They still don't understand what went wrong

All the media debates about the roots of the financial crisis seem pointless since they won't admit that the system is based on greed.

October 20, 2008

THEY'RE NOT happy, these bankers who've been forced to resign, are they?

For example, Fred Goodwin, who's lost his £4.1 million salary at Royal Bank of Scotland and must now manage on a £580,000 pension, seemed furious, as if he was a sacked docker from the 1980s, and you expected him to shout, "Brothers and sisters, I call upon you to oppose this injustice as General Secretary of the National Union of Outrageous Bonus Receivers and Allied Parasitic Trades."

Columnist: Mark Steel

Mark Steel is a comedian, a columnist for the Independent newspaper, and a socialist and activist in Britain. He's the author of two collections about contemporary Britain, It's Not a Runner Bean: Dispatches from a Slightly Successful Comedian and Reasons to Be Cheerful--as well as Vive la Revolution: A Stand-up History of the French Revolution.

But just because the government is taking over banks, that doesn't mean it's socialism. Certainly none of the founders of socialism, such as Karl Marx, appear to have written anything along the lines of: "Workers of the world unite! It is time to pay every penny on the planet to bail out bankers who've cleaned the world dry with greed, and make sure they get a few million quid payoff as they must be quite upset. Only then, toiling masses, will you have broken your chains!"

But someone should have been reading Marx, because then, they wouldn't have declared almost every day: "There will be no more boom and bust." There might not have been 100 articles a week exclaiming, "This boom built on speculation can't possibly crash like the booms built on speculation in the past, because those booms were in the past and crashed, whereas this boom is happening now, so it can't crash."

Or "Property prices can't possibly fall like they did in 1991, because underlying monetary stability is tied to a sound moneyness, which prevents crash-potential, offering me fiscal protection, a lot of love and affection, as shown in this squiggly graph."

So now all these same people ponder how it went wrong, puzzling who's to blame for not seeing it coming. But capitalism is ordered in such a way that the people making millions couldn't possibly see it coming--because the banks and dealers and major shareholders are all in competition.

So imagine getting up at the shareholders' meeting of Bradford & Bingley or some Icelandic company three years ago, and declaring the bank should lend less money, slow down the property boom, stop speculating and be responsible to help prevent a crash. The rest of the board would have called an ambulance and insisted you were sectioned, as you must be hearing voices. Because if their bank didn't cash in on the boom, all the other banks would, leaving them to fall behind and probably get taken over.

They had to believe in the pursuit of bonuses based on rising shares and property prices, just as a priest can't do his job unless he believes to some extent in God.

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SO ALL these inquests about why the banks have failed society seem pointless. They didn't fulfill society's needs because that's not their aim. Their aim is to make as much profit as possible for their shareholders. You might as well ask an athlete why he failed to defend the near post at corners, and wonder why you get the reply, "Because I'm a tennis player."

It would make more sense if the TV discussions had titles such as "Why was I a greedy bastard, and what measures can be put in place to stop me being one again?" But instead, they debate matters such as the failure of regulation, when any attempt to regulate them was denounced by Blair, Mandelson, Brown and all the banks as being an outrageous restriction on their right to plunder.

It's like inviting Mafia bosses to discuss: "Where did organized crime go wrong in failing to make life peaceful for the average Italian?" One of them could say: "I lay the blame with the failure of regulating officers, who proved highly ineffectual, especially after I blew them up with dynamite."

Marx's socialist approach might entail a different set of priorities, in which property, like other things, was organized according to the long-term needs of society, rather than the short-term needs of shareholders. Or maybe this is unfair, and Gordon Brown really has decided to implement socialism, so his next speech will begin, "Given the gravity of our circumstances, it seems prudent to convert Balmoral into pensioners' allotments and abolish Peter Mandelson."

But even a genuine socialist response to the current crisis would face one problem similar to that faced by this government--the issue of compensation when it comes to characters like Fred Goodwin, who've been removed from their posts at the bank. The debate about how much these people should pay us for robbing the place dry would keep the country engrossed for years.

First published in the Independent.