The Point
Last updated: 27 June 2022. sky thinking for an open and diverse left

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The Bubble Bursts - 10 Years On.



The Bubble Bursts: Capitalism In Crisis was written in the aftershock of the world economic crash of 2007/08 when the free market soothsayers who had boasted for years about the inevitability and longevity of capitalism were forced to re-appraise their glib and shallow pronouncements.

Apparently the idea of socialism died in the rubble of the Berlin wall collapse in 1989 and the only show in town across the planet was big business capitalism, private ownership and control of the majority of each nation's assets by increasing rich billionaires at the head of multi-national corporations.

Socialists pointed to the stubborn resistance of Cuba and the miraculous improvements in health care, literacy and wider education in the midst of crippling economic blockades as a morsel of comfort throughout the 90's. Then left governments securing election in places like Brazil, Bolivia and especially Venezuela provided more encouragement to the idea that an economy and society based on social need and human cooperation rather than private greed and wasteful competition was possible. The world of academia and mainstream media production regularly pronounced, however, that capitalism had won the day. No other system had a look in. And then along came the crash of 2007/08.

Steve Arnott's The Bubble Bursts, originally published by Solidarity, attempts to analyse some of the root causes of the crash and rages against the grotesque inequalities the advance of capitalism has visited on societies everywhere but particularly within the UK. It is very timely to have it re-printed and promoted now some 10 years after the crash as not only do some of the same conditions which caused that crash prevail now (massive and unsustainable personal, corporate and sovereign debt), but the battle of ideas is very much alive with right wing and reactionary solutions triumphing in America, Hungary and Brazil a warning to socialists and democrats everywhere that fascism was defeated in the 1939-45 World War but it was not buried completely. The desperation, insecurities, inequalities of neo-liberal capitalism, and the failure of left parties to offer solutions always allows gaps for right wing reactionaries to fill.

If the left is to prevent the rise of the intolerant and fascistic right it must offer genuinely radical solutions, rooted in reality, and the ability to tackle grotesque inequality and poverty. Some of those solutions are surely to be found in this newly republished pamphlet, now widely available online for the first time.

Please read it and spread the vision it contains.

Tommy Sheridan


The Point republishes, in a new edition, 'The Bubble Bursts' by Steve Arnottwritten contemporaneously with the Great Financial Crash of 2008. It is intended as a timely reminder of anger and outrage, and the remorseless logic of capitalism; from the recent past, in sad anticipation of a repeated future, and in hope that, next time, we can make things happen differently.



Global recession, how it affects you and what should be done.


Living through history


Capitalism is the astounding belief that the most

wickedest of men will do the most wickedest of

things for the greatest good of everyone.

     -  John Maynard Keynes


A great philosopher once said that all things go through an uninterrupted process of coming into being and passing away.  Or, as the Canadian rock band Rush were to sing in a later century ‘change isn’t permanent, but change is’.

Sometimes change happens so gradually that we can’t see it – like the slow erosion caused by rain and wind on the mountaintops, or the gradual workings of biological evolution. In the social, political and economic world too, change is always there, often pulling in different directions, but so gradual that it isn’t at first perceived. At other times all of the contradictions and gradual changes that have been bubbling under the surface erupt forward at an accelerated pace.

Species die and new species emerge as a result of global climate change. The gradual erosion of the mountain loosens tons of rock, which under the force of gravity avalanche downward as a tremendous landside which changes the topography forever.  Or a social and economic system which seemed to some the very paradigm of stability is suddenly shaken to its very foundations.  All of a sudden we feel that history is no longer the academic study of past events, but something that we are living through.

The bursting of the world’s debt bubble and all the free market illusions that went with it is just such a moment.  The great credit crunch of 2007-2008 and the subsequent and ongoing recession, with its devastating effects for ordinary working people, is just such a time – a time of turmoil, a time of political reassessment, a time of accelerated change, and, hopefully, a time of fightback.

Following the collapse of the Soviet bloc in the late eighties, and with it its hideous totalitarian distortion of socialism, many right wing thinkers proclaimed ‘the end of history’.  The capitalist system – mediated by liberal democracy - was the best that humanity could hope for or achieve, they said.  Social democratic parties in Europe, including the Labour party in the UK, accelerated their drive to the right, ditched any commitments to socialist change and enthusiastically embraced the ‘free’ market.

For the past eleven years New Labour crowed about how it could manage capitalism better than the Tories, and despite political difficulties over Iraq, were able to point to year on year growth in the economy, albeit it at a modest average of 2-3 percent per year.  As recently as a year ago Gordon Brown was still trumpeting that he and New Labour had done away with ‘boom and bust’.  Similar mantras were repeated by pro-capitalist political leaders in almost every advanced capitalist country.

Socialists pointed out, of course, that even under these conditions of modest growth there was a considerable downside.  Inequality continued to rise. Levels of poverty, by a whole range of measures, were either unaffected by this neo-liberal market miracle or actually rose. Council and health service finances were squeezed as New Labour continued to insist that capital projects were delivered by the costly and profit driven Private Finance Initiative. Workers on the shop floor felt the whip hand of Tony Blair’s drive for ‘flexibility’ and the push for increased corporate profits. House prices rose and millions had to mortgage themselves to the hilt to get a decent roof over their heads. Others were priced out of the housing market altogether. As is the case in all periods of capitalist boom some did alright thank-you-very-much, but millions continued to work hard for little reward, living lives of quiet desperation and little hope, struggling to get by as best they could.

To mainstream politicians and the reflective lens of the mass media and its commentators, however, everything in the garden continued to smell of roses. The corporate giants in banking, the privatised utilities, the phone and internet companies, as well as the energy, food and transport companies posted record profits year on year. Some people, somewhere at least, were having a big and ongoing party. 

Gordon ‘Iron Chancellor’ Brown and Tony ‘Third Way’ Blair, by embracing the market, hounding the jobless, kicking the unions and restricting public spending, were creating ideal conditions for big business to flourish. Easy credit meant that, whatever were the other problems of life, people could at least buy things they couldn’t otherwise afford.  Rising house prices made millions feel better off, even if in reality that fictitious capital gain would never be realised for most.

So what happened?

If, in July 2007, some white robed prophet had walked into BBC News Headquarters at Pacific Quay in Glasgow and claimed that, within months, a major British bank – Northern Rock - would be nationalised to prevent a run on it as people queued in the streets to remove their deposits, he would have raised only mocking laughter and been asked to leave.


Panic outside Northern Rock

Had he then said that by next summer house prices throughout the UK would be falling at an accelerating rate; that with Gordon Brown as Prime Minister there would be massive discontent over domestic fuel bills that had risen by over 40%; that production and profits were falling at the same time inflation and unemployment was rising; that the Tories would hold a consistent 10 -15% percentage point lead in UK wide polls of voting intentions for the Westminster Parliament; and that Labour in Scotland would not be able to regard any of their Westminster seats as safe from the SNP, news staff would probably have dismissed our imaginary Cassandra as a late April fool or some leftie ‘Trot-Nat’ stuntist.

And if, as the security guards professionally but firmly prepared to eject the soothsayer, he let it be known that by September 2008 two major American banks would have failed, that 50% of American mortgages would be effectively nationalised by the Bush administration, and a trillion dollar state intervention to save the US banking system would actively be being proposed; that further, by early October Brown and New Labour would have part nationalised both Bradford & Bingley and a merged Lloyds TSB/HBOS and taken a 60% public stake in Scotland’s biggest company, the Royal Bank of Scotland, to prevent the whole UK banking system from collapse...well, social services would probably have been called.

Our prophet’s narrative would probably never gotten as far as mid-October 2008, when, even after the US, British and European governments had, in co-ordinated fashion, recapitalised failing banks the world over through their effective nationalisation or part nationalisation, and over 2 trillion dollars  - that’s 2,000,000,000,000 or two thousand billion to me and you - of public money had been spent to prevent complete financial meltdown, stock markets the world over continued to plummet on the fears of a severe global recession. (At the time of writing UK and US stocks have lost 40% of their value, and are still sliding.)

Of course, as socialists we don’t believe in prophecy, but what this thought experiment illustrates is how absolutely no one could have predicted the pace and scale of the collapse of the international financial system, and just how desperately the advocates of capital would reach for the socialist instruments of state intervention and public ownership (though not, of course, on a genuine socialist basis) in order to keep their system afloat.

Even socialists and Marxist thinkers who had previously explained - almost as voices in the wilderness - that the economic growth of the nineties and early noughties was on the basis of unsustainable debt, and that, at some point, there would be an accounting (and, inevitably, a recession) could not have imagined the titanic scale of the economic meltdown that took place in September and October of 2008. On a global basis these were truly historic events, the reverberations of which will be felt for years to come.

To a certain extent however, the firestorm that was the banking crisis was something of a distant spectacle for ordinary folk, a circus played out on the nightly news bulletins where collages of red screens and plunging red lines were played out against a symphonic background of incomprehensible numbers and the finance speak of ‘sub-prime’, ‘liquidity’, ‘de-leveraging’, and ‘credit default swaps’

People were worried but were unsure to what extent this strange parallel universe of high finance would start to affect them

Unfortunately, the deals done with mountain ranges of taxpayers cash to stabilise the banking system are the end of the beginning of the crisis in global capitalism, not the beginning of its end. 

The banking crisis was the lightning in the sky that presaged the coming of a hurricane in the wider economy.

Unemployment has been predicted to rise to 3 million over the next two years – Thatcher era levels.* (see afterword)  By the time this article has been printed and published another 30 – 40, 000 people will have lost their jobs as the economy contracts. Others will face a rising tide of home repossessions and the nightmare of negative equity.  Mothers and fathers will find it harder to heat their homes, and feed and clothe their children. 

     Unemployment will soar to Thatcher era levels 

Real people, real lives, will be ripped apart and transformed for the worse.  For those already on the poverty line – the people that capitalism forgot – life is going to get even harder. The rich bankers and corporate fat cats had their days in the sun, and some are now losing their jobs and assets, but it is unlikely that Fred Goodwin, ex-boss of the Royal Bank of Scotland and a £2million plus a year man, will worry about where his next meal is coming from, or whether he can afford a tenner for a pre-payment token before the electricity runs out.  On the other hand the ranks of those who do have to worry about these things are about to be massively swelled.  That, however, is a minor concern for Gordon Brown compared to keeping the City of London liquid.

This is their crisis: a crisis of the greed and venality of capitalism – yet they and their supporters in government expect you to pay the price. It’s their crisis but your job, your income, your home, your public services, your pension, your quality of life at risk.

Solidarity – Scotland’s Socialist Movement does not believe in a system that puts the greed of a few before the needs of the many. We do not believe in politicians who tell us we need to fix a broken system so that we can go through the same tragedy and farce in another five or ten years.

We believe in a fundamental transformation of society from top to bottom (and from bottom up); a democratic, green and libertarian socialism - in an independent Scotland and internationally - that can guarantee a decent life for everyone.

This pamphlet sets out to explain the underlying causes and processes that have caused the economic crisis, examines the effects that will have on all our lives and on politics here in Scotland and elsewhere, and asks - what needs to be done?

What, who and why? 

If the money isn’t loosened up

this sucker could go down.

                                                         - George W. Bush, September 26 2008


These measures are not intended to

take over the free market, but to preserve it.

                                       - George W. Bush, October 14 2008


Such has been the shock to world leaders – the political executive of the capitalist ruling class – of their whole system going into a Chernobyl style meltdown that they have often spoken with uncharacteristic and unintended candour.  The two quotes above from the usually tongue tied warmonger, hometown boy and Texan oil multi-billionaire, George W. Bush, speak bluntly of the unplumbed depths of the financial crisis the defenders of the corporate world found themselves in this autumn, and the extraordinary - and for them ideologically poisonous - measures they were prepared to take to ‘preserve’ the system.

To be fair to these leaders and the ‘free’ market ideologues that surround them, they had to do something.  There can be no doubt that without the massive international state intervention, the partial or full effective nationalisation of banks and mortgage lending institutions across the globe, and the hundreds of billions of pounds of public money pumped into the money markets to provide liquidity and security, the world banking system, the very heart of capital itself, would have gone bust.  There would have been an immediate economic crash and slump on the scale of the US depression of 1929 – 1933, but on a global basis.

(As it turned out even these measures proved futile. With a short delay, a great global recession was precisely what occurred - SA)

But they acted, ultimately, on the basis of their own class interests, not the interests of the vast majority who have no stake in the anarchic, boom-and-bust, few winners and many losers system that is capitalism. Some political commentators who should know better have lauded Gordon Brown to the hilt. No doubt a few Labour Party and trade union die hards will be naively brushing up their Old Labour clothes on the strength of the state intervention and nationalisations that have taken place. Brown and Darling, and Bush and Paulson have been crystal clear however – their actions have had nothing to do with taking the banks and financial institutions into genuine and democratic public ownership so they can be run for the benefit of the many. Not for them the idea of a rationally planned economy for the benefit of all. 

Like imperial masters disdainfully reminding serfs about their real place in the world order New Labour let the score be known as official figures confirmed that the UK was sliding into a steep recession.  With public concern mounting over job losses and home repossessions Alistair Darling made it clear that the huge taxpayers’ bailout of the banks ‘does not buy favours’.  Later that same week it was announced that there had been 11,000 home repossessions in the second quarter of 2008, a figure up 71% on the same quarter the previous year – and this at a time before the crisis reached its height.

The unprecedented financial measures to save the banking system were taken not to change the old world order, but to perpetuate it, and to keep the economic downturn to the scale of a severe recession rather than an outright crash or depression.  Gordon Brown’s injunction to the banks to return to the irresponsible lending levels of 2007 as a condition of the bail out show decisively that what is uppermost in the minds of these so-called leaders is as quick as possible a return to business as usual.

As the great Russian revolutionary and anti-Stalinist Leon Trotsky wrote many years ago:

‘It is not simply a matter of what is done, but who does it and why’


Anatomy of a crisis

‘Scottish industries in the late 1960s were internationally famous. Clydeside made more ships than the USA…railways were exported to South America from Shettleston, cars made in Linwood, cranes in Govan, Ravenscraig made steel for these in furnaces from the coal in Scottish mines.’

So wrote Alasdair Gray in an inspiring article in the Guardian shortly after the SNP came to power in the Holyrood elections of 2007. After years of Labour ‘talking down’ Scottish independence it is always refreshing to be reminded, particularly by a thoughtful writer such as Alasdair Gray, that Scotland used to be the proud home of world class industry and production. For those of us born during the near omnipotent reign of the Iron Lady, children of Thatcher, we may have little or no memory of industries such as Denny’s of Dumbarton, Singers, Tate and Lyle, Bryant and Mays not to mention British Steel and Clyde Shipbuilding. All strong home-grown industries and all now folded as capital and investment bestrode the globe in search for ever cheaper sources of labour and increased rates of profit. All that is left in its wake are the empty husks of abandoned factories that are now so frequently dotted around the country.

These old brick monoliths act as memorials to a time when a myriad of products were manufactured in this country and exported throughout the world, a time when capitalism –exploitative as it was and as much as we wanted to change it - seemed more straightforward. That is, before Thatcher’s political crusade against state intervention and organised labour turned the economic heart of this country away from manufacturing and towards the more abstract realms of banking and finance. Nothing could seem further removed from the world of industry than the world occupied by city traders, a world in which nothing is produced yet still colossal sums of money are made and lost at the role of a dice. As the film director Ken Loach has remarked ‘it seems insane that we are all bound to this terrible wheel of instability.’

Just how unstable this wheel actually is has now starkly been laid bare and the consequences for a de-industrialised Scotland are grim. Recession, according to all expert opinion, is now upon us. National growth came to an abrupt halt in spring and the ripples of this are felt across the country, in what banker Mervyn King has described as ‘the great unwinding.’

Hearing the various news sound bites about company after company going into administration; falling house prices; rising mortgage payments; tens of thousands new unemployed by Christmas, only a fool could not be struck by the interconnectedness of the economic world – the financial sector and the ‘real’ economy, but also how the whole global system has relied on a heady stream of cheap credit. Never before in history was it easier to access dizzyingly high levels of credit – personal, mortgage and corporate - and never before has there been such an array of credit cards, mortgage lenders and debt management services.  Virtually all of the advanced capitalist countries followed a policy of financing consumption through easy credit to one degree or another.  The winds of recession blew earliest in the US and that triggered the first blasts in the financial demolition derby.  Remember when we were told that this crisis was caused by, and would be confined to, the sub-prime mortgage market in the US?  Were those who propagated that fiction idiots or liars?

Banks dismissively entitled these mortgage products ‘sub-prime’ because these were mortgages made out to low income families often with a poor credit history.  Working class wages remained almost static yet credit levels spiralled out of control as families were able to take out 100% mortgages which were up to five times higher than their annual salary. This seems remarkable risk-taking, but as property prices continued to rise and interest rates remained low it may have seemed like a sound investment – and both lenders and borrowers were encouraged to believe it was.

However, between 2004 and 2006 US interest rates rose from 1% to 5.35% and inevitably families began to default on payments. As this trend grew mortgage lenders hit upon the cavalier idea of selling of this highly risky debt.

These debts were bundled together in various complex portfolios made up of both prime and sub-prime mortgages and sold to other banks and financiers (credit default swaps).  Also add to this dubious equation were the insurance brokers who jumped on the chance to make tidy premiums selling insurance to cover the risk of these mortgages defaulting. Thus a house of cards was built.  And not just in the US.


This ‘toxic’ debt did not spread around the world like a new flu or internet craze.  The virus was already inherent in the whole body of the system, in the very methodology of the neo-liberal global economy. Rates of profit were maintained by ‘outsourcing’ manufacture to developing countries where cheap labour was available to be exploited; consumption levels for cheaper products were maintained in the de-industrialised countries by creating historical levels of personal debt and the fictitious capital of rising house prices, with as much money as possible to be made from the burgeoning housing market and off the backs of working folk. Once banks realised the scale of this ‘toxic debt’ suspicions were raised about just how much of it had spilt across the balance book, how much of it could be recovered in the coming economic downturn, and as a result inter-bank lending dried up. The financial sector began to fall apart.

Recession in the ‘real’ economy caused the house of cards to fall, not vice versa.  But the fall of the house of cards gave a yet stronger impetus to recessionary factors and pressures.



 The crisis has unquestionably unfolded as a global crisis yet      Brown and Darling – aided by a largely complacent and  bewildered media - have eloquently dodged responsibility by  suggesting that this is a problem which has swept in from across  the Atlantic, a problem they are reacting to and dealing with    ‘responsibly’.


It is worth mentioning here that in the UK in 2007 the independent market analyst Datamonitor estimated that growth in sub-prime mortgages in Britain would double the growth in normal mortgages by 2011. Northern Rock, the first to fold, was described by the Financial Times as ‘one of the most enthusiastic users of the capital markets to finance its mortgage lending business.’ In other words it too borrowed capital to lend mortgages to people with poor credit ratings and thus did its bit to cash in on consumer debt. The figures are staggering as the bank had lent out three times more than it holds in savings and deposits, a total of £33bn. Clearly banks were involved in the same irresponsible lending here as much as in the US.  Undoubtedly, this failure is as much an indictment on Gordon Brown’s term as Chancellor as it is on the financial system as a whole.

The UK government’s total failure to regulate the financial industry and their active encouragement of the debt based economy has meant that on average consumers have accrued total debts worth 180% of their disposable incomes. As Heather Stewart in the Guardian pointed out this is ‘the highest proportion of any country in the G7 club of rich nations. It adds to a mountainous £1.44 trillion in personal debt.’

Solidarity, in its July 2007 document The Whole of the Moon, predicted that this huge debt bubble would inevitably deflate at some point, deepening and extending a recessionary crisis in the economy.  These predictions, based on a Marxist analysis of the economy, are now being borne out tenfold.

The immediate effects of the credit crunch/recession has seen mass staff redundancies in the financial sector from HSBC to Lehman Brothers, not to mention the many jobs threatened if Lloyds TSB takes over HBOS. However, the effects of the recession will not be limited to the financial sector; every aspect of the economy will be shaken. Mortgage lending has fallen by a massive 95% as potential first-time buyers have a steeper climb onto the ‘property ladder’ and many mortgage products have been withdrawn from the market. In fact, the government has stated that the number of houses being sold has fallen to its lowest level since 1959 whilst in the summer repossessions reached a sixteen year high.

In turn other companies have suffered a sort of domino effect, firstly those retailers connected to the housing market like Rosebys and MFI, and those which specialise in luxury goods like the package holiday company XL whose sudden death left thousands of holiday makers high and dry. These ripples will spread. The outlook for unemployment looks undeniably grim as in August people claiming job seekers allowance rose by 32, 500. David Blanchflower, member of the Bank of England’s monetary policy committee, has also warned that by Christmas unemployment may well reach the two million mark. Pension schemes across the UK have also been hit hard, losing a whopping £250bn off the books.

The aforementioned Heather Stewart sums this disaster up from the point of view of the ruling elite when she says that this recession will ‘mark the end of a golden economic period.

‘There is no hiding place. No corner or crevice of the UK economy will emerge without scars from this crunch. Unemployment across Britain is rising sharply: the schadenfreude at City bankers clearing their desks will soon be tempered by the realisation that they will soon be joined by a growing queue of others, from every region and every industry.’

More worrying still is that this recession may have a potentially disastrous affect on public services. Alistair Darling has already said he will try and spend his way out of this recession – but what kind of Keynesianism can we expect from New Labour’s arch free marketeers?

Already, like a fool singing a wedding song at a funeral, Peter Mandelson is gleefully briefing about the possible privatisation of the Royal Mail. The Office of National Statistics has revealed that public borrowing has soared to record highs in September; in fact it is at the highest since records began in 1946. As taxable income is reduced and public expenditure increases this could be anything up to £100bn in the next two years. Will this mean eventual cuts in public services?  Or income tax rises?  Or both?

Furthermore, over the last eleven years New Labour has cut funding to local authorities and encouraged them to invest their money in order to boost cash flow. However, with the three major Icelandic banks collapsing in recent weeks and with it many UK local authorities’ investments, anything up to one billion pounds could be lost. Could this mean eventual rises in council tax?  Or further cutbacks in council services?  Or both? 

On top of this New Labour’s PPP/PFI initiatives have encouraged private companies to take over many aspects of our public service. How the recession will affect these profiteering companies and thus further erode the quality of public services across the UK is yet to be seen. New Labour ideology would have us believe that the market can solve everything and if only we would let it run its course then our society would be affluent and content.

For many, this belief is now shattered and exposed for what it is. As Tony Benn stated in a BBC interview ‘You can’t nurse capitalism.’

It is clear that the majority of working folk will have to pay many times over for this financial debacle. A debacle caused by the short sighted and unfathomable greed of a few. We will pay in higher taxes, in loss of pensions, in higher interest rates, in cuts to public services, in our jobs and with our homes.


 Whilst Gordon Brown holds down public sector pay rises  to below inflation levels, city bankers, those  responsible, have walked away with colossal sums of  money.

 Sir Fred Goodwin aka ‘Fred the Shred’, shamed ex-  chief executive of RBS, has waived his £1.29 million  pay  off - which is hardly punishment considering he  made  more than £4 million from RBS, including a  £2.86  million bonus. This is small change, however,  compared to the £22 million Bob Diamond, chief  investment banker at Barclays, walked away with.

Furthermore, despite US government bail outs of $700bn many financial workers at top banks in Wall Street are still to receive $70bn in pay deals and bonuses.

When nothing less than jail time should be handed out to these corporate criminals for bringing the global financial system to its knees, they are instead being rewarded amply. 

The heart of the problem

However, it cannot be stressed enough that the problem here is not just the reckless behaviour of a few but the culture and system which has allowed them to get away with this for so long.

This takes us to the crux of the matter. It seems that at the heart of our capitalist society there exists a set of fundamental and irreconcilable tensions.

The first is that that whilst the owners of industry wish to keep wages relatively low in order to increase profitability they also require huge amounts of consumer spending to boost the economy. The two do not add up, and in order to overcome the contradiction record levels of credit have been made available, allowing, in fact, encouraging people to spend way beyond their means. As we are now seeing debt must be paid back sometime, and as a result the fictitious bubble of affluence which has swelled our economy is now collapsing fast as credit dries up and property devalues.

Another tension is that which exists between capitalism and democracy. How many people were consulted about how their savings and pensions were being invested? How many people voted on how local authorities invested public money? It seems bizarre that for something as important and risky as this the public in general do not even get a look in. As Noam Chomsky has stated the movement of capital can be used as a weapon against democracy creating a ‘virtual parliament’ between investors and lenders, ensuring real decisions are taken by the privileged few and excluding the rest of us. 

The final tension that exists is that between the free market and public subsidy. Solidarity co-convenor Tommy Sheridan has highlighted a report published by the non-profit policy research foundation Cato Institute ‘which puts a $92bn a year figure on the subsidy to big business through tax relief and direct handouts’.  ‘Free’ trade has not been free at all but has been propped up by public subsidy all along. Sheridan continues:

 ‘In fact, if the states across the world did not intervene with ordinary workers' hard-earned cash - the system would have collapsed already. Capitalism, contrary to its slick PR campaign parroted in the minority-owned media, is a subsidy junkie. The only difference now is the size of the fix required.’

So was Karl Marx right?  The short answer to that question is yes.  Commentators of all political stripes and on both sides of the Atlantic have referred to Marx in their columns analysing the crisis – sometimes half-jokingly, sometimes with trepidation and sometimes with something approaching respect.  Perhaps the raising of this spectre long pronounced deceased was what led many right wing commentators in the states to – somewhat prematurely – bemoan the advent of ‘a socialist America’.**(see afterword)

One enterprising T-shirt maker went quickly into production with a T-shirt carrying the classic portrait of the white bearded Marx bearing the quote underneath ‘I told you this would happen’.  Perhaps this shows that there is a role for the market after all!

On a more serious note all of three tensions referred to above were first described by Marx in the 19th century.  What Marx laid bare with mathematical precision was the Achilles heel of capitalism; that it may appear to be a dynamic and world girdling system but in its fundamental nature there is a powerful chaotic attractor lurking within the system.


Some argue that the flaw inherent in capitalism’s essence is that all commodities must be produced by workers, whose wages can never buy back the products they make because capitalism produces commodities for profit, leading to inevitable crises in the system.

There is truth in this, and this does happen – but the reality lies even deeper than under-consumption, which is a contingent symptom of capitalist crises, but not its deep flaw.

The deep flaw lies in the very nature of value and what Marx called ‘the capitalist mode of production’ itself; whether something has use value or exchange value (in the capitalist system it is normally, but not always, both), all value is fundamentally created by labour. The ultimate source of profit on Planet Earth is human labour.

But humans can only work a maximum of twenty four hours a day (and even that isn’t practicable). So capitalists, despite their common class interests, are compelled to compete with one another. This they do by revolutionising the means of production constantly i.e. through new machinery. New machinery is congealed labour; what Marx called ‘dead’ labour, and it can only become a source of profit when energised by real, living human labour.

OK, it gets complicated here and this is a summary and you really have to read ‘Capital’, but essentially, in order to compete, every capitalist has to increase the amount of congealed or dead labour in terms of capital investment in new machines in ratio to the amount of living labour supplied by the workers to maintain profitability, which is the sole driver of capitalist investment. Some capitalist will win out in this capitalist arms race, others will not.

Ultimately, this leads on average, to what Marx called ‘the law of the tendency for the rate of profit to fall’, leading to panic, disinvestment, job losses, factory closures, crisis, and recession.

Marx’s discovery was as profound as Darwin’s uncovering of the mechanism behind evolution, or Einstein’s discovery that time and space are relative to the position and velocity of an observer, and just as mathematically and scientifically profound. Marx showed that the cycle of boom and bust – including this cycle of boom and bust was inherent to the nature of the capitalist system itself, and not just accidental.*** (see afterword)

Sometimes recession can be delayed by the opening of new markets, or the exploitation of a new technology, or increasing the exploitation of working people, but it can only be delayed to emerge later with even greater force. In the past 10 – 15 years the capitalist system sought to overcome its own contradictions by exploiting cheaper labour in the developing world and making historically high levels of credit and fictitious capital available in ‘the West’ to fuel consumption.  Now the fool’s paradise they constructed is coming crashing down about their heads – but as usual they are trying to make sure that working class folk pay.

The chaotic rhythms of boom and bust cast a long and cancerous shadow across our society. It is clear now more than ever that working people, the real foundation to our society and economy, must be protected and valued, and a genuine, truly democratic socialist alternative must be found. 

The recession and politics in Scotland

Alex Salmond at the recent SNP conference in Perth laid the blame for this ‘age of irresponsibility’ solely at the feet of Gordon Brown:

"Where did this age of irresponsibility come from? Who broke down the barriers in the financial sector? Who presided over the inflation of asset values? Sub-prime? More like sub-prime minister."

Unfortunately for Alex, the SNP and he have been promoting a capitalist vision of independence for Scotland that had a lightly regulated financial sector at its heart.  Swinney and Salmond have close connections to the rich Edinburgh financiers that brought the Royal Bank of Scotland and HBOS to their knees.

Gordon Brown, on the other hand, has used the government bail out opportunistically as a means to attack aspirations towards Scottish independence. The £37bn rescue package “would not have been possible with a Scottish administration” he said, ending the already fragile truce between Edinburgh and London.

However, it is clear that it is Brown’s neo-liberal policies that are at least partly responsible for leading us to this point in the first place. An independent Scotland would have had access to a large public oil revenue fund which could have been used to take the banks into public ownership.  An independent socialist Scotland could have developed a different kind of economy and a different kind of society, whilst maintaining stability through a publicly owned and democratically controlled financial sector – organised on a wholly new basis and with a strong sense of social responsibility at its heart. 


At the time of writing the Glenrothes by-election is under way. Originally seen to be a shoo in for the SNP, bookies have now shortened the odds on Labour holding the seat because of a Brown bounce effect resulting from the media’s supine and complicit portrayal of him as being strong during the crisis.  It is as if an oil tanker captain wantonly steered his ship onto rocks and then became a tabloid hero for helping clean up the resulting oil slick. (Herald columnists Ian Bell and Iain MacWhirter have been among the few honourable exceptions to this banal ‘all in the blitz together – let’s batten down the hatches’ journalism).

This slight upturn in Brown and New Labour’s fortunes however, is unlikely to be long lasting as the effects of recession start to bite over the coming months.  As people face increasing hardship and the prospect of a Cameron led Tory government this new found goodwill towards Brown will disappear like snow off a dyke. The carefully constructed narratives that Scotland is too small a nation to weather an economic storm, or that oil is too volatile a commodity to underpin independence will wither under close scrutiny.

In Venezuela, a small oil producing country with a radical socialist government, the economy has grown by 7.2% for the 19th consecutive quarter and Chavez has made clear his intention to nationalise the Bank of Venezuela so that the profits can be channelled back to the people.  Oil has funded massive reforms in Venezuela but spending is based on an annual estimate price of oil – exactly as would happen in an independent socialist Scotland.  Where is the economic crisis in Venezuela? ****(see afterword)

Socialists need not be fearties in championing independence in these times. Or, as Alasdair Gray says much more eloquently:

Pessimists will say there is now nothing left in Scotland for Home Rule to improve. I deny that, if we work as if in the early days of a better nation.”

Unionist New Labour fully intends that the private bankers who got us into this mess in the first place buy back the government shares once taxpayers’ cash has restored to the banks their viability and profitability. Ditto the American bail out plan. Gordon Brown has repeatedly stated that the government has no interest in running the banking system and that the banks should continue to operate ‘as commercial organisations’.

This has already led to the absurd obscenity that Northern Rock, effectively a state owned bank, has massively increased its rate of repossessions so that the remaining private shareholders can pay back their government loan as soon as possible. At the time of writing Brown and Darling seem ready to water down the initial conditions of the banking bailout – made under the pressure of public opinion - that the taxpayer would receive money back prior to dividends being issued to existing private shareholders. 

Is there a pattern developing here? 

Brown infamously said he would spend ‘whatever it takes’ to win the inglorious, illegal and immoral Iraq war (in cash and lives, we presume).  Now he and Darling echo that phrase in relation to the bank bailout.  But it is all one way traffic it seems.  As one articulate unknown citizen put it on a BBC voxpop ‘we’re lending money to the banks interest free so they can stay afloat and lend our own money back to us and charge us interest’.

Or, to put it another way, as Brown said when not talking about invading other people’s countries or bailing out the banks, “we can’t help people keep their old job, but we can help them into their new one.”  (By cutting their benefit if they don’t take lower paid work, we presume).

In contrast to this cowardice and timidity before the social power of capital, Solidarity has called for the following measures to make sure that the majority benefit from the huge public stake in OUR banks:

• Full and genuine public ownership and control of the banks. The
creation of real and genuine people's banks in Scotland and
throughout the UK and Europe

• No repossessions to pay for the banker's crisis. Publicly owned banks to renegotiate mortgage terms where necessary and to offer new 'not-for-profit', low interest mortgages to householders and first time buyers

• The publicly owned banks to offer 'not for profit', low interest lending to
councils and other social housing providers to provide capital for a
serious and sustained programme of building quality social housing
for rent

• State owned banks to fund the public takeover, under worker and consumer control, and at minimum cost, of failing companies in the forthcoming recession. Minimise job losses and develop a new democratic socialist economy.

• A public debate on how to use the new publicly owned banking
system to fund a programme of investment in renewables and
infrastructure in Scotland and elsewhere

• An end to punitive banking charges. Stop the rip offs.

• Open the books to public scrutiny. Where there is evidence prosecute those responsible for playing Russian roulette with our savings and pensions


Only socialism - public ownership of the main levers of the economy democratically owned and planned for the benefit of all - offers a rational response to this huge crisis of capitalism.

The key areas of life for working class people are all interconnected – fuel, energy and climate change, housing, incomes and pensions, and public services – in the context of the crisis, anarchy and inequity caused by this crisis of capitalism. Next we'll look at energy and housing in particular, and offer a concrete socialist programme in those particular areas to transform all our lives for the better.


The Great Energy Con

‘Maybe it’s two jumpers instead of one’

Jake Ulrich, managing director of Centrica, parent company of British Gas and Scottish Gas, prior to the announcement of the 35% increase in domestic fuel prices.


‘Jumpers! Naw, you need to put a balaclava on and go round and visit that bastard with a gun’

Frankie Boyle, Scottish Comedian, Mock the Week


As fuel and energy prices went through the roof and both oil and gas exploration companies and the energy utility companies announced record profits in August/September 2008 – even before the current recession had hit the economy – ordinary people were rightly beginning to question the energy priorities of New Labour and their pro-corporate agenda

In the Glasgow East by-election at the time Solidarity co-convenor Tommy Sheridan and Solidarity candidate Tricia McLeish tore up a giant cheque on the steps of Parkhead Forge for the benefit of the TV cameras. Although the item never made the news schedules, the point that was being made was a simple one – that for every year Scotland continues to be part of the Union every man, woman and child in Scotland is effectively writing a giant cheque to the Westminster Chancellor of the UK government.

                                         Who are the real subsidy junkies?

The figure on the cheque represented the per capita share of the 83% of oil and gas revenues that would come to Scotland on the basis of international law were it to become independent – an estimated £12-15 billion per annum at oil and gas prices averaged over the whole of 2008. Less than two weeks after that election British Gas, despite record profits, announced a 35% increase in prices for already struggling domestic consumers. Only a handful of weeks prior to the election many people throughout Scotland rolled their eyes in disbelief when they found out – courtesy of a workers’ strike over pension rights – that the private owners of the Grangemouth Refinery were making more than a million pounds in profit per day from that one operation alone (maintaining the pension scheme to the workers satisfaction cost roughly the same figure annually).

All of these figures show that the world remains an ill-divided place for working class Scots, particularly in relation to energy, in times of boom or bust. The Thatcherite era of counter reform saw energy utilities and British Petroleum privatised at knock down prices. The post-Thatcher era saw New Labour enthusiastically embrace ‘the market’ and the profit motive. For many pensioners, low paid workers and single income families this winter the results will be unprecedented misery as they struggle to meet unprecedented heating bills.

More than two decades after the big privatisation drive of the eighties, Scots working folk are entitled to ask why, when Scotland is such an oil and energy rich country do ordinary people see so little benefit.

The answer is of course, that the Shareholder Sids of the privatised oil companies and energy utilities (not ordinary people, but city fat cats), together with successive Westminster governments have conspired to carry out one of the biggest cons of all time – the great energy con.

                                                                      Grangemouth Refinery: Private profits of hundreds of millions a year     

Energy companies’ profits have risen by £2.3 billion in the past three years. Meanwhile tanker drivers at Shell recently had to strike for a fair increase in pension provision. The consumer watchdog Energy Watch reports this spring that the average national household gas bill has risen by 108.7% in five years – this before British Gas’ recent summer announcement of a 35% increase outlined above and the massive planned energy bill increases scheduled for this autumn. As New Labour’s love affair with the market delivers record profits for the boardrooms and record fuel poverty for the majority on low to middle incomes, the challenge now is to find practical proposals for bringing an increasing proportion of Scotland’s energy companies into public ownership for the redistribution of wealth, fair fuel pricing, social investment and increased investment in renewable energy production, within the context of an independent or fiscally autonomous Scotland.

Table one: How Fuel Bills Have Risen         Source: Consumer watchdog – Energywatch.

Daily Express (Mon April 21, p9:2008)




























The issue of redistribution of energy wealth however, cannot be separated from the question of independence. If Scotland was to keep the 83% of current tax revenues allocated to Westminster allowed for in an independent Scotland according to the latest GERS report, at current average oil prices over the past year, Scotland could spend the following per annum

£2-3 billion to a Scottish Oil Fund

£2-3 billion to reduction/stabilisation of fuel prices

£2-3 billion to underwrite a publicly owned Scottish Housing, Land and Infrastructure Bank

£2-3 billion to research and development of renewable energy and non-carbon fuels

But only around a third of gross profit for North Sea Oil currently goes to the Exchequer in taxes and revenues, the rest is pure profit for the private companies involved in the exploitation of North Sea oil and gas. If these assets were publicly owned and democratically controlled in an independent socialist Scotland, that surplus profit would belong to the people of Scotland for them to redistribute or reinvest as they saw fit, so – depending on internal industry spending decisions - the figures quoted above for reinvestment to the common weal could double or triple. ***** (see afterword)                                                                               

Renewable Energy - The Case For Change

Solidarity firmly believes that in an independent socialist Scotland we should use part of the huge oil wealth to invest in a massive shift to renewable energy, ensuring electricity generation becomes 100% renewable within a generation, and that Scotland’s economy is boosted by becoming a world leader in renewable energy generation.  Huge oil profits continue to roll in almost none of which finds its way into developing renewable infrastructure. An ultimately expensive national dependency on fossil fuels continues whilst the perfectly realisable development of renewable alternatives remains relatively neglected in Scotland. Andy Cumbers, in his excellent 2003 paper Remaking the case for Public Ownership, is in agreement that the “UK sector of the North Sea has seen research and development expenditure fall dramatically in recent years as part of government aided cost reduction efforts” (Cumbers, 2003, p16).

Table two: R & D expenditure on energy as proportion of GDP for IEA countries in which figures were available 1998















United Kingdom


Source: Cumbers, 2003, p16.

The system of corporate ownership of the energy supply industry stifles initiative and investment into renewable development and thus perpetuates the energy crisis, as the table shows. Cumbers points out that the OECD regularly chastises nations such as Norway, Demark and France for having overly regulated oil and gas industries, (Cumbers, 2003, p3) whilst the United Kingdom is held up as an example model of deregulation for the rest to follow. However, Denmark’s and Finland’s system of local ownership and democratic control of energy supply encourages research and development whilst allowing significant economic growth and employee participation. It is useful to make Scottish comparisons with other nations’ variety of public, local and private ownership of energy corporations.

British Petroleum (BP, now BP Amoco) and Shell reduced their spending on research and development (R&D) by £202 million between 1990 and 1996, and more recently BP Amoco cut its R&D budget by £102 million in the year to 1999. Clearly the results of these cuts are impacting the present situation. Of course this is exacerbated by such things as the price of Russian gas, and energy demands from India and China; necessary to lift many millions of their population out of poverty and into the post modern age. 

Certainly a burgeoning world population should be seen as an increased catalyst to improve R&D into renewables and an incentive to play our part in setting an example in tackling climate change.  The impact of decisions made in the privatised energy market globally certainly contributes to damaging the environment through increased burning of fossil fuels.

In Scotland there is an abundance of natural power that can be harnessed for energy use. This includes onshore and offshore wind power. Indeed the Department of Trade and Industries own research shows that on both the East and west coast of Shetland annual mean wind power density is over 1200kW/m2, where there are large areas of ocean at only 30-40 metres in depth. (DTI, 2004, p29).  In particular; expanses of ocean East of Fife, Sutherland, and West of Uist are relatively shallow. Research into harnessing this energy could be a focus of R&D. This could perhaps include the use of existing semi submersible and wind turbine technology.

Another source of renewable power, tidal power, also has potential for energy supply. The world’s first ever commercially available tidal power machine – Pelamis - has been operating in the Pentland firth, Orkney through developing existing oil and gas industry technology; according to recent reports in the Scotsman News.

“Scotland’s drive to develop new sources of renewable energy took a leap forward yesterday as the first tidal-power-driven electricity was connected to the national grid…the turbine device was installed off the island of Eday in Orkney two years ago…it is expected to pave the way for a huge tidal-power development next year in the Channel Islands”.

The news of such significant research and development is welcome. However there are no reports that such technology developed in Scotland is to be applied for use in Scotland. This is despite Department for Trade and Industry (DTI) commissioned research identifying the south western corner of Mull as having similar tidal power to that off the coast of Southern Orkney. (DTI, 2004, p24).


Wave power at Cruden Bay in Aberdeenshire                                                         

The third sustainable source of power; wave, is abundant around Scotland. A DTI wave resource assessment shows significant Annual Wave Power on the east and west coast of Scotland; from Orkney and Cruden Bay stretching into the North Sea. Cape Wrath, The Butt of Lewis and the Little Minch in the North and West also have high wave energy. Not to mention Colonsay in the South West that is subject to15-20 kW/m of annual wavepower. 

One other potential energy solution is the future use of hydrogen as a fuel, as its production does not emit carbon dioxide and is therefore potentially environmentally neutral. Lindblad of The Uppsala University, Sweden states that hydrogen used in fuel cells “generates electricity and will drive cars, buses as well heat our homes. Today hydrogen is produced from fossil fuels (however) it can also be produced from renewable resources such as photosynthetic micro organisms (algae).” (Miyake et al, 2004, p75).

The suggestion for the production of hydrogen consists of gathering it as a product of photosynthesis from algae cultures. P.C. Hallenbeck from the University of Montreal points out that “hydrogen production by biological systems has long been known and studied…hydrogen production by micro algae has been studied since the mid 1940s” (Miyake et al, 2004, p93).  Challenges remain to be overcome regarding the efficiency of environmentally neutral hydrogen production. However it is beyond doubt that cyanobacteria are among the idea candidates for this production as they have minimal nutritional requirements. They thrive on air (carbon dioxide, nitrogen), water, mineral salts and natural light.

However – as a pragmatic Dundonian might say “talk is cheap but it takes money to buy drink”. 

What is clear that the private energy industry will prioritise shareholder profit before the necessary level of strategic investment required to make a socialist Scotland a world leader in renewable energy production, despite our massive natural resources.

Capitalism relies on state subsidy to develop renewables and is stifling innovation through lack of funding to research and development of new technologies in favour only of land based wind farms. That is why Solidarity calls for a proportion of our existing oil wealth to be used to set up a public owned and accountable renewable energy corporation and for the Scottish Government to develop a ten year strategic plan with the aim of making all of Scotland’s electricity come from a variety of renewable sources within a generation

It is a challenge for the socialist movement to seize the initiative on energy policy in Scotland. In recent years energy policy has been decided by a tiny handful of directors and shareholders – supported by successive pro-market governments whose response to the threat of climate change has bordered on the Neroesque. Together these few individuals direct their business in a manner which is failing us on sustainable growth, fair prices and democratic accountability.

Properly managed and publicly owned energy industries in Scotland could meet the triple challenge of redistribution of energy wealth and ending fuel poverty, investment in the transfer to renewables, and provide significant funds from the profits of such publicly owned companies to allow a future Scottish independent government to invest significant sums steadily in Scottish infrastructure. New jobs, new skills and new wealth could thus be created by a fundamental socialist and green shift in our economy.

Facilities like Nigg at Invergordon could be utilised by public local or nationally owned energy companies building turbines & platforms for renewable projects 

Above all, what is needed is a system of diverse, open and dynamic public ownership, responsive to worker and consumer need as well as national strategic imperatives, but operating on a not for profit basis. Flexibility and participation are important elements within such a sytem. The challenge of steering the energy industries towards innovation, democracy, social responsibility for workers and consumers is inevitably complex.

Perhaps Scotland’s share of oil and gas tax revenues in an independent Scotland could be spent on dedicating six fully publicly owned bodies - an exporatory and extraction company, a nationally owned renewables company, a grid and infrastructure cmpany, and three competing not-for-profit energy delivery companies. On the other end of the scale, perhaps communtiy or council owned Local Energy Generating Companies could be funded from the abolition of Scottish Enterprise. According to the Solidarity manifesto of 2006, the abolition of Scottish Enterprise would save £500 million annually. This could provide stimulus for renewable energy development as well as long term jobs and training.

Of course, it would be important to ensure democratic control over these new public bodies. One possibl model could suggest that in the case of the major parent public bodies that the directing boards are composed on the following basis – one-third ministerial appointees from the elected government of the day, one third directly elected by the Scottish public as a whole, and one third elected by the workers in the industry.  For the smaller local energy bodies, which could include local private sector elements, a similar structure could be adapted, with one third local authority appointees, one third from workers and participants, and a third directly elected from the communities which each LEGC served.

Alternatively, perhaps a range of working models could be explored, allowing for the best to be selected after a period of socialist competition.

Conclusions on energy

We are not naive about what we are proposing here. First and foremost such a radical shift in the ownership, control and priorities of energy production would meet with the most trenchant opposition from the vested interests who benefit from the current status quo – the profiteering shareholders of the big oil, gas and utility companies and the unionist Westminster exchequer.  Current EU law would also place formidable obstacles in the path of comprehemsive public ownership.

Our proposals are predicated on Scotland becoming an independent nation, then achieving a left/green consensus on public and local common ownership of our energy resources within a new and sovereign Scottish Parliament, and then securing the public and worker support and participation necessary to push such changes through, potentially in the teeth of international neo-liberal opposition.

These historical tasks are huge, but even more urgent in the face of global financial meltdown and deep economic recession.  Faced with the reality of global warming, unsustainable and punitive fuel prices, an underdeveloped social infrastructure, and the gross levels of material and cultural inequality that still exist in 21st century Scotland, they assume the character of historical necessity.

Used progressively, Scotland’s oil and energy wealth could make our nation a beacon across the world for social justice, equality, education and the new environmentalism. For decades we have watched it squandered as a Westminster resource; used first by the Tories to finance mass unemployment in the eighties and the switch from a manufacturing to a service economy under Thatcher; then by New Labour to finance illegal foreign wars and pamper the wealthy with tax cuts.

We have watched as privatised utility shareholders have grown fat on their bloated profits at our expense; watched the balance sheets of the big oil and gas companies grow bigger as ordinary people struggle to heat their homes or fill their car with petrol. Above all we have watched in vain waiting – at the behest of Greens, Nationalists and Labour – for the wonderful ‘market’ to provide the switch to renewable energy generation that we and the world now so desperately require.

Scotland’s massive natural energy resources should be both our common resource and our common wealth.

The great energy con perpetrated upon our people over the last four decades and the failure of our mainstream politicians to stand up to it is one of the most shaming scandals of the modern era.

This generation of the left in Scotland should make righting that wrong its great moral and economic crusade.


One of the other key areas in which the credit crunch and accompanying economic recession will be most keenly felt is in the area of housing.  Already new mortgage applications have fallen dramatically. At the time of writing repossessions of mortgaged homes had already doubled in Scotland, exceeding 1000 a month for the last three months, compared to 504 in January 2007.  As house prices fall many who were seduced by Brown and Blair’s false housing boom will find themselves in negative equity.  Many who, prior to the credit crunch, considered themselves ‘property ladder’ winners of the housing boom may now face severe difficulties, particularly those who lose their jobs.

There were several key areas of national social need in relation to housing that were becoming particularly acute even prior to the current crisis, however, for those whom the housing ‘boom’ had passed by. In Scotland, even before the credit crunch had hit, there were over 40, 000 registered homeless on council house waiting lists. The general nature of the housing problem was exacerbated in areas where spiraling house price rises, an increasing lack of public sector rented accommodation and consequent sky-high rents in the private rented sector combined.  Until recently, such areas in Scotland had become more and more common. Now a crisis in housing faces a large minority, if not an outright majority, of the population.

Official homelessness tells only half the story. Many low to medium income workers, people on benefits, and young people are trapped in unsuitable and insecure private rented accommodation with little or no prospect of achieving housing stability either through buying or renting - with all of the concomitant stresses such a long term position entails.

Those “lucky” enough to have got their feet on the so-called property ladder are mired in high levels of mortgage debt with disposable incomes extremely vulnerable to upward fluctuations in interest rates and downward deflating house prices.

It was common, pre-crunch for banks and building societies to offer unsustainable mortgages at 4-5 times an individual’s annual salary, because house prices are so artificially high due to a restricted market, the paucity of the affordable public rented sector, changing work life patterns and speculative capital acquisition engendered by a buy-to-rent epidemic (itself a consequence of pension uncertainty, where property was seen as the best ’investment’ for retirement). The credit crunch saw Brown bail out the banks but where is the bail out for those encouraged to borrow, borrow, borrow by New Labour and the big financial institutions?

Solidarity offers instead a socialist solution - partly achievable in the context of the Scottish Parliament, and wholly achievable in the context of an independent socialist Scotland.

No repossessions to pay for the credit crisis

The publicly owned banking system to offer renegotiated mortgages on a non-profit, low interest basis

Similiar mortgages to be made available to first time buyers

End all social housing sell-offs. Enable tenants of private housing associations to ballot to return to local authority control

Cancel the historic housing debt of Scotland’s councils to enable the immediate implementation of Shelters demand of 30, 000 new affordable homes for rent as the first phase of a massive program of affordable house building to create jobs and homes

End the right to buy from social landlords.  Replace with a right to live rent free after 25 years.

Create a publicly owned and controlled Scottish Housing, Investment and Land Bank to make not-for-profit low interest capital available to social housing providers and not for profit low interest mortgages available to individual house buyers.

Take the major Scottish construction industries into public ownership

Set a target of an affordable quality home for all those who require one within 5 years

New regulation to protect those in insecure private rented accommodation meantime

A commission of housing experts, trade unionists and home seekers to work with the Scottish Government to oversee the housing program and develop a legally binding and universally understood definition of what constitutes an affordable home.




                                   Everyone accepts the problem has been one

                                   of an irresponsible credit and housing bubble

                                   that has burst with spectacular consequences.

                                   House prices are falling faster than in 1991.


                                   The debt model for the British economy is dead,

                                    the markets understand that viscerally. Just

                                   cutting interest rates and stuffing the banks with public

                                   money will not work – and if it did, it might just lay

                                   the ground for the next bubble.

                                                               - Iain MacWhirter, Sunday Herald, 12th Oct.

The Bubble has well and truly burst.  In capitalism’s boom years over 25% of people live on or near the poverty line while the super rich juggle their millions and billions.

In a slump, however, even those who have gotten by, who perhaps have kept their heads down and worked hard and bought into the dream sold to us by big business politicians are suddenly thrown into the melting pot; millions of lives in the UK and potentially hundreds of millions internationally ate turned upside down and thrown on the scrap heap.

And the best response from our elected leaders:  lets spend billions keeping the same corrupt system afloat, get back to ‘business as usual’, and pretend it was all a bad dream.  Until the next time.

It seems that ordinary folk everywhere have a choice to make – to tighten our belts and accept what the misdeeds of others will bring us; to accept the pernicious lie that most of us are just Tesco’s check out fodder, and that the super rich and super poor and those in between will always be with us; that the best we can do is hope for a better life for our children.

Or we can stand up and fight for a better society; one free of the anarchy of greed – and make sure that all of our children can reach their full potential, and one day look back at these times as a curiousity of the past.

These are undoubtedly times of crisis, but a time of crisis can also be a time of opportunity.  Working class people in Scotland and across the world will face increasing pressure as the crisis deepens.  A renewed left must be there standing shoulder to shoulder with these (extra) ordinary folk, defending them from attack and helping them defend themselves. 

But this is also the time to be spelling out the case ‘for a newer world’, for a new and reinvigourated socialism, shorn of the errors of the past and claiming democracy, liberty, science, and the environment as our own, as well as the more traditional territories of workers rights, social ownership, anti-imperialism and wealth redistribution.  All socialists, but particularly pro-independence socialists, need to make this crusade their common cause.

Capitalism in the current crisis has been exposed in all its brutal splendour and contradiction; a light has been shone on its shaky and rotten foundations and its impermanence illuminated for all to see.

We are living through history, and future history waits.  To paraphrase the Spanish civil war fighter, anarchist Buenaventura Durruti:

  The capitalists may blast and ruin their own world

 Before they leave the stage of history

Bur we have a new world

Here in our hearts 

It is growing this very minute.


Afterword and footnotes

The original 'Bubble Bursts' pamphlet was written in the late autumn/early winter of 2008, and has been revised only slightly by the author for a tenth anniversary republication suitable for the internet and social media.  The intention is to present the original with as much of its historical accuracy and immediacy as possible, and remind people as a warning of what could all too easily happen again of next time - and there will be a next time - if the left does not unite nationally and internationally to nationalise the assets and privatise the losses, jail irresponsible capitalists and bankers, protect and extend the social wage of working class people, and make a fundamental shift in the distribution of weath and power from the billionaire elites to the working class majority.

I wrote this originally when I was a member of Solidarity, and in that historical sense it has the limitations of a party document. I am no longer a member of any political party, and I hope this republication can reach out beyond party and tribal lines and find an echo across the left over and beyond the tenth anniversary of the first great capitalist crash of the 21st century.

To deal briefly with some necessary footnotes:

* Historically unemployment did not rise, after all, to Thatcherite levels. Instead it was replaced by historical underemployment, precariat and self employed or part time work, or people moving onto the black economy, as Tory governments demonised welfare claimants and bore down on the unemployed and those too ill to work with sanctions and Kafkaesque 'assessments' - driving many people off benefits and off the official claimant count.

** With some delay, socialism in America is finally making its voice heard, and the 'S' word openly being used in US political discourse, with Bernie Sanders running on a left program for the democratic nomination in 2016 - and fatally just missing out to Hillary Clinton. This was unfortunate as Sanders outpolled Trump amongst every consituency. since then, more Democrats than ever before have stood for state or congress positions identifying as 'socialist' or 'democratic socialist'.

*** This is a passage I have changed from original, which did not sufficiently differentiate between under-consumption as a contingent and synmptomatic phenomenon, and the real underlying 'Achilles' Heel' of capitalism - The Law of the Tendency of the Rate of Profit to Fall.

**** Tragically there is now a massive economic crisis in Venezeula. Domestic and US economic sabotage in an attempt to bring down the Bolivarian socialost revolution and its example mys bear the prime responsibility for this. However, in the vuew of this wriyter Madura and the Venezuelan Government continued with errors that were incipient under Chavez and excacerbated them. This is not the time and place to go into details but fundamentally a) there was a failure to reinvest a sufficient proportion of the oil wealth of Venezuela in retooling and diversifying the economy b) there was a failure to deal decisively with rampant gang and gun crime (see Cuba for a counter example: it's Miami that has the problem with guns and gangs, not Havana) c) there was a straegic failure to win over a section of the white mniddle clases and give them a stake int he Bolicarian revolution and d) imposing price controls and a supply of price controlled goods in government shops while a large criminal black market existed to exploit that oppoprtunity was the height of naivete. It is to be fervently hoped that it is not too late for the socialist Bolivarian revolution in Venezeula to correct these mistakes and move forward in a renewed fashion.

***** Unionists in Scotland have made much of the flawed GERS figures and the collapse in international oil prices occasioned by Saudi Arabian price manipulation since 2015. oil prces have started to rise again, because attempts at market manipulation are not sustainable in the long term, but it has confirmed that oil and gas are potentially volatile resources. Fortunately, for Scottish independence, almost every model of how the scottish economy would work after independence now counts oil and gas as a bonus, not the raison d'etre. A Norwegian stye oil fund would be set up to smooth out any volatitly in the market and, rherefore, or tax receipts, over a longer period of tme. the vasic argument in 'The Bubble Bursts' on oil and gas remains sound, however. It has been a huge potential resource for Scotland that various Westminster administrations have wasted. There is now a legitimate argument within the Scottish independence movement about whether to use the oil and gas bonus or to be super-green and 'leave it in the ground'. If Scotland chooses to use it's oil and gas responsibly with independence. however, the possibilities for using those resources to socially, industrially and technologically transform the country are almost boundless.

It remains only for me to acknowledge the contributions in thought and deed that came from many others and went into the writing of the original pamphlet, in particular I wish to mention the research and words of Donald Morrison and Stephen Mowat.

Finally, a grace note in the form of a poem I wrote some years later based on experiences (personal and political) in 2007-2010. Not everyone is into a seasoning of poetry with their politics, but for those souls who are, you can find 'On Seeing Orcas in Burra Sound' HERE.

In the context of 'The Bubble Bursts', and the new bubble that is inflating to burst again with renewed force, I heartily recommend its central message and final lines.

Steve Arnott, November 2018





External links:

Bella Caledonia

Bright Green

George Monbiot

Green Left


The Jimmy Reid Foundation

Richard Dawkins

Scottish Left Review

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