Western capitalism is in crisis, and it is time we woke up to the fact, argues William A. Cook* Last month, the UK journalist Stuart Jeffries writing in the British newspaper The Guardian observed that "capitalism is in crisis across the globe -- but what on earth is the alternative?" In 1840, the US writer Orestes Brownson in his essay The Labouring Classes, asked the same question: "what shall government do? Its first doing must be an undoing�ê� We want first the legislation which shall free the government, whether State or Federal, from the control of the Banks�ê� a banking system like ours, if sustained, necessarily and inevitably becomes the real and efficient government of the country." How ironic it is that 172 years ago, only 49 years after the adoption of the US Bill of Rights, Brownson noted that "at the end of ten years [of] constant hostility, [we know] all too well the power of the Banks, and their fatal influence on the political action of the community." He declares further that "uncompromising hostility" against the banking system should be the motto of every working man and of "every friend of humanity". Brownson's Labouring Classes is a call to action, virtually at the inception of the US, to put the control of the government back in the hands of the people. "The system must be destroyed�ê� The system is at war with the rights and interest of labour, and it must go." How ironic is Jeffries' observation of the current state of affairs, when contrasted to that of Brownson. "Today, 164 years after Marx and Engels wrote about 'grave-diggers', the truth is almost the exact opposite. The proletariat, far from burying capitalism, are keeping it on life support. Overworked, underpaid workers ostensibly liberated by the largest socialist revolution in history [China's] are driven to the brink of suicide to keep those in the West playing with their iPads. Chinese money bankrolls an otherwise bankrupt America." Brownson not only understood where the power existed, he knew all too well the consequences for the people and the country if they were to rise against the forces of privilege. "On this point there must be no misgiving, no subterfuge, and no palliation." To bring down the banks means that "every friend of the system must be marked as an enemy to his race, to his country and especially to the labourer. No matter who he is, in what party he is found, or what name he hears, he is, [in] our judgments, no true democrat, as he can be no true Christian." Today, Brownson would no doubt have understood that the class warfare caused by the industrial revolutions in the UK and the US has not disappeared; indeed, it might be said that the past decades of "de-industrialisation" in America and the shipping of America's industries to foreign countries have resulted in the barons of industry outmaneuvering the workers, depleting their numbers, savaging their unions and destroying the middle class. Some days ago the US channel PressTV contacted me as a possible participant in a new show that concentrates on finance. "Below is the topic of our talk. I really think it is for you," the channel said. The e-mail noted these points of focus: securitisation, the asset-based economy and fractional reserve banking (creating money out of nothing); banks and US politics: how the big banks purchase favourable legislation and influence politics; the Federal Reserve System (what it is and how it operates and shady, behind-the-scene deals and practices); the Jewish domination of the US and European banking systems, from the German Jews and the Rothschild banking family to the current near monopoly of modern Jewish dominance; the sub-prime mortgage crisis, bankruptcy and bailing out of the "too-big-to-fail" banks and the failure/collusion of the rating agencies; the shadow banking system and non-bank banks/institutions and their role in the current great recession; monetary and fiscal policies (quantitative easing/printing money) and related macro/micro-economic effects and side-effects including inflation, accumulation of debt and deficit. I declined. While I appreciated the opportunity to talk about Wall Street, my real interest in economics is not what Wall Street is doing and why, but why Wall Street exists at all. My concerns go back to the founding documents of the US and indeed those of any country that claims to be the securer of its citizens' rights. Wall Street is a beast created by bankers, private bankers, using the money that belongs rightfully to the people of the country. The economic system of any truly democratic state should serve the state so it can be responsive to its citizens. This system I have called "nationomics", a non-profit system serving the citizens and not profiteers. Only a country can create a currency for its people as stipulated in its constitution unless the people's representatives have given that right to private banks that are based on profit and usury. That was the case in the United States when Congress created the Federal Reserve System in 1913. In effect, Congress gave the American citizens' rights and their tax dollars to those who borrow from the Federal Reserve, while these private bankers made enormous profits through interest and the issuance of money they did not hold, for which they charged interest, all backed by the taxes of the people of America. Thus are the people of the United States and their children held hostage to a corrupt system. People have the right to demand that the state protect them, keep the nation secure and provide for their health ("right to life" in the US constitution, which means health) and their common good. Yet, the opposite is true in the West; the Bank of England, like the Federal Reserve Bank in the US, is owned by a private family/corporation like the Rockefellers/Rothschilds. Even the gold reserve in Britain is owned by these banks, and, not to be outdone, the newly minted United States in 1791 chartered the Bank of the United States, almost 100 years after the Crown chartered the Bank of England, as a privately owned corporation with the US government holding only 20 per cent of the shares. Consider that these banks borrow money from the Federal government, paying a paltry percentage for that favour, then loan that money out to citizens and entrepreneurs et al at generally exorbitant interest rates ranging from five or six per cent to 30 per cent; indeed, they set the rates and they benefit from inside knowledge to gouge the government of the money it receives, taxpayers' money. "The super-rich are currently hiding away wealth estimated between US$21 trillion and US$32 trillion in tax havens such as Switzerland and the Cayman Islands," according to writer Ernst Wolff, who also notes that "in 2005, the estimated offshore assets of the super-rich amounted to US$11.5 trillion. Since then this total has doubled or tripled. Today the top 10 per cent of the world's population control 84 per cent of its assets, while the bottom 50 per cent have access to just one per cent. The top of the pile, 92,000 people who constitute an infinitesimal fraction of the world's population, have hidden financial assets amounting to more than US$9 trillion, an average of nearly US$100 million apiece." These hidden assets would eliminate roughly three-quarters of America's estimated debt. Consider as well that the major corporations benefiting from the largesse of the Federal Reserve System also stash away their profits to avoid paying taxes to the very Congress that must raise the debt ceiling every year to keep the budget afloat. "The world's 10 largest private financial institutions, including Deutsche Bank, moved more than US$6.25 trillion offshore in 2010," Wolff writes. Perhaps of even more interest to the beleaguered US taxpayer is the ability of the favoured wealthy, even in underdeveloped countries to which taxpayers' money has gone in the form of loans, to hide their money, thus denying its use for vital services to their fellow citizens. "In the past 40 years, the wealthiest citizens from 139 developing countries hid away non-declared assets estimated at US$7.3 trillion to US$9.3 trillion in tax havens. Their offshore assets are often greater than the national debt of their respective countries and play a major role in the lack of money to finance urgently needed public health and education programmes in their home countries," writes Wolff. That's usury plain and simple; we are just beginning to understand how criminal and greedy this system is, as the recent debacle over the London Interbank Lending Rate (LIBOR) demonstrates. Note how merciless this system is, simply because it is accountable to no one. When a citizen fails to pay a mortgage because the value of a house collapses to its true market value, the banks don't readjust to the market. They foreclose on a house they mortgaged at high rates and then gamble on the failure of their actions, knowing how risky their ventures were. And since they have access to US politicians through campaign contributions to both parties, in affect buying the people's representatives, they determine how the taxpayers dollars are distributed in a vain attempt to right a Ponzi scheme they themselves designed. By contrast, a national bank working with state banks could provide the dollars for the states to function at low rates, knowing that all they needed to cover non-profit costs would be the value of the services being covered. No trading on phony mortgage schemes, no destroying of another nation through exorbitant interest rates that get higher and higher as the country goes into default through "austerity" measures that need not exist, followed by Wall Street vultures seeking ways to capitalise on the economic chaos while people are unemployed and desperate. Take the usury out of banking and the profit schemes used to create wealth without creating anything but phony paper, and tax money could be used to put people to work, knowing that whatever they earned would be recycled into the nation's economy, items bought and jobs created. Give it to the bankers and it leaves the US for the Cayman Islands, with nothing offered to replenish the coffers of the taxpayers. The solution is to abandon the banks and let them slide into oblivion, into the slime they represent. Since the only money they can demand belongs to the citizens, they have no money to use should their existence be denied. What power they have has been given to them by corrupt politicians; they too should be thrown out. The US government has responsibilities to its citizens first and to the economic system as it serves that goal. The bankers can demand what they want, but without the currency of the state available to them, they must resort to the courts and to the people that pay them, the taxpayers. The 19th-century president Abraham Lincoln in a time of crisis financed the US Civil War by issuing United States notes without interest. We in the US are in a time of crisis today, and we too could issue notes and cease functioning within the Federal Reserve System -- indeed, pay it off with such notes -- and return the control of the economic system to the government. How ironic that banking built on the premise of the Federal Reserve depends on a guarantee of payment based on taxes, which is a socialist system at its core, true socialism at its finest. No one speaks about this insidious, parasitic system that bleeds the taxpayer to keep its profits flowing. Ironically, as the barons have joyfully moved their industries out of America in order to capitalise on wage-slaves in underdeveloped countries, they have drained America of its middle class, which can no longer continue the flow of taxes since their jobs have been cut, close to 15 million unemployed these past five years, and the Congress must raise the debt ceiling and borrow more billions to pay the bankers who demand their payback even as they concoct schemes like derivatives to milk the failed system they have created. This brings us back to Orestes Brownson, as he longed to see the America of 1840 attack the barons and bankers. The rich, he noted, will never voluntarily acquiesce to equality of income or parity of living, since "we know too much of human nature to believe that this will ever be effected peaceably. It will be effected only by the strong arm of physical force. It will come, if it ever comes at all, only at the conclusion of war, the like of which the world as yet has never witnessed, and from which, however inevitable it may seem to the eye of philosophy, the heart of humanity recoils with horror." Can anyone doubt that capitalism is a failed economic system? How many times must it fail for people to accept that fact? Yet, the US press and representatives and US schools keep up a thundering drum beat of regurgitation to keep it afloat when its very existence has been made possible by taxpayer buyouts of its failed policies. But, like the US writer Ayn Rand, one needs to keep living and pushing to that objectivistic end, self-gratification at any price, even if it means living off the dole. How ironic. * The writer is professor of English at the University of La Verne in southern California.
