the next step

Dave Osler wonders if the left is in any shape to take advantage of the financial crisis and notes that there isn’t much in the way of a coherent leftwing alternative to current economic orthodoxy in public circulation and that it therefore might survive by default.

It’s certainly true that there’s no coherent political alternative available. Different governments have acted in different ways in the face of the crisis, but all of them are trying to keep the system going and, broadly, restore the status quo. It’s the capitalists who don’t believe in capitalism anymore. Hedge funds and other short sellers are betting against the financial sector, and while markets don’t trust the banks, the banks don’t trust each other: the main reason they keep collapsing is because they refuse to lend money, often for no good reason other than the fact that mutual distrust has become endemic: to ask for money is itself sufficient grounds for refusal. So when central banks inject capital into the market it doesn’t work through the system. The brain has told the heart to stop pumping blood round the body, with that in turn subjecting the rest of the economy to a kind of creeping gangrene.

Well, Marxists always expected capitalism to kill itself, though not in the way it currently appears to be doing. The logic of this points beyond bailouts and the nationalisation of failing institutions to the state taking over the functions that banks are currently failing to perform. Without the kind of thinking Dave talks about this seems inconceivable. But two years ago a run on a bank was inconceivable. The government tried everything it could think of before it finally nationalised Northern Rock, but accepted the need to move much more quickly over Bradford and Bingley. Meanwhile the shotgun wedding the government arranged between HBOS and Lloyds TSB is in danger of falling apart because the share price has plummeted: private investors apparently think that the price of saving this particular locus of capitalist enterprise is too high and are bailing. So the state looms once more as the owner of last resort. Maybe there is a step by step revolutionary economic strategy out there: just not in the places you might expect.

Comments

[Fellow Traveller]

...refuse to lend money...

Untrue and widely circulated. The banks will lend money but only at interest rates upon which other banks refuse to borrow. The money's there, but no bank will take it because it will cut into their profit too hard. This whole bailout will protect bank profits, nothing else.