The widespread belief that the financial meltdown and consequent global crisis is not systemic but was caused by the insatiable greed of financial CEOs reinforces another myth: that government--or the state--can hardly be blamed for the crisis.
The state’s responsibility in this mess is considered to be merely one of omission--its failure to regulate the profiteering activities of big banking and investment houses that are based on sheer speculation. And now, fortunately, governments are undertaking extraordinary measures to bring the whole house back in order for the common good. Government is seen in this light as the savior and not one of the culprits.
The notion that government did not have a major hand in bringing about this severe financial crisis can be traced to the general perception, propagated by policymakers, experts and the mass media, that "neoliberal globalization" means freeing market forces from government regulation and intervention.
Indeed, neoliberalism supplanted Keynesianism which advocated active government intervention through public works projects and fiscal and monetary policies to ensure economic stability and growth.
The impression created is that government thereafter stood aside disinterestedly while market forces operated freely. Thus, even when “neoliberal globalization” started wreaking greater havoc on weak economies rather than globalize progress and prosperity, some of its most vocal critics concentrated their ire and fire on the irresponsible and profit-hungry transnationals and corporate empires.
But, in fact, the neoliberal policies of deregulation, liberalization, privatization and denationalization could not have been implemented without governments adopting and enforcing these as national policy.
The World Trade Organization (WTO) treaty needed to be ratified by states. Many developing and dependent countries have had to amend their constitutions in order to reconcile their laws with the terms of the WTO.
The lowering or removal of tariffs and foreign exchange controls, liberalization of trade and investments, deregulation of labor, removal of government subsidies, privatization of public utilities, etc. were all enforced by governments and could not have been done by the multinationals by themselves.
Even in the US and other centers of monopoly capital government was the instrument by which public funds could be diverted from social services and welfare benefits for use by the finance-industrial capitalists and wages could be suppressed in order to maximize profits.
In the 1990s, legislation was passed to deregulate the flow of speculative capital, including the repeal of laws such as the Glass-Steagall Act that was designed to prevent a repeat of the Great Depression. The Act strictly regulated and oversaw the activities of commercial banks.
The latter were usually insured by the FDIC (Federal Deposit Insurance Corporation ) and had access to advances from the Federal Reserve in emergencies. Thus they were not allowed to engage in speculative activity unlike investment banks.
But in the 80s, regulators allowed explicit waivers of some aspects of Glass-Steagall or pretended that there was nothing wrong when commercial banks and investment banks became more and more indistinguishable.
On the surface, the determined, if frantic efforts of the US government as well as those of other big capitalist centers - England, Germany, France, Japan etc. -- reinforce the perception that Government is employing everything in its power to douse the fire and rescue the entire system.
But one need not look too deep to see whose interests these governments are really protecting and upholding. The US$700 billion bailout proposal crafted by US Treasury Secretary Paulson, former top executive of investment house Goldman-Sachs, clearly reveals that the Bush government was rescuing the errant bankers at the ordinary taxpayers’ expense.
The rationale given is that some big banks (read financial monopolies) have become "too big to fail" or "what is bad for the big banks (e.g. JP Morgan, Goldman-Sachs, et. al.) is bad for America". The truth of the matter is that the system not only allows big financial-industrial monopolies to become "too big to fail", it ensures that this is the case.
How did this come about?
With all their resources and economic power, financial-industrial giants-- monopoly capitalists-- were able to dominate governments soon after they were able to dominate national economies in the early 1900s, combining their financial-economic power with the power of the state.
These monopoly capitalists utilized their respective governments to advance their interests in their rivalry for territory, markets and dumping ground for excess capital as well as in conniving among themselves to extract greater profits from the less-developed countries in Asia, Africa and Latin America.
In the US, the Morgans and Rockefellers (who controlled such monopolies as Standard Oil and Chase Manhattan Bank) set up the Council on Foreign Relations (CFR) at the end of WWI. In 1973, the Trilateral Commission (TLC) was set up as a global version of the CFR.
Initially consisting of 180 top leaders from the US, Western Europe and Japan (later, Pacific-Asia),the membership now runs up to 300-350 from the three regions, each individual screened by David Rockefeller, acknowledged godfather of his family’s corporate empire.
Political analysts of various persuasions–including conservatives like Sen. Barry Goldwater–are agreed that the TLC aims to be a shadow world government that would shape national policies worldwide to suit the interests of big monopoly capital.
Holly Sklar wrote in Trilateralism: the Trilateral Commission and Elite Planning for World Management, "The Commission's purpose is to engineer an enduring partnership among the ruling classes of North America, Western Europe and Japan… to safeguard the interests of Western capitalism in an explosive world.”
US Presidents Carter, George HW Bush and Clinton and Vice-Presidents Mondale and Cheney were all TLC members with the Commission as their biggest campaign contributor.
Democrat or Republican, post-WWII and post-1973 governments had CFR and TLC members, respectively, in the most sensitive posts (State Department -- Dulles, Rusk, Kissinger, Vance, Haig; Defense -- Weinberger, Cheney; National Security – Brzezinski; Treasury – Rubin; Federal Reserve --Volcker, Greenspan).
Dean Rusk and Paul Wolfowitz (Defense Undersecretary under Bush Jr.) eventually became presidents of the World Bank.
Alan Greenspan, was a TLC member appointed by Reagan in 1987 as chairman of the Federal Reserve and served through Clinton’s and Bush’s terms up to 2006.
Greenspan is held responsible by many economists and analysts for causing the current financial crisis by keeping interest rates low, tolerating the subprime loans and allowing the derivatives market to run unregulated far too long.
Notably, the TLC counts among its former members prominent neoconservatives such as Cheney and Wolfowitz.
While they are known to be strong advocates of US “unilateralism” more than the TLC’s “multilateralism”, the fundamental objective of consolidating global US political and economic hegemony is shared.
Besides, global political realities and financial constraints have forced the neocon Bush government to adopt a more multilateralist foreign policy despite its unilateralist rhetoric.
It is little wonder that national and even global policies (such as "neoliberal globalization") ultimately serve the interests of this small group of monopolists.
These are of course attractively packaged to be for the interest of the greater majority, global peace, etc.
But when crisis strikes, the masks are torn away and the ugly face of monopoly is revealed. Imperialist states are ruled by the same economic and socio-political elite that run Wall Street and Main Street. #
*Published in Business World
24-25 October 2008