Cailean Bochanan
1st July, 2011
We have a sense that capitalism is coming to an end. If by capitalism we mean that system which was introduced into England subsequent to the Dutch invasion of 1688 then that is true.
With the setting up in 1694 of the Bank of England, a consortium of private financiers came to the fore or rather came to exercise their power from behind the scenes of Britain’s political facade. In this original public-private partnership, they lent to the government at interest and used the bonds issued as the basis for leveraged banking. Swift defined concisely this new interest:
“that set of people, who are called the Monied Men; such as had raised vast Sums by Trading with Stocks and Bonds, and lending upon great interest and Premiums; whose perpetual Harvest is War, and whose beneficial way of Traffick must very much decline by a Peace”
Elsewhere he talks of “a new estate” to whom every house and foot of land in England paid a rent-charge, free of all taxes and defalcations” and where “the gentlemen of estates were, in effect, but tenants to these new landlords”
A whole class, “these new landlords” on behalf of whom the entire nation is taxed. Does this not ring a bell in post-bailout Britain?: the whole nation is mortgaged to the banker elite, which for all that their methods have evolved since the early seventeen hundreds, are essentially the same “interest” as Swift was describing and warning us about. At least, in Swift’s day the consortium’s original loan was from their own funds, however ill-gotten: today the banks are lending back to the government the funds they received from the government to bail them out, basic usury as conceived then has become the fraudulent shenanigans of the notorious “carry trade”. Now that there is no longer even the pretence that banking is about investing in business, understood as legitimate business, and now that the various bubbles from the dot.com through the housing market to commodities have exploded in our faces the monied men limit themselves to milking the state for all its worth and the ultimate bankruptcy of the system is the bankruptcy of the state itself. Curiously, the flow of funds into government bonds is being characterised as a “flight to safety”, yet the returns provided fall well short of inflation generated by endless treasury money issuance. Where then is the profit in the profit system? Wealth creation is over and the financiers are limiting their ambition to, instead of creating new wealth, monopolising all that already exists. It’s not at all clear where, if anywhere, the rest of us fit into the picture. We’ll soon find out: the peril of the “flight to safety” is becoming evident and nothing will glitter which is not gold. The burst of the bond bubble and the collapse of the dollar/pound will be dramatic events indeed, the cue for our long awaited awakening or our plunge into the abyss.
In These New Times 