Top management today is independent not only of the firm's own shareholders, but increasingly of the capitalist or property-owning class as a whole, including the financial institutions. As compared with the inter-war period, a higher proportion of profits is ploughed back into the business, and a higher proportion of capital expenditure is financed internally and not by resource to outside capital. It is true that the Marxist prophesy of the transition to "finance-capitalism", as industry fell more and more into the clutches of the City and the banks, was never at any time wholly fulfilled in Britain. But the financial difficulties created by the depression caused at least a trend in that direction before the war; and there were certain important industries in which management was, in consequence extremely susceptible to outside financial pressure.
Today, however, a decade of prosperity and high gross profits, combined with a lower ratio of dividend distribution, has greatly fortified the financial strength and independence of most public companies. Despite the increased weight of taxation, undistributed profits are normally sufficient (taking industry as a whole) to finance the whole of industrial capital formation - with a good deal, indeed, to spare. Naturally some firms still ned to borrow or make new issues of share capital; but internal company savings, relative to investment, are now higher than before the war. The economic power of the capital market and the finance house, and hence capitalist financial control over industry (in the strict sense of the word), are now much weaker. This change alone makes it rather absurd to speak now of a capitalist ruling class.
Sunday, 31 July 2011
What would Crosland say now?
Here's his view of power over public companies in The Future Of Socialism: