Readers of this weblog will know that the global financial crisis of the past 3 weeks has, in my view, fundamentally changed the landscape of global capitalism. A world that was effectively born on 4 November 1980, with the election of Ronald Reagan as U.S. President (I was in San Francisco at the time) has ended, and a period of untrammelled global neoliberalism will have to change if global finance capital is to survive.
How much has the world changed? Consider this. In the United Kingdom, where, of course, London is the second most important financial center in the world, the Royal Bank of Scotland, one of Britain's most important financial institutions, will soon be 57 per cent owned by the British state. It is also expected that the British state will own up to 40 per cent of the newly merged (and so far unnamed) Lloyds-TSB-Halifx Bank of Scotland combination, which is also one of the largest and most important British financial institutions. The British state already owns Northern Rock and Bradford and Bingley, specialist mortgage lenders that overreached their market niche and paid the price. In other words: the British state, which was one global center of the de-regulating neoliberal project, now is steering some of the most important components of British finance capital. Consider also another paragon of neoliberalism (indeed, as a consequence of the Wassenaar Accord, possibly the earlist adopter of neoliberalism in the North: the Netherlands' state owns the Dutch rump of ABN-AMRO and Fortis Nederland, two of the three biggest banks in the Netherlands. Again: the Dutch state is steering the most important components of Dutch finance capital. Examples of this degree of state intervention in finance capital abound in the North: in Germany, in Belgium, in Denmark, in Ireland, in Italy, in Iceland and, in all places, in Switzerland. The most significant intervention, of course, is the one that I have saved for last: the U.S. state owns 79.9 per cent of AIG, which at one time was the largest insurance company in the U.S., and as a consequence of the policy moves made by the U.S. Treasury on Monday will soon own significant shares in nine major U.S. financial institutions, including Bank of America (with which one-half of all U.S. households does some kind of banking), Citigroup, Wells Fargo, Morgan Stanley, Goldman Sachs (former firm of the U.S. Treasury Secretary), J.P. Morgan and Merrill Lynch. This is a consequence of their agreement to take part in both the Treasury’s ‘voluntary’ capital purchase programme--which was nothing of the sort, which U.S. finance given no choice by the state--and the Federal Deposit Insurance Corporation’s guarantee programme of senior bank debt and assorted deposit liabilities.
The world has changed; the state has acted to save capitalism, just as it did in the 1930s, and where this will lead is very difficult to know.
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