An extraordinary week best measured by the fact that the traditional Trotskyite Transitional Demand of nationalising the banks now appears to be the plan B of choice of the IMF. It may even yet come to that if only because G7 appears to be having problems agreeing on a Plan A and the situation is primed to run out of control.
The two most convincing analyses that I have run across from a broadly Left point of view come from Will Hutton and John Ross. Let me simplify horribly their different emphases: For Hutton is it about trust, for Ross it is about power. Hutton is also interested in power, of course -specifically the power of the nation state, and especially national states acting in concert - over unregulated capital, but his main explanation is a lack of trust in the market because no-one actually knows where the debt is and hence no-one will do business with each other. This is called a liquidity crisis. Ross on the other hand, thinks the fundamental problem is one of power – the fact that US (& by implication, British) assets really are overvalued – and have been for a long time because the Americans have been living way, way beyond their means (see graph). So the dollar has to be devalued – and surely that means a significant decrease in American living standards, and a decline in the relative power of American across not just the global economy but 'full spectrum dominance'. To be fair, Hutton also warns that failure to stabilise the current situation will result in a British devaluation of – this is a direct quote – '30 or 40%' - but I would draw the implication from his articles that stabilisation is possible, even at this late hour, and an orderly decline can be organised. In other words: the Anglo-Saxon world, possibly the whole of North America, EU and Japan – are going to have to get poorer. It's a question of at what speed, and whether basic services start 'falling over' if this happens too quickly.
But politics lags behind economics. The global elites may now be ruefully aware that the world has changed – the people clearly aren't. & no-one is going to tell the American people this during an election campaign. Here at home there may be a rising tide of disgruntlement- even the beginnings of real anger – at the actions of 'the bankers' – but we are a million miles away from people really understanding that the whole system is in danger
of collapse. So even as Brown shows an unexpected capacity for leadership in proposing anti-neoliberal stabilisation measures for capitalism, and as the Tories are reduced to 'me-too-ism', the political commentators are still saying, probably correctly, he is likely to get the blame for the unfolding crisis.
P.S. Comrade Mason says there is a power struggle going on between the governments and the bankers over the conditions under which the state(s) support them. This is class struggle behind closed doors. How long can it remain there...