Socialist Party documents

British Perspectives 2008


British Perspectives 2008

1 March 2008
Hannah Sell, Socialist Party deputy general secretary , photo Paul Mattsson

Hannah Sell, Socialist Party deputy general secretary, speaking on British perspectives at Socialist Party congress 2008. Photo Paul Mattsson

The 2008 National Congress is taking place against the background of a profound change in the world economy and, flowing from that, the political situation.

The capitalist press is bursting with panic-stricken predictions of doom. They are describing all of the fault lines in the economy which we have pointed out over the last decade.

The turmoil on the world's stock markets over recent months is not accidental. It reflects the city traders' sudden realisation that the US sub-prime crisis is not an isolated and containable problem, but is the earliest expression of the slide into recession of the US economy and the deflation of the multiple bubbles that have driven the US boom.

The Société Générale crisis is clearly not the responsibility of one hapless trader. And it illustrates the degree to which the absolute confidence of the 'masters of the universe' in the infallibility of their system, and their certainty that they would continue to win every gamble, have meant they have happily allowed the financial markets to grow uncontrollably, on a scale that defies imagination.

Grim panic is now gripping the strategists of capital because they have finally realised that this vast financial edifice which looms over and dominates the world's 'real economy' is utterly out of control and could potentially collapse catastrophically.

Even if this worst case scenario haunting the world's markets does not take place it is clear that the US economy is entering recession.

US growth in the last quarter of 2007 was virtually non-existent, at an annualised rate of 0.6%. As we have commented many times before the US economy has acted as the 'Atlas' that has held up the world economy over the last decade.

Atlas falling to his knees will have a seismic effect worldwide. The idea that the 'BRIC' countries - Brazil, Russia, India, and especially China - could step into the place of the US, has already been shown to be a pipe dream.

On the contrary the drop in US consumer spending is pushing them into crisis.

At the time of writing it is too early to be able to judge the full extent of the current economic crisis.

Even regarding the US, where the crisis has advanced furthest, it is not yet possible to be certain if this will be a sharp, relatively brief recession or, as seems more likely, a longer depressionary period comparable with the prolonged crisis suffered by Japan from the late 1980s.

However, there is no question that this marks a turning point in the world economy and will lead to economic problems of varying intensity in all the major capitalist economies.

It will also lead to a change in policy by the world's capitalist classes. The era of unfettered globalisation is drawing to a close. Capitalism is a blind system. Policy changes take place, not as a result of reasoned discussion in cabinet or board rooms, but as an empirical response to crisis.

Just as the world economic crisis of the early 70s led to the abandonment of Keynesianism and the adoption of monetarism, the current crisis will force governments away from the complete laissez-faire policies of neo-liberalism and globalisation that have dominated the previous decades.