The stakes are very high. Climate change is accelerating, inequality is at historic levels, unemployment is rampant and many countries are bankrupt. The financial industry continues to teeter on the brink of collapse, threatening the entire global economy. And despite all this our political system has proved incapable of effecting the structural transformations necessary to bring about real change. The time is right for a new approach, a new progressive system and a new economy. Having more of the same failed medicine is clearly never going to work. We cannot simply shed crocodile tears.
Jobs
A New Banking System? – time for real change!
At long last there now does seem to be some debate about our society and the need for change. There was recently even a mention and a debate about real societal change, and fundamental changes to the banking system on the Jeremy Vine radio show. And the ‘occupation movement’ does seem to be having a positive impact. We are also seeing widespread opposition to our bankrupt and failed system.
As Marx once explained, a developed credit system both gives greater elasticity to capitalist production and accentuates capital’s tendencies to overproduction and overspeculation.
The crash of 2008 was big enough that governments had to nationalise or bail out major banks, “socialism for the rich”, as it was termed and world trade shrank sharply in 2009.
A crisis, as Marx explained, brings “a tremendous rush for means of payment, when credit suddenly ceases and only cash payments have validity”. Except that in today’s capitalism there is no real “hard” cash. Every form of “cash”, US dollars, British pounds, euros , are only IOU’s issued by one government or another.
The lurch of capitalist policy away from neo-liberalism which many predicted in 2008, has not happened and now surely will not happen.
Capital is still sunken on credit. The global amount outstanding on foreign exchange derivatives rose from $14 trillion in 1999 to $63 trillion in mid-2008, then fell back somewhat, but has risen again to $69 trillion plus in mid-2010.
Governments have more extensive credit than banks. They were able to intervene to save the banks in 2008. But that intervention strained their credit, and in a time when global credit markets were becoming tighter. At the same time governments’ incomes shrank because of the downturn in trade and production following the financial crash and political blunders.
Most governments now depend on getting credit in global financial markets, not on siphoning savings from their own citizens as they used to. For eurozone governments the discipline is especially tight, since they cannot print their own money, and the European Central Bank was set up with rules that limit its assistance to governments. They are trying to change the rules as I type.
Some eurozone governments were bound to run into credit difficulties. The first were Greece, Ireland, and Portugal. And most countries have had bail outs and are in deep trouble or indeed bankrupt.
The present and ongoing crisis could well lead to the collapse of the eurozone, and a retreat by European governments back to national currencies. The impact of that on European capital, which depends day to day on the low costs of doing business across Europe, will be huge. They will find some way to patch things up for a while. As the previous so-called “bail-outs” patched things up for a while, only to make them worse in the long term. We need a long term plan, for the future of us all.
We should however, not underestimate the power and resourcefulness of a system based upon capital. The cuts programmes in Ireland and Spain are brutal, but they are having an effect, so far, in capitalist terms. Since the EU’s leaders know that the crisis is so dangerous, it is possible they will do something more radical than expected. But radical enough to restabilise government is debatable and they are running out of options and getting very desperate. Unfortunately, wars have historically been a ‘solution’ and a consequence. Real progressive changes are however now possible.
The project of the European single currency was botched from the outset, in 1999-2000, hurried through on the wave of capitalist triumphalism typical of the time, and with questions about how it would deal with tricky imbalances glossed over. Credit and fictitious capital became the norm, but we were all living on borrowed time. The Eurozone crisis is only one part of the world wide crisis.
So back to today, Greece’s debt should be cancelled, and a new beginning made. Banks should be nationalised under democratic control and a Social- Worldwide Bank should be created. Social equality and workers’ rights should be levelled up across the continent. And new plans should be formulated, which draw upon the lessons of these disasters and create a fair and less greedy society. Again, I call for a real debate about a real change of society.
And on a completely different note the Birmingham March and Rally went very well, despite the pouring rain. Thanks for the considerable support.
Birmingham March and Rally- 27 October- 12- noon.
Well just one more. Bad news about the NHS and the Lords vote. But we must continue the struggle and call for all the groups and organisations to unite in opposition to the new proposals.
And for information a number of Rallies and demonstrations will be taking place over the coming months. This is just one of them called by the WMPC.
Economy and our society!
Well that really was the very last one on this topic. Over the months we have seen politicians imprisoned, further wars, a continuing global economic crisis, high rates of unemployment and that is just for starters. But perhaps one very important matter I have neglected is our precious NHS which now looks in danger. For example,
- The Secretary of State’s legal duty to provide a health service will be scrapped. On top of that, a new “hands-off clause” removes the government’s powers to oversee local consortia and give some guarantee of the level of service wherever we live. We can expect increases in postcode lotteries together with less ways to hold the government to account if the service deteriorates.
- The NHS will almost certainly be subject to UK and EU competition law. Private health companies will be able to take new NHS commissioning groups to court if they don’t win contracts. Scarce public money could be tied up in legal wrangles instead of hospital beds. Meanwhile, the legislation lifts the cap on NHS hospitals filling beds with private patients. We must avoid a US style system.
- And has we now know this bill has now been passed, with only a handful of Lib Dems voting against. So it is now imperative to lobby the members of the House of Lords and join in the demonstrations planned for October.
- Enjoy your weekend and I hope you join me on my new Blog planned for October. Ivor Timson MSc (Econ)