Go to Main Website

Back to Front - Moving money about


AFTER YEARS of being told that the City was an engine for “creating wealth”, the tens of thousands of workers in financial services – and not just in the high-profile collapses of recent weeks – must be wondering what’s gone wrong. Perhaps the reason is that they were never creating wealth in the first place.

For all the homage paid by Brown and Blair before him at the altar of finance capital, the idea that the City was actually creating wealth is one of the more ludicrous cons, like the word “securitised” an abuse of language.

Certainly a lot of money was accumulated there, drawn from far and wide. And equally certainly, a lot was spent – via huge bonuses and (now often worthless) stock options – driving up the cost of housing in and around London and bringing smiles to luxury car dealerships.

But wealth creation? That’s quite another matter. Speculation doesn’t create wealth. You don’t create wealth by going into a casino or buying a lottery ticket (though you make the owners of casinos and lotteries rich). You create wealth by creating things that are useful as well as tradeable – primarily through two activities scorned by Labour: industry and agriculture.

Packaging up a load of bad debts and selling them to someone else is not wealth creation – it’s just wealth redistribution, among the rich only. And when a government takes the risk of billions of pounds of debt, it’s another redistribution – this time a redistribution of risk from the rich back to the poor.

This Labour government has presided over a massive redistribution of wealth: from millions of hard-working people and pensioners to the rich. With its faith in the free market and the City it has encouraged the idea that you create wealth by getting into debt. We all know – or should know – that’s a nonsense.

And let no one think that sub-prime mortgages were limited to the United States. What were British banks doing offering 125 per cent mortgages? They thought that property prices would carry on rising, so their investments would be safe even if the people taking out the loans were kicked out on the streets.

Under this viciously reactionary government – a government that has taken Britain to war in Iraq and Afghanistan, that has stamped on local democracy, that is privatising education and health on a scale Thatcher could only have dreamt of – greed and debt have become the household gods.

The result has been catastrophic. Per capita debt in Britain is now higher than in the United States.

Listen very carefully and you might hear the faint sounds of a handful of stable doors closing – such as the temporary ban on “short selling”. But otherwise nothing has changed. Labour is a party more wedded to finance capital than any in our history. It deserves to go the way of Lehman Brothers, and it will take more than £1 million from Harry Potter’s creator to rescue it.

So where does all this leave the workers? No better off, that’s for sure – not unless we take advantage of this weakened government, this discredited system, and go on the offensive: for jobs, for health, for industry, for education, for a future for Britain.

The Chinese communist Mao Tse-tung understood perfectly: “Everything reactionary is the same: if you don’t hit it, it won’t fall.” Let’s start hitting.