Leaflet distributed by Solidarity students at Sydney University seminar on the financial crisis
The world is suffering its most serious financial crisis since the 1930s. Most economists believe that more banks will fail regardless of the billions being poured into failed banks across the world.
After all the years of rhetoric about privatisation, small government, the miracles of the free market and private profit, governments have had to intervene to effectively nationalise huge swathes of the banking system.
But the cost of this will be borne by ordinary people, not the corporate executives who created this mess. The US$700 billion spent on bailing out the US financial system will be paid for by increased taxes and cuts to public services for ordinary Americans. Yet the CEOs of the banks that survive will keep raking in millions. Even the executives of collapsed banks like Lehman Brothers will not be asked to hand back the millions of dollars they made.
Several major economies, including the US economy, are already in recession. Growth in China is slowing too. Australian companies are already cutting jobs. Predictions from forecasters at NAB are that 300,000 jobs will go by the end of next year. Even optimistic forecasts say the Australian economy will grow only one or two per cent. Inflation is officially over 5 per cent.
Even before the crisis hit, state governments have been trying to force wage cuts on public sector workers by holding their pay rises below inflation. Kevin Rudd too was calling for wage moderation. Now there will be more calls for those workers who manage to keep their jobs to take wage cuts or more forced overtime to make up for those who have been sacked.
The federal Labor government was quick to inject $4 billion into non-bank home loan companies but workers superannuation has taken an enormous hit.
Product of the free market
This crisis may have been precipitated by the toxic debts of the subprime crisis but it is a product of the neo-liberal free market madness of the last 25 years. The deregulation of financial markets created incredible global speculation as money chased profits around the world.
But the real causes of the credit crunch lie in the long-term crisis of profitability with which global capitalism has been struggling since the end of the 1960s. We have experienced 25 years of attacks on ordinary people’s living standards through forcing people to work longer and harder for less as business has attempted to restore profitability. Now the boom has gone bust and so has the myth that neo-liberalism was a new paradigm for capitalist prosperity.
At the very least we need to push for wage claims of at least 5 per cent to keep up with inflation. We need to push for the Rudd government to scrap all of Howard’s WorkChoices laws. It is a disgrace that a Victorian CFMEU organiser is facing a jail sentence for standing up to Howard’s anti-union building task force.
Cutbacks at universities
The Sydney Uni management is trying to make staff and students accept cuts in the name of the economic crisis. Last week the Vice-Chancellor claimed university revenue was down $100 million a year due to money lost gambling on the stock market, and so cuts to departments were necessary. This was also used to claim that the university could only afford 4 per cent wage increases for staff—less than inflation and so effectively a pay cut.
The university has now admitted in a briefing to the staff union the NTEU that it actually had a $53 million surplus overall last financial year and that “core University activities of learning, teaching and research do not rely on any investment income at all”. Last year Sydney Uni increased its payments to executives on more than $240,000 by 25 per cent and paid recently departed Vice-Chancellor Gavin Brown $940,000. But courses are already threatened as the university has demanded departments become profitable through taking full-fee students and corporate donations.
Sydney Uni has already been operating more and more like a corporation. Instead the university should be leading a concerted campaign to restore public funding. The Rudd government came to office promising an education revolution—yet it has failed to reverse Howard’s spending priorities.
The global financial crisis has thrown the whole ideological underpinnings of capitalism into the air. Now we know why the Howard government tried to silence dissent. University management went along with turning the university into a corporate degree factory trying to marginalise political economy and stifle critical thinking.
The Wall Street crash and the recession that is spreading around the world will bring even more misery in its wake. University staff and students have a role to play, standing up against the demands for cuts to pay and courses, and questioning the basis of the new world order brought to us by Howard, Bush and Blair.
Their system has failed. But neo-liberalism won’t just collapse under the weight of its own contradictions. The ideas of Marx are back on the agenda. But there remains an enormous weight from the past period in which we were told there was no alternative to the market.
We need to re-new the discussion of what is the socialist alternative to the market. That discussion needs to go hand in hand with the fight against demands to make us pay for their crisis. It took strikes and demonstrations to win reforms like free education in the first place. It will take such movements to win them back.
