The American ruling class
http://www.globalresearch.ca/index.php?context=va&aid=12205
The American ruling class
By Tom Eley
Global Research, February 8, 2009
World Socialist Web Site - 2009-02-06
On Wednesday, President Barack Obama announced measures that purport
to restrict executive compensation to $500,000 at financial
institutions receiving billions in government assistance. The figure
does not include stock options, which could be redeemed after
financial firms pay back loans from the federal government. Nor does
it apply to the original recipients of tens of billions in TARP
(Troubled Asset Relief Program) money.
The measures are essentially a public relations exercise. Their aim is
to provide political cover for a new and even larger Wall Street
bailout, which Treasury Secretary Timothy Geithner will unveil next
week.
Yet the discussion that has emerged in the wake of Obamas
announcement sheds light on the domination of government by a tiny
financial elite and the increasingly threadbare pretense of democracy
in the US. This financial aristocracy, the episode reveals, is a power
to be approached on bended knee.
The media have responded to Obamas proposal of a $500,000 limit on
executive compensation, which would affect only a handful of firms, as
though this were a severe and astonishing punishment. Yet the figure
represents approximately 12 times the annual salary of the typical
worker. To the majority of the population, a salary of a half million
dollars is a staggering amount of money.
Obamas servility before the financial aristocracy was summed up by
the reassurances he gave it in announcing his limits on executive pay.
This is America, Obama said. We don't disparage wealth. We don't
begrudge anybody for achieving success.
Such a vision of America is at odds with both its present
circumstances and its history, which has been characterized by deep
democratic and egalitarian traditions that date back to before the
Jeffersonian democracy of the early Republic. And while liberals are
busy attempting to equate Obama to Franklin Roosevelt, the latter, in
the midst of the Great Depression, attempted to capitalize on the
tremendous contempt for the rich in the population at large by
regularly issuing bromides against the money changers.
Indeed, Obamas obsequiousness stands in sharp contrast to the anger
of the working masses, who find it incomprehensible that the same
executives who are responsible for ruining the economy and squandering
trillions in taxpayer money are now presented with pay limits of a
half million dollars. Workers are wondering why there havent been
criminal indictments and television scenes of handcuffed executives
frog-marched from their offices.
But on Wall Street, $500,000 is considered a pittance. The New York
Times reports that executives felt cheated by taking home only $18
billion in collective bonuses in 2009. I feel like I got a doormans
tip, compared to what I got in previous years, an investment banker
with Citigroup told the Times.
The Financial Times reported on Wall Streets opposition to the
largely token measures. Senior bankers were quick to warn the plans
would cause a brain drain from the profession as top executives seek
more rewarding jobs out of the public eye, it wrote. Unlike other
careers where job satisfaction and other considerations play a part,
finance tends to attract people whose main motivation is money.
The cap is a lousy idea, complained one top Wall Street executive.
If there is no monetary upside, who would want to do these jobs?
Andrew Ward, a University of Georgia professor and specialist on
corporate boards and management, told the Financial Times that
executives could respond to Obamas measure by calling his bluff
refusing to allow their firms to accept a bailout that would in any
way limit their personal enrichment. One of the potentially
unintended consequences is that executives might try and hold off
asking for government assistance until it is too late, Ward said.
Media and academic figures who have tried to argue that the massive
pay packages of the Wall Street executives are somehow legitimate, or
even rational, succeed only in revealing the rot that characterizes
intellectual life in the US. Their central argumentthat the same CEOs
who have driven their companies and the economy as whole into the
ground are worthy of remuneration in the tens of millionsis so absurd
it is almost an embarrassment to answer.
The immense power of the financial elite is revealed by the case of
Bernard Madoff, the investor who squandered more than $50 billion in
wealth in a giant Ponzi scheme. While working class Americans are
arrested and spend years in prison for far lesser offenses, Madoff
remains ensconced in his Manhattan penthouse.
For nearly a decade, a whistleblower named Harry Markopolos, who had
uncovered Madoffs scheme, attempted to draw the attention of the
Securities and Exchange Commission (SEC), the federal regulatory
agency ostensibly tasked with policing the securities and stock
industries. Instead, the SEC ran interference for Madoff. Rather than
being applauded for his efforts, Markopolos feared for his safety. We
knew that he was one of the most powerful men on Wall Street and in a
position to easily end our careers or worse, he said.
The social psychology and physiognomy of the financial elitewith its
wealth, special privileges and its control over the organs of public
opinionresembles nothing so much as a modern aristocracy.
Any discussion of a rational attempt to find a solution to the
economic crisis runs immediately into the ferocious opposition of this
elite. Similarly, in the 18th century the aristocracy of the French
ancien regime precipitated a financial crisis through its avarice and
wars. When the aristocracy convened the Estates General in 1789, it
was to demand that the Third Estate, the commoners, bail the
aristocracy out of the crisis of its own making. But the monarchy and
nobility refused to cede a bit of its power and privileges. This set
the stage for the great French Revolution.
The odious subjective characteristics of the US financial aristocracy
its greed, arrogance, stupidity and decadenceare themselves deeply
rooted in objective historical developments, the social expression of
an underlying economic process. The rise of this narrow social layer
with its obscene levels of accumulation is inextricably bound up with
the decline of American capitalism in the world market and the gutting
of its domestic industrial base. Indeed, what makes the whole process
so filthy, what imparts to it such a decadent and repulsive character,
is the degree to which this wealth is unconnected to any progressive
economic process. It is in every sense destructive and reactionary.
In an earlier period of history the US had its robber barons, such
as Cornelius Vanderbilt, Andrew Carnegie and John D. Rockefeller. As
brutal and greedy as these men were, their wealth was bound up with
the creation of enormous industrial empires. The latter-day robber
barons of Wall Street, on the other hand, have made their billions
from the destruction of the industry and productive capacity built up
over decades.
The staggering wealth accumulated in the top one percent of American
society over last 25 years is directly bound up with the deterioration
of the economy, the decline of industry and the impoverishment of the
working class. The enormous personal fortunes of the elite have been
built up on hedge funds, the leveraging of debt and other forms of
financial speculation. This has entailed an enormous transfer of
resources out of manufacturing and into finance, and out of the
working class and into the pockets of those who have played the
critical role not only in destroying living standards, but in setting
the stage for the present disaster.
The fortunes that grew on this basis at a certain point assumed a
dynamic of their own. Their sheer scale assumes a malignant character
that becomes an insurmountable obstacle to any rational policy coming
from within the confines of bourgeois politics.
It follows that there is no solution to the crisis without a direct
and massive assault on social inequality, and thus the wealth and
privileges of the financial and business aristocracy. This cannot be
carried out by pressuring the Democratic Party. The Obama
administrations meager rules on executive pay shows that it will not
consider any policies that even hint at the redistribution of wealth.
The American political elite, Obama included, is tied by a thousand
strings to the financial aristocracy. The Obama administration is
populated by individuals who have parlayed their political positions
into lucrative positions in finance. Virtually the entire cabinet fits
this billingnot only Tom Daschle, the former senator who withdrew his
nomination for the Secretary of Health and Human Services amidst
revelations that he had withheld tens of thousands in taxes owed on
payments he received from his corporate sponsors.
Yesterday it came to light that Leon Panetta, Obamas nominee for
chief of the Central Intelligence Agency, took home more than $1
million last year through payments from corporations for consulting,
speaking appearances and through his membership on corporate boards.
He was paid handsomely for speeches by financial firms that have since
collapsed, including $56,000 by Merrill Lynch and $28,000 by Wachovia.
Chief of Staff Rahm Emanuel and Secretary of State Hillary Clinton
have also used their political connections to make millions from the
same financial elite that would ostensibly be targeted by Obamas
rules on executive pay.
Obama knows very well that when he leaves office he will be able to
make millions of dollars, as Bill Clinton, the last Democratic
president, and countless other leading politicians have done. Nor
would this be a departure for Obama, whose career was taken into hand
early on by leading financial and political figures in Chicago.
The subordination of the whole of society to the financial aristocracy
is most clearly expressed in the massive bailout of Wall Street. Its
political representatives, Democrats and Republican alike, hand over
trillions to the biggest banks, while providing no provisions for the
masses of people who have lost their jobs and homes.
Millions of workers who voted for Obama are now coming face to face
with the fact that his administration will defend the interests of the
financial elite every bit as ruthlessly, if with a slightly different
presentation, as the Bush administration.
The solution to the economic crisis is not a technical question but a
social, political and revolutionary settling of accounts, and a
historical necessity. At a certain point in the late 18th century, it
became necessary for the oppressed classes of France to rise up and
destroy the power and privileges of the nobility. In the America of
the 1860s, the only resolution to the irrepressible conflict was the
destruction of the slave power in the South.
At this point it is necessary to destroy the political and economic
power of the financial aristocracy. A resolution to the economic
crisis can only begin with an independent mass movement of the working
class that aims to break the political stranglehold of the financial
elite over society; the development, to be blunt, of a revolutionary
movement.
Disclaimer: The views expressed in this article are the sole
responsibility of the author and do not necessarily reflect those of
the Centre for Research on Globalization. The contents of this article
are of sole responsibility of the author(s). The Centre for Research
on Globalization will not be responsible or liable for any inaccurate
or incorrect statements contained in this article.