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April 29, 2012


james higham

Shareholders appear to own banks, but bankers, in effect, really do.

Correction - the globalists own all banks. The old money.

Account Deleted

If bankers really are getting the full fruits of their labour, then they cannot be producing surplus value for shareholders. This vision of a worker's collective owned by penniless capitalists doesn't quite ring true.

The original quote implies that curbing excessive pay necessarily means shareholders taking more out of the banks. The speaker seems to have ignored the possibility that the money could be put to any other use.

Luis Enrique

This is true, however I often wonder whether those campaigning for lower banker pay realise they may also be campaigning for higher bank profits.

What we need are lower prices for financial service and lower bank revenues from trading in markets they have an edge in etc. Applying pressure to lower banker pay doesn't look like a terribly effective means to achieving that end to me.

A Pedant

What Marx actually says about abilities and needs, after several paragraphs denouncing that blood slogan (which is Lassalle's) as hopelessly utopian for the foreseeable future:

"In a higher phase of communist society, after the enslaving subordination of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life's prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly -- only then then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!"

I wish people would read the Critique of the Gotha Programme before quoting it out of context.


@A. Pedant. I'm sure Chris has read it.

I would be interested in finding out why Captialism, in particular, is blamed for the "the essence-appearance dichotomy".


The issue is that bankers have managed to break down the trade-off that is supposed to exist between pay and job security. Jobs with low pay are supposed to have high job security, and vice versa. Bankers get paid tremendously well and don't get fired even when they miss an $8 trillion residential real estate bubble and bust, which crippled the economy and which we are still recovering from. I'm almost certain Marx would have approved of none of this.


"..there is a distinction between formal or apparent ownership and real ownership."

I think this is true - or true often enough to be interesting anyway - but it is not how Marxists have often answered the challenge of the separation of ownership and control. At least as far back as James Burnham (http://en.wikipedia.org/wiki/James_Burnham) some folk have argued that shareholders, the formal owners, aren't really in control of organisations - managers are. But Marxists like Robin Blackburn have often responded by saying this apparent autonomy of managers is strictly limited by the over riding logic of capital accumulation which demands maximum returns for the de jure owners.

Once I would have found Blackburn's response satisfying. But today I struggle with it, or at least see it as incomplete. Managers in the financial industry have, at the very least, very substantial autonomy to rake off surpluses from both their own firms and the wider economy as Chris says. But how to control them? Nationalisation alone won't necessarily reduce this autonomy, and nor would a consumer's co-op. (These may be necessary elements but they are clearly not sufficient.)

The thought of a major financial institute run as a *worker's* co-op makes me shudder - indeed, it might be seen as the constitutional formalisation of what is the basic problem in the first place.

gastro george

Weren't a lot of the investment banks partnerships, so had no shareholders until recently? So they've been used to raking it off anyway.


"...for example labour contracts appear as fair exchanges but in essence are not..."

Or that points like this appear to be incisive comments on political philosophy but in essence are attempts to wind up people on the left.


"Jobs with low pay are supposed to have high job security, and vice versa"

I do not understand that comment at all?

Pay depends on power. Low paid workers get shafted all the time as they have little power. The fact some operators in the finance industry both got huge financial rewards and fucked up and were bailed out should not be a surprise. It is only a shock if you accept the fairy tale about capitalism being fair and efficient. Rather than a system of every man for himself and the strongest get lots and the rest very little. That a small elite has got itself a very favourable situation may be a problem for conventional descriptions of economics but that is an indication of how economics is not as scientific as it is touted as being.

Why not Nationalise the Banks. Turn them into a Government department and pay all bankers on a civil service pay scale? Is it that hard a Job? Does it require a genius level mind? Why would any civil servant with appropriate training be unable to do this work at a small fraction of what is paid now? The British Civil service is full of graduates.


Your points about taxpayer bail-out and systemic risk (as 'negative externality') are excellent. Shareholders have lost out but so have other creditors (lenders, contract counterparties). This could be addressed by 'ring fencing' normal banking from investment banking.
Your points in the second paragraph dont add up, I would politely suggest that you re-visit them. But a good blog entry nonetheless!


According to Marx, surplus value is generated by exploitation of the workers. And then the surplus value appears in such forms as interest, rent, (accounting) profits, and even the wages of non-productive workers. (The distinction between productive and non-productive labor is a technical one, not a matter of morality.)

So, I think, the wages bankers get, in Marxist theory results, at least partially, from the exploitation of workers in other industries. Even if the share-holders in banking received no return on their capital, banking would therefore not be a Marxist dream.

So my question: does Worstall know he has no idea what he is talking about?

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