Trapped by Finance Capital: Business as Usual While Planet Burns. Part I: Control

Despite the absurd antics of a few fossil-shills in the U.S. Congress, most Americans now recognize the urgency of taking strong actions to mitigate the rapidly growing climate crisis. Mitigation has to mean stopping the flow of CO2 into the atmosphere and oceans so that the damage to ecosystems that is well underway can be slowed. It means bringing earth systems back into balance and relative stability. That is a tall order, which is unfortunately still treated by politicians as just another policy choice. The real choice is between mitigating climate chaos and the extinction of Homo sapiens.[1]

Without huge reductions in total carbon emissions (to near zero), human populations around the world will not be able to adapt to destabilized climate conditions. Growing climate disruptions are already threatening food production and diverse human habitats. Even the World Bank, ordinarily a promoter of fossil-fuel driven international development, has recognized the imminent dangers of continued global warming. But finance capital (the money investment banks and corporations use to finance capital extraction/production projects), whether on Wall Street, in Geneva, or even in Beijing, marches to its own drummer – business as usual.

Whatever rhetoric politicians may deploy trumpeting “personal freedom,” or “free markets,” or “free enterprise,” the locus of control of national and international economies is found in the central banks, large investment banks, and hedge funds around the world. For a very long time, the ideologists of “free market” economics have been able to successfully conflate “democracy” with the control of markets by Finance Capital. When these propagandists demand no public control over finance capital, they usually invoke “personal freedom” or “innovation” by “small business” – and investment needed by the “job creators.”

Political decisions are routinely made in the interests of the largest financial institutions in the world. Because of the creation and flow of money and debt is largely controlled by these powerful institutions, both corporate investment planning and government fiscal planning are almost always consistent with the interests of finance capital. We tend to think of the Federal Reserve as a government institution. It is certainly federally chartered. But it was given the power to create money and allocate government debt in the interests of its member banks – which own it.

Say what you will about the ideals of “democracy” or a “representative government,” it is the giant financial institutions that control the economy, not presidents, not Congress. Interests of finance capital and the fossil fuel corporations are closely aligned. Their actions confirm that. Corporate consolidation in various economic sectors facilitates implicit coordination and control. You do not need a back-room conspiracy when the interests and affiliations of large institutions are integrated.

The economic interests of General Electric, for example, control a large segment of the mass media communications sector. Owning Comcast cable, NBC, Universal Pictures, and Focus Features, helps frame the public consciousness. Content control helps align public beliefs and biases with corporate and financial interests, instilling fear about terror, a putative necessity for perpetual war, and the “threat” of immigration. All these contribute to its bottom line. GE is but one example. Need I mention Rupert Murdoch’s NewsCorp properties, such as the Wall Street Journal, Fox News, and the New York Post? Or the media content controlled by Viacom, Time Warner, Disney, and CBS? GE also manages a large segment of government military and “security” spending, along with a few other “defense” contractors. A mere six media giants control about ninety percent of what we watch, listen to, and read about the world. Most media content is highly consistent with the interests of finance capital.

This institutional structure keeps finance capital in a very comfortable political position. Making big-money-now is the core goal of finance capital. That does not leave much, if any, room for public responsibility. Business as usual for finance capital is to invest in more and more fossil-fuel driven economic growth. It is quite amazing when one thinks about men who manage the world’s largest financial institutions just not getting the threat to human existence that their continued climate-destabilizing practices ensure.

Or do they? Recent revelations about Exxon’s executive “leadership” knowing a great deal about the dangers of global warming posed by continued carbon emissions in the late 1970s reveal a human capability for evil on a planetary scale. With that knowledge, Exxon [2] promoted the lies of “climate denial” contributing to decades of delay on serious climate action. The scale of the ensuing chaos is so great that it is hard to fathom.

Part II of this 3-part series will deal with the planetary chaos that results from the distortions of the role of finance capital in controlling the economy today.
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[1] Gerardo Ceballos, Paul R. Ehrlich, Anthony D. Barnosky, Andrés García, Robert M. Pringle, and Todd M. Palmer, “Accelerated modern human–induced species losses: Entering the sixth mass extinction.” Science Advances. 19 Jun 2015: Vol. 1, no. 5, e1400253. Accessed at http://advances.sciencemag.org/content/1/5/e1400253
[2] See also investigative reports in the Los Angeles Times, “What Exxon knew about the Earth’s melting Arctic,” by Sara Jerving, Katie Jennings, Masako Melissa Hirsch and Susanne Rust (Oct. 9, 2015). Accessed at http://graphics.latimes.com/exxon-arctic/ . See also, Inside Climate News, “Exxon: The Road Not Taken.” Accessed at: http://insideclimatenews.org/news/22102015/Exxon-Sowed-Doubt-about-Climate-Science-for-Decades-by-Stressing-Uncertainty

Global Capital, Illusions of Wealth, and the Walking Dead

Any genuine scientific analysis of the trajectory of global capital is hard to find. Economic history is rife with ideological stories of “wealth creation,” “capital formation,” and the mythical “invisible hand.” What is capital? What is wealth? What is money? Well, they are all pretty much taken for granted in most economic thinking – conveniently so for the financial elite. On top of that, economics itself has been dominated by the ideology of the power elites that dominate society. Little room is left for science. International finance and the ‘wealth of nations’ are managed in very strange ways – I describe them below in a highly condensed sketch.

Global Capital and Central Banks
Put as succinctly as I can, during the industrial age finance (the management of capital) has gradually become globalized. But it was not international trade that spurred the emergence of a global financial network of banks. It was more a matter of the most powerful banks forging a network of control over the monetary systems of nations. In fact, industrial development and the human misery that has accompanied unprecedented wealth have always involved a struggle between public and private control of money and banking.

Each historical example of public banking and sovereign control of national currencies has been accompanies by prosperity and stable prices, then followed by an assault on public authority by private banking. Usually, this has led to the “privatization” of what is in its essence a public utility: money and banking. Benjamin Franklin explained to the British parliament how the Pennsylvania and other colonies were funding their economies by issuing credit in the form of paper script not “backed” by gold or silver to stimulate commerce, leading to unexpected colonial prosperity. Soon King George banned colonial script, and Parliament passed a Currency Act, requiring all taxes to be paid in gold or silver, forcing them to borrow from the Bank of England at usurious rates. That put an end to colonial prosperity based on public credit and gave a strong impetus to revolution.

Numerous other examples, from Canada to New Zealand, Lincoln’s “Greenbacks,” etc., eventually let to a cartel composed of the central banks of each nation, each privately owned and coordinated by the Bank for International Settlements (BIS) in Geneva, itself owned by the central banks. The International Monetary Fund (IMF) and World Bank (WB) impose financial requirements and lend to ‘developing countries’ in support of the interests of global capital in dominating national economies.

So, the currencies and banking requirements of nations are controlled by the private international banking cartel. The control of national economies in the interests of central banks, causes booms and busts in their pursuit of bank profits and control of national economies. Today, each central bank is largely controlled by its relationships to the cartel. Governments take a back seat to the whole of global finance, and their economic and monitary policies are subordinate to the global capital markets controlled by the BIS, the IMF, and the WB, all operated in the interests of the banks, not nations.

Illusions of Wealth
Most of the ‘highest values’ of modern economic ideology are buzzwords for the mechanisms by which the Big Banks control national economies and extract vast amounts of “wealth” from them.

“Free Trade,” for example, is actually the freedom of giant corporations and the giant banks that finance them to exploit labor internationally and avoid any responsibility for environmental damage they do in the nations in which they operate. “Financial innovation” is actually the various schemes of the Big Banks to extract phantom wealth out of the banking system by ‘packaging’ debt into complex derivative instruments from which additional fees and profits are squeezed, and risk externalized.

It is all built on a system of debt-based money, that is, money created out of debt through double-entry electronic bookkeeping when a bank makes a loan. Banks are allowed to lend much more money than they have ‘on reserve.’ The money they lend is thereby created “out of thin air.” They can borrow even more from the central bank – the Federal Reserve in the U.S. – at very low rates and lend it to their customers at much higher rates. Remember, the Fed is owned by its member banks.

It’s a great big illusion. Why? Because the creation of money is not related to actual economic activity in the real world. Of course, lending does occur for actual production of goods and services for the economy, but the money and banking system I am describing here operates independently and in addition to the real world of investment in the economy itself. In the past couple of decades the phantom-wealth ‘economy’ has expanded to the point where it accounts for a much larger share of the GDP than before. Yet, it contributes nothing to the real economy. Despite massive “quantitative easing,” little of the vast funds released to the Big Banks have reached down into the real economy. Contrary to the dominant ideology, you could do away with these “too big to fail” banks and nothing much in the real world would be missed.

The Walking Dead
The unbridled global capitalist system has no natural constraints, except the finite supply of energy and other resources. It is in the early but rapidly accelerating stage of near-death. Unless it is radically transformed, quickly, the extinction of the human species from which it emanates, will be its final constraint. That will depends upon whether or not the illusions of global finance capital continue beyond the tipping point of ecological and societal collapse. In either case, it is already the walking dead.