Capitalism Kills (Love) by the artist Claire Fontaine By Andrew Brady In the iconic CGIL building in Rome I recently attended a Conference of a number of unions’ who represent finance sector workers across Europe coordinated by FISAC. It was fascinatin …

Andrew Critical Economics
Capitalism Kills (Love) by the artist Claire Fontaine

Capitalism Kills (Love) by the artist Claire Fontaine

By Andrew Brady

In the iconic CGIL building in Rome I recently attended a Conference of a number of unions’ who represent finance sector workers across Europe coordinated by FISAC. It was fascinating to hear directly from workers in the frontline about their experiences since the global financial crash in 2008; workers who have been sacrificial lambs in their hundreds of thousands for the mistakes of CEOs and the investment marketeers.

It is crucial to separate the honest workers in many of these tainted financial institutions who work long hours under enormous pressure and who acted with complete integrity while those further up the food chain were involved in outright corruption and acted as if they were illusionists.

The illusionists performed tricks on each other – and us all – by deliberately marking-up their asset portfolios to artificially inflate the price of the company in order to secure loans, through accounting tricks such as REPO 105 in the States, insider-trading and exerting influence on the infamous credit rating agencies.

I’m reading Andrew Sorkin’s Too Big To Fail which is a complete eye-opener on the incompetency, ignorance and wilful blindness of the CEO’s of Lehman Brothers, Bear Stearns and the rest of the motley crew who have thrown the world into a Depression. Yet, we have really failed in many respects to criticise the disease rather than the symptoms of which the aforementioned galaxy of firms are party of.

Those of us who went to University and did economics were taught to believe in the sacrosanct principles of the ‘invisible hand’ of the market, rationality and that free competition would lead to the most efficient allocation of resources. These concepts with the help of mass media have penetrated the public consciousness in untold ways. These principles many people believe as truths.

Yet, the work of Nobel Prize Winner Daniel Kahneman in Thinking, Fast and Slow has proven that many people do not act rationally and the fundamental principles of free market capitalism are just scientifically wrong. To the contrary, faced with huge losses people tend to gamble more further putting themselves in financial jeopardy: cue the financial marketeers.

In the aftermath of the Depression we have witnessed the subtle and powerful reconstruction of free market capitalism. In ‘recognition’ of the risks facing economies there has been a new edifice built to save capitalism from itself – or so they would have you believe. This has included the reform of credit agencies and implementation of ‘stress tests’ in Europe whereby banks are required to have a mandatory minimum amount of money set aside for the next crisis in order to not go under.

EU banks for example will be required to hold 8 per cent of capital to their risk-weighted assets under transitional Basel III rules. The same stress-tests in 2010 gave Irish banks a clean bill of health months before the country’s finance sector imploded along with Spain’s Bankia and the Dutch SNS Reaal.

The real point of such ‘reform’ and ‘tests’ is to create in the public consciousness transmitted through the mainstream media the perception that the powers that be recognise their mistakes and are acting on them to ensure that we do not have a repeat of 2008. The vested interests are, however, deliberately propagating this new edifice as being the solution when in fact it is once again sowing the seeds of our downfall. The trick is to recreate the illusion of growth and wealth and in doing so the dangerous moments the masses have created in the form of resistance to austerity will fizzle off.

The moment will be lost to truly threaten the system and those that rule our world can return to their old tricks. It is up to us to expose this illusion and the visible hand of the market which is dictated by one rule only: the maximisation of profit by any means necessary. It is time to build new pillars which our economies can be built on and governed by principles of justice, equality and fairness.

We cannot let the moment pass.

 

 


This work is licensed under a Creative Commons Attribution-NonCommercial License.

Related Articles