The global financial crisis, which this weekend claimed the giant investment bank Bear Stearns and led to a hysterical response on world stock markets, has no precedent. Comparisons with the Wall Street crash of 1929 or even the “bankers’ panic” of 1907 don’t even begin to get near the essence of the crisis.
Bear Stearns, the fifth largest investment bank in the US, was sold for just $230m. This was a tiny fraction of its value a year ago – before it became one of the early victims of the end of the 60-year credit-led boom (see our blog Financial 'Katrina' begins to blow , June 2007). The bank is the latest in what is becoming a torrent of failures. Global investment giant Lehman Brothers looks very shaky. In the UK, big names like Barclays, HBOS – owners of the Halifax - Alliance and Leicester are in the frame.
But however far back you look on any scale, previous events are dwarfed by the yawning gulf that had grown between the billowing clouds of credit blowing around the world - Marx appropriately called it “fictitious value” - and the real value in the global economy produced by human labour.
Attempts to pour more money in to stem the panic have the same effect as assurances from Brown and Bush. More panic. Stock market meltdown. Soaring prices for oil, gold and food. Mortgages becoming scarce, expensive, or just simply unobtainable. The Bank of England tossed another paltry £5bn into the collection plate yesterday, but it got sucked into the vortex of the tornado and scattered into the air, like so much confetti.
The Financial Times, the voice of global capitalism, has given up on government action, preferring divine intervention. After Martin Wolf’s call to prayer last week, assistant editor Gillian Tett has this to say : “For as anyone with a classical education knows, credit takes its root from the Latin word credere (‘to trust’). And as the current credit turmoil now mutates into ever-more virulent forms, it is faith – or, rather, the lack of it – that has turned a subprime squall into a what is arguably the worst financial crisis in seven decades.”
If they’d all taken the trouble to read the review copies of A House of Cards, from fantasy finance to global crash we sent them four months ago, they wouldn’t have been so surprised by events. Our book tells the story of the credit-led growth of global corporations and the dismantling of regulation. It explains the objective necessity – for the capitalist economy - of this process of expansion at all costs, and how consumers had to be fitted up with debt and seduced with three-for-the price of two offers, buy now - pay later, go large.
A House of Cards doesn’t take up much space asking how bad the crisis can get. We’re more concerned to move forward through proposals aimed at composting capitalism.
We put forward the following principles as a way to act globally by starting locally:
• ownership of production facilities of the major corporations and of land and water through a variety of forms of co-ownership
• democratic control and self-management of economic and financial resources, including public services
• productive capacity shifted towards satisfying need rather than generating profit
• ecologically sustainable production and distribution
• encouraging and supporting small-scale enterprises, creative workers and farmers to work sustainably
• favouring local production for local needs
• facilitating the development of the “thinking market”.
Humanity has arrived at an historical crossroads where we face key decisions. Capitalism has its own “solutions” to the crisis: financial and economic disorder, war and dictatorship. The development of a global society based on co-operation, co-ownership and sustainability offers another way forward. This is nothing less than a challenge for power over capitalism and its political system. Get a copy of A House of Cards. Read it. Help us to build A World to Win as a movement that can inspire people to take the path of revolutionary change.