Debtors of the World, Unite!

With City Hall in the hands of Boris Johnson, an anti-political clown if there ever was one, it would seem that the intransigence with which the state opposes the demands of trade unions. There has been talk for a while now of taking the workforce out of the tube completely, replacing them with automated machines. It would be a popular move in the London City-State, where any kind of inconvenience equates to an outright assault on one's basic liberty. The tube unions are the last bastion of working-class power left in this country and this is precisely the reason that the forces of reaction are out to destroy them. No doubt it's part of the same process that has rolled back the state in public services and even more so today. After all the tube is mostly to get people out there to be rinsed at work and in the shops, think surplus value. Thatcher could only dream of doing what Cameron is doing today. The Tories themselves have been caught saying this, though we all know it.

The Tories handed over a lot of public money to banks from 1992 onwards as part of the Public-Private Partnership, which sold-off public aid and gave greater power to bankers. As Michael Hudson wrote "The financial giveaway had the effect of increasing prices for basic infrastructure services by building in heavy financial fees – guaranteed for the banks, who lent the money that banks and property owners used to pay in taxes in more progressive times." The theory goes that the banks will create jobs as they invest the funds in British infrastructure, specifically public transport, but it was really a way for real estate speculators to get even richer. The extension of the Jubilee Line to Canary Wharf cost £3.5 billion as it raised property values along the route by £13 billion. The public investment in transport could pay for itself simply with a tax on the higher rent-of-location and the site value. But the government would rather the banks rake in the cash.

As Chomsky has pointed out when politicians prefer to talk about 'jobs' than even utter the filthy word 'profits'. The allies of the super-rich then moved to sell-off British Rail and saw to it that the railways carry an over-flowing gravy train for the wealthy. It is standard practice in a privatisation for the state to make sure the buyers are well served with comfy pillows stuffed with the taxes of working-class people. Last year that blond gannet Richard Branson gobbled up £18 million of tax-payer's money as the system underwent a multi-billion state upgrade. The privatisation opened up a space for private ownership safeguarded by public investment and, even as standards of service have slipped, there has been no attempt to re-nationalise the railways. The government contributes £4.6 billion to the railways as the private sector pays just £459 million into the set-up, most of which goes towards stock rather than anything in the real world.

Since the 70s we have seen a process of de-industrialisation and financialisation. Thatcher sold-off an awful lot of things and broke the backs of major unions as part of a policy that amounted to the destruction of entire industries. Production was taken abroad where there was a ready workforce desperate enough to work for a $1 a day or whatever. The businesses of the country began invest overseas and import much more from abroad. The back of the industrial working-class was smashed in the 1980s leading to a massive unemployment level. So the threat of unions to the power of the wealthy had been significantly diminished. The people were left in a position where they could easily be squeezed dry by businesses, working-class people suffered some of the biggest wage-cuts in 1990. You would've thought that this would've held down the ability of people to spend, spend, spend. But a lot of credit had been freed up as the constraints that had kept banks in check were removed.

The shock of the assault on the living-standards of the working-class left them in an increasingly dependent position on debt. To make up for the loss in wages people turned to their credit cards, there was a much greater need for loans and mortgages than ever before. This is the basis of the explosion of household debts in the last 30 years. A lot of these debts are concentrated in housing markets because the system is pushed to find profitable investments in order to grow. We're talking about a minimum of 3% compound growth. The desperation to find new investment opportunities for over a trillion dollars has led to greater investment in the control of assets. We might want to think that the banks take unused funds from our bank accounts and use them to help some family to buy a home somewhere. Instead, what we've seen is the emergence of a huge property bubble and the concentration of enormous sums to feather the nests of a very few.

The banking system is built on the knowledge that not everyone will come into the bank and want every last penny of their money. Of course, when a run on the bank happens it's newsworthy for this reason - remember Northern Rock. The odds are calculated in the favour of greater lending and accumulation. The presupposition is that there being enough money to keep the bank going, so that there is enough there for people to pay the bills and put food on the table. The tendency here is to lend out more and more money to accumulate in order to cover itself. This is how the system pushes itself at the ground level. Everyone knows that banks aren't what they used to be. There used to be a time when the pound sterling was symbolic of a pound of silver somewhere. Now that's gone with the advent of fiat currency much to the chagrin of nostalgic right-wingers. It's much more important that the financialisation of the economy has made financial crises likely.

The household debt in Britain is set to rise from £1,560 billion to £2,126 billion in this time of austerity. I would assume there is something similar going on with household debts around the world given the attempts of government to patch up the system as it is. Household debt in the US was at 115% in 2011 down from 135% in 2008, the dip is probably the result of the crisis. In the years of the bubble, 2000 to 2007, households doubled their debt to almost $14 trillion while personal consumption shot up by 44% from $7 trillion to nearly $10 trillion. Over a period of 5 years American households ringed $2.3 trillion of home equity loans and cash-out refinancing from their homes. That's an injection of nearly $500 billion into the economy every year. So you can see why Obama's so-called "stimulus package" was a cop-out, $787 billion for 2 years doesn't cut it! Especially when it's left to the sort of self-glorified bureaucrats who would rather cut than spend.

There is actually an opportunity in this. It might seem that the working-class movement is finished because it has been de-industrialised and, at this point, unions have been reduced to xenophobic suspicions of anymore foreign rivals coming over here. That extends to the opposition of trade unions to European integration, these are supposed to be organisations that are internationalist. It's fine to propose unionisation of workers on a European scale. We're wrong to confine the prospects of unionisation to traditional industries that have been wiped out. Follow the money, grab the vampire by the balls before you drive in the stake! The formation of debtors into unions on a cross-continent scale could potentially give the working-class a way to yank at the banks. A straight refusal by the majority of people with debts to make the payments unless the rates of interest are cut could work. It could also be a way to repudiate the debts altogether.

There are flaws here, but it is a way forward. It would definitely need to be well organised and coordinated to ensure that it was a mass-scale action that would have an impact. Generally the major flaw of the trade union is that the relationship between capital and wage labour can be taken for granted. The priority is to improve the conditions for workers within that relationship, which is fine but the relationship is the fundamental problem. The capitalists have the upper-hand to the workers in this relationship, so victories can only be temporary. It's true that the debtor union would only be active in pushing for a better deal for people who need to fall back on credit cards, loans and so on. But it's striking at the centre of the system and we forget that banking is actually more susceptible to social democratic compromise than labour-intensive industry was. If the bankers think they have to pay-off socialism that's exactly what they'll do.

The Greek Tragedy.

European Tough Love.

The banks are opposed to a Greek default in order to avoid a cash haemorrhage, which is the same reason that the financial institutions are opposed to regulation and taxation, in one way or another. The natural option is austerity, the rape of the Greece, it only costs the poor who are mostly too disillusioned to participate in politics and the mega-rich are left unscathed whilst near a majority can be persuaded it is all necessary if the fear of deficits is just ramped up. The austerity measures will fail and only succeed to turn Greece into a basket economy. And yet no bank or financial institution has been allowed to fail. With the exception of Lehman Brothers which was losing around $8 million a minute at one point and then Dick Fuld walked away with $500 million from that year alone. Just think of the millions of American homeowners, many of which are black and poor, have lost their homes or have been left desperate to save a mortgaged property. We might think of it as tough love, love for the rich and tough for the poor as Noam Chomsky once noted.

It was clear before the vote that Greece is the point of a showdown between the people and the banks, even if it is still unclear what is going to happen in Greece and Europe as a whole. The general strike in Greece lasted two days and it was accompanied by huge demonstrations in opposition to the vote for €78 billion worth of spending cuts and privatisation stipulated by the European Commission. As the country is about to raped by the banks, the right-wing press ramble on about the "Greek Gravy Train" and the "flaws" in the Greek character which led to the crisis, a suspicious line of thought indeed. It isn't over yet, but the future does not look bright. For around 10 or 15 years there will be little economic growth in Greece, if any at all. The standard of living for the average person will go into steep decline and in the end the country will still have to default. No doubt Portugal, Ireland and Spain will be affected in just the same way. Unsurprisingly, the Eurosceptics are filled with the glee that is particularly devoid of compassion for the people affected.

The destructive consequences of the 1929 Crash laid waste to entire countries. Today there is the potential for serious political turbulence, no one should forget that it was back in 1967 that the Greek state was seized by a military junta which ruled with the support of the US for several years. Nor should we forgot the ways Fascism came to power in the midst of the economic and political crises of the 1920s and 30s. Though I am not saying that as a direct result of these measures we will live to see the resurgence of Fascism. The devastation may not be on the same scale as the Great Depression, which is a result of the bailouts, but the cuts will hit ordinary people hard and the reaction is not easily predicted. The core of democratic institutions are under threat in Greece from Big Finance. The Greek people took to the streets and have been on the streets fighting, but so should the people of Europe take to the streets against the measures that are hitting each economy. As Richard Murphy pointed out, there was no real choice in this instance.

The impact of economic factors on politics should not be underestimated. When we look back in history we find that the opening for democracy in Greece, the first of it's kind in the world, came about as a result of the advent of iron-based equipment which converged with popular struggle. The landowners had sought expansion through debt-bondage, which trapped small farmers into arrangements that would leave them without land or freedom if they could not repay the loan. It was the abundance of iron and the simplicity of the production process increased the availability of iron tools and weapons in Greece. The small farmers were able to form militias, for which peasants could serve as infantry and rowers on warships. All of which enabled popular uprisings which brought down the dictatorship and the aristocracy before going on to defeat the Spartans who took the side of conservatives in the country. Just as bronze had empowered only an aristocracy, iron had the potential to empower the masses and now we find that finance has the potential to empower a new aristocracy.

The different genres of narrative around the 2008 financial crisis typically exclude systemic risk, the contradiction internal to capital accumulation. As David Harvey points out the problem back in the 1970s was the excessive power of organised labour which necessitated the repression of unions through legislation and that in turn led to stagnant wages for many people. All the while the financialisation of the economy picks up speed and really accelerates in the 1980s. It is important to keep in mind that financial innovation is at the heart of the capitalist system, which is the reason for the greater focus on innovation and that focus has the potential to empower financiers at the cost of others. The insufficiency of demand which would result from the stagnation of wages is bypassed through credit, which would explain why the debt per household has exploded over the last 30 years. A huge amount of that debt is within the housing market, with absurd results in the US and ultimately the finance crisis was half-solved at the expense of a sovereign debt crisis.

In Franco-German financial institutions, where much of the Greek debt is held, there are hopes it can consistently profit regardless of the socio-economic consequences and even significant losses incurred by the systemic mania. In the case of a Greek default the French and German banks holding the debt could easily go under, which would necessitate another round of bailouts for the banksters. We should also note that the amount of trade between Greece and Germany increased dramatically after Greece joined the Euro. Germany has done very well out of exporting to Greece, where several industries have been decimated by the influx of German goods. Rationally, the Germans should bailout Greece in the way that the US bailed out Germany for free after it defaulted just after the Second World War. In fact, Germany is the country which defaulted in the last century more than any other country in Europe and in each instance the Germans were bailed out.

It used to be that the interest rates on loans were the only kind of insurance as it were, then people like Nigel Lawson came around to tweak the regulations and guarantee that the bank would be able to get its money no matter what. It might seem time to call for no bailouts, the banks are not too big to fail and so on. The problem there is that the banks generated a speculative housing bubble and when it all came crashing down the people who flip the bill are not the masters of the universe. To willingly fling open the door to the black abyss and then leap into it would not be advisable. You should keep in mind that the people calling for this are the same people who don't believe in universal health-care and the provision of any kind of safety-net. American and British banks gambled with equity on other peoples' homes and created imaginary capital in doing so, the most appropriate way to deal with this within the system is to impose regulations and restructure the financial sector.


Greece has not been bailed out, but the banks have been and the European country that has defaulted more than any other in the last century is Germany. Germany was excused from reparations to countries that it had invaded. The loans and occupation costs Germany had pressed out of the countries it had occupied in World War II were not paid back. Especially not to the Greeks. Germany didn't even pay back the US for the loans that were used to pay the reparations levied on Germany after World War I. As Albrecht Ritschl said, Germany was the biggest debt transgressor of the 20th Century. The decision on Greece has been delayed on the next bank bailout in the EU, the package could be around €160 billion which is meant to further the cuts that have already bled public services dry in the country. But it is true that a default on the debt is inevitable, it is only a matter of when and how at this point. The default should have come earlier rather than later, which is what is most likely to happen.

Fuck You, Sir.

 Where are the Jacobins?

Michael Gove has spat out a warning against "militancy" directed at teachers in an interview with Andrew Marr and has played the usual tune that those out-of-control unions are an "inconvenience" for ordinary people. Though the line is not unique to Gove's personality, rather it is the case that he is acting as any other politician would in his role. Of course, it is unique of Michael Gove to send out a mass-letter to head teachers across the country in which he informed them of their "moral duty" to keep schools open. The reaction of anger from head teachers was more than appropriate as Gove was nothing more than a know-it-all, who was grossly overpaid as a journalist (he was once paid £5,000 to declare his love for Tony Blair) and now feels he knows something about how the education system should be run. As late as 2008 Gove described Iraq as "a proper British foreign policy success", he had no time to mention the millions slaughtered, displaced, mutilated and robbed by that miserable conflict.

The main area of interest for Gove is not education but foreign policy as he is a member of the Henry Jackson Society, which is fully dedicated to the active promotion of democracy abroad by military intervention if necessary. Importantly for teachers the fact that Michael Gove is a neoconservative means he is adept at spinning "noble lies", not facing up to the consequences of his own actions and drawing up disastrous policy. The Iraq war consisted of the media and the soldier holding the Iraqi down so that the businessman can go through his pockets. The education reforms consist of the teachers being held down by anti-union legislation and the media whilst the Bullingdon Boys ransack the class-rooms. If you think that the Coalition has debt reduction in mind with any of its' reforms you should take a good look at the cuts to higher eduction, the funding of which amounts to 0.7% of GDP and the debt was around 70% in 2010.

So when you find that Mr Gove has increased the extent that the forces of the market can interfere with education, and he makes it easier for teachers to be sacked, don't think it has anything to do with "debt reduction". Keep in mind this is the same minister who pissed £21 million into the mouths of consultants. Remind yourself that out of 32 of these so-called "free schools" 13 of them will be in the most affluent areas, only 2 will be in the 10% most deprived areas and 10 in 20% of the most deprived areas. Less than a fifth will be opened in the North and over half will be opened in the South. These schools are a blessing for the most sharp-elbowed parents of the middle-class, who are necessary to win over in order for a Conservative majority to be achieved in 2015. Teachers are expected to work until the age of 68, raise contributions by up to 50% and all for a pension that will be shrunk in value by 15%. As if all of this is not bad enough, Michael Gove and David Cameron actually demand that the teachers lie down and let this happen.

For a clear and fair debate over the issues we might turn to the BBC, which would disappoint in the usual manner with Newsnight on Monday. Where Jeremy Paxman is basically paid to ask the wrong questions for the sake of concision and conventions. Thus, he opens the show with a line about those selfish teachers going on strike and depriving a "large number of children" of an education for a single day... So we should not be surprised to find Paxo giving the trade unionist a prod about the "damage" done to children, who'll have to endure the unremitting horror of daytime television. Oh think of the children! Then he prods her again about the "audacity" of teachers to go on strike when they have a lot more time off than anyone in the private sector. Tory fopdoodle Nick Boles was keen to point out on Newsnight that the teachers contribute 6.5% to the scheme while the government contributes 13.5% and went on to play the classic line that public sector workers are "pampered".

No doubt the name of the game is a vulgar populism, which pits workers against one another in a bid to divide and conquer. We have seen it again when David Cameron stresses that public sector pensions cost every household £1,000 a year. Cameron invoked the coming pensions crisis, which has come about because there will soon be more retirees than people in work and so there is a need for serious changes. For the Tories the change has to come in the public sector, "change" being in the long-term the overhaul of the current pensions system and the creation of a private system. The only possible ways to deal with the pensions crisis is to either raise taxes or increase immigration. These options are a nightmare for politicians concerned with their careers. So the first easy answer is to raise retirement age, leave the mess for the next government to clear up and give yourself an advantage in opposition. In the long-term the answer will be privatisation no doubt as the crisis is inflamed by the careerism of our beloved MPs.

The resort to strike action is unquestionable in this instance, the only real matter is just how effective it will be. This isn't 1974 when industrial action broke the back of a Conservative government and brought down Ted Heath, who had struck out at the social democratic consensus in a way which was not emulated by the Thatcherites. The approach of the Con-Dem Coalition is not much different from Heath's scatter-gun attack, though Cameron does not have to bludgeon the unions to curtail their ability to resist pay-cuts, redundancies and dawn raids on pensions. Heath was brought down by significant industrial action, though it should not be forgotten that it was industrial action that contributed to the fall of Callaghan in 1979. Since then the labour movement has been smashed, the extent to which was demonstrated in 1990 as workers endured some of the biggest wage-cuts in the world. Union membership has declined sharply as has the influence of unions in the Labour Party.


The necessary approach is not a general strike, which for some signifies the beginning of the long-awaited uprising against the ruling class in the name of equality, fraternity and so on. The truth is a lot less climactic! In actuality a general strike might reveal just how fragile the unions are to a wave of populism on which David Cameron would ride over us to the next election. There is a genuine need for a coordinated series of strikes which hit the government on policy in serious ways, as well as serious protests and civil disobedience which goes beyond the standard formula that is used to organise Flash Mobs. At the same time, we need an adequate leadership capable of breaking through the media-wall to the alternatives to cuts and expose the Coalition for what it is. It isn't clear what will happen over the next 10 years, the political class are in a silent crisis as George Osborne is willfully opening a door and no one knows what is on the other side.