape of the building of data centres, but such centres employ very few people. Typically, around a dozen or so people. Its hardly comparable to the investment of, say, Ford, in Britain, in plants that employed thousands of workers. What these data centres do do, however, is to consume huge amounts of energy, and its not clear that Britain even has the capacity in its energy infrastructure to meet it, without causing energy prices to rise sharply, and denying existing consumers a secure supply. Its rather like the situation described recently, in Ethiopia, where a huge hydro-electric plant is being used not to supply cheap power to domestic consumers, but simply to power a Bitcoin mining operation!
James O'Brien, however, has done it again. He, of course rightly ridicules the petty-bourgeois nationalists, and their mouthpieces in the likes of The Daily Mail, Daily Express and so on. But, in doing so, he feels compelled to defend Starmer, claiming that, as a a result of the Brexit those petty-bourgeois nationalists promoted, Starmer had no choice but to disappear up Trump's arse. Bullshit! Starmer has had 6 years since he took over in 2019, as Labour Leader, to have argued the case gainst Brexit, which would have been pushing at an open door. He could have been negotiating with Brussles to rejoin the EU during all that time, ready to have stood on that promise in 2024, and be now taking Britain, on a fast—track back into the EU. He could, then, have told Trump where to get off. But, no, Starmer has actively pursued the same reactionary nationalist agenda, and as he and those around him made clear, has shown a genuine personal affinity with the grotesque that is Trump. That close personal affinity is not just manifest in the choice of the awful Mandelson, but, also, in Starmer's active support for the Zionist genocide in Gaza.
And, the irony is that this seems like a repeat of the conditions in late 1999, just before the huge run-up in technology shares ended in a massive bust of those shares in March 2000, with the NASDAQ dropping by 75%. Only in part was that because the Internet had been overhyped, and because on the back of it, huge (actual) investments in ICT infrastructure, particularly the roll-out of vast amounts of fibre optic cable, and switching gear had been undertaken by the likes of CISCO, which proved to be a massive overproduction of commodities, which, then, at best lay idle, and at worst became scrap. A lot of the data centres being built, today, will equally be seen to represent a huge overproduction.
The simple corruption seen with the Blue Labour government, in just the last year, and the revelations about why they appointed Mandelson, despite knowing about his relations with Epstein, indicates that we can't just assume that decisions are made purely for the benefit of the British ruling-class, and certainly not for the interests of the British economy, as against the short-term interests of a few individuals. The decisions of Blue Labour to continue with the pursuit of the disaster of Brexit, even when a clear majority of voters, now, oppose it, and want to rejoin the EU, can, now, be set within this context of a series of personal connections with Trump and his coterie, and with the tech bros. It ties a declining UK to the US, and, in the process, drives a wedge between the UK and EU, making any future EU membership more difficult. The ridiculous commitment of the UK to AUKUS, as well as to the US inspired Pacific trading bloc, has the same effect.
But, that is not sustainable for the reasons I have previously outlined. It is no more rational for the UK to align itself with the US economy, at least 3,000 miles away, with the Atlantic Ocean separating them, than it is to align itself with a pacific trading bloc on the other side of the planet! It is never going to replace Britain's trade with the EU, and dependence on that trade for its prosperity. The situation has arisen because of Britain's political and military/strategic alignment with US imperialism, in conditions of a continual decline of Britain's former imperial role, whilst the EU, has failed to quickly consolidate itself into a state, and to impose itself, as an alternative to US imperialism, in terms of that military/strategic power. But, its not the EU that is being ripped apart by seeking to align with the US. It is the UK.
In the end, economic reality trumps politics. In the end, Britain will have to accept the economic reality that its future prosperity, indeed, its existence, depends on being a part of the EU.
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