‘BY means of the banking system the distribution of capital as a special business, a social function, is taken out of the hands of the private capitalists and usurers. But at the same time, banking and credit thus become the most potent means of driving capitalist production beyond its own limits, and one of the most effective vehicles of crises and swindle.’ Karl Marx Capital Vol 3 Chapter 36.
How accurate is Marx’s analysis of banks and the entire banking system can be seen today, as crises and swindles emerge rapidly.
Every week a new scandal hits the pages involving the giant banks that dominate modern capitalism, scandals that reveal the criminal venality that exists at the very heart of the banking system.
The most recent involves six major global banks being fined by US and British regulators a record $6 billion for rigging the world’s currency markets.
This latest case saw guilty pleas from Barclays Bank, JPMorgan Chase, Citicorp and the Royal Bank of Scotland (RBS) for conspiring to manipulate the massive currency market, as well as a guilty plea from Switzerland’s UBS, for rigging benchmark interest rates – the Bank of America is facing huge fines for ‘unsafe and unsound practices’.
US regulators described the case as ‘a brazen scheme’ to manipulate the $5.3 trillion-a-day global foreign exchange market in order to cheat their clients and boost the bank’s own profits.
The manipulation was simple, working together employees from these banks – communicating with each other via an internet chat room called ‘The Cartel’ – fixed the currency exchange rate on a daily basis so that their banks could buy foreign currencies at a lower level and then sell them on to customers at a higher level with the banks pocketing the difference.
The US attorney general commented ‘their actions inflated the banks’ profits while harming countless consumers, investors and institutions around the globe’.
Despite all this rhetoric about brazen criminality, the most striking feature of this latest case is, that in common with previous banking scandals like the rigging of the Libor interest rates, not a single banker is facing the threat of jail.
Even when they are forced to admit their own culpability and guilt in massive frauds involving billions, the bankers are assured of the gentlest of raps across the knuckles.
The fines, which are trumpeted as being record breaking, are in reality insignificant in terms of the vast profits made by the banks.
That fines and public exposure are no deterrent to banks is obvious when you consider that this latest round of illegal rigging took place at least one year after the Libor rigging scandal broke.
Indeed it was instructive that the reaction of the financial markets to the news of these record fines was not to heap abuse and denounce these banks as criminals but to pile into them – Barclays shares shot up by more than 3% adding £1.4 billion to the bank’s value.
This is the price of being a banking criminal under capitalism, when caught and convicted you make even more profit!
In the case of RBS it is 80% owned by the taxpayer, and it is they who will pick up the bill for a scam that poured billions into the profits and bonuses of the bankers.
It is, of course, the working class who the bankers expect will always pay for their debts while they pocket the profits.
When the entire banking system collapsed into bankruptcy in 2008 their debts were taken over by the capitalist state – it is these debts that capitalism is now demanding be paid for through the most savage austerity cuts and privatisations across the world.
The banks cannot be tamed or regulated as the reformists in the Labour Party claim. They can only be abolished along with the capitalist system that they were instrumental in building, by the socialist revolution.
Under a socialist society the banks, along with land and industry, will be nationalised and placed under the control of the workers for the benefit of all not the profit of a few.