First, the Government semi-nationalised the banks. Now, it is quarter-nationalising the everyday process of trade credit, with the announcement on 14 January of Government guarantees for some £20 billion on loans made by banks to firms for "working capital", i.e. the cash they need to be able to pay wages and bills before their sales income comes in.
This version of the article is longer than the one in the printed paper.
The package announced by the Government is complicated. It wants to get the banks to lend by giving them some insurance against losses, but at the same time to keep some safeguards against excessive losses for the Treasury (on an existing government scheme for credit guarantees to small businesses default rates are up to 35%).
It may well also be inadequate in its own terms. Its political significance, though, is that the Government has been pushed into a further step of substituting a sort of social regulation for the market.
For decades all the mainstream politicians have told us that the free pursuit of profit in competitive markets is the only way to efficiency and dynamism. The credit crisis has demolished that story. Then the Government tried to salvage the economy by pouring in cash and credit guarantees "at the top", through the banks, in the hope that more-or-less ordinary market mechanisms could "trickle down" the salvage from there.
It hasn't worked. On the same day that the Government announced its scheme, the Financial Times reported that banks had been reducing firms' lines of credit. "More than a third of large UK companies that do not use their full credit facilities have had them reduced by banks". The furniture company Land of Leather blamed its collapse, and the construction equipment company JCB its big new job cuts, on lack of bank credit.
So the Government is trying to move down a step, nearer to the day-to-day workings of production and commerce.
It is already true that within the giant corporations of today, as Frederick Engels put it over a century ago, "the production without any definite plan of capitalistic society capitulates to the production upon a definite plan of the invading socialistic society". The new Government measures are a step further - an element of "definite plan" in the day-to-day organisation of trade.
As Engels also wrote: "So far still to the benefit and advantage of the capitalists... The modern state, no matter what its form, is essentially a capitalist machine, the state of capitalists, the ideal personification of the total national capital.. The workers remain wage-workers, proletarians...
"The solution can only consist in the practical recognition of the social nature of the modern forces of production... by society openly and directly taking possession of the productive forces which have outgrown all control except that of society as a whole".
The first step, now, would be to fully nationalise all the banks and other big financial companies, and transform them into a publicly-owned, democratically-controlled banking, mortgage, and pension service; and to nationalise under workers' control all the big firms making cutbacks, saving jobs and reorienting their production to social goals.
That would be the first step of working-class socialism. The "bankers' socialism", and now "industrial and commercial bosses' socialism", of current government policy points the way to it, and reveals the basis for it, but is also a polar opposite, because it is trying to mend the crisis while preserving the priority of private profit.
Further Government measures are likely. Both the Tories and the Lib-Dems have criticised New Labour for timidity, the Tories advocating £50 billion of guarantees and the Lib-Dems advocating direct government control over the banks to make them lend. Big though £20 billion looks, it is, so far, a small amount on the scale of the more than £1100 billion (yes, £1100 billion, about £18,000 for every child, woman, and man in Britain) fed into the banks in credit guarantees and recapitalisations.
But there's no more of "you can't buck the markets". Even the bosses and bankers recognise that the Government has to "buck the markets" to try to stave off economic collapse. The question now is, who "bucks the markets"? This New Labour government, doing everything in line with the priorities of profit, or a workers' government, created by a political mobilisation of the labour movement?