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Oliver Twist banks – Please sir, can I have some more?, photo www.squashdonkey.co.uk |
While socialist ideas are beginning to resurge, the political representatives of capitalism are in disarray.
Just weeks before ‘black October’ Gordon Brown was still lecturing other European leaders on the need for further deregulation of their finance markets.
Today all that is forgotten. Brown, along with all other capitalist politicians, has suddenly discovered the necessity of increased regulation and state intervention.
The government has had to nationalise or part-nationalise a number of banks. Almost half of all mortgages in Britain are now owned or underwritten by the government. Globally, governments have made £5,000 billion available to the banks, a vast sum equal to a sixth of annual global economic output.
Britain’s banking system has been bailed out to the tune of £400 billion, more than four times the annual NHS budget, or equivalent to almost a third of Britain’s total income for a year.
Meanwhile the government is refusing to meet the modest pay claims of public sector workers, instead demanding that they accept yet another below inflation deal (a pay cut in real terms).
Yet the cost of meeting every single public sector pay claim would be considerably less than £5 billion.
The entire wages bill for the public sector is £161 billion, less than half what has been handed over to bail out the banks.
New Labour’s new found willingness to nationalise banks does not mean it has discovered socialism. As the Financial Times, voice of the City, put it an editorial called ‘Nationalise to save the free market’: “Brown came to save capitalism, not to bury it.” (13.10.08)
Capitalism is a blind system driven by production, not for need but for the profits of a few. It is inherently crisis ridden. As a result the most anti-regulation and state intervention governments in the world have had no choice but to intervene on a huge scale in order to try and prevent a catastrophic breakdown of their system.
Alan Greenspan, ex-head of the US Federal Reserve, and arch-proponent of neo-liberalism, summed up the hypocrisy of the representatives of capitalism when he declared in astonishment, after months of profound crisis, that he had “found a flaw” in the ultra-free market policies he had pursued over decades and that he was “distressed by it”.
The ‘flaw’ was that Greenspan and co believed in the untrammelled rule of the market, including ‘securitisation’ – the indiscriminate distribution of toxic loans – which has now come back and bitten them.
The ideologues of neo-liberalism were able to dismiss the flaws in their policies as long as the profits kept flowing in.
The chasm between rich and poor, and starvation for millions in the neo-colonial world, could be dismissed as ‘necessary evils’.
When their system was under threat, however, they abandoned their policies in an instant.
However, it is not the capitalists who will suffer real distress at the ‘flaw’ in the ultra free market capitalism pursued by Greenspan and co.
The ‘masters of the universe’ – the finance capitalists – have made the biggest profits in history over the last decade.
Crisis for them will not mean losing their homes or their livelihoods. The worst they can expect is having their mega-bonuses trimmed for a year and feeling a twinge of embarrassment at being bailed out by the state.
Meanwhile, the International Labor Organisation estimates that global unemployment will increase by twenty million as a result of this crisis.
This is likely to prove to be an underestimate. The tens of millions of people faced with losing their homes or their jobs are the ones who suffer genuine distress.
Next: Marx was right
