Reading John Lanchester s book Whoops about the international financial crisis whilst on holiday (its a laugh out loud read, not many books about financial capitalism you can say that about). He writes about how banksters invented derivatives to outwit the financial regulators and create the impression of low risk for loans based on junk mortgages.
A brilliant metaphor he makes, comparing the regulators to lifeguards who weren’t asleep but trying to cope with swimmers who were pouring blood into the water because they thought a few sharks would make it more exciting.
All the Collatorised Debt Obligations and Credit Default Swaps and even CDOs squared (read the book for an explanation and to realise how we were all conned by these legalised crooks) created such a fog and confusion, the whole banking system blocked up. Money ceased to be reliable.
In the 19th century the same process happened with industrial capitalism. Mills and factories created such pollution that they could not operate. Water was too dirty to be used to wash wool in Bradford for example. The already rich industrialists had to bang heads together to impose the first environmental protection laws to control pollution. The same happened with public health because they were running out of labour die to the high death and disability rates caused to the working class. Free laissez faire enterprise had to be controlled to prevent a clogging up of free enterprise.
They used physical resources. 21st century financial capitalism uses information as a resource. CDOs and CDSs pollute the pool of information. But whereas all industrial capitalists wanted a low pollution environment, financial capitalists actively try to pollute the information environment. It’s the way they create the tiny differences between buying and selling prices they exploit to make their profits in huge purchases and sales many times a second.
So the financial regulators have a much tougher job than the 19th century equivalents.
What’s this to do with coops? Lanchester speculates about business that exists to serve need rather than just make money by any means. He suggests those days are over. He also says financial capitalism is a near dead duck. It is irrecoverably polluted. But he doesn’t mention coops once. Coops exist and survive only so long as they serve their member’s needs. And can survive when capitalism so polluted by financial dodgy dealings is having another in its series of heart attacks.
People laugh at Marx’s belief that capitalism is is own grave digger. He may still be right.
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