These really are unprecedented times, even for folk who – amateurs as we are – could see that the levels of debt which were integral to what has been called ‘free market’ capitalism’ were unsustainable. The sheer scale of the figures involved become ever harder to grasp, and were not predicted by most amateurs or, as it happens, the full gamut of finance professionals, who, it turns out, appear to have believed in their fantasy world. The assessment of losses has increased from $400bn at the end of February ‘08(US Monetary Policy Forum,) to $2.8 trillion as given by the Bank of England in November, via 1.4tn from the IMF a few weeks earlier. Since then we have heard the then President George Bush feeling it necessary to take airtime to tell the American people that Capitalism is really a jolly good thing — I’m a free market kind of guy” — and to stick with it, while the word Socialism entered its presidential election campaign. This came after watching American and British banks being nationalized by the Bush Administration, and by a New Labour government (one that advertised itself as ‘prudent’, while selling London as the least regulated global financial centre), that did their utmost to call it something other than ‘nationalization’. In other parts of the world also, banks are ‘saved’ or part-nationalized. The question then for people who see capitalism as a mean, unjust, and crippling political-economic form, is how to use this political opportunity, rather than arguing over any exclusive formulation of a Marxist theory of crisis. One serous concern is media presentation, the framing and description of what is happening, in which the recession is presented only through the fetishized drama of up-and-down stock market figures The BBC speaks of ‘demystifying’ what has happened. “with the experts and correspondents to give you a comprehensive explanation of events in the financial world.”. In fact it is thoroughly partial explanation, a monologue of many colours which includes the apocalyptic, but is exclusively in the hands of finance world wiseguys, wise-after-the-event wiseguys – bankers, financial journalists and analysts, – giving in-house, Green Zone, analysis. They speak with authority even when it necessarily incoherent, and when what has happened has shown them to be ignorant or greedy wishful thinkers. Meanwhile the ex-head boys and girls in the studio automatically refer to ‘socialism as ‘old-fashioned’ or ‘dinosaur’.
Over the last year there’s been a cycle of denial ‘n admission in the matter of the ‘soundness’ of venerable financial institutions and the ‘seriousness’ of the situation. Ever since Lehman Brothers, [i]an American investment bank, went down the tubes and things got seriously out of hand, the authoritative voice has switched, without shame, to a narrative of catastrophe, but catastrophe as defined by them, on their terms. “Staring at the abyss”, and “On the brink”, and then “Averting a catastrophe”. These phrases give a fetishized word-picture of ‘economic collapse’ as a singular, melodramatic event, and have been repeated so many times that it becomes boring enough for most folk to fall asleep on the job of working out what the hell is going on. Meanwhile the abyss turns out not to be an abyss, but rather a dragged-out austerity of privatized, watching-the-pennies, anxiety for the majority.
At the same time –to scare the children taxpayers – there’s “meltdown”, as in nuclear disaster. It is scaring the children with a purpose, that the banks be saved, more or less on their own terms or who knows what may happen in the real world. This current Green Zone concern with the real economy, ought to imply a recognition that what we’ve been fed before is a fantasy world, but its functions are very different. Treasury Secretary Paulson, for example, has talked repeatedly of ‘using all the tools in the locker’ when dishing out more money as if fixing an engine with a temporary fault. At the same time this real economy becomes somehow virtuous, as if it wasn’t a business of armaments production, ‘terminator’ seeds, and the super-exploitation of export processing zones.
Various sensible demands have been made on behalf of the “taxpayer” as quid pro quo for any bail-out of banks., sensible demands which include, but go beyond, a bail-out tax, or the prevention of foreclosures for mugged house-buyers. Sensible demands have also addressed the deflationary recession that is in process. These demands include money directed to empty and empty new-build housing made into social housing; raising the minimum wage; and increasing social security payments, all of which would increase “effective demand” to counter the recession..
But such sensible proposals — whether we call them ‘reformist’ or not – will not have the smallest chance of success if the authoritative voice is not challenged at every opportunity. Understanding that the suit of clothes does not exist, that the Emperor is naked, is no guarantee of the radical change which present circumstances demand, but is a prerequisite As it is now, public challenge has been monopolized by useless professional hands, not just useless but part of this monologue. There is the irrelevant irreverence of satire and ‘alternative’ comedy, the routine grilling of easy meat politicians, and demands from professional opinionists that capitalism be nicer. When it comes to the economy what we get are unchallenged experts, all of whom have been party to the ‘free market’ fantasy world. It may have a coat of many colours, but the monologue is highly selective. So much so is such that we don’t even get to hear Trade Union leaders on the mass media, not even when their quid pro demands for rescuing greedy bankers, are so weak. What this suggests however, is that this neoliberal/free market narrative of brazen capitalism has a thin skin. Alternatives of all sorts, however mild, are seen as a threat.
Crises are moments when the bright lights shine on what was hidden and opaque, all the murky corners that are integral to capitalism. There have been many instances of naff opportunism by the British left, but these should not put off people who see and feel capitalism as unjust and archaic, from taking this exceptional opportunity to keep those bright lights aimed at its greeds, pretensions, and wishful thinking.It is also necessary defensively, to fight off blame being attached to ‘illegal’ immigrants, generic Muslims or ‘finance capital’ as Jewish capital. These possibilities give the job urgency, as do the ways in which Green Zone in-house explanations of what has happened have been busy smothering what has been shown up, and keeping the free-market’s pretensions afloat; and the way in which it is being used to accelerate the capitalist process of monopolization.
WHOSE FREE MARKET?
Looked at with a cold eye, its pretensions are ludicrous. The reality of the free market has been of ‘uneven development’ with its historically-loaded dice; of various extremes of exploitation; of a process of monopolisation; a dependence in its ‘Anglo-Saxon’ heartland on a military Keynesianism; and on the privatized debts and anxieties of large numbers of people. The perverse pride in its impersonal, yet anthropomorphic power – the invisible hand- is laughable given its penchant for gurus. Like all such gurus one is liable for a fall as in the case of Alan Greenspan, but another one is there to take his place. This time, Warren Buffet the sage of Omaha whose investment decisions and even opinions can alter what is grotesquely called ‘market sentiment.’
It has depended on crude notions of inevitability, with its convenient denial of human agency. After the East Asian currency crisis of 1997-8, which free marketers had blamed on a ‘crony capitalism’ it portrayed as characteristic of that area, Greenspan, the then-guru, called its resolution –the enforced liberalization of capital markets in Asia – as ‘a milestone on the inexorable trend towards market capitalism.’ Even more crude was a celebration of the ruthless nature of this inevitability. Commenting on another crisis of that time, an attack on the Brazilian currency, David Smith, Economics Editor of Murdoch’s Sunday Times wrote “It may not always be pretty, but it is the way international capitalism works. Control it or insist on tougher lending criteria and the supply of capital that is the lifeblood of economic development will dry up. You cannot pick and choose, or try to put the genie back in the bottle.”
What has now made these pretensions risible is that all the self-styled tough, independent characters who make up this market, having derided governments, and government interference, have had to be rescued by taxpayer-financed governments. It would be inhuman not to enjoy the hubris of the market and its representatives, and at the same time to be clear about what a real dent in its fantasy version of itself this is. Governments and government action were ridiculed: because if they started to influence risk and investment decisions they would mess it up; because they were helpless to influence the market because of its sheer size and global nature; and most of all because it would give the lie to the fetish of ‘the independence of money’.
In an interview two years earlier,[ii] city wiseguy Graham Bishop referred to the market as ‘a rolling referendum on the views of savers about government policies.’ Talking in the same interview he talked of how ‘pressures from the owners of securities will stimulate a bottom-up restructuring of European industry’ and how this boded well for EU competitiveness. Pretty clear then what kind of government policies were judged in this rolling referendum conducted by ‘market confidence’, the relative and competitive conditions made for maximum and secure extraction of surplus value.
‘ALL THAT WAS SOLID MELTS INTO AIR’
The methods by which governments created a situation where ‘market’ judgements could have such a fast and dramatic impact on their own powers, are well known, the deregulation and liberalization of finance capital. This was a politico-economic strategy beginning in the early 1970s, and aimed at those who created surplus value both for individual capitalists, and for those individuals as components of capital’s incessant need to accumulate. For its demands to be met the demands of workers, both economic and cultural had to be disciplined. Deregulated capital fetishized as ‘the market’ and free to go where it pleased took on this disciplinary role with the great advantage that it could not be negotiated with. After a two month strike at General Motors, a UAW official talked of how it had been impossible to negotiate in this ‘universe of shareholders and analysts,’ one which had replaced that of industrial managers whose authority had been undermined by labour militancy, and the cultural confidence that went with it. This reassertion of the power of capital did not take place in isolation, the skewing of infrastructural investment towards telecommunications and information technology, coalesced with the dynamics of transnational corporations..
This macro-role in the push to extract more surplus value was matched by a micro process of mergers and acquisitions, and lately the managerial activity of private equity, all credit financed. It meant a hands-on role for finance capital in creating more surplus value in productive sectors of whose material processes the new ‘managers’ knew nothing. All they know is to increase the intensity of labour, that is, the same or more work done by less workers. But both at micro- and macro level, and taking into account the huge increase in the global extraction of surplus value coming from south and East Asia, the global pot is always finite. Needless to say however, the market active in a range of price movements of every conceivable currency or commodity, material or ‘immaterial’.– wheat futures, CDOs or shares in an armaments company waiting on a defence ministry contract — developed its own set of interests in increasing its share of that finite pot to beyond what was possible.
The self-regulating ‘invisible hand’ market proved to have partial vision, prejudices and irrationalities. Its collective blindness was being unable to see that the pressures it exerted in surplus-value extraction, whether it be union-breaking, relocation or job cuts, meant lower real wages across the board, and this would create problems in the realization of surplus-value. Already, ten years ago wiseguy Ed Yardemi was saying that the world needed all the yuppies it could muster. There have not been enough and though there a relatively large scale bourgeoisie is being created in China and India their consumer spending power is still relatively small.. Instead, as has been obvious for several years, the circle was squared with a rapid increase in personal debt which, in the UK began during the time of Margaret Thatcher.
That especially partial vision which chose not to see that this could not last for ever, became so became so addicted to use and accumulate capital, that it to and rip off the poor, there being not enough yuppies. It survived in the meanwhile by both creating, and being part of a fantasy world, one in which house prices for instance, would never fall. Back in 1998, ‘market sentiment’ had created the reality of a Brazilian currency crisis, despite what used to be known as economic ‘fundamentals’, like its Balance of Trade being strongly in surplus. This seems to have lead to the belief that all ‘fundamentals’ had been somehow overcome, as with Greenspan’s ‘new .era economics: It is a DIY reality world which was epitomised by Mr Tony Blair saying “I only know what I believe” when confronted with unambiguous evidence of the absence of WMD in Iraq. (FN the White House quote).
SOUND-BITE HISTORY REPEATS ITSELF
A basic requirement of a fantasy world living in an eternal present, is not just to ignore, or not see, awkward facts, but to blank out history however recent. Around ten years ago there were crises which though small scale looked at from now, were not seen as such at the time. The East Asian currency crisis, followed by a Russian debt default and the subsequent collapse and rescue of a major hedge fund of the time (the ironically named Long Term Capital Management), caused a brief period of self-examination in the financial world. Then too there was talk of ‘tottering on the brink’ and ‘infection spreading.’ President Chirac proposed reforming the IMF and annoyed the Americans as Sarkozy is now. There was talk of a global financial architecture by many of the same people talking of it now, like George Soros, but also the Financial Times.
“LTCM shows that it is not only in developing markets that transparency, oversight and prudential controls have been found wanting, A growing proportion of global capital is leveraged, so the G7 needs to make progress on two fronts next week. It must start to create a global financial architecture that can deal with problems in emerging markets. But it must also deal with problems of transparency controls, risk management and regulation much closer to home.” (FT 26/9/98)
That was ten years ago, and as we know, none of these things happened, the whole idea rejected by the Bundesbank .even more vehemently than the US Treasury.
Other headlines of the time sound equally familiar:
“The situation raises questions of banks’ risk management practices But the lure of high fees on derivative products and the increasingly lax lending standards of recent years contributed to the willingness to take risks.” Wall St Journal 2nd September 1998
“Greed has replaced bankerly caution, this under the misguided assumption that some players were too big to fall.” Herald Tribune 7th September98
It is even more eerie, in light of Paulson’s $700bn bail-out that was pushed through Congress without proper debate, to read what was said earlier in that year of 1998
“Before pumping more money into the system, Congress has the right to ask what’s being done so that it will not have to choose again between aiding undeserving bankers and risking a global collapse.” Washington Post 29/1/98
The language at that time was also similar, the collapse of the real economy was the alternative, an apocalypse. The only difference is that in 2008 this kind of rhetoric was reported as if billions had not already been provided by the Fed and the Bank of England against collateral that was dubious at best. What the similarities do suggest is that capitalism could not reform itself, even in its own long-term interest. The dotcom bubble was followed by Enron, while the only significant US legislation of the time was the Sarbanes-Oxley Act, Rule 46-R of which allowed for those notorious-again off balance sheet special entities.
This time the crisis is on a massively different scale but in part that has been caused by what was supposed to be the safeguard to Rule 46-R, that these off-balance sheet vehicles were OK so long as the bulk of reward and risks lay with others. That assumed financial institutions would be wholly truthful to each other.
“’WHEN I CHOOSE A WORD,’ HUMPTY DUMPTY SAID, ‘IT MEANS JUST WHAT I CHOOSE IT TO MEAN…’”
This assumption has been blown away by the inescapable fact that banks are reluctant to lend to each other, knowing for themselves what can be done with balance sheets and asset values, just how deceptive they can be. Blown away by the sight of financial institutions suing other financial institutions for having been misled by the other as to the value (ie how secure the income stream on which it was premised) of the various financial packages passed on. Big name institutions that have come on like wronged virgins in this pass-the-parcel game,[iii] are then sued themselves for having shafted smaller funds.
Within the Green Zone, this has exacerbated, a concern as to the ‘small’ investor’s loss of faith in ‘the market’ which had surfaced during the dotcom bubble, so much so that in June 2008 two of the big honchos of the collapsed Bear Sterns were indicted not just for routine ‘insider trading’ but “for not giving full information to investors”
Outside of the Green Zone what the crisis spotlight has shown is that in the fantasy culture there is only partial information: one where objective scientific research turns out to be funded by corporations with a distinctly partial interest in the results. In short, it was revealing what was already there, a crisis in the integrity of information. This is especially serious in what it says about the parallel fantasy world of the ‘information society’. Marcel Rohner, the new CEO of UBS Bank –which, though both virgin and seducer in passing the parcel made heavy losses – rationalized what had happened by blaming not the lack of integrity, but rather the overload of information. This is hardly new, the CIA started the trend when explaining its failure to know that the first Indian nuclear bomb test was about to take place, but Rohner’s is especially revealing. “The problem was not a failure to appreciate complexity, but rather the opposite: it was a lack of simplicity and critical perspective, which prevented the right questions from being asked while there was still time.” This is another version of “Bankers ain’t what they used to be” which has been heavily used in capital’s smothering self-explanation, as in, It’s all the fault of those mathematicians in the financial world. [iv]But it does undermine the rationale of the Information Society, which has not had ‘critical’ thinking high on its agenda, not for non-elites. Even in universities, critical thinking has often been silenced by the exceptionally partial analysis of unchecked think-tanks, fanatics of the fantasy world, and the publicity they are given.
The complexity Rohner describes, and perhaps the very notion of such an Information Society, involves ever greater levels of abstraction, and this, along with the comprehensive predominance of marketing and its language, is a characteristic of the fantasy world. It is a continuation of the dynamic by which exchange values came to dominate use –values. It was highlighted in the recent crisis by the estimate that Deutsche Bank had become the biggest landlord in Cleveland, Ohio, with plenty of empty properties to rent: hard to believe that any executives or the risk committee of the bank had been anywhere near the streets of Cleveland. Living in another world in which there are no queues or weekly anxieties, these bankers appear not have been informed that real wages in the USA had been stagnant or falling in the last 10 to 20 years. Things were going well for them, it followed then, as if they actually believed the ‘trickle-down’ narrative, that everyone was happy.
Such abstraction is fertile ground for the capitalist fantasy world. A Herald Tribune headline (12th June 2008) read “Housing is booming if only on television.” The audiences for HGTV and TLC the two US networks with the most ‘property programming’, it reported, have been growing over the last 3 years. As the housing market slumped, the scheduling of “House Hunters” and “Designed to Sell,” increased dramatically. R. J. Cutler, a wiseguy producer of one of them, Flip the House, commented with a routine piece of dodgy analogy, that “People had loved comedies during the depression too,” It is as if, along with the credit, more fantasy had to be ‘pumped’ into the system. [v]
EYES WIDE SHUT
The crisis of information integrity for the capitalist class takes the form of value-as-price, of what things are worth. Assets with a face value of millions turn out to have little or no value because they were dependent on a stream of income, the source of which capital itself had already squeezed. All this seems surprising given the cultural obsession with numbers in American society, and when the mantra of the ubiquitous McKinsey Consultancy, pioneers of securitization’, is that “if you can measure it, you can manage it”. There are private profit-making ‘institutions’ that were supposed to assess values: ratings agencies; and auditors. Given their form, it is amazing that the oligopoly of global auditors has continued untouched in this role. Take Coopers&Lybrand, with its auditing record for Robert Maxwell, Polly Peck and Barings Bank. In light of these successive scandals, they took the very British step of changing its name by merging with Price Waterhouse, and, in the process, furthered the process of monopolisation. It now turns out that after the notorious case of Arthur Andersen’s complicity in the frauds of Enron and the promise to police matters of a conflict of interest in the future, , PriceWaterhouseCoopers were auditors and consultants for Northern Rock, whose collapse and the shock of seeing those queues of people at its doors, demanding their money, visually symbolized an end to the fantasy world.
Ten years ago –once again –the analysis was there in respect of ratings agencies.
“What were the banks research departments saying six months ago? Nor did the IMF or ratings agencies such as Moody’s and Standard and Poor, provide any warnings…” asked the Washington Post (6th January 1998). Fitch’s make up the cosy threesome oligopoly of these agencies, and they too have happily managed to not bother about their conflict of interests. Not when it comes to the creditworthiness of banks, their assets and financial ‘products’ which is what they are supposed to be objectively rating with their triple AAAs and so on. Suddenly it is common knowledge, as if we’d known all along, that these agencies were being paid by the financial institutions whose bonds and assets they were rating. And, this is how brazen one can be in a fantasy world, the banks could pick and choose among the three to get the best rating for their money.
It is important that the bright light remains on these sectors which the crisis has brought out of the shadows. One tactic of the Green Zone’s smothering strategy (and its determination to stay in control of interpretation of what is happened), which was succinctly described in the Herald Tribune of 5th June 2008. “Regulators have struggled to assign blame for the mortgage debacle, at times pointing to everyone and no one.” [vi]While it has been entertaining to watch the ‘masters of the universe blaming everyone else including each other –it’s not me guv — it is important not to let this diffusion of blame become like ‘the market’ itself one in which responsibility cannot be pinned on anyone in particular, or any of capital’s own service industries.
Secondly, both have crucial roles in capital’s .version of itself. The oligopoly of auditor consultants are prime movers in the murky business of carbon emissions trading, and in the global and profitable business of public-private partnerships, and direct privatization. The ratings agencies role is especially significant as a means of discipline in which the fiction of the independence of money, can be maintained, and as a corollary the unique efficiency of private capital in making investment decisions. Speaking at the time of that Indian nuclear bomb test which the CIA had failed to predict, Felix Rohatyn [vii] spoke of the disciplinary power of the market, how it had punished India in a way diplomacy could not. “While many countries refused to sanction India as a result of its nuclear tests, the capital markets provided that sanction promptly.” But this required the mediation of Standard and Poor’s, who, he went on to say, “downgraded the outlook for India from ‘Stable to Negative’ thereby raising India’s borrowing costs immediately. The Bombay Stock Exchange slid and the rupee lost 10% against the dollar.” This was not the market itself, but a political decision, masquerading as non-political. Sometimes it has worked the other way. At the time of the East Asian currency crisis., the agencies who had seen nothing wrong with its economies, followed the market when its ‘sentiment’ turned sour, and by doing so amplified the misery that ensued in that part of the world by raising the cost of credit.
REALITY CHECK
It’s hard to believe that anyone in the Green Zone actually believed in the trickle-down narrative of the fantasy world, that the poor would only get richer if the rich got richer, though all subscribed to it. Smug journalists and think-tank fanatics perhaps; possibly also its multi-disciplinary marketing department. The ‘fundamental’ is that the fantasy world period is one of a steady increase in inequality, and a spectacular increase in the proportion of global wealth taken by the very rich, the top one percent. In the USA, this top 1% took 9% of national income in 1979, and by 2005, it was 17.5%. Their greed is at the top of a coalescence of personal and family greeds which have added another dimension to capitals’ compulsion to accumulate. By the simultaneous pushing down of real wages this has involved, and claims on the global surplus value that exceed its generation, an economic crisis has ensued. Our job is to make of this a political and cultural crisis.
A Couple of years after all the 1998 talk of financial architectures, the greed of banks, and reforms that must be made, was seen to have had no consequences. This too is typical of the dark, marketing side of the fantasy world in which promises of Disaster aid are made but not actually delivered. By then also things had quietened down in the fantasy world at the expense of the poor people of Indonesia and other SE Asian countries whose suffering was not spectacular enough to excite much comment. It meant that the Financial Times could adopt a blasé voice following the convictions in a case of share price manipulation. :“Business morality, like business itself, is cyclical in nature: during periods of financial euphoria and strongly rising rising share prices, people cut corners and bend the rules; during the austere times which follow, the rule books are rewritten and everyone agrees things will be different next time.” FT September 1990. It is if the whole thing was comfortably cyclical, not to worry, not when the austerity had no impact on its writers. Our job is to make sure that the sobering up process is in our own hands and that it is an exposure of the fantasy world and what it has hidden.
This time there is such an opportunity because things are rather different – and it should be emphasized still in process with another huge bail-out of Citigroup– not just because the scale of what has happened, but because the free market has had to run to the political state, and thus to “the taxpayer”, that being who appears regularly in nasty newspapers, as being prey to the costs of “politically correct” projects, ones that cost thousands rather than billions. It is an opportunity to escape the roles that are imposed on us and kept separate in their boxes: taxpayer, consumer, and -–the ghost in the cupboard – producer, to become class-conscious citizens, a not-impossible process when so many types of work have been proletarianized. What will not help is to get stuck in the coils of what is ‘reformist’ and what ‘revolutionary’. What matters most is how gains are fought for, and the dynamic they engender which have the possibility of going further than their representation , otherwise we are likely to be paralyzed by these ahistorical concepts, which have been further confused by the monopolisation of the very word ‘reform’ by the useful idiots of the ‘free market’. ‘Reformism’ is often seen as the working class being ‘bought off’, as if the class were saints-in overalls being lead into temptation. That is both moralistic, undialectical, and — in the context of modern globalization as opposed to previous periods of imperialism in which cheap imports were not balanced against falling real wages in the western world. — ahistorical. The evidence from ten years ago is that capitalism has great difficulty in reforming itself, because there are related basic psychic fears in the mean and foxy capitalist mind of give-them-an-inch-and they’ll take- a-mile, of being drawn into anything that compromises the inalienable right of private property, and even of the transparency it talks of, as can be seen in the secretive distribution of the October Paulson hand-out b y an ad hoc body. Keynesian economics is ‘reformist’ in that it is premised on exploitation, but it is subversive in its emphasis on human agency as against an omnipotent market. The stark overturning of this ex-reality is there for all to see, and shows the possibility for radical change does exist.
ON ALERT
‘Reformism’ should not be confused with the achievement of all limited class gains. Some defuse popular anger, others give it focus, .as for example those that concern housing and its class-skewed structure which at present is wholly to the benefit of a rentier class, banks and individuals. The defusing of anger is what does characterise it. It is when the maximum gains possible against a weakened enemy, are not made, or even demanded, or smothered by irrelevant modifications, that demands become reformist, This is a danger, especially when the capitalist class wants a period of consolidation of its gains, a quiet period when it will be content with much lower rates of return: the wholly self-absorbed ‘flight to safety.’ Alertness is required rather than being paralyzed b y fear of being ‘reformist’.
The presence of popular anger as a political force–so easily dissipated as described by George Caffentzis after Paulson’s October $700 bank-friendly bail-out – instead requires amongst a variety of tactics and means of opposition, an immediate slapping down of:
-all attempts t create new fantasies, like the idea that ‘the taxpayer’ may profit from the bail-outs
-the notion that only capitalism can allocate resources efficiently, or rather that it does so at al, and in the process raising the question of efficiency for who?
-the idea that finance capital is a temporary excrescence as against the ‘real’ economy presented as virtuous and wronged
-the fantasy that bank investment can be directed without nationalisation.(In this instance such a slapping down does not mean necessarily that nationalisation should be demanded, just that a new fantasy is being proposed)
-that capitalism can ever be stable, let alone just.
It also means not being afraid of popular anger. Capitalism is not a ‘system’ but a mode of production which requires its own self-interested agents. It’s one of Marx’s great strengths that he is both moralist and analyst, that while unpicking capitalisms dynamics, he names names, attacks particular individuals and particular institutions which today, includes accountants and rating agencies. Nothing seems to have angered people more than the fund manager saying that banks could not hold down pay and bonuses, because it would cause ‘an exodus of staff to Mumbai, Shanghai or Dubai.’ The response was, Go on then, an instinctive attack on the elitism that is a fundamental justification for massive inequality; and on the brazen shamelessness of bankers being expressed by the ways the ‘taxpayer’s money is being used in the concentration of finance capital by merger and acquisition for example; and in the wholly non-transparent manner the Paulson $700bn is being distributed.
Against this shamelessness, a whole language of contempt is required. One that has to storm the Green Zone of capital’s own explanation of what has happened and what will be done; one that does not allow the smothering of the clears slogan, Private Profits: Social losses.
[i] Why then was Lehman Brothers allowed to fail when Europeans like the French Finance Minister, Christine Lagarde, saw this as the trigger that sent the crisis global. At the time Ben Bernanake said “A public sector solution for Lehman proved infeasable, as the firm could not post sufficient collateral to provide reasonable assurance that a loan from the Federal Reserve could be repaid. And the treasury did not have the authority to absorb billions of dollars of expected losses to facilitate Lehman’s acquisition by another firm.” This, as various people have pointed out simply doesn’t add up, not when the |Fed had proved willing to buy so much debt without collateral and when guarantees on liabilities were given in the case of bear Sterns and Wachovia. One can imagine a conspiracy theory whereby it was all an American plot to pass the parcel. More likely, given their record elsewhere the authorities simply didn’t understand the consequences. Since then blame has been narrowed down to the banks CEO, Fuld, for trying to drive too high a bargain in finding commercial partners or buyers. None of which prevented him making some $480 million personally over the last ten years, and then, hen questioned about it in the House of Representatives coming on like a Holocaust denier and saying that really it was only $400m.
[ii] “The Money Changers”: Robert G. Williams: Zed Books 2006
[iii] UBS are in the middle of this. The original impression given was that they were one of the mugs in a game they didn’t understand, but in February 2008 they were sued by, and counter-sued the Paramax hedge fund of apparent misrepresentation by the bank It also has to fight against the German HSH Nordbank for ‘mis-selling and misrepresentation of risk.’ The volume of such cases has porovoked a bokk “The Pebble and the Pool; The Global Expansion of Subprime litigation” : Doherty and Hans: pub Tomson West 2008
[iv] See Barker “Structural Greed”: Variant Issue 32: Summer ‘08
[v] And as if Preston Sturges’ great movie Sullivan’s Way, justified ever on-screen banal fantasy
[vi] This singular blame on subprime has itself been deceptive, and part of the smothering tactics used in media presentation. More exactly it was the straw that broke the camel’s back loaded down with leveraged assets. See Barker as above.
[vii] Rohatyn, New York’s financial ‘saviour’, then US Ambassador to France, but lately of collapsed Lehman Brothers