Almost all commentaries on Britain’s financial and economic condition have managed to omit the fundamental dimension of imperialism: both that Britain is a major imperialist country in its own right, and, as a client of the us, the number two agent in the American imperialist system.
1. The pound operates as a reserve currency because Britain was a major imperialist country at the time when the present system was set up.
2. Britain’s balance of payments has suffered massive erosion from overseas expenditure—which is nothing but an attempt to perpetuate an imperial rôle.
3. Britain’s trading patterns are still (though decreasingly) influenced by the preferences and concessions connected with her imperial past. With the decline of the system, however, its contradictions have run out of control (‘defence’ expenditure to protect private investment in, say, the Middle East).
4. The perpetuation of Britain’s imperial rôle and the survival of sterling as a reserve currency has been encouraged and, up to a point, subsidized by the us.
To facilitate analysis (or to evade responsibility), Britain’s problem is often split into two: on the one hand the problem of improving the economic situation, and on the other hand the question of the pound as a reserve currency. This may be a legitimate division for the sake of clarity, but it must be realized that the two problems have a common background—and that they are not susceptible to purely technical solutions. Both problems involve political options, and these in turn demand a recognition of the historical burden imperialism has loaded on to the present, a burden which weighs considerably more heavily on the poor countries of the world than it does on the British proletariat.footnote1
Throughout the long period of imperial decline Britain has been piling up an ever vaster debt with the rest of the world, which she has consistently refused to pay off—and apparently never will. She has accumulated a historical debt over the decades at the expense of poorer countries, which has been institutionalized in such a way as to make it virtually impossible for these countries ever to get redress. More immediately, this would make it extremely hard to liquidate the sterling area, even with good will on Britain’s part—which anyway is conspicuously lacking.