Those who are hoping that the new boy on the UK Tory block, Rishi Sunak, will be any better than the last lot of Tories, will soon have to think again. Saving the UK from the worst economic storms ahead, or the planet from becoming even more degraded are the last thing on Rishi’s mind. Being ‘too busy’ to attend COP 27 is an almost complete give away and represents a feeble euphemism for being focussed on business as usual. And Rishi’s usual business is Finance Capitalism. He and his family have not got super rich by stacking supermarket shelves, staffing hospital wards or keeping the environment.clean. They have got rich by ruthlessly playing the existing political and financial system for their own calculated advantage and will try to stay rich doing the same.

Rishi’s time at Goldman Sachs bankers, (the ones who got super rich by catering to dictatorial regimes, engaging in futures speculation and selling the dodgy mortgage backed securities based on subprime mortgages that led the 2008 financial collapse,) has benefited him in numerous ways. Particularly in perfecting a barefaced ability to sell illusions to unsuspecting punters and now to gullible voters without any glimmer of conscience when the illusory bubbles bursts – as they did in 2008. The Finance Capital sector is itself a business world built on illusions spun in such a way as to fool the public. Most of the investment vehicles the bankers sell to the unaware are just paper promises and their inflated paper value can disappear as quickly as the numbers involved were printed on a financial instrument by a computer.

The vast majority of such ‘asset vehicles’ are fictitious in that they involve mathematical calculations, which bear almost no real relationship to any tangible assets. They are inflated paper promises called ‘financial instruments’ which are primarily designed to secure the salaries, expenses, fees and commissions financial sector operatives gain from their sale to those hopeful of a positive return. The similarity between the inflated paper promises of politicians printed in their election manifestos, is obvious. These too are also primarily made to secure the salaries, expenses and fees associated with public office. This similarity should already be obvious as the earlier promises of the Johnson election manifesto have already disappeared. Rishi’s promises will be next for the recycling bin.

Politics, Finance and even Religion have so much in common because they all deal in promises in the form of words and illusions rather than in the production of anything real. You are just required to believe the polished narratives they have perfected. For of course, money and words (sacred or otherwise) cannot directly create anything tangible. Even in the case of the investment of money, when it is not actually a fictional capitalised amount, the return of the amount loaned and the interest on it has to come from the financial or productive activities of someone else. The links between lenders, borrowers and reality may be intentionally obscure, but somewhere along the chain of transactions the value of the loan plus added interest is returned via the transformational application of human skills and labour to some form of valuable and tangible production.

Since money can only buy ‘things’ it can never be anything other than a claim on tangible forms of wealth. The financial sector is solely dedicated to amassing such claims whilst producing nothing tangible itself.

The origin of interest or profits on investment, is nothing more than a deducted portion of the monetised surplus-value created during capitalist production, which is passed along a chain of interconnected obligations back to the lender. The basis of this process, which rests upon productive-capital, is therefore ultimately the labour-power and spending power of working people. But Rishi and his ilk emanating from this sector haven’t understood this yet. They seem to think that financial manipulations are self-sustaining and more important than (and independent of) ordinary working people. But under capitalism no amount of money is of any use if there are few things to buy, and many things cannot be bought if not enough people have enough money to purchase them.

The capitalist system is built on production and profit from sales of commodities and services, not purely from finance.  The recurring contradiction between gross production and gross consumption is the unsolvable problem faced by the supporters of the capitalist mode of production. A post 1950’s solution has been frequently sought by governments and the finance sector which involves creating more purchasing power by extending credit and creating more currency. But credit only delays the need to pay and creating more currency only devalues the currency which then appears as price inflation leading to less purchases and austerity And neither solution solves the real problem.

Those finance sector participants who only understand the benefits of their economic system and not its problems, then focus on getting inflation down which continues a spiral of recessions which they and their governments have caused in the first place.

The vast amounts of monetary wealth and influence accumulated over many decades and controlled by it has made the Finance-Capital sector so rich and powerful that this wealth and power frequently comes to their aid. Finance capital not only influences industry and commerce now but also national governments. The ability of the finance-capital sector (banking, insurance etc.) to reward favours with grants, lucrative posts and consultancy fees makes it able to promote self-serving changes in government policies. Institutions such as the World Bank, the International Bank of Settlements, and International Monetary Fund are the global instruments of this sector. They and their proxies have conduits of influence reaching deep into industry, politics and governance.

If they are astute enough, they can even influence who is put onto ballot papers and election slates. Lower down the institutional pyramid of finance there are organisations (stock exchanges, Hedge Funds etc.) whose activities are also global. This includes investment possibilities, speculative opportunities and asset stripping manoeuvres. Financial institutions (developed from merchant bank organisations) also originate and circulate financial instruments known as Asset Based Securities (ABS’s), Mortgage Based Securities (MBS’s) and Collatoralised Debt Obligations (CDO’s) among others. This is the parasitic world Rishi and his backers are part of and it is the world they will return to when they have finished their present revolving door stint of self-engrandisement and lucrative office filling in government.

It is also the world which is creating the current financial instability and which is helping fund the present ecological destruction and detrimental climate change. The general 2008 financial crisis, triggered as it was by the collapse of the housing mortgage bubble in the USA, revealed the vast international network of financial instruments (ABS’s; MBS’s ; and CDO’S etc.) then (and still) circulating around the globe. Some people in the financial sector then had long suspected a looming problem and kept quiet about it. However, not even the expert regulators of these ‘instruments’, fully understood their complexity, the amount of leverage based upon them, and the magnitude of defaulting when the bubble burst.

The unravelling of financial speculation in 2008 demonstrated that financial crises, don’t remain within that sector. The 2008 crash caused bankruptcies in industry and commerce, redundancies, unemployment, as well as public sector shrinkage and austerity. This is because the ‘finance sector’ is connected to the general commodity and service money circulation system, the private productive-capital sector and the public sector. It is the tail grown so big that it now routinely manages to wag the dog. Any sizeable future crisis in the finance sector will instigate a general economic and social crisis and visa versa. The Finance Capital sector are probably quite pleased that one of their own has grabbed hold of power in the UK. Using this power may help to mitigate any eventual financial backlash and make it easier for them to be bailed out again. Welcome citizens of the UK to the world of Rishi Rich!

Despite their culpability, those in the financial sector were massively bailed out in 2008 and their losses made good or simply written off. This, as much as anything, demonstrated the power and influence of the finance sector over the economic and political classes. The election of Rishi Sunak to Prime Minister in the UK demonstrates this power to influence yet again. Few in the banking and financial sector – including Rishi then and now – thought they had done anything wrong and have continued doing what they did before. Consequently, another financial crisis lies ahead – only it’s timing is uncertain! Meanwhile, that sector carries on granting itself huge bonuses for selling unstable financial instruments, and naive speculators (including pension funds) within ‘the system’ continue to buy them. They also actively peddle political promises through their agents in the political sphere of capitalism and hope that we buy into those.

Roy Ratcliffe (November 2022)