Editorial: It’s capitalism that’s to blame
In the space of a few months bankers and the rest of the financial sector have gone from being the self-styled “masters of the universe” to little more than “Scumbag Millionaires” in the words of the tabloids. Even social workers, teachers and imams are getting a better press these days.
On both sides of the Atlantic, bankers are being hounded by journalists and interrogated by politicians in televised show trials. They’re having to hand back the private jet and cancel the company team building event at Florida. (Realising it might look bad to take the private jet, Bank of America’s CEO slummed it on a train for 8 hours travelling to Washington to give testimony at the Senate hearing). Not all executives take well to the sackcloth and ashes: Eric Daniels, Chief Executive of LloydsTSB, tried to claim his £1 million was a “modest salary”.
The blame game is in full swing with politicians, bankers and regulators all trying to place responsibility with someone else. And every so often of course, the working class are dragged into this and accused of starting the problem by daring to imagine that they could lead the lives of the class above them that have been trailed endlessly over the years in the media, so ending up over-stretching themselves to accept all those mortgages and other loans.
The current stand-off between the banks and the government exposes one of the hidden features of the market system. While the government has provided the banks with mind-bogglingly large sums of financial support, they still seem reluctant to lend. (There is even a joke doing the rounds. Apparently Gordon Brown has told the police that they should now turn a blind eye when they see a bank robbery. The reason? – he’s realised that given the current stand-off between the banks and the government, it’s probably the quickest way to get some money into circulation).
But of course, while capitalism may be going through interesting times at the moment, that does not mean that the fundamental rules of capitalism are not holding. In fact we are going through such apparent upheavals in order to maintain an orderly and even conveyor belt of profit to the capitalist class. Recession is a natural part of the life-cycle of capitalism.
Economists may be confused, and financial modellers may be bamboozled, but capitalism is actually acting true to form. The fundamental requirement is for investment to deliver a return commensurate with the risk. The banks don’t see many parts of the economy where they can confidently see a return on their investment, so they are refusing to lend. For the 5 percent of the world’s population who don’t need to work but instead live off their monopoly and the profit generated by others (or its close relations, rent and – with particular relevance to the banking sector – interest), this may be a period of uncertainty. But it’s all in a good cause, ensuring the maintenance of a healthy profit stream into the future.
There will be many innocent by-standers caught in the cross-fire of this latest in the long list of economic crises of the market system, but ultimately it’s an issue for the capitalist class. Workers shouldn’t waste their time trying to sort out this mess, or to try and better regulate it. Instead its high time we posted notice on an economic system that creates chaos and is, by its nature always in crisis.