The bravado of bankers

It has been a matter of some astonishment that bankers should so swiftly have reasserted their untouchability after the shortlived scorn heaped upon their greed, ignorance and irresponsible inventiveness in the creation of risky 'financial products', says Jeremy Seabrook.

IT seems that bankers are immortal: Olympian, detached, serene in their enjoyment of fabulous self-remuneration, they retain their god-like position, unreachable in their glass and granite pyramids, where bonuses are being administered once more and fabulous profits are again being made in the counting-houses of cyberspace.

How brief the moment of penitence for the chaos of a year ago, when Lehman Brothers collapsed and the bankers appeared to be in flight, carrying their possessions in plastic boxes from their devastated places of employment. It seems that repentance has become as perishable a commodity as any other in the vast moral inventory of the West.

Despite the obituaries over casino capitalism, the pieties over robust regulatory regimes, the resolve to make future 'bubbles' impossible, the prophecy that 'the world had changed forever', no efforts have been spared to return to the curious aberration that passes for capitalist 'normality.' British premier Gordon Brown even spoke in April 2009 at the G20 meeting in London of a 'new world order' - a hand-me-down phrase, first used by Woodrow Wilson at the end of World War One when the League of Nations was formed. It was also the title of a book by HG Wells in 1940, in which the author wrote, 'We are living at the end of a definite period of history, the period of sovereign states.' The phrase reappeared with the establishment of a 'bipolar' world after 1945. It was briefly resuscitated by Gorbachev just before the collapse of the Soviet Union, and was subsequently taken up by a triumphant George Bush at the time of the First Gulf War, as marking the perpetuity of US hegemony. It is clear that new world orders are as mutable as they are ephemeral.

And so it has been with Gordon Brown's moment of exaltation a bare six months ago.

There is nothing new about the world order that is being so noisily re-established: far from new, it has all the eclat of a restoration. The world has been dazzled by a technicolour imagery of red ink, green shoots, blue-sky thinking, black holes, grey areas and a discordant music of alarm-bells, wake-up calls and the din of falling profits. The fear of collapse has evolved into a frenzy of reconstruction.

In the last few weeks, talk has been all about 'recovery' and emergence from the dark night of recession. The crisis is over. If governments had wanted to introduce harsher regulatory regimes they should have done it at the moment of greatest weakness of the system. That time is now past. Notwithstanding the fact that it was government which rescued the banking system, it is time once more to give the wealth-creators their head and let them get on with what they know best. Competitive advantage will ensure that countries whose natural endowments include high finance and low morality will evade any universal regulatory regime, no matter how 'robust'.

There is an epic impertinence in the rapid rehabilitation of the virtues of small government and getting the state off the back of entrepreneurs; the apostles of the free market are now blaming government for the very virtues which prevented a total collapse of the global system. Far from the Washington Consensus having been consigned to the WC, it was only briefly suspended. The hidden hand, which was momentarily made manifest as the grip of a serial killer around the throats of the poor, has now reverted to the benign puppetry of wealth-distribution. Bonuses are back; a new round of mergers and acquisitions betoken a return of confidence; share prices have risen above 'the psychologically significant' level of 5,000 or 10,000 or 15,000. Bankers are heard explaining why it is impossible to curb salaries of the big players: any attempt to cap their remuneration will cause them to migrate to countries where their 'talents' will be recognised - those same talents which brought the banking system of the richest countries to within hours of breakdown 12 short months ago.

Since about 10% of the GDP of Britain depends upon 'the financial sector', it is perhaps to be expected that the British government will be among the most ardent supporters of a return to the status quo ante. While many European leaders have insisted upon international legislation to regulate the financial system and to limit the remuneration of bankers, the voice of Britain has been significantly faint; and the unity of Labour and Conservative was observed in the general agreement that the Europeans were bent on destroying London's dominant position in the European 'finance industry' - as it is now known. Jealous continentals, it seems, are, not for the first time, trying to undermine one of the most important pillars of our economy. Both Gordon Brown and Chancellor Alistair Darling insisted in the London meeting of 6 September that the assault upon the financial sector be toned down; while Boris Johnson, Mayor of London, had already made a mercy dash to Brussels a few days earlier, to forestall European Union desire to regulate hedge funds as an attack on London's position as an international financial centre. London is, according to all reports, 'home' (if the idea of residence is not too sedentary a concept for something so volatile and nomadic as capital) to more than 80% of European hedge funds - worth more than $400 billion.

According to the BBC, 'hedge funds use sophisticated, complex investing strategies to make returns, even when markets are falling.' In plain English, this means that there is no disaster, no misery, no sleight of hand out of which profit cannot be got. Under proposals put forward by the European Union, hedge funds would be required to be more 'transparent' in their dealings. 'Transparency' is a word much in vogue when it is a question of redressing the corruption, nepotism and venality of the rest of the world. In its Western heartland it becomes government intrusion or excessive bureaucracy, dragging down the wealth-creators.

Boris Johnson leaped indignantly to the defence of the hedge funds, while representatives of the City of London corporation complained that the European directive was 'narrowly protectionist', and fails to take account of other global players, including the US, thereby damaging an important EU industry. Now the argument that if 'we' address some abuse, others, less scrupulous, will take advantage of our idealism and naivete, has a long and dishonourable pedigree. It was an argument advanced for the perpetuation of slavery, the retention of child labour, unlimited working hours, and against the introduction of a minimum wage. It is scarcely surprising that it should form part of the 'fightback' against 'excessive' regulation of the financial sector.

Money mystique

It has been a matter of some astonishment that bankers should so swiftly have reasserted their untouchability after the shortlived scorn heaped upon their greed, ignorance and irresponsible inventiveness in the creation of risky 'financial products'. Yet it is significant that the public 'outcry' against their cupidity and arrogance was muted compared to the vehemence provoked by news of the profligate expenses of Members of Parliament in Britain. A majority of MPs had committed insignificant offences, and only a handful were guilty of any criminal intent. Yet the contempt and loathing their actions inspired were infinitely greater than those of bankers whose might, Samson-like, almost demolished the temple of the financial architecture. MPs certainly never jeopardised the system, nor did they heap up gigantic fortunes. The publicity over their misdemeanours served as a useful conduit and diversion from the epic wrongdoing of financial institutions.

The relative security from public wrath of bankers and dealers derives, of course, from their proximity to money, a substance which haloes their activities with a sense of holy mystery. It is a commonplace that the role of the rich has been transformed in Western society: no longer oppressors of the poor, monopolists of the people's necessities, they have become philanthropists, even saviours of those living in misery, since as generators of wealth and makers of fortunes, it is upon their hard work, grace and good will that we all survive. Wealth has been elevated to such a degree that those who hold it are now objects of reverence. Indeed, what we see is a global reappearance of the politics of deference: where once in Britain, the humble and lowly used to bow down before birth, breeding and lineage, it is now only money which prompts respect. This is how the culture of celebrity was born, whereby people appointed by the market to exalted station are now the focus of universal admiration. By association, bankers, financiers and all those who have access to money in its many forms - liquid, solid or vaporous as invisibles - are beyond reproach, since they hold our future in their hands. In more homely imagery, who would quarrel with their bread-and-butter, bite the hand that feeds them or kill the geese that lay the golden eggs?

Perhaps this is why financial personnel have become not merely forecasters and fortune-tellers to the media, but also consultants, diviners and soothsayers once more. No TV programme or newspaper article is now complete without a peppering of the deep understanding of people described as 'head of global equities' at some business house, 'head of transaction services', 'banking analyst', 'head of corporate finance' or 'equity strategist'; and their wisdom is requested not merely on economic affairs, but on social, moral and philosophical issues; or perhaps these have all become inseparable from the economy.

It is vital to grasp the profound change all this represents. Globalisation is not merely a technical process. It is underpinned by an ideology which makes a mockery of all the fine words about democracy and freedom. The bankers and their associates are, in this new mutation, representatives of money, whereas MPs, legislators and governments represent mere people. In such an unequal contest, there is no question over the ultimate victor; and the sagacity and integrity of financiers emerge unscathed, even though the life and livelihood of millions have been laid waste.                                 

Jeremy Seabrook is a freelance journalist based in the UK.

*Third World Resurgence No. 228/229, August-September 2009, pp 31-32