AS October advances, strange things happening — gold price soaring, dollar value dropping — have been reported as significant and troubling developments. On October 9, a Guardian article recorded that expectations the gold rally would continue were being fuelled by the purchase of gold by central banks.

On October 12, the Observer carried an article by Matthew Bishop, co-author of In Gold We Trust (2011), noting the fall of the dollar against other currencies by more than 10 per cent, and the rise in the price of gold to above $4,000 an ounce over the past week.

In 2001, gold was available at $250 per ounce. Its price rose high following the financial crash of 2007-8, reaching almost $1,800 in 2011, but then falling and not rising above that figure until 2020.

The dark side of the rise in the gold price was lately highlighted by a top US investor’s saying: “I’ve never seen so many foundational pillars of society hanging by threads.”

Back in 1944, when the Bretton Woods international treaty fixed the price of gold exchangeable for the US dollar as one ounce against 35 dollars, the assumption was firm that the US dollar would be the currency on the throne across the world indefinitely.

But by the mid-1960s, the dollar came under threat, influenced by growing US indebtedness from financing its war against the Vietnamese people who sought freedom both from landlordism and from foreign imperialism.

The pound sterling, over the post-war decades, had been the world’s number two currency, and was also under such a degree of menace that it was devalued, abruptly, in November 1967. After that, speculation against the dollar mounted, while growth rates in the US in productivity and output were slipping.

In this context, the US restricted the conversion of dollars into gold to central banks, and in 1971, the conversion rate of 35 dollars per ounce of gold was dropped, driven by the harsh fact that US gold reserves amounted to barely a fifth of US overseas debt. February 1973 was the month when the diminished link between the dollar and gold was snapped altogether, and the world’s currencies became uneasily floating items.

The dollar was now treated as a successor to gold, aided, as Vijay Prashad put it in his book The Poorer Nations, by Washington’s ability “to print currency if it needed to pay its creditors.” But this did not end the trials of the US paper currency, or condemn gold to outsider status.

During that battle to protect the dollar and banish gold into the shadows, Anglo-American “experts” came on stage. Rajani Palme Dutt, formidable Marxist economist (one-time editor of this paper’s predecessor, the Daily Worker and veteran Labour Monthly editor), faced off these “experts” with his usual cogency in April 1968.

Castigating a Times editorial of November 28, 1967 (which denounced gold as “a most inadequate basis for the world’s monetary system”), and a Time magazine piece of January 15, 1968 (which designated gold “a basically inelastic and unsatisfactory medium of exchange”), he pointed out the fallacy underlying such approaches.

It was a dream which has “stubbed its toe against the material basis of gold.” Gold, he explained, had its own value, independent of governments. Its value “is necessarily determined in the same way as the value of every other commodity, that is, by the average socially necessary labour for its production, in this case, for its extraction.”

Dutt quoted Karl Marx’s Capital, from which official economists and financiers would have benefited, saving them “headaches.” “Gold,” Marx had declared, “is now money with reference to all other commodities only because it was previously, with reference to them, itself a commodity.”

That did not mean, of course, that gold could not become overpriced when the mad magic of capitalism required it. But its value, as “a commodity,” sniped at the hopes of those supporting its simple replacement by the paper currency of the dollar.

In the above-mentioned book In Gold We Trust, billionaire Rembrandt picture collector and gold investor Thomas Kaplan commented: “Compared to gold, all currencies are like toilet paper, though the dollar may be double-ply.”

Today, governments (and their electorates) have not yet escaped the effects of the financial crash of 2007-08 — if it was just a financial crash.

In his book Marx’s Das Kapital and Capitalism Today (2018), Communist Party of Britain general secretary Rob Griffiths wrote this: “Perhaps its origins lay deeper, in the long term tendency of the Organic Composition of Capital to rise and the tendency of the rate of profit to fall reaching a critical point, requiring the large-scale destruction of capital values, both fictitious and real?”

Griffiths considered here work by Alan Freeman and Michael Roberts, which suggested that the crash amounted to “a classic crisis of over-accumulation and over-production, albeit one of a particularly acute character.”

But he gives weight separately to “the impact of neoliberalism and financialisation from the 1980s onwards and the impact of a financial crisis on the unfolding cyclical downturn in the productive economy.”

US stockbroker-journalist Peter Schiff, comparing the current gold run to the subprime market in 2007, warns: “Gold’s surge in 2025 likely portends a US dollar and sovereign debt crisis next year that will make the 2008 financial crisis look like a Sunday school picnic.”

The US national debt in August this year was officially calculated as $37 trillion. Now the IMF has weighed in with a global financial stability report, which declares that companies prominent in the AI boom are at risk of a “sudden, sharp correction” in the stock markets, while the bond markets linked to many governments might be “on shakier footing than they seem.”

Britain cannot be expected to be immune from the consequences of a large economic recession in the US, and the situation in Britain for many is desperate already. A workforce of 30.3 million is now shown to be undercut by unemployment of 5.3 per cent, with job vacancies dropping to 717,000 by the end of September.

If official economists and financiers would have saved themselves “headaches” had they, in Dutt’s view, studied Marx’s perception of the basis of the value of gold, they might, then and now give themselves alternative headaches, through an understanding of how capitalism functions: exploiting working people through the seizure of surplus value, producing an unemployed “reserve army,” cyclical downturns linked to a fall in the rate of profit, and one imperialist war after another.

Amid the current prospects of even more misery for many, a new British party of the left is close to being established because the Labour Party has become an authoritarian party of the right.

The story of the dramatic rise of Jeremy Corbyn in summer 2015 to be Labour leader, against the expectations of bookmakers, media and even those few right-wing PLP members who misguidedly enabled him to get on the leadership ballot, can be usefully recalled.

Corbyn, of course, in September 2015 gained 59.5 per cent of the vote of Labour Party members and registered supporters, to become leader, prompting the resignation, among others, of junior minister and handcuffed-to-Treasury-orthodoxy future Chancellor Rachel Reeves.

Journalist Gary Younge wrote in the Guardian soon afterwards that Corbyn “spoke in unequivocal terms about his support for the weak against the strong and fairness against inequality. He voiced support for refugees, trade unions, council housing, peace, international law and human rights.”

Newly appointed shadow chancellor John McDonnell, in an Observer interview, was explicit about one source of his own thinking: “You can’t understand the capitalist system without reading Das Kapital. Full stop.” So the new party’s membership, while pursuing vital progressive aims, can only benefit from a developing understanding of the negatives inherent in the capitalist system.

Stuffing Marx’s three-volume Capital into the letter boxes of 10 and 11 Downing Street could produce headaches from resident politicians just from looking at it. Their reading and benefiting from it, however, which could theoretically lead to cutting short ambitious political careers (via a switch in beliefs comparable to St Paul’s conversion to Christianity en route to Damascus) — more headaches — is not on the cards.