Writing in the London Review of Books earlier this month (Volume 40, number 13), John Lanchester reminds us how much the world has changed – and in some respects how little is different – ten years after the credit crunch and the beginning of the Great Recession.
Lanchester is one of our smarter contemporary thinkers. He’s the author of one of the best books on the credit crunch – Whoops! Why everyone owes everyone and no one can pay and the only novel i can recall about the resulting London property boom, Capital – you may have seen the television drama made from it even if you have not yet read the book. Although there is very little explicit Marxism in either book, Lanchester is one of the few contemporary writers who knows his Marx . This was apparent when he gave a talk to promote his book Capital to the London Review of Books – much of his talk was about the more famous book of this name.
Lanchester describes in the article the climate of intellectual over-confidence that preceded the crisis in 2007. He points out that most of the time, in conventional economic thinking, debt and credit don’t present a problem. Every credit is a debit, every debit is a credit. The problems arise when no one is sure who owns what. As he points out, on a global scale there are billions of pounds more credits than debits. Why? The rich have hidden their assets in off-shore tax havens to avoid paying tax.
Lanchester reminds us that, following the bail out of banks, no one has addressed the too big to fail problem. Furthermore, the risk of failing remains high. We have previously commented on how John Vickers fluffed the opportunity to ring fence banks’ more risky business from their socially useful activity of providing credit to businesses and consumers. Another problem Lanchester highlights is the failure to rein in shadow banking – all the things banks do but which are done by institutions that don’t have a formal banking licence.
Is another banking crisis on the way? Probably, but one thing is clear. Each new crisis in capitalism shows a different face, a different mix of problems. Into the mix sooner or later global warming is going to feature. This is why the Communist University in South London, CUiSL, is working on a discussion paper looking at how classical Marxist theories of crises and social revolution relate to this new threat. If you wish to see how this is progressing, and, even better, to join in, follow https://communistuniversity.wordpress.com/.