Capitalism - guilty as charged!

It is rare enough for anyone on the voice-of-the-establishment BBC to even mention the ‘C’ word let alone devote a whole programme to it. Even rarer then for it to broadcast a two-parter entitled “Capitalism on Trial”.

Reality will out, however, because the evidence that this is a crisis of the system as a whole is piling up, hour by hour.

Today, Italy’s debt was further downgraded. Yesterday, frantic discussions over the worsening Greek-focussed Eurozone crisis led to a postponement of the country’s aid package.

The reason? European banks are in no position to cope with an inevitable Greek default. So they are going to have to be bailed-out in advance! In the meantime, a new credit crunch is gripping financial markets.

Consumer spending has slumped, with incomes slashed by inflation, unemployment and short-time working. Sales of petrol in the UK, for example, have fallen by 15% since 2008.

Hosted by former Tory Michael Portillo, who admitted having a small part in the early 1986 Big Bang deregulation of the financial markets by the Thatcher regime, the programme gave air-time to a handful of the BBC’s favourite commentators.

Its own Robert Peston, the FT’s Gillian Tett, and the ever-lugubrious Will Hutton were among those offering a variety of defences of the crisis-ridden system, accompanied by those in favour of state intervention and others who would prefer to see “creative destruction” allowed free rein. Even the Socialist Workers Party’s Alex Callinicos got a look-in, drawing attention to Marx’s discovery of the tendency of the rate of profit to fall – the system’s most fundamental flaw.

But it was Peruvian economist Hernando de Soto who got closest to the heart of the problem, explaining the necessity of current attempts to reconnect the stratospheric book values of financial assets that were set free by the Big Bang to the real value-producing components of the global economy.

When the 30 years of deregulation driven on by the expanding needs of globalising manufacturing corporations stretched the credit system to breaking point in 2007/8, the requirement outlined by de Soto became unpostponable.

On the sidelines, the Coalition’s George Osborne’s rabbit out of a hat of “new” credit for small businesses is more confidence trick than conference trick. It finds him floundering against the stream of more wildly radical would-be policy makers who are calling for bank and mortgage debts to be wiped out by 50-100% “haircuts”, so that consumers can be freed to start spending again.

Portillo’s programme ended with a serious challenge – the system may be in crisis, but as yet nobody, he suggested, has come up with a well-defined replacement.

It’s a test that cannot be ignored and must be taken up by the crowds of people assembling in city centres across the planet. How can we extend the multitude of not-for-profit, democratically-controlled, worker and consumer co-operatives to the rest of society?

How do we bring the corporations and financial centres under social, common, democratic control? What bits of the old system can prove useful and what should be discarded (eg hedge funds, stock markets)?

We have to aim to go beyond resistance, beyond protest and pressure, beyond strikes and even occupations to actually challenge and remove the system’s grip on people’s lives and futures.

There is a need to contest political, state power itself because that’s how the system is held together. Creating new democratic forms like people’s assemblies, we shoud bring them to the point of challenging and replacing the old order.

That has to be the focus of the growing occupations of places like Wall Street (where trade unionists will join today’s march) and plans for similar actions worldwide on October 15.

Capitalism has had its “trial” and been found guilty as charged.

Gerry Gold

Economics editor