The Socialist Party and ISR protesting at the G8 summit 2005, photo Paul Mattsson
While socialist ideas are beginning to resurge, the political representatives of capitalism have suffered an enormous ideological blow.
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. Britain’s banking system has been bailed out to the tune of £1.2 trillion, equivalent to one week of global GDP.
In what could be the biggest con-trick in history the blame for the resulting increased deficit has been laid at the feet of the public sector.
The three big parties are united in demanding that it is public services, and public sector workers, who will have to suffer cuts to pay for the economic crisis and the bail out.
Cost
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 one fifth of what has been handed over to bail out the banks.
New Labour’s new found willingness to nationalise banks and to chastise (although not actually punish) bankers does not mean it has discovered socialism.
As the Financial Times, voice of the City, put it in an editorial entitled ‘Nationalise to save the free market’: “Brown came to save capitalism, not to bury it.” (13 October 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 anti-state intervention governments in the world 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, months into the 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.
Ideologues
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, global unemployment has increased by more than twenty million over the last year. The tens of millions of people faced with losing their homes or their jobs are the ones who suffer genuine distress.
