I just watched today on YouTube a video of the mock trial of Goldman Sachs that was held at Occupy Wall Street last week. While it’s admittedly tragicomic that we’re now more than three years into the current debt crisis and still nobody responsible (save Bernie Madoff) has gone to jail, as Matt Taibbi pointed out a while ago, I don’t agree with Chris Hedges that the main thing now is to return to the rule of law in finance. I think another quote from David Malone‘s excellent book The Debt Generation (2010) is in order here (I promise to write a review of the book later):
“If Goldman Sachs were to be found guilty¹, the case would no doubt be cited as an ugly ‘bad apple’ story, perpetrated by ‘rogue traders’. It would be a cautionary banker’s tale used to highlight their own horror at such ‘isolated’ bad practice. But, if you look around, it isn’t just a one-off. It’s not a case of one bad apple but more like an infected orchard.
There are currently investigations into the dealings of most of the world’s biggest global accountant firms, who along with the banks they ‘audit’, make up the muscle and sinew of the financial world.
All the investigations point to accountants seemingly blind to the very things they are supposed to be looking for. We see mortgage brokers not properly checking on the real ability of their buyers to pay the mortgage. We see the banks and brokers securitising those loans not properly checking the real quality of those loans. We see the banks’ auditors not properly checking the banks, and we see the ratings agencies not properly checking on the real quality of the securities but stamping almost anything as AAA guaranteed.
What we see are whole chains of people (and it’s people we are talking about here not some faceless automated ‘system’) choosing to ignore the law, and their moral obligation, and instead seize their share of the rotten profit. In many cases the bankers, their accountants and even their regulators are the same people who revolve from one position to another. So it’s not just Goldman Sachs bankers. Not just one bad apple. Not even just one bad tree. What we see is corruption from the roots up to the very top. Any horticulturist will tell you when an orchard is infected you cannot prune or simply remove the odd tree. You have to tear every last tree out by the roots and burn the lot. I’d say this is good and sound advice.
The financial system has become systemically corrupt. It is no longer fit for, or even designed, for the purpose of spreading wealth. It has become a means of looting wealth from those foolish enough to still observe the laws, and transferring it to those who regard themselves as far too clever and superior to have to bother with such trifling niceties.”
The keyword here, I think, is “systematically.” The problem we have is not individual greed or criminality, but a system that engenders and rewards unscrupulous profit-making, and nothing else. In this system laws are not seen as absolute limits but rather as obstacles to be negotiated.
I think the root of the problem is the fact that the financial system has become totally alienated from the real world. In the fantasy land of finance wealth can be created out of thin air and brokers bet on securities like they were race horses. Living in this fantasy land, these people fail to see that their decisions actually have effects on the lives of real people in the real world. Morality means little in a fantasy land. Morality can only arise from being an integral part of a genuine human society.
Nothing in this current financial system is worth salvaging. What we need is a totally new banking system that is wholly owned by the people, outlaws speculation and discourages hoarding of resources. But that’s not enough. We also need to take the production of those goods that are necessary for the sustenance of human societies back from the publicly traded corporations. That’s how we starve the vampire squid.
¹ Malone is referring to the fraud suit filed by the Securities and Exchange Commission in April 2010.