APPLYING THE EMERGENCY BRAKE
US President Barack Obama wants to limit the power of banks. He is not fighting capitalism but trying to save it.
By Klaus Fischer
[This article published in: Junge Welt, 2/24/2010 is translated from the German on the Internet, www.jungewelt.de/2010/02-24/022.php.]

On Thursday morning, the US president will presumably make his last attempt to redeem his central election campaign promise – health care reform. The chances of the Washington administration do not look good. Does this mean introduction of a universal health insurance in the US was only one of the usual election promises?

Whoever wants to make politics and its socio-economic roots transparent must know how obstructions supervene. What does Barack Obama have in mind? For over a year, heads of state, economic decision-makers, cultural actors and “normal Americans” have puzzled over what can be expected from the 44th president of the United States. Even the European left that on principle is skeptical about political leaders of the superpower seemed seized by the Obama fever for a time. Perhaps they hoped that individual personalities can occasionally guide world history in different paths like a revolution from below.

“Change” was the watchword of the campaign that brought the first African-American into the White House. With all commanded skepticism toward such productions, this slogan cannot be simply dismissed as a promise soon to be broken that was never meant seriously. Even if it has become a rule that votes in “western democracies” are won with deceptions, the historical dynamic of social processes should be borne in mind. Scholars say the nature of a development must be separated from its outward forms. Referring to the United States in 2010, this means: the most powerful state on earth urgently needs changes.

Obama plans small revolutions. Measured by the Dutch or German standard of a civil democratic body politic, one cannot even call them reforms. Rather the US president faces the tasks of forming a functioning system in the 21st century out of a developed socio-political country in which neoliberal market forces were given almost a free hand for decades.

Obama’s first defeats should not conceal that he did not act just for the fun of politics. Perhaps a universal health care will not happen in the foreseeable future but at most an obligation of private insurance that does not cut the profits of the health insurance industry. Even as an angel of peace, the recently honored Nobel Prize winner cannot be successful. Forcing stricter rules on financial capital is a challenge that Obama must absolutely solve.

The bank executives, fund managers and their financiers know this and mobilize resistance. With investment banking, risky trading or simply exploitation of global currency fluctuations, the money companies of the US believe they have a cash-cow in the stall that produces endless wealth. However this is not true. Wall Street banks have been in a unique power position for a long time. Wall Street banks can play the money god as mother companies of the quasi-private Federal Reserve in the homeland of the dollar, the world’s key currency. Goldman Sachs, Morgan Stanley and Co can redistribute profits gained elsewhere to their enrichment – including profits that will first be generated in two, three or ten years. The US banks model forces others in indebtedness, inflates the money supply, devalues assets and generates virtual dollars. On the search for profits, these virtual dollars are immediately pushed back in the same circulation, mutate to real money and operate on the “markets” like capital. This undermines commodity-money relations and ultimately leads the capital-relation ad absurdum.

Not everyone will or can understand this. “Obama castrates US banks,” the Financial Times of Germany titled its report at the end of January. If one ignores the sensational picture of the headlines, the second most important business paper of Germany (FTD) grumbles about the US president. His effort to rigorously monitor financial companies and deny them certain businesses is interpreted by the author as a political reaction to recent election victories of republicans. This may be a tactical-political analysis, media pompousness or suggestion. It is not information. To some, this seems diversity but at most is a bombardment with smoke candles.

The financial crisis has demonstrated one thing: Wall Street banks are involved in a “systemic risk” that endangers the capitalist reproduction process. What should be done? On principle all “market actors” are rivals in capitalism, rivals for surplus value and profit. Adopting the role of virtual total capitalists is and remains the task of the state or an alliance of states.

Obama tries this by applying the emergency brake with financial companies. His historical mission is to triumph against greed for profit, lobbyism and ignorance. If successful, he could save the system for several more decades.

RELATED LINKS

VIDEO: Dean Baker’s “False Profits” on GritTV:
www.grittv.org/
www.baselinescenario.com
“The Quiet Coup” by Simon Johnson:
www.theatlantic.com/doc/print/200905/imf-advice
VIDEO: Joseph Stiglitz’ “Freefall” on BookTV:
www.booktv.org/Featured/11279/After+Words+Joseph+Stiglitz+Freefall+interviewed+by+Lori+Wallach.aspx
“Ways Out of the Crisis” by Jean-Paul Fitoussi and Joseph Stiglitz:
www.ofce.sciences-po.fr/pdf/dtravail/WP2009-17.pdf