In These New Times

Cailean Bochanan

11th November, 2010

A John Pilger article is always a major trend setter on the left and the trend in question this time is an extraordinary one: Pilger effectively declares that there is no capitalist crisis. In the old days the drastic measures taken by the government to cut public spending would have been opposed by the left on the grounds that they were necessary for capitalism  but the sign for us of the need for  completely different system. Now Pilger declares that Britain’s financial travails are “not remotely a crisis”. Some doubtful statistics and facile analogies are good enough to reassure him that “there is no economic rationale” for the cuts. This is all the more extraordinary in that chancellor Osbourne is himself telling us that Britain is “on the brink of bankruptcy”: are we really to believe that this is a lie concocted to justify an ideological attack on public spending? Anyway, we don’t have to take Osbourne’s word for it: there is overwhelming evidence that Britain is bankrupt. He isn’t exaggerating, he’s playing it down: massive amounts of debt are being concealed by dodgy accounting including the bizarre practice of counting the bank bailout funds as an asset- does the government really expect to see that lot again? And then there the small question of 4 trillion of hidden debts.   Pilger claims Britain’s situation is no worse than in 1945 when Anglo-American power, having seen off Germany and Japan, largely at the expense of the Soviet Union, was consolidating its global leadership. For all his exposes on colonialism and the Iraq war, Pilger seems to have no sense that what we are looking at is essentially imperial demise: if Britain really was still, as David Cameron seems to think, in a position to dictate to countries like China how they should run their economies then  the figures would not be so grim- we could could go on offloading our debt onto others and consuming at their expense. But capitalism, at least the Anglo-Saxon version, which has always been inseparable from the domination of other nations, really is finished: the left just don’t want to know. They therefore content themselves with traditional remedial measures, laudable in themselves, such as opposing cuts on social spending and calling for taxes on the wealthy. They are unable to grasp the truly revolutionary nature of the crisis, or its dangers:  but this will soon become clear to them and to everyone else.

Back in July, Davis Goldman pointed to the continued difficulties banks were experiencing:

“True, the banks have shed bad loans but they can’t find good loans either. So the banks will continue their zombie existence.”

But the idea of the banks merely continuing their zombie existence is looking complacent. House prices are falling both here and in the USA and new waves of bad debt are washing over the banks. On top of this, or, rather, emerging from  deep within the bowels of the system is fraud leading to market breakdown. The bankers have killed the golden goose and the whole notion of mortgage lending is coming into question: people needn’t pay mortgages fraudulently incurred even if they could pay them, which becomes more unlikely by the day as cuts fall and jobs are lost. How long can the banks go on ruining people and getting returns off them at the same time. It doesn’t add up: they are going to require another bailout.

Having constituted themselves as a committee for organising the affairs of the City of London and Wall Street, the UK and US governments will surely comply in rescuing there distressed masters. However, at some point political factors come into play: does the public not have any say in its own sacrifice at the alter of plutocracy? Marx’s class war has up to now been a very strange one: only one side is fighting. They are throwing everything at us from spending cuts to a marvellously creative array of taxes and illegal fines.

And now we face another bailout. Their preference would be a stealth bailout but the big banks are too big to fail without being noticed. Watch out for falling share values of vulnerable banks such as Bank of America. Watch out for the reversal of the BoE’s decision not to launch another round of quantitative easing. The moment their problems can no longer be hidden is the moment that the choice confronts us: save the banks under whatever guise or save ourselves and what is left of our economy and society.

What a new bailout/ round of QE means in practice is the deployment of the inflationary weapon as a unique instrument for the impoverishment of the whole population, not, as Obama would have us believe, a sort of benign Keynesianism for stimulating the economy and creating jobs. This is just laughable. This process has to be stopped in its tracks: the only sane step is to put the big banks through bankruptcy. This is also the starting point for the reconstruction of Britain and the  redefinition of Britain’s place in the world.

As I have explained elsewhere, Britain cannot resolve this crisis internally. We are wedded to globalisation but globalisation is no longer something which is happening on our terms. We must therefore come to terms with others, especially our creditors, and seek to benefit from international collaboration in rebuilding our shattered economy and society. This requires political leadership which, alas, as yesterday’s ill-judged and ignorant comments in Beijing by David Cameron show, does not as yet exist. We are therefore left to fight it out as best we can against a vicious elite intent on protecting its ill-gotten gains (Cameron’s recommendation to China of Britian’s “rule of law” is surely the ultimate hypocrisy). In such a situation with a hyperinflationary recession coming towards us like a great tsunami we must draw bottom lines and defend them. All the essential needs, shelter, food and warmth must be defended. For the first time since the thirties and on a far greater scale we are in a crisis which threatens our very existence. We are engaged in a fight for our survival.