The New Worker

The Weekly paper of the New Communist Party of Britain

Week commencing 3rd October, 2008

Brown getting desparate

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by Caroline Colebrook

THE GOVERNMENTS of the United States, Britain and most of the western world are still reacting day by day to new manifestations of the great financial crisis that has global imperialism in its grip. Meanwhile carefully thought-out emergency rescue packages threaten to come undone a few days after they were thought to be sorted and sealed.

 After Monday’s vote in the US Congress, rejecting the $700 billion bail out for Wall Street, no one is sure what will happen next, least of all the media’s finance experts and advisers, who now have less credibility than tabloid newspaper astrologers.

 The bail-out package, slightly revamped to give the American taxpayer’s a little more protection, is being presented again, first to the Senate and then to Congress. It is expected to pass but no one is taking it for granted that it will. The Congress men and women face an election soon and they are very sensitive to the feelings of American voters right now and the bailout package is very unpopular.

Most of the American people are currently feeling very angry and betrayed by the collapse of finance giants they had believed to be immortal. The crash they had been told was impossible is happening and their faith in capitalism is shaken.
 They certainly do not want billions of their dollars going to the bankers they believe have been irresponsible and should be punished.

 Nearly 300 years ago in London, Parliament voted that the profiteering speculators responsible for the inflation and collapse of the South Sea Bubble, in which hundreds of investors lost fortunes, should be sewn into a weighted sack and thrown in the Thames. The American people are currently feeling much the same about their financial elite.

 Now in Britain most people are more resigned and cynical, but those who have savings can still get panicky.

 On Wednesday Prime Minister Gordon Brown had to intervene to calm rumours that the Lloyds TSB takeover of HBOS was unravelling after the value of HBOS had fallen so low it was assumed Lloyds TSB would want to renegotiate the deal.

 HBOS shares fell nearly 14 per cent on Tuesday but rose by 21 per cent on Wednesday when Lloyds TSB confirmed the deal was still going ahead, even though the shares are still worth less than when the deal was first agreed, just two weeks ago.

 Brown backed the Lloyds TSB-HBOS deal by waiving all the “competition” legislation, designed to prevent the monopolisation process. So much for capitalism’s puny efforts at self-regulation – blown out of the water as soon as a crisis hits!

Meanwhile there are reports that savers in Britain are withdrawing their money and moving it to banks considered safer:

Northern Rock (nationalised last spring), the Post Office savings scheme and National Savings.

This movement of millions of pounds of savings is also having a destabilising effect on banks.

The Government has raised its guarantee to depositors that if their bank fails they will now get up to £50,000 back, up from the £35,000 guarantee it pledged when it took over Northern Rock.

 The Irish government has upset the apple cart by pledging to cover 100 per cent of all depositors’ money in Irish banks. The European Union is concerned that this will attract savings now lodged in other banks, undermining them.

 And some Irish TD’s (MPs) are alarmed that their government has pledged a sum that could be two or three times the country’s Gross Domestic Product.

 France is considering its own multi-billion euro bail out plan while others are debating an EU-wide plan.

 And even if the $700 billion US bail out package does win Congress and Senate support this time, no one is certain whether it is enough and in time to prevent more collapses.

 If it does not get through, American capitalism may cease to be a power in the world but the American workers will pay a heavy price in unemployment, homelessness and poverty for their bosses’ mistakes.

 Many are already saying they would sooner the money went into social welfare, healthcare, education and homes. They have been taught to see socialism as the enemy; now they may be ready to change their minds.



The next step on the ladder

THE UNITED STATES Congress last Monday night voted to reject the $700 billion rescue package that had been worked out between Republican and Democrat leaders for the economic crisis. It sent the Wall Street stock exchange into freefall, losing a record total of 777.7 points in one day and sending stocks and shares crashing around the globe. The US Federal Reserve tried in vain to shore up share prices by injecting billions of dollars but soon gave up when shares continued to plummet anyway.

The Congress men and women voted narrowly against the package after pleading from George W Bush and most of those voting against were Republicans. They ignored Bush’s desperate please and dire warnings of the collapse of capitalism because they face a Congressional election in a few weeks and the proposal to give away billions of taxpayers’ money to failed bankers and fat cats is deeply unpopular among the American people.

Many of the die-hard American Republicans really believe in the capitalists’ mantra that there should never be any government intervention in the free market and that financial crises are nature’s way of wiping out the inefficient and less profitable. They believe the crash should be allowed to run its course unhindered. They believe any kind of state intervention – or democratically accountable control of the economy is covert socialism.

But they ignore the social and political consequences of the crash: the middle classes will lose their savings and pensions and face an old age of poverty while the working class will face millions of job losses, cuts in welfare and face dire poverty, hunger and homelessness. And in America these conditions already affect hundreds of thousands; the crash will multiply the numbers in dire poverty many times over.

The American people are already disillusioned with their government; after Iraq and the “weapons of mass destruction” they do not believe George Bush when he cries “wolf!” anymore.

The leaders of world capitalism fear the political chaos that could be unleashed and most of all they fear that the workers will turn leftwards. They are beset by contradictions; if they take over the failing banks to rescue them from collapse they are in effect nationalising them – a real step on the way to socialism. As Lenin pointed out in The Impending Catastrophe and How to Combat it: “For socialism is merely the next step forward from state-capitalist monopoly. Or, in other words, socialism is merely state-capitalist monopoly which is made to serve the interests of the whole people and to that extent ceased to be capitalist monopoly…. State monopoly capitalism is a complete material preparation for socialism; the threshold of socialism, a rung on the ladder of history between which and the rung called socialism there are no intermediate rungs,” (September 1917). Lenin did, of course, point out elsewhere that the political preparation for socialism required the destruction of the bourgeois state apparatus and its replacement with a working class state apparatus. But there is some substance to the fears of the die-hard free-market Republicans.

The leaders of world capitalism could reduce interest rates to encourage lending and spending again. But that would be to repeat the policies that led to this collapse. The problem with all policies based on debt is that eventually is all has to be repaid – with interest. The borrowers must have a realistic prospect of being able to pay it back.

Or they could let the chaos take its course, leading to economic and political instability and even world war.

Chaos is fertile; it could, given the correct political leadership from the left, result in a massive swing towards socialism; or without that leadership it could result in fascism.

Capitalism is destroying itself because the capitalists can no longer trust each other. This crisis is thrusting forward the monopolisation process to a point where surviving banks and/or IT companies will be so big they will effectively be the state – all administration of the state will be privatised to these giants and the democratic structures will shrink into barely relevant rubber stamps like the European Parliament. We could soon be living under state monopoly capitalism. Our job is to be ready to push it forward to socialism and not let it go backwards to fascism.
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