There are at least two conclusions you can draw from the admission by Ed Balls, the schools minister, that Britain is facing its most severe economic and financial crisis for more than a century: We have been systematically lied to about the severity of the rapidly developing catastrophe and the public is being softened up for dramatic political developments.
Balls, the prime minister’s closest political ally and economics adviser to Brown when he was chancellor, is, along with the rest of the government, privy to information we don’t have access to. So when Balls says that the crisis was "more extreme and more serious than that of the 1930s" and that these were "seismic events that are going to change the political landscape", he is only letting the cat out of the bag.
That’s why Downing Street was today trying to “explain” that Balls did not actually mean what he said, just as No.10 had to “explain” last week that Brown’s use of the D word in the Commons was also a “slip of the tongue”, and that the prime minister meant recession and not depression. A Freudian slip might be a more honest account.
For the New Labour government actually knows that the banking system is shattered and beyond repair, that jobs are vanishing at an unprecedented rate, that demand for everything except food has collapsed, that the pound is on its knees on foreign exchange markets and that Britain is the most vulnerable of all the advanced economies because of its reliance on a now broken financial sector.
And yet the government staggers from pillar to post, with a bail-out here and a bail-out there and a pathetic inquiry about City bonuses headed by Sir David Walker, who enjoyed and sanctioned bonuses when chairman of investment bank Morgan Stanley International. Walker earned the nickname Mr Whitewash after being closely involved in two previous inquiries – into the transparency of the private equity industry and ethical standards at BAe Systems – that led to little change.
Back to Balls, who told New Labour members in Yorkshire: "We now are seeing the realities of globalisation, though at a speed, pace and ferocity which none of us have seen before. The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years as it will turn out." More to the point, Balls also them that they should remember how the politics of the 1930s “were shaped by the economy".
We are left to draw our own conclusions about what he implying. The politics of that period included fascism in Germany and Spain, military dictatorship in Japan and, of course, national, coalition rule in Britain following the collapse of Ramsay MacDonald’s minority Labour government in 1931. So which of these are we are being softened up for by Balls’ reference to “seismic events” that will change the “political landscape”?
None of these “choices” are acceptable yet the fact is that we now have a profound political crisis alongside the global economic and financial crisis. This is making itself felt in every country, including America where president Obama is already in some difficulties, in Spain, where the government is being overwhelmed by the growth of unemployment and in France, where Sarkozy is under enormous popular pressure.
At times like these, there is an all too apparent danger that the façade of the parliamentary democratic state will be torn aside in favour of some sort of emergency, authoritarian rule. Such a move will expose the capitalist state for what it is – an instrument for preserving the rule of the corporations and banks at any cost. Balls has spilled the beans and we should take note.
AWTW communications editor