Wednesday, 21 January 2009
The way things work becomes clear in times of crisis. Marx believed that capitalism contained inherent contradictions that would eventually be its downfall. Well, they don't come more contradictory than the current situation where the government lends public money to bankers hoping they will lend that money to borrowers. The banks prefer to use the money to clear bad debts rather than create even more bad debts by lending it to businesses in a recession. If the banks did lend all the money then we could all get out of the recession faster but the banks have to be primarily self-interested as long as they are still private institutions. Same goes for consumers: we should all spend our way out of the recession but common-sense tells us to pay off debts and save our money. Catch 22. Good article by Simon Jenkins in today's Guardian.