[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 
to protection­ism.  
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 
progressive  politics.  
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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