Here is the historical truth: at this late stage of capitalism, the financial class desperately needs to gamble on derivatives and manipulate markets on a huge scale in order to survive. The old, tried and true law of diminishing returns on investment, combined with the global rise of economic powers beyond their ability to control, caught up with the Lords of Capital some decades ago. Wall Street invented derivatives so that the big boys, the only ones equipped to play – and, therefore, rig – trillion-dollar games, could generate sufficient windfalls and mega-scores to keep the decaying system going. “Productive” investment – the kind that creates good jobs in mature capitalist societies – no longer sufficed to keep Wall Street’s speculative pumps primed. Take away their ability to craft exotic mega-wagers, create “markets” and “bubbles” out of “notional” capital, and to organize vast waves of leveraged funds, protected by law and/or the armed might of the U.S. and its imperial partners, and finance capital ceases to function. Which would be a very good thing, if societies put in place public investment institutions capable on their own of financing growth and structural renewal. But that requires the displacement – the overthrow – of private capital from the “commanding heights” of the economy and national polity.
By Make the Choice: Wall Street or Society (via azspot)