Tuesday, September 30, 2008

Meltdown and revolt

The global capitalist financial system is grinding to a halt amid a meltdown of support for bailing out banks and political paralysis in the United States, the most indebted country of all. Without forms of finance/credit, the economy itself cannot function. It’s that serious.

When two-thirds of Bush’s own capitalist, right-wing Republican Party refused to endorse a $700 billion transfer of taxpayers’ money to financiers in return for worthless, toxic “assets”, they were looking nervously over their shoulders at a grassroots revolt. An overwhelming majority of their constituents are opposed to the hand-out while they suffer job losses, repossession and falling living standards. Many have taken to the streets in spontaneous protests on Wall Street and throughout America.

The fact that capitalist politicians baulked at rushing through a bill which was painted by president Bush as necessary to prevent a collapse of the financial system, is just one of many insoluble contradictions:

– In a world drowning in credit there isn’t enough money in the world to prevent the implosion of the global financial markets. Even if a deal were to be made on mortgage debt, much worse money mayhem is on its way.

– The relentless, profit-driven expansion of the global economy over the last 30 years led to and was eventually driven by the array of fantasy finance now unravelling before our very eyes.

– The cost to taxpayers of bailing out the banks is beyond their ability to pay. The credit crisis first erupted when people reached the limits of their ability to service the debts they’d accumulated, so attempts to pass them the [now valueless] buck only wakes a long-dormant opposition, stirring the rage of the working people. Jobs, homes and pensions are melting away as the price of food and energy skyrockets.

– With interest rates rising, attempts to blackmail us with the story that the pain of not stabilising the system will be greater than the cost of attempting to patch it up falls on ears deafened by the ever-louder demands of the debt collector.

– A new consciousness is appearing on the streets because hundreds of millions of people around the globe can’t see why we should have to pay for a crisis that we’ve been seduced into by failed promises of the good life continuing forever, when those who appear to be responsible are walking away with fortunes.

– Attempts which are anyway failing to resuscitate the hardly-regulated capitalist markets take the form of socialisation, (the work of “communists” according to Republicans). This sticks in the throat of those who claimed that “free markets” were the ultimate success of the capitalist system and its victory over socialism.

In the end, there are no capitalist-type “solutions” to this momentous crisis. They would have been discovered by now if there were any. Politicians and financiers are powerless to control and direct events because ultimately capitalism functions in an unplanned, uncontrolled and anarchic way and is prone to catastrophic crises like the one now unfolding.

Capitalist socialisation of the failing banks is a backhanded acknowledgement that private ownership for profit has failed. Now is the time to seize the initiative and finish what the capitalist politicians cannot. Millions mostly new to political action can coalesce into an organised movement to refuse to pay their existing debt. From there we must build a movement that aims to create a new democratic power.

This would take control of both financial institutions and the essential productive side of the economy. Then we could re-establish these resources on sane, rational lines and operate them on a not-for-profit basis for the benefit of the majority. These are without doubt revolutionary proposals that will take some achieving. Yet it would be dishonest to suggest that there are more palatable, less challenging ways forward in these dangerous times.

Gerry Gold
Economics editor

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