World Orders in Decline – then and now

With the election of Donald Trump, Britain’s vote to leave the European Union, the rise of populist movements across Europe, and the increasing assertiveness of Russian foreign policy there has been much talk about the possible end of globalisation and a return to great power rivalry. In this extract from The Strange Death of Liberal England, George Dangerfield recounts the beginnings of The Great Labour Unrest of 1910-1914 in a world where (rather like ours) a hegemonic power was in decline, wages for many were stagnating or declining, and wealth was concentrating in fewer and fewer hands…

 

 

 

 

 

 

The date of the Unrest’s beginning is, by general agreement, January 1910; and the most obvious cause of it was the continued drop in real wages . . .

Back in 1890, with the opening of new fields in South Africa, the world’s stock of gold began to increase at an alarming rate; by 1909 it had been swollen by a quantity very considerably greater than the total amount of bullion and coin previously existing in Europe, America and the Colonies, a quantity more than half as much as the world’s total previous stock in all forms. The mysterious metallic tide, flowing into England year by year, trickled into even the poorest houses; but – such was its nature – the shape it took there was scarcely an aureate one. It became a halfpenny more on the pound of tea, or three-pence more on a pair of boots; it became a general price rise. By 1910 the purchasing power of the pound, steadily declining, had shrunk to 16 shillings and 11 pence.

This was the effect of cheap gold upon the workers of England, and it was an unavoidable effect. But there should have been a compensation. For an increase in prices means an increase in productivity, and an increase in productivity means an increase in wages. Yet wages, though they had risen a little, had not risen in proportion; in 1910 the English worker was a poorer man than he was in 1900. What was the reason for this? Were businessmen, filled with a joyful confidence, investing too much of the nation’s resources in worthless undertakings? Were they growing careless? Were weak men remaining in the field, who, in less prosperous times, would have sold their concerns to more ruthless competitors? Any one of these reasons would have resulted in a lessened productivity and a consequent fall in real wages.

Or was capital discovering more attractive fields for investment than the field of British industry? The Boer War and the Russo–Japanese War had absorbed their share, and more than their share, of the national resources; and by 1910 one and a half billions of private capital were sunk in North and South America, and perhaps two billions were profitably scattered to the foreign ends of the earth. Was there consequently less capital available to co-operate with labour in the home field?

These questions lead us deeper into the sad mazes of the investing mind, which at each turn becomes more careless, more greedy, more vindictive and more feeble. The rate of return to capital was visibly increasing, but where was that capital invested? What uncouth toilers, in what remote corners of the world, sweated and starved to bring to some comfortable little householder in Upper Tooting his pleasant five per cent? The comfortable little householder probably asked this – not of his conscience, however, but of his prospectus and balance sheet, which always returned the most reassuring answers. And, besides, what else could he do with his savings? They were not his to control. The independent small entrepreneur – that dream of Liberal economics – had vanished from the earth; the great illusion of the middle classes was over; wealth was in the grip of other and fewer and more formidable hands.

Indeed, that tide of gold, rolling up out of South Africa, had deposited in the boardrooms and drawing-rooms and palaces of England a preposterous and powerful flotsam, which, arriving casually like seaweed, established itself with the instinctive adroitness of a barnacle. The new financier, the new plutocrat, had little of that sense of responsibility which once had sanctioned the power of England’s landed classes. He was a purely international figure, or so it seemed, and money was his language, like a loud and glittering Esperanto; it was a language, moreover, which England’s upper classes seemed unable to resist. Where did the money come from? Nobody seemed to care. It was there to be spent, and to be spent in the most ostentatious manner possible; for its new masters set the fashion and the fashion they set was not likely to be a reticent one. Society in the last pre-war years grew wildly plutocratic; the middle classes became more complacent and dependent; only the workers seemed to be deprived of their share in prosperity.

The picture is hardly a pleasant one, yet it has to be rendered even more unpleasant by the added colours of fear. The British industrialist was definitely afraid. The infinite interacting veins of credit, which seemed to knit the world up into one vast organism, gave a specious promise of peace and co-operation; a radiant promise. And the world’s financial map, studded with the inevitable concentrations of capital, was radiant indeed; but it was the radiance of acne. It was a creeping disease, and the first of its victims was British industrial supremacy. Already inhuman hostilities had been proclaimed; foreign tariffs, foreign bounties, the restrictive commercial policies of foreign governments. The old world-empire of Free Trade had long since tottered to its fall. American Trusts and German Kartellen controlling their own home markets were dumping their products in non-protected countries; and though the influence of this was hardly yet felt in England, the very existence of such tactics bred a secret terror. Wherever the English industrialist looked, he could not escape the presence of America and Germany. Technical inventions were now their speciality; they were admirably organized; they had discovered within their borders vast resources of iron, coal and oil. In ’95, England was the leading coal-producing country; now she was far behind the USA, and only just ahead of Germany: in the relative production of iron-ore, pig-iron and steel she was an ignoble third. Where was it all to end?

True, in her exports of domestic produce she still led the world, but by an uncomfortably narrow margin, which dwindled every year. And she still had almost a monopoly of the world’s sea-borne trade. Almost, but not quite. Japanese shipping, leaving its particular hunting ground in the China Sea and the Pacific Islands, was creeping across to the Pacific coasts of South America, and even supplying parts of the Indian Ocean. Germany was becoming a menace. Even America, no longer content with her modest coal exports to Cuba and Mexico, was making shipments to Mediterranean and South American ports. Scarcely had the thunders of Gettysburg and Sedan died away than this new and more sinister warfare declared itself, whispering at last into the farthest corners of the seven seas. Its first effects upon England had been the depressions of ’75 and ’84; and now – and now – why were economists prophesying another depression, perhaps in 1916? Well, there was no use thinking about it; times were unusually prosperous, England was still the leading industrial nation. But steadily and irresistibly the fear grew…

Read more about The Strange Death of Liberal England here.