Dominic Sandbrook
Exactly 80 years ago, international capitalism stood on the verge of meltdown.
The collapse of the banking system in the summer of 1931 sent shockwaves through Europe, bringing governments to their knees and thousands out onto the streets.
In the United States, an increasingly careworn president and his congressional critics fought a bitter battle over government spending and tax rises.
And in Britain, with the Labour government broken by the economic crisis, a Conservative-dominated coalition imposed the deepest spending cuts in a generation, slashing benefits in an attempt to restore confidence in the nation’s finances.
With the banks refusing to lend, and millions of people thrown out of work, capitalism itself seemed utterly discredited.
In other countries, many turned to the far Right, swelling the ranks of the Nazis and their allies.
In Britain, a generation of intellectuals turned their backs on capitalism, placing their faith in the utopian idealism of Soviet Communism and closing their eyes to the horrors of Stalin’s barbaric regime.
For decades afterwards this extraordinary historical moment — when capitalism itself appeared to have failed — was forgotten, and looked like the stuff of ancient history.
But in the summer of 2011, with the eurozone in chaos, the British economy stagnant and the U.S. crippled by debt, with social mobility at a standstill and millions of ordinary families squeezed until they can barely breathe, it feels disturbingly familiar.
In the past two days alone, stock markets have been in free-fall across the capitalist world. With investors manifestly losing confidence in Spain and Italy, two of Europe’s biggest economies, a second devastating world recession cannot be ruled out.
Although the share-price plunge does not yet come close to the infamous Wall Street Crash of 1929, this week’s market mayhem is a chilling reminder of the sheer fragility of the capitalist system.
If the worst happens, if Spain and Italy go down and the euro crumbles, then the world economy really will be in trouble.
Only 20 years ago, the capitalist West was congratulating itself on victory in the Cold War. The Berlin Wall had come down, the Soviet Empire had broken up, and American intellectuals were even proclaiming the ‘end of history’.
Marxism was dead and capitalism triumphant, or so we were told. Having lifted millions in the West out of poverty, having showered them with goods and opportunities, the free-market system could do no wrong.
Today, the picture is very different. For although the Left has never recovered from the fall of the Soviet Union, capitalism has rarely seemed in a more desperate condition.
And with bankers still pocketing gigantic bonuses and Europe swept by a wave of austerity, even the Right are beginning to wonder whether the system is intolerably loaded in favour of rich metropolitan elites.
Only last week, for example, the Tory MP Douglas Carswell suggested that ‘the free market all too often turns out not to be a free market at all, but a corporatist racket for the few’.
Modern Conservatives, he said, should be ‘as suspicious of Big Business and Corporatism as we have been of Big Government’.
On the surface, this may sound shocking. Yet when you dig a little deeper, it is not hard to see why so many people have lost faith in the free market.
The entire premise of the capitalist system, after all, is that in a free market, hard work will produce its own reward. For capitalists, the important thing is equality of opportunity. If you put in the effort, then you can be whatever you want to be, regardless of your background.
So when Margaret Thatcher, one of capitalism’s most passionate champions, ran for the Tory leadership in 1975, she defined her values as ‘the encouragement of variety and individual choice, the provision of fair incentives and rewards for skill and hard work, and a belief in the wide distribution of individual private property’.
And when she walked into Downing Street four years later, she promised to ensure that ‘hard work pays’.
But you do not have to be a card-carrying Left-winger to see why millions of people — not just in Britain but across the world — feel completely cheated.
When most of us contemplate the results of the bankers’ greed, for example, talk of ‘fair incentives and rewards’ seems a sick joke.
In every corner of Europe, ordinary families, through absolutely no fault of their own, are paying an intolerable price for the outrageous avarice of the financial elite.
Recent figures show that City bonuses came to a staggering £14 billion last year, with one executive, Barclays boss Bob Diamond, pocketing an incredible £6.5 million — and that’s on top of his £8 million-plus annual pay package...
Read more: http://www.dailymail.co.uk/news/article-2022993/DOMINIC-SANDBROOK-Capitalism-crisis-warning-history-Eighty-years-ago-banking-collapse-devastated-Europe-triggering-war-Today-faith-free-markets-faltering-again.html#ixzz1UGAixrX4
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