A new publication written by James Silverwood, Bishop Grosseteste University and Craig Berry, Manchester Metropolitan University, explores British capitalism since the 19th Century and argues that is should be seen as the prototype project for state capitalism.

The journal article ‘The Distinctiveness of State Capitalism in Britain: Market-making, Industrial Policy and Economic Space’ argues that although Britain is rarely considered an example of state capitalism (a term often ascribed to emerging markets and transition economies to explain capitalism with a strong role for the state), it should be.

The paper argues that Britain should be considered an original exemplar of state capitalism in the world economic system, and advances a new definition of state capitalism as:

the use of state agency to (re)produce certain dominant modes of capital accumulation and social organization for the benefit of privileged interest and societal groups, taking place in conjunction with, or in subjugation of, economic agents in the private sector, and involving multi-scalar relations from the individual to the global.

This definition is then utilized to understand the development of capitalism in Britain arguing that state capitalism in Britain has rarely been limited to the geographical constraints of the nation-state. Instead, it has been a multinational project, whose focus in different periods has been variously empire (formal and informal), Europe, and the global economy. Here, the paper notes that the often-financialized nature of the industrial policy deployed to exploit or service these geographies suggesting that intervention is constitutive of a financial state capitalism.

The journal article advances this argument via two case studies of British economic history. The opening period (labelled financial state capitalism 1.0) occurred between 1821 and 1914. The multi-scalar nature of financial state capitalism in this era is emphasized ranging from the domestic to the global, with world economic relations restructured around Britain’s dominant domestic mode of financial capital accumulation. Such was the success of this strategy (due to the confluence of macroeconomic management through the gold standard and free trade, and the willingness to extend British economic influence through imperialism) that external economic spaces around the globe were successfully internalized, with London in particular becoming a global entrepot and financial centre.

The next period (named financial state capitalism 2.0) took place between 1958 and 2016 (although it really accelerated after the election of the Conservative party under Margaret Thatcher in 1979). Again, the multi-scalar nature of capitalist activity is noted, but there was a reversal of economic geography on the earlier period with internal economic spaces in Britain opened up for use by international finance. In providing a second example of financial state capitalism in Britain, we hoped to strengthen our argument for why Britain should be considered amongst the diversity of state capitalist regimes in evidence throughout global economic history.

Finally, in both these periods, financial state capitalism is observed to work for the benefit of a rentier class, rather than those who sell their labour for a wage or seek to undertake genuinely entrepreneurial (as distinct from financially speculative) activity. Rentiers are social groups who derive their incomes from the ownership of assets.

The journal article is available to view online at: https://journals.sagepub.com/doi/full/10.1177/0308518X221102960

21st June 2022