Can We Blame The Bankers? (Spoiler Alert: Yes!)
by Ann Pettifor via RethinkingEconomics.com,
ZeroHedge.com
Mon, 05/14/2018
At a Rethinking Economics conference in Oslo last month I pointed out that western politicians and economists are repeating policy errors of the 1930s. The pattern of a global financial crash, followed by austerity in Europe and the UK, led in those years to the rise of populism, authoritarianism and ultimately fascism. The scale of economic and political failures and missteps led in turn to a catastrophic world war.
Today that pattern – of a global financial crash, austerity and a rise in political populism and authoritarianism – is evident in both Europe and the US. And talk of war has risen to the top of the US political agenda. Why have we not learnt lessons from the past?
The “fount and matrix” (to quote Karl Polanyi) of the international financial system prior to its collapse in 1929, was the self-regulating market. The gold standard was the policy by which the private finance sector, backed by economists, central bankers and policy-makers, sought to extend the domesticmarket system to the international sphere – beyond the reach of regulatory democracy. In the event, the 1929 stock market crash put an end to the delusional aspirations of Haute Finance: namely that financiers could detach their activities from democratic, accountable political oversight. (Polanyi, The Great Transformation 1944).
Between 1929 and 1931 the losses from the US stock market crash were estimated at $50bn. It was the worst economic failure in the history of the international economy. Within three years of the crash millions of Americans were unemployed, and farmers were caught between rising debts and deflating commodity prices. In Germany between 1930 and 1932, Heinrich Brüning, the Chancellor, with the tacit support of Social Democrats, imposed a savage austerity programme that led to high levels of unemployment and cuts in welfare programmes. This in turn led to the demise of social democracy, the rise of fascism and ultimately a global war.
The question that arose during the Rethinking Economics debate was this: could bankers be blamed for the current period of financial crisis, austerity, political polarisation and the rise of fascism? Surely responsibility rests with politicians?
I boldly asserted that bankers (meaning the private finance sector) can be blamed for the Great Financial Crisis and for the economic policies implemented after the crisis. After all, it was bankers (backed by mainstream economists) that lobbied most successfully (both in the UK, the US and the EU) for laissez faire in the 1960s and ‘70s: the deregulation of credit creation, and for the lifting of controls over interest rates and for cross-border capital mobility. (Duncan Needham, 2014). By bribing and intimidating the political class, most notably in the US, financiers achieved, and still enjoy, self-regulating, global markets in finance.
The Rest…HERE
