The instability within the capitalist system means that no one knows what is going to happen in the economy over the next year – and that uncertainty is striking fear into the ruling class.
The ruling class everywhere is anxious that a recession could drive many companies into a spiral of bankruptcy, but it is also worried about the ideological impact that a major recession can have.
Two weeks ago Martin Wolf, an important columnist on the Financial Times newspaper, wrote, “I now fear that the combination of the fragility of the financial system with the huge rewards it generates for insiders will destroy something even more important – the political legitimacy of the market economy itself.”
He is right to be worried. Anyone with any belief in “people’s capitalism” will have had their faith badly shaken.
Last week the Scottish Widows’ life insurance company stopped small investors withdrawing their money from one of their funds.
Spectacularly, Societe Generale, one of Europe’s biggest banks, was almost brought down when a trader bet billions of euros on European stock markets rising and lost.
There is widespread anger at the way New Labour has handed over up to £50 billion to the hedgefunds that are the shareholders of Northern Rock when the same government could not come up with £2 billion to save the Rover car company.
Many people, who a year ago would have said they were broadly happy with the system, will today be wondering what on earth is happening.
The economic crisis has the effect of making people bitterly angry about their own situation.
If you’ve been paying into a pension fund for years and suddenly you are told that it is going to fall in value because the stock market has fallen, of course you are going to be furious.
And some of those who are most furious are the very people who previously appeared to be the most conservative sections of the working class.
If you’ve been working in the same job for 30 years – clocking in and out, making yourself a prisoner of the boss for five or six days a week – and suddenly you are told that you are “surplus to requirements”, how do you feel? Livid is the most common answer.
It is for that reason that people like Martin Wolf are worried. They think that the result can be the emergence of a politics that challenges capitalism on a wide scale.
Economic crisis, however, can have a contradictory effect on class struggle.
Initial bursts of anger at unemployment can fade into demoralisation – even after a short period of being out of work – and people can turn against each other.
This was true of the economic crisis in Britain in the late 1970s. Margaret Thatcher came to power in 1979 and for about two years she faced huge demonstrations and strikes, including a national steel strike that lasted for 16 weeks.
This led to calls for a general strike by even right wing union leaders.
But within a couple of years mass unemployment had the effect of demoralising the working class until the Miners’ Strike began in 1984.
Socialists do not welcome economic crisis. We know that it is the working class, not the bosses, who are going to suffer.
We also know that such crises do not automatically lead to revolt – they lead to anger, which has to be channelled into a fight with the system if it is not to lead to demoralisation.
The 1930s are today known as the “hungry 30s”. But the political bitterness of that period also created mass movements of the left across the world – leading to workers’ occupations of factories across the US, mass strikes in France and a workers’ revolution in Spain.
In Britain today Gordon Brown wants desperately to hang on to the bit of the British economy that has grown in the last few decades – the financial sector.
In order to do this he has to stop the pound falling in value by keeping interest rates as high as possible, while also keeping public sector borrowing as low as possible.
That means clamping down on spending – and especially on pay.
But many analysts are predicting that the US central bank’s cutting of interest rates will see inflation there rise to about 10 percent. That will have implications for Britain too.
Economists regard the combination of recession with inflation as the most potentially explosive because it opens up the possibility of large scale struggle by workers.
In such circumstances strikes can provide the focus for all the accumulated bitterness in society and can politically polarise society along class lines, creating a “them and us” feeling.
They can provide huge opportunities for the left to pose its own alternative to capitalism.
Bosses will use every means at their disposal to disperse such feeling. We can expect right wing newspapers and politicians to whip up scares over immigration and asylum seekers in an effort to divert the bitterness away from class struggle.
The most important challenges for the left today are firstly to win people to the idea that capitalism is a mad system and that we need an alternative.
Secondly, there must be an argument in every workplace about the pay limit and why the unions should fight against it.
Lastly socialists must involve themselves in every campaign against neoliberalism and war, and fight to create political connections between different struggles.
The biggest mistake we can make is to believe we can respond to the crisis with trade unionism alone. In order to beat a bosses’ offensive it is vital that socialists respond in a political way.