Meltdown hits New Labour

The turmoil in global financial markets is now reflecting itself as paralysis and confusion in the minds and actions of politicians, amid opposition from bankers to their plans for more regulation. Most significantly, the crisis is also finding a strong echo in the opinions of voters, especially in Britain where confidence in the Brown government has plunged to a record low.

Over the weekend, the Group of Seven industrialised nations and the International Monetary Fund governing council made up of global finance ministers and central bank governors, endorsed nothing less than 65-point plan to reform global financial markets. The plan involves raising the amount of capital banks have to hold if they want to invest in complex credit securities, new disclosure requirements and the creation of a “college of supervisors” from different countries to monitor banks.

This plan was dead in the water almost as soon as it was announced. Wall Street bankers rejected the G7 call to raise more capital, saying they were opposed to selling shares at the current depressed prices while others advocated self regulation. In any case, there was no particular timetable for implementing the changes, which would be left up to national governments to carry through.

As to the present crisis, there was nothing in the way of either a plan or a strategy. Ministers actually rejected the IMF’s call for globally co-ordinated public intervention to tackle the problems in the financial system directly. With the dollar and the pound continuing their free fall on currency markets, the G7 also ruled out any intervention in this area despite their fears that the slide could spiral out of control and intensify the economic recession.

Grandiose plans combined with lack of actual activity are a graphic illustration of the impotence of the G7, IMF and other global institutions in the face of the credit crunch. Last week, for example, the Bank of England cut interest rates only to see lenders not only fail to pass this on to homeowners but in some cases increase rates to borrowers. Now Alistair Darling, the chancellor, has called a meeting to urge them to respond to interest rate cuts while the bankers say the credit crunch prevents them from doing so. The problems of banks was shown today when Bradford & Bingley led a fall in shares after reports that it was going to have raise new capital to fill a large hole in its balance sheet.


There was more bad news for the government today when a poll revealed that Gordon Brown is less trusted to steer his country through the global financial crisis than any other major western European leader. A Financial Times/Harris poll suggests Britons no longer trust his government on the economy – 68% said they were “not confident at all” in its ability to deal with the economic crisis. The figure was 52% in Germany, 51% in the US, 50% in France, 43% in Italy and 36% in Spain. This came the day after a Sunday Times poll which gave the Tories a 16 point lead over New Labour.

Even previously pro-government newspapers like the Financial Times are beginning to have doubts. Its editorial said: “If British voters are worried about the global credit squeeze – more than a third expect their finances to worsen – then they are right to be. They have no more reason to trust politicians’ assurances that the UK can weather a US recession than believe their next-door neighbour’s.”

The paper added: “Like the US, the UK has relied on a debt-fuelled boom in consumer spending to drive growth. As the credit squeeze begins to bite and households cut back borrowing, overall demand is likely to weaken. A long-predicted correction now under way in the UK’s inflated property market will be painful too.” New Labour is unravelling almost as fast as the financial system itself and the need to create alternative political movements to challenge corporate and financial power is more urgent than ever.


Paul Feldman
AWTW communications editor

Food prices revolt grows

Governments across the globe are being shaken by mass protests, as people take to the streets demanding lower food prices. According to the World Bank, increases in global wheat prices reached 181% over the 36 months leading up to February 2008, and overall global food prices increased by 83%. The UN says the price of rice has soared by 75% in just two months.

There have been strikes and protests across Africa, in Ivory Coast, Burkina Faso, Cameroon, Senegal, Mauritania, Guinea and Mozambique. In Asia, there have been protests in India, Singapore, Philippines, and Bangladesh. In Mexico thousands have marched and people in El Salvador protested outside the state bank. This week alone:

· Protestors in Haiti marched on the presidential palace demanding a cut in food prices; five people were killed, leading to demands for the government to resign.
· in Vietnam, 15,000 workers in a factory making trainers went on strike demanding better to pay to cover higher food prices.
· In Egypt, strikers took to the streets demanding a cut in the cost of bread.

In Europe too, droughts in Spain, France and the Po Valley last year have led to big rises in fresh food prices. With durum wheat up 30% this year, pasta is becoming a luxury product. In Britain, the cost of an average basket of groceries has risen 12% in a year.

World Bank president Robert Zoellick has warned of growing unrest if a solution is not found. And Prime Minister Brown called for food price inflation to top the agenda at the G8 summit in Japan in July. Both Zoellick and Brown called for more aid. But G8 countries are not even meeting their existing promise, made at Gleneagles in 2005, to double aid to Africa by 2010. Aid was lower in 2007 than in 2006, and in fact rich countries gave a higher proportion of their GDP in aid in 1963 than in 2007.

As for “trade not aid”, the International Monetary Fund says more than 20 African countries will see their trade balance worsen by more than 1% of GDP through having to pay more for food. The World Bank among others blames biofuels production for driving up food prices. Brown says he will review the impact of the UK’s biofuels subsidies and opposes further increases in EU subsidies. This is too little, too late. The world is now locked into profit-driven, bio-fuel production at the expense of food production. The market itself is in the driving seat.

The immediate causes of food price inflation are selling food crops at high prices for bio-fuels; switching land from food production to bio-fuels; last year’s drought in food producing areas such as Australia and Central Europe and the increasing cost of oil, leading to higher production and transportation costs.

But the underlying cause is the profit-driven system of food production at the expense of local needs. With the expansion of agri-business in the last three decades of globalisation, food dependency has increased and local systems of food production and exchange have been overturned. Now agri-business is moving into more profitable areas, creating food shortages where there could be plenty for all.

With starvation on a global scale now looming, what is needed is a strategy to wrest control of all land and natural resources from the global corporations (and the governments that support their rule). We could then combine technology with new scientific understanding of agricultural production to create systems of sustainable, dependable local food production.

In two very concise and readable books – Running a Temperature, an action plan for the eco crisis and House of Cards: from fantasy finance to global crash, the members of A World to Win propose a programme of democratisation of both ownership and of the state as the only solution to the growing global crisis. Included in both books are radical proposals for food, agriculture and land use. We call on everyone to join us in developing these ideas further with a view to putting them into practice.

Penny Cole
Environment editor

IMF predicts the unpredictable

Headline reports of the stark admissions, predictions and warnings in the two latest reports from the International Monetary Fund (IMF) literally overshadow the impact of the developing financial and economic crisis on the world’s population. A third report, also released this week, for the weekend spring meetings of the central bankers and finance ministers has been almost universally ignored.

The World Bank’s global monitoring report report deals with the results and prospects of action on the Millennium Development Goals (MDGs) such as child and maternal mortality, poverty, malnutrition, education, climate change, sustainable development. It’s not really surprising that nobody is paying them much attention now, since progress on the MDGs has always been made contingent on extracting crumbs from an ever-expanding capitalist economy.

Now the blunt statements from the IMF’s Global Financial Stability report and World Economic Outlook (WEO) tell us that “the financial market crisis that erupted in August 2007 has developed into the largest financial shock since the Great Depression”.

Headlines refer to the $945 billion predicted losses to the banks and other financial institutions arising from the US sub-prime mortgage crisis. But you should put this together with a muted, unquantified reference in the WEO to “rising questions about the soundness of the credit-default-swap market’”, which has played a big role in the so-called spreading of risk. Some put the size of that market, now effectively worthless, at $45 trillion, dwarfing the sub-prime losses. Doesn’t bear thinking about.

And, as “both of the financial system’s twin engines [the banking system and the securities markets] are faltering at the same time” the present credit squeeze could “mutate into a full-blown credit crunch”, warns the IMF. Especially as the huge injections of additional liquidity by the Federal Reserve and other central banks intended to ease the problem appear to be having the opposite effect – credit is becoming less available and more expensive.

With the US already in a recession, the IMF has revised its previous predictions for growth sharply downwards offering a 25% chance of a global recession. But is this a prediction dependent on the success of proposed co-ordinated action by a broad group of countries, or is it what might happen if such multilateral initiatives fail? It is just not clear. At least to me.

What the newspapers don’t report is that the IMF points to “a collective failure” to appreciate the extent of growth of credit and “the associated risks of a disorderly unwinding”. In other words, all those who were supposedly in a position to steer the global economy failed to see the dangers of a 60-year boom made possible only by a ballooning of credit in a variety of forms.

So why aren’t they all resigning? And why should we believe any of the predictions they are now making? Like this one: “All the advanced economies are expected to face serious consequences if deepening losses to bank capital and a further loss of confidence in structured financing were to transform the current credit squeeze into a full-blown credit crunch.” The IMF also admits that no previous episodes of distress in the finance sector “provide much guidance for the current unprecedented situation”.

As the mathematically-based econometric models they use for prediction aren’t up to the job, they’ve invented a new one based on “a combination of negative shocks” just to see what might happen. They consider three related shocks:

• A temporary shock to consumption and investment from a further tightening of credit conditions while the financial system goes through a protracted rehabilitation period during which capital and credibility are repaired after extended financial turmoil.
• A permanent downward shift in expectations for long-term productivity growth in the United States.
• A shift in investor preferences away from US assets.

Once again, the global consequences of this combination of shocks - a deeper and longer recession - don’t bear thinking about. Except that the IMF recommends that countries should start contingency planning. The worst is yet to come.

The uncertainly around the unravelling of credit and its impact brings to mind the famous 2002 statement by the then US secretary of defence, Donald Rumsfeld:

As we know,
There are known knowns.
There are things we know we know.
We also know
There are known unknowns.
That is to say
We know there are some things
We do not know.
But there are also unknown unknowns,
The ones we don't know
We don't know.

Gerry Gold
Economics editor

Housing market misery

The morbid concern over the sharp fall in house prices in March not only expresses middle-class obsession with property values. It is also graphically illustrates how the market economy in housing results in gross distortions. In human misery terms, it means growing numbers of repossessions, more homelessness, overcrowding, extortionate rents and children denied the space to grow up or do their homework.

In places like London, most new households can’t afford a place to live for love or money while the number of homeless households living in temporary accommodation in England has almost doubled since 1997 to reach almost 90,000. More than 70% of these households are families with children – meaning the problem affects almost 125,000 children, says the campaign group Shelter. House prices have risen by 156% since Labour came to power in 1997; during the same period incomes have gone up by 35%. The average house price is now nearly 11 times average earnings. Not surprisingly, mortgage repossessions rose 65% last year to 17,000 homes. This is plainly the result of the laws of the jungle – sorry, laws of supply and demand in a capitalist market economy.

There has always some kind of a housing crisis in Britain, despite the fact that it is one of the richest countries in the world. Yet it has been exacerbated by the actions of successive governments, who have imposed naked market forces where once the state played a moderating role. For a long post-war period, local authorities built millions of homes for rent, enabling most new households to find somewhere to live. Rents in the private sector were controlled. The quality of housing was not always great, but the system provided access to an affordable roof over your head.

The rot set in with the Thatcher governments from 1979-1997, which pursued open monetarist policies and set out to break the power of local councils. They were compelled to sell their best housing stock and denied the chance to use the proceeds to replace the two million homes that were disposed of. Councils now build no homes whatsoever. The great “property-owning democracy” illusion began. With other routes closed off, people were driven into so-called home-ownership, whereby the bank/building society remains the actual owner. Prices crashed in the early 1990s and hundreds of thousands of people lost their homes as interest rates soared.

The Tories encouraged housing associations to build new homes for rent. The market-driven financing of these homes proved so expensive that the rents themselves became unaffordable for anyone who wasn’t receiving state benefits. So they were turned into ghettos of the unemployed and then made targets for experiments in dealing with “anti-social behaviour”. New Labour has gone further by using large parts of its housing budget to subsidise home ownership schemes instead of building for rent. These “shared ownership” homes have also become largely unaffordable, selling for as much as £300,000 in London and taking up huge proportions of average earners’ incomes.

More than 130 years ago, Frederick Engels wrote about the “so-called housing shortage, which plays such a great role in the press nowadays” and asked rhetorically: “How is the housing question to be solved then? In present-day society just as any other social question is solved: by the gradual economic adjustment of supply and demand, a solution which ever reproduces the question itself anew and therefore is no solution.”

Today’s housing crisis is testimony to the power of Engels’ analysis. The market’s “solutions” to the crisis are unacceptable. We need to devise a new plan for housing which should embrace public ownership of land, social ownership of housing finance, a halt to repossessions, conversion of mortgages into affordable rent, the requisition of empty properties (especially offices in the City of London now lying vacant) and a sustainable building programme agreed by local communities.

Paul Feldman
AWTW communications editor

Help - I could lose my seat!

If some New Labour MPs are suddenly concerned about how Gordon Brown’s tax changes benefit the well off at the expense of low earners, it is not because for the most part they have suddenly developed a political conscience. Their real worry - panic is probably a better expression - is about whether they can retain their seats, along with their comfortable, expenses-paid, two-house, lifestyle, at the next general election.

After all, the Institute for Fiscal Studies (IFS) showed in March 2007, over a year ago, at the time of Brown’s last budget as chancellor, what the impact of the abolition of the 10p income tax rate would be. Overall, 20% of taxpayers – five million people - would lose, 40% would be unaffected and another 40% would gain, said the IFS. The main losers would be single adults on £18,000 a year or less, with no children and not on tax credits. Families with two earners whose tax credit rise was not sufficient to compensate for income tax losses would also be worse off as would taxpaying women aged 60-64. Those earning £18,500 and £39,000 were set to gain.

So where have the brave New Labour MPs been all this time? Why did they only speak up a few days before the tax changes actually came into effect on Monday? Those who sit on the Treasury select committee heard evidence about the impact of the tax change some time ago. This week, the committee finally published a report saying that low wage earners were an "unreasonable target for raising additional tax revenues". The government doesn’t give a hoot about their bleating, however, and business secretary John Hutton quickly said that the changes would not be abandoned.

While the government can stump up billions to help failed banks like Northern Rock, it is not particularly concerned about poorer families. They have to make do with complicated, means-tested “tax credits”, which have proved an absolute failure in terms of their impact. In fact, the government is reclaiming money paid out in error, which people have already spent.

Poorer households are also hit hardest by the increases in food, travel and utility bills now running through the economy. Pensioner groups said a rise in winter fuel payments would do little to offset raised utility bills and council tax. The Civil Service Pensioners' Alliance, and National Federation of Royal Mail & BT Pensioners, said over the weekend that people aged 60-65 would be badly affected, including more than 600,000 female pensioners.

New Labour MPs have a right to be concerned – about their future that is. Three weeks before the local elections in May, a Sunday Telegraph/ICM opinion poll showed Labour on 32% and the Lib Dems on 18%, each trailing behind the Tories' 43%. This is enough to give the Tories an overall majority in a general election. In London, Tory right-winger Boris Johnson is ahead of Ken Livingstone in the race for Mayor.

Meanwhile, the housing crisis is gathering pace. Prices are falling at their sharpest since 1992 and Abbey today became the last bank to abandon 100% mortgages. Millions face steep rises in repayments as cheaper starter mortgages come up for re-financing while others who used rising house prices to borrow and spend against the value of their home are no longer able to do so. These are just some of the signs of market failure on a global scale, failures that look certain to destroy the fortunes of the capitalist New Labour government as well.

Paul Feldman
AWTW communications editor

Put this Olympic torch out!

Former Blue Peter presenter Konnie Huq no doubt summed up many people’s feelings after a protester tried to grab the Olympic flame from her yesterday. She valued the Olympic ideals but also condemned the “despicable” nature of the Chinese government’s role in Tibet. The Chinese Olympic organisers may well have lost control of the script for the flame, but they are still in charge of China and will get on with murdering Buddhist monks in Tibet and killing and jailing dissidents at home.

Yesterday’s torch run through London offered a ludicrous spectacle. Constantly surrounded by Chinese minders and British police, it was difficult to even see the flame. The whole exercise cost council taxpayers up to £500,000 plus an additional £2 million for the police “ring of steel”. Free speech also paid a price as police forced demonstrators to take down wholly inoffensive but political placards and made protesters take off their pro-Tibet T-shirts. You got a taste of what the 2012 Games in London will look like.

To suppose that politics and the Olympics don’t go together would be to ignore the history of the modern Games. The idea of a torch relay itself was initiated by the Nazis. The 1936 Berlin games, for example, were a showpiece for Hitler’s regime, even while being undermined by black US runner Jesse Owen’s amazing performance. In the Cold War, the United States, the Soviet Union and former East Germany, also used the Games for political ends. Forty years ago, at the Mexico City 1968 Olympics, American athletes Tommie Smith and John Carlos gave the Black Power salute on the podium in protest against US racism. Only days earlier, the Mexican authorities had massacred hundreds of students staging a protest.

In today’s world, corporate sponsorship for companies like Coca Cola – who are sponsoring the torch - and big business interests dovetail with the propaganda of authoritarian regimes to make the Games into their plaything. The cost of the London Games has spiralled up from an original £2.4 billion in 2006 to a current budget of £9 billion plus a £2 billion contingency fund. For what? So that land values in Stratford where the Olympics are being held can rocket, or that surveillance on spectators can reach Orwellian heights? Severfield-Rowen, the construction company for the London Olympics, has reported record profits and a doubling of its order book. MoneyWeek writes that “security companies should see good business from the Olympics as well…. These are likely to be the most watched-over games in history”. No wonder that three quarters of the British population and 60% of Londoners don’t think the Olympics will benefit them!

New Labour’s hypocrisy when it comes to human rights in China is breathtaking. For them, business comes first. In any case, the Brown government is hardly a paragon of democracy. The UK’s record on human rights, rendition and its role in Iraq, Afghanistan and the war on terror is, perhaps a bit more subtle than the Chinese kleptocracy, but just as authoritarian.

The Beijing Olympics should indeed be boycotted. In fact, the modern Olympics should be abandoned altogether! Why not simply call off the London Olympics? Even half the money could provide affordable housing in a city where only the rich can pay for somewhere decent to live as well as good, free sporting facilities. The ideals of friendly, international sporting competitions could then be pursued in an entirely new context.

Corinna Lotz
AWTW secretary

Martin Luther King's unfinished business

Martin Luther King, who was assassinated 40 years ago today in Memphis, where he was supporting a strike of low-paid municipal workers, is more often than not characterised as leader of the civil rights movement in the United States and man driven solely by religion. But King was much, much more than that and by the end of his life was advocating change of a revolutionary character, challenging the power of American capitalism.

In August 1963, under Kennedy’s presidency, King led a multi-racial rally of 250,000 in Washington demanding economic justice. It was the largest gathering in the capital’s history, and where King held the crowd spellbound with his inspiring, momentous “I have a dream” speech about how “this nation will rise up and live out the true meaning of its creed: 'We hold these truths to be self-evident, that all men are created equal’”.

King rebuked the country’s leaders for breaking the promises contained in the Constitution and the Declaration of Independence, to guarantee the unalienable rights of life, liberty and the pursuit of happiness. “Instead of honouring this sacred obligation, America has given the Negro people a bad cheque, a cheque which has come back marked 'insufficient funds,'" he said. Moreover, in a distinct rebuff to America’s black separatist movement, King urged unity, declaring: “Many of our white brothers as evidenced by their presence here today have come to realise that their destiny is tied up with our destiny and they have come to realise that their freedom is inextricably bound to our freedom. We can not walk alone."

From 1965, King started to attack America’s war in Vietnam. Exactly a year before his death, he delivered “Beyond Vietnam: A Time to Break Silence”. He insisted that the US was in Vietnam "to occupy it as an American colony" and denounced the government as "the greatest purveyor of violence in the world today”. King also said that people around the world would look with indignation and see “capitalists of the West investing huge sums of money in Asia, Africa and South America, only to take the profits out with no concern for the social betterment of the countries”.

In private he sometimes spoke of his support for democratic socialism. In a speech in front of his staff in November 1966, King told them: “You can't talk about solving the economic problem of the Negro without talking about billions of dollars. You can't talk about ending the slums without first saying profit must be taken out of slums. You're really tampering and getting on dangerous ground because you are messing with folk then. You are messing with captains of industry… Now this means that we are treading in difficult water, because it really means that we are saying that something is wrong… with capitalism… There must be a better distribution of wealth and maybe America must move toward a democratic socialism.”

In 1968, King and the Southern Christian Leadership Conference organised the "Poor People's Campaign" to address issues of economic justice. He criss-crossed the country to assemble "a multiracial army of the poor" that would descend on Washington — engaging in non-violent civil disobedience at the Capitol, if need be — until Congress enacted a poor people's bill of rights. Reader's Digest warned of an "insurrection". King cited systematic flaws of racism, poverty, militarism and materialism, and that "reconstruction of society itself is the real issue to be faced".

His family have never supported the official version of the assassination, which has James Earl Ray as the lone gunman. Ray was an escaped convict who later retracted his confession. He had neither the motive, money or mobility to have killed King by himself. Jesse Jackson, who was with King on April 4, 1968, says: “Our government was very involved in setting the stage for and I think the escape route for James Earl Ray.”

A report published today by the Service Employees International Union explores the economic implications of King’s movement and message. "Beyond the Mountaintop: King’s Prescription for Poverty", concludes that 40 years after King spoke of a promised land of social and economic justice, “we seem to be paralysed outside the gates of the city”.

Paul Feldman
AWTW communications editor

Carbon emissions deadline looms

Carbon emissions have to peak before 2015 to have any impact on climate change, according to the International Panel on Climate Change (IPCC) meeting in Bangkok this week, where it discussed mitigation measures. It would take a reduction in average annual growth rates of less than 0.12%, to achieve this target, the IPCC report claims.

This relatively modest cost compares to the 2006 Stern Report for the British government, which stated that with “business as usual”, climate change would reduce welfare by the equivalent of a reduction in consumption of between 5% and 20% per head.

But the IPCC warns that “delayed emissions’ reductions lead to investments that lock in more emissions-intensive infrastructure and development pathways”. So the question is, can the global capitalist system change course in the next seven years? The signs are not promising.

About 50% of the total mitigation required could be achieved by reducing emissions from deforestation. But in September 2007, the Philippines’ government signed an agreement with China to develop 400,000 to 500,000 hectares of “idle, alienable and disposable lands and forest lands”. In other words they plan to grub up crucial areas of biodiversity and carbon sinks for agribusiness.

And a recent UN study found that virtually all the forests in Ethiopia have gone. A hundred years ago 40% of the country was tree-covered; today less than 3%. This is an environmental disaster in a country which was once one of nature’s most crucial areas of bio-diversity.

The report sets out a range of energy options to increase end-use efficiency as the best way of reducing demand. But the supply side is still the focus of global governments. The UK government is seriously considering an expansion of coal-fired power stations and China is opening new coal-fired power stations at the rate of two a week.

And this brings us to a paragraph which is in the main body of the IPCC report, but left out of the summary for policymakers, which makes clear what governments actually need to do.

“For low and medium stabilisation levels, developed countries as a group would need to reduce their emissions below 1990 levels in 2020 (on the order of -10% to -40% below 1990 levels for most of the considered regimes) and to still lower levels by 2050 (40% to 95% below 1990 levels), even if developing countries make substantial reductions.

“Under most of the considered regime designs for low and medium stabilization levels, developing country emissions need to deviate from what we believe today would be their baseline emissions as soon as possible, even if developed countries make substantial reductions.”

In other words, the argument that China and India must be permitted to go on polluting until they reach the same level of capitalist economic development as the developed countries simply does not hold water. Of course, some argue that this a kind of “justice”. But that assumes that there is some benefit is to be gained for the mass of people in developing countries from unfettered globalised profit-driven development, when the truth is quite the opposite. Rising food prices, drought, floods and pollution affect the poorest people first.

It is increasingly clear that the best way to mitigate the impact of global capitalism is to remove its power to continue on its current path. What the developing world actually needs is an opportunity to leapfrog this stage of development and move straight to a cleaner, more sustainable and humane economic model. And there is some justice in the argument that it is a duty of us, in the developed countries, to lead a struggle to achieve that.


Penny Cole
Environment editor

Out of control

Some people you meet have a touching faith in global capitalism, although they would never put it like that. They believe that the authorities are more or less always in control of affairs and they will always be able to “manage the crisis” to avoid disaster. The assumptions behind this are that a) capitalism is a rational system that follows a predictable logic b) they have all the answers up their sleeves. Of course, if you add a) and b) together, there is no chance of challenging, let alone defeating, the economic system.

This viewpoint is found not just in universities but among militant trade unionists too. They prefer not to talk about the current economic crisis because they believe it is a passing phase, which the authorities are getting a grip on. So in the end, both the academic and the trade unionist can carry on with their present activities. One can continue to write impenetrable texts which neverthless advance careers, while the other can still focus on industrial issues or speak demogogically at meetings, ignoring the economic crisis altogether but still sounding miitant.

In reality, the financial authorities only wish they had as much control and power as they are ascribed! They know better than their opponents that capitalism is far from a rational, organised system. Production is carried out by private corporations operating purely to maximise profit. Commodities are turned out without firms knowing for certain whether goods will actually be sold because this is subject to the whims of the market. Reliance on credit, especially in the sphere of consumption, adds to this uncertainty and leads to overproduction in a world of scarcity. Subjective factors like confidence and trust are essential aspects of capitalist economic activity which no one “manages”.

Taken together, these diverse aspects of the capitalist system come together to constitute an objective process, a level of reality that has always been beyond conscious control and is more so in the present period of globalised economy where borders and national government policies are disgregarded by powerful economic and financial forces. None of ths is hot news. In 1848, Marx and Engels in the Communist Manifesto compared modern bourgeois society to “the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells”. They wrote of crises of productive forces that become too powerful for private ownership to handle and as a result “bring disorder into the whole of bourgeois society” leading to “enforced destruction of a mass of productive forces”. Sounds familiar?

But let’s not take Marx and Engels as the sole authority. Fast forwarding to April 2008, those in the know say something quite similar. Take George Magnus, senior economics advisor to investment bank UBS. He has warned that “there is a quite serious risk that the de-leveraging downturn could run amok: credit contraction causes economic contraction, which causes further write-downs and capital destruction, which leads to more credit contraction and so on”.

Magnus has also said that what the central banks are doing is just “firefighting” and that if the banks don't want to lend, no amount of extra liquidity is ultimately going to help. He should know about the crisis. UBS this week announced a $19 billion writedown in assets, to go with $18 billion losses revealed earlier this year. UBS is now top of the global mortgage writedown chart.

Yesterday, First Direct becamethe first UK major mortgage lender to close its doors to new customers. The bank - one of the country's top 20 home loan providers - gave only five hours' notice. The move came as figures showed that more than 90 mortgage products a day have been scrapped over the past week as lenders put the shutters down. Oh yes, they are really “managing the crisis”!

Paul Feldman
AWTW communications editor

Speculation feeds rice price crisis

Across Asia, sudden stratospheric increases in rice prices have prompted countries to ban exports amid fears that shortages could provoke food riots following street protests in Jakarta, capital of Indonesia. World prices for rice, the staple food of about 2.5 billion Asian people, have almost doubled since the beginning of the year, joining those of wheat, corn and other agricultural commodities which have surged since the end of 2006.

Governments of producing countries are restricting exports to ensure their own populations get enough to eat at a price they can afford, but the result is to raise prices further. Last week, Cambodia banned all exports for two months to ensure "food security", following the lead of Egypt, a major exporter. Vietnam, which ships 5m tonnes abroad each year, on Friday declared a 20% cut in exports. Global demand outstripped supply by nearly 2m tonnes last year. The predicted shortfall this year is more than 3m tonnes of the 424m tonnes required.

The World Food Programme has raised the alarm on potential mass starvation. "There are hundreds of millions living at, or just below, the poverty line of $1-a-day, spending 70% of their day-labour wages on food. If food costs double they've no opportunity to increase their earnings and no alternative but to reduce what they and their families eat."

Global food prices, based on United Nations records, rose 35% in the year to the end of January, markedly accelerating an upturn that began, gently at first, in 2002. Since then, prices have risen 65%. Analysts attribute rising food prices to many causes: spiralling oil prices, the key input to all production; extra demand for biofuels to offset rising oil prices which reduces available food stocks; a rapidly growing population; the shift to an increasing consumption of meat as incomes rise for some in rapidly developing Asian countries - meat production needs a vastly greater amount of land; neglect of irrigation and research; and changing weather patterns throughout the world which have adversely affected production.

With global rice stocks at their lowest level since 1976, prices are expected to continue to rise until the end of next year, at least. Some analysts predict rice could hit $1,000 (£500) a tonne before farmers plant more crops and increase supplies – a response which will take years to come into effect.

Severe weather across Asia has certainly damaged production. Record icy temperatures were recorded in China and Vietnam, which also suffered a pest outbreak. Bangladesh endured a devastating cyclone while Australia suffered a prolonged and devastating drought. "It's been described as a 'perfect storm' of factors that have pushed prices to their highest levels since the 1970s," said Adam Barclay, of the International Rice Research Institute.

But even this ‘perfect storm’ explanation omits a surely more obvious source of the sudden inflation in food – speculation and profiteering. As credit markets remain closed, property values and stock markets are declining, and recession deepening, investors are seeking new homes for their capital – and fast. Andrew Lynch, a portfolio manager at global asset management company Schroders inadvertently lifted the lid:

"The food retailers, the Tescos and Carrefours of the world ... can manage to disguise quite effectively to the average person on the street food inflation by special offers here and discounts there, and get a lot of prominence while quietly pushing up the price of a loaf of bread by 10% in three months. That's why I own much more [shares] in food retail."

Gerry Gold
Economics editor

Unions should act on asylum rights

The sinister underside of New Labour’s racist, dehumanising immigration policy came to light at a trade union and community conference over the weekend. It is a Kafkaesque world of state-organised disappearances, unlimited detention, rapid expulsions, exploitation and destitution designed to divide communties and win cheap votes at election time.

Real life experiences related to the conference make a mockery of the claim by New Labour’s Border and Immigration Agency chief Lin Homer last week that: "We operate a firm but humane system, supporting those who are vulnerable with accommodation and assistance.” She was responding to the publication of a year-long investigation by the Independent Asylum Commission , led by an ex-senior judge, John Waite which said that “treatment of some asylum seekers was a shameful blemish on the UK’s international reputation”.

Speakers at Saturday’s conference included a representative from the All African Women’s Group based at Crossroads Women’s Centre, and asylum seekers Robinson Baldeon and Alphonsus Okafor-Mefor. They and others from around the country painted a grim picture which backed up the detailed research published by the Asylum Commission, but also documented how asylum seekers are courageously organising, inside and outside detention centres, to defend their rights.

John McDonnell MP, whose constituency includes the Harmondsworth and Colnbrook detention centres, revealed some of the most grotesque aspects of government policy. He believes that more than 800 people are currently being held at these two locations alone, although no one knows the exact figures. Some migrant workers are being picked up by immigration authorities and police and handcuffed while signing on at Job Centres. Some are even taking suitcases with them when they go to sign on in fear of arrest and deportation.

McDonnell denounced the sinister tactics adopted by the immigration authorities, which meant that those he and other MPs were trying to help often simply disappeared off the radar: “Often the only appeals which the authorities recognise at all are from MPs, but people are being shifted around the country. It is extremely difficult to find where they have been taken and MPs like myself are often told that the asylum seeker is no longer in their constituency, so that they cannot represent them.” There was an entire separate population sleeping rough, some in churches, some on friend’s floors or in the open, and a policy of brutality to young people who can now also be deported before they reach the age of 18, McDonnell said. He called on the trade unions to recruit asylum seekers and mount a national campaign on their behalf.

Alphonsus Okafor-Mefor showed the reality of the statistic that four out of every ten asylum seekers are destitute. Thanks to his own determination and community support, Alphonsus managed to receive “leave to remain”, but he said that the life of an asylum seeker was a “life of despair and hopelessness, with no right to work, medical care, good accommodation or education”. The experience of detention debased humanity, he said. “I am one of thousands who don’t have the chance to speak out.”

Robinson Baldeon, a refugee from Ecuador, said that as an “illegal” worker “it is a crime to go sick”. The 90,000 Ecuadorians who live in the UK are “invisible”, he added. Another speaker said that a woman had been held for four days in a police cell near Victoria station, without legal representation, money, adequate food, or chance to shower before being secretly deported. Under the new “fast-track” system, Britain is reportedly deporting one asylum seeker every eight minutes.

And it is not only the government which is denying basic rights to immigrant workers. Chinese workers in central London, who recently held a demonstration against dawn raids, want to hold a rally in Trafalgar Square. Jabez Lam from Chinese Immigration Concern Committee (CICC) said that Greater London Authority officials had told him that it was only possible to hold a rally in the square if there was a “special reason” and if the organisers took out a public liabilities insurance policy of £80,000.

Corinna Lotz
Secretary, A World to Win

Send for Dr Who!

Regulate! Regulate! Regulate! This is the cry heard with increasing stridency on both sides of the Atlantic as the global financial crisis continues to take its toll on both bankers and ordinary people’s lives. This sounds plausible enough, even mildly anti-capitalist. But in truth, regulation is a non-starter when it comes to dealing with the depth and breadth of the meltdown.

Firstly, a correction. It’s not actually about regulation as such but more about re-regulation. The financial sector was actually heavily regulated and controlled in the period 1945-1980, when the character of the world economy was international rather than globalised in character. There were fixed exchange rates and tight controls on the movement of capital. Credit was difficult to come by and mortgages were relatively rare.

These restrictions had been imposed in a bid to stabilise the world economy at the end of World War II and prevent a return to the slump of the 1930s. But the contradictions inherent within the capitalist system of economy undermined the controls and they collapsed amid rampant inflation, massive unemployment, class warfare and the end of the post-war political consensus.

These are the conditions that gave rise to the transition to the present-day globalised economy, where regulations were abandoned in a process referred to as “liberalisation”. The subsequent growth in production was driven by fewer and fewer corporations operating transnationally, fuelled by an entirely new phenomenon – an electronically-driven, 24-hour, borderless financial system.

So herein lies the first problem for commentators like the Financial Times’ Martin Wolf – who says the period of liberalisation is over - The Guardian’s Larry Elliott, who is a fan of (re)regulation and Professor Peter Dreier, Occidental College, California, who wants tough action against rogue financiers. In essence, they favour a kind of return to a period of capitalism when states and governments exercised greater influence over finance. Leaving aside the abject failure of this approach by governments of the 1960s and 1970s, the question is: can you actually go backwards in history? Is it possible to turn the clock back to a pre-globalisation period? Well, we’d all like to travel back in time. So far, only 'Dr Who' and the stars of the movie 'Back to the Future' have succeeded.

The chorus of calls and plethora of proposals for regulatory reform to stop such things ever happening again cover every aspect of the system, including: accounting standards, rating agencies, the ratio of capital held by banks to the credit they issue, limits on what financial institutions are allowed to do, and not least, bankers’ bonuses. But even these were undermined by simultaneous publication on Wednesday 26 March of the Financial Services Authority report on its supervision of Northern Rock and governor of the Bank of England, Mervyn King’s warning that the financial crisis had entered “a new and different phase”.

The FSA’s failure of oversight wasn’t due to a problem with the regulatory regime itself, apparently, but with management failure in applying it. And there’s no way that the FSA can compete for the specialised staff needed to understand the new products the banks and non-banks invent to subvert and evade control. In the case of Bear Stearns, its regulator, the Securities and Exchange Commission, says that the bank was operating according to national and international standards.

The lessons of the growth of hedge funds, off-shore private equity funds and exotic, toxic financial products is that they were designed to bypass whatever system of regulation remained after the progressive dismantling of the post-war system. They are not “excesses” but have been integral to the expansion of globalised capitalism, especially in terms of funding consumption. So the second, underlying problem, is that the crisis in the financial system is inevitably related to and driven by the recession in the productive side of the economy. And no amount of regulatory proposals can fix that.


Gerry Gold & Paul Feldman
Co-authors, A House of Cards – from fantasy finance to global crash

An Anglo-French nuclear nightmare

The very concept of a “nuclear renaissance” is such an assault on the senses that it seems that only a madman could come up with it. Yet today Gordon Brown and French President Nicolas Sarkozy will agree to build a new generation of Anglo-French nuclear power stations, with the aim of becoming the world’s largest exporters of nuclear technology.

Trade and Energy Minister John Hutton has already offered a terrifying insight into what the two governments have in mind. Speaking to delegates at the Unite union conference, Hutton claimed that Britain can become “the gateway to a new nuclear renaissance across Europe”. The potential scale of the investment is “breathtaking”, he said, and added: "There has never been a greater global demand for finance, equipment and skills to build and operate nuclear power stations. I want Britain to be leading the world in the development and application of this new generation of low carbon power technology."

The UK should not only replace its 23 existing nuclear reactors, but opt for a huge expansion. With “no artificial cap to constrain the potential of new build in the UK” the industry could create thousands of jobs and “the prize could be massive". That weasel phrase “no artificial cap” means the government believes anyone trying to stand in the way is guilty of creating “artificial” blockages to an economic bonanza. So let’s look at some “artificial” blockages.

First of all, in no way is nuclear a “low carbon option”. Construction of a nuclear power station would emit 20 million tonnes of CO2. It would take 100 years to generate sufficient “carbon free” electricity to offset this carbon cost. A 100 megawatt nuclear reactor needs 160 tonnes of uranium each year, processed from 16 million tonnes of rock and releasing 320 tonnes of CO2. Uranium is a non-renewable resource, which is itself already running out.

The drive to mine in new areas is opposed by indigenous communities from Namibia, Australia, Canada and the Black Hills of Dakota. To obtain one tonne of uranium means mining and milling 98,000 tonnes of rock. The refining process leaves 10% of the uranium behind, dumped as radioactive sludge. Wherever it has been mined, it has wrecked the health of people, animals and eco-systems. Here’s another “artificial blockage”. Where is the spent radioactive fuel to be stored? The government’s only plan so far is to offer bribes to some of the poorest communities if they will accept to have storage facilities.

These facts about nuclear energy are summarised in A World to Win’s book Running a Temperature, an action plan for the eco-crisis . It also sets out basic principles for an alternative approach. It proposes a massive investment of public money to insulate people’s homes. The book points out that centralised energy generation wastes power, and proposes instead the formation of local democratically-elected energy groups, which could plan the right combination of energy efficiency measures and local power generation to meet their community’s needs. They would, as far as possible, use renewable resources.

For New Labour, climate change is now simply a business opportunity – their unthinking reflex is always to support the option that suits the global corporations and generates the most profit. The challenge that we face is not just making the transition beyond oil, but the transition beyond the drive for profit, which is threatening our survival. Such a change can only be brought about by a transformation of ownership of the energy companies and the states that promote their interests.


Penny Cole
Environment editor

Credit chain breaks at weakest link

Hedge funds are not just investment opportunities open only to wealthy individuals. They also apparently come in the shape of Iceland. Now, pardon the pun, Iceland’s finances are in meltdown and it could be the first country to fall victim of a global credit crunch that shows no signs of abating.

Iceland has been dubbed a “giant hedge fund” because of the way in which the country’s corporate and banking sectors have expanded rapidly on borrowed money to give above average returns. Until the credit crunch, that is. Yesterday, Iceland’s central bank suddenly hiked up interest rates 1.25% to 15% in a bid to restore confidence in its currency and ward off full-scale economic crisis. It may be too late for the country of 300,000 people.

Its central bank blamed “deteriorating financial conditions in global markets” for the rate rise, which smacks more of panic than anything else. Confidence in the Icelandic krona has plummeted this year, falling 22% against the euro, driving up inflation to around 7%. Meanwhile, traders in so-called credit default swaps have pushed the cost of protecting the country’s three main banks’ debt against default sky high.

Iceland’s plight is a sure sign that the global financial chain is breaking apart, with the weakest and smallest going to the wall first. The intervention of the world’s central banks last week, when countless billions of dollars were thrown at the crisis and US bank Bear Stearns was forcibly taken over, is now being seen as the last despairing throw of the financial dice. And it has made no real difference. The cost of inter-bank borrowing has actually risen since that intervention. Banks are still reluctant to engage in inter-bank loans because they are uncertain whether they will ever get their money back.

While the stock markets are behaving as if nothing is amiss, with shares soaring in London, the latest data from the US economy confirms that things are badly awry. US consumers are at their most pessimistic for 35 years and house prices are falling at the fastest rate on record. Prices in 20 large cities fell by 10.7% in January compared with the same period last year.

What these cold statistics manifest is the economic recession that is now gripping America, which has only been staved off in the past by borrowing on a larger and larger scale, both by corporations, individuals and the federal government. When the financial musical chairs stopped last summer, many institutions were left with what used to be “non-performing loans”. This term was used to describe the Latin American debt crisis of the 1980s, where countries like Mexico were unable to repay the interest, let alone the capital, on their mammoth foreign loans.

Today’s financial crisis is a global phenomenon, afflicting every country, large or small. Iceland is the first sovereign state to face meltdown but it won’t be the last. Creating a new, stable monetary and financial system out of this chaos is clearly beyond the capacity of governments and central banks. For real solutions to this crisis, you should read A House of Cards, which we published recently, and then decide to do something about it.


Paul Feldman
AWTW communications editor

The hidden unholy alliance

The backlash from senior religious figures against the human fertilisation and embryology Bill before parliament should not be allowed to obscure their medieval, anti-science viewpoint on the one hand and the government’s close connection with biotech corporations on the other.

Cardinals and bishops throughout the land used Easter to launch ferocious attacks on the government for refusing – so far - to allow a “free vote” in the Commons. Cardinal O'Brien, Scotland's most senior Catholic cleric denounced what he called "Frankenstein" experiments and called the Bill’s proposals a "monstrous attack on human rights, human dignity and human life". The Church of England joined the fray in the form of Tom Wright, the Bishop of Durham. He saw fit to denounce the government for “pushing through, hard and fast, legislation that comes from a militantly atheist and secularist lobby”.

Cardinal Cormac Murphy-O'Connor, the Archbishop of Westminster, has called for Labour MPs to be granted a free vote, saying: "I think Catholics in politics have got to act according to their Catholic convictions, so have other Christians, so have other politicians.” Three Catholic cabinet ministers are taking their cue from the Pope’s man in Britain - Welsh Secretary Paul Murphy, Transport Secretary Ruth Kelly (a member of the highly secret, far-right Opus Dei sect) and Defence Secretary Des Brown – and are threatening to leave the government.

They oppose the Bill because it allows the use of cloned embryos in the very early moments after fertilisation, which they claim is a form of murder. The Catholic Church’s opposes abortion on similar grounds. In fact, the use of stem-cell therapies, which is what the tiny balls of cells (which in no-way can be called human beings) are used for, has already been proved beneficial in treating Parkinson’s disease. The Catholic Church and other opponents of scientific knowledge want to cash in, as always, on people’s fears and ignorance of the hidden processes by which a human being arises from just those clumps of cells.

There is an entirely justified fear and distrust of another unholy and hidden alliance – that between politicians of all parties and the global corporations whose interests dominate scientific and medical research of all kinds. Brown’s main concern is that biotech corporations will be left behind by their competitors if the Bill doesn’t go through. How they steal an advantage is another thing. Only recently GlaxoSmithKline was forced to admit that it had covered up the fatal effects of Prozac on young people by refusing to place internal research in the public domain.

The secrecy surrounding patents of new medicines, the use of wide swathes of the population as guinea pigs for new drugs, the premature prescribing of new products due to pressures from corporations on the medical profession – in short, the wholesale entry of market forces into the National Health Service have all contributed to fears of unchecked experimentation.

In our book, A World to Win, we document the way in which the Biotechnology and Biological Sciences Research Council is dominated by commercial interests, in particular companies like GlaxoSmithKline, Astra-Zenica, Unilever and United Biscuits.

At present, the choice is between leaving the questions of scientific research to a toothless parliament in hock to corporate interests, who will secretly experiment on people, or endure new forms of moral intolerance and anti-science, parading under the banner of “freedom of conscience”. There has to be another way. The row over this Bill shows the urgent need for a science that is financed and controlled with the interests of society as a whole at the centre of research rather than the balance sheets of Big Pharma.

Corinna Lotz
AWTW secretary

No security against climate change

New Labour’s characterisation of climate change as a “security threat”, second only to terrorism in the pecking order, indicates how the state intends to respond to the results of global warming. And we’re not talking drastic cuts in carbon emissions here but a huge increase in the powers of the state over ordinary people.

The so-called National Security Strategy published yesterday says that Britain faces the risk of severe floods and that flood defences will not prevent serious damage to homes and communities. Extreme weather events “will become more frequent and more severe”. Climate change “is potentially the greatest challenge to global stability and security and therefore to national security”, says the document.

“Rising sea levels and disappearing ice will alter borders and open up new sea lanes, increasing the risk of territorial disputes. An increase in the frequency and intensity of extreme weather events - floods, droughts and storms - will generate more intense humanitarian crises, adding further stresses on local, national and international structures.”

This is the most dramatic and pessimistic statement on climate change the government has ever made. What is significant is that it was made in an assessment of “national security” risks rather than, let’s say, a statement turning down planning permission for a new runway or a coal-fired power station.

And if climate change is to be characterised as a security risk, then what is required is a security response. The main actions arising from this report are the expansion of the spy agency MI5 to 4,000 spooks – double the number in 2001. Funding for the Joint Terrorism Analysis Centre, which is run by MI5, will increase by 10%. And there will be four new regional counter-terrorist units in addition to those already operating.

A standby force of civilian experts, consisting of former judges and ex-police and army officers, already exists, and will be 1,000-strong by June. Readers of this blog will remember that when the floods took place in Gloucester last year, it was the chief constable who took charge not the local council. This deadly combination of increased state surveillance and control, plus a total failure to implement any reductions in carbon emissions or universal energy conservation measures, is the only response that New Labour’s market state can make to the challenge of climate change.

The government’s report acknowledges that many of the results of global warming are “likely to fall most heavily on those countries least able to deal with them, and therefore most likely to suffer humanitarian disaster, but also to tip into instability, state failure or conflict”. Two recent reports underline this reality.

Minority Rights Group International has tracked the impact of climate change on minority communities - from Roma in Hungary, Dalits in India and African-Americans in New Orleans and found they already suffer most from extreme climate events. And the International Union for Conservation of Nature’s report has mapped out the areas of the world which will be most vulnerable to climate change in the future and found that the worst impact will be on indigenous peoples many of whom are already living on the edge of survival.

But opportunities to profit from climate change forge ahead. In New York on Monday, “The Green Exchange” was launched, to trade in carbon “futures” with four new products based on European and US emissions trading schemes. It will compete with the largest existing carbon trading exchange - the European Climate Exchange and the Chicago Climate Exchange, both owned by London-based Climate Exchange plc. which posted a profit this year for the first time, with revenues up 249%. As the capitalists of northern England said during their 19th century hey-day, “where there’s muck, there’s brass”.

Penny Cole
Environment editor

Our next blog will be published on Tuesday, March 25

Iraq: America's nightmare

Exactly five years ago, US and British forces embarked on an illegal pre-emptive war on Iraq with the stated aim of bringing “freedom and democracy” to the country. Instead, they have destroyed Iraq, turning it into a country of mutually hostile ghettoes, presiding over the deaths of over one million Iraqis, driving more than two million into exile, with another 1.9 million internally displaced.

This constitutes a ghastly mass social experiment using live and unwilling subjects. By any count, the governments in Washington and London, to put it bluntly, stand guilty of massive war crimes against humanity. If we actually lived in a democracy, then Bush, Cheney, Brown and Blair and everyone in their regimes who endorsed the invasion and occupation, would be behind bars. The fact that they are still at large speaks volumes for the real nature of present-day politics.

The charge sheet is endless. Driven by corporate greed to turn Iraq from a state-run to a market economy, the occupying powers have dismembered and sold off industries and withdrawn government subsidies for food and power. This “shock therapy”, which was the real objective of the invasion, has added to the untold misery of the Iraqi people. The oil industry, however, was left in state hands so that its resources could be divided up between the oil corporations through contracts so generous that no other country in the world would have agreed to their conditions.

As anyone who cared to investigate at the time knew, the invasion was prepared and launched on a pretext. It followed a softening-up process in relation to international law, when pre-emptive military action was taken against former Yugoslavia and Afghanistan to effect regime change. The United Nations was reduced to a pathetic onlooker as Washington and London prepared the 2003 invasion of Iraq. It took former general secretary Kofi Anan until September 2004 to say that the war was contrary to international law, when a word or two at the time might have made a difference.

As to the fabled “Weapons of Mass Destruction” – they were, of course, essentially weapons of mass disinformation. Former UN weapons inspector Scott Ritter said in an interview: “All this talk about Iraq having chemical weapons is no longer valid. Most of it is based on speculation that Iraq could have hidden some of these weapons from UN inspectors. I believe we did a good job of inspecting Iraq.” The UN blew up the main manufacturing plant and Ritter says that anything hidden would by now be “useless sludge”. He adds: “If Iraq was producing weapons today, we’d have definitive proof, plain and simple.”

The lies about WMD were known in London, where dodgy dossiers cobbled together from the Internet and reworked by press officers tried to build the case for war. On May 1, 2005 the "Downing Street memo" was leaked. It contained an overview of a secret July 23, 2002 meeting between New Labour ministers, defence and intelligence figures who discussed the build-up to the Iraq war. The memo stated: "Bush wanted to remove Saddam, through military action, justified by the conjunction of terrorism and WMD. But the intelligence and facts were being fixed around the policy." According to the Center for Public Integrity, Bush's administration made a total of 935 false statements between 2001 and 2003 about Iraq's alleged threat to the United States.

History will come to see the invasion as a desperate act by desperate politicians on behalf of a greedy corporate elite. Far from demonstrating the all-powerful nature of the US, the war has exposed its Achilles heel – the massive indebtedness of the country, which is bringing down its banking system and depriving millions of people of their homes. The true cost of the invasion and occupation of Iraq is put at a staggering $3 trillion – or $3,000,000,000,000. That has helped bankrupt the US Treasury, weaken the dollar and deprive America itself of much-needed public investment. In this way, the cost of the war has contributed to the recession now hitting the US economy. The war, paradoxically, has weakened the US where it hurts most. No wonder that most Americans are now opposed to the continued occupation of Iraq.

Paul Feldman
AWTW communications editor

Policies for a crisis without precedent

The global financial crisis, which this weekend claimed the giant investment bank Bear Stearns and led to a hysterical response on world stock markets, has no precedent. Comparisons with the Wall Street crash of 1929 or even the “bankers’ panic” of 1907 don’t even begin to get near the essence of the crisis.

Bear Stearns, the fifth largest investment bank in the US, was sold for just $230m. This was a tiny fraction of its value a year ago – before it became one of the early victims of the end of the 60-year credit-led boom (see our blog Financial 'Katrina' begins to blow , June 2007). The bank is the latest in what is becoming a torrent of failures. Global investment giant Lehman Brothers looks very shaky. In the UK, big names like Barclays, HBOS – owners of the Halifax - Alliance and Leicester are in the frame.

But however far back you look on any scale, previous events are dwarfed by the yawning gulf that had grown between the billowing clouds of credit blowing around the world - Marx appropriately called it “fictitious value” - and the real value in the global economy produced by human labour.

Attempts to pour more money in to stem the panic have the same effect as assurances from Brown and Bush. More panic. Stock market meltdown. Soaring prices for oil, gold and food. Mortgages becoming scarce, expensive, or just simply unobtainable. The Bank of England tossed another paltry £5bn into the collection plate yesterday, but it got sucked into the vortex of the tornado and scattered into the air, like so much confetti.

The Financial Times, the voice of global capitalism, has given up on government action, preferring divine intervention. After Martin Wolf’s call to prayer last week, assistant editor Gillian Tett has this to say : “For as anyone with a classical education knows, credit takes its root from the Latin word credere (‘to trust’). And as the current credit turmoil now mutates into ever-more virulent forms, it is faith – or, rather, the lack of it – that has turned a subprime squall into a what is arguably the worst financial crisis in seven decades.”

If they’d all taken the trouble to read the review copies of A House of Cards, from fantasy finance to global crash we sent them four months ago, they wouldn’t have been so surprised by events. Our book tells the story of the credit-led growth of global corporations and the dismantling of regulation. It explains the objective necessity – for the capitalist economy - of this process of expansion at all costs, and how consumers had to be fitted up with debt and seduced with three-for-the price of two offers, buy now - pay later, go large.

A House of Cards doesn’t take up much space asking how bad the crisis can get. We’re more concerned to move forward through proposals aimed at composting capitalism.

We put forward the following principles as a way to act globally by starting locally:
• ownership of production facilities of the major corporations and of land and water through a variety of forms of co-ownership
• democratic control and self-management of economic and financial resources, including public services
• productive capacity shifted towards satisfying need rather than generating profit
• ecologically sustainable production and distribution
• encouraging and supporting small-scale enterprises, creative workers and farmers to work sustainably
• favouring local production for local needs
• facilitating the development of the “thinking market”.

Humanity has arrived at an historical crossroads where we face key decisions. Capitalism has its own “solutions” to the crisis: financial and economic disorder, war and dictatorship. The development of a global society based on co-operation, co-ownership and sustainability offers another way forward. This is nothing less than a challenge for power over capitalism and its political system. Get a copy of A House of Cards. Read it. Help us to build A World to Win as a movement that can inspire people to take the path of revolutionary change.

Gerry Gold
Economics editor

Tibet: Brown puts trade before human rights

While China is desperate to present a benign image to the world in anticipation of the summer Olympics, the brutal crackdown on Tibetans determined to defend their language, religion and culture, betrays the real nature of the authoritarian regime in Beijing.

While a wave of demonstrations and oppression rages inside and outside Tibet, the response in Western capitals is muted to say the least. Concerned more about maintaining trade with China – whose reserves literally prop up the ailing dollar – Bush and Brown do no more than express “concern” while the bloodshed continues.

The Chinese authorities’ attempts to blame Tibetan “attacks” on Han Chinese for the crackdown is disgusting. Chinese troops were sent in last week when a march by 300 monks from the Drepung Monastery outside Lhasa grew rapidly into probably the biggest protest since early 1989. Then, under China’s present president, Hu Jintao, 200 demonstrators were killed. This time, a hail of police fire killed around 100 Tibetans, amongst them boys and girls, according to eyewitnesses. All the reports show that the Tibetan capital, Lhasa has been transformed into a war zone. There are troops on the streets with armoured vehicles warning people to stay off the streets or face lethal force.

By shutting down access to Tibet-related internet sites anywhere in China and curbing mobile coverage, the authorities seek to hide the extent of the killings. But despite the ferocity of the crackdown, Tibetans feel this could be a chance for their cause to resonate around the world. "Total desperation has arrived," said Lhadon Tethong of Students for a Free Tibet. "The people of Tibet are fighting for their religious and cultural survival. With the Beijing Olympics only five months away, many see it as now or never."

The stakes in this confrontation are extremely high on all sides. Chinese rule is reliant on political control by the Communist Party – a Stalinist, bureaucratic organisation which is desperate to cling to power. Party bureaucrats have become monstrously rich by making deals with the global corporations. They are terrified of losing sovereignty in Tibet, because it could signal the unravelling of Chinese control in Taiwan as well as in Xingang in the north. Meanwhile the rest of the capitalist world, particularly the global banking system, is deeply in hock to the Chinese government.

For Tibetans, the struggle goes back to 1950, when Chinese forces invaded Tibet. They have been denied the right to their culture, language and religion for decades. By flooding the area with Han Chinese immigrants, Beijing has hoped to smother Tibet’s own traditions. But in fact, it was Britain’s invasion into Lhasa in 1903-4, which turned the hitherto inaccessible mountain area into a pawn in the struggle for domination between the Russian and British empires. A hundred years later, economic interests are still to the fore, particularly as the international banking system staggers from one crisis to the next.

Campaigners for human rights in Tibet are calling on Brown and foreign secretary Miliband to condemn the Chinese government’s brutal attack on the basic rights of Tibetans. Matt Whitticase of the Free Tibet Campaign denounced Brown’s silence on human rights during his recent trip to China as “shameful”. In the end, however, New Labour puts trade and corporate interests above human rights – both in Tibet and Britain.

Corinna Lotz
A World to Win Secretary

Prayers as 'the great unwinding' claims another casualty

Guests on last night’s Newsnight (BBC2) talked about a ‘crumbling house of cards built by the capitalist financial system’. They weren’t talking about our book A House of Cards, from fantasy finance to global crash but they might as well have been. Instead, they were discussing the latest bankruptcy of a major financial group.

This time it is Carlyle Capital Corporation (CCC), a $22bn mortgage-backed securities fund. As the Financial Times put it, “CCC represents one of the most dramatic casualties of the great unwinding that is occurring in the financial markets as lenders pull back from risk. The fund, which had $31 of debt for every $1 of its own, had hoped to use its massive borrowings to generate higher returns from investments in highly rated mortgage securities.”

This latest collapse panicked the stock market, led to further falls in the dollar, drove commodities to new records and delivered a sharp blow to chancellor Alistair Darling’s belief that slowing growth and increasing inflation are only temporary – the naïve reassurance at the heart of his first budget. If anything was clear from Wednesday’s speech, it was a tacit admission that there aren’t any measures New Labour can propose to match up to the severity of the escalating global financial and economic crisis.

Its scale and spread renders any national government incapable of defending its economy against global storms. The world’s central banks have thrown at least $100bn at the markets this week – all to no avail.

Darling’s speech was peppered with phrases which passed the buck – there’s a “slowdown in the global economy”, “turbulence in global financial markets”, “significant disruption across many credit markets: with a number of them barely functioning at all”, and falling global stock markets pose “a major risk to the world economy”. Despite this, he remains confident about the relative strength of a British economy which is utterly dependent on the fate of the global financial system.

Later that day, the International Monetary Fund’s first deputy managing director, John Lipsky told it how it really was. Things are bad, and are going to get worse. “Policy actions worldwide, so far, "may not prove to be adequate" to deal with the "low probability but high impact events" that may materialise and undermine global financial stability. Policymakers as a matter of course need to `think the unthinkable,” and to consider how they would plan to react if contingencies arise. The need to prepare systematically for potential risks has been demonstrated amply during the past few months." This was hours before CCC hit the headlines. He must have known.

In a stark admission of the failure of the IMF’s policy of unregulated, free markets Lipsky said: “I fully recognise an appropriate role for public sector intervention after market solutions have been exhausted.” Some support there, then for Darling’s Northern Rock rescue, and a strong indication that further vast sums of public sector money will have to be diverted into more ill-fated attempts to shore up the global capitalist economy.

Perhaps most worrying is the way Darling proposes to deal with the threat of climate change. “There will be catastrophic economic and social consequences if we fail to act,” he says. But, in a move hardly noticed by green critics, and certain to negate the other wholly inadequate measures he announced, Darling is going to offset the arrival of Peak Oil by reforming “the North Sea fiscal regime to help incentivise investment and support production”. This will maximise the “economic recovery of the UK’s oil and gas reserves”, he says.

More profits from more fossil fuel? Maybe the FT’s Martin Wolf was right in his conclusion to Tuesday’s column about the financial crisis: “We must pray.”

Gerry Gold
Economics editor

E.ON calls the tune

Alistair Darling’s failure to keep his pledge to put “sustainability at the heart of his budget” may have disappointed campaign groups like Friends of the Earth, but they shouldn’t really be surprised. Earlier this week, the government’s new Committee on Climate Change met for the first time – and got an object lesson in just how effective they are likely to be.

Trade and energy Minister John Hutton chose that very day to make it clear that the government will approve a coal-fired power station at Kingsnorth in Kent without specifying “carbon capture” technology as a condition. The extent to which the government’s whole agenda on climate change is dictated solely by business interests, was highlighted when the trade and energy department caved in to pressure from the global energy giant E.ON over the new power station on the Medway Estuary.

In an exchange of emails (obtained by Greenpeace under Freedom of Information), an official in Hutton’s department suggested that permission might be dependent on a commitment to retro-fit carbon capture technology. E.ON’s Martin Land replied: “E.ON is reluctant to specifically reference carbon capture and storage as a consideration without legislation. The Secretary of State has no right to withhold approval for a conventional plant." Just six minutes later, the official emailed back, saying: “I won’t include it.”

So the energy corporation denied the government even the slightest fig leaf to hide their shame. The reality is that carbon capture is currently a pipedream, but the government hoped that writing it in would make the Kingsnorth decision seem less odious. The plant will be one of the country’s largest emitters of greenhouse gas – around 8m tonnes a year. Seven other similar sized or bigger coal-powered stations are planned, driving the UK target of cutting emissions by 60% by 2050 further and further away.

Which brings us back to Lord Adair Turner (former McKinsey consultant and Director General of the CBI, the employers’ organisation) and the Climate Change committee that he chairs. Their role is to monitor how effective the government is in progressing towards the targets in the Climate Change Bill. Interviewed on the BBC Radio 4 Today programme, he refused to comment on Hutton’s announcement. “I’m not going to get into giving week-by-week comment on specific decisions. We are there to map the path from 2012 to 2050.”

But that path is pretty clear already, if every single “specific decision” is made on the basis that what’s good for business is the only criteria that counts. Turner can learn more about the likely future influence of his committee from Jonathon Porritt, chair of the UK Sustainable Development Commission, another body advising the government. He told the Today programme: “The government takes our advice seriously on issues where it is convenient for them to do so. On energy efficiency they say it can’t be made to work because our economy cannot tolerate it.”

John Hutton is the minister who this week told the TUC and Labour Party to stop attacking fat cat City bonuses and millionaire salaries. We need more millionaires, he explained, and Labour must "renew our commitment to wealth creation and enterprise in Britain…." So that would be starting with E.ON then?

Penny Cole

Environment editor

Goldsmith's allegiance to the state

As we approach the fifth anniversary of the occupation of Iraq, it is indeed ironic that the man who now tells us that an oath of allegiance to the state by young people would enhance respect for authority and engender a stronger sense of citizenship, is the same person who in 2003 helped facilitate the illegal invasion.

Lord Goldsmith’s own respect for authority – in this case the established principles of international law – was found wanting when the Blair government asked for – demanded, to be more accurate - an opinion that an attack on Iraq was lawful. Step forward the then Attorney-General, the very same Lord Goldsmith. The accepted legal position was that an attack on another sovereign state was only justified under specific conditions, including the threat of an attack by that country or where force had been authorised by the United Nations. Neither applied in the case of Iraq.

Goldsmith’s creative mind was exercised by this dilemma. His original memo written on 7 March 2003 was equivocal. He said existing breach of Security Council resolution 1441 could provide a “reasonable case” for the use of force without a further resolution, but conceded that a court might well conclude that another UN resolution was needed. The armed forces were not satisfied with this position. So ten days later, on the eve of the invasion – with no prospect of getting a further UN resolution - Goldsmith bluntly stated that the use of force in Iraq was lawful, dropping all his earlier caveats.

In handing Blair a legal fig leaf, Goldsmith had given the green light to the blatant objective of regime change, the installing of a government more to the liking of Washington and London which would open up Iraq to foreign investment and guarantee oil supplies. When the invasion began on 20 March, Elizabeth Wilmshurst, deputy legal adviser at the Foreign and Commonwealth Office, promptly resigned in protest. She also accused Goldsmith of changing his view on the matter.

Respect for “authority” has continued to plummet following the invasion. In the case of Iraq, the authorities patently fabricated evidence and dossiers about so-called weapons of mass destruction. No wonder fewer and few people believe what the government says on any issue. The authorities are viewed as duplicitous at best, ignoring people’s wishes on a variety of questions ranging from nuclear power to expanded airports.

Goldsmith’s proposals on an oath of loyalty in schools have about as much merit as his discredited opinion on Iraq. The idea of swearing allegiance to the monarchy, Britain’s least democratic institution, is, in any case, absurd and laughable. Goldsmith’s nonsense is yet another sign of New Labour in disarray. Having lost the respect of millions of voters, creating a society more unequal than ever before, Brown’s government is wrapping itself in the Union Jack and banging on about imagined “shared values” in a desperate bid to rally support. Add this to the surveillance, database-driven state that is far advanced in Britain, and you get an idea of the direction New Labour is heading in. It’s not a pleasant prospect.

Paul Feldman
AWTW communications editor

The surveillance Olympics

If gold medals were awarded for surveillance, then Britain will win a hatful at the 2012 Games. The Metropolitan Police hopes to use no fewer than 500,000 CCTV cameras to police the 2012 Olympics Games in London. All of its own cameras, numbering a mere 10,000, will be pooled with traffic, congestion and other cameras across the city to create a network, the BBC reports. This network “would be operated from a command centre, in London, by military, police and intelligence services … It is understood the command centre would remain in place after the Olympics”. Just like that!

And the plan does not stop with the cameras. The Met’s head of special operations Tarique Ghaffur, has outlined a number of other measures: the division of London into three security zones to make the arrangements more effective; the use of three helicopters for close surveillance during the games; an automatic number plate recognition system; and the issuing of tickets that are linked to the identity of buyers, whereby a spectator “will be tracked from the venue to his or her home with these tickets”. Ghaffur also promised a conference in Abu Dhabi that there would be stringent checks, including biometric fingerprinting for the 40,000 workers building the venues.

All this represents another big lurch towards the police state that even some respectable commentators are warning about in the capitalist press. The London Olympics, for the police, the military and the spooks is an irresistible opportunity to test out new ways of monitoring and controlling a population. The state, in a period of crisis and uncertainty, like that of today, constantly seeks to re-arm and strengthen itself. Led by New Labour, the forces of the state try to turn every event or feared event into an excuse for taking away the freedoms of people and raising their own powers. The so-called,“terrorist threat” becomes the pretext for new restrictive laws and mass surveillance that actually leaves aside the real causes and issues around terrorism.


All these measures are preparation for something other than terrorism, however. The ruling and political classes understand very well that as mortgages, fuel bills and food prices rise and as the financial crisis intensifies and workers lose their jobs, there will be upheavals. The history of this country shows time and again that the masses will defend their rights and their liberties and that is why the state is tooling up with cameras on every corner and database-driven ID cards.


The Games themselves over the last 30 years or so have become more and more an arena for the big corporations to advertise themselves and to market their products and less and less of a genuine sporting spectacle. The media companies, who broadcast to 3.9 billion people at the last games in Athens, also make a killing.

Athletics, the main sport at the Olympics, is hopelessly compromised by drug-taking, leading to scandals, lawsuits and phoney results. The 2012 games will cost at least £10bn (rising all the time), apart from the security bill. Many people and small businesses in East London have been forced out of the area, and arts and community projects have been starved of funds, as lottery money is channelled to the Olympics.

And yet a different scenario, a not-for profit Olympic Games without corporate sponsorship, is not hard to imagine. Sport, released from the orbit of the profit-hungry mammoths, would re-discover some of its old values and sportspeople, free from the pressures of winning at all costs, and in a different cultural environment, would soon learn to eschew drugs.

The games would ultimately be owned, controlled and organised by the athletes, the fans and the local community. Their organising committee could of course call on the same experts, planners, designers, architects and others who are doing the work now, but, freed from the agenda of the globalised sports industry and governments that support big business, the games would soon become a different - and uplifting – event, without the sinister and pervasive security that is going to be a feature of the London games.

Peter Arkell

Clegg sounds the alarm bells

Media pundits made fun of the Liberal Democrats’ new leader, Nick Clegg, when he split his party over the European Union treaty referendum vote. But over the weekend, he defied predictions of disaster by winning over spring conference delegates with a sweeping condemnation of “establishment politics” in a bid to position himself for the outcome of the next general election.

Clegg attacked class divisions in Britain, where “some people are still more free than others” saying that Labour had “sold its soul and became the second Conservative party”. He pointed out that children born into poor neighbourhoods might have a life expectancy far shorter than the rich. Clegg tapped into the growing disaffection with existing political structures, especially the two-party system that has dominated British politics for so long.

Casting himself and his party as rebels against the political establishment, he said, “a new type of government” was needed - “a new system, that empowers people not parties”. He called for a 100-strong citizens’ jury to join forces with parties, churches and other groups in a Constitutional Convention to “redesign the way Britain is governed”. He noted how there is a “vast and growing army of people who want something different than the main political parties” who rejected the two main parties. Clegg also called for a mass movement of millions of people to take action to protect the planet and tackle climate change.

The Lib Dem leader spoke of liberty taken and abused by government officials and “a faceless state”. He referred to Brown’s “obsession” with building bigger and bigger database systems. He denounced New Labour’s pride “that Britain is leading the world in fingerprinting children at school” and “that the identity card database will be the biggest and most complex that the world has ever seen”. He warned of the impact of a US recession on Britain, saying: “We’ve been building castles in the sand. And the tide is coming in.”

All of these things are undoubtedly true. But behind Clegg's bold words and “high-risk strategy”, he is in fact positioning his party for a possible coalition in the event of a hung parliament. When he refers to “the rotten old system”, he actually means the two-party system, NOT the profit-driven, debt-based system of production, which is now spiralling out of control. He is aware that increasing numbers of people know and feel the existing political structures are neither democratic nor representative. But the bottom line is that Clegg is seeking a way of shoring up faith in the present political system, by offering the pipe dream of capitalism with a democratic face. He is sounding alarm bells about the political system with an eye to backing a Tory or Labour minority administration in the event of a hung parliament.

Many observers, especially those far to the right of Clegg, have noted the sea change in Britain over the last few decades, particularly since New Labour came to power. There is a vast alienation from what is seen as “politics” – in other words the existing undemocratic and somewhat corrupt parliamentary system of rule. The Liberal Democrats’ re-positioning is not just speechifying but a desperate attempt to balance an extra-parliamentary movement with one still chained to the old system. It should be seen as a clarion call to develop a truly alternative economic and political vision to bourgeois democracy and corporate power. A World to Win’s next discussion on April 3 will be another step in this direction.

Corinna Lotz
AWTW secretary