Thursday, April 5, 2012

The 1% want to split up the banks. But only workers' control will avert further catastrophe's

We, don't make the decisions. We own the losses, not the gains
The Wall Street Journal is the dominant mouthpiece and cheerleader for US finance capital.  In its editorial pages it champions market forces as the solution to all things though it knows better in the real world.  The theoreticians of capital know better.  But as Marx pointed out, The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.” and as a result of the historic crisis that befell the system in 2007, this committee of the capitalist class stepped in to the fray in order to save it from collapse, to manage the “common affairs” of the class as a whole.

The corporate media will never assign this role to the government. The government we are told is a social structure that represents ”all” people equally. We are taught that it is a government of the people by the people for the people.  Which class of people is the issue? The fact that workers have won concessions from this institution is a result of the struggle between the classes, but as we see every day, the beating of students, smashing of strikes and taking back gains won over decades, the jailing of youth; the government defends the interests of the class that governs. We live under capitalist rule.

Two theoreticians of the 1% have a piece in yesterday’s WSJ condemning the concentration of capital in society. The five largest financial institutions in society now have control of 52% of society’s assets compared to 17% in the seventies they point out.  They don’t like nor have faith in government regulators or bank officials to halt banking industry concentration and “exert market discipline” in order to avert another catastrophe.  After all, they point out, “Institutions holding one third of US banking system assets did essentially fail in 2008-09, surviving only with extraordinary government assistance.”

This is not acceptable. Capitalists believe in freedom, the freedom to buy and sell, to move capital at will wherever the best opportunities for profits, for the appropriation of surplus value exist. Capital doesn’t appreciate borders of any kind.

Our writers don’t reckon much to regulation but the recent crash gave them a big scare. Their precious market, their vibrant private sector, was dragged form the edge of the abyss by public funds----not a good image.  So like many of them, they are seeking some way of avoiding such a scare in the future and many dangers exist. The world economy is more integrated than ever before and the European crisis is far from over.  Then there is the student debt bubble in the US at more than one trillion dollars.   The Great Recession has been a big shock to them and they are aware that social unrest and even revolution arises out of such things; they need answers but they really don’t have any. In the aftermath of the crash they turned to none other than the devil himself; to Marx.  Marx was required reading if you wanted to figure out what went wrong, the Financial Times advised its readers.

Things are a little calmer now as the system is still standing and profits are still there.  The crash is but a memory to many of them as they have very short memories. But danger still lurks and our two Wall Street writers have it figured out: small is beautiful.   The problem is that banks are too big and the US government’s “too big to fail” (TBTF) policy is worse than regulation because, like regulation, “the rules of market capitalism are undermined and subverted.”

 A bailout is just like bankruptcy, “failure with a different label” our experts declare; the only difference being the taxpayers foot the bill.  Their solution is to break the big banks up in to small banks.  The big banks are too complicated, too complex to manage and too open to corruption and mismanagement.  That’s it; it’s just mismanagement.  “Crony capitalism” is what it is; the system is OK, its just human nature, bad people.  They may not understand why these periodic crises occur, but our two theoreticians of capital know that occur they will so surely if capital were less centralized, the effect on society would be lessened.  Only a local community here and a town or perhaps a small state there would be savaged by market forces; a much safer scenario.  But they point out, “When a handful of banks---each with a nearly national geographic footprint---get in trouble while holding more than half the banking system’s assets, the economy faces rough sledding.” It does indeed.

But haven’t we heard this before?  Didn’t Teddy Roosevelt take on the trusts appealing to Congress to curb their “corrupt” influence?  Throughout the history of capitalism, especially in times of its periodic crisis, capitalist politicians rail against big money and the “banksters.” But capitalism is a state of war, a war fought for control of resources and domination of markets.  They can say what they like about the need to curb the bankers and corporations that dominate society and control its wealth but it is the system’s natural tendency for the big fish to swallow the little fish. It is Utopian to think that the system can return to the days of a few small operators serving local communities.

The banks and financial institutions provide the capital that allows an economy to function.  They hold the savings of individuals, the community and the entire society and have a powerful influence in the direction an economy takes through their “structural” power, the allocation of capital, it’s cost, exchange rates etc. The economies of entire nations are dependent on it. Many of the same capitalists that own stock or shares in industry own the banks and sit on the boards of both and it is this small group of people that can determine which areas of society shall receive this capital, this collective wealth created by the working class though the process of production past and present. Their main purpose is surplus value, the source of profits, so this will determine how capital is allocated.

Our authors in the WSJ are not very optimistic that much has been learned from the Great Recession and that as the economy climbs out of the swamp on to firmer ground, capitalists will return to their old ways and what they believe to be the cause of these period cries, “human weakness” will cause “occasional market disruption” but unless they break up the banks and end TBTF, they will “turn these otherwise manageable episodes into catastrophes.” It is not human weakness in the abstract that causes these crises; they are as Marx pointed out, inherent in the system, a direct outcome of how social production is organized and to further catastrophe’s they are headed for sure.

No, it is not whether banks are too small or too large or whether they are too big to fail.  As with the ownership of the production process and the surplus value it creates, it is the ownership of the financial institutions that is the issue.  Even when the capitalist state takes in to public ownership or nationalizes these institutions as the UK government did with Northern Rock or the US did with the auto industry or the mortgage industry, the “public” meaning the worker class as opposed to the owners of capital, may own this means of production legally (even like a pension fund for example) but do not own it economically, do not control these means of production and determine their workings.
Workers have to end the rule of capital if we want to put a stop to this catastrophe scenario.

This is the crux of the issue and what we have to change.

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