The leaders of the world’s economies converge on London for the G20 summit. They have no answers. Their system has failed…

G20: a giant with feet of clay

WORKERS, APRIL 2009 ISSUE

Another month, another summit. This April it’s the G20, hosted in London’s Docklands by a man on his way out. Each week brings news that makes Gordon Brown’s tenure as Prime Minister increasingly fragile. One of the triumvirate along with Blair and Mandelson who re-branded Labour for electoral purposes in the early 90s, Brown is suitably positioned to oversee its demise. As with Obama, Brown has no answers other than to shovel the cost of the massive debts incurred onto the working class in the form of the loans paid out to banks. Unemployment in Britain has now hit 2 million and is rising inexorably.

What we are experiencing is not an aberration. It is the consequence of trying to live with a moribund system. Finance capital has come to dominate industrial capital and has become increasingly parasitic. In previous slumps we have witnessed industries collapse, and companies and banks go to the wall. Capitalism, British capitalism in particular, has always been adept enough to switch from industry to industry, from industry to finance, or to gold, fine art, food and minerals as commodities. Anywhere a buck could be still turned and workers exploited. Preferably with a war to fund because wars are particularly profitable.

Thatcher saw that privatisation could give the infusion that the markets needed, and Brown has taken asset-stripping to new levels, such as the Royal Mail privatisation currently mooted – something even Thatcher regarded as “a privatisation too far”.

Crises are endemic to capitalism. Brown boasted, Canute-like, that he could hold back the inevitable, that he had “banished boom and bust”. At least Canute made his claim to demonstrate human frailty to his sycophantic thanes. Brown still believes in magic.

Hence we end up with economies being “fuelled” by debt (called credit), bundled up in ways in which no-one knows what’s viable and what isn’t. Speculation: gambling pure and simple. “Blatcherite” political economy, as one commentator labelled it on Radio 2.

Paeans to the gods of the City have rung in our ears from this government. It is Brown who has consistently praised the City, the banks, the speculators and finance hucksters. No regard for industry, a total reliance on money chasing money that has resulted, as ever, in inflation, but inflation that was channelled into house prices and presented as “wealth”.

Docklands: an essential part of the failed fabric of the City – and a suitable location for the G20 summit.

In one of the richest ironies of the past few weeks, a gang of pensioners in London face gaol for forging £5 million worth of £20 notes and 50 euro notes. Their activities were seen as damaging to the value of the currency at just the same time as the Bank of England devalues Sterling by “printing” the first tranche of £2 billion out of the £75 billion being created in the “quantitative easing“ strategy. Given that this new money is to be used to buy “toxic”, i.e. worthless, bonds from the banks, no wonder the first allocation was 9 times oversubscribed: “money for old rope” it used to be called!

We have bought into this illusion, displaying a touching faith in the ability of capital to provide, when our class history tells us the opposite is the case. Our class believed it didn’t need to fight for decent wages – just join the speculation by borrowing on 125 per cent mortgages and loans at 6 times the level of income (and conveniently ignoring the small print).

All of 170 years ago Charles Dickens wrote in Nicholas Nickleby of the effects of speculation: “Speculation is a round game: the players see little or nothing of their cards at first starting; gains may be great – and so may the losses. The run of luck went against Mr Nickleby; a mania prevailed, a bubble burst, four stockbrokers took villa residences at Florence, four hundred nobodies were ruined, and among them Mr Nickleby.” We can’t say we weren’t warned!

At the beginning of March the UK National Defence Association (weapons industry) reported that In a surprising bout of private frankness, an unnamed government adviser had told it that manufacturing had no value. Furthermore, “Defence, aerospace, manufacturing and engineering have no real value to us. Only high-quality professional services, financial services and the City of London have any real value and they should be supported at all costs. The rest of the country can be turned over to tourism.”

If the British government ever talks of supporting industry it’s always in terms of “sexy” new technologies – information, bio and nano. These are seen as existing in a rarefied atmosphere disconnected from all that has gone before. But recent research by economists has shown that most technological innovation takes place when adjacent to the “old” industries that spawned the need for innovation in the first place. First, there’s not much that’s old-fashioned about these industries anyway. Do we manage without steel, coal, bricks, textiles, food? Of course not – we import instead. Secondly, British capitalism now sources half of its research and development overseas.

And therein lies the importance of the struggle at Lindsey, Staythorpe and other power stations and refineries. In a brilliantly organised campaign, workers in construction have stripped away all the myths about our lack of skills. They have shattered the idiotic notion that demanding jobs at home is somehow racist whereas taking jobs from others and in others’ countries is somehow a righteous stance.

Further, their campaign has shown how toothless is the EU when confronted by resolute workers and how supine are parliamentarians who hide behind European laws to sell off their constituents’ livelihoods. The construction workers and engineers involved have entered into a principled campaign against unemployment, low wages and forced migration and won at least 100 new jobs. The fight continues and should be joined by workers in every sphere.

The first few days of April will see the East End of London play host to the political Olympics referred to as the G20 summit. Obama, Brown and the rest will strut their stuff, playing to their own national audiences. Simultaneously, they will strive to convince the others that they have the answers to the financial crisis engulfing capitalist economies.

Back in the real economy

US president Barack Obama is already struggling to convince. Wall Street continues to slide. In the real economy, 600,000 US workers a month are being made unemployed. The automobile industry and construction are in dire straits and the US aerospace factories are struggling for orders. Frightened to upset finance moguls, Obama refused to endorse the so-called ”steel clause” amendment that would have given favoured status to American and Canadian steel products. American workers already see their interests ignored in favour of the banks they’ve just bailed out.

In Ireland and France, the response of the respective governments has been to attack public service workers’ pensions; millions are out of work in Germany, Italy and Spain and young people in Greece are on the streets protesting against the lack of employment prospects.

60,000 enterprises have closed in China since the autumn; 20 million migrant workers are returning to the countryside as their jobs have gone. Exports have slumped by 25 per cent in the past year. Imports, likewise, have collapsed. There is a stagnant economy in Japan with millions out of work.

So, from all corners of the Earth the “Princes of the Universe” will gather in the heart of Docklands (no ships though) and come up with solutions that will offer us no succour whatsoever. And why should they? This is a national question – it is a class question – and we as workers have to step up to the mark and impose our solutions on a ruling class that’s surviving on our weaknesses.

What we need: ideas for renewal

Workers in the G20 countries need to have our own meetings, take actions pursuing our own agendas, begin to take a lead. Here we should take a leaf from the Lindsey campaign. We have skills and talent right here in Britain. We have capital to deploy. We should demand that the two are brought together. The only thing we hear from the Labour Government, from the EU and others is the mantra about globalisation and free trade. The finance ministers meeting in London in preparation for the full G20 summit could talk only of the need to foster free trade, eschew protection of industries and burden countries with more debt via International Monetary Fund loans. For workers everywhere, what we need is mutually beneficial trade on equal terms, not rapacious loans. Alastair Darling calls for a further £25 billion to shore up the crumbling economies of Eastern Europe where riots and protests have taken place in Latvia, Hungary and Bulgaria as workers lose their homes and jobs to western banks. Instead of shoring up the EU our money should be used here. Some examples. New “super” trains are to be purchased with government funding to run on the West Coast route. They are to be built by Hitachi in Japan. The motors may be built here; they may be constructed in Europe. The wheels will be cast here. The £7.5 billion should only be used here. If Hitachi still want the contract they’ll agree. If they don’t like the terms other bidders based here can build the locos and carriages. “Posted “ workers from other EU countries now number 971,000 compared to 221,000 British workers operating elsewhere in the EU. Cheap labour via the EU, in and out of Britain, helps workers nowhere. Instead of throwing money at the banks for them to dispense loans abroad, loans for business should be ring-fenced and prioritised so that capital is used here. US and Canadian steelworkers pushed for the “steel clause” in the US bank re-financing package only for Obama to have it removed at the last second. We import 36 million tonnes of coal to run our power stations each year whilst we live on top of 300 years’ supplies. We have developed clean burn coal technology that could utilise Yorkshire coal in the power stations of the Trent and the Ouse. Yorkshire pits could be connected to the power stations. The power stations could be linked by pipeline and the extracted carbon dioxide gas pumped into the strata below the North Sea and “captured”. Some of the billions of pounds being thrown at the banks could be directed to what would be a massive civil engineering project that would indeed be a world leader. We could start by cancelling this £19 million G20 stunt and move on to serious rebuilding of Britain.

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