The Global Financial Community

An excellent article by Prabhat Patnaik on, the website of International Development Economics Associates, starts off with Lenin and goes on to talk about the role that the IMF and the World Bank play to create a “group of core ideologues” to exert “peer pressure” on elites to adopt a belief system that is friendly to global finance capital. This helps to explain why Obama picked the economic advisers he did:

How people like Summers, Geithner and Rubin come to occupy such important political positions within the U.S. system is pretty obvious. American Presidential elections require massive amounts of money, a good chunk of which invariably comes from Wall Street. The story doing the rounds for a while was that Obama had got most of his funds from small donations of $100 each garnered through the internet; but this was complete nonsense. Obama like others before him had also tapped Wall Street and the appointment of the trio, who had organized Wall Street finance for him, was a quid pro quo. The elevation of members of the global financial community to run the American economy therefore should cause no surprise.

I love the light tough of his title. Anyhow, here’s the beginning of the article, which is well worth reading. Hat-tip to LF.

The Global Financial Community

By Prabhat Patnaik

Lenin in Imperialism had talked about a financial oligarchy presiding over vast amounts of money capital through its control over banks and using this capital for diverse purposes, such as industry; speculation; real estate business; and buying bonds, including of foreign governments. The finance capital that Lenin was talking about belonged to particular powerful nations; correspondingly, the oligarchies he was referring to were national financial oligarchies. He talked for instance of French, German, British and American financial oligarchies. But in the current epoch of ”globalization” when finance capital itself is international in character, the controllers of this international finance capital constitute a global financial oligarchy. This global financial oligarchy requires for its functioning an army of spokesmen, mediapersons, professors, bureaucrats, technocrats and politicians located in different countries.

The creation of this army is a complex enterprise, in which one can discern at least three distinct processes. Two are fairly straightforward. If a country has got drawn into the vortex of globalized finance by opening its doors to the free movement of finance capital, then willy-nilly even well-meaning bureaucrats, politicians, and professors will demand, in the national interest, a bowing to the caprices of the global financial oligarchy, since not doing so will cost the country dear through debilitating and destabilizing capital flights. The task in short is automatically accomplished to a large extent once a country has got trapped into opening its doors to financial flows.

The second process is the exercise of peer pressure. Finance Ministers, Governors of Central Banks, top financial bureaucrats belonging to different countries, when they meet, tend increasingly to constitute what the distinguished Argentine economist Arturo O’Connell has described as an ”epistemic community”. They begin increasingly to speak the same language, share the same world view, and subscribe to the same prejudices, the same ”humbug of finance” (to use Joan Robinson’s telling phrase). Those who do not are under tremendous peer pressure to fall in line; and most eventually do. Peer pressure may be buttressed by the more mundane temptations that Lenin had described, ranging from straightforward bribes to lucrative offers of post-retirement employment, but, whatever the method used, conformism to the ”humbug” that globalized finance dishes out as true economics becomes a mark of ”respectability”.

But even peer pressure requires that there should be a group of core ideologues of finance capital who exert and manipulate this pressure. The ”peers” themselves are not free-floating individuals but have to be goaded into sharing a belief-system. There has to be therefore a set of key intellectuals, ideologues, thinkers and strategists that promote this belief system, shape and broadcast the ideology of finance capital, and generally look after the interests of globalized finance. They are not necessarily capitalists or magnates; but they are close to the financial magnates, and usually share the ”spoils”. The financial oligarchy proper, consisting of these magnates, together with these key ideologues and publicists of finance capital, can be called the ”global financial community”. The function of this global financial community is to promote and perpetuate the hegemony of international finance capital. And here the most critical issue concerns the relationship of this global financial community to the politics of particular countries.

To say that the World Bank and the IMF are the main breeding ground for these key figures who are part of the global financial community and mediate the relation between particular countries and globalized finance is to state the obvious. True, the Fund and the Bank are not the only institutions; there are sundry business schools and departments of economics, of business administration, and of finance in prestigious Anglo-Saxon universities. But even for the products of the latter institutions, the Fund and the Bank often act as “finishing schools.”

Read the rest of the article.

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