Britain emerged from the war in a weakened position both economically and politically. ‘Her losses in human lives were comparatively small, about three hundred thousand, which was four times less than in 1914 —18. Material damage and losses were much more substantial, about 25 billion pounds. British exports fell drastically too, while high imports continued due to the structure of the economy and its dependence on raw materials and foodstuffs. Britain had to sell about half of her foreign capital investments to pay for the war, and in addition to borrow money widely.

In that situation Britain tried to maintain its social and economic position by accepting the role of junior partner of the USA. This was the background to the policy described as a ‘special relationship’ with the United States in the notorious speech of Winston Churchill at Fulton, Missouri, on March 5, 1946. This speech was popularly regarded in the west as the start of the cold war against the Soviet Union. It was a policy that was to impose heavy burdens on the British people.

British industry had been neglected in favour of capital investment abroad; it was technically backward, especially in the basic industries, and its exports did not cover in earnings the imports. The difference or deficit had been met by the huge flow of superprofits derived from the colonies. Now these profits were cut by half due to the sales of capital during the war. A further strain was the cost of military bases maintained by Britain abroad. Before the war the peoples of the colonies paid for these costs. As the old colonial system collapsed more had to be paid by Britain itself. Such was the background of Britain’s slow economic advance after the war, the slowest in the capitalist world. However, advance did take place, in spite of financial crises, the devaluation of the pound in 1949, and the growing waste of men and materials in rearmament. This economic advance was characteristic of a normal postwar boom. Throughout this period of moderate economic expansion there was an increasing trend towards monopoly development in the main branches of industry. Such were the problems which the Labour government (1945—51) faced. If the British Labour government of Attlee — Morrison — Bevin had really been socialist, as it claimed to be, it would have solved the problems of the country by taking measures against the domination of monopoly capital at home and stopping the export of capital abroad. However, the right-wing Labour leaders borrowed widely from the USA thus becoming more and more dependent on the USA. Britain became an automatic supporter of whatever the American government chose to do. In the UN organization, in the Central Control Commission in Germany, in West Berlin, on all issues Britain danced to the tune of the USA. The Potsdam agreement was ignored by the Western powers, the cold war against the Soviet Union and the countries of peoples’ democracies was stepped up. The NATO bloc was formed in March 1949. Britain’s military role as the junior partner of the United States was that of an ‘unshakable aircraft carrier’; The occupation of Britain by American bombers began in July 1948, American bases were extended all over the country.

The British Labour government paying lip service to the principles of socialism carried out nationalization of derelict industries, such as mining, energy, the railways, means of communication. The Bank of England was nationalized too. However, this was typical capitalist nationalization. Lavish compensation was given to the ex-owners. The workers were completely deprived of any control of the nationalized sector. The Labour government claimed that it had made important social advances with security guaranteed to the workers in nationalized industries, and the introduction of a system of social security that was hailed to be the best in the world. But the hopes of the workers were soon disappointed. Social insurance, with the new free health service, was paid for by contribution from the worker (35 per cent), the employer (33 per cent), and the state (32 per cent). However, the share of the state was passed on to the public, that is mainly to the workers, in the form of increased indirect taxation. It is necessary to emphasize that the social benefits granted by Attlee’s government were largely nullified by a steady increase in the burden of indirect taxation. The construction of state hospitals was carried out at a low pace, municipal housing was limited, the number of pensioners was restricted and the pensions were quite inadequate to make a living. Labour leaders had claimed that a social revolution had been carried through with their establishment of a ‘welfare state’. In fact this was a complete fraud. The improved social services had been paid for by the workers themselves through increased taxation. Moreover, when more money was needed for rearmament the government cut allocations for social needs. Social injustice continued to prevail in the country. The Oxford Institute of Statistics showed that in the 1950s 60 per cent of the adult population owned less than 100 pounds each, totalling only about 4 per cent of the nation’s capital, but 63 per cent of the total capital was owned by a mere 3 per cent of the adult population.

The Labour government having implemented a programme of limited reforms began to carry out a typical policy of wage-freeze, demanding from the workers an increase of production without any wage increase. Such a policy in the face of a constant growth of prices on food and consumer goods meant an actual deterioration of the living standards of the British people. This was coupled with tax increases and social security cuts. It was quite logical that discontent with the policies of the Labour government became widespread. The rift between the popular masses and the Labour government was quite vividly expressed in the results of the general election in 1950 when the Labour party won a marginal victory and remained in office till 1951.

In foreign policy the Attlee government was especially unpopular.

The Labour government did its utmost to delay independence to India. However, under the pressure of the national liberation movement it was forced to grant independence to India in 1947, then to Burma and Ceylon in 1948. Political independence was granted to India but the country was divided into two states, the Hindu state of India and the Moslem state of Pakistan, in accordance with the classical imperialist strategy of ‘Divide and rule’. Other colonial peoples were held down by force as long as possible. In 1948 the Attlee government unleashed a typical colonial war against the people of Malaya. Neo-colonialism too was widely pursued by Britain in her policies against the newly-independent states.

As a result of such unpopular policies the British working class turned away from the Labour government, and the Conservatives exploited the situation to their advantage and won the elections in 1951 on the wave of mass Labour discontent. The government of ‘big business’ held power till 1964.

In this period the Communist Party of Great Britain played an important role in uniting the progressive forces in the country and stepping up the struggle of the working class for its rights. In this respect the new draft programme of the British Communist party ‘Britain’s Road to Socialism’ published in 1951 contributed to the whole labour movement. This programme reaffirmed that the only solution to the problems of the British people was socialism. The winning of this aim had to be considered in the light of the new world situation, with onethird of the world in the socialist camp, with the breakdown of the old imperialist system, and a new balance of forces.

The new Conservative cabinet of Churchill — Eden (1951—5) facing serious economic and financial problems caused by growing military expenditures tried to solve them at the expense of the British people by slashing social security programmes and curbing imports. Such a policy was a continuation of the policy of the right-wing Labour leaders. (The British working class staunchly opposed such moves. The national strikes of the engineering workers and of the dockers in 1953—4 clearly expressed the resolution of the workers to defend their cause. Tension grew within the Conservative government and Churchill was forced to resign in 1955. He was succeeded by Eden, a ‘progressive Conservative’. The temporary improvement of the economic situation coupled with a modest pay rise contributed to the victory of the Conservative party in the 1955 elections. However, soon the election promises were broken and forgotten. The growth of labour opposition expressed in the number of strikes forced the government to cancel its direct attempts to ban strikes. This was an important development in the conflict between labour and capital.

The crisis of the colonial system hit Britain especially hard. Under the pressure of the national liberation movement British colonialism was forced to retreat. In 1954 British forces withdrew from the Suez Canal zone. However, when President Nasser of Egypt nationalized the Suez Canal in 1956 the combined Anglo-Franco Israeli intervention of Egypt took place. British imperialism once again exposed its aggressive nature.

There was world-wide condemnation of this act. Moreover, the Soviet Union issued a stern warning. Under such circumstances Eden resigned in January ,1957 to be followed by Harold Macmillan. The unpopular actions of the Conservatives eventually brought them to defeat which occurred in October 1964 when the Labour party regained office and Harold Wilson became prime minister. The Suez disaster proved that the days of colonialism were over.