The 'free' market Taliban pose a very real threat to our society

There can hardly be a person in the UK who has not heard of the 'terrorist threat' or the 'war on terror'. We have become used to living with heightened security. If you travel by train as I do you will have heard automated Orwellian announcements which refer to "unattended luggage being removed and destroyed by the security services" - whoever they are supposed to be. Some people have argued that all this security has gone way over the top and that the 'terrorist threat' has been deliberately exaggerated by politicians to suit their own purposes. Adam Curtis, in his excellent documentary, The Power of Nightmares, argued that politicians play on our fears and use the terrorist threat to get us to vote for them, and ultimately, to control us. I am sympathetic to this view, but that is not what this post is about. It is about a very real threat which is causing enormous economic damage, human misery and death in the West on a scale that terrorist groups like Al Qaeda could never hope to emulate.

Ayn Rand - prophet of the 'free' market right

But the real threat doesn't come from outside, from some foreign power or terrorist group it comes from within. Those who a perpetrating very real damage to our society are not terrorists or even idealists -  they, like the Taliban, are fundamentalists. These people are neoliberal 'free' market fundamentalists whose views are not economic, nor even really ideological, they are more a belief system. If you wanted to compare these 'free' market fundamentalists with other groups you would find they had more in common with extremist religiously inspired groups like the extreme evangelicals in the USA or the Taliban in Afghanistan.

The holy tenets of this 'free' market religion are not to be found in one holy book, though if they had a bible it would probably have to be Atlas Shrugged, and their prophet would be its author, Ayn Rand. The 'free' market fundamentalists claim to be the descendants of Adam (Smith) though their views are a distorted and selective extract from his writings. They believe in deregulation, privatisation, in outsourcing, downsizing, austerity and small government. They believe that there are magic beings called entrepreneurs who we all depend upon for wealth and  prosperity. And make no mistakes these are beliefs, which when examined closely, turn out to have about as much validity as the beliefs of the Creationists and other flat-earthers. Do they care about that? Not at all! -  because they have faith.

The 'free' market fundamentalists are the very people who brought you the greatest economic crisis in capitalism, a near collapse of the world economic system, featuring the credit crunch, the sovereign debt crisis, and the Eurozone crisis. These are the people who have deepened and made worse those same crises by their belief in austerity, and, as things continue to get worse, as economies crumble, mass unemployment grows and people's living standards are destroyed, what is their answer? Why - of course - more of the same! They are like the mad medieval doctors who while bleeding the patient to death - call for yet more blood to be spilt. Believe me, these people are a far greater threat to the planet, your family and your community than the Taliban or Al Qaeda ever could be. They need to be stopped, for all our sakes, before they bring the whole world down in ruin.

Now the banks must be brought under democratic control

Its not that long ago that UK taxpayers bailed-out UK banks to the tune of £1.2 trillion. This, in the UK alone, is a sum which dwarfs the amounts being spent on the bailouts of five Eurozone countries - Greece, Ireland, Portugal, Spain and now Cyprus. It was a scandal that this happened and banks such as Northern Rock, RBS and HBOS (which was merged with Lloyds TSB) were allowed to remain under private management and the senior managers continued to award themselves, and traders, vast bonuses. Nobody was really held to account. Nobody went to gaol, despite the damage done to the UK economy, which has lead to savage cuts in jobs and benefits, affecting the very taxpayers who funded the bailout - though Tory chancellor George Osborne couldn't find £81 billion to help them. As I have said before, this is pretty much the biggest heist in history.

But now we find out that Barclays Bank has been fined £290 million by the FSA for fiddling the LIBOR interbank lending rate. Not just Barclays though, apparently they were in cahoots with other banks. This kind of stuff, coming on top of the bailout, beggars belief. Barclays boss Bob Diamond earned £20.9 million in 2011 as chief executive. Did he know what was going on? One thing we have learned from the News International scandal is that top people just can't remember whether they knew anything or not, so perhaps Bob won't.

Bob Diamond: earned £20.9 million in 2011

This is an unfolding scandal so we don't know what the outcome will be but it seems incredible that nobody will face criminal charges. It has to be some sort of fraudulent activity surely? Those affected, and there are bound to be many companies and individuals who lost money, will be asking these questions and expecting compensation. And all this comes on top of the recent RBS IT debacle.

For me, the case for breaking up and nationalising the banks has become unanswerable. There will never be a better opportunity because most of them are bust anyway. For a start, RBS and Lloyds must be brought under national democratic control. They should be broken up. We need smaller, regionally-based banks which can help to grow jobs by investing in local communities, and we need mutuals and credit unions to support and democratise finance in our economy. Finally, can anyone really understand that a UK government can give such support to the banks but can't find £69 million to bailout a hospital trust?

We must Occupy the economy

The roller coaster ride of the world economic crisis continues. Elections in Greece and France have shifted the political ground slightly to the left, with a Socialist majority in France, and the spectacular result obtained by SYRIZA in coming second in Greece with about 27% of the vote. But the Eurozone crisis stumbles on and the 'free' market fundamentalists, the architects of the broken economic system, are still in the driving seat. Banks are bust and, under the current system, there is nothing to look forward to apart from years of economic stagnation at best. Meanwhile in the UK, millions are being pushed below the breadline by the governments cuts in benefits, tax credits, and increases in rents.

In 1966, the Marxist economist Paul Sweezy wrote a book, with Paul Baran, called Monopoly Capital, in which he said that the natural tendency of monopoly capitalism was economic stagnation, as capitalists struggled to use the surpluses of capital accumulation, and that they could only achieve this by increases in spend on marketing and defence spending, and increasing debt. Was Sweezy right? Its certainly true that US defence spending in WWII ended the Great Depression, and that a mountain of debt has been used to keep capitalism going in the past 30 years or so.

So what do we do? The market fundamentalists have no answer. They are like the mad person who repeats the same actions over again in Einsteins famous quote:

"Insanity is doing the same thing, over and over again, but expecting different results"

Einstein: described the madness of market fundamentalists

 
So we need an economic alternative. But what is that alternative? Neoliberalism, over the past 30 years has put commercial interests above democratic sovereignty. This has happened globally through organisations like the WTO and the European Union. We need to reverse this process and re-assert democratic control of our economy. This economic change must put governments in charge, actively planning and managing economic development, allow local decision making and create a mixed economy based on  genuine sustainable development to deal with ecological crises and halt endless growth. In the longer term the only answer to the domination of private commercial interests is to put the economy in the hands of the 99%. How can we do all that?

Firstly, we need to nationalise the bust banks that are hoovering up resources which need to be spent on creating jobs. Its a scandal that the UK's bust banks have been bailed out but are still in private hands. This must end, some banks must fold, and we need banks to be broken up to provide finance to small businesses, and local and regional banks which can focus on reviving local economies;

Secondly, we need to take the creation of credit out of private hands and put it under democratic control. Debt creation is too great a power to be left in the hands of private enterprise - this is what caused the current crash;

Thirdly, we need to take control of the big utilities such the energy and water companies, and sectors which rely on massive public subsidy to continue such as the railways;

Fourth, we must institute a programme of investment in our economy to create jobs through green quantitative easing and a Green New Deal;

Finally, and most importantly, we must break the power of the corporations by mutualising the economy, providing the finance to set up co-operatives and giving employees the power to buy-out the companies they work for and control them. This latter measure is crucial in putting economic power into the hands of ordinary people. We need to create a new culture of doing business in which people work together to create successful mutuals which are focused on local communities. Co-operatives have a better success rate than companies and they don't outsource downsize, or export jobs overseas.

Its a little known fact but there was an expansion of mutuals in the USA during the last Great Depression and there are many successful co-operatives both in the USA and here. It is a sector that is already growing. 130 million (yes that is million) people in the USA are now involved in mutuals and if you want to find out more detail read this previous post. You should also take a look at Gar Alperovitz's excellent book 'America beyond Capitalism' which gives practical examples of how the 99% in America are taking control of their economy from the bottom up by creating co-operatives. This is economic democracy in action and something we should celebrate.

Think it can't happen? Well, we have to make it happen. Its likely that the failure of the global banking system is going to mean that states are going to have to take a much bigger role in managing the economy now that the failures of the market have been exposed, and that people are going to be much more willing to trust democratic control and planning after they have experienced the privations of neoliberal austerity. If we want to really cure the malaise of neoliberalism and avoid the stagnation of monopoly capitalism we need to participate in the most important occupation of all, we need to Occupy the economy.

Zombie capitalism

Ever since the crash of 2008, when Lehman Bros. bank went under, politicians in the EU and USA have been battling to restore the status quo, which is often described as 'business as usual'. But it wasn't the collapse of Lehman's which brought the capitalist economy to its knees, it was the accumulation of a huge bubble of toxic debt in the world banking system. Rather than a crash, it has been more of a slow motion collapse, as the house of cards comes down.

The banking bailouts which followed, where governments injected capital into a bust banking system, was supposed to solve the problem, but it hasn't and it never could have done because the debt is still there, it hasn't just disappeared. In the shorter term the debt problem has become a sovereign debt crisis which is threatening to break up the Eurozone. European banks have been propped up by short term loans from the ECB, and this still hasn't solved the problem, but what if it can't, what if there is simply too much debt for the system to pay off?

I have blogged before about how I suspected that there were lots of insolvent banks which were hiding their insolvency with the collusion of governments. For any other kind of business this activity would be illegal, but as we have seen, there is one law for the banks and another for everyone else. Now the Telegraph has revealed the state of hidden debts in the UK banking system. The article, by Liam Halligan, shows that UK banks are sitting on £40 billion of undeclared losses, and that is just what we now know about.

Britain's banking black hole

My guess is that taxpayers patience is exhausted. Are we really going to be expected to bailout a bust system yet again? Not a chance in my view. The reality is that there can be no return to 'business as usual'. Neoliberal capitalism, through privatisation and deregulation, has broken the world economic system. The emperor has no clothes. There isn't going to be a recovery, not in the short to medium term, probably not ever. In a recent post I explained why I thought capitalism had reached the end of the road. In essence falling profits have lead to a class-war attack on the 99%, cannibalisation of the public sector, mass unemployment and an unsustainable property and financial bubble. Now there is nowhere left to go. We urgently need a radical alternative economic strategy which has to involve the state taking responsibility for control of the economy, nationalisation of the banks, a Green New Deal, and a move to a low carbon economy. The alternative could just be a collapse into the kind of barbarism we saw in the 1930s. Oh, and don't forget the fact that we have to deal with climate change, and we saw a graphic illustration of that in the UK this weekend.

Greece: the frontline in the battle against austerity

In July 2011 I posted on this blog about how 'The Greeks MUST default on 'their' debt'. Getting on for 12 months later that default is looking increasingly likely. The Greeks are being sacrificed for the sake of the Eurozone and the banks. The crucial point is that the bailouts were never intended to help the Greek people. The purpose of the bailouts is to save banks, Greek, German and French banks, NOT the Greek people. The pain the Greeks are suffering is to save bust institutions which made bad lending decisions. Once again, banks are too 'big to fail' but people lose their jobs and go hungry and homeless, or lack access to medicine - that is OK, apparently.

This is appalling and inhuman, and what it tells us is about the kind of economy we live in, an economy where people come a long way second to money, and financial institutions. It also tells us a lot about the EU, and what kind of institution it has become. Angela Merkel had the nerve to talk about Solidarity with Greece. But what is happening is the exact opposite of solidarity. The Greeks are being screwed. It is the Germans who have benefited from years of having a weak currency, the Euro, which has helped them to export. This has been at the expense of Greece and other southern European countries.

In the aftermath of the recent Greek election, now that the parties have failed to form a coalition, the screws are being turned on the Greek people once again. Threatening noises have been made in Germany and elsewhere. There is a clear attempt to bully the Greeks into voting for a coalition in June which will implement to terms of the bailout which have been imposed on Greece. This has come about largely due to the resistance of the SYRIZA coalition which came second in the recent election. Quite rightly, SYRIZA have insisted that the terms of the bailout must be renegotiated because they recognise that the debt can never be repaid on these terms and the Greek economy is being destroyed. Its well worth reading the letter that Alex Tsipras, leader of SYRIZA, sent to Manuel Barroso, President of the European Comission. It is perfectly level headed and points out that the terms of the bailout have to be re-negotiated.

SYRIZA: fighting austerity

So where does that leave us? Another election, in which SYRIZA is expected to gain even more of the Greek vote. And we are today being told that if SYRIZA win Greece will have to leave the Euro. So much for solidarity! The tragedy is that 70% of Greeks still want to remain in the Euro. I can only assume they would feel that it would be a national humiliation to leave. But what could be more humiliating than the position they now find themselves in? A default and a return to the Drachma would be hard. Banks would go bust and close. But the outcome, the longer term would be that Greeks could regain their self-respect, and a much larger measure of sovereignty than they have now. It would be a chance to re-build their economy and it has been done before, most recently in Argentina.

You can be sure that the Eurocrats are shoring up the EU economy as best they can, to protect themselves against a default. What they should be doing is helping the Greeks out of the mess both they and the leaders of Greece have created. Whatever happens, and make no mistake a Greek default could have serious ramifications for the world economy, the EU has been severely damaged by this debacle, which leaves a very nasty taste in the mouth.