The banks and socialism

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The banks and socialism
14 January 2010

In the midst of the greatest economic and social crisis since the
Great Depression, the major US banks are about to announce
multimillion-dollar year-end bonuses for their top executives and
traders. Bankers are able to resume full tilt their mad pursuit of
personal enrichment due to the plundering of the treasury carried out
for the sole purpose of bailing out the “financial wizards” whose
speculative practices precipitated the crisis.

This is a global phenomenon. In all the major centers of world
capitalism, the financial elites are emerging from the economic
wreckage stronger and more powerful than ever, and are dictating the
terms of their own enrichment to servile governments.

In the US, Goldman Sachs is expected to announce bonuses totaling more
than $20 billion, about the same amount as California’s state budget
deficit. One analyst estimates that the average Goldman bonus will
approach $600,000, and that some executives may take home more than
$10 million. It is anticipated that Goldman Sachs, Bank of America,
Citibank, JPMorgan Chase and Morgan Stanley will together pay out $90
billion in 2009 executive compensation, with more than half in the
form of bonuses.

In a transparent attempt to preemptively divert and contain public
outrage, President Obama will announce on Thursday a proposal to put
in place a surtax on 20 banks that received funds through the Troubled
Asset Relief Program (TARP). According to the administration, this
would raise $120 billion over ten years—not much more than the five
biggest banks will pay their executives for 2009 alone.

The surtax proposal comes together with another public relations
stunt—the hearings held this week by the Financial Crisis Inquiry
Commission, the toothless body set up for the purpose of whitewashing
the criminal activities of the bankers.

Whatever the precise details of “Obama’s gentle bank tax,” as the Wall
Street Journal calls the measure, it can be said with certainty that
it will result in no significant penalty for Wall Street. The proposal
will be blocked or watered down to the point of irrelevance by a
Congress comprised of politicians who depend on campaign contributions
and other bribes from the very banks they purport to regulate. Such
has been the fate of the much-vaunted proposals for pay restrictions,
the bank regulatory overhaul, credit card “reform,” and Obama’s
so-called housing rescue.

The response of the princes of Wall Street to even the slightest
encroachment on their right to salaries hundreds of times greater than
those of mere mortals is to bristle with indignation.

Much like the powdered wig-bedecked aristocrats of the French Ancien
Regime, these modern-day lords and ladies insist on their
unchallengeable right to unlimited personal enrichment. “I am a little
tired of the constant vilification of these people,” an indignant
JPMorgan CEO Jamie Dimon said this week of the furor over bonuses. “I
don’t think it’s just whining,” another unnamed executive said of the
bankers’ protestations. “There are legitimate liquidity issues that
people have.”

These are people who produce nothing of value. Unlike the captains of
industry of an earlier period—associated with names such as Carnegie,
Rockefeller, Edison and Ford—whose enormous personal wealth was bound
up with the creation of vast industrial empires, today’s robber barons
have made their fortunes through parasitic financial operations bound
up with the destruction of industry and a relentless attack on the
living standards of the working class.

In the midst of soaring foreclosures and growing hunger and poverty,
the financial elite flaunts its wealth. “As traders and investment
bankers near the finish line of what looks like a boom year for pay,
some are spending money like the financial crisis never happened,” the
Wall Street Journal recently reported. “From $15,000-a-week Caribbean
getaways to art auctions to $200,000 platinum wrist watches...signs of
the good life are returning.” New York’s elite real estate brokers are
“outright giddy” over the bonuses, which will “boost sales,
particularly in the $2 million to $5 million range.”

More than a year after the near-collapse of the US and world economy
at the hands of the bankers, nothing has been done to reform the
financial system. Nobody has been held accountable. On the contrary,
the banks have exploited the crisis of their own making to make more
money than ever, and the government, the courts and the media have
revealed themselves as mere handmaidens of what can rightly be called
a financial aristocracy.

This demonstrates that the concentration of wealth in the hands of a
tiny elite and its unbounded pursuit of personal enrichment are not
mere excesses or aberrations of an otherwise rational and healthy
system. These characteristics are rooted in the very nature of
capitalism as it limps into the 21st century.

It is not a question of “reforming” the US and global banking system.
The death grip of the banking elite over the wealth of society must be
smashed. The answer to the plundering of society by the financial
aristocracy is the expropriation of the bankers, the nationalization
of the banks and finance houses, and their transformation into public
trusts under the democratic control of the working population.

The alternative to the tyranny of the bankers is socialism, i.e., the
abolition of private ownership of the banks and the major industries
and the replacement of the capitalist market with rational planning
and democratic control, geared to social need, not private profit.

The books of the banks must be opened to public inspection, and all
predatory and illegal activities prosecuted. The ill-gotten wealth of
the financial elite should be seized and used to meet pressing social
needs—health care, education, housing, jobs.

This requires the independent political mobilization of the working
class in the US and internationally, a struggle against the Obama
administration and the two parties of US big business, and the
formation of a workers’ government.

This is the program of the World Socialist Web Site and the Socialist
Equality Party.

Tom Eley

http://wsws.org/articles/2010/jan2010/pers-j14.shtml

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