IN RESPONSE to the current global shocks to the world economy, more than 100 people packed the all-London Socialist Party public meeting on 7 February.
A third of those present were young people, with a quarter of the audience attending a Socialist Party event for the first time. Many came after seeing our posters, others came with local party members.
Lynn Walsh, editor of the magazine Socialism Today, outlined the causes of the financial turmoil – kick-started by the US subprime mortgage crisis – now working their way through global markets.
It is impossible to predict exactly how far and for how long the effects will spread. What is clear, however, is that working-class people will pay the heaviest price in home repossessions, job losses, attacks on wage levels and cutbacks in public and social services.
In a wide-ranging discussion, the parasitic nature of finance capital was highlighted, with the collapse of the Enron energy company in the 1990s given as an example.
The main difference is that the Enron scandal was largely contained, whereas the current crisis is systemic, spreading to the wider economy.
The question was raised: would the nationalisation of Northern Rock just bail out big business? The Socialist Party’s approach is radically different to the demands of some establishment politicians and economists.
Northern Rock should be run for people’s needs, providing cheap loans to working- and middle-class families. Compensation in the event of nationalisation should go only to small-scale shareholders. No compensation should go to parasitic hedge funds that buy shares to cream off profits.
Several contributions focused on the effects of recession on the lives of working-class people. Glenn Kelly pointed out that two million homes have been repossessed in the US. Given the inflated housing bubble in Britain, a repetition here would be devastating.
The US government is giving a $300 rebate to each worker to try to stimulate growth. Could similar measures be taken in Britain? It was stressed that the only safeguard against pay restraint was strong union organisation, above all, united action across the public sector.
Jim Horton highlighted the impact of credit card and mortgage debt. Most people going to the Citizens Advice Bureau go for debt-related reasons – before the full scale of economic slowdown has hit Britain.
Nancy Taaffe pointed out that less than 20 years ago, when the Berlin wall was brought down, politicians and commentators claimed victory for capitalism. Now, they are paralysed with fear. This impacts on attitudes to the demands we raise.
A few years ago we called for nationalisation of Rover when the car company faced closure. Some saw that as utopian and many on the left did not raise it. Today, it is commonplace to demand the nationalisation of Northern Rock.
One speaker, critical of our position, demanded to know what the exact scale of the economic crisis would be, when it would arrive in Britain, and its effects on working-class consciousness.
He said we underestimate both the potential for China to rescue the world economy and the amount of profit in the system which could stave off recession. He did not, however, offer any answers, leaving the impression that this current global shock will not be far-reaching. In short, he sided with the most optimistic capitalist commentators.
Lynn agreed that measures to stimulate economies can have a limited effect: in 2000-01, pumping in liquidity staved off a global recession. But it shored up trouble for the future – today. China’s dependence on exports ties it to the US economy, and it will be hit by US recession.
Another fundamental problem is that the profits have not been mainly reinvested in industry or infrastructure. They have boosted more speculative activity, adding fuel to the global financial fires.
The current turmoil is opening up a questioning of the system, as shown by the turnout at this meeting. It is the responsibility of socialists to argue the case for democratic planning of the economy and ownership of its main parts by and on behalf of the working class and society as a whole. Only that would put an end to the cycles of boom and bust perpetuated by profit-driven capitalism.
£265 was raised from the fighting fund appeal, with £50 more raised from raffle ticket sales.