Chris Harman


What’s there to celebrate?

(October 1986)

From Socialist Worker, 25 October 1986.
Reprinted in In the Heat of the Struggle, London 1993, p.234.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

THE stockbrokers and financiers of the City of London are preparing for a huge celebration next Monday. That is when the ‘Big Bang’ takes place.

It involves the scrapping of many of the controls which regulate the buying and selling of stocks and shares.

Those controlling massive wealth can make it grow at maximum speed by moving their money around. They switch their investments from firm to firm and from country to country so as to keep up with even the smallest changes in profit levels. For instance if they can borrow £100 million in the US at a rate of interest of, say, 7 percent, and lend it in Europe at 8 percent, they can make a million pound profit at no cost.

They do not want to be restricted in what they can do by traditional regulations which tie them down to this or that country. They want to be able to trade in stocks and shares in a vast international market.

Yet not all supporters of capitalism are so enthusiastic about what is taking place.

The Wall Street Journal said a fortnight ago that

‘The accelerating rush towards one world wide market – with this month’s Big Bang deregulation in London the latest sign – increases the disturbing possibility that somehow and somewhere and sometime, a financial tremor in one corner of the world could send economic shocks around the globe.’

The fears arise because capitalism has always needed controls to stop some capitalists behaving in ways which would destroy the prospects of all the others.

These controls have been imposed by national capitalist states. But the greater the number of transactions that cross national borders the less effective national state controls are.

Long complicated chains of lenders and borrowers grow up, until it is often impossible for a lender at one end of the chain to know if a borrower at the other end really can afford to pay back the loan.

Yet eventually a point is reached in which some major firms – or even whole countries – cannot pay back their loans. Banks themselves lose huge sums and face the threat of going bust. The huge chains of borrowing and lending suddenly fall apart.

In Britain there has been a massive growth in borrowing by individuals encouraged by the banks and building societies since 1979. And the banks have regarded their loans as safe because they are usually guaranteed by the value of people’s houses.

There has been a spiral. A high level of borrowing has enabled some privileged people to bid ever higher amounts for private housing and the rising value of private housing has guaranteed ever greater amounts of borrowing.

But the governor of the Bank of England recently pointed out there is no reason why house prices should always rise. His comments have caused jitters in many financial circles. If house prices did begin to fall the banks and building societies would find there was no real guarantee for many of the loans they had made.

Some far-sighted sections of big business see this and tremble at the consequences for their system. Meanwhile their short sighted friends see only the quick profits to be made from turning the City of London into the casino of world finance.

Last updated on 28 February 2010