SIR John Gieve, the deputy governor of the Bank of England, yesterday admitted that he was a victim of the historical blindness of the bourgeoisie, and that he and the bank’s other leading officials could not grasp the depth of the crisis of the capitalist system, even when it stared them full in the face.
Gieve said that the Bank knew ‘crazy borrowing’ was taking place and the price of houses and other assets was rising unsustainably, but didn’t understand the seriousness of the situation.
They viewed it in the same way as a policeman might after seeing a man driving crazily at 180 miles an hour, in the wrong direction on a motorway. The situation was ‘crazy’ and ‘unsustainable’ but not serious since there could well be a smash up, but a quick clearing of the wreckage would allow traffic to flow once again.
The problem was that the learned economists of the bourgeoisie were convinced that when Brown gave them the power over interest rates that they had the tool in their hands for controlling capitalism.
They had no understanding of ‘value’. They considered that there is no intrinsic value, and that the value of a thing is just as much as it will bring, and that value equals price, and that the difference between cash, credit and debt is relative.
It was Marx long ago who explained that despite the fact that there are such things as natural values, that what made gold and other commodities valuable was the quantity of human labour taken to produce them.
He stressed that money is not just a means by which commodities circulate but is a measure of value, and is either gold, or based on gold.
Otherwise it is just a piece of paper, another promise to pay.
What happens when all of the promises to pay cannot be transformed into cash payment was seen in the US sub-mortgage market collapse. It turned out that the big banks had plenty of commercial paper but no cash – and they collapsed like a pack of cards.
This crisis exposed the historical blindness of the Bank of England which thought that the laws of the capitalist crisis could be brought under control by interest rates or government guarantees.
It went from the line ‘fighter against inflation’, to reckless spenders and even more reckless borrowers, sacrificing the currency in the process to try and buy off the crisis they thought would never happen, as did Gordon Brown.
The brilliant thought that has now emerged from Gieve is that ‘We need to complement rates with something financial-sector specific.’ No he does not mean shooting a banker every morning to get the others to start lending, he is talking about coupling a massive propping up of the banks with a much more concentrated bourgeois dictatorship.
Sir John said yesterday: ‘We need to develop some new instruments, which sit somewhere between interest rates, which affect the whole economy . . . and individual supervision and regulation of individual banks.’
On November 25, the governor of the Bank of England Mervyn King spoke up in a similar vein.
He warned that the UK economy will go into ‘a steep recession’ if the commercial banks don’t resume normal lending levels.
He answered: ‘I think given what we have seen it would be an extremely brave person that would rule anything out,’ when asked whether nationalising banks was a possibility.
‘It’s very unlikely to be the first option. Remember that the government now owns the majority holding in shares in more than one bank.’
Reckless spending, a massive state indebtedness and the destruction of the pound sterling is the chosen policy of Brown-King.
They are only deepening the catastrophe. The truth is that capitalism has shot its bolt. The only way forward is through a socialist revolution to put an end to it and bring in a socialist society.