The New Worker

The Weekly paper of the New Communist Party of Britain

Week commencing 30th April 2010

Wealth is back in fashion

UNEMPLOYMENT is rising, factories and shops are closing, home repossessions are continuing and public sector services are facing huge cuts — but we no longer need to worry about the truly filthy rich. The publication of the Sunday Times Rich List shows that for the really wealthy the financial crisis is truly over; they have not just recovered; they are wealthier than ever before.

This is not surprising news for Marxist-Leninists; it is a well recognised and easily predicted part of the cycle of capitalism. An economic crisis sends some businesses to the wall; others experience a dip but the survivors eat up the remains of those that went under and emerge far stronger than ever before. It is the process of monopolisation that concentrates wealth and power in fewer and fewer hands.

The collective wealth of the 1,000 multimillionaires in the 2010 Sunday Times Rich List has climbed to £335.5 billion, up £77.265 billion on 2009. This is a 29.9 per cent increase, easily the biggest annual rise in the 22 years of the Rich List.

They include individuals from banking, land-owning and industry and the list is based on their personal income for the year. Top of the list is Lakshmi Mittal, a steel tycoon — a man who last year decided to pull the plug on the Tyneside Corus Steelworks because it was not making enough profit for him.

The Duke of Westminster is still up there in the top three. Other billionaires come and go but he, and other big landowners remain. Land is more permanent than stocks and shares; it continues to provide vast incomes from rents no matter what because people always need somewhere to live and to build their offices, factories, shops and so on.

The big banks are back in profit, even Lloyds which is owned by us taxpayers and those profits should go to benefit taxpayers to offset the huge bailout given to the bank two years ago. But it is set to be returned to the private sector — how soon depends on who wins the general election next week.

Meanwhile in the US the banking firm Goldman Sachs is facing charges of fraud because during the sub-prime crash some of its people were making a fortune by betting that shares would crash — known as short-selling — and thus helped to deepen the crash.

But that is not the full story. Bankers all around the world were dealing in predictions — gambling — trading in hedge funds; selling debt and forgetting it was not real money.

It was all based on pushing working class consumers into taking on more and more debt and assuming that only a few would default. But workers can only work so many hours to pay off their debts before they collapse. The level of defaulting rose to a critical point — especially with the sub-prime mortgages in America. The financiers thought they could not lose because they could always foreclose and still be left holding the property. But so many foreclosures at once caused the value of the properties to plummet — and left thousands of families homeless.

Leading politicians in Britain, the US and Europe are talking about putting restrictions on the banks so they cannot behave so irresponsibly again. But it cannot be done. Capitalism is based on the drive to maximise profits; it needs continually expanding markets. It will need workers to start buying things again. But workers who are facing wage cuts and job cuts and who are already deep in debt cannot do this.

The capitalists need workers to be both producers and consumers of commodities. Wages are always lower than the value of the goods the workers produce so they can never buy it all back. Capitalists will always end up with a pile of stuff they cannot sell because no one can afford it — and there will be another crisis. Allowing workers to get into debt so they can effectively buy using their future wages will only postpone the crash and make it bigger when it comes.

It will take more than an election to get rid of capitalism and replace it with socialism. In the meantime, allowing the Tories back in with their plans for massive public sector jobs cuts will make things even worse.