2012/12/14 Minutes Economics Working Group
Capitalisation and Financialisation paper by Nelio
Dialectical process to understand the economy to change it. Trying to change the dynamic of the EWG – important to have a paper for discussion to educate and produce output. Clarification of ideas and questions raised in the group. Personal world view – after the dictatorship in Brazil, Portugese revolution in 1974; synthesis of reading and experience; trying to escape from subjectivity. Everything has to make a profit, education, health, prisons etc. financialisation started a long time ago (Marx); UK City eclipsed industry – contrast with Germany; financial sector strips value from other activity and produces nothing; greater returns in financial products than from investment in industry. The FT will not tell you the truth. Definition of capitalism? Why is the name capitalism so contentious. The markets are the mega-banks themselves; shadow banking system is beyond control; World Bank goes to the markets to raise money and the recipient states will extract payment from the people – now the poor – austerity; it is not possible to control the system; World Bank has 4000 people, Africa Development Bank 2000, how do banks control 100,000s of employees; now they are trying to create a monolithic IT network to link all banks and transactions; All the central banks are there to control the capital accumulation process; Basel I, II and III. A lot of criticism of Basel. Strategy for occupy – people suffering in the real economy, target people in debt to enlist their support; 75% in debt in USA – David Graeber; what are the figures for UK? Debt collectors/vulture funds etc.
Banks investing in Railway shares in the 19th century and the ensuing scandal caused split investment and retail banks (merchant banks) which remained until big bang in 1986 under Thatcher; type of capitalism today link between capital and state; east European version of communism – state owns everything; Fascism state contracts out to private enterprise (Nazi Germany – Thyssen, Krupps, Hugo Boss); SA exactly the same thing 80% business controlled by large companies – SA brewery monopoly – fascism is corporatism (Mussolini); capitalism is supposed to be about competition; we’ve moved from a mixed economy to fascism in the UK over the last 30 years; authoritarian, right wing government framework – we have less rights than in 1907; Nelio’s paper is good base starting point to build offensively;
Paul Tucker in USA; before NASDAQ opened – massive buying banks at a discount and then all the trades had to be cancelled; the US is defining and addressing shadow banking; employing anti-terrorism techniques to investigate contracts in the shadow banking system;”comprehensive capital analysis and review” – feel they can get a better handle on the shadow banking system. On the European continent – doing similar things;
There are a number of papers from the EWG including the Roadmap which contains similar information (Richard Murphy has written on network banking); capitalism and Marxism interpretation; Marx talked about the “withering away of the state.” Golden age of capitalism? Debt Jubilee; wealth owned by pension, investment companies – who is going to pay to support the ageing population; crisis of demand because all the money at the top is not circulating. How do we transfer from wealth from rich to poor – paper from David; like doctors – need to diagnose the problem; system in decline;
Complexity of the language; Haldane reformation v reformism; simplicity of the fraud inflicted upon us; intentional opacity to alienate the majority from understanding. financialisation; the land issue is a big problem – the middle classes will resist change; clean up capitalism/co-ownership. Capitalism struggling to get out of recession, no way out but austerity; need a new system; Lehman Brothers anti-capitalists were right; maximising profit is the major problem; domino effect; maximise profit/minimise tax; Boots now owned with borrowed money which dramatically reduced tax bill. Clive – paper on land, interest and citizen’s income.
Recommended reading: Decoding Mammon by Peter Dominy – 7 year PhD thesis