Socialist Party documents

Perspectives for Britain and the world 2009

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Paralysis of the banking system

The banks and financial system remain paralysed. 'Throw everything but the kitchen sink' at the problem is a British saying. Now, some Keynesian capitalist economists urge the 'kitchen sink' should be used as well! Mervyn King, the dour Governor of the Bank of England and a pillar of British capitalism, prepares to try on Fidel Castro's battle fatigues and Che Guevara's beret in a thinly-veiled threat to nationalise British banks if they do not 'do their job'.

The Financial Times thunders to the plutocrats at the top of the banking system, "Lend - or else!" Nationalisation of the banks is dangled over their heads like the sword of Damocles.

The head of Merrill Lynch, himself a banker, has urged the government to create its "own bank" to get lending moving!

Neither King nor the rest of the capitalists are ideologically opposed to nationalisation when carried out in a 'state capitalist' fashion, as was the case for Northern Rock and the partial nationalisation of some banks in Britain, as well as the de facto nationalisations in the US.

These are seen as 'temporary' until the banks are renovated and handed back to the capitalists when they have been rescued by the 'taxpayers', that is the working and middle classes' money.

Moreover, as Brown and Mandelson have made abundantly clear, they are prepared to have an 'arm's length' relationship towards the nationalised banks, with 'popular control' or the idea of workers' control scorned.

Even the suggestion of day-to-day government involvement in 'nationalised' banks is dismissed, both by the Brown government and the capitalists.

Northern Rock, theoretically in the hands of the 'people', is still throwing workers out of their homes for falling behind with their mortgage payments.

Yet so paralysed are the banks, particularly in providing loans to even viable small businesses, that it has compelled some authorities, like Essex County Council, to discuss plans to create a 'Bank of Essex'.

This was one of the local councils that considered taking over closing post offices. The purpose of the latest project - proposed by a Tory-controlled council no less - was to circumvent the "banks [which] don't seem to be supporting some very viable small businesses".

Friedrich Engels pointed out that state intervention was itself a confession of bankruptcy by private capitalism of further developing the means of production.

This, together with the process of monopolisation and the tendency to eliminate competition, was a sign of the "invading socialist revolution".

In its own small way, a right-wing dominated council vindicates this idea.

It also shows that where we have local power, or councillors able to exert influence on unstable coalitions, like Lewisham or Coventry, we must support or even initiate such projects.

Even if they come to fruition, we would differ with others who would see them as a viable end in themselves.

We would look at such developments, including partial nationalisation, as a springboard, armed with the ideas of workers' control and management, for raising the question of further state 'encroachments' and nationalisations of other failing industries and services.

The great German philosopher Goethe wrote: "Reason becomes unreason and unreason becomes reason." This is particularly so at decisive turning points in society, which the present situation clearly is.

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