MUCH BANKING AND FINANCIAL ACTIVITY "LACKS SOCIAL VALUE" -Adair Turner, chair of the Financial Services Agency.

Why it's even worse than this
Why politicians are acting like rabbits in headlights
Why are viable alternatives not being pursued more vigorously?

The chair of the UK Financial Services Agency, himself an ex-banker, recently caused a frisson of horror in the financial markets and vehement objections and denial by the majority of leading politicians.
What did he do? He asserted that a significant proportion of the activities of the investment and banking industries had no useful social purpose. By this he meant that speculating with money to create money and gambling on future events like the rise or fall of share prices (or anything at all, in the case of many financial speculators) really did not create value for the bulk of those in society - only a small group of the wealthy. His exact words, were, "Financial innovation has produced some products of very dubious social value and then there are products that on paper you might have thought would be useful that have not happened.....And if you ask experts why these products don't exist you will be told that there's no liquidity in the market for them, there's no demand for them - but that's because there's no supply! This is an area where a government should create certain financial instruments as strategic aims of policy".

His comments are quite correct and all the more so coming from a prominent banker, but he might have carried his argument much further.
Not only does financial speculation fail to create value for society, it actively damages the interests of the majority. We have no need to go into the causes of the current crisis - they are well known to be the growth of reckless speculation in an industry that owed a duty to no-one but itself and its insatiable greed.
But far worse, the speculative nature of the financial markets has directly or indirectly spurred the following social malaises:

The growth of an extraordinary international network of "institutes" and "think tanks" aimed at pushing a flood of propaganda supporting market fundamentalism has all but squashed any intelligent exploration of the causes and remedies needed to create a better world - See Spreading the True Faith.
A result of the capture of the media and political systems in the United States and Britain by the prophets of market fundamentalism has been relative silence and an almost total lack of purposeful response to the causes of the current financial crisis by US and UK politicians. The bulk of the population are not informed about what lies behind their travails and therefore have no coherent voice. The banking industry is rapidly returning to its old bad habits of concocting new and risky financial instruments, doling out huge bonuses and exploiting the bail-outs by government to make obscene profits again. (Investment banks are making a fortune on arranging government loans. Government loans are necessary because of raising money to bail out the banks. Thus a truly hellish circle is squared).

Why are positive alternatives not being pursued more vigorously?

There are many healthy alternatives that can supplant or stand alongside the current financial system:

Right now, the most useful forms of innovation, the creation of socially useful forms of banking and finance, are being prevented by the unholy alliance of the finance industries and politicians. Until people manage to get their hands back on the levers of economic power, the undemocratic conspiracy of big finance and politics will continue, to the detriment of the interests of the vast majority of people. For proposals on what can be done, see:


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