John McDonnell – Oct 2010


the phoney war of threats of cuts is coming to an end, and the real questioning of why cuts are necessary is beginning in earnest’’

A week before TUC Congress, a group of what even the BBC’s Robert Preston described as “a conspiracy of bankers” met in Switzerland and fixed in their favour the outcome of the Basel Committee on Banking Supervision. This was meant to be the high powered committee of experts which would assess the lessons of the 2008 banking crisis and set up a new international regulatory framework for banking to protect us all from another credit crunch. It was supposed to establish the new rules that would ensure that banks could no longer spin out of control in speculative profiteering and have to be propped up with taxpayers’ money as had to be done last year in Europe and the US.

Unfortunately, the bankers have been let off the hook and are literally laughing all the way to their banks. The verdict from Switzerland is that banks will still be allowed to lend dangerous multiples of the capital they hold, with a leverage ratio of 33 to one (which will render them prone to bankruptcy if their assets fall 3% in value). Instead of being required to boost their capital reserves sufficiently to protect against bankruptcy and prevent the need for government support in the future, they have been allowed to lend vast sums based largely upon the precarious security of their current capital stocks. In addition, over the eight year transitional period set aside for the introduction of the new banking rulebook, there will be no constraints on dividend payments, remuneration of the bankers or their bonuses.

The message is very clear. With not even a thank you, the banks have taken hundreds of billions of taxpayer’s money to save themselves from collapse. They have gone on to undermine any attempt at effective regulation and are now all set to start the casino wheel spinning all over again. At the same time, the rest of society is left to pay off the debts incurred in salvaging the banks.

The role of the Con-Dem Coalition is simply to deliver the cuts in public expenditure required to pay off the debts incurred in saving the banks. All of those public sector workers who are being laid off, all of us who are witnessing our public services being cut and all of those who are having their benefits and pensions cut must be really proud of the contribution we are all making to restoring the bankers’ bonuses and restoring the same financial system so that it is virtually certain to go into crisis just in time to penalise the next generation.

Already the cuts are happening, but on 20th October the Coalition will announce its Comprehensive Spending Review setting out its detailed programme of large scale cuts in public services and welfare benefits that, over a three year period, will aim to tear down the last vestiges of the public provision of services. If they are allowed to get away with it, the Tories and LibDems will reconstruct our society. They hope to persuade people to accept that vast inequalities in wealth and quality of life are inevitable and to accept without question that poverty and squalor are the results of individual failure, not societal ills.

Although in 2008, at the height of the credit crunch, the whole corrupt operation of the capitalist system was exposed and anger emerged at the bankers’ bonuses and the collusion of craven governments, this subsided – and the left lost the first phase of the ideological battle. Capital has been able to mystify and transform the perception of the cause of the economic crisis, blaming public spending and setting the overriding target as tackling the deficit.

Now, in this latest phase of the crisis, as the cuts are moving beyond the abstract and individuals are beginning to feel their consequences, the opposition to them is starting to grow. The phoney war of threats of cuts is coming to an end, and the real questioning of why cuts are necessary is beginning in earnest. Now is the most critical time for socialists for at least a generation. We have the golden opportunity of being able to answer people’s questions about why the cuts are being forced upon us and what the alternative is. We have the huge gift of people increasingly looking for ways to resist and fight back.

Let’s mobilise. Let’s mobilise in every organisation and community of which we are members. Let’s mobilise every group and every section of our society of all ages, gender, ethnicities, and orientations. Let’s mobilise using every mechanism and weapon we can lay to hand – public meetings, marches, demonstrations and direct action. Using every platform we can access, every form of communications, art, music, dance, drama and new media, we have to shout resistance.

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