Novelist. Author of APSARAS and tales from the beautiful Saigh Valley. First person to quantify spiritual values.

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Friday, 20 August 2010

The future of Capitalism

The Banks are reporting their profits this week and pretty good reading it makes if you own or are a shareholder in one. The truth of the matter is this that Banks, because of their greed, almost brought the world to its knees and yet whilst economies round the globe are still in recession, they come up smelling of roses. Something stinks in the capitalist wood pile. I'm not an advocate of socialism; it doesn't work, but its self evident that whilst most companies have to do something, make something or generally have to get their hands dirty, parasitic Banks use other peoples money to make more money for themselves. With this wealth comes power and with this power comes the corruption of the Capitalist system leading to corrupt governance. There has to be another way.

Let me be clear here. Basic retail banking is not in the dock over the recent scandal. Money is a commodity to be bought and sold on a supply and demand basis.

The trouble has been the arrant greed of bankers who, having cellars full of other peoples money, weren't happy to let it sit there. They devised more and more ingenious products to introduce to a market, primed to encourage populations around the world to borrow beyond their means. These people are no better than conmen. If anyone ever arrogantly tells you that they work in the City, automatically think leech; bloodsucker. They are not interested in creating wealth for the common good, like say a company drilling for oil or a mining company that earn their profit. No! They are only interested in accruing money and power for themselves. In fact why would any company ever want to do anything else but run a Bank. Everything else is surely too much like hard work.

Bankers who speculate must be considered as no better than betting shops. They must never be allowed to speculate with money or assets that aren't theirs. Bankers shouldn't be allowed to trade with assets they or their agents do not physically own. It's a simple idea that I don't doubt will be difficult to police but I believe we have to try. Taxes in the trade should be high and penalties for infringements should be severe. Speculation with people's pension funds should be outlawed, as well as all the extortionate fees charged by fund managers, who still exact fees even when their funds lose money. Then there is the scandalous charges for the electronic movement of money.
The whole brigade of those managers involved in the financial markets should be brought down a peg or two and don't tell me it isn't the way to attract the best talent. Who wants to attract the most talented people, those most able at relieving people of all their hard earned money?

What is the answer? Is there another way? It may already have gone so far. I read, today, that Liverpool football club may be taken over by a Chinese company financed by the country's investment arm. The Banks are already so huge in economic terms that they are worth more than the country's they operate in.

Recently on BBC's Hardtalk, Professor David Harvey was talking about just this. He argued that the world economy grows at 3% compound each year, which was fine when the world was growing but now after years of globalization, there is no room for this sort of growth. The wealthy are investing in assets such as property and 'devices' that make yet more money out of money such as derivatives. Where one they invested their wealth in 'production' or manufacturing, they now invest in assets. The result of this is that the working and increasingly the middle classes will be squeezed out as the wealthy become mega rich as polarization of money supply chokes off prospects for the cash poor.
Professor Harvey didn't really say what he thought was a good alternative to 'capitalism', only that he thought there may be fighting on the streets to bring about a more equitable society.

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