Thursday, 22 December 2016

Italian Banks Reprise Irish Experience

Renzi lost the referendum. He went, and another technocrat was appointed in his place. The Italian banks are still bust, and now the Italian government is seeking to bail them out, and nationalise them, so as to protect the interests of the owners of fictitious capital, which was why the referendum was really called in the first place. Once again, its amazing how conservative politicians always tell us that there is no money to be able to finance decent public services, or pay decent wages and instead impose damaging policies of austerity, but when it comes to propping up the prices of astronomically inflated asset prices, and protecting the paper wealth of the top 0.001%, money is apparently in limitless abundance!

Italian workers should oppose any bail-out of the Italian banks, which really means bailing out the shareholders and bondholders in those banks. Let the banks fail, let asset prices collapse, and then workers can take them over, and run them, under their ownership and control, for their interests. They should not be fooled by those on either left or right, who try to deceive them into believing that ownership by the capitalist state is the same thing as their own direct ownership and control. As Trotsky put it,

"It would of course be a disastrous error, an outright deception, to assert that the road to socialism passes, not through the proletarian revolution, but through nationalization by the bourgeois state of various branches of industry and their transfer into the hands of the workers’ organizations."

And Pannakoek also illustrated the difference.

“The acknowledged aim of socialism is to take the means of production out of the hands of the capitalist class and place them into the hands of the workers. This aim is sometimes spoken of as public ownership, sometimes as common ownership of the production apparatus. There is, however, a marked and fundamental difference.

“Public ownership is the ownership, i.e. the right of disposal, by a public body representing society, by government, state power or some other political body. The persons forming this body, the politicians, officials, leaders, secretaries, managers, are the direct masters of the production apparatus; they direct and regulate the process of production; they command the workers. Common ownership is the right of disposal by the workers themselves; the working class itself — taken in the widest sense of all that partake in really productive work, including employees, farmers, scientists — is direct master of the production apparatus, managing, directing, and regulating the process of production which is, indeed, their common work…

“As a correction to State-managed production, sometimes workers’ control is demanded. Now, to ask control, supervision, from a superior indicates the submissive mood of helpless objects of exploitation. And then you can control another man’s business; what is your own business you do not want controlled, you do it. Productive work, social production, is the genuine business of the working class. It is the content of their life, their own activity. They themselves can take care if there is no police or State power to keep them off. They have the tools, the machines in their hands, they use and manage them. They do not need masters to command them, nor finances to control the masters.

Public ownership is the program of “friends” of the workers who for the hard exploitation of private capitalism wish to substitute a milder modernized exploitation. Common ownership is the program of the working class itself, fighting for self liberation….”

As Pannakoek says, it is impossible for workers to exercise control unless they exercise their own direct ownership. To suggest that workers can obtain any real control whilst ownership is in the hands of capital, particularly state capital, is to deceive the workers cruelly. As Trotsky says,

"... a bourgeoisie that feels it is firmly in the saddle will never tolerate dual power in its enterprises. workers’ control consequently, can be carried out only under the condition of an abrupt change in the relationship of forces unfavorable to the bourgeoisie and its state. Control can be imposed only by force upon the bourgeoisie, by a proletariat on the road to the moment of taking power from them, and then also ownership of the means of production. Thus the regime of workers’ control, a provisional transitional regime by its very essence, can correspond only to the period of the convulsing of the bourgeois state, the proletarian offensive, and the falling back of the bourgeoisie, that is, to the period of the proletarian revolution in the fullest sense of the word."

Outside those conditions, real workers control can only be implemented as part of direct workers ownership of the means of production, i.e. the kind of transitional property forms that Marx describes in Capital III,

“The co-operative factories of the labourers themselves represent within the old form the first sprouts of the new, although they naturally reproduce, and must reproduce, everywhere in their actual organisation all the shortcomings of the prevailing system. But the antithesis between capital and labour is overcome within them, if at first only by way of making the associated labourers into their own capitalist, i.e., by enabling them to use the means of production for the employment of their own labour...The capitalist stock companies, as much as the co-operative factories, should be considered as transitional forms from the capitalist mode of production to the associated one, with the only distinction that the antagonism is resolved negatively in the one and positively in the other.”

Every instance of state capitalist ownership has turned out badly for workers. It resulted in massive rationalisation at the expense of workers jobs, and ultimately with the newly capitalised, and rationalised industries being handed back to private capital. The British mining industry was a classic example, where even a mighty trades union like the NUM was incapable of introducing any kind of "workers control" over production during the whole period after 1945, and rather suffered attack after attack, such as the year long strike of 1984-5, prior to the complete decimation of the industry. As Kautsky recognised long ago,

“If the modern state nationalizes certain industries, it does not do so for the purpose of restricting capitalist exploitation, but for the purpose of protecting the capitalist system and establishing it upon a firmer basis, or for the purpose of itself taking a hand in the exploitation of labour, increasing its own revenues, and thereby reducing the contributions for its own support which it would otherwise have to impose upon the capitalist class. As an exploiter of labour, the state is superior to any private capitalist. Besides the economic power of the capitalists, ii can also bring to bear upon the exploited classes the political power which it already wields.

The state has never carried on the nationalizing of industries further than the interests of the ruling classes demanded, nor will it ever go further than that. So long as the property-holding classes are the ruling ones, the nationalization of industries and capitalist functions will never be carried so far as to injure the capitalists and landlords or to restrict their opportunities for exploiting the proletariat.”

(The Erfurt Programme)

Italians are being fed the same lies today that the Irish workers were fed prior to the nationalisation and bail-out of the Irish Banks. Italian workers are being told that the banks require around €20 billion to recapitalise them. That is a ridiculously low estimate, and follows what happened in Ireland, as was described nicely some time ago by Irish Marxism. That is lies were told about how much capital was required by the banks, so as to bring about the initial government bail-out. Once that process was underway, and the state took ownership of the problem, it was on the hook to follow through with the provision of the capital actually required. The fact was that the capital actually required was many, many times what had first been stated, and was so great as to nearly bankrupt the Irish state, leading to its subsequent introduction of harsh measures of austerity that destroyed real capital, and undermined the growth of the Irish economy for several years.

This is the way, at times, the owners of fictitious capital are able to push their own narrow interests, via their conservative political representatives, even where that means destroying real capital and undermining the interests of real productive-capital, and the economy. As Marx put it,

"The credit system, which has its focus in the so-called national banks and the big money-lenders and usurers surrounding them, constitutes enormous centralisation, and gives to this class of parasites the fabulous power, not only to periodically despoil industrial capitalists, but also to interfere in actual production in a most dangerous manner — and this gang knows nothing about production and has nothing to do with it. The Acts of 1844 and 1845 are proof of the growing power of these bandits, who are augmented by financiers and stock-jobbers."

(Capital III, Chapter 33)

Italy's oldest bank, Banco de Monte Pasci de Sienna (BMPS) is quite visibly busted, with its share price having collapsed by more than 90%. It has been given until the end of the year to recapitalise so as to meet the requirements of the ECB's stress tests, which despite the lax requirements of those tests, it failed. But, the owners of fictitious capital are not themselves willing to risk losing more of their paper wealth, and have turned down the opportunity of throwing more money down the throat of this turkey prior to Christmas. Instead, Italian workers are again being asked to stump up the cash via their taxes. They should actively refuse.

The Italian banks on past experience need trillions of Euros to cover their bad debts, and to cover the fact that the fictitious capital on their books is next to worthless if properly valued. Once the Italian banks start to actually shut their doors, it will be a very short pause before the German banks that have lent to them, and which have an even larger stock of astronomically inflated, but essentially worthless paper assets on their balance sheets, follow in behind, with the other EU and UK banks falling like dominoes in the aftermath. It was the tie up between Irish banks and UK banks, and then UK banks with banks across Europe that led to the demands by the owners of fictitious capital, for the Irish banks to be nationalised. The same is now happening in Italy.

Italian workers, supported by workers across the EU should organise demonstrations and action to prevent workers taxes being used to bail-out the owners of fictitious capital. We should say a loud "No" to socialism for the rich. If states have ready cash in the billions to give to the bankers and owners of fictitious capital, we should demand instead that those billions be used to end austerity, to invest in real productive capacity and infrastructure, especially in those parts of Europe like Greece, Spain, Portugal and Italy that need real capital investment so as to begin creating viable long-term jobs.

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