Lenin had it right
Role of the banks in the economic crisis
Published Oct 24, 2009 12:03 AM
When the workers at Republic Windows and Doors in Chicago seized the factory
last winter, their heroism in defying both their boss and the Bank of America
electrified workers and progressive people all over the country and even around
When they walked out of the factory in victory—with their demands for
severance pay, wages and other benefits agreed to by BOA—they had
accomplished what seemed impossible. Some 250 or more workers, mostly
immigrants, had forced a giant financial behemoth, which controls hundreds of
billions of dollars through its banking empire, to back up and meet their
Revealed in that struggle was an important relationship that all
class-conscious workers should take to heart. The capitalist boss of Republic
Windows and Doors, the exploiter of the workers in his factory, was just a
dependent of his giant creditor.
He needed the money from Bank of America to continue to carry out the
exploitation of the workers. The boss lived off the profits sweated out of the
labor of the workers. But without the money to keep going, he was unable to
continue the cycle of exploitation. Thus, the workers were out of a job.
In a microcosm, that struggle revealed a basic truth. It is a class
relationship that is concealed for the most part.
In capitalist society, exploitation and all economic activity begin with money.
This explains the power of the banks. In order to live in the profit system,
workers must sell their labor power. In order to thrive in the profit system,
the boss must buy that labor power and the means of production. But that takes
Because of the special circumstances of their struggle, the small contingent of
workers at Republic Windows and Doors was actually in combat with the real
economic rulers of capitalist society.
Lenin on the special role of the banks
The dominance of the bankers was dramatically revealed on a larger scale when
the financial crisis first broke out in September 2008 after the failure of
Lehman Brothers. Bailout money poured into the coffers of the banks in return
for the government taking shares in them. There was talk about the
“nationalization” of the banks—a government takeover.
When the smoke cleared, there had been no government takeover of the banks.
What really emerged was that the biggest, most powerful banks had made great
inroads in taking over the financial reins of the government.
This is a confirmation of the Marxist analysis of imperialist society which
V.I. Lenin, the architect of the Bolshevik revolution, elaborated in his book
“Imperialism, the Highest Stage of Capitalism,” written in 1916
during World War I.
Lenin described the evolution of capitalism from its competitive stage in the
19th century to its monopoly stage in the 20th century. He showed how the means
of production grew to gigantic proportions and how the imperialist powers
divided up the globe among themselves into colonies and spheres of influence.
He described the growth of giant monopolistic corporate cartels and syndicates
that dominated the resources and markets of the globe. He pointed to the
growing export of capital abroad and the super-exploitation of the colonial
Looking at the power behind it all, he singled out the role of the banks and
how they came to dominate industry and created finance capital. In a famous
section entitled “The Banks and Their New Role,” he wrote:
“The principal and primary function of banks is to serve as middlemen in
the making of payments. In so doing they transform inactive money capital into
active, that is, into capital yielding a profit; they collect all kinds of
money revenues and place them at the disposal of the capitalist class.
“As banking develops and becomes concentrated in a small number of
establishments, the banks grow from modest middlemen into powerful monopolies
having at their command almost the whole of the money capital of all the
capitalists and small businessmen and also the larger part of the means of
production and sources of raw materials in any one country and in a number of
countries. This transformation of numerous modest middlemen into a handful of
monopolists is one of the fundamental processes in the growth of capitalism
into capitalist imperialism.” (Lenin's works can be found on
Later in the same work, Lenin described the parasitic nature of the financiers,
which is so prominent in the present crisis:
“It is characteristic of capitalism in general that the ownership of
capital is separated from the application of capital to production, that money
capital is separated from industrial or productive capital, and that the
rentier who lives entirely on income obtained from money capital is separated
from the entrepreneur and from all who are directly concerned in the management
of capital. Imperialism, or the domination of finance capital, is that highest
stage of capitalism in which this separation reaches vast proportions. The
supremacy of finance capital over all other forms of capital means the
predominance of the rentier and of the financial oligarchy.”
Much has been written of late about the so-called “financialization of
capital,” as if it were a new discovery. The wealth of the banks and the
magnitude of their speculation have grown immensely with the growth of
capitalist imperialism. But Lenin described its evolution and fundamental
features almost a century ago. Wall Street’s insatiable lust for profit
cannot be treated in isolation from the analysis of imperialism as a form of
Lenin showed that the dominance of finance capital is an inevitable and
irreversible stage of the capitalist system. Competitive capitalism grows into
monopoly capitalism—the stage in which finance capital and the financial
oligarchy have risen to the pinnacle of the system of exploitation and wage
slavery, at home and abroad.
Banks suck profits from everywhere
The banks are tied to big oil, big industry, the insurance companies, all the
hedge funds, the private equity funds, the mortgage brokers, the stock exchange
and every other institution in society that thrives off the stolen labor of the
The banks profit from every war and every intervention because wars are
economic enterprises that take financing and involve fees and interest. The
banks get profit from the government, which borrows from them at high interest
rates to pay for wars. They also get profit from the military-industrial
complex itself, which they finance. Plus they profit from the spoils when the
Pentagon conquers territory.
The banks profit from every layoff, every plant closing, every speed-up,
because every business, large and small, is in debt to the banks and pays
interest out of the surplus value it has wrung from the workers.
They profit from the debt of the workers. After workers are exploited on the
job, their wages are converted into profit for the banks in the form of fees
and exorbitant interest payments. Banks will make loans to corporations to
break strikes but will deny loans to companies to pay workers’ benefits,
as in the Republic Windows and Doors case.
Banks profit from the high cost of education, both from the interest they get
from student loans and the fees from college and university trust funds that
they manage. They profit from the health care crisis because they are
completely intertwined with the insurance companies, the pharmaceutical
companies and the medical-industrial complex.
And they make money from racism, which brings extra profits because of the
lower wages paid to Black, Latino/a, Asian, Middle Eastern and Native peoples
and because divisions within the working class keep all wages down and profits
The banks profit from sexism because women get paid less than men, to say
nothing of women's unpaid labor in the home—which, among other
things, provides the next generation of workers for the bosses free of
They profit from lesbian, gay, bi and trans oppression, not only because it is
divisive but because LGBT people are deprived of countless economic and social
benefits available to straight people—benefits that would have to come
out of the coffers of the government or the bosses.
There is no aspect of capitalist society in the imperialist epoch that is
untouched by the bankers.
Banks get rich while workers sink
So it should be no surprise that Timothy Geithner, Larry Summers and other
lackeys of the bankers—who are high-paid government officials but are
lackeys nevertheless—scurry about trying to save their masters while the
entire ship of the working class is sinking.
When the government orchestrated the bankruptcy of General Motors, tens of
thousands of workers' jobs were destroyed through plant closings. But the
biggest banks—including JPMorgan Chase, Citigroup and Credit Suisse, all
of whom were getting money from the government—made sure that the
bankruptcy settlement guaranteed them every penny of the $6 billion in loans
they were owed. Other syndicates of bondholders also got paid off.
When the financial meltdown came in the fall of 2008 and the banks were in
trouble, within days they had Henry Paulson write a three-page piece of
legislation granting them $750 billion. Paulson, a former co-chair of Goldman
Sachs and secretary of the Treasury under George W. Bush, made sure the
legislation specified that neither Congress nor the courts could review or
alter this colossal grant.
When Congress rebelled and voted down this outrageous giveaway over fear of
mass anger, the bankers simply turned up the heat and got the vote reversed
over the space of a weekend.
After a struggle among the banks, a small number of them emerged stronger than
before the crisis. Banks that were bailed out because they were “too big
to fail” have gotten bigger, richer and financially and politically more
What was revealed in microcosm in the Republic Windows and Doors strike is now
being revealed on a society-wide scale. Financial vultures are using their
power to swallow up more and more of the wealth of society while the working
class is plunged into economic and social disaster.
Goldman Sachs announced that it made a record $3.1 billion in profits in the
last quarter. It is scheduled to fork out $5.3 billion in bonuses to its team
of bankers. (New York Times, Oct. 16) JPMorgan Chase had third-quarter profits
of $3.6 billion, seven times higher than a year ago. (AFP, Oct. 14)
Meanwhile, home foreclosures went up 23 percent in the month of September.
Workers are living out of their cars and being pushed into homeless
This is the perfect capitalist symmetry of wealth and exploitation. Bankers get
rich while the masses are plunged deeper into crisis. The stock market goes up
to 10,000 while unemployment edges up to 10 percent. (Real unemployment is
nearer 18 percent.)
The latest numbers on the government stimulus plan reveal that $16 billion has
been spent to create 30,000 jobs—a paltry result. About 8 million jobs
have been lost and the number is climbing. But the bankers’ stimulus plan
has yielded billions in profits and stock market riches.
Workers’ rebellion inevitable
This situation can only be temporary. It is all based on the fact that the
workers have not yet begun to fight back on a wide scale. The relationship of
class forces is temporarily on the side of the bankers and the bosses.
They are pushing everyone around now, including the Obama administration, which
has catered to them. The banks have spent $220 million lobbying against even a
minimal financial reform bill designed to restrain them from wild speculation
and gambling—which touched off the present crisis in the first place.
The banks are the central nervous system and the organizers of capitalist
imperialism. They dominate capitalist politics. Their representatives are
always high up in every administration, Republican or Democrat. They break
through every attempt to hold them back from plundering the workers because, as
Lenin said, they gather all the financial resources of society into their
hands. Money capital is the beginning point of the exploitation of labor,
because capitalist industry must have funds. But the banks also use this
financial power to promote speculation, gambling and financial extortion.
They think that they can go on like this forever. But they will soon see that
there is a force mightier than capital, mightier than bankers. It is the force
of tens of millions of workers and oppressed people, who will get to the point
where they can’t take it any more. All the capitalists' money will
not be able to stop the class struggle and a class war against capitalism
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