Speaker: Raphie de Santos of the Scottish Socialist Party

Tuesday 20th October, 7.30pm, Bennetts Bar, Bennetts Hill, Birmingham City Centre

Two years after the credit crunch and one year after the collapse of Lehman’s there is talk in the media that the biggest economic and financial crisis is over. Stock markets around the world have increased in value by over 40% since their low point in March 2009.

But the financial system globally remains badly polluted, with UK banks writing off 36 billion pounds of losses on the first half of 2009.

Consumer credit, which was the main driving force of the long period of economic expansion which started at the beginning of the eighties, has collapsed and dried up. Of the near 150 billion pound that the Bank of England has pumped into the banking system – on top of the 150 billion that the government has used to bail out the banks – only about £2bn has flowed through to the consumer, mainly through mortgage loans giving a slight upward support to house prices. The rest is being held by the banks against future potential losses.

Western Economies

In the US consumer credit is collapsing, with a fall of over 20 billion dollars from June to July of this year. Economists estimate that two thirds of the US economy is driven by consumer credit. The economies of the Japan, France and Germany – less polluted by the bank crisis – have seen a modest upturn in their economies. They have had more money to spend on stimulating spending. But new capital requirements for these countries will mean that their governments will have to spend more on bank bailouts in future. The banks in these countries have huge exposure to emerging market property bubble. However, inventories being restocked and the clash for clunkers scheme is seeing a one – off slight upturn in production in the major economies.

China

In China a massive infrastructure spending programme and $3 trillion of new consumer loans has technically kept it out of recession. But tens of millions have lost their jobs and much of the consumer loans have fuelled a property and stock market bubble.

Global Crisis

Unlike the crisis of 1929 this financial one is global and much more complex. There is a ball and chain of debt hanging from the system of $700 trillion of unregulated derivatives as well as ten of trillions of pounds of credit linked to houses, consumers, property speculation and corporate speculation. With overvalued stock markets there is the potential for another black autumn.

Governments worldwide have to raise billions of pounds to pay for the bailouts and quantitative easing programmes. In the UK they have spent 25% of our annual income (GDP). They are going make us pay for this by cuts in public services, benefits and tax rises.

What demands should socialists put forward in these circumstances that can halt the financial crisis and create a just sustainable economy?

Raphie de Santos, an economist and member of the Scottish Socialist Party introduces such a discussion.

Speaker: Raynor Lysaght of Socialist Democracy in Ireland

Tuesday 25th August, 7.30pm, Bennetts Bar, Bennetts Hill, Birmingham City Centre

Summary: The Irish Economic Crisis and the potential  resistance

When the 26 counties freed themselves politically from Britain they formed an under-developed agricultural state. With limited resources of coal and none of iron ore, Ireland could not have been a player among the North Atlantic industrial economies that controlled the world. Centuries of foreign domination and landlordism aborted an economy based on agricultural production. Most capitalists developed as small scale usurious traders or gombeenmen. The most enterprising followed the example of the disappearing landlords to make their fortune abroad.

Northern Ireland was different: there local capital had been able to build and maintain an intensive, if localized industrial economy dependent on Scottish coal and the use of religious sectarianism as a productive force. In 1921 it had reached the height of its development and has been declining steadily ever since, becoming essentially a client economy of the British state.

The new Free Sate’s chief product was live cattle. Its first government accepted this, concentrating on agriculture, with little consideration of the possibilities of its side products. Then, from 1932, for a quarter of a century, general industrial neglect was replaced by blanket protection. Obviously, by 1957, this was not maintaining employment levels and tariffs were dropped as casually as they had been adopted. The protected industries disappeared, replaced by foreign firms attracted by generous bounties and, above all, by low wages.

It became clear that, to continue, this low wage economy had to pay still lower wages. Then the northern struggle exploded. After Bloody Sunday, 1971, workers began to occupy British factories. They were diverted into burning the British Embassy, but the situation did not allow successive governments to use capitalist methods to save the economy. Instead they tried to buy off the revolution. Only after ten years had shown that the Republican movement would not, and no other force could turn the national struggle into social revolution, did twenty-six county governments face a much deteriorated problem and try to solve it at the expense of the workers.

From 1987, the economy was rebuilt as a partner in international finance capitalism, aided by grants from what is now the European Union and an open doors policy to unorganised workers from Eastern Europe. Corporation tax was cut and health and education cut even more. From 1997, personal tax was cut further. Unemployment fell. However, by 2001, it was clear that this could not continue. Foreign investment was going to Eastern Europe. The government turned again to priming the pump and financed the building boom that collapsed last year. Now unemployment is 400,000 and projected to be 500,000 in 2010, while state debt is E10 billion and rising. New welfare cuts have been imposed and more are promised.

Overcoming this will be posed in the remainder of the talk.

Videos of the meeting:

Part 1:

Part 2:

Speaker: Andy Kilmister

Tuesday 16th June 7.30pm, Bennetts Bar, Bennetts Hill, Birmingham City Centre

“…..the commercial crises….. by their periodical return, put the existence of the entire bourgeois society on its trial, each time more threateningly. In these crises, a great part not only of the existing products, but also of the previously created productive forces, are periodically destroyed. In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity – the epidemic of over-production.”

Karl Marx 1848

The last few weeks have seen an increasing number of media reports of the `green shoots of economic recovery’ coupled with statements by financial analysts that the worst of the recession may soon be over – or may indeed already have passed.

Socialist Resistance has never taken the view that the current crisis is just about the weaknesses of the banks following the sub-prime debacle in the USA.

The financial turbulence that became apparent in August 2007 and then worsened dramatically in the autumn of 2008 is just one aspect of a broader process. This process involves the unravelling of many of the institutional frame-works that have governed the international economy since the mid -1980s and have laid the basis for neo-liberal politics. Economic growth in the last three decades has depended not just on rising debt but also on cheap commodity prices and ecological devastation within a context of global capital flows and imperialist exploitation. All of this is now thrown into question.

But the retreat of the most immediate threats of financial collapse and the temporary stabilisation of the banking sector does mark the end of a particular phase of the crisis and provides an opportunity for socialists to analyse the turmoil of the last year and to discuss likely developments in the future. We hope our new book Socialists and the Capitalist Recession will be a good basis for doing this.

In understanding what is happening to the economy at present Marx’s theories of crisis provide an invaluable starting point. The key dilemmas and tensions which lie at the centre of the current recession can be traced back to the themes highlighted by Marx over a century ago. This talk will look at three of them:

• Where will the demand come from to ensure economic growth and prevent mass unemployment, after the collapse of the housing bubble and debt-fuelled consumption? In societies like the USA and Britain, with massive inequalities and stagnating wages, how can ordinary people continue to afford to maintain consumption? What will be the impact of the current rise in government borrowing and the threat of higher taxes and public expenditure cuts to come?

• Are we heading for an era of global economic instability? Will increased demand from countries like China and India make up for slower growth in the USA and Europe? Will the dollar and euro maintain their values? What lies behind the fall in the pound?

• What is happening to profitability both in the financial and industrial sectors? Who is gaining and who is losing from the crisis and who will bear the future costs? How can capitalism deal with the mass of speculative investment left over from the boom?

Of course the outcome of the current crisis will not depend only on the background of global economic developments or on the strategies of employers and governments. More important than these will be the responses of workers and ordinary people to the attacks on living standards which the recession will bring. But in building campaigns and struggles to withstand these attacks we need to analyse what is happening in the economy and make predictions about what is coming next. This talk is intended to contribute to just such a discussion.

Part 1:

Part 2: