Tuesday, 7 October 2008

New Worker editorials on the current global financial crisis

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.

October 3rd 2008

To be or not to be…

WHEN THE GOING got tough back in the 1960s Labour leader Harold Wilson famously said that a week is a long time in politics. Well Brown’s Labour government has 20 months to play with until the next general election. But if Labour doesn’t radically change its direction it will face crushing defeat at the polls at the hands of the Tories. Unfortunately this message has barely sunk through to Labour Party conference in Manchester this week, least of all to the New Labour leadership who still imagine that they can weather the storm of the current capitalist crisis by pursuing the same Thatcherite policies that have alienated millions of workers who make up much of Labour’s core vote.
Sure we heard union calls inside the hall for the taxing of the rich and the renationalisation of the energy companies but nothing will come of it unless the unions link their demands to the financial support they give the Labour Party to keep it afloat.
The two issues are linked. The Tory offensive against the working class began when they returned to office in 1979 and it has largely continued under New Labour since 1997. The state and public sector was privatised. Collective bargaining was severely curtailed and vital services like the Health Service, public transport and local amenities have all become seriously underfunded.
Working people who can remember the 1970s look back nostalgically to the days of free medical treatment, affordable council housing, dole money as a right, pensions linked to average earnings, controlled transport fares and energy costs and a domestic rating system that didn’t crucify working class homeowners. It was paid for by the profitable sections of the public sector and through progressive income tax.
We must mobilise the class in its own defence to fight for the restoration of state welfare to at least the levels existing in 1979. This demand can easily be met by returning to the income tax levels that existed in 1979 and returning the privatised corporations to state control. We must make the rich pay for them by disgorging a fraction of the wealth they extort from the working class every year.
This can only be done by building fighting, militant trade unions with leaderships determined to fight to defend their members interests against the employer and willing to use their immense financial bargaining and constitutional power within the Labour Party to ensure that a future Labour government carries out the wishes of those it was established to represent.
At the fringe meetings the left social-democratic and Trotskyist “alternatives” are scrabbling around for yet another platform to challenge Labour at the next election. Some sects still seek the Holy Grail of the “correct line” which will miraculously win over millions of workers if only it is repeated again and again and again. Others believe that left unity can be built around a left social-democratic platform that specifically excludes the Labour Party and its affiliated trade unions.
They call for social-democratic reforms while campaigning against the only mass force capable of implementing reform, the Labour Party itself. They foster the illusion that there is a left electoral alternative to Labour when the reality is that the only alternative, in the current situation, is a Tory or a Liberal Democrat government.
None of them wonder why Labour lost London or why the Tories have a 20 per cent lead in the opinion polls. None of them ask why past attempts like the Socialist Alliance, Respect and the Scottish Socialist Party have all failed.
A Labour government, with the yet unbroken links with the Labour Party, the trade unions and the co-operative movement, offers the best option for the working class in the era of bourgeois parliamentary democracy. The NCP’s strategy is for working class unity and our campaigns are focused on defeating the right-wing within the movement and strengthening the left and progressive forces within the Labour Party such as the Labour Representation Committee and the unions.
At the same time we must build the revolutionary party and campaign for revolutionary change. Social democracy remains social democracy whatever trend is dominant within it. It has never led to socialism. Our Party’s strategy is the only way to fight for the communist alternative within the working class of England, Scotland and Wales. We want day-to-day reforms and they can only be achieved by the main reformist, social democratic party in Britain, the Labour Party. We want revolution and that can only be achieved through the leadership of the communist party.

September 26th 2008

A $450 trillion black hole

Last Monday the giant American investment bank Lehman Brothers filed for bankruptcy after finding itself without funds to continue operating. It first announced its troubles a week ago and hoped to find a buyer to bail it out. The Bank of America and the British bank, Barclays, were interested but pulled out when they learned that the American government was not prepared to use its Federal Reserve to write off most of Lehman Brothers’ debts – leaving Lehman to collapse.
The Bank of America did however move to buy out Merrill Lynch, another of the top five US investment banks that was teetering on the brink of bankruptcy. That makes three out of the top five firms – Lehman Brothers, Merrill Lynch and, last March, Behr Stearns – either crashed or removed from the private sector. And the giant AIG insurance firm is also in deep trouble and seeking a $40 billion loan from the Federal Reserve.
Finance “experts” have estimated there is a $450 trillion black hole in total in and around Wall Street as bad debts pile up and each crash tears a hole in its neighbours.
The Federal Reserve – effectively the US taxpayer – has done some huge bailing out in the last two weeks, after it rescued (nationalised) the two giant mortgage companies Freddie Mac and Fanny Mae just over a week ago. We could almost believe it’s a dream socialist agenda – the commanding heights of the global economy being taken into public ownership. Alas the US taxpayers will be footing the bill but are not going to get much control in return.
They, along with workers all around the globe, are going to suffer loss of pensions as stock markets tumble, unemployment, personal bankruptcy and homelessness. The value of wages is falling as food and fuel prices rocket.
The banks, that a short while ago were complaining about state regulations and taxes, are now blaming the US government for failing to regulate properly and begging for taxpayers’ money. They are also blaming each other for “lowering standards”, taking risks and behaving like predators. But that is the essence of capitalism. Each one of those banks is hoping to be one of the tiny few that survive the storm to eat up those that have fallen. That is the process of monopolisation.
So many of the “financial experts” being interviewed are expressing shock and surprise while we Marxists know these crashes are an integral part of the capitalist process.
This will cast a shadow over the US presidential election, which is looking more and more like a very close race. The Republican candidate, Senator John McCain represents the most reactionary circles within the American ruling class while the Democrat, Barack Obama, is a liberal bourgeois who hopes to garner working class support with promises of welfare reform and a less aggressive policy abroad. Whoever wins, the American people will face a prolonged period of suffering from the outfall of this capitalist crisis.
The Bush administration has left the US militarily weakened, politically isolated and in deep economic trouble. It’s puppets like Sakashvili, Musharraf and Yushchenko are falling while those it has threatened, like Kim Jong Il, Chavez, Morales and Mugabe are prevailing.
Dick Cheney has urged Bush to treat the whole world as the enemy of the US and now that the US is visibly weakened those “enemies” are uniting to ensure the US gets no chance to regain its broken global powers and threaten them again.
None of this is good news for Gordon Brown as he faces efforts from the right-wing of his own party to unseat him in the run-up to the next general election. He has proved to be a disastrous and dithering Prime Minister from any point of view but changing the leader without changing the policies would be futile – and none of the current batch of Blairite challengers has even mentioned policies.
A leadership contest could only be of value if it leads to a real debate on policies and a massive shift to more pro-working class policies. Any other path and the Labour government seems doomed to defeat at the next election. If that happens, in the current global economic climate, we can look forward to extreme anti-working class measures from the Tories, now with greater powers of repression from the growth of the surveillance state and the draconian “anti-terror” laws. We must fight tooth and nail to prevent that.

September 19th 2008