This crisis-ridden system only fosters poverty! it must be replaced!

6 October 2008

Bush's $700bn (£400bn) bail-out of US banks was finally passed by US politicians, but not without a big show of reluctance - not because they baulked at lavishing public money on greedy bankers, but because of the electorate's predictable anger in the run-up to next month's elections!

Whether this will stop the wave of bank failures, is another matter. Judging from the on-going fall of US share prices, the capitalists themselves are not convinced. Nor are governments, judging from the way they are bending over backwards to try to reassure the public and avoid a run on a bank.

Big business' welfare state

Yet, astronomical as this latest rescue package may seem, it is only the visible part of a much larger iceberg. Over the past months, the rescue of US financial institutions and loans to US banks has already cost the US Federal Reserve over $600bn, or 80% of its cash. And this is on top of the debt incurred by lending $400bn to other central banks to keep the dollar afloat.

As we can see increasingly clearly now, these enormous chunks of public funds are mainly used to prop up the power of the largest banks. Giants such as JP Morgan, Citicorp, Bank of America, etc.. are richer and more powerful today than they were a year ago - thanks to the US state underwriting their take-overs of failing rivals with public funds.

Nor is this process confined to the US. Gordon Brown's role in the bailing out of HBOS first, and then Bradford & Bingley, has resulted in a huge bonanza for giants like Lloysd-TSB and Banco de Santander. Not to mention Barclays' raid on the failed Lehman Brothers bank. Each time, the government stepped in by providing the raiders with financial guarantees against future losses, while taking over the failed banks' debts.

Much the same is happening on the Continent, as was shown this weekend by the bail-out of the Fortis bank, which is comparable in size to HBOS. While its Dutch operations were taken over by the Dutch government and its bad debts by the Belgian government, the largest and most profitable share of the bank was taken over by French giant BNP, under the auspices of the French government.

Of course, none of this should come as a surprise. This is the "normal" operation of a profit-driven capitalist system. Mindless greed and competition generate speculative booms, leading to crises in which the weakest get eaten by the strongest, thereby concentrating all wealth into the hands of an even smaller number. It is the way the capitalists' law of the jungle operates, while their trustees in government act as facilitators at the expense of the population as a whole.

The real cost of capital's parasitism

An illustration of the real cost of the madness of this social system is provided by the figures on child poverty which have just been released by a number of charities.

Everyone remembers Brown's past promise to halve child poverty by 2010 and to make sure it no longer exists by 2020. This was demagogic hot air, of course, but one might have expected that child poverty would not increase, at least. But it has! The figures show that 5.5 million children (42% of the total) live in poverty, which is defined as living in a household in which the average income per adult and child is £70/w or less.

Why is it that in one of the world's richest industrialised countries, such a large proportion of children (and their families!) live in poverty and that so many working class parents cannot make a decent living, even when they are in work? Why is it, if not because the tiny layer of capitalists who own and control everything in this system, are so parasitical on the rest of society that they leave less and less of the wealth produced for the rest of us? This is the cost of living under a system which is based on the right of idle capitalist parasites to steal the wealth produced by the working population!

Now that the financial crisis caused by the capitalists' greed is deepening, poverty can only get worse across society as long as this system remains. Using the pretext of the crisis, the bosses are cutting jobs left, right and centre. So much so that the real jobless figure has soared by over 150,000 since last May. And yet, under the pretext of bailing out the capitalist vultures, the government is squandering funds which should be devoted to funding public programmes for the benefit of all. This is capitalist logic, a logic that we will have to fight, no matter what. But above all, we will need to get rid of a system which is increasingly too costly to be allowed to go on!