Avoiding a repeat of history
Karl Marx cited the words of his teacher Georg Hegel, when he recalled, “all facts and personages of great importance in world history occur, as it were, twice”, with Marx adding: “The first time as tragedy, the second as farce.” That déjà vu feeling came to mind while watching TV and reading the news over the weekend.
The Wall Street crash of October 1929, when the American stock market came down to earth, was featured on BBC2 on Saturday evening. The Great Crash was, as the commentary said, the precursor to the Great Depression, a global slump, the collapse of democracies in Europe, the rise of fascist regimes and World War Two. Like the present financial crash, the 1929 collapse had its origins in a speculative orgy based on credit.
Fast forward almost 80 years later to last autumn. Lord Myners, a former banker from Rothschild’s sitting in an office above the Treasury, faced the total collapse of Britain’s banking system and recalled the scene for the weekend press, saying:
How close were we to a systemic collapse of the banking system? We were very close on Friday, October 10.
There were two or three hours when things felt very bad, nervous and fragile. Major depositors were trying to withdraw – and willing to pay penalties for early withdrawal – from a number of large banks. The whole system is like a house of cards. It would have been – Bank A today – Bank B tomorrow – Bank C the next, all the way down.
The Bank of England had to contact major creditors in Tokyo and New York to dissuade them from withdrawing vast sums from the Royal Bank of Scotland group.
Back to Wall Street in October 1929. Bankers and the financial authorities tried innumerable measures to steady the ship and hold share values. But it didn’t stop a thousand banks going bankrupt and a shanty town of cardboard huts being created in Central Park, Manhattan! Nor did the New Deal policies of Roosevelt have much of an impact on the economic slump that quickly followed.
Yesterday, Ruth Lee, an economic advisor to the Arbuthnot banking group, said of Myners’ remarks, “it was highly irresponsible for Myners to reveal the scale of the problems because it could wreck already fragile levels of confidence. We are not out of the woods yet … If it was panning out that way, then the government would have no choice but to step in and nationalise the whole financial system.”
This begs the question – whose fragile “level of confidence” are people like Lee concerned about? Savers, workers or pensioners in Britain? Not at all. The authorities are concerned about foreign lenders and those who underwrite insurance risks about New Labour’s ability to honour government bonds that are flooding the market.
Despite those “in the know” wanting to keep mum, the truth of this crisis will out and we will have to face the facts and the consequential political decisions that the capitalist state and its agencies will use in an attempt to restore order. These realities cannot be ignored nor should they paralyse you. History does not have to be repeated. To be forewarned is to be forearmed. Take up the struggle for your rights and fight for a transfer of economic and political power into the hands of working people as the way to avoid the catastrophe that followed 1929. Signing the People’s Charter for Democracy would be a practical first step.
26 January 2009