Archive for the ‘Banking and financial services’ Category

Below is an article submitted to Redline by Alec Abbott written 18 April 2017

1. A quintessentially liberal cycle: from smugness to despair, from despair to hope and from hope to smugness

The initial blow

Trump’s election victory left the liberals reeling with shock and incomprehension. Detached from the poverty and discontent around them, and supremely confident in the Democratic Party’s electoral machine, they saw Hillary Clinton as unassailable. Her defeat did little to diminish their disdain for ordinary working people, or to improve their grasp of US

Rather than consider the socio-economic forces that brought Trump into office, the liberals focused almost exclusively on his personality, his egocentric greed for power, money and fame. Some went so far as to detect the sinister hand of Moscow at work. When asked how he viewed Trump’s relationship with Russia, Bernie Sanders, always hovering between radical liberalism and mild social-democracy, replied:

‘The American people are astounded that when you have an authoritarian like Putin who is moving Russia more and more towards an authoritarian society, President Trump has only positive things to say about this authoritarian figure. What hold does Russia have over the President? We know that Russian oligarchs lent Trump and his associates money. Does that have anything to do with Trump’s relationship with Russia?’ (CNN News, 30/3/2017)

From the start of the election campaign, liberals viewed Trump as an impulsive maverick, a right-wing bigot who has little regard for civilized norms of behaviour. Only by pandering to the worst prejudices of disaffected Americans, they maintained, would he succeed in capturing the presidency. The great unknown was how this relative new-comer to politics would behave once in office. Would he adapt his election pledges to political reality or would he pursue his outlandish agenda to the bitter end? That was the question on the minds of liberal commentators as Trump assumed the position of the 45th president of the US.

In no time at all the liberals gave vent to their despair. Maggie Lake, CNN commentator and political analyst, bewailed: ‘He hasn’t changed. There was the expectation that the office changes the man but we have not seen this with Donald Trump.’ (CNN News, 23/3/2017) Not long after, The Los Angeles Times, a prominent liberal organ, delivered the following lamentation:

‘Like millions of other Americans, we clung to a slim hope that the new president would turn out to be all noise and bluster, or that the people around him in the White House would act as a check on his worst instincts, or that he would be sobered and transformed by the awesome responsibilities of office. Instead … it is increasingly clear that those hopes were misplaced.’ (4/4/2017) (more…)

Tony Norfield will be giving a lecture next week at King’s College, London, on Wednesday 8 February.

The session is from 6pm to 8pm, and is part of a series of seminars at King’s on Contemporary Marxist Theory.

The seminars are open to the public, but arrive in time to get signed in if you want to attend.

Venue details:
342N Norfolk Building (entrance on Surrey St)
King’s College London, Strand, London WC2R 2LS

This paper discusses how the financial system both expresses and reinforces the power of major countries. Developing Marx’s theory by examining bank credit creation, bond and equity markets, the paper shows how what Marx called the ‘law of value’ is modified by the evolution of finance. To understand imperialism today, one has to recognise how financial markets help the centralisation of ownership and control of the world economy. They are also an important way in which the US and the UK siphon off the world’s resources. The question of Brexit and the City of London is also discussed.

downloadExcellent interview/podcast by Tom O’Brien with Tony Norfield, here.

Tom’s Alpha and Omega site, where the interview also appears, is here.  There’s also an excellent interview there with Michael Roberts.

Our interview with Tony is here.

imagesby Michael Roberts

Pete Green has now taken up the cudgels in the debate that Jim Kincaid and I have begun over the causes of regular and recurrent crises in capitalist production and in particular the Great Recession.  He makes a welcome and considered critique of my views, as expressed in my book, The Long Depression and in recent discussions at the Historical Materialism conference in London earlier this month.  I think he raises some new and important points in his critique, which, as he says, will require further debate and research.

Like Pete, I cannot deal with all arguments in this short reply on my blog but I’ll do my best to take up some key ones, but it still makes this post long enough!

The data is actually clear

Pete starts by saying he is not going to dispute the data on the rate of profit that I have presented, mainly for the US, but also for other economies.  But apparently he “shares Jim Kincaid’s scepticism about reliance on US national income accounts as source for corporate profitability”.  Actually, I am not sure Jim is sceptical of the official data.  Indeed, he has said that I have used the data accurately and as Pete says, “there is no adequate alternative available for those engaged in empirical investigation”.

And that is what the bulk of my research is: engaging in empirical investigation to verify or otherwise particular theories or laws.  In my view, too many Marxist economists have ignored empirical work and concentrated on interpreting (and re-interpreting) Marx’s writings and ‘what he meant’, rather testing his laws of motion of capitalism to see if they best fit the facts.

Luckily, I am not alone in doing empirical investigations – Andrew Kliman has done prodigious analysis, Anwar Shaikh’s new book is a gold mine of empirical studies, G Carchedi has also tested Marx’s law with the evidence.  And there is a host of new young scholars internationally doing such work.  Carchedi and I will be (more…)

60172François Chesnais, Finance Capital Today: Corporations and Banks in the Lasting Global Slump, Brill, Leiden, 2016; reviewed by Tony Norfield

This book is well worth reading. It is written in a clear and accessible style and discusses key points about the limitations of capitalism and the role of contemporary finance. Perhaps its most important point is how the financial system has accumulated vast claims on the current and future output of the world economy – in the form of interest payments on loans and bonds, dividend payments on equities, etc. These claims have outgrown the ability of the capitalist system to meet them, but government policy has so far managed to prevent a collapse of financial markets with zero interest rate policies, quantitative easing, huge deficits in government spending over taxation, and so forth. The result is an unresolved crisis, a ‘lasting global slump’, in which economic growth remains very weak and vast debts remain in place.

There are two related points in his approach to the world economy and finance that distinguish Chesnais from many other writers, and for which he deserves to be commended. Firstly, he states clearly that we are in a crisis of capitalism tout court (pp1-2), not a crisis of ‘financialised’ capitalism – the latter being one that could presumably be fixed if only the evil financiers were dealt with by a (capitalist) reforming government. Secondly, he takes ‘the world economy as the point of departure’ for his analysis, although that is ‘easier said than done’ (p11). While he shows the central role of the US, he avoids the wholly US-centred analysis common to radical critics of contemporary capitalism, and instead highlights how the other powers also play a key part in the imperial machine.

Finance Capital Today helps the reader’s understanding of the realities of contemporary global capitalism by (more…)

17197454-abstract-word-cloud-for-imperialism-with-related-tags-and-terms-stock-photoWe’ve been a bit tardy in reporting the continuing discussions of the Imperialism Study Group.  Some updates should go up over the next week.

Our next international hook-up will be the second weekend of October, when we’ll be joined by John Smith, the author of Imperialism in the 21st Century.  There is a Redline interview with John, here.

See also our interview with Tony Norfield, a member of the study group and author of The City: London and the power of global finance, here.

And check out the anti-imperialist manifesto produced by the old MidEast Information & Solidarity Collective in 2001, here.

by Michael Roberts

downloadIn a recent post, Paul Krugman took up the issue of whether movements in the stock market provide a good guide on how the capitalist economy is doing well.  The question arises because the US stock market prices have hit a new all-time high in the last couple of weeks with apparently slightly better economic news and with the conviction among investors (i.e. big banks, corporation, managed funds and hedge funds) that the US Federal Reserve was not going to raise its policy interest rate this year or even for the foreseeable future.

Krugman reckons that “stock prices generally have a lot less to do with the state of the economy or its future prospects than many people believe. As the economist Paul Samuelson put it, “Wall Street indexes predicted nine out of the last five recessions.” Indeed, Krugman went further in saying that “in some ways the stock market’s gains reflect economic weaknesses, not strengths. And understanding how that works may help us make sense of the troubling state our economy is in.”

Krugman makes three (good) points to explain why stock prices are of little guidance about the state of the US economy: “First, (more…)