The following was an academic piece of literature, attempting to analyse some Marxist theory in relation to the 2008 global financial crash and the UK’s economic and fiscal response.
Are Karl Marx’s ideas about class, the State and ideology still relevant in the global capitalism of the 21st Century?
Karl Marx is considered by many to be outdated, even archaic and idealistic in moral intention, but unworkable and irrelevant in modern political debate. The increased individualistic politics of the 1980s shifted the political centre-ground to the right, and the post-Thatcherite consensus still controls political debate today. ‘In 1976, a many good people in the West thought that Marxism had a reasonable case to argue. By 1986, many of them no longer considered that it had. […] From the mid-1970s onwards the Western system underwent some vital changes. There was a shift from traditional industrial manufacture to a postindustrial culture of consumerism’.
The failure of the mortgage market and thereafter the 2008 financial crisis, globalisation’s discontents and the state of the UK economy, are amongst issues that writers such as Terry Eagleton argue Marx provides a credible analysis, but remains ignored due to the stigma attached to his name. Despite his definition of capitalism as a system of exploitative boom and bust that requires constant market expansion, in the face of industrialised greed and public austerity not many see him as relevant.
Despite being only fifteen years into the 21st Century the UK and global economies have experienced juxtapositioning extremes of economic ‘boom’ and bust. This investigation will analyse Marx’s ideas about class, the State and ideology in relation to the causes and results of the global financial crash, and will attempt to evaluate the extent to which Marx’s ideas have relevance in the 21st Century, if any.
The Creation of a Crisis: Housing Market Failure of the 21st Century
The housing market in the early 21st Century was awash with uninventive and poorly designed mortgage products. Collateralised Debt Obligations (CDOs) were one method in the mortgage market of ‘securitisation’. The first available investment in such a mortgage products was considered perfectly safe, given a AAA rating by credit agencies. Due to the ‘safety’ of this investment it thereby had the lowest return. The second available investment of the packages was rated BBB, which offered a larger investment return than the first investment. The final investment was unrated and therefore considered risky. If too many mortgages in the CDO were unpaid this investment would offer no return, but if they were paid it would offer significantly more return than the safer investments.
CDOs supposedly offered security to the mortgage originator and investment bank as it would ‘diversify’ risk, whereas traditional banking would have the full burden of risk upon a community bank should a case of non-payment or foreclosure come about. It was unlikely that so many mortgages would fall into negative equity or foreclose – that an investment would not turn a profit, so the logic went. This was supposedly seamless for investors as the value of houses, in the US particularly, rocketed due to a global real estate bubble manufactured by ‘a deregulated market awash in liquidity and low interest rates’. The lowering of federal interest rates, which made buying government bonds have poor return, but made credit easily available, was itself a failed response to the bursting of Alan Greenspan (Chairman of the Federal Reserve) and inherently, George W. Bush’s technology bubble between March 2000 and October 2002. The easily available credit ‘flooded the market with liquidity. With so much excess capacity in the economy the lower interest rates […] worked – but only in replacing the tech bubble with a housing bubble, which supported a consumption and real estate boom’. Between January and February of 2004, the median price of a house increased by $10,100 and houses on average increased in value by 0.77% every month. By March 2007 the median price of a house was $262,000, a rise of $86,400 or 49.2% in percentage terms, of a home’s value in July 2002, the beginning of Bush’s housing bubble policy only seven years earlier.
Once the housing market was open for all those who could afford it, prime customers, the market had seemingly nowhere else to expand to. However, a new market was opened. The sub-prime mortgage market. This offered mortgages to those who could not necessarily afford them, on ‘inventive’ mortgage products. 100% non-recourse mortgages were offered. These incentivised consumers to buy large homes that they could not afford, and because creditors either collected the fees or had the home returned upon non-payment, they both won regardless. If the home was returned to the borrower they would profit as the prices of homes was ‘constantly’ rising. Lenders had no incentive to curb the use of risky products – they instead promoted them. Many mortgages and loans, so called ‘liar loans’ did not even require proof of income, such was the desire of lenders to produce the supposed gold mine of CDOs.
Mortgages with teaser rates and balloon payments entailed repeated refinancing, at which point the borrower would face a new set of fees. ‘The mortgage originator had a new set of profits’. Borrowers were told that they need not worry about refinancing, as by the time the teaser rate expired the price of their home will have risen in the ever-expanding and ‘wealth’ filled market. This meant they could easily make a mortgage equity withdrawal placing themselves in more debt for the sake of retaining or increasing their standard of living despite stagnant and falling wages, under the belief, influenced by their creditors, that it was not real debt, as the value of the house could only continue to grow.
All of these products were severely flawed in several ways. ‘The first was the assumption that it would be easy to refinance because house prices would continue to rise at the rapid rate that they had been rising. This was a near economic impossibility. Real income (adjusted for inflation) of most Americans had been stagnating – in 2005 the median household […] income was nearly 3% lower than in 1999’.
The same was true of income in the UK. By 2004 despite company profits being at an all-time record high, income for the bottom 50% had flatlined. For the bottom third incomes had gone into reverse. Wages now represented a much smaller slice of the economy than they had, following the effects of the Thatcher era, falling from two thirds of the economy to nearly half. Despite this consumer spending continued to rise. People were encouraged to privately borrow and privately spend, as this kept the wheel of profit and illusory growth turning. In 1980 the ratio between debt and income was 1:14. In 1997 it had doubled. In 2007 it had reached an astonishing 1:157.4. As purchasing power slowed, more credit was given to consumers to continue the boom, producing record profits and bonuses. This did not transfer to rising real wages. ‘Between 2000 and 2007, consumers spent £55 billion more than their pay packets, courtesy of the plastic in their wallet or hefty bank loans’. This was ‘helped’ massively by equity that could be drawn from mortgaged houses, all of which had seemingly endlessly rising prices.
Sub-prime mortgages and became a problem (unknown to most) the globe over, quickly. The United States had exported its deregulatory philosophy, the strong foundations of which were laid by Margaret Thatcher and Ronald Raegan in the 1980s and picked up by ‘third-way’ politicians such as Tony Blair and Bill Clinton. This globalised deregulatory philosophy meant it was all too easy for toxic assets to be exported. Over a quarter of U.S. mortgages quickly being owned abroad. Financial institutions in countries across the world, from the US to Iceland and even to communist China (although not to the same extent) owned toxic products, whether they were geographically in their nation or not. ‘The United Kingdom had succumbed to a real estate bubble. But worse under the influence of the City of London, a major financial hub, it fell into the trap of the “race to the bottom,” trying to do whatever it could to attract financial business. “Light” regulation did no better there than it did in the United States. Because the British had allowed the financial sector to take on a greater role in the economy, the cost of the bailouts was (proportionally) even greater.’
The Turning Point: The 2008 Housing and Financial Market Freefall
Inevitably the housing market went into freefall, taking the financial services industry, which had created this crisis with regular citizens hard earned (now potentially disappearing) savings, with it. Unsurprisingly most sub-prime mortgages were unpaid as the homeowners were either unable or unwilling to pay, and the mortgages were defaulted on. The foreclosure meant rather than a payment into a CDO, the creditor now had a house. This was an issue of plurality. Due to the scale of the sub-prime mortgage market and poor mortgage products, a large number of homeowners foreclosed. The issue was hugely complex, but the initial effects can be outlined three-fold. Firstly less money was being made in CDOs. Those with the riskiest investments were not seeing return on their investments, neither were some of the safer investments. This meant money was lost for investors and investment was then less likely. Secondly an increase in the number houses available on the market, the housing supply, was now rising whilst demand was not. This caused house prices to fall – an inconceivability for many profiteers. They not only fell, they plummeted from (the median) $262,000 in March 2007 to $205,100 in March 2009. Thirdly, this price plummet created a difficult situation for homeowners who were still paying their mortgages. As the value of their house falls due to the volatility of the market, the rate of the mortgage doesn’t. They begin to wonder why they are paying $262,000 with interest, for a home worth $205,100, and voluntarily default on their mortgage, exacerbating and perpetuating the initial two issues. The market was in a self-destructive cycle.
CDOs are now worthless. They are simply a collection of empty homes with falling prices, filling none of the cascading tray system of investment return, thus providing no profit for anyone. The banks hold the worthless CDOs which they have borrowed billions (thanks to low interest rates) to buy. They are unable to load them off to investors. Mortgage lenders attempt to sell mortgages to banks to add to CDOs, but knowing investment is worthless and could further their debt they reject. Investors refuse to invest as they know the CDOs are bombs prepared to blow the financial system to ruin. But it is far too late. The investment banks have already bought thousands of the worthless investments, which have been exported across the globe. Banks across the globe fall into massive losses. Savings in many banks are now worthless. The deposits of regular people have been used for the purpose of short term profiteering, and their savings have been destroyed.
Perhaps the greatest embodiment of the illusionary rise and the earthshattering crash, is the Royal Bank of Scotland (RBS). Riding on the wave of the housing market RBS underwent an expansion unparalleled in financial history, going from being the second biggest bank in Scotland to being the fifth largest bank in the world, in 7 years. In March 2000, RBS acquired Natwest, a company twice its size, providing ex-Finance Director, newly appointed Chief Executive Fred Goodwin with an £800,000 bonus. Using Natwest’s vault and savings RBS bought another insurance company, a credit card operation in Germany and a second hand car franchise. RBS saw America as its smartest potential market. With an American arm already operating, Citizens, it could expand from a local base. Echoing Fred Goodwin’s comments ‘we don’t do acquisitions for fun […] if there’s no acquisitions that make sense we won’t look to do any’ Chief Executive Larry Fish stated: ‘we’ve avoided unsecured lending both to the consumer and to the corporate sector’. In May 2004 RBS acquired Charter One, one of the many companies wound up in sub-prime. They continued the drive to expand, making money out of money, meaning corporate and investment banking. By 2005 RBS had spent over £30bn on acquisitions. In 2008 RBS posted the biggest corporate loss in history, £24 billion in a single year. It was then bailed out by the taxpayer in 2008-2009 to the tune of £46bn, £1500 per taxpayer. The nationalisation of banks which occurred across the globe meant a large transfer of private debt to the public sector to rescue the savings of ordinary people.
The global economy went from neo-liberal free marketism, to socialist state support in a matter of months. ‘Their [the bankers] exuberance was not at all irrational: it was quite rational, in the knowledge that when it all collapses, they can flee to the shelter of the nanny state, clutching their copies of Hayek and Friedman’. Yet, when it comes to addressing the UK’s fiscal deficit, caused by a decimation in tax revenue, socialism didn’t get a look-in. We face an era of austerity in which the banks are bailed, barely unchanged from the pre-crisis state and some taxes are cut for the rich, but risen 24 times for ordinary Brits who, for the first time (on a large scale) in decades, are becoming increasingly impoverished and savagely demonised. This is an era of austerity where we are told with 80% debt as a percentage of GDP ‘we are on the brink of bankruptcy’ due to ‘Labour overspending’ by George Osbourne, despite the Osborne’s statement just months before the crash ‘the Conservative’s will be spending the same as Labour’ – saying they would match New Labour spending plans ‘pound for pound’ up to the financial crash.
Compare this to the austerity Britain of the 1950s. Britain underwent the most destructive war in our history, entering the war as the worlds’ greatest creditor and coming out as its greatest debtor with 238% debt as a percentage of GDP. Yet the Atlee Administration created the much attacked welfare state of today: social services, support in sickness, assistance in unemployment, disability benefit, housing, infrastructure, pensions the elderly could survive on and our NHS. Untold misery did not become of a socialist Britain. Much the opposite occurred. A better future for Britain was built, in the face of near-fiscal impossibility. That can not be said of today’s circumstances, nor today’s government. Cuts are an ideological tool of neo-liberals to create the minimal state they so desire. In the meantime tax avoidance and evasion which accounts for between £49bn and £119.4bn remain untouched by the economic orthodoxy. This would of course eliminate the deficit and would make the £30bn per year cuts, a victorious 2015 Conservative government would make, economically redundant. So long as the post-Thatcherite consensus remains, big businesses can milk the aiding state for all it has, while the poor and vulnerable are left to blame one another and the ideology of our time justifies it. ‘[It’s] Socialism for the rich: sink-or-swim capitalism – and food banks – for the poor.’
A Public Unknowingly In-line With Marx – Who the State Works For and Ideology
When regular Britons wages’ were stagnating (and still are), but companies made record profits and the private capital they produced was siphoned abroad to tax havens, the UK and US governments turned a blind eye. The world currently has a theoretical impossibility of the global balance of payments being at a net loss. Money is being exported, but not being recorded as imported elsewhere. When compiling statistical data Gabrial Zuchman was able to show the most plausible reason for this anomaly was the unreported financial assets of tax havens. ‘By his cautious estimate, these amount to nearly 10% of global GDP. Certain non-governmental organisations have proposed even larger estimates (up to 2 and 3 times larger).’ In 2013 the World Bank, a neo-liberal organisation in all but name, estimated the global GDP at $75,592,941,000. That would put the amount of money held in tax havens at around $7,559,294,100. $7.6 trillion accumulated by those wealthy enough to siphon their capital into black holes. This goes largely un-chased by governments such as the UK’s which has 3,315 people looking into benefit fraud worth £1.2bn (1% of the social security budget) whilst HMRC’s Affluence Unit employ 300 people to target affluent avoiders/evaders, worth between £49bn and £129.4bn. In defence of the HMRC’s Affluence Unit, if we consider that being 1000 staff for each remaining member of Take That, the unit is fairly over-staffed.
From this it is reasonable to infer that the government, the executive of the state, acts not in the interests of her people who are hurt by cuts, but of those in positions of economic power, who benefit from a blind eye to tax avoidance – big business and wealthy individuals. ‘The executive of the modern State is but a committee for managing the common affairs of the whole bourgeoisie’. 
Those were the words of Karl Marx in The Communist Manifesto. The language may not be that of a 21st Century politician or philosopher, but the message is one that’s highly relevant today. The government places the production of wealth for a minority (that does not trickle down) before the well-being of the majority. That is something echoed by the general public today. In wake of the HSBC scandal, an ICM poll found that 67% of people believe that ‘big business is so close to politics that no government will stop tax dodging’, a High Pay Centre poll found 76% agree that ‘big businesses have too much power over the government’ whilst 82% believe ‘the benefits of business success go to the owners and bosses without benefiting workers or the community’. It’s clear that despite writing this in 1848, Marx’s analysis of the (capitalist) bourgeois state is highly relevant in the eyes of the British public.
This is slightly limited as, of course, Marx meant this in a far more complex analysis of the structure of capitalist society than the modern general public do. Marx believed that the state is run by and for the bourgeoisie. In all periods of human history the state has been run in the interests of those who control the means of production, the economic power and wealth. In agricultural societies, such as the feudal society which capitalism evolved from, this would be the land, and therefore the bourgeois class were the landed aristocracy. Everything in society is a product of this economic base, the means of production, including the police, the civil service, the state, even ideas themselves such as the concept of fairness. Economics determines the character of the rest of society – ‘it is social being that determines their consciousness’. In layperson’s terms, it is the type of society and culture that we are in that to a large extent determines what we become.
Everything being derived from the economic base is known as superstructure. As the superstructure is a product of the economic base, the state is at the disposal of the bourgeoisie, who in the 21st Century own the economic base. The relevance of this today is clear. The dominating post-Thatcherite ideology is neo-liberalism. An ideology of minimalising the state, and lowering taxes for the wealthy, due to their complex alike to the L’Oréal tagline – ‘because we’re worth it’. These ideas of self-interest and constant competition as the natural state of humanity proliferate due to the nature of our society, one that constantly advocates greed and individualism. This creates a self-perpetuating cycle of ideology, what Engles referred to as false consciousness. This is something that perpetuates a mistaken or false view of the world. ‘Marx believed that the distortion implicit in ideology stems from the fact that it reflects the interests and perspective on society of the ruling class.’  As we are constantly told that unrestricted competition and acting in your self-interest is natural, and will get you far in life, it becomes ‘common sense’ for a low tax economy to be desirable.
This is of course to the advantage of wealthy individuals, who keep more of ‘their’ wealth, and to big business, who have a destructive advantage against small business owners in the ‘free’ market. ‘Their diminutive capital does not suffice for the scale on which Modern Industry is carried on, and is swamped in the competition with large capitalists’. You are of course far more likely to see a boarded-up (ex-)small business than you are to see the closing down of a tax-avoiding, zero hours contract using Starbucks, Café Nero, KFC or McDonalds. The neo-liberal free-market narrative that runs through our discourse makes it much easier for governments such as the Conservative-Liberal Democrat coalition to impose austerity measures on the British public under the façade of necessity, whilst taxes are cut, and avoidance accepted, for the rich. Marx’s ideas about ideology and the nature of the state, are certainly relevant today, whether his perspective is necessarily agreed with or not.
A Pain in the Class: Marx’s Class, Social Justice and Inequality in the 21st Century
Many of the antagonisms with Marx in the modern day can be expressed through the words of self-proclaimed socialist Tony Blair and frothing at the mouth communist John Prescott – ‘we’re all middle class now’. Many people would argue that due to the rise in living standards of the working class, since the time of Marx, an increase in social mobility and the blurred lines of the British class structure, Marx is simply outdated. Before we examine this it is worth noting that Marx acknowledged the ever-changing nature of capitalism, admiring it for its invention and acknowledging its ‘constant revolutionising [of] the instruments of production’.
The argument of irrelevance due to improved class conditions is understandable. It is clearly the case that material conditions have improved since the Industrial Revolution. The Western working class of today are relatively better off than the working class of Marx’s day. This is largely down to advancements in technology and human welfare that have moved productivity forward. Increases in productivity (improvements in the means of production) then make products relatively cheaper, giving consumers more purchasing power. This is a strong criticism of Marx, which questions, if the state of the working class has increased, why his critique is necessary?
Although Marx did acknowledge the existence of a lower-middle class (whom he imagined as merchants and small tradespeople), he imagined they would be squeezed into the proletariat, as the bourgeoisie centralise and monopolise wealth. This, of course, is yet to be the case. The middle class has in fact grown with the diversification of the economy, but not to the extent of being a majority, never mind ‘all’ of us. The movement to postindustrial society, where consumerism, information technology and the service industry are the order of the day, has diversified labour, taking out one of the great tenets of Marx’s theory, that working class labour would centralise and create class consciousness, leading to revolution.
Despite this, wealth, post-1970, has become more and more concentrated in the hands of the bourgeoisie. In 2009 the 1% had their global share of wealth at 44%. In 2014 the figure was 48%. ‘Of the remaining 52 per cent of global wealth, almost all (46 per cent) is owned by the rest of the richest fifth of the world’s population. The other 80 per cent share just 5.5 per cent and had an average wealth of $3,851 per adult – that’s 1/700th of the average wealth of the 1 per cent.’ We may have seen the growth of the managerial and professional middle class in the West, thanks to the advancements in the mode of production (that Marx said were inevitable) and the way capitalism has adapted, but this does not at all make Marx redundant. It merely makes the evidence of some predictions more implicit. As the manufacturing industry has left the UK (7 million factory workers in the UK in 1979, 2.5 million in 2011) and the mining industry is all but dead, the traditional icons of the working class are no more. In his post-war work Austerity Britain David Knayston had no issue in finding three symbolic occupations of the working class ‘they were in no particular order, miners, dockers and car workers’. Seeing these symbolic, skilled jobs stripped from the economy can lead us to believe that the class boundaries have too been stripped. This is not the case. The service sector is at the heart of the revolution in the jobs market. Jobs in retail now account for 20% of US employment. The service sector as a whole accounted for 80% in 2012. Looking at the UK specifically to put it into perspective ’there are now nearly one million people working in call centres and that number is rising every year […] there were one million men down the pits at the peak of mining in the 1940s. If the miner was one of the iconic jobs of post-war Britain, then, today surely, the call centre worker is as good a symbol of the working class as any’.
Service sector jobs such as retail are almost always minimum wage, well below the living wage, the income one requires to sustain oneself. ‘Two thirds of all care jobs in the UK […] 930,000 care workers [are] below that level.’  In 2014 5.28 million people were paid below the living wage, working for their poverty. However in the modern UK economy even this does not accurately represent the bleak situation the low paid face. Although some are paid more than the living wage hourly, so are not included in this statistic, they are not provided with enough hours to find their way out of poverty, or find themselves on zero-hours contracts, where no pay or hours are certain. The use of these contracts has been on the rise under the coalition government increasing to 1.8 million in 2015, up from 200,000 in 2008. Marx may be surprised by this. He argued that ‘the average price of wage-labour is the minimum wage i.e. the quantum of the means of sustenance’ – meaning he believed that anywhere employers could they would pay the living wage to maintain their being. Knowing that the state will top up poverty pay, employers no longer need to provide the level of minimum sustenance, the living wage, as they know tax-payers will do it for them.
These wages are neither moral, nor accurate. Market value rarely reflects the true value of labour. Whilst advertising executives at McDonald’s earn six figure salaries for promoting obesity and consumerism in children, nurses have seen a 15% real terms cut in their £21,478 wages, despite clearly providing greater moral, economic and social value than the McDonalds advertising executive. The market simply does not care. ‘It has resolved personal worth into exchange value’. This removes humanity from labour and instead makes people commodities which can be bought at the rate of their wage-labour value. In 2009 the New Economics Foundation calculated that the generally minimum waged NHS cleaners produced £10 in social value, for every £1 they were paid, taking into account that they maintain health standards and wider health outcomes. This is compared to city bankers destroying £7 of social value for every £1 they are paid, and advertising executives destroying £11. Not only does the market’s wage-labour not reflect one’s true social-economic worth, but removes all personal worth as those who are limited in their market worth are therefore near worthless commodities, as Conservative Peer Lord Freud’s unfortunate ‘they’re [the disabled] not worth the full [minimum] wage’ comments demonstrate.
With the service sector now dominating employment in Western countries, where has the manufacturing industry flocked to? It’s something we all know, but rarely like to remind ourselves. Sweatshops. ‘A handful of transnational corporations distributed production and investment across the planet in pursuit of the readiest profits. A good deal of manufacturing was outsourced to cheap wage locations in the “underdeveloped” world, leading some parochially minded Westerners to conclude that heavy industry had disappeared from the planet altogether. […] While “peripheral” countries were subject to sweated labour, privatized facilities, slashed welfare and surreally inequitable terms of trade, the bestubbled executives of the metropolitan nations tore off their ties threw open their shirt necks and fretted about their employees spiritual wellbeing’. Around 250 million children ages 5 to 14 are forced to work in these conditions to maximise profit for the bourgeoisie. This is horrifically clear evidence that Marx’s belief in the injustice of capitalism and class struggles are still relevant today. Although we now have a waged managerial class, providing a blurred middle ground between ruling class and subjected class, the difference between proletariat and bourgeois lives on in saddening relevance. The bourgeoisie hoard the productive wealth of the proletariat on a greater scale than ever.
From Marx’s graveside Engles exclaimed ‘his name will endure through the ages and so will his work’. That is clearly the case today. His name endures today with the connotations of totalitarianism that warped his name in their own advancement. Marx was aware that interpretations of his work were becoming far from what he intended, even contradictory to what he outlined, he claimed ‘all I know is that I am no Marxist’. This is not all that remains of him though.
Although not acknowledged in mainstream debate largely due to his name, Marx’s ideas about class, the State, and ideology are more relevant now than they have been for a century. Karl Marx stated that the ‘need of a constantly expanding market for its products chases the bourgeois over the whole surface of the globe’. As outlined in the opening section, this was the 2008 financial crash. The investment banks needed, or rather wanted, an ever-expanding housing market, with ever increasing house prices and ever continuing profits. It was impossible. The drive for ever-expanding markets as a means for short term profiteering, advocated by neo-liberals, was the crisis of the bourgeoisie. Yet it is the middle class and the proletariat that now shoulder the burden, thanks to the ‘committee […] managing the affairs of the whole bourgeoisie’ – the modern state.
With industry elsewhere it’s easy to pretend that ‘we’re all middle class now’. It’s easy to pretend that nurses aren’t losing 15% (real terms) of their already unfairly low pay. It’s easy to pretend that the clothes on our backs aren’t made by 5 year old children. It’s easy to pretend that the 1% ‘elite’ own the majority of the world’s wealth because ‘they’re worth it’. An unregulated market doesn’t distribute justly. It isn’t ‘what they’ve earned’. It’s not their labour. If multinational CEOs took a week off life could continue. If those who work below them took a day off the global economy would grind to a halt. This isn’t a call to arms. This merely seeks to highlight the true source of wealth production. The fact is the proletariat are the wealth producers, not the bourgeoisie, yet in the 21st Century it is they who reap the reward more than ever and the lower classes who shoulder the burden of their failure. The exploited have the true economic power, if only they could realise it.
‘The proletarians have nothing to lose but their chains. They have the world to win’.
 Terry Eagleton, Why Marx Was Right, Yale University, 2011. Pg. 3
 Mortgage product investment is ‘secured’ by pooling a high number of mortgages, which are then sold to investment banks and thereafter investors. The package (pool of mortgages) is then split into three investments, which are organised like cascading trays filled by monthly mortgage payments, and thereafter return on investment. As it is unlikely a number of mortgages will foreclose at one time, payment and profit is supposedly secure.
 They were given an AAA safety rating by credit rating agencies such as Moodys and Standard and Poor’s, for investment return, as they also came available with an insurance product known as a Credit Default Swap (CDS) which insured that in the case of third-party debt (mortgage foreclosure) the investment bank would pay the loss, not the investor.
 Joseph Stilgitz, Freefall: Free Markets and the Sinking of the Global Economy, London 2010. Pg. 1
 Joseph Stilgitz, Freefall: Free Markets and the Sinking of the Global Economy, London 2010. Pg. 4
 Average taken using http://www.tradingeconomics.com/united-states/housing-index
 Non-recourse mortgage – 100% or more of the value of a home was offered in a mortgage. If the house price increased the home owner kept the difference. If the value decreased the borrower could return the keys to the creditor and walk away.
 ‘Temporarily low repayment rates that exploded after a few years’ – Joseph Stilgitz, Freefall: Free Markets and the Sinking of the Global Economy (London, 2010), Penguin Group. P.g 85
 ‘A short term mortgage taking advantage of currently low interest rates that had to be refinanced in five years’ – Ibid
 The process of borrowing money against the value of a house as the value of the house appreciates
 Joseph Stilgitz, Freefall: Free Markets and the Sinking of the Global Economy (London, 2010), Penguin Group. P.g 86
 Department for Work and Pensions Households Below Average Income: An Analysis of Income Distribution 1994/1996 – 2007/2008, London 2009 p.19.
 Owen Jones, Chavs: The Demonization of the Working Class, London 2011 p. 157
 Owen Jones, Chavs: The Demonization of the Working Class, London 2011 p. 158
 ‘The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you’d be able to purchase.’ http://www.investopedia.com/terms/p/purchasingpower.asp
 Daniel O. Beltran, Laurie Pounder and Charles P. Thomas Foreign Exposure to Asset-Backed Securities of U.S. Origin Board of Governors of the Federal Reserve System, International Finance Discussion Paper 393, August
 RBS: Inside The Bank That Ran Out of Money, BBC, 2011
 RBS: Inside The Bank That Ran Out of Money, BBC, 2011
 Noam Chomsky, (lecture), The Center Cannot Hold: Rekindling the Radical Imagination, 2010, Haven Center
 Over 900,000 adults and children requiring emergency food packages from food banks a 183% rise in a year http://www.trusselltrust.org/foodbank-figures-top-900000. 8-10% fall in the median wage since 2008 http://cep.lse.ac.uk/pubs/download/cp422.pdf.
 George Osbourne, The Andrew Marr Show, BBC, 1st October 2010
 George Osborne, Interview on Breakfast, BBC, 3rd of September 2007
 Barry Kushner & Saville Kushner, Who Needs The Cuts?, London, 2013, p.g 27
 The official government estimate of 2013/14 http://www.ibtimes.co.uk/uk-tax-gap-widens-austerity-lack-avoidance-law-1466606
 Richard Murphey, The Tax Gap, report for the Public and Commercial Services Union, 2014
 Owen Jones, It’s Socialism for the rich, capitalism for the rest of us in Britain, The Guardian, 2014
 The difference between the amount of money coming into and leaving a country
 Thomas Piketty, Capital in the Twenty First Century, London 2014, pg. 466
 Gareth Steadman Jones, Karl Marx and Friedrich Engels, The Communist Manifesto with an introduction and notes from Gareth Steadman Jones, London 2002, pg. 221
 The bourgeoisie is defined as the capitalist class who own the ‘means of production’, that being the ownership of the instruments of labour (such as machinery) and the subjects of labour (such as natural resources) for the production of goods and/or large wealth in which they profit, but do not have to sell their labour, (waged labour) to survive.
 Andrew Heywood, Political Ideologies An Introduction, Houndsmill 2007 pg. 6
 Karl Marx and Friedrich Engels, The Communist Manifesto [English Edition], 1888
 Karl Marx and Friedrich Engels, The Communist Manifesto [English Edition], 1888 pg. 8
 The class of people who do not own the means of production. They sell their labour ‘wage-labour’ as though their lives were a commodity to be bought and sold, so that they may afford to survive. In selling this labour they produce products that are sold by the bourgeoisie at a surplus value (profit).
 The bourgeois class are the capitalist class who own the means of production, the productive forces, and profit from that. They do not have to sell their labour to survive e.g. in feudal times the means of production was the land and the bourgeoisie the landed aristocracy.
 Owen Jones, Chavs: The Demonization of the Working Class, 2011 London pg.140
 Owen Jones, Chavs: The Demonization of the Working Class, 2011 London pg.140
 Thomas Piketty, Capital in the Twenty First Century, 2014 London pg. 90
 Owen Jones, Chavs: The Demonization of the Working Class, 2011 London pg.147
 Karl Marx and Friedrich Engels, The Communist Manifesto [English Edition], 1888 pg. 24
 Karl Marx and Friedrich Engels, The Communist Manifesto [English Edition], 1888 pg. 6
 Owen Jones, Chavs: The Demonization of the Working Class, 2011 London pg.159
 Terry Eagleton, Why Marx Was Right, Yale University, 2011. Pg. 4
 Mark Steel Lectures: Karl Marx, 2003, BBC
 Karl Marx and Friedrich Engels, The Communist Manifesto [English Edition], 1888 pg. 8
 Karl Marx and Friedrich Engels, The Communist Manifesto [English Edition], 1888 pg. 5
 Karl Marx and Friedrich Engels, The Communist Manifesto [English Edition], 1888 pg. 52