THE one thing guaranteed by the world economic crisis of the capitalist system, is that all the weakness, greed and corruption of the ruling class emerges into the plain light of day for all to see.
The reality of the world crisis is being driven home in Britain through a succession of collapses in heavy industry and amongst the largest retailer in the country.
On Monday, the construction giant Balfour Beatty saw its shares plunge by 25% following the fifth profit warning in two years after it discovered that it had inadvertently overlooked a further £75 million profit shortfall on its forecasts.
Balfour Beatty are not the only giant to make mistakes, Tesco (the world’s third largest retailer) recently had to own up to ‘accountancy errors’ leading to it overstating its profits – and so keeping up its share price – by £250 million.
This confession immediately led to a drop in Tesco shares by about 15%.
On to the banking system for the next round of bad news for capitalism.
Again on Monday, Lloyds bank announced that it had sacked eight staff over their role in the Libor interest rate rigging scandal.
This scandal revolves around a number of banks who set the benchmark interest rates for the whole banking system – and therefore directly affect the interest rates paid by ordinary people repaying bank loans and mortgages.
Leading dealers at these banks are accused of conspiring to artificially boost the official rates to make even bigger profits for the banks – and incidentally secure themselves bigger bonuses as a result.
Two months ago Lloyds – which had to be bailed out at taxpayers’ expense in 2009 to save it from bankruptcy and is now 43.3% publicly owned – was fined £226 million for its role in the Libor scam.
Lloyds are not alone – six other banks ( RBS, HSBC, JP Morgan, Barclays, City and UBS) have all been warned they face fines that would be even greater than Lloyds.
Many commentators, and the banks themselves in unguarded moments, claim with justification that the banks rule the capitalist world, that they are too big to fail, too powerful to regulate.
The banks may be masters of the capitalist universe but it is a universe that is collapsing on itself into a massive black hole of debt.
This was made clear by the 16th annual report of the Geneva Group – a high powered economic think tank composed of economists and former central bankers – their message was stark: global debt is rising and ‘the world is seeing a poisonous combination of growth and inflation rates that are lower than expected’.
The phrase lower than expected is a classic understatement.
Growth in all the main capitalist countries is virtually non-existent, while at the same time the mountain of debt is increasing day by day to levels that can never be repaid.
Britain has a national debt of £1.4 trillion, the US borrows $17.5 trillion a year just to finance its debt and keep solvent while countries like Italy and Japan are totally bankrupt.
The Geneva Group’s solution to this crisis is for capitalism to print more valueless money through Quantitative Easing.
This has not worked in any country where it has been tried.
The only real solution as far as capitalism is concerned, is not in tinkering around with money supply and interest rates but forcing the only class that produces real value, the working class, to pay for the crisis through poverty wages, unemployment and by smashing up every gain made in the past – reducing workers to the level of slaves to capital.
For the working class, there is only one solution and that is to put an end to this corrupt, bankrupt capitalist system with the socialist revolution, to replace a system that produces only to make profit for the tiny number of capitalists in the world with a socialist society where production is for human need not profit.