The world’s financial markets were thrown into turmoil by the House of Representatives’ unexpected rejection of the George Bush-Hank Paulson $700 billion bail-out plan. As I write, frantic negotiations continue. Most commentators agree a deal will be done. The rescue plan will be enacted. Whether that saves US and global capital from a major recession is, though, another matter entirely.

Both the US bourgeois parties blamed each other for the failure on September 29, but the mathematics clearly shows that the heart of the rebellion lies in the Republican camp. One hundred and thirty-three Republicans voted against the Bush-Paulson plan. Together with a smaller but significant chunk of the Democrats – there were 95 of them – they sunk the package by a 23-vote margin.

Republicans feel betrayed and bewildered. Ever since Newt Gingrich’s ‘Republican revolution’ of 1994 their party has preached the virtues of free-market capitalism and crusaded against big government (read welfare provision). Now, seemingly at a stroke, their own president has turned 180 degrees and nationalised the insurance giant AIG, along with the dominant mortgage lenders, Fanny Mae and Freddy Mac. On top of that, Bush insists there is no choice. Historically unprecedented sums must be provided by hard-pressed taxpayers in order to save Wall Street.

No wonder Jim Bunning, hard-right Republican senator from Kentucky, warns against what he calls “financial socialism”. Other Republicans seethed that the package was un-American and insisted that thieving bankers should not be bailed out. There are also angry constituents to placate. Ted Poe, Texas representative, put himself forward as their pugnacious spokesperson: “New York City fat cats expect Joe Sixpack to buck up and pay for all of this nonsense … Reward people for being irresponsible and expect responsible people to pay for the sins of the financial industry? I don’t think so.”¹

Greed on the right

This echoes a traditional theme on the right, and in nationalist discourse more commonly – greedy bankers. The economic crisis is the result of bankers, their incomprehensible ‘instruments’, derivatives of derivatives and their never satisfied lust for more and more profits, no matter what the dire consequences. Last century Adolph Hitler ranted in Mein Kampf (1926) against the anti-national evils of finance capital – which he insisted was dominated by parasitic, cosmopolitan, Jewish forces. The honest German Volk should rid themselves of these spongers.

We have seen tentative versions of this sort of approach coming from John McCain and Barack Obama, the American presidential hopefuls; figures in the Tory Party; the archbishop of Canterbury, Rowan Williams, whose views were filtered through a citation of Marx;² and even Bank of England boss Mervyn King, whose doctrine of ‘moral hazard’, however quickly abandoned, saw him flirting with the ‘irresponsible greed of bankers’ critique.

The tactic is an obvious enough one. Sections of the bourgeois establishment have turned to populist rhetoric, whose criticisms of the aloof banking elite actually mask an underlying solidarity with the system of capital. A system which drives all its personifications – industrialists and retailers, as well as bankers – to the endless pursuit of profit. If they choose to opt out of that at some moment, or simply stumble and fall, takeover and/or bankruptcy surely follows. All that marks out finance capital – eg, Wall Street and the City of London – from Main Street industrial and retail capitalism is its incredible short-termism and extreme vulnerability to sudden moments of panic.

As populism goes, what we have on offer from the establishment is, of course, remarkably timid – only the esteemed archbishop has really weighed in with any politics, which is a stark contrast to similar sentiments during the great depression, which resulted in Franklin Roosevelt’s ‘new deal’ and the big-spend solutions of Maynard Keynes (leave aside Mussolini’s Italy, Nazi Germany and the mass fascist movements).

John McCain is an instructive case. Caught on the hop by ‘black Monday’ (September 15), with the collapse of Lehman Brothers and chaos on Wall Street, McCain’s first reaction was to declare that “the fundamentals of our economy are strong”. After this received the derisory reaction it deserved in the press and media, he decided that by “fundamentals” he meant the American workers, and that “the excess, the greed and the corruption of Wall Street have caused us to have a situation which is going to affect every American”.³

Still, this dramatic volte face has not stopped McCain visibly involving himself in this $700 billion ‘Joe Sixpack’-mugging bill, which he enthusiastically supported and over which he attempted to broker a deal. To add to the confusion, he has committed himself to unspecified tightening of financial regulations, despite his much boasted history of opposition to state regulations and controls and an apprenticeship served under the hard-line cold warrior and fiscal conservative, Barry Goldwater.

Not surprisingly, the last week in particular saw a series of disasters for the McCain camp, with Sarah Palin’s increasingly eccentric profile compounding the rather farcical showing on the economy outlined above. In Britain too, the Tories have been caught off guard, as the crisis plumbed new depths. Brown seized back three percentage points in the polls, citing his drip-feed of bail-outs and use of ‘shotgun weddings’ – as in the case of Lloyds TSB’s buyout of HBOS – as evidence of his cool and competent approach in the storm.⁴ Conservative Party leader David Cameron, noted for his soft-focus Toryism, has been stung into giving near unconditional support to government finance legislation, and is struggling to maintain the initiative on the economy.⁵

So why the attacks on greed from the right of the bourgeois establishment? Well, the purpose of rightwing political parties (in countries with universal suffrage) is to establish a link between the numerically weak dominant classes and sections of the subordinate classes, particularly the petty bourgeoisie, to the effect that the former are hegemonic.

The Tory Party, for example, systematically exploits the worries of the middle class about the inexorable growth of government control, faceless bureaucracy and institutions such as the European Union. All undermine notions of personal autonomy and self-sufficiency. It also uses an array of reactionary, authoritarian tropes – homophobia, immigration hysteria and the like – to peel off backward layers of the working class.

This alliance, in times of economic stability, can take on the appearance of something permanent. In crises accompanied and exacerbated by an incoherent working class rebellion – as in the ‘winter of discontent’ of 1978-79 – ruling-class hegemony over these subordinate elements can intensify.

However, it is clear that this kind of alliance necessarily comes under strain when an economic crises threatens to hit as hard as the present one might. At this particular conjuncture, the middle classes face severe pressure through mass lay-offs in the financial sector, the drying up of consumer demand, increasing interest rates and rising inflation. The last thing such people want is to foot the bill for the huge losses incurred by the ‘greedy bankers’. The right has to play to their concerns, express their fears and frustrations, while at the same time maintaining their loyalty to the system.

A difficult balancing act. Not least because the system as a whole does need a massive bail-out. Reading the coverage of the Congress vote is extraordinary – the shock jumps out from the pages of the press. Martin Wolf, writing in the FT, was unequivocal – “We are watching the disintegration of the financial system,” he writes. Yet, judging by its foolish rejection of the Paulson plan, “congress believes” it is time to risk another great depression like 1929-33 – “the greatest catastrophe of the 20th century”.⁶

Greed on the left

All of this is of food and drink to opportunists on the left.

Indeed, it is impossible for seasoned Marxists to read Ted Poeur’s reference to ‘fat cats’, etc, and not think of the Labour left. John Cruddas, the centre-left Labour MP and deputy leader challenger, has greeted Gordon Brown’s nationalisations and rescues as a “return to the values and ethics” of old Labour. After all, the prime minister had denounced “irresponsible” capitalism, pledged himself to curb City speculators and promised fairness. Tony Woodley, joint general secretary of Unite, has demanded government action to that end and called for the renationalisation of gas, electricity and water.

Peter Taaffe’s Socialist Party in England and Wales has come out with a similar line in last week’s issue of The Socialist: “Fat-cat bankers from Wall Street to the City of London are reeling from the white-knuckle ride of last week’s financial crisis.” Further down, we read that, “as ordinary workers struggled [in the boom years], city bankers strutted around, their wallets bulging with huge bonuses, thinking themselves ‘masters of the universe’”.⁷

This is all basically true, of course. It is a permanent truth of a mode of production based on the exploitation of the workers by a small number of capitalists – even when and where living standards have broadly risen, the wealth gap between the rich and the poor has always remained huge. The executive bonuses in the city have caused recurrent minor scandals; and now we are faced with the basically obscene spectacle of the erstwhile bosses of bailed-out banks collecting multi-million severance packets.

The problem with repeating this stuff endlessly, however, is that the Socialist Party is enlightening exactly no-one. Before the present period, these populist exhortations were at least obviously and visibly to the left of the major parties. Now their agitational rhetoric matches that of Texas Republicans, and is distinguished from the noises from Lambeth Palace only in that Rowan Williams has the requisite backbone to refer to Marx!

It is no great surprise to find, both in the Socialist article and in a press statement from the SP’s sleepy front, the Campaign for a New Workers’ Party, the usual poverty of programme. Dave Nellist, the author of the latter, reckons we should use “the traditional language of socialism” to fight the “free market system” (sic, September 29). And what does comrade Nellist mean by this? Just the old obsession with nationalisation, of course. State ownership equals socialism – a principle that has far less in common with Marx than his old foe, Lassalle.

Instead of harping on about the greedy bankers, it is the job of Marxists to locate the crisis in the system. We must not only blame capitalism, but show how crisis has been successfully put off again and again – in part because of government intervention; in part, however, because of the role of social democracy and ‘official communism’. We must also outline a realistic programme of immediate defence together with a programme for the supersession of capitalism.

Attempts to outdo the populism of the right will get our class nowhere.

Notes

1. The Financial Times September 30; tinyurl.com/4yq7b8. The Poe quote differs between the print and online editions – I have taken a statement from each.
2. “Marx long ago observed the way in which unbridled capitalism became a kind of mythology, ascribing reality, power and agency to things that had no life in themselves; he was right about that, if about little else” (The Times September 24).
3. New York Times September 16.
4. The Financial Times October 1.
5. Ibid.
6. Ibid.
7. The Socialist September 23.