October 2008

The new merger and forming of Unite in November has massive potential in the construction industry. The Amicus section is mainly made up of electricians, pipefitters,
plumbers and steel erectors from The Electrical, Electronic,
Telecommunications and Plumbing Union days.

Like the earthquakes and tsunamis that wreak havoc on the people who
live along the faults and plate boundaries of the earth’s crust, the
pressure from below is inevitably manifested on the surface. It doesn’t
unfold gradually either but in an explosive way. Leon Trotsky explained that the nice cosy relationships of the trade
union leaders, even with the bourgeois state tend to breakdown on the
basis of the pressure from below. In the current climate in Britain the
relations between the trade union leaders and the Labour government are
clearly under strain.

In the early hours of this morning
(08.10.08), the government and the financial authorities have finally agreed an
ambitious plan to save the banks. They present the £50bn bail-out as decisive
action to stop the rot. In fact their hands were forced, and there’s no sign that
it will stem the panic on UK stock markets in any case.

Last Tuesday shares in two of our biggest
banks, HBOS and RBS, plummeted by 40%. Let Nils Pratley (Guardian 08.10.08)
chronicle the damage. “At the close of trading, Royal Bank of Scotland, a bank
that raised £12bn of fresh capital from its shareholders in June, was worth
only £18bn.” (That is what the sum total of its shares came to.)  “Shares in HBOS were priced 50% below the value
of a bid from Lloyds TSB to buy it.” The banking system faced catastrophe.

Yesterday saw the biggest ever one-day fall on the world’s
stock markets. The Dow Jones collapsed by over 800 points at one stage, pushing
the Dow below the 10,000 level. The FTSE 100 suffered its biggest one-day
percentage fall since Black Monday in October 1987 and the biggest points fall
ever. The Russian stock market fell by 19% and the exchange remains closed. The
sell-off engulfed Brazil, Indonesia and Saudi Arabia. The MSCI Emerging Markets
Index slumped 11%, its largest daily fall since 1987. This has been one of the
worst days yet in the 14-month-old credit crunch.

Neoliberalism, the dominant ideology of modern capitalism, is under
sustained challenge. For the past quarter of a century neoliberalism, sometimes
called market fundamentalism, the policy of non-intervention in the economy, has
been the ideology, and the set of policies that go with it, which has adamantly
opposed the rights and attempted to drive down the living standards of the
working class all over the world. Now the economic crisis is forcing the authorities
to intervene, regulate, and even nationalise firms because they have no choice.
Is neoliberalism dead?

‘Modern history’s greatest regulatory failure’; ‘The end of American
capitalism as we know it’; these are just two of the headlines thrown up by the
credit crunch, both appearing in the Financial
Times, the organ of British finance capital. In the course of a single
week, we have seen the collapse of three of America’s biggest financial
institutions: on Sunday 13th September, Bank of America announced it
was buying out Merrill Lynch, one of the world’s most famous investment banks; on
the following Monday, Lehman Brothers, the fourth largest securities firm in
the US, filed for bankruptcy; and, as if that were not enough, on Tuesday, the
US Federal Reserve invested $85 billion in a takeover of AIG, America’s largest
insurance company. More recently, on Thursday 25th, the huge US bank
Washington Mutual, in a state of collapse, was taken over by JP Morgan Chase,
in a move described as ‘the biggest bank failure in American history” (Saskia Scholtes, Joanna Chung and Deborah
Brewster, JPMorgan swoops in again, FT, September 26 2008).

Socialist Appeal 166 is out now!