The real looters

The coalition government has placed an emergency army battalion on standby and is considering authorising the use of water cannon and tear gas to quell disorder and looting around the country.

But the threat of a mailed fist is a desperate response to an out-of-control social and political crisis. It cannot possibly solve the deeper issues that lie behind the anger and contempt for authority seen in British cities since Saturday night.

The looting of sportswear and plasma screens from high street shops shrinks to insignificance in comparison with the havoc wreaked in the global economy by those in charge. The hard men and women who have come to the aid of the ailing capitalist system have their own economic wrecking ball.

Governments in the United States, Europe and elsewhere have sought to resuscitate growth and bring about a recovery of production following the 2007/8 credit collapse. But their attempts have precipitated a new, far deeper crisis as the debt tsunami engulfs the world’s richest nations.

The truth now emerging is that a return to profitable growth is impossible without imposing equally impossible intolerable conditions of exploitation. ‘Austerity’ doesn’t even begin to describe what must follow if capitalist society is to survive.

It’s not only government cuts that will hurt people. Over the last seven days alone, £200 billion was wiped from the market - and about £300 billion in the past month, drastically reducing people’s pensions and savings.

The United States, still the world’s biggest economy, is no longer able to inspire confidence in the global financial markets. On Friday it experienced a humiliating downgrading of its debt. Standard and Poor, one of the credit rating agencies which speak for the gamblers, speculators - so-called ‘investors’ - whose interests seem all-powerful today, expressed their contempt for the outcome of the US political process and are driving the crisis into a new, more dangerous stage.

President Obama whistled in the dark when he responded on Monday to the historic downgrade of US debt. “No matter what some agency may say, we have always been and always will be a triple-A country,” said the President, as he tried to reassure the investors whose power commands governments.

But whether or not Obama believed that his words could unite the warring factions amongst Democrats and Republicans into accepting his demand for slashing cuts to Medicare and tax increases, they failed to halt the world’s stock markets plunging into the darkness.

The Federal Reserve’s despairing decision to hold interest rates at historic lows for two years cannot restore the US economy any more than it has in the UK in the last two years or in Japan in the last decade. The towering edifice of fantasy credit and debt has to be eliminated, and as a consequence the capitalist economy will contract. Surplus productive capacity has to be physically destroyed.

The nature of the capitalist system is the heart of this crisis – a system first revealed around 150 years ago when Karl Marx published the first volume of Das Kapital, his analysis of the capitalist mode of production.

The words of a critic were incorporated into an afterword to the second German edition in 1873. “The scientific value of such an inquiry” he said “ lies in the disclosing of the special laws that regulate the origin, existence, development, death of a given social organism and its replacement by another and higher one. And it is this value that, in point of fact, Marx’s book has.”

Resolving the current crisis by replacing the present system with a democratised economic and political form of society is on the order of the day.

Gerry Gold

A World to Win economics editor