acards are being prepared. Photo-opportunities are being organised. A list of demands is being drawn up by a coalition of pressure groups, unions and NGOs. Yes, preparations are well under way for protests to mark next month’s 10th anniversary of the collapse of Lehman Brothers – the pivotal moment in the global financial crisis.
Make no mistake, the fact that events will take place in all the world’s financial centres is no cause for celebration. On the contrary, it is a sign of failure. The banks were never broken up. Plans for a financial transactions tax are gathering dust. Politicians toyed with the idea of a green new deal and then promptly forgot about it. There never was a huge swing of the pendulum away from the prevailing orthodoxy, just a brief nudge that was quickly reversed. The brutal fact is that the left had its chance, and it blew it.
Ten years on, international finance is as powerful as it ever was. There has been only cosmetic reform of the banking industry. Corporate power is ever more concentrated. The benefits of the weakest global recovery from recession in living memory have been captured by a tiny minority. Wages and living standards for the majority in developed countries have grown only modestly, if at all.
September 2008 was a near-death experience for global capitalism. At one point there were fears for the entire western banking system; when the recession was at its worst, industrial production was collapsing more quickly than it had in the early stages of the Great Depression. It was that bad. The moment was ripe for politicians brave enough to state the obvious: that the crisis was the result of removing all the shackles on global financial capitalism put in place for good reason in the 1930s. But social democratic parties failed miserably to come up with a progressive response to the crisis that would have involved redressing the imbalance between capital and labour. They were timid when they should have been brave, and have paid a heavy price as a result. Mainstream parties patched up the system and paid scant heed to the anger felt by those who felt ignored. The bitterness bubbled away and eventually found other ways of manifesting itself.
In the winter of 2008-09, there was a naive assumption on the left that the shock of Lehmans was so profound that change would inevitably occur. If the oil shocks of the 1970s had been the catalyst for the seizure of control by a rightwing political agenda, then the sub-prime mortgage crisis would do the same for the left. But it wasn’t quite that simple, because those who had done well in the decades that followed the Thatcher-Reagan revolution used all their power, influence, financial clout and cunning to resist change. A few tactical retreats were made in order to safeguard the status quo.
The contrast between Franklin Roosevelt in the 1930s and Barack Obama is telling. Both men arrived in the White House in desperate times. Both had a mandate for change. Roosevelt thought reform was necessary to save capitalism from itself. It was this intellectual framework that resulted in the Glass-Steagall Act to separate banks’ investment and retail operations; public works schemes for the unemployed; and laws to make it easier for trade unions to organise. Obama, like most of his fellow centre-left politicians 10 years ago, was a technocrat who broadly accepted the status quo and never seriously contemplated taking on finance. Wall Street detested Roosevelt. It found Obama much more amenable.
Obama deserves a bit of sympathy. Every radical period requires a philosopher king to help to provide a political framework for action. For the first generation of free-market liberals, the gurus were Adam Smith and David Ricardo. For Lenin it was Karl Marx. In the 1930s, it was John Maynard Keynes. And in the 1970s it was Milton Friedman and Friedrich Hayek. Ten years ago there was no one.