05.05.2010

Banksters versus the people

Steve Freeman looks back at the election campaign in Bermondsey and Southwark, where he stood as an independent socialist

Writing before the general election votes are cast or counted, I think it might be useful to review our campaign. Why did I decide to stand in the first place? What was the political message of the campaign and what have we learnt about the state of public opinion?

In the first place it was hard to get onto the ballot paper. My aim was to be a candidate for the newly formed Trade Unionist and Socialist Coalition. But I got no support from Tusc. This was a setback which created divisions and greatly weakened my campaign. The CPGB offered to stand three candidates for Tusc and when this was refused the CPGB decided not to mount an independent election campaign. Without CPGB resources it was a much greater handicap for me and more or less derailed the campaign before we even left the station.

However, in the course of the class struggle many things are sent to defeat us and we have to do our best to overcome them. In any case my objectives were very limited. First, it was to strengthen the trade union struggle to defend South Bank University by raising political arguments. Second, it was to create a local organisation for trade unionists and socialists.

Neither of these two objectives requires the election campaign to win any votes. Even with no votes we can achieve these objectives. But we will not know whether we have done so for weeks or months. In the Bermondsey and Old Southwark constituency there is no socialist organisation. So there is no means of organising the socialist case and no means of getting votes.

Defend South Bank

London South Bank University is a major workplace, with over 2,000 staff and 23,000 students located in the constituency. The trade unions (UCU, GMB and Unison) have been engaged in a low-level fight to defend collective bargaining and national pay awards. The election campaign was aimed at raising the argument to a higher level and connecting with students.

The campaign argued that LSBU faced three major threats: a tsunami of spending cuts, redundancies, pay freezes and increases in fees; a corporate plan subtitled ‘Putting students first’; and the danger of increased racism, as the recession and rising unemployment finds scapegoats in immigrants and Muslims, etc. Blaming foreigners and immigrants for our woes is a very dangerous situation and will benefit the British National Party.

Our election campaign website carries three slogans: “Put people first”, “Make the banksters pay” and “For a people’s parliament, not a House of Thieves”. Even something anodyne like “Put people first” is different from putting white people first or putting students first and the so-called ‘customer care’ ideology.

These general slogans have to relate to concrete arguments connected with popular and working class experience about the crisis and the role of banks, the City, the government and parliament. In Greece workers are taking a militant stand in defence of the public sector pay. Greek trade union reps on TV always emphasise that workers did not create the public spending crisis. It was down to the politicians. So the argument about who is to blame is a central question for workers.

Banksters

What to do about the banks is one the politicians avoid as much as possible. With 2.45 million people unemployed, the economy is not producing enough and not creating enough jobs. One answer would be to invest more, spend more on education, health, housing and transport, and cut taxes, especially on low-income families. If this inflates away the national debt it will cost the banks.

There is a huge amount of waste from various political projects, such as Trident, estimated at £100 billion, the war in Afghanistan, interest payments of £42 billion to the banks and £50-£100 billion in uncollected taxes and tax avoidance schemes. But the banks see this waste as an investment or benefit for them. They want the working class to pay. With the current government deficit of £167 billion this year alone, the estimated cost for each adult is £148,000.

The banks are private businesses whose prime aim is profit. Their executives are the buccaneers of modern capitalism. Loan sharking, gambling, speculation, robbery and plunder, fraud and swindling are among the black arts of private banking. Ferdinand Pecora, the chief counsel to the US Senate Committee on Banking in the early 1930s coined the term ‘bankster’. The combination of ‘banker’ and ‘gangster’ described the behaviour of the top bankers before the great Wall Street crash in 1929.

British banks have their own banksters directing operations. Barclay’s president Bob Diamond received a £63.3 million pay package in March 2010 (Daily Mail March 20). Sir Fred ‘the shred’ Goodwin was chief executive of the Royal Bank of Scotland (RBS), when it made losses of £24.1 billion in 2008 and he was paid off with a £700,000 per year pension. Eric Daniels, chief bankster of the Lloyds-TSB and HBOS group, received a pay and bonus deal worth up to £6.8 million this year to top up his £1.12 million annual salary. He told employees that the bank faced “very, very few restrictions”. All thanks to the injection of up to £5.5 billion of taxpayers’ funds (Daily Mail March 26).

During the election the spotlight fell on Goldman Sachs, the US bank accused of fraud by the US Securities and Exchange Commission. Goldman encouraged clients to invest in securities, withholding crucial information and betting against its own recommended deal. Investors lost $1 billion, but Goldman took $15-$20 million in fees (Financial Times April 19).

The British economy is especially vulnerable to a banking collapse. The City is one of the world’s major financial centres, responsible for about 8% of the country’s output. In the bubble years from 2001 to 2007 bank assets doubled to £6 trillion. The amount of taxpayers’ money needed to prop this up was enormous.

None of the three main parties want much attention focused on what went wrong and who was responsible. All their policies concentrate on making the people pay through cuts in public spending and tax increases.

Great bankster robbery

The private ownership of the banks leaves immense power in the hands of banksters. It enables them to hold the country to ransom, threatening to go on strike by withholding vital finance. Would a country facing bankruptcy like Greece or the UK be helped by interest-free loans or a ‘holiday’ from interest payments? Not when dealing with the international loan sharks. Smelling blood, they are circulating around the Greek islands demanding more and more.

The sharks have been demanding 7.45% interest. This is rising to around 9%. The Eurozone (Germany and France) have stepped in to offer £26.4 billion at 5% (Financial Times April 12). If the Greek workers are screwed too hard, too quickly, there could be a political crisis or even some sort of revolution against banks. This could spread into other countries. The Greek workers have thus convinced the German banks to come up with a better offer! Currently the UK is paying £42 billion in interest payment to banks. This is expected to rise to £78.8 billion by 2014-15. The screw is being turned ever tighter.

At the core of the great bankster robbery is the alliance between the City and Wall Street. This underpins foreign policy, such as the invasion of Iraq, the war in Afghanistan and the threat of military action with Israel against the Iranian Islamic Republic. This alliance enables the British crown to play at super-power politics by wasting billions on paying the US for a useless Trident weapons systems that can only be fired with US permission.

In economic policy the UK and the US have promoted the Anglo-Saxon ‘free market’ model of economics. It meant ‘light touch’ (or next to zero) regulation of the banks. UK banks got a bigger share of US toxic subprime mortgage debt. With the support of US banks the City became the most bloated part of the UK economy. UK banks were hit harder than the other European banks and the recession bit deeper.

Regulatory failure

Powerful banks not only dominate finance and the economy, but exert powerful influence at the heart of government. Their interests hold sway with the Bank of England, the treasury and the prime minister. The City and the banks have been traditionally influential in the Conservative Party. But in 1997 New Labour embraced the City and this new relationship was signified by making the Bank of England independent. This meant a new freedom for the banksters to make profits and bonuses.

The banksters remain the ‘untouchables’ of the British economy. No control was exercised by shareholders. They were happy to rake in dividends in good times and accepted state support when they failed. The Financial Services Authority was set up to guarantee minimal regulation. It is effectively a banksters’ quango to protect them from public scrutiny. It saved the banks from too much regulation or ‘interference’ by parliament. Parliament failed to exercise public scrutiny over the banks or pass necessary laws and ensure effective implementation. This is where the major system failure took place.

The failure of the banks and parliament are connected. The banks failed and parliament failed to do its job in keeping them under control. Imagine an earthquake hitting two countries. In one the houses fall down, in the other most remain standing. We should not conclude that one country was unlucky. It was not an accident that houses fell down. It was failure of architecture and design and building regulations. It was failure of the politicians who allowed the dodgy building companies to jerry-build cheap houses. In the UK we have institutionalised banksterism.

Change

One of the main themes to come out of the election is the desire for change. This is the message given by people to the politicians. With a broken economy, a broken society, busted political system and failed parliament, something has got to change. Labour has presented itself as the ‘steady as she goes, safe pair of hands’ party. But the Tories and the Liberal Democrats are claiming the mantle of parties of change. Both have a plan to rearrange the deckchairs on the Titanic.

When we leave behind the rhetoric and concentrate on what kind of change, we see that all three are planning to carry out their own great bankster robbery. All three parties have more less the same size of cuts because they have been listening to the same banksters. The differences between them are not in the size of the robbery, but in the timing over the next five years. The Tories want to front-load them and Labour puts more in the later period. There are some differences with the Liberal Democrats on where the axe will fall.

My campaign promoted change through the slogan of a “New England”, as symbolised by the three campaign colours of red, purple and green. A new England means popular sovereignty and a different relationship with Ireland, Scotland, Wales, Europe and the world. It does not contradict the demand for a voluntary federal republic. It is young people and workers producing the wealth who have the power to make a better society, not the three conservative parties.

The new parliament will not bring any real change. It may raise some people’s hopes, only to dash them. It will be more of the same, only worse. The next parliament, like the last one, will be in hock to the vested interests in the banks and the City, and to the corporate interests more generally. The new parliament will be a rubber stamp for the great bankster robbery. It will be a House of Thieves.

What about a hung parliament? Well nobody could vote for it. It was not on the ballot paper. It is delivered by the electoral system and the state of public opinion. The City wants one party to govern alone. This will be a more effective form of elected dictatorship. One-party government is able to make cuts more quickly without challenge. Many people want a hung parliament for the opposite reasons.

A Financial Times headline read: “Investors fear the effects of a hung parliament” (April 19). Ten leading investment funds worth £4,570 billion were worried about an indecisive result, but did not care whether there was a New Labour or Tory government, provided it had a clear majority. A hung parliament could lead to higher interest rates. They were saying the ‘wrong’ result would cost us.

Opinion polls before the election came to the opposite conclusion. Those by ComRes and YouGov said it was the public’s preferred option. Faced with a hung parliament, the socialist movement should start to prepare straightway for the next election. Second time around, we must make a better campaign.

Conclusion

My conclusion from the campaign, and from testing out the arguments with workers and people we met in the street and with other socialists, is that we have a strong message, but a weak delivery system. It is like having a nuclear bomb, but only a broken bicycle to transport it thousands of miles to its target.

Without a national party, without local organisation with roots in Bermondsey, we have no chance. Add to this the handicap of a campaign which started late and spent its early days arguing over whether standing in such inauspicious circumstances was a good idea or not. However, we had a sense of realism and strictly limited objectives.

First, the aim was to encourage workers and students at LSBU to resist the cuts imposed by the great bankster robbery, to oppose the divisive corporate plan and resist the growth of racism, which inevitably rises in conditions of economic crisis and unemployment. Second, it was to seek to launch some kind of local socialist organisation linking socialists in South Bank with those in Bermondsey and Southwark. The third aim was to raise and test the ‘New England’ slogan as a new direction for the ailing and failing socialist movement.

We were putting down a marker - marking the territory or battleground for the next period. The success of this election campaign, against impossible odds, should be measured not in votes, but against these three objectives and how much progress we make in achieving them over the next two or three months.