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From The Socialist newspaper, 23 September 2008

Their failure, their system: make the capitalists pay

Notice overlooked by Lloyds bank, which has just swallowed up Halifax Bank of Scotland, photo Paul Mattsson

Notice overlooked by Lloyds bank, which has just swallowed up Halifax Bank of Scotland, photo Paul Mattsson

FAT-CAT bankers from Wall Street to the City of London are reeling from the white-knuckle ride of last week's financial crisis. Capitalism has taken an almighty battering. In order to calm global markets, governments and financiers tried bail-outs, shotgun takeovers, and even letting a bank fail.

Elaine Brunskill

Trying to answer the question "Is the panic over?," The Independent's economics editor said: "For now, yes, if only because we're running out of banks to trash." Alan Greenspan, the former chair of the US Federal Reserve, commented that the demise of an institution such as Lehman Brothers was "probably a once-in-a-century type of event".

However in one volatile week, alongside the Lehman crash, we've seen: the US government being forced into nationalising AIG; Merrill Lynch (the third biggest US investment bank) hastily taken over by the Bank of America; and the take-over of HBOS, Britain's largest mortgage lender, whose share price plummeted by around 70%, with "spivs and speculators" blamed for the debacle.

All this followed hard on the heels of the bail-out of mortgage giants Freddie Mac and Fannie Mae - the US federal government was forced to nationalise them to rescue the US mortgage system and to try to stop further domino-effect banking failures.

These events are a huge ideological blow for fans of neo-liberalism. As Seumas Milne wrote in The Guardian: "What is certain is the dominance of the free-market model of capitalism which held sway across the world for two decades, is rapidly coming to an end."

Another Guardian commentator laments that the chair of the US federal reserve and the US treasury secretary, "have done more for socialism in the past seven days than anybody since Marx and Engels"!

On Sunday's AM programme, Gordon Brown tried to calm City nerves by saying: "We are pro-business; pro-market". Of course, he said absolutely nothing about New Labour being pro-working people. Even the last 16 years of economic growth have been dismal for the vast majority of workers who have had to run up huge debts to afford a half-decent standard of living.

But as ordinary workers struggled, city bankers strutted around, their wallets bulging with huge bonuses, thinking themselves 'masters of the universe'. These odious individuals used to whinge that the 'nanny state' is too costly and should be dismantled. Suddenly they have had a change of heart and want us to bail out their failing enterprises. This about-turn has been dubbed "socialism for the rich".

Socialists want the nationalisation of all the major banks and financial institutions, not just those which are floundering. However, we don't just want short-term nationalisation that pumps workers' taxes into failing banks, only to privatise them when the economy looks healthier.

We want these institutions permanently taken into democratically run public ownership. This move could guarantee affordable mortgages, and ensure workers' homes are not repossessed because of free market failings.

The fat-cat financiers who created this crisis are still creaming it in. The chief executive of AIG who - in his four months at the helm - managed to plunge the company into an abyss, will get a $7 million golden handshake.

The head of Lehman Brothers, which was "corroded by bad debt and bonus-fuelled speculation", walked away with $11 million. Meanwhile ordinary workers at Lehman's London office were told there was no guarantee they would be paid their final month's wages!

In Britain, it is estimated that over 100,000 jobs will be axed in the financial sector.

There will be no golden goodbyes for the bank-tellers, office cleaners and other working-class people in the finance sector - only unemployment (with scarce alternative jobs), a mountain of debt and the fear of losing homes as they struggle to keep up with rents and mortgages.

Capitalism's boom has come to an abrupt end.
More and more workers and young people will be looking for a socialist alternative to the destructive madness of the market.

Video: Credit Crunch part 1 - Interview with Socialist Party general secretary Peter Taaffe (4 mins)

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The coronavirus crisis has laid bare the class character of society in numerous ways. It is making clear to many that it is the working class that keeps society running, not the CEOs of major corporations.

The results of austerity have been graphically demonstrated as public services strain to cope with the crisis.

The government has now ripped up its 'austerity' mantra and turned to policies that not long ago were denounced as socialist. But after the corona crisis, it will try to make the working class pay for it, by trying to claw back what has been given.

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