[Marxism] Islip Political Newsletter for March
Midhurst14 at aol.com
Midhurst14 at aol.com
Thu Mar 19 06:16:06 MDT 2009
Capitalism in a deep and prolonged crisis
George Anthony writes that the solution lies in organised struggle
The comfortable win by Derek Simpson for the Joint General Secretaryship of
UNITE bodes well for the health of the labour movement in the battles ahead
with the crises-ridden employers and with the Brown led Labour government, as
we approach the General Election in 2010.
Initiated by the ultra left to place Derek in a vulnerable position after
the recent demonstrations for jobs in the construction industry, the Daily
Mail, The Sun and The Times took this opportunity to remove Derek from the
leadership of UNITE.
In the event, both destructive forces failed.
That capitalism is in crisis needs no persuasion from the pages of Islip.
However, the fact that Detroit, founding city of the car industry, is now
referred to as the Rust Belt. That 80% of men in Britain’s mining areas are
unemployed and that 43 million tonnes of coal was imported last year,
illustrates the bankruptcy of a system that is controlled by stock market
Only the depth of the recession and the labour movement’s answer to it, is
the subject of this article.
For we are witnessing the deepest, broadest and most dangerous financial
crisis since the 1930s. As argued elsewhere, “banking crises are associated with
profound declines in output and employment.”
This is partly because of overstretched balance sheets: in the US, overall
debt reached an all-time peak of just under 350% of GDP - 85% of it private.
This was up from just over 160% in 1980.
Among the possible outcomes of this shock are: massive and prolonged fiscal
deficits in countries with large external deficits, as they try to sustain
demand; a prolonged world recession; a brutal adjustment of the global balance
of payments: a collapse of the dollar; soaring inflation; and a resort
The transformation will surely go deepest in the financial sector itself.
The proposition that sophisticated modern finance was able to transfer risk to
those best able to manage it has failed. The paradigm is, instead, that risk
has been transferred to those least able to understand it.
As a former chairman of the US Federal Bank, Volcker, remarked, during a
speech last April: “Simply stated, the bright new financial system - for
all its talented participants, for all its rich rewards - has failed the
test of the marketplace.”
In a recent paper Andrew Haldane, the Bank of England's executive
director for financial stability, shows how little banks understood of the risks
they were supposed to manage.
He ascribes these failures to “disaster myopia” (the tendency to
underestimate risks), a lack of awareness of “network externalities” (spillovers
from one institution to the others) and “misaligned incentives” (the upside
to employees and the downside to shareholders and taxpayers).
The pundits now seek an alternative in Keynesianism, who was about saving
capitalism from the horrors of workers rule, and we are seeing, in this
financial crisis, a return to his ideas.
In the Financial Times of March 9th, Robert Shiller, economics professor at
Yale University wrote, “We are talking again of the 1936 book The General
Theory of Employment, and Money, which was written during the Great
This era, like the present, saw many calls to end capitalism as we know it.
The 1930s have been called the heyday of communism in western countries.
Keynes's middle way would avoid the unemployment and the panics and manias
of capitalism of capitalism. But it would also avoid the economic and
political controls of communism.
The General Theory became the most important economics book of the 20th
century because of its sensible balanced message.
In times of high unemployment, creditworthy governments should expand demand
by deficit spending. Then, in times of low unemployment, governments should
pay down the resultant debt.
With that seemingly minor change in procedures, a capitalist system can be
stable. There is no need for radical surgery on capitalism.”
He concludes that “The idea that unfettered, unregulated capitalism would
invariably produce the good outcomes was a wrong economic theory regarding how
capitalist societies behave.”
Thus the idea, emanating from monetarist, Milton Friedman, via Reagan and
Thatcher has been well and truly busted. The pundits now shout this from the
rooftops. Furthermore, Greenspan, last Chairman of the US Federal Bank, in
congressional testimony last October, said he was “in a state of shocked disbelief
” over the failure of the “self-interests of lending institutions to
protect shareholders equity.”
In addition, for these well educated individuals, the explanation for
over-production: surplus value, never appears in their script; the idea that this
occurs in the process they call business is a mere incidental, indeed Keynes
probably never understood it.
The turmoil throughout Europe and the changes with the Obama administration
in America, by intervening to rebalance incomes as well as prop up America's
economy, Obama aims to make the crisis the beginning of a new era of
With governments falling in Iceland and Latvia, strikes or protests
erupting in Greece, Ireland, France, Germany, Britain, Lithuania, Ukraine,
Bulgaria, Guadelope and Russia's Vladivostok, new challenges confront the organised
working class throughout the world.
The 25th anniversary of the miners strike recently featured on BBC 4, apart
from admitting that the mounted police had charged the miners first and then
moved in with snatch squads, showed how trade unionists in action may have
to battle with the state machine and bring out its ugly face when threatened.
John Gollan, General Secretary of the Communist Party of Great Britain,
painted an alterative picture of society, and how to achieve it “…..the mass
political extra-Parliamentary struggle can alter decision-making and can be a
profound factor on the Cabinet, Parliament and the courts, as the battle over
the Industrial Relations shows.
The role of the British people in decision-making in our class-divided
society is primarily by conflict and struggle, and not by formal participation. We
seek the transition to socialism by democratic political struggle.
Indispensable for this is the unity of all socialists and Communists in the labour
movement, and the defeat of right-wing influence in the movement.
Our objective is to win a Parliamentary majority of socialists and
Communists in the labour movement, pledged to carry out socialist aims, but we have
always stressed the dual aspect of Parliamentary and extra-Parliamentary
The threat to democratic freedoms comes from the right, not from the left.
For the full development - of democracy, socialism is needed. Socialism
requires not only the common ownership of the big industrial and commercial
enterprises, the banks and the land. but the full and consistent development of
Our aim is the construction of socialism in Britain in forms which would
guarantee personal freedom, the plurality of political parties, the
independence of the trade unions, religious freedom, and freedom of research, cultural,
artistic and scientific activities.”
John Gollan-Socialist democracy-Some Problems-Marxism Today-January 1976.
We are therefore on the cusp of a constantly and radically changing
As the Chinese have it “May you live in interesting times.”
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