Taibbi: The Lunatics Who Made a Religion Out of Greed and Wrecked the
Economy
By Matt Taibbi, The Guardian
Posted on April 26, 2010, Printed on April 26, 2010

So Goldman Sachs, the world’s greatest and smuggest investment bank, has
been sued for fraud by the American Securities and Exchange Commission.
Legally, the case hangs on a technicality.

Morally, however, the Goldman Sachs case may turn into a final
referendum on the greed-is-good ethos that conquered America sometime in
the 80s – and in the years since has aped other horrifying American
trends such as boybands and reality shows in spreading across the
western world like a venereal disease.

When Britain and other countries were engulfed in the flood of defaults
and derivative losses that emerged from the collapse of the American
housing bubble two years ago, few people understood that the crash had
its roots in the lunatic greed-centered objectivist religion, fostered
back in the 50s and 60s by ponderous emigre novelist Ayn Rand.

While, outside of America, Russian-born Rand is probably best known for
being the unfunniest person western civilisation has seen since maybe
Goebbels or Jack the Ripper (63 out of 100 colobus monkeys recently
forced to read Atlas Shrugged in a laboratory setting died of
boredom-induced aneurysms), in America Rand is upheld as an intellectual
giant of limitless wisdom. Here in the States, her ideas are roundly
worshipped even by people who’ve never read her books or even heard of
her. The rightwing “Tea Party” movement is just one example of an entire
demographic that has been inspired to mass protest by Rand without even
knowing it.

Last summer I wrote a brutally negative article about Goldman Sachs for
Rolling Stone magazine (I called the bank a “great vampire squid wrapped
around the face of humanity”) that unexpectedly sparked a heated
national debate. On one side of the debate were people like me, who
believed that Goldman is little better than a criminal enterprise that
earns its billions by bilking the market, the government, and even its
own clients in a bewildering variety of complex financial scams.

On the other side of the debate were the people who argued Goldman
wasn’t guilty of anything except being “too smart” and really, really
good at making money. This side of the argument was based almost
entirely on the Randian belief system, under which the leaders of
Goldman Sachs appear not as the cheap swindlers they look like to me,
but idealized heroes, the saviors of society.

In the Randian ethos, called objectivism, the only real morality is
self-interest, and society is divided into groups who are efficiently
self-interested (ie, the rich) and the “parasites” and “moochers” who
wish to take their earnings through taxes, which are an unjust use of
force in Randian politics. Rand believed government had virtually no
natural role in society. She conceded that police were necessary, but
was such a fervent believer in laissez-faire capitalism she refused to
accept any need for economic regulation – which is a fancy way of saying
we only need law enforcement for unsophisticated criminals.

Rand’s fingerprints are all over the recent Goldman story. The case in
question involves a hedge fund financier, John Paulson, who went to
Goldman with the idea of a synthetic derivative package pegged to risky
American mortgages, for use in betting against the mortgage market.
Paulson would short the package, called Abacus, and Goldman would then
sell the deal to suckers who would be told it was a good bet for a long
investment. The SEC’s contention is that Goldman committed a crime – a
“failure to disclose” – when they failed to tell the suckers about the
role played by the vulture betting against them on the other side of the
deal.

Now, the instruments in question in this deal – collateralized debt
obligations and credit default swaps – fall into the category of
derivatives, which are virtually unregulated in the US thanks in large
part to the effort of gremlinish former Federal Reserve chairman Alan
Greenspan, who as a young man was close to Rand and remained a staunch
Randian his whole life. In the late 90s, Greenspan lobbied hard for the
passage of a law that came to be called the Commodity Futures
Modernisation Act of 2000, a monster of a bill that among other things
deregulated the sort of interest-rate swaps Goldman used in its
now-infamous dealings with Greece.

Both the Paulson deal and the Greece deal were examples of Goldman
making millions by bending over their own business partners. In the
Paulson deal the suckers were European banks such as ABN-Amro and IKB,
which were never told that the stuff Goldman was cheerfully selling to
them was, in effect, designed to implode; in the Greece deal, Goldman
hilariously used exotic swaps to help the country mask its financial
problems, then turned right around and bet against the country by
shorting Greece’s debt.

Now here’s the really weird thing. Confronted with the evidence of
public outrage over these deals, the leaders of Goldman will often
appear to be genuinely confused, scratching their heads and staring
quizzically into the camera like they don’t know what you’re upset
about. It’s not an act. There have been a lot of greedy financiers and
banks in history, but what makes Goldman stand out is its truly bizarre
cultist/religious belief in the rightness of what it does.

The point was driven home in England last year, when Goldman’s
international adviser, sounding exactly like a character in Atlas
Shrugged, told an audience at St Paul’s Cathedral that “The injunction
of Jesus to love others as ourselves is an endorsement of
self-interest”. A few weeks later, Goldman CEO Lloyd Blankfein told the
Times that he was doing “God’s work”.

Even if he stands to make a buck at it, even your average used-car
salesman won’t sell some working father a car with wobbly brakes, then
buy life insurance policies on that customer and his kids. But this is
done almost as a matter of routine in the financial services industry,
where the attitude after the inevitable pileup would be that that family
was dumb for getting into the car in the first place. Caveat emptor, dude!

People have to understand this Randian mindset is now ingrained in the
American character. You have to live here to see it. There’s a hatred
toward “moochers” and “parasites” – the Tea Party movement, which is
mainly a bunch of pissed off suburban white people whining about
minorities consuming social services, describes the battle as being
between “water-carriers” and “water-drinkers”. And regulation of any
kind is deeply resisted, even after a disaster as sweeping as the 2008
crash.

This debate is going to be crystallised in the Goldman case. Much of
America is going to reflexively insist that Goldman’s only crime was
being smarter and better at making money than IKB and ABN-Amro, and that
the intrusive, meddling government (in the American narrative, always
the bad guy!) should get off Goldman’s Armani-clad back. Another side is
going to argue that Goldman winning this case would be a rebuke to the
whole idea of civilisation – which, after all, is really just a
collective decision by all of us not to screw each other over even when
we can. It’s an important moment in the history of modern global
capitalism: whether or not to move forward into a world of greed without
limits.

Matt Taibbi is a writer for Rolling Stone.

The Enterprise of Nations
by David S. Landes
Critics have tried to explain away the West’s centuries- long economic domination of the globe; they would do better to study its lessons.

Western entrepreneurship and technological progress go back centuries and have changed the world for the better. That, at least, is one assessment of the historical record— one with which not everyone would agree. There are some scholars who, disapproving of Western triumphalism or solicitous of Asian (mostly Chi nese) pride and prowess, would date the Industrial Revolution as a late phenomenon in the history of entrepreneurship and treat it as lucky accident (or unlucky, depend ing on one’s sense of values). It could have happened anywhere, they say; it just fell to Europe or Britain, in large part owing to political fortune, reinforced by overseas dominion. And globalization, in the sense of worldwide diffusion of trade, industry, and technology, came even later, after World War II.

Keynes: The Return of the Master by Robert Skidelsky
Allen Lane, 213 pp, £20.00, September 2009, ISBN 978 1 84614 258 1

It has become a commonplace to say, in the aftermath of the Great Recession, that ‘we are all Keynesians now.’ If this is so, then Keynes’s great biographer, Robert Skidelsky, should have much to say about the recession, its causes and the appropriate cures. And so indeed he does. I share with Skidelsky the view that, while most of the blame for the crisis should reside with those in the financial markets, who did such a poor job both in allocating capital and in managing risk (their key responsibilities), a considerable portion of it lies with the economics profession. The notion economists pushed – that markets are efficient and self-adjusting – gave comfort to regulators like Alan Greenspan, who didn’t believe in regulation in the first place. They provided support for the movement which stripped away the regulations that had provided the basis of financial stability in the decades after the Great Depression; and they gave justification to those, like Larry Summers and Robert Rubin, Treasury secretaries under Clinton, who opposed doing anything about derivatives, even after the dangers had been exposed in the Long-Term Capital Management crisis of 1998.

We should be clear about this: economic theory never provided much support for these free-market views. Theories of imperfect and asymmetric information in markets had undermined every one of the ‘efficient market’ doctrines, even before they became fashionable in the Reagan-Thatcher era. Bruce Greenwald and I had explained that Adam Smith’s hand was not in fact invisible: it wasn’t there. Sanford Grossman and I had explained that if markets were as efficient in transmitting information as the free marketeers claimed, no one would have any incentive to gather and process it. Free marketeers, and the special interests that benefited from their doctrines, paid little attention to these inconvenient truths.

While economists who criticised the ruling free-market paradigm often still employed, as a matter of convenience, simple models of ‘rational’ expectations (that is, they assumed that individuals ‘rationally’ used all the information that they had available), they departed from the ruling paradigm in assuming that different individuals had access to different information. Their aim was to show that the standard paradigm was no longer valid when there was even this seemingly small and obviously reasonable change in assumptions. They showed, for instance, that unfettered markets were not efficient, and could be characterised by persistent unemployment. But if the economy behaves so poorly when such small realistic changes are made to the paradigm, what could we expect if we added further elements of realism, such as bouts of irrational optimism and pessimism, the ‘panics and manias’ that break out repeatedly in markets all over the world?

Of course, one didn’t have to rely on theoretical niceties in order to criticise the faith in unfettered markets. Economic and financial crises have been a regular feature of capitalist economies; only the period of strong financial regulation after the Second World War was almost totally free of them. As financial market regulations were stripped away, crises became more common: we have had more than 100 in the last 30 years.

The present crisis should lay to rest any belief in ‘rational’ markets. The irrationalities evident in mortgage markets, in securitisation, in derivatives and in banking are mind-boggling; our supposed financial wizards have exhibited behaviour which, to use the vernacular, seemed ‘stupid’ even at the time. If we are to design policies to prevent crises or to deal with them when they occur, it is essential to understand the critical flaws in the standard paradigm. It is here that Skidelsky goes astray.

Is Anti-Capitalism Enough? The New Crisis & the Left
— Howard Brick

The New Spirit of Capitalism
by Luc Boltanski and Eve Chiapello
translated by Gregory Elliott
Verso Books 2006, paperback edition 2007, 656 pages, $39.95.

WHETHER OR NOT the current economic crisis and a historic
presidential election open up hidden potentials for renewed
popular protest and collective action, it is obvious that the
radical Left has lost a great deal of its size, visibility, élan
and influence since the 1970s.

When French sociologists Luc Boltanski and Eve Chiapello commenced
their work together in the mid-1990s, resulting in this monumental
and inventive book, they saw not only that the Right had surged
and the Left declined since heady days of revolt in the late 1960s.

They also believed that “social critique has not seemed so
helpless for a century.” That is, the practical and theoretical
opposition to the status quo was weaker than at any time since the
beginnings of the modern mass labor and socialist movement.(1)

Why was the opposition so deep in the hole? After all, the signs
of growing inequality were evident, and activism persisted through
the 1980s and ’90s in addressing acute problems and grievances,
concerning AIDS, homelessness, the plight of the undocumented, or
the lack of modern medical care in the poor world at large. But
almost no one talked much any longer of the systemic framework —
of capitalism — that demanded a correspondingly systemic
challenge, thought Boltanski and Chiapello (hereafter B&C).

In this respect, things may have been different in the United
States than in France. Here, plenty of people were talking about
capitalism — in an overwhelming din of celebration.

While the remarkable energy signaled by the burst of the
“anti-globalization,” or global justice movement, promised to
“revive critique,” as B&C put it, those campaigns suffered a sharp
setback in the wake of a renewed Right turn following 9-11. Even
the momentous antiwar protests of 2003 lost energy steadily as the
Iraq war continued.

Now, nearly ten years after B&C first ventured their judgment that
“capitalism has benefited from the enfeeblement of critique,” it
remains unclear if much is different.(2) Capitalism has suddenly
revealed its fragility for all to see, but it is quite another
matter whether the Left now has the standing or the poise to offer
the radical, democratic and transitional demands that would, one
would think, have a growing audience amidst the present crisis and
current calls for “change.”

It is the great ambition of The New Spirit of Capitalism to
diagnose the peculiar shape that capitalism has assumed since the
1970s, to explain how and why its new forms have eluded a
forceful, concentrated challenge, and to venture proposals for
reinvigorating, indeed reinventing an effective anticapitalist
critique.

It’s not as if everything is new: Capitalism, in B&C’s eyes,
remains a system for pursuing profits and limitless accumulation,
amidst the generalization of wage-labor; and anticapitalism —
critiques of the domination, alienation, inequality, and
antisocial egoism spawned by the system—has kept it company since
its very beginning. Yet there has been plenty of room for
shape-shifting along the way.

(clip)

More than two years after Wall Street’s closest brush with death since the Great Depression, taxpayers, investors and voters are still waiting for the kind of bare knuckles Congressional action like the Pecora Hearings in the 1930s that resulted in federal legislation creating basic firewalls within the banking industries.

http://www.guardian.co.uk/commentisfree/belief/2009/aug/15/einstein-darwin-mary-midgley

We all have myths through which we explain the world. The very word “myth”, however, is a little awkward, because it is sometimes used simply to mean “false”, but its other meaning can be very useful. I also talk about dreams and dramas and visions and so forth. Whichever way one talks about it, it’s about an imaginative background, a way of seeing a problem in the world which determines what questions you ask and how you select your questions.

The idea that all you need to do is simply and honestly find the answers to questions does not work. You’ve got to have the right questions. As the history of science has built up and developed, at every stage this has been a very important factor.

In the 17th century the imagery of clockwork was terribly strong, so when Newton was trying to understand the universe he was seeing it as a clock heading in a single direction. It’s not surprising that people were terribly impressed with clockwork because at the time it was magic, a miracle, a mystery. Once you have established a way like that of thinking about how things work, you stick with it, it is gratifying and satisfying – you find you can apply it to lots and lots of things, so you don’t feel a need to look for another one.

It remains, of course, with us. We still talk about a mechanism. And the idea that all the bits of our bodies are machines is a thought often used today. For one thing it makes our bodies less frightening – a machine is something that people make, something that people can control, can take out and alter. It provides a sense of control.

So people very much liked to look at things this way. After a time, however, physics began to find the machine image not very satisfactory; so from Michael Faraday’s time, instead of little particles you started having fields and waves and so on. Different imagery was required. Then from Albert Einstein on, the imagery questions became very difficult indeed – there is no comprehensive model or pattern which you can imaginatively see.

By the 19th century, the age of Charles Darwin, the market had already begun to be an image that fascinated people. The way in which Herbert Spencer developed Darwin’s ideas to create this terrible idea of “social Darwinism” was an attempt to make a direct equation between the processes of the market and the processes of nature. On the one hand you see the idea of the market deployed to understand nature, illustrating “the survival of the fittest” with reference to the stock exchange; on the other you see the idea flipped so that it can be said: “the stock exchange is actually just a jungle.” On both sides of the coin, things are simplified.

Why have the crude, brutalist images of social Darwinism have been so persistent? Because they have that enormous flexibility. They can be used both ways. If people are morally worried about what’s happening on the stock exchange, they can shift that worry by saying, “It’s just nature, isn’t it?” On the other hand, if they are worried about what’s going on in the jungle, they can say, “It’s all a great machine.” You are getting away from agency all the time.

These images, both of which have been very powerful in science, as well as everywhere else, have an appeal because they simplify things. But they simplify them in a way which gets rid of certain awkward frictions. And it is hard to debunk this pattern because it’s doing so much for people; soothing their anxieties – making them think it’s all quite simple.

Marxism was a big feature of the time when I was growing up, so it’s the political philosophy I’m most familiar with. It is another striking example of an imaginative system – a fable, a dream, a drama, a vision – within which a lot can go forward. Of course there was a good deal of fairly dodgy stuff on the fringe of science which was Marxist, but I don’t think it was any dodgier than the monetarist things that have been going on since then. The mythology of how markets work, of how money can do things on its own, is as remote from solid physical reality as these other things. And of course whatever the mythology of the time is, those inside it don’t recognise it as such; they think they are just noticing facts.

Mary Midgley is a moral philosopher and author of Beast And Man: The Roots of Human Nature. The article above is excerpted from a Theos pamphlet, Discussing Darwin theosthinktank.co.uk

Raul Castro, who officially took over as president from his ailing brother, Fidel, last year, launched his own quiet revolution on the island. He is attempting to streamline, decentralize and revive the economy.

But Cuba has been forced to cut spending on marquee social programs such as health care and education.

As the island’s transportation infrastructure crumbles, horse-drawn carts serve as taxis in many parts of the country. With gas at just over $4 a gallon and spare parts in short supply, many Cubans have turned to bicycles, horses and ox carts to get around.

Cuba’s trade deficit has soared. The government has a liquidity crisis. The 47-year-old U.S. embargo still hampers trade with its closest neighbor.

And adding to Cuba’s problems, the island was hit last year by three hurricanes.

But none of that seems to bother Adele Silva, who lives in the eastern city of Holguin.
Satisfied With The Welfare State

Much of the roof on her house has collapsed, and gravel is piled in the living room. A flock of chickens resides just off the kitchen.

Yet Silva says she’s happy. “Because I enjoy any situation, and I take a positive attitude. In Cuba, I always feel protected,” she says.

Last year, Hurricane Ike ripped the roof off the back of Silva’s house. Just recently, the government brought her bags of sand, bricks and a truckload of gravel, which she’ll use to repair her building.

Despite the delay, she says the Cuban state looks after its people.

“Here, there’s social security. It’s very special,” she says. “In Cuba, everyone has social security. It’s one of the principles of the revolution.”

She says the state provides her with food, clothes and basic furniture. In Cuba, even the poor send their children to college, she notes, which isn’t the case in many other Latin American countries.

Asked if Cuba might change to capitalism, she says flatly that Cubans don’t want that. Silva says she is proud of the socialist country built under Fidel Castro, the ailing leader who transferred power to his brother in 2006 and was replaced by Raul in 2008 elections.

In Cuba’s Camaguey province, rice farmer Roberto Barada Perez (center) dries his crop on the main road. Barada, 44, got two parcels of land totaling 65 acres under a new program to redistribute state-owned land on the communist island to private farmers. Jason Beaubien/NPR

But in a recent speech in Holguin, Raul Castro said Cuba’s woes won’t be solved by shouting patriotic slogans or denouncing the United States. He called on Cubans to return to the land and revitalize the island’s faltering farms.

A Surplus Of Problems

“These have been difficult and arduous months from one end of the country to the other,” he said.

Cuba doesn’t have a surplus of anything “except problems,” he added.

According to Raul, half of Cuba’s arable land is sitting idle or underutilized while food imports increasingly drain the public treasury. In an effort to revive agriculture, Raul launched a program that has given out more than 1.5 million acres of fallow state-owned land to private farmers and small cooperatives.

The economy has slowed so much that many of Cuba’s main roads are almost empty. In the Camaguey province, rice farmer Roberto Barada Perez is using one lane of a two-lane highway to dry his crop.

He received about 65 acres last year under Raul Castro’s land redistribution program and planted all of it with rice.

“It’s a dignified way to support my family,” Barada says. “Because, really, there aren’t other ways to help my family financially.”

Barada is only allowed to sell the rice to the government at a price set by the state, which he complains is too low. Despite this, he says he hopes to get one more plot in the coming months.

As president, Raul Castro has also allowed Cubans to buy computers and cell phones and to stay in tourist hotels. And he’s suggested that pay should be linked to performance.

‘A Different Kind Of Socialism’

Rafael Hernandez, editor of the quarterly journal Temas in Havana, says Raul Castro is attempting to transform the Cuban state.

“Cuba is in the middle of transition from a kind of socialism to a different kind of socialism,” Hernandez says.

Hernandez predicts that that transition won’t follow a Russian or Chinese model, but a uniquely Cuban model.

“Cuban socialism is sick of hypercentralization, and everything is related to that. That is, to me, the monster to kill,” he says.

Hernandez says Raul is attempting to decentralize the only communist state in the Americas by granting greater autonomy to individual government ministries.

Across Cuba, there are people desperate for U.S.-style capitalism to come rushing back in. But Hernandez says he doesn’t think they are the majority, and they certainly are not in power.

Most Cubans want a socialist state, he says. They just want one that functions far better than the one they currently have.

http://www.alternet.org/story/141281/

Historically, every financial and economic crisis has been used to
further centralize power and concentrate wealth. This one is no
different, and in fact the moves being promoted by the Obama
administration and the central banks of the Western powers will take the
whole world to the pinnacle of financial despotism — unless enough
people wake up and claim their own “money power.”

In recent months, the Fed has expanded its “assets” from about $800
billion to more than $2,000 billion. Those so-called assets are
securities it bought from financial institutions and loans made to
central banks in other countries. But the Fed refuses to name the
specific recipients of those funds, while admitting that by doing so
they are manipulating the value of the US dollar on foreign exchange
markets. (Congressman Alan Grayson Grills Fed Vice Chair Donald Kohn.)

Where does the Fed get the money to buy those “assets” or to make those
loans? Quite simply, it creates the money. Unlike you or me or any other
economic entity, the Fed has the power to create Federal Reserve dollars
by effectively writing a check against no funds. This is the function
known as “Open Market Operations.”

What is the economy experiencing now, and what is in prospect for the
future? Despite unprecedented inflation of the money supply, we are now
(mid-July, 2009) in a period of depression. How can we have simultaneous
inflation of the currency and still have economic depression?

It is a matter of where the money is going. While the public sector
(federal government) is being lavishly funded to maintain a global
empire, and the banks are being bailed out to try to keep a
dysfunctional and destructive financial system from collapsing, the
private productive sector is being starved for credit. As a result,
businesses are bankrupting, people are losing their jobs and their
incomes, and lower levels of government are being squeezed because their
tax revenues are shrinking.

There is also the matter of the real estate bubble that was created by
the financial institutions as they loaded up the private sector with a
debt burden that was way beyond its ability to bear. Now that burden is
being shifted to the public sector as the government assumes those
“toxic” loans. Unfortunately, it is not the poor suckers who were lured
into the debt trap that are being relieved, but the predatory lenders
who laid the traps. So mortgages are being foreclosed at an
unprecedented scale, people are losing their equity as housing values
plunge, and more Americans are being made homeless.

These are the factors that have so far kept the effects of monetary
inflation from becoming extreme. Ultimately, however, such abusive
issuance of political money shows up as rising prices.

When will the price effects of hyper-inflation begin to kick in? How
will the government respond to it? What will be the social and political
fallout? What can ordinary people do to protect themselves from monetary
and legislative abuses? These are the questions that beg for answers.

Already there are rumblings and signs that the U.S. dollar is about to
lose its status as the global reserve currency. When that happens,
imports of energy and other necessities will become more expensive. The
U.S.’s massive trade deficits will not be sustained into the future.
China, the OPEC countries, and others that have been buying massive
amounts of U.S. government bonds with their dollar earnings, are
indicating that their appetite has been sated. Bilateral and
multilateral trade agreements are being made that bypass the use of the
dollar for international trade.

One thing is clear — we cannot rely upon the government to act in the
best interests of the people. Already, President Obama has moved to give
the Federal Reserve even more power to control the people’s credit and
financial resources. According to a June 18 article in the Wall Street
Journal, “The central bank would win power to monitor risks across the
financial system, and sweeping authority to examine any firm that could
threaten financial stability, even if the Fed wouldn’t normally
supervise the institution.” This is not a new plan; it was floated as a
trial balloon during the Bush administration. As early as March 2008,
then Treasury Secretary Paulson was proposing to “give the Federal
Reserve broad new authority to oversee financial market stability, in
effect allowing it to send SWAT teams into any corner of the industry or
any institution that might pose a risk to the overall system.”

Ostensibly that would be done to prevent the errant financial
institutions from repeating their sins of the recent past, but more
likely it will have the effect of suppressing any private initiative
that might compete with the financial cartel. The Fed is, after all, a
private company run by the bankers for the bankers. A recent Reuters
article is critical of Obama’s move because of the Fed’s lack of
accountability. It is a plan that seeks to preserve at all costs the
credit monopoly that exists under the central banking regime and to
perpetuate the looting of the economy by monetization of federal
government debts and other ultimately worthless “assets.”

During the Great Depression, President Franking Roosevelt, upon taking
office in 1933, declared a “bank holiday.” He ordered all banks to
close. Many of those banks never reopened and many people lost their
savings. He also demanded that all Americans turn in their gold holdings
in return for paper currency, which was one of the biggest robberies in
history up to that time. Some pundits are predicting that another such
bank holiday is being planned to put the brakes on price increases, once
they begin in earnest, by depriving people of access to their savings,
as was done in Argentina in 2002.

Governments that mismanage money invariably use the force of law to
prevent the sheep from escaping from the shearing pen (or the slaughter
house). So long as people are completely dependent upon political money
and banks, they will docilely (or grudgingly) accept whatever
“solutions” the political leadership puts forth, and do whatever the
government demands of them.

Fortunately there is a way out. The primary purpose of money is to
facilitate the exchange of goods and services in the markets. But it is
possible to mediate the exchange process without using political money
as the payment medium, and without borrowing from banks.

There is plenty of precedent for this sort of cashless trading. It
involves a process of direct credit clearing among associated buyers and
sellers. During the Great Depression the entrepreneurial middle class in
Switzerland organized themselves into the WIR Economic Circle
Cooperative. After 75 years, the WIR clearing circle continues to thrive
with more than 60,000 member businesses trading the equivalent of about
US$1.3 billion per year.

The past four decades have seen the emergence of a new industry
comprised of commercial trade exchanges, sometimes called “barter”
exchanges, that act as “third part record keepers” enabling the same
sort of direct credit clearing for thousands of businesses in cities
around the world. Efforts at the grassroots by social entrepreneurs to
localize exchange and finance have been similarly widespread in many
communities over the past twenty-five years.

Measures to properly reform the money and banking system by political
means have about as much chance as the proverbial snowball in hell.
However, what is possible, and what seems to be gaining traction to
transcend the dominant system, is the materialization of voluntary,
private initiatives that enable the cashless exchange of goods and
services. As these systems continue to improve, proliferate, and scale
up, they will provide a pathway toward a sustainable economy, greater
local control, and a better quality of life for all.

Thomas H. Greco, Jr. is the director of the Community Information
Resource Center, which he founded in 1992. CIRC is a nonprofit
consulting organization and networking hub dedicated to economic equity,
social justice, and community improvement, specializing in community
currency and mutual credit design, development, and implementation. His
newest book is The End of Money and the Future of Civilization.
© 2009 Independent Media Institute. All rights reserved.

View this story online at: http://www.alternet.org/story/141281/

… have completed adding Hilferding’s ‘Finance Capital’ to the Marxist Internet Archive.

http://www.marxists.org/archive/hilferding/1910/finkap/index.htm

The archive also carries Kautsky’s review of the book:

http://www.marxists.org/archive/kautsky/1911/xx/finance.htm

… Kautsky’s article on Hilferding’s mistake on money (translated by MIAer Daniel Guido) …

http://www.marxists.org/archive/kautsky/1912/xx/gpcc.htm

… and Lenin’s notes on the book:

http://www.marxists.org/archive/lenin/works/1916/ni-theta/hilferd.htm

Happy Bastille Day reading …