As the global credit crisis lurches out of control, you can always find some consolation if you look hard enough, especially if you are a Guardian columnist with words of advice for the political and financial élites who are allegedly in control.
Economics editor Larry Elliott believes that financial market mayhem makes the case for returning to some golden age of regulated capitalism and the policies of the economist Keynes, after which everything will be more or less just hunky dorry. Unfortunately for him, the globalisation of financial markets alongside transnational corporations make this scenario a pipe-dream.
But wait. Today, comment editor Seumas Milne sees hope for the future in the actions of the state in response to the convulsions in the global financial system. “What,” he writes, “last week seemed outlandish becomes today's common sense”. After rather stupidly attacking the Tories for being “irrelevant” (if only that were true!), Milne says the scope for “piecemeal interventions may be coming to an end”, adding:
“In particular, if the HBOS deal, the last rampart of a private solution, were to unravel, there is already speculation that wholesale nationalisation of banks could become unavoidable.” Milne, who likes to think himself as a man of the Left, is particularly infatuated with what’s going on in America, declaring: “When a US Republican treasury secretary comes up with a $700bn bank rescue package, the potential of what governments can do with political will is thrown into unusually sharp relief.”
So all that’s lacking is the “political will”? Milne’s touching faith in the state to provide the answers and solve the crisis is extremely dangerous as well as naïve. When he writes that “the battle has been won over the necessity of intervention”, he is reinforcing the illusion that the crisis can some how be brought under control by a set of rational actions drawn up by the Guardian.
This assumes that the state is actually capable of imposing some sort of order and that this in itself would be a good thing. All the evidence is that recession is turning to slump and the state can do nothing about it, except try to save capitalism from itself at the expense of jobs, homes and living standards. And lest Milne, who has a reputation as an apologist for Stalinism, has forgotten his history, we should remind him that when the capitalist state comes together with corporate and financial power it equals fascism.
We have a double bind. The mass of the people are disenfranchised because the major parties stand for the same thing. And the state is openly the plaything of big business and finance. So the challenge is to create a new democratic politics and state that can propose a sane economic system based on production for need and not profit. Working on that project would be more fruitful than expecting the capitalist state to somehow become progressive in the midst of the gravest crisis since the 1930s.
Paul Feldman
Communications editor
For revolutionary solutions to create a sustainable, not-for-profit economy in place of global capital alongside a real democracy based on People’s Assemblies. Visit our web site at www.aworldtowin.net
Showing posts with label nationalisation. Show all posts
Showing posts with label nationalisation. Show all posts
Thursday, October 02, 2008
Monday, September 29, 2008
Another way is possible
The increasingly desperate attempts to bail-out the financial system in America and Europe have raised fundamental questions about economics and politics that were considered dead and buried not so long ago.
1. The “C” word is back. Nearly everyone (New Labour is an exception here) is talking about the fact that it is capitalism as a system that is in crisis, although remedies range from regulation to revolution.
2. Financial markets which were viewed as the source of endless wealth and easy money have lost their lustre and invincibility. They stand revealed as casinos and purveyors of fantasy finance.
3. The crisis has thrown into sharp relief the inability of capitalism to sustain itself without political support and intervention. So the markets by themselves cannot operate independently in some apparently weightless state.
4. The duty and role of the state is first and foremost to private banks and financial institutions to the detriment of taxpayers, workers and those threatened with repossession. This demonstrates unequivocaly that we are ruled by a capitalist state.
5. Democracy becomes an unaffordable luxury at times of capitalist crisis and the spectre of national government looms large, especially as all the major parties stand for the same thing.
These developments have undoubtedly produced a change in social consciousness, particularly in the United States . Opposition to the $700 billion buy-out of toxic debt with no known market value is vociferous and increasingly militant. The Bush plan is a massive transfer of wealth from the public sector in the shape of taxpayers to the private sector. The debt is being socialised and the profit privatised. Meanwhile, thousands of Americans lose their homes each day and join the dole queue.
Proving there is no real choice in capitalist politics, the Democrats are riding to the rescue of the beleaguered Bush administration. Obama, the Democratic candidate for the presidency, is lending his support to Bush while some Republicans cavil at the bail-out because their phones are ringing off the hook and they face re-election in November. In Britain, the Tories can hardly bring themselves to criticise New Labour because both parties are responsible for what is taking place.
For more than a decade, Blair and Brown governments followed their Tory predecessors in promoting the everyone-can-get-rich-quick spirit of globalised capitalism. House price inflation was seen as a good thing by governments because it seemed a way for everyone to get wealthy. When teachers and firefighters needed affordable homes, for example, they were encouraged to buy them with state financial support and the building for rent social housing programme was all but wiped out. So when Brown says that the “age of irresponsibility” is over, the hypocrisy meter registers off the dial, driven by the saving of Bradford & Bingley, the bank that funded speculative buy-to-let properties.
As for the bail-outs, hand-outs and pseudo-nationalisations – they won’t work. The global debt mountain has barely started to unravel and the economy is already in recession. What is taking place is unacceptable. Ordinary people are being informed that they have to stump for the bankers and for a crisis not of their making.
Another way is possible, however. Building an independent movement to challenge the capitalist state and its cosy relations with the banks and corporations offers a fresh perspective. This raises the revolutionary question of who should rule society: big business and finance or the people? Creating a new, democratic state to embody people’s power is, like other questions that were off the agenda for a long time, now not such a fanciful thing to consider.
Paul Feldman
Communications editor
1. The “C” word is back. Nearly everyone (New Labour is an exception here) is talking about the fact that it is capitalism as a system that is in crisis, although remedies range from regulation to revolution.
2. Financial markets which were viewed as the source of endless wealth and easy money have lost their lustre and invincibility. They stand revealed as casinos and purveyors of fantasy finance.
3. The crisis has thrown into sharp relief the inability of capitalism to sustain itself without political support and intervention. So the markets by themselves cannot operate independently in some apparently weightless state.
4. The duty and role of the state is first and foremost to private banks and financial institutions to the detriment of taxpayers, workers and those threatened with repossession. This demonstrates unequivocaly that we are ruled by a capitalist state.
5. Democracy becomes an unaffordable luxury at times of capitalist crisis and the spectre of national government looms large, especially as all the major parties stand for the same thing.
These developments have undoubtedly produced a change in social consciousness, particularly in the United States . Opposition to the $700 billion buy-out of toxic debt with no known market value is vociferous and increasingly militant. The Bush plan is a massive transfer of wealth from the public sector in the shape of taxpayers to the private sector. The debt is being socialised and the profit privatised. Meanwhile, thousands of Americans lose their homes each day and join the dole queue.
Proving there is no real choice in capitalist politics, the Democrats are riding to the rescue of the beleaguered Bush administration. Obama, the Democratic candidate for the presidency, is lending his support to Bush while some Republicans cavil at the bail-out because their phones are ringing off the hook and they face re-election in November. In Britain, the Tories can hardly bring themselves to criticise New Labour because both parties are responsible for what is taking place.
For more than a decade, Blair and Brown governments followed their Tory predecessors in promoting the everyone-can-get-rich-quick spirit of globalised capitalism. House price inflation was seen as a good thing by governments because it seemed a way for everyone to get wealthy. When teachers and firefighters needed affordable homes, for example, they were encouraged to buy them with state financial support and the building for rent social housing programme was all but wiped out. So when Brown says that the “age of irresponsibility” is over, the hypocrisy meter registers off the dial, driven by the saving of Bradford & Bingley, the bank that funded speculative buy-to-let properties.
As for the bail-outs, hand-outs and pseudo-nationalisations – they won’t work. The global debt mountain has barely started to unravel and the economy is already in recession. What is taking place is unacceptable. Ordinary people are being informed that they have to stump for the bankers and for a crisis not of their making.
Another way is possible, however. Building an independent movement to challenge the capitalist state and its cosy relations with the banks and corporations offers a fresh perspective. This raises the revolutionary question of who should rule society: big business and finance or the people? Creating a new, democratic state to embody people’s power is, like other questions that were off the agenda for a long time, now not such a fanciful thing to consider.
Paul Feldman
Communications editor
Wednesday, September 24, 2008
Post-capitalist irony
Ironically, the best case for the abolition of private ownership of production and finance is now being made by capitalism itself. For example, banks which until just a few months ago were firmly in the private sector are now state owned or controlled. As yet, the world as we know it has not come to an end following this remarkable turnaround.
Of course, George Bush and Gordon Brown have not become revolutionary anti-capitalists. Their actions are desperate moves to prop up the failing international financial system and save it from total collapse. Every day there’s another frantic response. Yesterday, America’s Federal Reserve made $30bn available to central banks in Australia, Denmark, Sweden and Norway, to ease money markets. The American government is printing money like there is no tomorrow.
What the crash of 2008 is demonstrating, however, is that a) the market-driven capitalist economy and financial system has failed big time b) there is no iron law that says private ownership is necessary and c) there are alternative ownership models which can actually work.
So the crisis itself indicates the solution. Shareholder-owned and profit-driven corporations and banks have produced chaos and an impending catastrophe. Let them be commonly owned and run for the benefit of society as a whole. Of course, the capitalist state and proxy governments like New Labour are only interested in keeping the system going, if at all possible, whatever the social consequences in terms of unemployment, repossessions and lower living standards. They intend to either wind up or hand back to the private sector the enterprises they have nationalised.
Yet this assumes that the financial crash is now under control and manageable. Some superficial observers even believe that current events lead back to a much more conservative financial system, where credit/debt is much reduced and the regulatory framework is tightened up. This back-to-the-future fantasy scenario is championed by liberal commentators like the Guardian’s economics editor Larry Elliott and Will Hutton, chief executive of the Work Foundation.
Serious analysts know that the credit crunch is only just beginning, however. The unravelling of countless trillions of dollars of fictitious “assets” has a long way to go and will be reinforced by the impact of recession, falling house prices and lower consumer spending. All eyes are now turning to another mysterious area – credit default swaps (CDS).
These are insurance-like contracts that promise to cover losses on certain securities in the event of a default. They typically apply to municipal bonds, corporate debt and mortgage securities and are sold by banks, hedge funds and others. Contracts can be traded — or swapped — from investor to investor. The instruments can be bought and sold from both ends — the insured and the insurer.
The CDS market exploded over the past decade to more than $45 trillion by mid-2007, according to the International Swaps and Derivatives Association. This is roughly twice the size of the US stock market and far exceeds the $7.1 trillion mortgage market and $4.4 trillion U.S. treasuries market. The top 25 American banks hold more than $13 trillion in CDS instruments. As asset prices plummet and companies go bankrupt leaving nothing but bad debts behind, the CDS market is ready to implode.
Yet another powerful reason to refuse to pay for the bankers’ crisis and to mobilise for the Stand Up for Your Rights festival on 18 October.
Paul Feldman
Communications editor
Of course, George Bush and Gordon Brown have not become revolutionary anti-capitalists. Their actions are desperate moves to prop up the failing international financial system and save it from total collapse. Every day there’s another frantic response. Yesterday, America’s Federal Reserve made $30bn available to central banks in Australia, Denmark, Sweden and Norway, to ease money markets. The American government is printing money like there is no tomorrow.
What the crash of 2008 is demonstrating, however, is that a) the market-driven capitalist economy and financial system has failed big time b) there is no iron law that says private ownership is necessary and c) there are alternative ownership models which can actually work.
So the crisis itself indicates the solution. Shareholder-owned and profit-driven corporations and banks have produced chaos and an impending catastrophe. Let them be commonly owned and run for the benefit of society as a whole. Of course, the capitalist state and proxy governments like New Labour are only interested in keeping the system going, if at all possible, whatever the social consequences in terms of unemployment, repossessions and lower living standards. They intend to either wind up or hand back to the private sector the enterprises they have nationalised.
Yet this assumes that the financial crash is now under control and manageable. Some superficial observers even believe that current events lead back to a much more conservative financial system, where credit/debt is much reduced and the regulatory framework is tightened up. This back-to-the-future fantasy scenario is championed by liberal commentators like the Guardian’s economics editor Larry Elliott and Will Hutton, chief executive of the Work Foundation.
Serious analysts know that the credit crunch is only just beginning, however. The unravelling of countless trillions of dollars of fictitious “assets” has a long way to go and will be reinforced by the impact of recession, falling house prices and lower consumer spending. All eyes are now turning to another mysterious area – credit default swaps (CDS).
These are insurance-like contracts that promise to cover losses on certain securities in the event of a default. They typically apply to municipal bonds, corporate debt and mortgage securities and are sold by banks, hedge funds and others. Contracts can be traded — or swapped — from investor to investor. The instruments can be bought and sold from both ends — the insured and the insurer.
The CDS market exploded over the past decade to more than $45 trillion by mid-2007, according to the International Swaps and Derivatives Association. This is roughly twice the size of the US stock market and far exceeds the $7.1 trillion mortgage market and $4.4 trillion U.S. treasuries market. The top 25 American banks hold more than $13 trillion in CDS instruments. As asset prices plummet and companies go bankrupt leaving nothing but bad debts behind, the CDS market is ready to implode.
Yet another powerful reason to refuse to pay for the bankers’ crisis and to mobilise for the Stand Up for Your Rights festival on 18 October.
Paul Feldman
Communications editor
Monday, February 18, 2008
Darling going down with the ship
“Floundering - SS Corporate Globalisation taking on heavy water – pumps failing.” That was the essence of the emergency message relayed to the world yesterday by chancellor Alistair Darling as he announced public ownership of failed bank Northern Rock following failure to strike a deal with venture capitalists led by Sir Richard Branson. His was the equivalent of announcing "don't panic" to passengers on the Titanic.
So a government that promoted with gusto the virtues of the deregulated market-driven global capitalist economy has now taken on responsibility for the bank’s mortgages, arrears and repossessions and the fate of several thousand Northern Rock employees. Or rather Ron Sandler, the bank’s new executive chairman who at a mere £90,000 a month will be making the decisions on behalf of New Labour.
Darling says that the intention is to return the bank to the private sector when “market conditions improve”. His grey hair may have all fallen out if and when that ever happens. For Northern Rock’s demise is only the most public face of a growing global financial crisis, one which is having the greatest impact in the United States and Britain where “economic growth” has been based on astronomical levels of debt. The government is, of course, taking over Northern Rock just as the bottom falls out of the housing market.
The panic, Sunday morning decision to nationalise Northern Rock rather than let it go into administration means that the British state – or, more precisely, taxpayers – have been saddled with mountainous debts with uncertain prospects of them ever being repaid. Taxpayers are already subsidising Northern Rock in loans and guarantees to other lenders to the tune of about £55 billion. Under the new plans this will jump to a staggering £110bn, a cost of £3,500 per taxpayer and getting on for a quarter of annual government spending.
What the Northern Rock fiasco also shows is that it is far easier for governments to promote and facilitate market-driven globalisation than it is to rescue parts of the system when the wheels come off. The globalised economic system is transnational in character, with an objective existence and presence that is far more powerful (and uncontrollable) than nation states. The evolving financial crisis is essentially beyond the reach of central bankers and governments. The fictitious nature of much of the financial system is exposed on a daily basis now that the real economy is slipping into recession.
Nationalising Northern Rock won’t stop other banks, particularly those heavily committed on the mortgage front, from going the same way. In fact, it might encourage a few more to declare themselves insolvent on the basis that the government will rush to the rescue.
New Labour clearly dithered over Northern Rock as it contemplated an autumn election. Now its actions are seen as damaging to the City of London, which is one the most powerful – and vulnerable - sectors of the global financial system. Prime minister Brown personally set up the regulatory system that so clearly failed in the case of Northern Rock.
Roger Bootle, the managing director of Capital Economics and a former adviser to the Treasury, said: "This is an iconic representation of the collapse of all the ideas over the past few years about the quality of our economic management.” He added: "This is clearly political dynamite.”
We have entered a slash and burn crisis phase of corporate-driven globalisation. That means jobs, homes, pensions and incomes are under threat in every country. At the same time, the political system is clearly incapable of dealing with the crisis. The challenge immediately ahead is to promote political and economic solutions that take us beyond the limitations and dangers of the capitalist market economy.
Paul Feldman
AWTW communications editor
So a government that promoted with gusto the virtues of the deregulated market-driven global capitalist economy has now taken on responsibility for the bank’s mortgages, arrears and repossessions and the fate of several thousand Northern Rock employees. Or rather Ron Sandler, the bank’s new executive chairman who at a mere £90,000 a month will be making the decisions on behalf of New Labour.
Darling says that the intention is to return the bank to the private sector when “market conditions improve”. His grey hair may have all fallen out if and when that ever happens. For Northern Rock’s demise is only the most public face of a growing global financial crisis, one which is having the greatest impact in the United States and Britain where “economic growth” has been based on astronomical levels of debt. The government is, of course, taking over Northern Rock just as the bottom falls out of the housing market.
The panic, Sunday morning decision to nationalise Northern Rock rather than let it go into administration means that the British state – or, more precisely, taxpayers – have been saddled with mountainous debts with uncertain prospects of them ever being repaid. Taxpayers are already subsidising Northern Rock in loans and guarantees to other lenders to the tune of about £55 billion. Under the new plans this will jump to a staggering £110bn, a cost of £3,500 per taxpayer and getting on for a quarter of annual government spending.
What the Northern Rock fiasco also shows is that it is far easier for governments to promote and facilitate market-driven globalisation than it is to rescue parts of the system when the wheels come off. The globalised economic system is transnational in character, with an objective existence and presence that is far more powerful (and uncontrollable) than nation states. The evolving financial crisis is essentially beyond the reach of central bankers and governments. The fictitious nature of much of the financial system is exposed on a daily basis now that the real economy is slipping into recession.
Nationalising Northern Rock won’t stop other banks, particularly those heavily committed on the mortgage front, from going the same way. In fact, it might encourage a few more to declare themselves insolvent on the basis that the government will rush to the rescue.
New Labour clearly dithered over Northern Rock as it contemplated an autumn election. Now its actions are seen as damaging to the City of London, which is one the most powerful – and vulnerable - sectors of the global financial system. Prime minister Brown personally set up the regulatory system that so clearly failed in the case of Northern Rock.
Roger Bootle, the managing director of Capital Economics and a former adviser to the Treasury, said: "This is an iconic representation of the collapse of all the ideas over the past few years about the quality of our economic management.” He added: "This is clearly political dynamite.”
We have entered a slash and burn crisis phase of corporate-driven globalisation. That means jobs, homes, pensions and incomes are under threat in every country. At the same time, the political system is clearly incapable of dealing with the crisis. The challenge immediately ahead is to promote political and economic solutions that take us beyond the limitations and dangers of the capitalist market economy.
Paul Feldman
AWTW communications editor
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