Crimes Without Laws. The U.S/Global Financial Crash.

Crimes Without Laws.  The U.S./Global Financial Crash, John Maynard Keynes, and The Difference From 1929.

Bitter antagonists say Capitalism is a criminal system.  New York today seems to offer solid proof the claim may be true.  Ordinary New Yorkers have been in the street demanding no bailout for the collapsing giants:  Bear Stearns, AIG, Merrill Lynch, Leyman Brothers, Washington Mutual, Fannie Mae, Freddy Mac, and…and…and.

The fraud involved in corporate behaviour began collapsing the U.S. housing market, hammering ordinary citizens, and spreading quickly, globally – partly because U.S. ideas of deregulation, privatization, and real U.S. toxic non-assets had been spread with missionary zeal around the world.  Leaders of the gigantic crimes-without-laws have stashed billions in mattresses and now want huge “separation” payments as they are ushered out the door. 

All this is happening with a dramatic difference from the-crash-and-after of 1929.  It is a difference no one mentions.

If what we are facing looks like a criminal system, is it one?  All at first looks “straight”.  The U.S. Federal Reserve Board (a private thing somewhat like the Bank of Canada) and the Bush government made possible the huge, elaborate, world-fooling practice of stuffing valueless debt into bright packages, selling them as if as-sound-as-bond-investments, and shipping them – literally – around the globe.  And around the globe, bankers were permitted to “print money” by backing loans with loans until their asset base and reserves were in ridiculous proportion.  And then calls came on debt – and the house of cards has tumbled.

When the whole rotten cargo began to burst and stink, Federal Reserve Board and the Bush government moved in “to protect the financial system” - that is, to endorse Capitalism as crime by protecting the fraudsters, buying the cargo, and [as in most crime] making the innocent pay for the depredations of the guilty.

Over years, Alan Greenspan, enigmatic head of the U.S. Federal Reserve Board (and fan of far Right novelist Ayn Rand), practiced  “stimulation” and employed highly intrusive policies to influence the U.S. economy.

The first years of the twenty-first century were marked by his bold slashing of U.S. interest rates.  People could borrow.  People without collateral could borrow.  Anybody could borrow.  People could spend.  House prices rose … and rose.  Home owners increased the size of their mortgages as prices rose.  Paradise had arrived.

The shady operators moved in, made their fake, bright packages of the valueless mortgage debt and hawked them everywhere.  Alan Greenspan had gigantically interfered in the U.S. “Free Market Economy”.  The Market “ruled”, except it was set up to do so by Alan Greenspan and the Bush government.  And, moreover, “The Market” was a mafia engaged in crime where no law existed.

So massive was the Greenspan interference that concerned people asked Greenspan if, perhaps, the Federal Reserve Board (having the power) should make some regulations about lending and provide some oversight?  Shouldn’t there be some laws, some regulations?  Greenspan cluck-clucked and said that would be interfering in the “free market economy” and he didn’t believe in that.

Are we dealing with someone who is insane, completely crooked, or something else?  Alan Greenspan, I’m pretty sure, “believes”, has faith in the unregulated U.S. Capitalist System.  Even now, he is probably untroubled about his role.  Capitalism has booms and busts.  That’s natural.  Capitalism is propelled by greed and fear.  It does its work.  This is a bust.  After a boom.  So?

I’ve written about Alan Greenspan, so far, but the present world of economic finance is almost a monolith; an aggressive religion; a single-minded, brainless, tunnel-visioned group of ideologues hell-bent on turning all public wealth into chips in a poker game in which the slickest, sleaziest, and most dishonest grab the most and prove, incidentally, the ascendancy of the individual, the legitimacy of greed, and the natural depravity of human kind.  In
Canada we have a prime minister with those values.

We expect tirades of nonsense from the National Post – and we get them, constantly.  In its Financial Post section for Thursday, Oct. 23 (08 FP15) William Watson writes a huge column attacking novelist Margaret Atwood’s economic ideas.  Watson is Chair of McGill’s Economics Dept., a columnist/propagandist for the Economic Monolith, a member of the C.D. Howe Institute, etc. 

He attacks Margaret Atwood’s economic ideas?  What on earth for?  Because the tunnel-visioned group of ideologues leaves no stone unturned! To keep the Monolith in place, every word of criticism must be gunned down!  Having taken the ideological whip to Atwood, Watson ends his column in a “triumphal” (?)
paragraph of verbal chaos.  His conclusion is (a) that “the law should reinforce responsibility and mutual obligation” (He won’t write of public responsibility and obligation – which Atwood is talking about.)  Then (b) he observes that “close regulation diminishes responsibility”.  What proof does he have of this?  None.  When was there too much regulation of the financial sharks?  And he closes observing (c) that “If what they are doing is legal, people come to believe, it must be moral”. 

Rubbish!

The title of this column is Crimes Without Laws.  And you can be sure that the men and women faking securities knew they were immoral and never kidded themselves.  In fact, the Bush/Greenspan regime hatchetted regulation to make the immoral legal.  And their agents travelled the world urging other regimes to privatize, deregulate, exploit. Only people like William Watson continue to labour under the fiction that, somehow, moral, nice people got confused by the lack of regulation, mistaking it for morality.

They belong, as I say, to the Monolith of nonsense-spouting ideologues, the real nut-cases of the contemporary world.  “Don’t tell me the facts”, they say.  “Don’t show me evidence. Don’t question my faith.  I believe.  I believe.” 

Take the Globe and Mail’s wonder-girl, Margaret Wente, “Attila
the Hun’s Girl Friday”, you might say.  Try a column she wrote just about eight months before the corruption in the capital markets of North America split wide open in the criminal disasters we are witnessing. (Globe Dec 11 07 A17).  Look what she had to say.

“Contrary to a lot of wishful thinking, white collar criminals do not, in fact, pose huge problems for the capital markets of North America.  This particular cycle of corporate greed, excess and lousy oversight ended years ago, and the really big-time bad guys are all locked up or dead.” 

Thank you Margaret Wente. You make Margaret Atwood look like an economic genius.

The trouble with the kind of theory put forward by William Watson and Margaret Wente is that it is baloney.  And for a very simple reason: every society has a shape, has laws, has values.  Every society “contains” its population and, however “free” it strives to be, it sets boundaries on the kinds and degrees of harm one person or a number of people may do to others.

No society “frees” the individual or group completely.  Never.  Capitalism claims to free all, but we know it doesn’t.  It frees the Capitalist to pursue greed.  It exalts greed.  It demands no impediment to greed. It makes laws to protect greed.

Keynes said that to pretend to free Capitalists is, in fact, to make laws, to shape society, to “contain” the population in a way that powerfully interferes with the economy in order to permit Crime Without Law. (Greenspan’s interest rate cuts without oversight, for instance). Since that is the case, Keynes said, keep a close eye on the economy, interfere (for there must be interference), and do it so the most people (all over the globe) get the fairest treatment from the economy.

As the British Empire gave way to the U.S. Empire, Keynes even tangled with an opponent over the matter of interference in the economy.

Friedrich Hayek of the Austrian School of Economics – worked at The London School of Economics at the time (1940s).  Hayek was a certified Reactionary, like Milton Friedman, a free marketer and a leader in the movement that has just brought U.S. financial corporations to their knees in disgrace for the shameless dealings I call Crimes Without Laws.

Hayek was exalted by people and regimes supporting unimpeded Capitalism.  Connected to a Chilean “think-tank” during the Pinochet regime, he won the Nobel Prize in 1974.  Margaret Thatcher got him the British Order of the Companion of Honour, and in 1991 he won the U.S. Presidential Medal of Freedom. Every Reactionary honour was preferred upon him.

As surely as Keynes was made a central figure during a time when the world was genuinely seeking greater democratic freedom and equality, Hayek was heaped with honours and medals by the new Reactionaries preaching class dominance, corporate fascism, and ruthless economic exploitation.

In June 1945, Keynes read Hayek’s reactionary, free market book, Road to Serfdom.  Hayek argued, in effect, that the kind of intervention Keynes advocated would lead to totalitarianism.  Don’t work for general employment, fairness, and balanced productivity.  Instead, free Capitalists who, somehow, will make the best of all possible worlds – free them by making laws that prevent any interference with their activity. Interfere.

Keynes liked Hayek’s book, to the surprise of many.  But he put his finger squarely on Hayek’s failing.  Hayek pretended that the erasure of interference in the economy to seek fairness would, in fact, erase all interference.  Of course it wouldn’t.  Keynes said that the changes Hayek wanted “would only lead in practice to disillusion with the results of your philosophy….” We are seeing that disillusion, now.

The Hayek/Friedman preaching since those days in the 1940s has gone unchanged: by erasing intervention that seeks fairness, justice, equality, balanced productivity, and full employment, - they argue – we are erasing all intervention and leaving the “free market” to order the economy.  But what happens is that the people who wield power undertake massive intervention to clear the road for the Capitalists.  Alan Greenspan’s massive interventions to lower interest rates prove the point.  His interventions were perfectly “normal” for “free market” actors – who interfere as much as possible to set greed free and make sure it is unimpeded – and the devil take the hindmost.

The view Keynes set out was the exact opposite.  He left no doubt he believed economics a moral science.  He was sure it could not be governed by eternal rules and “models”.  He remarked that one “had to be constantly on one’s guard against treating material as constant and homogeneous…”  Indeed, economists who have destroyed his vision believe economics is the proper playing out of greed in competition.  Not a moral science, it is a process of manipulation by which fixed rules are written to prevent government interference with the full workings of greed.  At best, governing powers act as facilitators for those engaged in the extension of personal wealth.

By coincidence, perhaps, Keynes was the British representative just as imperial power was moving across the Atlantic to the U.S.A.  And that country intended to have no system of international economics unless it was one it could dominate.  The  1945-46 Bretton Woods negotiations were hung up on that conflict and difference – the difference between anglo-saxon empires.  But another force was powerfully at work to assure that  - even with all the determination of the U.S. – the outcome would have, for a time, to provide “a better life” for more people than just the Capitalists. 

That force was the presence of a real anti-Capitalist power supported with elaborate economic analysis possessing global reach.  Russia was that power in 1929, and it was a massive power in 1945-46 when Keynes outlined a just world economics that the  U.S. has torn to shreds as it destroyed the USSR and took almost full power in the World Bank, the International Monetary Fund, and the World Trade Organization.

It cannot be said strongly enough that the Marxist/Communist world significantly shaped, for the good, the agreements that followed the Second World War and the decades after. Capitalist organizations across the Western World knew that if the people were not respected and given “a better life”, the Communist and other Left parties in their countries would win power and would “interfere” with Capitalist ideology in a way that would threaten its existence.

John Maynard Keynes was not a Marxist.  He did not offer a Marxist solution.  He turned away from such a project.  It was there that he demonstrated his original genius – a simple genius.  He had a moving vision of the possibility of a good social order, and he had a genuine care for the world.  As a result he kept his eye on the real state of things and the real problems facing people. 

That is why he changed his ideas, even occasionally contradicting himself as he gained experience.  He wanted real solutions in a real world.

John Maynard Keynes was in a major position – just as imperial power was passing from Britain to the U.S.A. – to propose a global system: fair, just, democratic, flexible. His famous statement that “in the long run we are all dead” focuses his insistence upon real solutions in a real world.  To those who offered “models” of economies that “in the long run” would bring good to the world, Keynes replied that “in the long run we are all dead”, meaning solutions have to be real, visibly real, and they have to affect the lives of the people around us.

He darkly suspected the private wealth producers of ignorance and worse.  He believed that Capitalism might be sufficiently reformed to work, to get to a point where [to quote Keynes] “the love of money as a possession …[would] be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to specialists in mental disease”.  He would agree, I think, to a title like Crimes Without Laws to describe activity in the U.S. financial corporations now – and in the institutions permitting them existence.

When the Second World War was coming to an end, Keynes proposed a World Bank with a special currency in a system that gave equality to members (regardless of size).  He proposed a system in which productivity was balanced in the world and where even – at times – countries might tariff foreign goods in order to build secure economies.  It was a system, he insisted, that must seek the wellbeing of working people all over the globe, that must provide a method of controlling over-production in powerful countries and encourage efficient production in weak ones.  The system he proposed was democratic and would truly have liberated humankind as, perhaps, never before.

The U.S. intended that none of it would happen.  The Communist powers breathing over the shoulders of U.S. policy makers forced them – for a time – to permit “a better life” to be won by many, especially in the West.  But that was a stop-gap until the USSR  could be destroyed, as it was in the late 1980s.

If Keynes had won the argument in 1945-46, history since then would be very different.  And – almost certainly – the housing crash and the globally echoing collapse of financial corporations would not be taking place as we watch.  Greed won the contest, and - with mayhem in every direction - greed still rules.  This time there is no USSR.  This time there is no check on the Capitalist ideologues.  This time when they pick up the pieces, there is every reason to believe they will use them as daggers to stab ordinary people in the back.