THE Prime Minister, Gordon Brown, who once boasted that he had resolved the crisis of capitalism and its tendency to go from boom to bust, has now admitted that capitalism is in its greatest ever financial crisis.
He has also admitted belatedly, that all of the instruments established at the Bretton Woods confere- nce, among them the IMF and the World Bank, to prevent a repetition of the 1930s crisis, have now failed. He now says that the global rules and global institutions need reshaping.
He said: ‘We are facing a global financial crisis. . .We have to reform our global financial institutions. It is absolutely clear that the national supervision that we have is inadequate and we need a global agreement.’
In fact, the basis of the post-Second World War boom was the vast destruction of the productive forces that took place in the 1930s’ slump, and throughout the Second World War itself.
The crucial agreement reached at Bretton Woods was that, with the US having the majority of the world’s productive forces, a stable measure of value could be established to facilitate world trade. This was the US dollar, that was treated as being as good as the real measure of value, gold, exchangeable at $35 an ounce, with central banks able to return dollar holdings to the US Federal Reserve bank and get gold in return.
This basic value relation was undone on August 15 1971, when as a result of a massive inflation of dollar bills by the US to pay for Marshall Plan aid, and the Korean and Vietnam wars, the US was threatened with bankruptcy, when General de Gaulle threatened to return all France’s dollar holdings to the Federal Reserve bank.
President Nixon responded by removing the gold backing for the dollar ushering in the era of floating currencies and hyperinflation that has led to today’s debacle.
The floodgates were opened via the British economic collapse of the 1973 three-day week, the major stock market collapse of Black Monday 1987, the collapse of Asian stock markets in 1997, which spread to Russia, destroying the ‘new capitalism’ and its banks, and then the crash of the dot com ‘South Sea Bubble’ in 2001.
Throughout the whole development of this crisis up to the sub-prime mortgage disaster, Brown remained convinced that the crisis of capitalism was controllable, and that credit and promises to pay were as good as money, causing him to sell half of Britain’s gold reserves in 1999, for a pittance, saying that gold was just a symbol.
Now the development of the financial crisis, and also the slump with falls of production in the US, has forced him to start singing a different tune.
However, there is going to be no international agreement to stop capitalism being capitalism. In fact, the ruling classes of the capitalist world are going to fight it out in traditional fashion to grab world markets and resources.
At home, the working class and the middle class will be made to pay for the capitalist crisis.
Brown has already spent £150bn supporting the Northern Rock Bank and has pledged similar rescue efforts for every bank in difficulties.
To try and finance this he has pledged wage cuts and job cuts for the working class while conceding that wages are being destroyed by inflation.
The more the crisis deepens, the more vicious that attacks will become.
The latest plan to emerge is to privatise every one of the great London hospitals by selling them to big business and then renting back those that the government intends to use.
Ministers have begun a review of London NHS property, and the London strategic health authority, which includes the 31 primary healthcare trusts in the city, has hired investment bankers to advise it on the disposing of NHS property valued at more than £23 billion. This is just the start!
It is clear that the only way to prevent capitalism returning to a version of the ‘Dark Ages’ is for the working class to bring down the Brown government and bring in a workers’ government through a socialist revolution to expropriate the bosses and the bankers and bring in socialism.
