Marx
points out that all of the fictitious capital, such as that referred
to in Part 3, adds not one iota of real value to the economy, and
nothing to a country's wealth. In fact, its destruction is generally
beneficial for real capital, and productive development. In 2008,
the best thing that could have happened would have been to allow all
of this fictitious capital to have been simply destroyed. Rational
levels of share and property markets are probably around 10-20% of
current levels, requiring prices to fall by around 80-90%. That is
around the level they fell in Japan, around the level that the NASDAQ
fell in 2000, and slightly more than the 60% falls in property
markets in the US, Ireland and Spain after 2008. That would mean
that land prices would fall to more reasonable levels, facilitating
greater levels of demand and supply of houses, as I pointed out
recently -
Building More Houses Will Not Cure Britain's Housing Crisis
. It would also mean that workers pension fund contributions would
buy more shares at these lower prices, giving them a bigger share of
the total share capital, and as lower share prices means higher
yields, just as lower bond prices would also mean higher yields, so
the income from these funds would be more able to meet future pension
payments for workers.
But,
that would also have meant most banks going bust. It would mean many
shareholders losing most of the fictitious wealth they held in the
form of these shares, and although this wealth is fictitious, it is
very real for the individual, provided they can find some bigger fool
to buy it from them at a higher price. As a result, it would have
required that the state ensured that there was sufficient liquidity
to enable commodity circulation continued, so that the minimum
disruption to the real economy occurred. As I've suggested in the
past - Sham Rocked
– if the banks went bust, socialists would argue for them to be
occupied by their workers, and transformed into co-ops, with
depositors funds guaranteed by the state, and all of them merged into
one worker-owned and controlled co-op bank. Incidentally, the demand
I raised at that time, that the trades unions demand an opening of the
books of the co-op bank and other mutuals, proved extremely prescient
given the subsequent events at the Co-op Bank!
But,
its precisely for this reason that neither the capitalist state nor
conservative and social democratic governments would adopt this
approach in the major economies. The nexus of political power, of
financial capital, running into the state, political parties, and the
media, as partly uncovered by Leveson, (and the same connections
exist in the US), meant that it was always going to be the case that
the banks were bailed out, and although a few bankers may lose their
honours, they would keep their multi-million pound bonuses, pay-offs,
and pensions, whilst the cost of their bail-outs was passed on to the
workers.
Sraid Marx On Anglo-Irish Bank Tapes
But,
equally inevitable was it then that this would provide the ammunition
for conservative forces to denounce state intervention to deal with
the consequences of their own high debt policies of the last 30
years. In fact, the real problem of high levels of private sector
debt, run up as a result of those policies, was largely swept under
the carpet, or blamed on central bank intervention, in order to focus
entirely on public sector debt, much of which had been run up, as the
Sraid Marx post illustrates, to deal with the consequences of the
financial crash!
The
fact that the bail-out of the banks was undertaken mostly under Bush,
was then quickly forgotten, as the Tea Party focussed its attention
on Obama. The populist nature of the Tea Party and its appeal to the
most ignorant and backward sections of US society, ensured that this
opposition would draw in all sorts of lunatic elements, and grounds
for opposition. So, the opposition to Obama had significant elements
of racism to it, it drew in the conspiracy theorists, who claimed he
was a Muslim (as though that should make any difference anyway) that
he had not been born in the US (again as though that should make any
difference anyway) and so on.
The
fact that some of those who put forward this nonsense include very
rich people like Donald Trump, and that the Tea Party is funded by
people like the Koch brothers, does not invalidate the analysis of
its class outlook and general composition, any more than the fact
that members of the bourgeoisie like Marx and Engels committed
themselves to the working class invalidates their class analysis.
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