the 99%, the 1% and ‘anti-finance’

Oisín Mac Giallomóir argues the Occupy movement needs to oppose capitalist production not just capitalist finance and governments

A lot of people have commented that a problem with the Occupy  movement is that it is not clear what they are for. I think that is a smaller problem than the lack of clarity about what they are against. It is against the rule of the 1%. But who are the 1%? What role do they have in society?

The statistical fact that there is a very, very small section of society that is in ‘control’ is clear but the nature and basis of their control isn’t. Certainly the argument is in some sense ‘anti-capitalist’. We are against the tiny minority who control the majority of the earth’s wealth and in the process have huge political power. And we are against the system that enables this to happen. But after that questions arise. What is the system that enables this to happen?

Two ideas have sprung up which are both wrong and dangerous. Firstly, there is the idea that is expounded by the Ron Paul loving, Ayn Rand reading, Austrian economics skimming, right-wing libertarians. An argument presented by many of these is that we are not truly living under capitalism but rather under corporatism, that is under a situation where the government and market are not sufficiently separated. The trouble here is supposedly the fact that people are not engaging in free market exchange, but rather the economy is being controlled by the big banks, large corporations and the government who are all hand in glove with one another.

The state

Here there is a failure to understand the nature of the state in capitalism. In previous types of society, the economic/political distinction did not exist in the manner it does under capitalism. We can think of how in feudalism the serf worked unpaid labour under their lord and for their lord on the basis of a direct threat of violence from the lord. The lord was both a direct political power and the direct economic exploiter. While it may seem that workers who freely sell their labour are not exploited and that the government has no rightful place in this exchange, the truth is far different. Today, the exploitation of workers is mediated by money. Workers work for their employers for a wage. Employers pay their workers less than the value of the product of their labour, thereby enabling them to earn a return on their investment, be it in the form of interest or profit. Here this takes on the seemingly neutral form of a market exchange. But it is not a neutral exchange. It can only happen if workers are excluded from control of the means of production. Workers only work for a wage because they do not have a means to live independent of waged work. Workers are excluded from control over the means of production because the means of production are privately owned. This private ownership is secured as a legal right with the full force of the violence of the state behind it. So far from the state being an imposition on free market capitalism, the latter cannot exist without the existence of the state to secure property rights. While in previous societies economic and political power were united, in capitalism they are divided but mutually dependent. The market requires the existence of the state. The further division of the state from the market as advocated by those who argue that the state needs to stop intervening in the economy fails to recognise the violence inherent in the system. The only reason there is poverty in the presence of great wealth, as in today’s society, is because that wealth is held privately and defended by the armed force of the police, the army, the courts and prisons.


The second wrong idea which has substantial currency in the Occupy movement is the vilification of finance. This is closely tied to the above delusions about the naturalness and political neutrality of capitalism. Finance is portrayed as parasitic on the real economy. The idea of a parasitic financial class is of course an old one.

But this is a fundamental failure to understand the nature of finance in capitalism. The perception often is that finance is simply about moving money around and not engaging in productive activity. This is revealed today with the calls for an end to central banking, fiat currency, fractional reserve banking etc. People say we need to get back to the real economy where people trade useful things and services. This is of course attractive even from a crudely Marxist perspective. Communists want a society where production is based on the production of useful things that satisfy human need not on the production of money and profit. But under a system where production is directed towards exchange the problems of capitalism will remain.

When a person produces for the market their productive activity is based on getting as much as possible in exchange for what they produce and minimising the costs of what they produce. They maximise revenue and minimise cost, or to put it more simply: they try to maximise profits. They act as a capitalist. The form in which this profit comes is secondary, whether it be in the form of paper or gold, provided it enables the capitalist to accumulate wealth and exchange it in the future, it works as money. Thus we see Marx’s famous description of capitalist production: M-C…P…C’-M’. Money (M) is invested in commodities (C: these commodities can be divided into means of production and labour power) and these commodities produce (P) commodities of greater value (C’) which results in the capitalist acquiring greater money than at the start of the process (M’). Taking out the question of production, we can simplify capital to a very simple process M-M’; self-expanding value; the use of money to create more money. But according to the anti-finance people, money creating money is precisely the perverse kind of capitalism for which the banks are at fault. But this is no perversion of capitalism and it does not happen because of the banks.

The function of banks or any financial intermediary in capitalism is to transfer funds from savers to investors, or put more simply, moving money from people who have it to capitalists who can invest it and make money out of it. They therefore play a very major role in capitalist production. Their role is far from parasitic on capitalism.

Worse, in the past this supposed ‘parasitism’ of the financial class was generally racialised in a manner that raised its ugly head again at an Occupy protest in Los Angeles. Patricia McAllister explained why she was protesting saying “I think that the Zionist Jews, who are running these big banks and our Federal Reserve, which is not run by the federal government… they need to be run out of this country”.

Banks play a major and central role in ensuring that capitalism works; that investments through which profits can be made are found and exploited. Without banks no capitalism. But equally, without capitalism no banks.

The idea of a pure free market capitalism unspoiled by government and finance is a fairy tale. Both violent government and financial intermediaries are necessary for capitalism. What is not necessary is capitalism itself.

8 thoughts on “the 99%, the 1% and ‘anti-finance’

  1. Genuinely not trying to stir here, but while I’d pretty much agree with and endorse everything this article says, I also can’t help noticing a bit of a glaring contradiction between this article and the very “anti-finance” cartoon you’ve got accompanying your (otherwise perfectly unobjectionable) editorial this month: I know that it’s a lot easier to draw a cartoon attacking a particular group than it is to do one attacking impersonal economic forces and all, and that it’s not easy to produce good, attractive communist propaganda on a regular basis when you’ve got limited resources, but still, that particular cartoon just seems to cross the line into the kind of anti-finance ideology that this piece so rightly denounces. Just wanted to point that out.


  2. I actually sort of disagree on finance but do have a criticism of the defence of the ‘real’ economy.

    On finance it has grown into a parasitic element in society. The sort of parasitic element that Smith levelled at the Aristocracy and the fuedal remnants. As socialists I guess we have to do what Smith did and look at and criticise these parasitic elements. The whole 1% would count as a parasitic element to socialists of course.

    On the ‘real’ economy I find this production for productions sake argument too widespread on the left. What we want is conscious production, production with rational thought. We don’t want the Keynesian, get a man to dig a hole even if the hole is not needed by anyone. On the other side of the coin think of all the resources wasted on speculative, find a gap in the market, production. From that point of view thank god capitalism wastes so many people in finance, they could be employed in factories producing crap no one actually needs and damaging the environment.


  3. This article is spot on, and addresses much of the foggy incoherency that surrounds the movement. Attacking corporations and bankers is essentially attacking a symptom. As the most recent crisis of capitalism worsens, we are witnessing the lines between state and capital become completely blurred – Greece and Italy being a case in point. This does not show that ‘another capitalism is possible’, it shows that capitalism is only possible with the state facilitating its hegemony. Democracy has always been a mere sideshow to the bigger game, which is to ensure that the process of accumulation continues – no matter the human or environmental cost.


  4. Excellent article, though it seems to me that one thing could make it even better: a short discussion of at least a bundle of underlying reasons for the formation of “anti-finance” ideology, – speculation, that is, profit from unequal exchange (which, ironically, turns the tables on not finance capital, but mercantile/merchant capital).


  5. Not sure how impersonal economic forces are to blame rather than individuals or groups. I’m pretty sure Capitalism was invented by people to service their desires, on trying to observe it as a natural force it seems other animal species are not infected by it. The problem with increasing power of financial institutions can’t be dealt with by saying they are merely a symptom. You can for example have an economic system such as China’s which is some where between market socialism and market capitalism but whose stability isn’t at the mercy of speculation? If a shop gets broken into and the doors left open and other come to rob it of it’s contents and these secondary thieves also in the wrong?


  6. Sorry for typos above. Also it’s a bit unfair to say Occupy are too anti-finance and not anti-capitalist enough. I’ve heard them raise concerns about neo-liberal economics. also despite the nice Marx formula above, I don’t see all producers and entrepreas bad capitalists, there are leaders of companies who really think about their communities and how to play a positive role in them. I think the problem is very much actually with people who extract more form the system than they put in, C.E.Os on six-figure sums, tax-dodgers, hedge-fund managers, benefit cheats, and yes some owners of production. My wife’s uncle had a leather tannery and he used pay his staff even when the tannery was in debt and when it was about to go bust, he cared about the people he worked with. He was a factory owner with more love than generosity than many critics I’ve met.


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