David Nicholls (Manchester Polytechnic)
A central theme in Perry Anderson’s 1964 explanation of the origins of the crisis of British capitalism was the failure of the industrial bourgeoisie to achieve hegemony within the British power bloc. That thesis can be summarised as follows. In the course of the nineteenth century, the landed aristocracy absorbed the industrial bourgeoisie and imparted to the ruling bloc its own ‘traditionalist’ ideology. Moreover, in the late nineteenth century, and in the context of the new imperialism, the aristocracy and the commercial and financial elites based primarily in the City of London drew closer together and created a new social bloc in which the City was, and has remained, predominant. There are a number of corollaries to this broad interpretation. The hegemony within the capitalist ruling class of first a landed and subsequently a financial or commercial elite, meant the continued subordination of industry and, in the second stage, the sacrifice of its needs to the requirements of an externally-oriented financial capitalism. The close relationship between City financiers and aristocracy was cemented by intermarriage and by the traditionalist education of the public schools and Oxbridge. The hegemony of this new power bloc was secured by its colonisation of the key offices of state – generally through the civil service, and most especially within the Treasury. In sum, it was Anderson’s central contention that the industrial bourgeoisie remained subordinate – to the aristocracy before about 1880 and to the City thereafter.
Now, while ‘Figures’ registers some significant shifts from the 1964 essay, this central emphasis on the weakness of the bourgeoisie remains in place. Indeed, Anderson believes that much of the intervening historical research has confirmed the soundness of his original thesis. It is the purpose of this present essay, therefore, to consider the credibility of that thesis and of the evidence marshalled in its support. Section (ii) will present evidence against the case for aristocratic hegemony, and section (iii) against that for City hegemony. Both sections will attempt to outline a possible alternative trajectory though it must be stressed that such an outline can only be provisional and schematic. It is hoped, however, that along with essays such as Anderson’s, it will assist forward other, and more complete and satisfactory, attempts at a ‘totalizing history’ of modern Britain. The final section will offer some concluding observations on the state of such explanations.
No doubt still smarting from Edward Thompson’s remark in ‘The peculiarities of the English’ that it was not Marx’s view that the aristocracy remained hegemonic in ‘this most bourgeois of nations’, Anderson opens ‘Figures’ with an account of the ambivalences and contradictions in Marx’s and Engel’s pronouncements on the subject, and suggests that they did, in fact, become increasingly doubtful about bourgeois hegemony. But he relies on the journalistic and somewhat impressionistic writings, rather than upon the theoretical corpus of their work. Similarly, he cites the conclusions of a number of historians, notably Rubinstein, Wiener, and Ingham, as confirmation of his thesis – historians who, ironically for Anderson, regarded their analyses as refutations of Marxist theory! Ingham, for example, warmly-praised by Anderson as providing ‘perhaps the most important single contribution – at once historical and theoretical – to a better understanding of the British fate to have appeared in the eighties’, wrote that ‘not only has the City been misidentified in Marxist theory, but also a generally ‘materialist’ analysis cannot readily account for the City’s continued dominance throughout the twentieth century ...’. Marxism largely fails, Rubinstein averred, because it does not ‘comprehend the complexity and diversity of the capitalist elite .... Marx himself would, one suspects, have been better employed in the Library of Congress than in the British Museum.’ And Wiener, for his part, argued that Marxists often did not appreciate ‘the power of the social and cultural context’, and the extent to which the phenomenon of decline involved factors peculiar to British society. The reliance on liberal empirical histories such as these is of itself no criticism of Anderson. However, he seems unaware, or makes no use, of books and articles which question their conclusions or which provide evidence for a very different sort of account of the progress of British capitalist society – not just the work of liberal historians, but perhaps more seriously, that of Marxists such as Robert Gray, David Coates, Jerry Coakley, Sam Aaronovitch, Ben Fine, Laurence Harris, and so on.
How, then, can the researches of these and other historians be used to provide a critique of the aristocracy and City hegemony theses and to suggest an alternative Marxist trajectory for British society? To take the case for aristocratic hegemony first of all, the evidence in its support has been presented in such a way as to suggest that it can be measured economically, ideologically, in socio-cultural terms, and politically. The most forcible evidence for aristocratic economic hegemony has come from the pen of W.D. Rubinstein who, through a meticulous study of inherited wealth as revealed by the probate records, concluded that the wealthiest men in nineteenth-century Britain were landowners, while the largest fortunes accumulated were in the fields of metropolitan-based commerce and finance, not northern manufacturing industry. The problems associated with this evidence as an accurate guide to wealth distribution have been highlighted by Barbara English. Even if, however, one grants that the wealth of most industrialists lagged behind that of a minority of the richest land magnates, this was in part inevitable. The new industrialists were starting from a much lower point and it would take them decades even to approach the fortunes accumulated over centuries by Old Corruption. Even so, their wealth was increasing rapidly and, by the twentieth century, growth in the sophistication of methods of tax avoidance was already beginning to create problems in assessing wealth distribution. Moreover, the ‘organic intellectuals’ of the bourgeoisie were able to capture important ideological ground by making moral distinctions between types of wealth. The superiority of industrial wealth was held to derive from the fact that it was earned not unearned income, productive rather than non-productive wealth, generated by a process that benefitted the whole and not just a small part of society.
Ideology was, therefore, a major terrain in the contestation between aristocracy and industrial bourgeoisie. Some of the most convincing arguments in Thompson’s blistering riposte to Anderson’s original article concerned, in fact, the forms which bourgeois ideological hegemony took – especially the Protestant and democratic inheritance, the importance of capitalist political economy, and the contribution made by natural science. Moreover, as Richard Johnson showed, it is possible to make out a still more convincing case against aristocratic hegemony than even Thompson, firing on all polemical cylinders, managed. Johnson demonstrated the extent to which Anderson had in effect swallowed and reproduced wholesale the principal theme of bourgeois Liberal ideology itself – namely, aristocratic hegemony. The aristocracy continued to appear to dominate English politics thus mystifying class relations while serving the interests of industrial capital. In sum, bourgeois ideological hegemony in mid-Victorian England can be measured not just in terms of political economy but in the multifarious reflexes of liberalism – from political radicalism through patriarchy, nonconformity, and the whole panoply of Smilesian values.
The socio-cultural case for aristocratic hegemony builds upon the ideological. In ‘Origins’, Anderson made great play of the extent to which the survival of ‘traditionalist’ values encouraged British industrial decline, and he is now able to cite an overrated monograph by Martin Wiener in support of that argument. Wiener’s book provides an extended examination of industrial decline in terms of the cultural hegemony of a rentier aristocracy, and a correspondingly enervated entrepreneurial spirit. In a nutshell, decline is held to derive from, or be compounded by, the fact that both government and industry have been starved of technocrats, businessmen, engineers and scientists, and run by ex-public-school boys steeped in Latin and Greek. British politicians are therefore unqualified or antipathetic with regard to industrial issues, while businessmen have been seduced by the attractions of the gentrified way of life. However, while this is sufficiently accurate as a description of socio-cultural life to lend it a certain populist appeal, traditionalism should be seen not so much as a root-cause of economic decline than as a consequence of the particular trajectory of British capitalism. For example, the traditional educational institutions of the ruling bloc have played a crucial role in sustaining class recruitment and economic and political control – the ‘Old Boy Network’. Moreover, the disadvantages for business and industrial acumen of a traditional education are offset partly by personal experience (sons are born into the business and gain experience from ‘life’ rather than ‘education’), but more importantly by the recruitment of a managerial stratum that is experienced in science and business. Ownership remains in the hands of a small capitalist class which has been able to draw on the expertise of middle managers without thereby diluting its overall control. In this way wealth can, and hardly surprisingly does, continue to find its natural outlet in the pursuit of a leisured and gentrified existence. Political control might almost seem a natural corollary to economic, social, and ideological dominance, and conclusive proof of aristocratic hegemony. However, the political hegemony of the aristocracy – often held to have been secured by a series of wise and timely concessions to the rising bourgeoisie – has in general been simplistically ‘read off’ from the numerical superiority of the landed class in parliament. Rather, it is crucial to understand how, especially after 1832, the Whigs acted, in Marx’s phrase, as the ‘aristocratic representatives of the Bourgeoisie’. The aristocracy, in the face of pressure from the bourgeoisie, enacted a whole series of measures vital to the latter – education reform, the new poor law and the onslaught on handloom weaving, local government reform, the establishment of local police forces, corn law repeal, and so on. Not only was the continued governing function of the aristocracy not indicative of its hegemony and a corresponding loss of nerve on the part of the bourgeoisie, but it, and the measures pressed upon parliament, are on the contrary evidence of the particular lineaments of bourgeois hegemony: the importance of urban politics; the ideological importance of press and education; the regimentation and control of the labour market; the freeing of trade; and the mystifying role of apparent aristocratic hegemony. The bourgeois critique of the last – in the form of radicalism – limited the potential for an embryonic working class to develop a hegemonic critique and a separate political vehicle of its own. The very first working class was constrained in its response to industrial capitalism within the parameters of the radical-democratic vocabulary available to it, only slowly developing an alternative socialist language. The hybrid ideological nature of radicalism therefore paved the way for the emergence of a Liberal party that drew its strength from such an inter-class appeal.
Anderson’s determination to assert the primacy of the aristocracy leads him towards a characterisation of the British state as, in essence, unchanged since the seventeenth century – thereby glossing over important moments of adjustment and restructuring (especially the refinement of the local state apparatus in the nineteenth century, and the growth in the state’s coercive and ideological mechanisms). Indeed, Anderson exaggerates the minimalist role of the British state. To take the one example of education, not only were the privileged institutions of the aristocracy prised open by the bourgeoisie in the course of the nineteenth century, but, at the elementary level as well, the state shifted the balance in the content of the curriculum from religion to political economy, and insinuated the ideological function of education into other of its apparatuses (prisons, workhouses, state-induced factory schools etc.). This failure to appreciate significant developments in the modus operandi of the British state leads Anderson to propound his false conception of the second modernising revolution, which other capitalist states are held to have had, but which has passed Britain by. The examples he cites in support of this argument – the elimination of Dutch regents, southern US slaveowners, French legitimists, Japanese landlords, Prussian Junkers, Italian latifundists – are, in fact, far too complex and multifarious to be so cavalierly lumped together to make a point about the singular isolation of Britain. Anderson seems to have forgotten here the quintessential point about the English aristocracy he made at the outset – namely its remarkable wealth, enterprise and longevity as a capitalist class. It is precisely this fact which makes a second revolution unnecessary. In short, his use of terminology to characterise the English aristocracy is imprecise and shifts according to the needs of his argument – at one moment, it is a thrusting, enterprising class, the most dynamic sector of British capitalism, at the next traditionalist, hide-bound, and comparable to the feudal remnants in other modernising states. This and other contradictions in Anderson’s argument derive from his determination to assert the continued hegemony of the aristocracy for much of the nineteenth century in the face of the new industrial middle class.
The development of capitalist relations of production in Britain was a slow process the origins of which can be traced back to at least the twelfth century. The English Revolution of the mid-seventeenth century should therefore be understood as the political and military moment of a protracted and fundamental transformation of English society. It was the moment at which the fraction of the nobility, whose wealth rested on the large-scale ownership of ground rent and the profitable nature of wool farming, and to a lesser degree the mercantile bourgeoisie, whose wealth depended on the growth and defence of an overseas empire, rid themselves of the existing social and production relations which formed an obstruction to their own further expansion and prosperity. The civil war was therefore followed by the consolidation of agrarian capitalist relations of production (the landowner, tenant farmer, landless labourer triad) marked especially by the rapid and ruthless enclosure of land, and by the implementation of policies favourable to the commercial bourgeoisie (establishment of the Bank of England, national debt funding, mercantilism, and the successful prosecution of commercial wars).
Because, however, the dominance of the capitalist mode of production had been established in the first instance in the realm of agriculture, the nobility assumed the dominant political role as well. Victory in the civil war for the Roundheads meant curtailment of the power of the Crown and a corresponding increase in the power of parliament – a ‘committee of landlords’. Lewis Namier long ago provided us with a precise analysis of the composition of the power bloc that emerged from all this – a landed class interpenetrated by the commercial bourgeoisie. Indeed, since the sixteenth century, wealthy merchants had bought estates and become landowners while, because of primogeniture, younger sons of landed aristocrats had sought their fortunes in colonial and trading enterprises. As the passage of time established a safe distance from the revolutionary events of the seventeenth century, this ruling bloc learnt to forget some of the principles by which it had come to power and to undo some of the measures enacted in the flush of revolutionary youth. The implementation of the Septennial Act is a good example of this and, along with the Place and Pension Bills and the control of parliamentary elections, provides evidence of that creeping corruption which was later castigated by William Cobbett.
As capitalist practices seeped into every pore of English economy in the eighteenth century this particular political formation – Old Corruption – came under attack from emergent new capitalist groupings (and the term ‘middling class’ came into currency to describe them). They were comprised of the lesser merchants, tradesmen and craftsmen, especially of London, who allied themselves with the politically-excluded Tory gentry of the country at large. The imperial wars of the eighteenth century helped to consolidate this middling class into a formidable social force and, forging an ideology that revived the Commonwealth tradition, they formulated a radical programme (essentially peace, retrenchment, reform) designed to cut away the roots of Old Corruption.
The Wilkes and Wyvill movements were the high-points of this early reforming movement and would almost certainly have culminated in success but for the period of reaction set in train by the supervention of the French Revolution. Faced with a politicised artisanal class, the middle class drew back from its confrontation with Old Corruption.
The prior commercialisation of agriculture and the resultant political dominance of the landed aristocracy therefore had a number of crucial consequences for the trajectory of British society. In the first place, it imparted to the British state its peculiar ‘feudal’ colouration – for example, the absence of a written constitution, and the continued importance of the House of Lords at the national, and the magistracy at the local, levels. Secondly, government by a commercially-minded class laid the basis for the massive capital accumulation necessary for industrialisation and at the same time delimited the area of conflict between land and industry. As the industrial bourgeoisie grew in power, its programme was essentially political and centred on parliamentary reform and was rationalised in terms of the ideology of radicalism. Now, while this could produce quite serious conflict, the reform programme was always congruent with and not antagonistic to capitalist relations of production. In this sense, therefore, the political struggles of the aristocracy and the bourgeoisie were never fundamental and, indeed, their contestation served to mask the real sources of power and to enlist the working class behind the middle-class radical programme. Radical ideology was, moreover, sustained by two essential elements: classical political economy and religious Dissent. The first was constructed, as Thompson pointed out, in advance of industrialisation and in the context of the requirements of agrarian capital and was again, therefore, a basis for the accommodation of land and industry. But the middle class as we have seen gave political economy their own particular moral twist in the condemnation of unearned income from rent and in their praise of productive labour (a sentiment which finds its contemporary echo in the abuse of the City’s practice of ‘making money not things’). Coupled with the moral onslaught on Old Corruption and the dissemination of values and precepts derived from Dissent, the bourgeoisie were able in time to capture the ideological as well as the political terrain from the aristocracy – though the ‘double armoury’ of deference and self-help which emanated from these two fractions of the power bloc remained to confront the working class. However, the pace of industrialisation in this early period has been overstated by the concept ‘industrial revolution’, and the full potential of the industrial bourgeoisie had still not been realised. For this reason, and the common interest of both landed and industrial property in the face of the general unrest from 1790 to 1820, the political confrontation did not reach its climax until the 1830s.
The Reform Act of 1832 revealed both the progress of the industrial bourgeoisie and the limits of its strength. It was confident enough to exploit the economic crisis, especially that which affected agriculture (the Swing riots), for example, by threatening a run on gold. But, still under-developed as a class because of the slow pace of industrialisation, it was dependent on an alliance with the working class (which it readily abandoned, of course, after 1832), and it was prepared to accept a limited measure of reform. Competitive capitalism therefore still continued to engender friction between its agrarian, commercial, and industrial fractions and the interests of each was promoted in different ways. The Tory Radical alternative appeal to the ‘people’ in the form of the anti-poor law and factory reform movements is evidence of this intrinsic fractional conflict. Moreover, before growth in the concentration and centralisation of capital, these conflicts took on a regional dimension – commerce operating from its City of London base, industry in the urban areas of the north and midlands, and agriculture in the countryside. And the fractions themselves could split – the division over economic policy between Manchester and Birmingham in the 1830s and 40s is illustrative of this.
All this must not, however, be allowed to disguise the fact that, after 1832, the industrial bourgeoisie was the dominant fraction of the power bloc. The aristocracy acted as its agents in the passage of legislation vital to it, and the bourgeoisie was able to establish a political base in the towns. Pressure-group activity was usually sufficient to ensure the necessary changes. Moreover, the reconstruction and consolidation of the new power bloc was hastened along by the economic slump of the 1830s – the first major crisis of overproduction in an industrial economy. In the face of the unrest this caused and the organisational strides that Chartism marked for working-class politics, the fractions of capital as usual found common cause in defence of their property. Land-City relations were no doubt closer in this period than land-industry or City-industry relations – and for historical and social reasons. Public school education, the Anglican religion, and kinship ties all worked to assist forward the interpenetration of land and commerce. Moreover, because of its entrepreneurial origins industry was largely self-financing and independent, therefore, of the banks. Nonetheless, there were also certain points of convergence between the City and industry, and land and industry. The fall in agricultural revenues, for example, encouraged landowners to diversify into mineral exploitation, railway investment, and urban development. Urban ground rents were a particularly lucrative new source of income. Also, the rise of joint-stock companies and the dependence of some industries on the banks were further points of contact. Indeed, by mid-century industry, which had earlier feared foreign competition, had generally been won over to the desirability of free trade – a policy which had at first been pushed by merchants. The vital contribution to the economy of invisible earnings and visible trade was already establishing the international orientation of both the City and industry, and especially with regard to the empire. The industrial bourgeoisie might grumble at the aristocracy’s management of imperial affairs – free trade was always preferable to costly annexations – but where vital interests were at stake (such as India) there were early signs that even their ‘theoretical’ objection to formal imperialism could be reined in. Indeed, empire and education (with the reform of the public schools and Oxbridge) were to become in the period after 1880 the chief integuments binding the competing fractions of capital into a new power bloc.
From the 1840s, as the railway boom provided an outlet for accumulated capital, the economy began to recover and working-class protest changed its shape. But reductive explanations of mid-Victorian stability couched in terms of some generalised prosperity are inadequate. The economic boom did, however, lead to a new network of social and production relations, and explanations for the ‘subordination’, ‘acquiescence’, or changed pattern of working-class behaviour should first of all be sought at the wage-labour nexus. For it is at this point that the dominance of capital over labour is realised – it is therefore a relationship of power, but a relationship that has to be reproduced at the ideological as well as the economic level. The resolution of the economic crisis and a greater confidence in the bourgeoisie following the doubts of the 1830s, allowed for an attenuation of some of the harsher tenets of political economy and for the promotion of the Smilesian values of respectability, thrift, temperance, self-help, and so forth. The archetypal illustration of all this is, of course, the Victorian family gathered around the paterfamilias as he regaled them with passages from the Bible. The essential ingredients of bourgeois ideology are present in this one image: religion and the patriarchal family. It was constructed by intellectuals who did not collectively belong to one class or class-fraction, but who nevertheless served to articulate the ideological hegemony of the dominant class-fraction. And, in the shifting production relations of mid-century, it found purchase in, and was directed at, the upper stratum or fraction of the working class. This labour aristocracy did not imbibe this ideology in an uncritical way and precepts such as ‘self-help’ took on their own particular inflexion according to the situation of the recipient, whose life-experience might expose its contradictions. In this way, the ideological hegemony of the industrial bourgeoisie was no functionalist form of self-control, but developed in the dialectic of class struggle. The working class for its part, facing a capitalism that was consolidating and confident, proceeded, in Thompson’s memorable phrase, ‘to warren it from end to end’, constructing the class institutions of the labour movement. However, in the short term, so successful was the strategy of the industrial bourgeoisie that it was able to call upon a section of the working class, now differentiated from the ‘residuum’ by its ‘respectability’, in the common cause of reforming parliament. Gladstone’s Liberal administration which followed the second Reform Act demonstrated the industrial bourgeoisie’s political hegemony by the enactment of a series of measures directed at Old Corruption – civil service, army, and education reforms, further amendments to the parliamentary system and so on. In sum, even, the governing function of the aristocratic fraction was now being usurped by the bourgeoisie, and in the 1880s land ceased to be the preponderant interest in the House of Commons.
The case for aristocratic hegemony is therefore riddled with contradictions that can readily be exposed, and it pales in significance when set alongside the City hegemony thesis, for locked within the heart of the latter are fundamental theoretical problems related to the concept of finance capital. Moreover, Anderson’s arguments here have been less subjected to critical rejection and are, indeed, echoed in many Marxist writings on the progress of British capitalism since the late nineteenth century. These historical accounts, including Anderson’s, have been much influenced by the ‘Hobsbawm thesis’ on industrial decline, developed in Industry and Empire. Having surveyed what he called the sociological explanations of decline – i.e. the absorption of entrepreneurs into the aristocracy – Hobsbawm concluded that this process was ‘a consequence of the loss of impetus in British business, not its cause’. Because of its pioneer industrial start, Hobsbawm argued, British industry was facing problems of increasing obsolescence when foreign competition became serious in the late nineteenth century. However, instead of confronting the problems directly, the British economy as a whole retreated into imperialism – capital export, international lending, trade, and so on – which fortuitously presented itself as an option at the very moment of crisis.
Hobsbawm’s argument has subsequently fed numerous Marxist explanations of British decline and the role of the City in that process. The familiar argument is that, with the international orientation of capitalism from the 1870s onwards (the new imperialism), the City emerged as the dominant sector of British capitalism. The City’s dominance was institutionalised within the state through the Bank of England and its relationship to the Treasury and by its key role in the overall determination of British economic policy – especially in defence of imperial interests and sterling’s international role down to the 1960s, and thereafter in its role as an international financial entrepôt. Opposition to City dominance has come from both industry and labour but it has been only weakly articulated. This overseas thrust under the pre-eminence of the City has therefore been responsible for the decline of manufacturing in Britain and the contemporary crisis of British capitalism. Different emphases and embellishments have been given to this thesis – for example, concerning the extent to which overseas investment reflects the strength or weakness of the working class – but there has been general agreement concerning the major ‘peculiarity’ of British capitalism, namely, the dominance of finance over manufacturing, of the City commercial and financial fraction over the industrial bourgeoisie.
In advancing this thesis, Marxists have been able to flourish their theoretical credentials by reference to the concept of finance capital. Anderson, for example, in his essays of the 1960s, advanced two propositions, namely: that industrial and financial capital had converged, and that ‘the City is now ... the most sectionally decisive single determinant of the shape of the economy’. In ‘Figures’, he has apparently abandoned this position in favour of Ingham’s very different emphasis on the hegemony of commercial capital. There are, indeed, two major and related problems connected with the attempt to see the City as the embodiment of finance capital – problems which have not been satisfactorily confronted in Marxist historiography and which have thereby opened the way for Ingham’s thesis.
In the first place, for Hilferding and Lenin, the power of finance capital derived from the process of concentration and centralisation. But the extent to which monopoly capitalism has ever developed in Britain has been the source of some disputation. Moreover, even the proponents of finance capital recognise its tardy development in Britain because of the independence from both banks and state that historical priority imparted to industrial capital. The restructuring of British capitalism began in the depression of the 1880s, but the major changes were delayed until the 1920s and 30s. The changing structure of British capitalism between these dates is therefore a more complex phenomenon than the City hegemony/finance capital equation indicates.
Secondly, those who have seen City hegemony as evidence of finance capital have generally left unresolved a central problem related to Marxist theory – namely, the nature of the relationship between the productive and the non-productive sectors of the economy. The problem concerns the extent to which the three forms of capital within the productive circuit of capital (industrial, banking, commercial) have become integrated and the precise position of banking capital within this articulated structure. The empirical evidence of Scott, Coakley, Harris and others on the personnel and financial linkages between banks and industry is evidence of what one might call the structural or institutional relationships. But their work does not resolve the question of the nature of the economic relationship – and therefore cannot establish the precise relationship between the banking and industrial sectors in the determination of policy. If, in the restructuring of bank-industry relations the City emerged with its pre-eminence intact and able still to ‘determine’ the overall direction of the economy, then the implications for Marxist theory are not dissimilar to those which derive from the view that finance capital has never arrived in Britain and that the trajectory of British economic development has been determined by the continued separation of banks and industry in which the interests of the latter have remained subordinate.
This last position is, indeed, the conclusion of Geoffrey Ingham’s study of City-industry relations. He dismisses Marxist ‘finance capital’ explanations and argues that the City and industry have been and remain divided. The basis of this division is the essentially commercial character of the City, which Marx underestimated. Moreover, there is no need to search for the key to City hegemony in the changes of the late nineteenth century. The City’s dominance in fact arose historically with its pre-industrial importance, and the wealth generated by mercantile capitalism provided an early basis for the interpenetration of merchants, bankers, and aristocrats. Indeed, the parameters of the modern British state and economy were established in the monetary and fiscal reforms of the early nineteenth century, which were inspired not by the industrial bourgeoisie but by commercial interests. And, when British industry faced the crisis of foreign competition in the late nineteenth century, the City plutocracy did not respond by establishing closer links with industry or by providing it with long-term investment capital but by projecting its own global commercial interests as the ‘national’ interest, and in this its own wealth was insulated from domestic decline.
Anderson sees Ingham’s book as providing confirmation for his own longstanding thesis on the failure of the industrial bourgeoisie to capture control of the British state, though he is either unaware or does not acknowledge the shift in his position from the 1960s essays and the implications of this new position for Marxist theory. For it was a central task of Marx to demonstrate the way in which industrialisation entailed the dominance of productive capital, the point at which surplus value is produced and upon which, therefore, banking and commercial capital are ultimately dependent:
The conclusion we reach is not that production, distribution, exchange and consumption are identical, but that they all form the members of a totality, distinctions within a unity. Production predominates not only over itself, in the antithetical definition of production, but over the other moments as well. The process always returns to production to begin anew. That exchange and consumption cannot be predominant is self-evident. Likewise, distribution as distribution of products; while as distribution of the agents of production it is itself a moment of production. A definite production thus determines a definite consumption, distribution and exchange as well as definite relations between these different moments. Admittedly, however, in its one-sided form, production is itself determined by the other moments. For example, if the market, i.e. the sphere of exchange, expands, then production grows in quantity and the divisions between its different branches become deeper. A change in distribution changes production, e.g. concentration of capital, different distribution of the population between town and country, etc. Finally, the needs of consumption determine production. Mutual interaction takes place between the different moments. This is the case with every organic whole.
Marx here, and again in the famous passage in the Preface to the Contribution to the Critique of Political Economy, sought to demonstrate the overall dominance of production while recognising that distribution, exchange, and consumption could, as distinct elements of the totality, exercise a determining influence on production. Moreover, in the reproduction schemas of Capital Volume 2, Marx proceeded by way of an analysis of the circuits of capital, to identify the priority of productive capital as the source of surplus value. Bank capital and commercial capital assisted this process but were dependent for their own profits on the creation of value at the point of production. In sum, Marx sought to describe the relationships between the various sectors of capital and, thereby, to indicate, without resort to reductionism, the overarching importance of productive capital.
Marx’s writings formed the basis for the elaboration after his death of the concept of financial capital by the Marxist theorists of imperialism. It is important to examine this concept carefully because it has been rather casually used by the epigones of Marx. Many proponents of finance capital, and their critics, have attached too much weight to the question of the integration or fusion of bank and industrial capital, confusing organisational relationships with economic ones. This emphasis may have derived from Hilferding’s concern with personal linkages, but it is more probably the product of the extent to which the theory of finance capital has remained underdeveloped, while it neglects other, more important emphases in Hilferding’s work. Finance Capital contains a number of useful insights for developing an understanding of the particular progress of British capitalism.
Firstly, Hilferding stresses that finance capital always retains its money form – that is, the profits of the finance capitalists come from the interest on capital invested in the productive process. The circuit of finance capital is not, therefore, an integrated or fused circuit of banking and industrial capital. Secondly, what is significant about the era of finance capital is that ‘industrial earnings acquire a more secure and regular character....’ This derives from the greater availability of credit which thereby assists industrial capital in the long-term management of the reproduction of the means of production. Athar Hussein has argued that it is this change in the character of credit-provision and its implications that distinguishes finance capital from bank capital – rather than the more usual emphasis on the changed institutional relationship between the banks and industry. Indeed, the availability of such credit might not, and in the case of Britain did not in the first instance, come from the banks, but from the floating of stock. This has implications for the question as to when the stage of finance capital began in Britain, and the role of the banks therein. Thirdly, Hilferding clearly stresses that the bank-industry relationship is an interdependent one – that is, while the bank is ‘the more powerful party’, it is itself compelled to invest more and more of its capital in industry. Fourthly, Hilferding pointed to the ‘personal connections’ which developed between banks and industries. Indeed, the leading magnates in both spheres are ‘increasingly the same people’, i.e. the ‘finance capitalists’.
Again, it is important to note that Hilferding did not see this as working to the detriment of productive capital. Rather, the finance capitalists had increasing control over ‘the whole national capital’, and could presumably, therefore, balance the interests of both the banks and industry. Finally, Hilferding is quite explicit that finance capital marks the ‘definitive’ decline of commercial capital, ‘transforming the once proud merchant into a mere agent of industry which is monopolized by finance capital’. This is particularly worth noting in view of Ingham’s claim for the pre-eminence of commercial capital within the British formation, and Anderson’s endorsement thereof, and in the light of Anderson’s praise of Hilferding as being more attuned to the historical differences between the leading capitalist economies than either Lenin or Luxemburg, or, indeed, Marx.
Lenin, in Imperialism, indicated the extent to which the concept of finance capital embraced a dichotomy: on the one hand, convergence between bank and industrial capital, on the other, the increasing separation between money capital and productive capital. In other words, Lenin emphasised the distinction between the organisational and the economic relationships of finance capital. Banking and industrial capital converge to create a powerful and, in the end, dominant oligarchy of ‘finance capitalists’, and yet remain separate and relatively autonomous circuits of capital. Indeed, Lenin suggested that it is with the coming of finance capital that this separation reaches vast proportions, and entails the predominance of the rentier, whose relationship to production is ‘parasitic’. Finance capital is not therefore an integrated capital, and banking and commercial capital should not be confused with it, though powerful bankers and commercial figures are part of the financial oligarchy. Nor should the directive control of the economy by this oligarchy be taken to imply the subordination of industrial to commercial capital. G. Thompson has summed up the relationships between the fractions, of capital under finance capital perfectly in his characterisation of banking capital as ‘dominant’ but productive capital as ‘determinant’– banking capital can decide where accumulation might take place, but not that it actually will take place. The relationship is rationalised through the organisational arrangements described so fully by Scott and others, and is supplemented by a similar union with government. Nevertheless, despite these new institutional relationships, the circuits of capital remain separate and bankers, just like governments, can operate in a relatively autonomous way. Indeed, by disclosing the vitality of commercial capital Ingham provides a forcible reminder that neither the policies of the state nor of powerful financial interests can be reduced in any simple way to the needs of productive capital.
With these observations on the concept of finance capital in mind, it is now possible to consider City-industry relations in an attempt to reveal how the dominance of productive capital within the British power bloc has been registered historically. In doing so, a very different trajectory of twentieth-century British capitalism to that sketched by Anderson will be suggested.
From the early 1870s, British capitalism began to suffer a new systemic crisis which was marked by a decline in foreign investment, a fall in land prices, and industrial stagnation and unemployment in the face of competition from Germany and the United States. The crisis accelerated the number of mergers and takeovers and forced forward a restructuring of British capitalism in the direction of increased concentration and centralisation. At the same time new industries and new technological processes were developed, mainly in oil, chemicals, electricity, and steel – the so-called second industrial revolution – which intensified problems of overproduction. A resolution to the profitability crisis was sought through the investment opportunities in the colonies and less-developed areas of the world and in the establishment of rival spheres of influence – the phenomenon known as the new imperialism. All the capitalist states competed in this scramble for formal and informal spheres of control, a process that contributed to the refinement of the apparatuses of the state and its interventionist role and which culminated in the first world war.
It is in this context that the City, at first mainly through the mechanism of the stock exchange and more gradually through the investments of banks and insurance companies, came to play the directing role for productive capital which the concept of finance capital is intended to elucidate. This took the form of the export of capital, mainly through portfolio investments especially in railway bonds and government stock and, to a much lesser extent, in public utilities and extractive industries. It is crucial to note that this did not work to the detriment of productive capital nor reflect the particular intra-capitalist relationships projected by the City-hegemony theorists. Rather, capital export assisted British industry by enlarging its markets and, more importantly, by cheapening its imports and thus enhancing the profitability of the monopolies. And the state, through such legislation as the Colonial Stocks Act, assisted this process. Moreover, there is no evidence that capital export starved domestic industry of funds or that industry was unable to borrow from the banks when it wanted to. Anderson repeats this particular canard. Yet all the leading authorities are agreed that domestic industry has had no difficulty finding finance when it has wanted it. In any case, retained profits continued to be a major source of industrial finance, and these profits were boosted by the activities of finance capital – capital goods exports rose from £263 million in 1890 to £430 million in 1910. Where Britain did differ from its capitalist rivals was in not having to resort to tariffs and cartels in this period to protect its trade and markets – a legacy of the priority of its imperialist past. It was for this reason that Chamberlain’s tariff reform campaign failed to shake the dominance of the free trade lobby. It is altogether too simplistic to interpret his campaign as the first in a series of unsuccessful attempts to rescue productive capital from its alleged subordination to the City. Rather, the autonomous interests of commerce (especially at a time when the restructuring of British capitalism was in its early stages), operated alongside and interacted with the conflict between small-scale, non-monopoly industrial capital (particularly the west midlands metal-working industries which formed part of Chamberlain’s constituency) and the international orientation of large monopolistic industries (mining, textiles, shipbuilding). But even the impact of this international orientation on domestic industry should not be overstressed. The return to the gold standard after the first world war was, for example, used as a basis for disciplining the labour force and obstructing Labour’s welfare plans, and for these reasons caused hardly a murmur amongst industrialists or from their newly formed forum, the Federation of British Industries.
The power bloc which determined the direction of British economic policy was dominated by finance capital – the shorthand term for the congruent interests of the monopolistic and internationally-oriented banking and industrial fractions of capital. But it was forged in crisis so that its reconstitution was not unproblematic and tensions were registered at the political and ideological levels. Moreover, these tensions in part derived from the class conflict engendered by the activities of a working class that was itself reconstituted in that self-same forge of crisis.
Monopoly capital entailed changes in production relations and the restructuring of labour. The socialisation of the means of production and the de-skilling of the labour aristocracy by new technologies encouraged the spread of socialism and new unionism, while finance capital enlarged the intermediate stratum of white-collar workers. These developments presaged fundamental problems for liberalism and its political vehicle the Liberal party. Moreover, the simultaneous challenge to patriarchy embodied in the resurgent feminist movement – which sought initially to repeal the Contagious Diseases Act but subsumed this and other grievances in the generalised demand for political representation – and a Darwinian undermining of the certainties of religion, augmented the crisis of liberal hegemony.
The conjunctural force that led to the fracturing of liberal ideology was the casual poor of London’s East End and the riots of 1886 and 1887. As Stedman Jones so ably demonstrated, the restructuring of liberalism in its collectivist and welfarist form was not an inevitable and unproblematic process. The shift in perspective from ‘demoralisation’ to ‘degeneration’ was an attempt to differentiate the working class according to traditional values and to apply collectivist measures discriminately to the ‘respectable’ stratum. The obverse of this was a series of harsh and punitive measures to isolate the ‘residuum’ – measures which occasionally verged on the proto-fascist in their ‘racial’ or ‘biological’ prescriptions (most notably in Arnold White’s proposal to sterilise the ‘unfit’).
Moreover, in the age of monopoly capitalism, the ideology was inevitably revamped in the glow of imperialism. London’s social problem lay at the heart of the empire and therefore threatened the vitality of that very empire. A new ideological construct, social imperialism, therefore infected the policies proposed to resolve the crisis and insinuated itself into all points along the political spectrum. Disraeli’s separate planks of imperialism and social reform became integrated in the nostrums of Conservatives after the crisis of the 1880s. As Cecil Rhodes aptly put it, ‘If you want to avoid civil war, you must become imperialists. Chamberlain’s tariff reform programme, whereby tariff revenues would pay for social reforms, was the most sophisticated of the new social imperialist policies. The Liberal social imperialists (‘Limps’) accepted the Conservative analysis – the British empire need an ‘efficient’ working class, but their remedy was different. They advocated the continuation of free trade, on the grounds that this brought prosperity and allowed for social reform to be paid for out of taxation. The new Liberals, who were the organic intellectuals of state collectivism, disliked the imperial thrust but were won over by the promise of social reform – and, in this way, the Liberal party managed temporarily to hang together on a programme of Dreadnoughts and old age pensions. Even the Labour party was to be tainted with social imperialism through the bureaucratic socialism advanced by Fabian theorists who proved in fact the most assiduous advocates of national efficiency. The limited ability of collectivist policies to resolve the deep-seated crisis can be demonstrated by reference to a second conjunctural moment, the crisis of 1910-14, which marked a replay, but this time in more intense form, of the several constituent parts of the earlier crisis – Ireland, feminism, syndicalism, and constitutional reform. Dangerfield’s famous prognosis of the moribundity of liberalism explicates the features of this crisis but in the end is flawed. For what died was not liberalism, but the Liberal party. Victory in the first world war meant that the British state took on the collectivist rather than the fascist cast that was inherent in the more extreme versions of social imperialism. Although the Liberal party disintegrated, its new liberal ideology was carried over into the Labour party which became the standard-bearer of social democracy. It was in this way, therefore, that a constitutional liberalism rather than a more authoritarian ideology emerged out of the profound crisis of this period. The reconstructed party system now more closely mirrored the property relations of capitalism. The three fractions of capital coalesced in the Conservative party – imperialism (Ireland and the first world war) the inevitable catalyst. The empire provided jobs for the aristocracy, capital export for the City (which ceased to be Liberal after 1874), and markets and raw materials for industry. This new political solidarity was reflected in the composition of Conservative cabinets and in the elevation of industrialists to the peerage, and its acme was the coalition governments from 1915-22. The war forced the abandonment of opposition to state-collectivist policies and separated and neutralised the respective strands that together had created the pre-war crisis. Female suffrage was granted in 1918, Ireland partitioned in 1922, and syndicalism confronted and defeated in the general strike. In this way, pre-war Conservative fears of constitutionalism, which had prompted Balfour to make his infamous declaration that the party would continue to control the destiny of ‘this great Empire’ whether in or out of office, were finally dissolved. The beast of democracy which the industrial bourgeoisie had unleashed in its contestation with Old Corruption was tamed. Indeed, it was possible to complete the process of democratisation both nationally (1884-5, 1918, 1928) and locally (1888, 1894). Constitutionalism and social democracy in the form of the party-system served to mask the concentration of power in the apparatuses of state to which the ruling class could more readily control recruitment and where their more sinister activities could be hidden behind the skirts of ‘official secrecy’ and ‘national security’– notably the cabinet and the civil service. The specific trajectory of British society in the generalised crisis of international capitalism was therefore dependent upon historical contingency – above all victory in the first world war, achieved it must be remembered only with American intervention. Had Britain lost the war then the fractional and ideological conflicts before 1914 would have climaxed in an entirely different balance of forces. Instead, the corporatist and social imperialist strategies of Oswald Mosley and the revolutionary politics of the CPGB were destined to remain at the margins.
The salient features of this major period of capitalist reconstruction from the 1880s to the 1920s – monopoly capital, imperialism and the re-constituted political and ideological framework – persisted after 1930. However, the deep depression of the 1930s provided the context for further structural changes. Concentration and centralisation increased. In 1909 the share of the net output of the hundred largest manufacturing firms had been 16%; by 1930 it was 26%; today it is around 50%.New industries, especially in the area of mass consumer goods, emerged in the 1930s and gradually challenged the pre-eminent role of the early staple industries (coal, steel, textiles). In 1931 Britain came off the gold standard for the last time. Moreover, Britain abandoned its peculiar attachment to free trade and embarked on its adversaries’ course of cartels, tariffs and preferential trade within the Sterling Area. Nevertheless, these were merely changes in strategy dictated by the economic crisis – the direction of policy still lay in the hands of the finance capitalists. The Sterling Area, for example, was a protected bloc within which trade and the export of capital could take place. The City channelled industrial and commercial capital to this bloc and repatriated the profits to the industries and commercial enterprises from which it had originated. The net outcome of a world divided into such protected blocs was inevitably the same as it had been before 1914 – imperialist rivalries culminating in world war. In this respect, the second world war was the extended coda to the first. However, the war was a costly drain on the British economy and confirmed American hegemony in the capitalist world at large. Through a dependence on American loans, Britain was compelled to dismantle the imperial preference system and to bow to a multilateralism constructed to serve American capital. The closed imperial enclaves of pre-war European capitalism, protected by tariff and monetary policies, were prised open. The resultant new liberal international economic order entailed a number of major readjustments for British capitalism – the subordination of sterling to the dollar, the gradual incorporation into the European Economic Community, itself a defensive response by European capitalism to American dominance, and the return to a more informal system of imperialism (neo-colonialism).
Above all, the shift from imperial blocs to Open Door entailed a new strategy – that of the multinational corporation which, in its more sophisticated production and marketing strategies, was a progression beyond simple cartelisation to a higher stage of monopoly capitalism. These giant companies operate through subsidiary companies in both developed and under-developed countries – in other words, through the increased interpenetration of capital and through neocolonialist strategies. And it is in the operation of the multinationals and the progressive internationalisation of capitalist economy that explanations of British manufacturing ‘decline’ must be sought – not in the subordination of industry to the City. The City is the institutional channel for finance capital – directing investment to the points where industry can maximise the extraction of surplus value. These ‘points’ are the myriad places throughout the globe where British multinationals operate. Victory in the second world war therefore allowed the international orientation of British capital to continue – and Britain was second only to the United States in the development of multinationals. The defeated powers – Japan and Germany – had, by contrast, to focus on the regeneration of domestic industry; hence the unfavourable comparisons that are drawn by the ‘decline’ pundits. In the first phase of monopoly capital, investment took the form of portfolio holdings which benefitted productive capital through the control of cheap raw materials and markets for domestic manufacturing; with the rise of the multinationals production takes place globally (through the strategy known as ‘world-wide sourcing’) – maintaining control over raw materials and exploiting cheap labour – but capital flows are now in the form of direct investment which yields greater returns than domestic investment. This capital does not necessarily come from the parent base and is, in fact, more often than not generated by the subsidiaries themselves. For example, British multinationals financed somewhere between 65 and 70% of their foreign investments from the unremitted profits of their foreign subsidiaries in the period 1964-69. Because of the progressive internationalisation and interpenetration of capital, foreign multinationals operate in Britain and foreign banks located in the City perform a similar function to their British counterparts overseas. In the period 1962-79 UK firms’ capital abroad grew five-fold in nominal value to £25.5 billion and the stake of foreign firms in the UK grew almost nine-fold to £18.9 billion. By 1982, the assets of British multinationals abroad amounted to £51 billion and the assets of foreign multinationals in the UK to £29 billion. Despite internationalisation, therefore, the multinationals remain predominantly owned and controlled by the various national capitals.
In these changed circumstances for British capitalism conflict between and within sectors of capital have not disappeared. Conflict occurs between multinational corporations and between monopoly and non-monopoly capital. Governments have attempted to smooth and perhaps even halt the decline of domestic industry through ‘planning’ strategies since 1945. But political, academic, and journalistic attacks on the City have found correspondingly few echoes in British industry. Indeed, the CBI has supported tight monetary policies and the defence of sterling precisely because international interests are more powerful than purely domestic ones while such supposedly City-oriented policies have assisted domestic industry in the disciplining of labour by wage controls and the threat of unemployment. For these reasons, even after seven locust years for British domestic industry, the CBI pledged itself in 1987 to a further term of Conservative government. Moreover, the shift in orientation towards Europe (which was promoted by the FBI after the Suez debacle had put the final seal on formal imperialism), and the devaluation of sterling in 1967, are indicative of the limitations of the City as a political force when confronted with the fundamental needs of productive capital for a reorientation of policy. Conflicts between fractions of capital persist therefore but remain constrained by the overriding requirements of the capitalist system as a whole. Explanations of policy adjustments must therefore be sought in terms of the complex inter-relationships between these fractions in which monopoly capital remains dominant, and in which the interests of subordinate fractions are accommodated (for example, of agrarian capital by the heavy subsidies of the Common Agricultural Policy, of commercial capital by the growth in the Eurodollar market, and of non-monopoly capital by the restraints on labour and the incentives for small businesses). The power bloc has therefore remained dominated by finance capital, that oligarchy of monopoly industrial and banking capitalists, and the conflicts with subordinate fractions have been limited and contained. Indeed, the ‘institutional relationships’ between industrial and banking capital referred to earlier were further consolidated in this period. Financial institutions increased their holdings of all quoted ordinary shares of UK companies from about 18% in 1957 to 40% in 1973, and strategic control of finance capital continued to be exercised through interlocking directorships and through what Scott, in an excellent account of the modus operandi of finance capital, has called a ‘constellation of interests’. Moreover, the ideological hegemony of finance capital was reinforced after 1945 by Cold War dogmas derived from the new international alignments and propagated by the powerful and overwhelmingly conservative mass media. The Bolshevik peril has been the stock-in-trade of Conservatism at least since the time of the Zinoviev letter. But it gained substance from the deformation of socialism embodied in Stalinism, and was woven into a powerful mystifying ideology in the 1950s whereby socialism was equated with totalitarianism, and freedom and democracy with the maintenance of capitalism. Moreover, it provided a rationale for the massive expenditure on armaments, and on the electronics industries and on nuclear energy, which contributes to the profitability of the largest companies in Britain. In this, and in other practices such as welfarism and intervention through nationalisation of declining manufacturing industries, the state has operated to ‘smooth out’ the contradictions generated by monopoly capitalism. 
It was able to do so in the exceptional conditions of growth of the 1950s and 1960s as industry made up for the wartime setback to production. In this ‘never had it so good’ climate of full employment the working class was able to make important economic and socio-cultural progress – in education, health, women’s rights and greater sexual freedom – but remained politically locked within a limited corporate and defensive posture. Ironically, working-class consumerism led certain intellectuals of the Labour party such as Crosland to fantasise that a socialist paradise was at hand, as if capitalism had somehow been painlessly transmogrified. The social-democratic ideology that had emerged from the crisis after 1880 had here reached its climacteric. For the prosperity and full employment of the 1960s were short-lived, and British capitalism entered a further epoch of crisis.
By the mid-1980s, unemployment in Britain had reached four million; decline in manufacturing industry was no longer merely relative but had become absolute (in 1983-84, Britain ceased to be a net exporter of manufactured goods for the first time since the industrial revolution); inflation was endemic; and the social-democratic consensus had broken down and the party-system fractured. It is this current crisis, then, and at a point well into the so-called ‘Thatcherite revolution’ to restructure British capitalism and society, that has prompted Anderson to re-launch his investigations into the deep-seated nature of the British malaise. This essay, however, has attempted to identify crucial limitations in Anderson’s analysis, and to outline a very different trajectory of British capitalist society. It remains, by way of conclusion, to suggest reasons for such divergent standpoints.
The debate on the Anderson thesis, since the 1960s and now rekindled by ‘Figures’ has, in fact, exposed serious limitations in Marxist historical writing on class relations in modern British society. Indeed, that historiography has been fraught with so many broad disagreements that the ability of historians to provide answers to some of the most basic questions has often seemed doubtful. Was the aristocracy or industrial bourgeoisie dominant in the nineteenth century? Is the City or industry dominant today? Indeed, are these ‘fractions’ of capital fundamentally divided or have they converged? Has industry been starved of investment or found finance all too easily available? Has the state been weak in resisting the international policies of the City, or strong in its promotion of policies beneficial to capitalism in general? Can one in fact establish connections between the capitalist class fractions and the state, or does it’ operate in a ‘relatively autonomous’ manner? Has the working class been weak in the face of decline and unable to resist policies detrimental to it, or strong in its defensive posture thus accelerating domestic decline?
The oppositional standpoints taken on these and other questions in part derive from a teleology of decline in which political positions have intruded upon the history. There is now a massive literature on the economic decline of Britain and though diagnoses differ across the political spectrum, there is at least a consensus that Britain faces major problems of a cumulative nature. Both Left and Right, of course, have had their own particular reasons for hammering away at the decline theme – the Left in anticipation of socialism, the Right as a stick with which to discipline a recalcitrant working class. Hence Sir Keith Joseph’s claim in 1979 that ‘Solving the trade union problem is the key to Britain’s economic recovery.’ Likewise, the language employed by the Left is instructive. Anderson, for example, wrote in ‘Origins’ of ‘a general malady of the whole of society’, ‘a slow sickening entropy’, ‘a sclerosed, archaic society’, and so the adjectives are piled on – ‘torpid’, ‘repressive’, ‘listless’, ‘demoralized’, ‘wretched’, and so on. Indeed, Anderson is quite explicit that the purpose and virtue of the New Left Review essays is their capacity to explain ‘the malady of the capitalist order in the UK’. However, despite these and other similar prognoses, the capitalist body has been rather stubbornly a long time a-dying. In fact, given the political genesis of much of the argumentation it is hardly surprising that such debates about the state of Britain’s health have been going on for at least a hundred years. This is not to argue that there has been no decline – the rundown of manufacturing industry in Britain is incontestable – rather that the perspective of national decline has distorted analyses of the trajectory of British capitalism as a whole and that appearance has too often been mistaken for reality. Some sense of the distorting lens of decline might be obtained if, for a moment, we consider the opposite perspective, namely, that Britain remains a very wealthy country in which productivity and living standards have steadily increased and in which the gap between the very rich capitalist countries (of which Britain is one) and the poor Third World countries has widened not narrowed. Indeed, even the vaunted collapse of British manufacturing industry began from a higher base than that of other advanced capitalist countries and continues to provide a higher level of employment than is the case in these ‘rivals’. In this perspective, ‘deindustrialisation’ becomes a process of structural adjustment to changes in the world economy rather than a symptom of some terminal national illness. It may well be the case, and Anderson recognises this fact in the concluding paragraphs of ‘Figures’, that, far from being ‘exceptional’ in its trajectory, Britain as the oldest industrial nation reveals the crucial characteristics of late capitalism that other less mature states are destined (and in the case of the United States are already beginning) to follow. Explanations, therefore, that are too oriented towards the state of the nation’s health remain locked within the paradigm of liberal ideology and can obscure more fundamental questions concerning ‘structural’, ‘international’, and ‘class’ dimensions.
Despite these reservations about Anderson’s methodology and the interpretative criticisms mooted above, his writings have nonetheless been remarkably stimulating and the task he identified over twenty years ago remains a vital and unfulfilled one. Any future attempt at providing ‘a total trajectory of modern British society’ will have to reinstate the general features of British capitalism and refute ‘exceptionalism’, though without losing sight of the specificities of the British experience. Two concluding points remain to be made concerning that particular experience. In the first place, the most significant specific features derive from Britain’s history as an imperialist nation, and this has generally been recognised, at least on the Left. The long history of empire has, therefore, accounted for many of those ‘peculiarities’ beloved of students of ‘decline’ – the early affinity between land and commerce, priority in industrialisation, the international importance of the City, the reconstruction of the power bloc in the context of the new imperialism of the late nineteenth century, the involvement in two world wars and the concomitant ramifications thereof, the importance of multinational corporations to British productive capital, the economic burdens of excessive militarisation, the particular characteristics of English nationalism and its nastier inflexion racism, and so on.
Secondly, the particular trajectory of British capitalism has to be understood in terms of the constantly shifting balance of class forces. While the congruent interests of the class fractions of both capital and labour and their fundamental antagonism justify the central Marxist emphasis on the dialectic of the class struggle, the historical dominance of the one over the other cannot be reduced to simple homogenous class categories. That dominance has rather to be understood in terms of a continually reconstituted power bloc comprised of shifting fractional alliances in which the hegemony of one fraction is masked at the political and ideological levels. Within the British power bloc, hegemony has shifted from land and commerce in the eighteenth century to industry in the nineteenth and to finance capital in the twentieth century. Political and ideological forms have not directly corresponded to that hegemony and have in fact fulfilled their mystifying role all the more successfully precisely because of just such a disjuncture. And that success can be measured in the case of Britain by the way in which historians such as Anderson have attributed power to the social groups with whom it appeared to lie – the aristocracy and the City – rather than to tease out its real bases.
 Parts of this essay originally appeared in D. Nicholls, ‘Fractions of Capital: The Aristocracy, City, and Industry in the Development of Modern British Capitalism’, Social History 13, no.I (Jan. 1988), pp. 71-83 and I am grateful to the editors of that journal for allowing me to reproduce them here.
 These shifts are discussed more fully by Bob Looker.
 E.P. Thompson, ‘The Peculiarities of the English’, Socialist Register 1965, repr. in The Poverty of Theory and Other Essays (1978). p. 46.
 ‘Figures’, p. 33 fn.43.
 G. Ingham, Capitalism Divided? The City and Industry in British Social Development (1984), p. 36. Cf. also pp. 6-8, 34.
 W.D. Rubinstein. ‘Wealth, Elites, and the Class Structure of Modern Britain’, Past and Present 76 (1977), pp. 125-26.
 M.J. Wiener, English Culture and the Decline of the Industrial Spirit 1850-1980 (Cambridge. 1981), pp. 168-69.
 W.D. Rubinstein, Men of Property. The Very Wealthy in Britain Since the Industrial Revolution (1981), and ‘Wealth, élites’, loc. cit., pp. 99-126.
 See John Saville’s article, fn. 13.
 Thompson. ‘Peculiarities’. loc. cit.,pp. 35-91, especially pp. 56-64.
 R. Johnson, ‘Moore. Anderson and English Social Development’, in S. Hall et al., Culture, Media, Language (1980), pp. 61-70.
 K. Marx, ‘The Elections – Tories and Whigs’, New York Daily Tribune, 21 Aug. 1852, quoted in T.B. Bottomore and M. Rubel (eds.), Karl Marx. Selected Writings in Sociology and Social Philosophy (1961; Harmondsworth, 1963), p. 201. Italics in original.
 See, for example, J.M. Goldstrom, The Social Content of Education 1808-70 (Shannon, 1972), and R. Johnson, ‘Educational Policy and Social Control in Early Victorian England’, Past and Present 49 (1970), pp. 96-119.
 Hence he gets into difficulty in his attempt to explain why the landed class faced economic problems from the 1870s onwards – the maintenance of cheap grain imports, damaging to landed incomes, did not, he suggests, reflect the ascendency of the manufacturers but was ‘mainly determined by the electoral necessities of low food prices for the masses’ (‘Figures’, pp. 42-3). Yet, only seven pages later, we are told that the working class at this time was politically weak because of the restricted franchise. (‘Figures’, p. 50).
 Barrington Moore Jr., Social Origins of Dictatorship and Democracy (1960; Harmondsworth, 1967), p. 19.
 See D. Nicholls, ‘The English Middle Class and the Ideological Significance of Radicalism 1760-1886’, Journal of British Studies 24 (Oct. 1985), pp. 415-33, especially pp. 416-25.
 Ibid.; and N. Poulantzas, Political Power and Social Classes (1968; trans. 1973), pp. 168-73. It is incumbent upon those who maintain that the aristocracy remained economically dominant to explain why, as wool-producers, they were so successful in protecting their economic interest against first the woollen manufacturers (cheap imports) and later the cotton-textile manufacturers (rival products).
 Johnson, ‘Moore, Anderson’, loc. cit., p. 66.
 A recent study of Lancashire supplies numerous local examples of this interpenetration of landed, commercial, and industrial wealth. See John K. Walton, Lancashire. A Social History, 1558-1939 (Manchester, 1987), chs.7 and 11. Walton also brings out well the forms and importance of middle-class urban political control (see especially pp. 228-29).
 It has been estimated that the growth of the manufacturing towns increased the Earl of Derby’s rent rolls in Lancashire from £14,000 annually to £180,000. S. Aaronovitch, The Ruling Class: A Study of British Finance Capital (1961; repr. Westport CT, 1979), p. 38.
 See P.L. Cottrell, Industrial Finance 1830-1914 (1980), pp. 24-25, 188-89, 194, 236-37.
 E.J. Hobsbawm, Industry and Empire (1968; Harmondsworth, 1969), pp. 145-46.
 See, for example, R.J. Moore, ‘Imperialism and Free Trade Policy in India, 1853-54’, Economic History Review 17 (1964), pp. 135-45. The critical importance of India to both the commercial and industrial sectors of the British economy cannot be stressed enough.
 The argument in this paragraph has been greatly influenced by R. Gray, ‘Bourgeois Hegemony in Victorian England’, in J. Bloomfield (ed.), Class, Hegemony and Party (1977), pp. 73-93 – an important essay of which Anderson seems unaware, and which marshals the evidence more capably and more fully than I can in the limited space available here.
 Thompson, ‘Peculiarities’, loc. cit., p. 71.
 Aristocratic mismanagement of the Crimean war had revived the cry for peace, retrenchment, and reform, and the industrial bourgeoisie set up its customary pressure groups to promote each cause.
 Hobsbawm, Industry and Empire, pp. 185-91. Italics in original.
 P. Anderson, ‘Socialism and Pseudo-Empiricism’, New Left Review 35 (1966), p. 14; ‘Origins’, p. 51.
 As with his characterisation of the landed aristocracy, Anderson seems unaware of the shifts and contradictions in his arguments. Moreover, dominance of ‘finance’ or ‘commerce’ raises questions which are never satisfactorily confronted. For example, why have political administrations (including, of course, Thatcher’s) attempted to revive industrial capitalism if the industrial bourgeoisie is indeed subordinate and financial enterprise is evidently so profitable? By the same token, if the City generates so much wealth by its commercial and financial activities, what need is there for domestic restructuring? Finally, Anderson, in his treatment of the twentieth-century ruling bloc shifts almost entirely to questions of economic structure, policy, and the role of the state, abandoning the earlier focus upon social structure, ideology, and culture. The aristocracy-City connection is assumed rather than demonstrated, whilst the extent to which City hegemony is registered by changes in the content of the dominant culture and ideology is never considered. I am grateful to Nev Kirk for this last observation and for his helpful comments on an earlier draft of this article.
 The problem has been in part a semantic one, i.e. the term finance (or financial) capital has been used to describe the activities of the City when it is clear from the context that it would be more appropriate to use the terms banking and commercial capital. The Marxist theorists of finance capital, such as Hilferding and Lenin, developed the concept to elucidate a particular relationship between banking and industrial capital, and therefore when Marxist historians write of the dominance of financial capital over industrial capital they create conceptual confusion.
 For a short introduction to the debate and the oppositional positions taken on this question, see H. Overbeek, ‘Finance Capital and the Crisis in Britain’, Capital and Class 11 (1980), pp. 99-120, and R. Minns, ‘A Comment on “Finance Capital and the Crisis in Britain”’, ibid. 14 (1981), pp. 98-110.
 See, for example, J. Coakley and L. Harris, The City of Capital (Oxford, 1983); J. Scott, ‘The British Upper Class’, in D. Coates et al (eds.), A Socialist Anatomy of Britain (Cambridge, 1985), pp. 30-46; Corporations, Classes and Capitalism (1979; 2nd ed., 1985), especially pp. 96-103, 111-13; Capitalist Property and Financial Power (Brighton, 1986); and, with C. Griff, Directors of lndustry (Cambridge and Oxford, 1984) and ‘Bank Spheres of Influence in the British Corporate Network’, in F.N. Stokman et al (eds.), Networks of Corporate Power (Cambridge and Oxford, 1985). See also, Aaronovitch, op. cit.; Overbeek, ‘Finance Capital’, loc. cit., pp. 116-18; R. Useem and A. McCormack, ‘The Dominant Segment of the British Business Elite’, Sociology 15 (1981), pp. 381-406; P. Stanworth and A. Giddens (eds.), Elites and Power in British Society (Cambridge, 1974); and M. Barratt Brown, ‘The Controllers of British Industry’, in J. Urry and J. Wakeford (eds.), Power in Britain (1973).
 Ingham, op. cit., especially pp. 4-13, 136-37, 158, 224-29.
 K. Marx, Grundrisse (1939; Harmondsworth, 1973), pp. 994ff. Italics in original.
 For the following points, see R. Hilferding, Finance Capital (1910; ed. T. Bottomore, 1981), especially pp. 95, 225-26.
 A. Hussein, ‘Hilferding’s Finance Capital’, Bulletin of the Conference of Socialist Economists Part I (March, 1976), pp. 1-18.
 ‘Figures’, p. 44fn.
 V.I. Lenin, Imperialism, the Highest Stage of Capitalism (1916; Peking, 1975), pp. 48,69, 120,150-51.
 G. Thompson, ‘The Relationship between the Financial and Industrial Sectors in the United Kingdom Economy’, Economy and Society 6 (1977), pp. 235-83, especially pp. 246-47.
 See Hobsbawm, Industry and Empire, table 34.
 D. Nabudere, The Political Economy of Imperialism (1975; 2nd ed., 1977), pp. 1 14-15.
 ‘Figures’, p. 44.
 It may be that the loans have too often been short-term, and that this is a product of the higher profits to be gained from overseas lending. But, for the most part, industry since the late nineteenth century has not complained of any shortage of funds, while the external orientation of investment can be explained in terms of the benefit to finance capital as a whole i.e. higher profits for banks, raw materials for multinationals and domestic industry etc. See S.J. Prais, The Evolution of Giant Firms in Britain (Cambridge, 1976), pp. 122-23, 134; W.A. Thomas, The Finance of British Industry 1918-76 (1978), pp. 5-6, 74-75, 336; W.M. Clarke, The City in the World Economy (1965), pp. 17-19; D. Purdy, ‘British Capitalism Since the War’, Marxism Today (Sept.-Oct., 1976), p. 314; G. Thompson, ‘The Relationship’, loc. cit., pp. 253, 265-68; and Coakley and Harris, op. cit., pp. 11, 41-42, 133, 225-26. According to the most recent Marxist analysis the banks, far from starving industry of funds, have met its demands all too comfortably. B. Fine and L. Harris, The Peculiarities of the British Economy (1985), pp. 134-36. At the time of writing, an extensive CBI study of industry-City relations has appeared, entitled ‘Investing for Britain’s Future’, which, according to a newspaper report, has concluded that ‘the financial community is not to blame for the poor performance of manufacturers in comparison with international competitors in West Germany, Japan and other industrialised nations’, The Guardian, 15 Oct. 1987, p. 26.
 Nabudere, op. cit., p. 129.
 Ingham, op. cit., pp. 173, 182-84; F. Longstreth, ‘The City, Industry and the State’, in C. Crouch (ed.), State and Economy in Contemporary Capitalism (1979), p. 168; S. Blank, Industry and Government in Britain. The Federation of British Industries in Politics, 1945-65 (Farnborough, 1973). The general quietude of the CAI in the face of City policies is often cited as further evidence of the subordination of the former to the latter. In fact, a more vocal opposition was never needed – if would certainly have received no support from imperially-oriented big business.
 S. Hall and B. Schwarz, ‘State and Society, 1880-1930’, in M. Langan and B. Schwarz (eds.), Crises in the British State 1880-1930 (London, 1985), pp. 14-15.
 G. Stedman Jones, Outcast London (Oxford, 1971), passim.
 Quoted in Lenin, op. cit., p94.
 The best studies are B. Semmel, Imperialism and Social Reform (1961), and G.R. Searle, The Quest for National Efficiency (1971). Social imperialism can be explored at the cultural level in music hall, novels (Kipling), the Boy Scout movement etc.
 Hall and Schwarz, ‘State and Society’, loc. cit., pp. 27-29.
 See W.L. Guttsman, The British Political Elite (1968), pp. 78, 91; and R.E. Pumphrey, ‘The Introduction of Industrialists into the British peerage: A Study in Adaptation of a Social Institution’, American Historical Review 65, I (Oct. 1959), pp. 1-16. Industrialists also reached the pinnacles of the Conservative party in the 1920s – Bonar Law, Baldwin, Chamberlain.
 Ingham, op. cit., p. 196; Prais, op. cit., p. 4; Fine and Harris, op. cit., p. 27. All 100 companies were multinational by 1970.
 In 1970, eleven of the world’s largest businesses were British compared with eighteen in all for the rest of the EEC. The majority of multinationals were, of course, American. America has also seen. therefore, similar structural adjustments to Britain – especially the decline of domestic manufacturing (cf. The Guardian, 10 Sept. 1986, p. 23). There are no doubt numerous academic theorists even now tapping away at their typewriters in order to show how US productive capital is in the grip of Wall St.!
 Nabudere, op. cit., p. 197. This is also more often the case in the developed as opposed to developing economies. Coakley and Harris, op. cit., pp. 178-79.
 L. Harris, ‘British Capital’, in Coates et al (eds.), A Socialist Anatomy, pp. 11, 22.
 Sir Terence (‘bare-knuckles’) Beckett’s speech as outgoing director-general of the CBI was a strong defence of the benefits of Thatcherism for British industry and a warning that a Labour victory would mark a return to the ‘slit trenches’ of the 1970s, The Guardian, 12 Nov. 1986, p. 29. W. Grant. ‘Representing Capital: The Role of the CBI’, in R. King (ed.), Capital and Politics (1983), pp. 69-94 brings out this basic contentment perfectly. Cf. above, fn. 43. Monetarist policies are not in fact the simple reflection of vested ‘City’ interests – see Coakley and Harris. op. cit., pp. 204, 213.
 Blank, op. cit., p. 143.
 Cf. M. Moran, ‘Power, Policy and the City of London’, in King (ed.). op. cit., pp. 49-68; Coakley and Harris, op. cit., p. 35; and Overbeek, ‘Finance Capital’, loc, cit.
 One of the most important of the centripetal forces assisting capitalist solidarity is, of course, the threat of an organised working class. Colin Leys, however, hangs too much weight on this when he claims that the subordinate role of industrial capital within the power bloc derives from ‘its historic fear of the British working class’. C. Leys, ‘The Formation of British Capital’, New Left Review 160 (Nov.-Dec. 1986) https://newleftreview.org/issues/I160/articles/colin-leys-the-formation…, p. 120. See also, C. Leys, ‘Thatcherism and British Manufacturing’, ibid, 151 (May-June, 1985) https://newleftreview.org/issues/I151/articles/colin-leys-thatcherism-a…, pp. 5-25.
 For reasons for the survival of non-monopoly capital in the era of monopoly, see M. Dobb, Studies in the Development of Capitalism (1946; revised ed., 1903), pp. 345-47.
 Prais, op. cit., pp. 119-20.
 Scott, Corporations, Classes and Capitalism, p. 112. The second world war encouraged the interchange of personnel between state, banks, and industry. Barratt Brown, ‘The Controllers of British Industry’, loc. cit., p. 103. The links between finance capital and the Conservative party are particularly close. Guttsman, op. cit., p. 361.
 The leading ‘organic guru’ of state intervention was, of course, J.M. Keynes. Since the 1960s, well over 70% of state spending on research and development has gone to the defence, aerospace, and nuclear sectors. Hall, ‘The State’, loc. cit., p. 274.
 Lack of space prohibits a detailed analysis of the strategy employed since the 1970s to restructure British capitalism, but there is now a plethora of books and articles on Thatcherism. Short useful introductions to the subject are: J. Hillard, ‘Thatcherism and Decline’, in D. Coates and J. Hillard (eds.), The Economic Decline of Modern Britain. The Debate Between Left and Right (Brighton, 1986), pp. 352-71, and P. Armstrong, A. Glyn, J. Harrison, Capitalism Since World War II (1984), ch.18.
 Coates and Hillard (eds.), op. cit., p. x. For a list of the most frequent explanations of decline, see ibid., p. 320.
 Quoted in A. Gamble, Britain in Decline (1981; 2nd ed., 1985), p. xvi.
 ‘Origins’, p. 50.
 ‘Figures’, p. 20.
 Cf. A. Singh, ‘UK Industry and the World Economy: A Case of De-Industrialisation?’, Cambridge Journal of Economics 1 (1977), pp. 113-36; Fine and Harris, op. cit., p. 25.
 ‘Origins’, p. 28.