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Capitalism in Crisis
Capitalism in Crisis
Stop the Slaughter in Gaza: London demo, photo Paul Mattsson
Spreading like wildfire across the planet, this is a truly global crisis. No country will escape its effects. The ludicrous idea that China and the other BRIC countries (Brazil, Russia and India) could decouple from the US economy has been shown to be the pipedream that it always was.
China's total consumption is lower than Italy's, such is the poverty of the vast majority of its more than a billion inhabitants.
As the markets of the west contract, the result will be unceasing misery for the super-exploited Chinese working class.
Already, in the manufacturing heart in the Pearl River area, half of the 2,200 factories in the shoe industry have shut, as have a third of the 3,600 toy factories.
As in China, globally it will be the poorest people in the poorest countries who suffer the most. However, the OECD predicts that Britain will suffer worst of the G7 countries (the seven biggest economies).
No wonder. Since the time of Margaret Thatcher, capitalism in Britain has consciously moved away from manufacturing, not least out of fear of the potential strength of industrial working class.
Instead it has concentrated on finance and the City. Britain has become more like a giant unregulated hedge fund than any economically advanced country in the world - with the exception of Iceland!
For a while finance gave British capitalism mega-profits. Finance alone made up 9.4% of the economy between 2003 and 2006 and yet was responsible for 30% of overall growth of GDP.
The financial bubble on the stock markets was combined with huge housing and personal debt bubbles. Personal debt in Britain is now greater than annual GDP. Now the bubbles are deflating rapidly and the debt that has been built up is going to hang like a millstone around the neck of the British economy, and around all our necks, prolonging and deepening the recession.
When the chancellor, Alistair Darling, and Brown proclaim that Britain is in a particularly good position to withstand the world recession they really are whistling in the dark to keep their spirits up.
The exact opposite will be the case. The recession will rapidly and brutally strip away the surface gloss to reveal the rotten underpinnings of the British economy.
New Labour has allowed the basic infrastructure of Britain to be sold off to foreign companies in a way that no other capitalist power would allow.
The ports, airport authorities, large parts of the electricity, gas and water companies, and nuclear power stations, all have been sold off to the highest bidder.
Although the economy is integrated on a global scale to an unprecedented extent, the nation state is still the fundamental building block of capitalism and most companies still have a 'national base' to which they will tend to retreat in times of crisis, leaving Britain vulnerable.
At the same time, manufacturing, which remains central to the underlying strength of an economy, is a poor third-class relation in Britain.
The economies of all the advanced capitalist countries are being 'hollowed out', but Britain is leading the way.
The number of workers employed in manufacturing has fallen by a quarter since New Labour came to power.
Now just over three million workers are employed in manufacturing, the lowest level since 1841. Nonetheless, the specific weight of the industrial working class means that, despite relatively small numbers, potentially, it has enormous power.