Category Archives: Organised Money

Destruction by organised money

80 odd years ago, F D Roosevelt argued that Government by organised money was just as dangerous as Government by organised mob. That assessment was shaped by experience of the run up to the 1929 Wall Street Crash which was followed by the austerity driven Great Depression. We now know it’s much more dangerous than that: leading to the destruction not just of jobs and whole economies, but many of the ecological systems we benefit from on planet earth.

He identified organised money as comprising “business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism (and) war profiteering”. Eisenhower added the “military-industrial complex”. Today, strands of academia and the social media would be included as they argue and promote the theoretical constructs which provide the coat of respectability for organised money’s activities.

The financial sector was largely called into existence to finance the industrialisation process which began in the 18th century and proved far beyond the capacity of the then possessors of capital, mainly the landed gentry. But the sector quickly found far easier ways of making bigger and quicker returns than by long term investment in industry. So the components of organised money came to dominate the financial sector with the ‘robber baron’ excesses which led inevitably to the 1929 crash. That pattern was repeated in the four decades leading up to the 2007-8 crash and subsequent austerity driven decade of lost opportunity.

Those lessons have been rejected by those in power. Government is dictated by organised money whose self-interested criminality is well documented. The Economist described the financial sector as mired in ‘a culture of casual dishonesty’.[i]That culture ignores unprecedented inequalities and denies the imperatives of ecological sustainability. It accepts, simply as a cost of doing ‘business as usual’, the fines for fraud and criminality, so long as they are paid by the corporate entity and the individual decision makers are not held personally responsible.

The saga of such criminality is far too long to reference here. The Financial Times reported that, ‘between 2009 and 2013 the 12 global bankers paid out £105.4bn worth of fines to European and American regulators.’[ii] They were fined for rigging the Forex market, as well as rigging various commodity markets, also for money laundering on behalf of various terrorist organisations and for Mexican drug cartels, not to mention tax evasion and the most energetic avoidance. Those 12 global banks had also made additional provisions in their accounts for a further £61.23bn of anticipated fines for crimes which presumably they knew all about, but which had not yet been uncovered. So a total of £167bn, which was ‘unlikely to be the final hit.

Most financial houses appear to have been behaving in similar fashion as indicated in Remaking the Real Economy.[iii]

So government by organised money is not just predatory on the real economy, and exploitative of the public, but in serving its own sectional interests, it has developed sophisticated means of avoiding and evading taxation and is willing to act with criminal fraudulent intent. Organised money is openly criminal and dominates government, notably in the US and UK.

The net effects are to create ever increasing inequalities of wealth and income both within and between economies, which must at some stage be reversed by whatever means. It also initiates all manner of ecological destructions which must similarly be reversed but within a defined time span.

One of the two first moves has to be to recognise the naked criminality of organised money which includes much of the financial sector. And to correct it.

The other move must be for classical/neoclassical economics to be set aside and disregarded in favour of understanding the practical realities of a modern economy . But that is another story.

Fighting for Fairness

Fairness is envisaged as an extremely broad concept. It includes universal human rights and equal opportunities for all, with social balance and some limitations on inequalities of income and wealth and the means of their achievement, all applied within and between communities and nation states. It also relates to fairness between generations. We are making a total mess of everything, and unless we change radically, we will bequeath a planet earth to future generations which is simply not sustainable. We don’t need to. There is an alternative, as we are continuously being reminded.  But so far we have done very little about it.

We need to remake the real economy and escape destruction by what Roosevelt so long ago identified as organised money. The real economy is what employs most people, making and innovating the products and services of everyday life and their continuous improvement. It is distinguished from the financial economy which came into being mainly to support developing the real economy by enabling the necessary finance for investment.  But, latterly, the financial economy has become predatory on the real, focused on extracting value in order to maximise shareholder take (MST) and increase its portion of the overall economy.

That distinction between the real and the financial is not widely recognised, and it is completely ignored by orthodox measures such as GDP. The modern state and its regulatory authorities need to make the distinction and regulate each appropriately so as to achieve progression with fairness.

The real economy comprises three quite distinct layers which are nominated here as  the social-infrastructural layer, the progressive-competitive layer and technological-revolutionary layer. Each layer requires quite different forms of support and regulation so that overall,  progression without destruction might be achieved, with fairness for all.

Roosevelt identified organised money when he introduced the second round of the New Deal which ended the austerity driven Great Depression which followed the 1929 Wall Street crash.  He identified its various constituents as ‘business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism and war profiteering.’  He noted that organised money ‘had begun to consider the Government of the United States as a mere appendage to their own affairs’ and recognising its  criminal tendency, he  warned that ‘Government by organised money is just as dangerous as Government by organised mob.

Roosevelt and Keynes victory over organised money last but four decades.  Over the past four decades, organised money has been reborn as the self-perpetuating driving force behind governments in Anglo-America and beyond. Its various constituents have been the prime beneficiaries from the application of the 21st century version of neoclassical microeconomics. That free market, profit maximising model was born in the 19th century and didn’t change much till the 1980s when Friedman and colleagues refocused it on MST.

The simple truth is we don’t need a theory of how things work when the reality is there before us to observe and understand. And we certainly don’t need a 19th century economic theory which has been shown, so many times, to be utterly false. Understanding how the real world works is much more important. That understanding reveals the various constituents of organised money, including government itself, to be initiating and approving the most fundamental crimes against humanity ever conceived.

‘Remaking the Real Economy: Escaping Destruction by Organised Money’ (to be published by Policy Press, August 2020) identifies actions necessary to rebuilding the social-infrastructural layer of the real economy, re-establishing the progressive- competitive layer and refocusing the technological-revolutionary layer to achieve a fully sustainable planet earth.

The practicalities of such an agenda will require a host of corrective measures which will be dependent on the effective regulation and restraint of organised money and the complete displacement of neoclassical economics.

That can be achieved either with the realisation and support of constituents of organised money, or, by some more aggressive action by other constituents. It may not be easy. But if the necessary actions are not achieved, then it will be our generation which is condemned by our daughters and grand-daughters as the contemptible traitors who destroyed their world.