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King's speech wins Oscar for half-truths

As everyone who buys their own food and fuel knows, price rises are accelerating. Even in the unlikely event that the revolutionary uprisings in the Middle East and North Africa don’t push oil prices even higher, inflation in the UK is shooting past 4% and heading towards double that by the middle of the year.

The supermarkets which control 75% of groceries, have already doubled the inflation coming through the commodity markets. They’ve pushed the price of processed food up by as much as 6.5% as they try to protect their profits from falling demand.

As the world has seen, when rising prices push food beyond reach even the most autocratic governments feel the anger of the people.

Inflation is just one side of the global crisis. It is the direct and inevitable result of desperate attempts by governments and central banks to reverse the implosion of the global financial system in 2007-8. They poured in trillions of dollars, pounds, yen, and yuan, hoping to restart lending through commercial banks that they had rescued with money borrowed in advance – without asking – from billions of ordinary people, their children and grandchildren.

It was clear from the outset – at least to some – that the growth needed to repay the debt will never materialise. But they had to try. So another solution to the worsening debt crisis is now in play – higher taxes and cuts in government spending which have already provoked social upheaval throughout Europe.

Now the reality is hitting home. Mervyn King, governor of the Bank of England, told MPs yesterday:

The research makes it clear that the impact of these crises lasts for many years. It is not like an ordinary recession, where you lose output and get it back quickly. We may not get the lost output back for very many years, if ever.

And, he added something that should strike fear into the parliamentarians:

The price of this financial crisis is being borne by people who absolutely did not cause it. Now is the period when the cost is being paid, I'm surprised that the degree of public anger has not been greater than it has.

Maybe King is thinking of joining the national demonstration called by the TUC for March 26, which looks like turning into the Britain’s very own Day of Rage. King told the Treasury select committee that the billions spent bailing out the banks and the need for public spending cuts were the fault of the financial services sector. And so he’s now proposing that rather than rescuing ailing banks, ways should be found to allow them to fail, albeit gracefully.

But the bankers’ banker is only telling half the story, or at best one side of it, to shield the real villain in all this – the capitalist system of production for profit. This is the elephant in the room that few people want to speak of. Certainly not the TUC nor Ed Milband and his let's-build-a “prosperous capitalism”-party which we wrote about yesterday.

A House of CardsFor decades, global growth of the capitalist economy was only made possible by an expansion of credit many times greater than the new value generated. It couldn’t last. When the limit was reached, meltdown took over. Then everything that was done to try and solve the crisis by treating its symptoms only made it worse.

Growth has been replaced by recession, and everything and anything that is done to try and deal with it just inflames the people affected most. King wonders why people are not angrier and out on the streets like the workers of North Africa. Don’t worry Mervyn. The rage is building and when it blows it needs to be directed not just against a few bankers but at the crazy capitalist system as a whole. At that point, you will be out of a job!

Gerry Gold
Economics editor
2 March 2011

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Jonathan says:

Andropov, before he wrote to (which was kept from the leadership) and met with Gorbachev, had access to the economic figures foretelling the economic collapse of the Soviet Union. As, previously, the leading figure in the KGB he knew two things clearly; where the bodies were buried and the real state of the economy. The CIA plan hatched in the early 50’s to bankrupt the SU with an arms race, the isolation of the Soviet Union behind Himler’s and Churchill's Iron Curtain, and within the stifling National character of The Bureaucracy that went and goes under the name of Stalinism foretold this doomed end to any average accountant. The CIA had average accountants.

Yet both Andropov and Gorbachev linked where the bodies were buried to the state of the economy. So: perestroika and glasnost.

During the Paris Commune the communards failed to take advantage of the physical possession of the Bank of France; “The hardest thing to understand is certainly the holy awe with which they remained standing respectfully outside the gates of the Bank of France." 1891 Introduction by Frederick Engels: The Civil War in France. Karl Marx. Certainly there is no awe left for the Bank of England. Now, it seems, even Mervyn King lets it be known that awe is the last thing people should hold the Central Bank in. Contempt maybe, which human, social, or individual emotion is to be behind the ‘anger’ he looks for is a very serious question; anger though is quite clearly to be to the fore. But, in-itself, it is not an organising principle. King knows the books, not the type to know where the bodies are buried, in my opinion, based partly on the fact he wouldn’t let them make him take all the flack with only the defence of ‘I told you so’ as he did. However, the ‘other’ audience, the lackey MP’s know, & what was he telling them; your necks not mine.

Let me throw into the debate that role, the legal role, of the Bank. The 1998 Act has:

Role of the Bank
11 Objectives

In relation to monetary policy, the objectives of the Bank of England shall be –

(a) to maintain price stability, and

(b) subject to that, to support the economic policy of Her Majesty’s Government, including its objectives for growth and employment.

Well there is support and there is support. But ‘support’ for a dying man, well, this is notoriously difficult. One that wants to drown everything. Especially when ‘policy’ can be seen, from the books to lead to the near total destruction of social life as even you know it. He knows, in short, what is, isn’t, and what is becoming is passing away: where to may be a mystery, and worrying, but obviously not as terrifying as he finds this situation, including the ‘bastards’ he is meant to support, is propelling everyone into. It must, in his opinion, be going nowhere.

There are many coach and horses able to be driven through that section of the ‘independence’ of the Bank. However, most significant is that if King speaks of ‘anger’, and this time most publicly, then he is as aware as should be any Marxist of the nature, the true nature, of the crisis; and he isn’t even the Prussian mushroom upstart Marx spoke of: “The contradictions inherent in the movement of capitalist society impress themselves upon the practical bourgeois most strikingly in the changes of the periodic cycle, through which modern industry runs, and whose crowning point is the universal crisis. That crisis is once again approaching, although as yet but in its preliminary stage; and by the universality of its theatre and the intensity of its action it will drum dialectics even into the heads of the mushroom-upstarts of the new, holy Prusso-German empire.” A quote that lives, inside which is ever more and more flavour. Of note here is why dialectics drums ever loader, yet as purpose or plan never signifies. And that is what is of significance in King’s speech. If his statement over lunch was not for public consumption (which now seems unlikely) this one was, most definitely was. Because there exists the certainly, fear in some quarters, hope in others, that conscious dialects, and organised resistance, may indeed swerve them from their plans. But it always remains their plans.

For the truth is, as Penny Cole put it in the notes from the recent Presentation notes from first teach-in: “Most campaigns are asking the government to do something (f)or us, to change its mind, to be different. But the government can’t be different – all the parties are agreed that the course being taken by the coalition is unavoidable.” To put it another way, to ‘present it for all children’ the fable on the Frog and the Scorpion is apt: This is the story. A scorpion wants to cross a river, but it can’t swim. It asks a frog to help. The frog is worried, but the scorpion promises “I won’t sting you, because if I did I would drown”. In mid river the scorpion stings the frog. The dying frog asks “why?” and the drowning scorpion answers “that’s my nature”. And that is capitalism’s nature, and Global Capitalism is not even cognisant of any other nature within it than super profit, even itself: all drown.

Penny says:

I realise that your title was ironic - but isn't it also incredible that the King's Speech won an award at a time when hundreds of speech and language therapists up and down the country are being sacked as part of the cuts.

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