CORONA REVOLUTION: Nationalise Wall Street?
By Chris Butters
Over 35 adults and children in one tiny house, including the tin shacks added in the backyard. One toilet. The only water is outside, a tap by the trash heap across the alley. The few people here who had jobs have lost them. The only way to get to a food store is in crowded minibuses. But there is no money for food anyway. This is Slovo township outside Capetown, where I donated some supplies a month ago. This is COVID-19. Weeks in quarantine? Hygiene? Social distancing? Dream on.
Beyond the health tragedy, the huge economic impacts of COVID-19 are becoming apparent. Whilst all levels of the economy will suffer, from individuals, to small businesses, to banks, at the top is the huge international power of the financial sector — the virtual futures markets, derivatives, and other “instruments” with which a tiny elite continue to push vast sums of money around the planet on the sole basis of profit, regardless of the human, social, or environmental consequences of their actions.
The myth of “normal”
But no, it’s not Wall Street alone. This is about all of us — in our minds — in our belief in what is “normal.” The powers that be, in particular the economists and financial institutions, are saying we must restore the globalised system of industrial economic growth and ever-growing consumption. This is the basic myth that most people think is the only possible way of organising our world. But it’s a lie. Economic growth cannot go on forever on a finite planet, and it is the principal cause of our ongoing destruction of our planet. This is a chance to reflect on the deep, corrosive power of the present global economic system, its inherent destructiveness and its lack of ethical foundation.
Solidarity?
Of course, the “normal” referred to here is that of the rich; for the poor, it has never been fair, acceptable, or liveable. Will we simply find ways to save ourselves and let the poor bear the brunt of the crisis (whilst making sweet talk about how much we are helping them)? The response to COVID-19 can’t be piecemeal actions by governments, charities, and a few “nice” billionaires, nor can it be minor concessions by banks or landlords. The UN Secretary General has stated that the keyword for today’s situation is “solidarity.” Can the world do it?
Society can not (and should not) mean relying on a few decent banks or billionaires. This is a task for all levels, and the lead must come from governments — in partnership with (ethical) business. There are grounds for being sceptical of “big government.” Of course, we need the market too. And globalisation has merits, but not when it is engineered by today’s rogue brand of financial capitalism. “Green growth,” whilst it has positive aspects, is also inherently unsustainable and is just the latest buzzword being used to prolong the existing system.
The 2008–2009 bailout
Governments must intervene in the capitalist market economy in ways normally associated with socialist regimes. When governments bailed out banks during the 2008–2009 crisis, they were using taxpayers’ money,- vast amounts of it — to save private companies that had made risky investments. They did this largely by nationalising — taking over part or full ownership of those banks — until such a time as the banks could buy themselves back through renewed profits. “Nationalisation” has been a hate word of neo-liberal economists for decades — socialism! Yet we did it.
The system is perverse. Citigroup’s Chuck Prince explained his high risk investments leading up to the worldwide 2008–2009 crash as the ruthless need to compete with the other banks in order to attract business, even though he knew it was a risky game that could not possibly last. What kind of greed lies in such behaviour? And what kind of financial policy allows it?
Paper over the cracks again?
Crises expose where existing systems are dysfunctional, and the worst response is to try and restore that same system and ignore the fundamental problem. Unless we revolutionise the financial rules and institutions, this crisis — and the next one — will be borne by the poor, and in richer societies, by the taxpayers. The bank rescue operation of 2008–2009 has been described as the biggest rip-off of the middle classes in history. But very little was changed. Consider the Tobin tax: financial institutions make billions by shifting money around according to exchange rates. Their computers are geared to notice even tiny fluctuations in nanoseconds. This is simply playing on the temporary weakness of currencies. The proposed Tobin tax in the USA was an effort to limit this disgusting game by imposing just a 0.5% tax on currency speculation. Not even that small measure was passed.
Or consider those huge bonuses given to executives. Most people recognise that they are unjustifiable, obscene. We could stop this today by imposing 100% tax on any bonus above, well, let’s be generous and say USD 2 million. Why does no mainstream political party champion this, right now? We can surely find equally good executives who do have a moral compass -and no need for three yachts.
Speculative money
Profitable speculation was intended, and permitted by laws, to fuel innovation by protecting innovators against risk. When the early industrial capitalists made profits, however, they invested them in new factories and jobs; they helped the real economy, real people, instead of, as they do today, just investing in money to make more money. President Obasanjo of Nigeria stated after the G8 summit in Okinawa in the year 2000: “All that we borrowed up to 1985 or 1986 was about $5 billion. So far we have paid back about $16 billion. Yet we’re being told that we still owe about $28 billion, because of foreign creditors’ interest rates. If you ask me what is the worst thing in the world, I will say it is compound interest.”
The world of speculative finance is now many times larger than the real economy — real work, jobs, and production of goods and services. In today’s situation, huge financial groups such as Goldman Sachs should perhaps be nationalised for an indefinite period. On a longer term basis, their speculative activities should be permanently curbed.
Lost resilience
How did we get here? In former times, every farmer knew that without food storage, his family could not survive a bad season. Every business kept a stock, as opposed to today’s “just in time” supply chain. A kind of “progress,” ironically, all in the name of “efficiency” — at the cost of both common sense and resilience. We are in this situation because we, and the whole world, live in debt. For individuals, this is in the form of credit cards and loans. Most nations have debt amounting to around 50 to 70% of one year’s total national product. How did we get on this carousel? Because we are urged, daily, to consume more and to use credit. Governments stimulate consumer spending. This means that we are all living off the future on money that isn’t there — value that has not yet been produced.
It is for the same reason — money has to make money — that the world did not prepare for pandemics that were clearly foreseen years ago. The impacts were known, as were the needs for vaccine research and for surge capacity. We are here because payback overrides prevention.
Can we change … our minds?
Ironically, the virus pandemic is saving thousands of lives through reduced air pollution in cities, as well as reducing energy use and climate emissions. These sadly “positive” effects have one basic reason: that Planet Earth Inc. takes a break from economic growth and consumerism. All the financial powers in the world will pressure us not to do anything that will upset the myth of “normal.” We must reflect on the deeper reasons why we are where we are right now, and address the underlying sickness, our myth. Is this possible, or likely? It is our system that is lethal. First of all, we need to CHANGE OUR MINDS.
Chris Butters has a lifetime of expertise in sustainable development. He has worked in several countries as a consultant, architect, energy adviser and project manager, as well as at several universities as a researcher. A founding member of the pioneering Norwegian GAIA network, he is the author or co-author of twelve books written in French, Norwegian, and English. He is currently a researcher on energy and sustainable consumption at the Centre for Development and the Environment at the University of Oslo, Norway. At the time of writing, he was on lockdown in Capetown.
