For three decades people have been encouraged to spend, and have spent, wages not yet earned, to become working class futures spenders. No wonder there’s a crisis…

Credit crisis: don’t just blame the bankers

WORKERS, NOVEMBER 2008 ISSUE

It is an ill wind that blows no one any good: the BBC demonstrates the truth of this old aphorism. As economic twisters roll around the international money markets, so the BBC is supplied with a surfeit of ready meals for its various fast news outlets. Economists, financiers, politicians and commentators are summoned to portentous studios to be verbally examined by grave, morally superior interviewers. Then there are those parodies of popular democracy, the phone-ins. There we hear a litany of crisis and despair, with a little panic from modest savers who have so little, and yet so very much to lose.

And how long will this go on? Up to 90 days, that being the maximum length, identified by Alistair Cooke of Letter From America fame, of media interest in any crisis.

This does not mean the actual economic crisis will have been resolved by then, only that the media’s appetite will have been sated and fresh carrion will be sought. What all this demonstrates is that in a self-proclaimed democracy, how little power and influence the people have within the system. Banks teeter on the crumbling edge of insolvency, threatening to take the modest savings and wages deferred as pensions crashing into the abyss with them. This is not a matter of failed bonus schemes for “fat cats”, but of depriving the working class, whose labour has already been exploited for profit, of a significant part of their earnings. And what opportunity is there for objections to be heard? A Radio 5Live phone-in!

The media in general and the BBC in particular have identified bankers as the villains: it’s their greed and incompetence that is responsible for the credit crunch and economic catastrophe. While it is not the job of Workers to defend bankers, the culpability is not all theirs. Since the Thatcher government assumed power in 1979, finance capitalism has been the vehicle of choice to drive this country’s economy forwards, at the expense of actual value-producing manufacture. For three decades people have been encouraged to spend, and have spent, wages not yet earned, to become working class futures spenders, including those considering themselves “middle class”.

The fetters of debt

Recently, personal debt stood at over a trillion pounds, effectively serving as an indenture: a man or woman with debts is far more conscious of those than of their class. The way to a better life was via the “plastic” rather than the very much harder involvement in a trade union to secure a better life through actively extracting from capitalism a greater proportion of the wealth they created. Blair’s Labour Party succeeded because it embodied this passive attitude: just leave it all to them and they would leave it to the financiers to make everyone better off.

Blair’s Chancellor, now Prime Minister, must act as the state always acts, to defend capitalism. A government that couldn’t possibly give public service workers anything other than paltry below-inflation wages settlements can suddenly conjure up hundreds of billions of pounds to support the banks. This is, of course, portrayed through the media as being in the popular interest, protecting those savings and pensions working people have accrued.

No change

Whatever the outcome the working class will not be consulted. True, there will be an election in the next couple of years or so, but a change of governmental personnel, even with a change of label from Labour to Conservative, will not substantially affect policy. Surely, no one believes that had Brown abdicated in the face of the crisis and been replaced by Cameron, any action taken by the state could have been different. After all George W. Bush concocted, or had concocted on his behalf, a similar response to that now being taken by the British government and being replicated all over Europe.

This contrasts markedly with how Cuba is presently dealing with the very tangible devastation inflicted by the three recent hurricanes (see Workers, October 2008), the ongoing US blockade and the final knockings of the Special Period, countering the economic crisis following the collapse of the Soviet Union.

All three of these elements involve the Cuban working class directly in both suffering the immediate effects, and, crucially, in the collective response. Socialism is not a panacea for all economic, social and political ills, but is an active, continuous process with advances and setbacks.

Be collective

The important factor is collective responsibility, an understanding that co-operative action is to the benefit of all, and therefore of the individual. But it is demanding and active, inimical to such passive measures as borrowing money many times actual income to buy a property that by some mystical means is expected to increase in value (price), rendering the purchaser free of economic and social obligations. Some just buy a lottery ticket and spend Saturday hoping beyond hope.

This is Britain’s ideological fall-out from the last three decades. Despite thirty years of the decline in wealth production, the appearance has been to the contrary. Most people feel progressively better off as they sit in their own (heavily mortgaged) house that until recently seemed to be endlessly becoming ever more valuable. That house is well equipped with all the latest techno gewgaws while the car, or cars, on the drive sport the latest number plate. Unfortunately, most of this is actually the property of finance companies and too many families are but a few salary slips away from penury. They have to work long hours and deal with ever-increasing workloads for wages that never quite keep pace with inflation.

For too many, the minimum wage has become not a bulwark against low pay, but rather the standard from which pay rates are worked out. This leaves many workers in the invidious position of not being able to afford to work as the low pay on offer would be less of an income than benefits when factors such as paying for child care and travelling to work are taken into account.

A significant number of workers also depend on benefits – even if they work they often have to claim credits to make up their wages to liveable levels. None of this is conducive to developing class consciousness, as exemplified by a recent contributor to a radio phone-in who described himself as a “typical middle class crane driver”.

The working class will be the major victim of the present economic crisis, suffering unemployment and wage cuts, while saddled with their own debts and, increasingly, with those of the culpable financiers. Their failing banks are being handed ever-increasing wedges of public funds, taxes paid by workers.

No voting in elections or phoning Radio 5Live will change any of this. The only protection workers can rely on is the mutual solidarity they can offer each other as a class united. No “model” can be imported. Cuba can serve as an inspiration for what a people are capable of, but in Britain it’s the British working class that must actively work out its own salvation.

We start with the only mass organisations presently extant, our trade unions. By becoming involved we can turn them into instruments through which our interests can be pursued.

Daylight robbery as Brown steals our money

The Brown government is stealing vast amounts of our money to save the banks. They have landed us with about £850 billion debt, £14,000 per person. The US Treasury is taking $700 billion and the EU governments another 1,300 billion euros. Altogether governments round the world have stolen about $3 trillion, cutting spending and issuing more debt to help the financiers. These are virtual coups by finance capital and its representatives. They will cause even greater harm – an economic slump. There is, though, an alternative – and a far better way of spending £850 billion. Bypass the banks. Invest straight into manufacturing industry and services. Lend directly to manufacture. Keep our industry going. Invest in science. We need R&D for new industries, and to help us grow what we need. Take charge of energy. Take control away of the companies that are bleeding householders dry. Plan – without EU restrictions – for a future without blackouts. Lend to small businesses – those that are viable but need cash to survive. Stop the repossessions. It’s no accident that Northern Rock, now nationalised, is repossessing houses at twice the rate of other banks. Launch a programme of public housing. Buy up from developers and buy-to-let speculators at the bottom of the market, and house the people. Offer state mortgages. Bring back controls on the export of capital. Force it to be invested here. Yet The Independent lectures us, “There is no possibility of using the lending power of these banks to provide a large economic stimulus to our economy and propel Britain out of this downturn … Most of [the funds] will be swallowed up simply repairing the banks’ balance sheets”. These precious banks have never invested in manufacturing industry: last year, their loans to industry were just 2.3 per cent of all lending. Instead of seeking to rescue an economy, governments are buying up debts to save the financiers. But nationalising bad debts doesn’t make them good debts. It is a matter not of toxic loans but of a toxic system – remember Brown’s pledge that his “prudence” would mean “no more boom and bust’”? Now he tells us that the last few years were an “age of irresponsibility” – nothing to do with him then? Talking in trillions But the $3 trillion doesn’t even start to cover the $55 trillion market in credit default swaps, which is now failing. ($55 trillion is more than twice the combined GDPs of the USA, the EU and Japan.) These contracts are supposed to insure banks against losses on their deals. Barclays and the Royal Bank of Scotland each hold $2.4 trillion of these swaps, which are now selling at just 8 cents for every dollar, so the debts are uninsured. The global pension, insurance and mutual funds hold $46 trillion of our money, wealth produced by the 95 per cent who work. The CEOs, bankers and hedge-fund owners – the money managers – have got rich by stealing from this global river of cash. So our savings, housing and pensions are vanishing. Education, health and industry vanish too. This Party has always said that industry, not finance, is the source of wealth. Now even the markets have lost faith in their own system. We have always said that capitalism doesn’t work and that socialism does work. The rulers lie to us that capitalism works, but most of us can now see that capitalism isn’t working, that capitalism is in absolute decline and that this bail-out of the banks is a long step down on that decline.

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