Socialist Party of Great Britain - Capitalism In Crisis - Helicopters, Kitchen Sinks and Capitalism


In a frantic attempt to stimulate the economy the central bankers are running out of policy ideas. In the past they persuaded politicians that they had their fingers on the pulse of the economy and were able to force capitalists to invest and consumers to spend. “No More Boom and Bust” they told the former Labour Prime Minister, Mr Brown. He then told the electorate: “No More Boom and Bust”. He was wrong. His advisors were wrong. The power the central bankers thought they had over the workings of the economy was just an illusion.

Capitalism just went its own old anarchic way and in 2008 the economy suffered another economic crisis, the repercussions of which are still being experienced today. And since the last economic crisis, the economy has performed badly despite falling unemployment and higher growth; an economy where so-called “zombie” businesses just struggle from one month to the next, where there is the persistence of huge private and government debt, poor productivity and under-investment in new technology.


Central banks have thrown everything at their economies, and yet the results have been disappointing … (W) hatever can be said about the world recovery since the crisis, it has been neither strong, nor sustainable, nor balanced (THE OBSERVER, 13 March 2016)

Typically, the government blames negative economic forces abroad that it cannot control. In Shanghai, at the gloomy G20 meeting, George Osborne gave an interview with the BBC in which he acknowledged the problems of the world economy:

We’ve just had figures that show the economy is smaller than we thought in Britain, and we also know that global risks are growing and Britain is not immune to those things (INDEPENDENT 3rd March 2016)

The Chancellor, George Osborne, is now promising more austerity and further cuts.

The policy of zero interest rates has not worked and it has now led central bankers to consider a policy of negative interest rates in an attempt to stimulate the economy. The Swiss have already tried this policy, so have the Swedes and the European Central Bank, all without success.

It was obvious that these economic policies were going to fail. The central bankers only had to look at the Japanese economy where every known policy known to capitalist economic theory has been tried and failed. The Japanese economy has been in stagnation since the mid 1990’s, marked by weak economic activity, commodity and asset price deflation, banking failures, increased bankruptcies, and rising unemployment. Japan’s economy has suffered the most sustained economic downturn seen in the industrial world since the 1930s.

Fearing a Japanese “lost decade” the central bankers are now proposing what has been called “the helicopter money option”, first put forward by the late Milton Friedman in the 1960’s. Central bankers are now seriously considering the idea of injecting money into consumers’ accounts, mandating pay rises or giving deposits away for a house. According to Matthew Lyn of the DAILY TELEGRAPH “no one really expects these policies to be adopted or even work” (Get Ready to be Showered by Helicopter Money, 22nd February 2016). Clearly desperate economic policy-makers are forced to implement desperate policies.

Once it is clear that there are no more economic policy options open to them, all the central bankers will have left open to them is the proverbial kitchen sink to throw at the economy. This has been acknowledged by Andraes Whittam Smith in an article “We’re teetering on a brink of a recession, but there’s one lever left” (INDEPENDENT 3rd March 2016). He said

The most important reason for pessimism, however, is not mentioned in the statements by official bodies. Nor could it be, for it raises the issue of whether these organisations and their governments have the ability any longer to influence the course of events

Whittam Smith’s “lever” is in fact no lever at all. It is the nothing more than the jammed and rusted lever on which the decomposing hand of Keynes impotently rests. This Keynesian lever has been permanently stuck since 1973 when the policy of the government “managing” the economy to maintain “demand” failed as inflation grew simultaneously with unemployment. In 1976, the Callaghan Labour government went on, via an IMF loan, to embrace the equally the equally fallacious theory of Monetarism.

So why not abandon the use of any economic policy and just let the economy run its course? This is very unlikely to happen. It will undermine the credibility of central bankers and politicians who are under the misguided belief that they run capitalism rather than the other way around.

For generations, politicians have told the working class that periodic economic crises and trade depressions can be resolved by the implementation of the right economic policy. So we have had Monetarism, policies around the raising or lowering of Interest rates, cuts in taxation, quantitative easing and proposals for more government spending.

No government could ever seriously contemplate telling a non-socialist electorate that the only option for bankruptcies and rising unemployment is to do absolutely nothing. No government could announce that workers would just have to put up with falling wages and salaries and long periods of high unemployment. And no government could say that the destruction of value, bankruptcies, defaults on debt and the stockpiling of commodities sets the ground for an eventual up-turn in the economy.

The government would be worried that other economic snake oil salesmen like themselves would step in and offer a “solution” to the problems of the profit system. “Saviours of capitalism”, these economists are called. The graveyard of capitalist economic theory is littered with their entombed bodies. As Marx, after a life time of studying capitalism, knew only too well, there is no solution to the trade cycle and its consequences; at least if you want to retain capitalism. And who in their right mind does?

Capitalists not Politicians know when to invest.

If there was a chance of investing “idle” capital and making a profit then there would be no cash mountain. It is in the nature of capitalists to invest and make a profit. As Marx noted:

As the conscious representative of this movement, the possessor of money becomes a capitalist. His person, or rather his pocket, is the point from which money starts and to which it returns. The expansion of value, which is the objective basis or the mainspring of the circulation M-C-M’, becomes his subjective aim, and it is only so far as the appropriation of ever more and more wealth in the abstract becomes the sole motivator of his operation, that he functions as a capitalist, that is as capital personified and endowed with consciousness and will…the restless never-ending process of profit-making alone is what he aims at (CAPITAL Vol. 1 Chap. IV p. 130)

So capitalists do not need economists, government ministers and politicians telling them when to invest. Capitalists invest when they believe they are going to make a profit. And when they cannot invest for a profit, then business take advantage of stock-markets to buy back their own shares, or lend to banks and other businesses, or to buy a few paintings by Renaissance Masters to hang on the wall of the CEO’s office – still a risk give the current poor performance of the global art market.

The problem of investment is even more acute for smaller businesses. Many cannot afford to borrow money on current lending terms. The problem they face is that they cannot find banks to lend them the money capital because of the unviable state of the company. Who wants to lend to companies who are likely to go bankrupt? The so-called “zombie” companies are barely able to stay afloat from one quarter to the next and are often weighed-down with debt and unable to expand. A period of higher interest rates would just kill them off, and the lenders know it.

So, investment will return only when capitalists believe they will get a return on their capital and not before. A lesson that economic policy-makers will have to learn once throwing the kitchen sink at the problem has failed.

So what about the working class? How do they fare in an economic depression? Not very well, as it happens. And it is not surprising; wage slavery is not only exploitative but leaves workers vulnerable, insecure and uncomfortable. And no more so than when made unemployed as workers are still experiencing today in the steel, oil and service sectors of the economy.

But then what? If capitalism cannot be made to work in the interest of workers why don’t workers pursue their own class interest? Why not begin to understand that the problems workers face as a class are caused by capitalism and realise that socialism is a practical and viable alternative to the profit system.

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Object and Declaration of Principles


The establishment of a system of society based upon the common ownership and democratic control of the means and instruments for producing and distributing wealth by and in the interest of the whole community.

Declaration of Principles


1. That society as at present constituted is based upon the ownership of the means of living (ie land, factories, railways, etc.) by the capitalist or master class, and the consequent enslavement of the working class, by whose labour alone wealth is produced.

2. That in society, therefore, there is an antagonism of interests, manifesting itself as a class struggle, between those who possess but do not produce and those who produce but do not possess.

3.That this antagonism can be abolished only by the emancipation of the working class from the domination of the master class, by the conversion into common property of society of the means of production and distribution, and their democratic control by the whole people.

4. That as in the order of social evolution the working class is the last class to achieve its freedom, the emancipation of the working class will involve the emancipation of all mankind without distinction of race or sex.

5. That this emancipation must be the work of the working class itself.

6. That as the machinery of government, including the armed forces of the nation, exists only to conserve the monopoly by the capitalist class of the wealth taken from the workers, the working class must organise consciously and politically for the conquest of the powers of government, national and local, in order that this machinery, including these forces, may be converted from an instrument of oppression into the agent of emancipation and the overthrow of privilege, aristocratic and plutocratic.

7. That as all political parties are but the expression of class interests, and as the interest of the working class is diametrically opposed to the interests of all sections of the master class, the party seeking working class emancipation must be hostile to every other party.

8. The Socialist Party of Great Britain, therefore, enters the field of political action determined to wage war against all other political parties, whether alleged labour or avowedly capitalist, and calls upon the members of the working class of this country to muster under its banner to the end that a speedy termination may be wrought to the system which deprives them of the fruits of their labour, and that poverty may give place to comfort, privilege to equality, and slavery to freedom.