AnarWiki/markdown/Abolish_the_Stock_Market.md

**Abolish the Stock Market: A Brief Diagnosis of the Depression** is a
2009 article by [James Herod](James_Herod "wikilink") that discusses the
Great Recession and a call to abolish the stock market.

## Transcript

(Being mostly a survey of scholarly research.)

It is obscene and insane that a few ten thousand very rich persons
(multi-millionaires and billionaires) can, by placing bets (gambling) in
the world’s [stock exchanges](Stock_Market "wikilink") (casinos),
artificially jack up, within months, the price of rice, wheat, corn, and
other food staples, thus forcing a billion or more people to the very
edge of starvation. Obviously, such an abominable situation should not
exist.

So you’d think there would be a great clamor to abolish the stock
market. But then, you’d think that there would be a clamor to abolish
the [CIA](CIA "wikilink") also, which is an absolute evil, and the
Pentagon, an equally absolute evil, as well as Hollywood. But as big and
bad as these outfits are they are nothing compared to the biggest
abomination of them all – [capitalism](capitalism "wikilink"), including
its [nation-state system](State_\(Polity\) "wikilink"). (While we’re in
the abolishing mode, let’s abolish [money](money "wikilink"), which
would get rid of all these evil institutions in one fell swoop.)

The [current financial meltdown](Great_Recession "wikilink") we’re in is
just an artifact of capitalism, and it certainly can’t be explained
without taking this system into account, although plenty of people are
trying to do just that. The most popular explanation says that those
Wall Street bankers are just <em>too damned greedy</em>.

So what’s going on? I have pieced together the following sketch of the
crisis from the writings of our radical social philosophers and
historians who have studied the matter, scholars such as John Bellamy
Foster and Fred Magdoff, most importantly, but also Immanuel
Wallerstein, Michael Hudson, Michel Chossudovsky, Doug Henwood, and
[Silvia Federici](Silvia_Federici "wikilink") / George Caffentzis, among
many others.

To begin with, we are in the early stages of a major depression. This is
not a typical brief recession, but a deep, long-lasting, systemic,
global depression. It may last a decade. There will be massive
unemployment. Hundreds of thousands of businesses will go bankrupt.
Maybe a hundred thousand nongovernmental organizations will shut down
for lack of funding. Millions will lose their homes. Millions more will
lose their pensions. Malls will stand deserted. Poverty will increase
dramatically. Millions more people will starve to death in the poorer
countries.

A depression is when the so-called economy contracts significantly,
maybe by as much as 10-15%. That is, “growth” stops. Growth of what?
Capital accumulation. Capital cannot find ways to continue to expand.
That is, rich people cannot find ways to invest their surplus money
which will yield sufficient profit. When the rate of profit falters,
crisis ensues. General panic sets in amongst “investors” (people who
make money off money). Capitalism – a system for accumulating capital
for the sake of accumulating capital – requires incessant growth (new
products, new markets), which is why it is often likened to a cancer,
and why it must be eradicated.

As it happened, capitalism has a cyclical aspect. It grows for thirty
years or so and then stagnates for roughly thirty more years, with the
cycle ending in a depression. And so it has been for five hundred years.
The years of stagnation stem from the increasing difficulty of keeping
the rate of profit up through the production of goods and services. The
built-up productive capacity outstrips demand. If goods and services
don’t sell, no profit can be realized, and there is no point in making
further investments in the “real economy.” So the people who own surplus
capital shift over to financial speculation in an effort to keep the
profits flowing in. This process is entirely normal to the system.

This is what has been happening again recently. There was a stagnating
economy combined with an over-abundance of capital with nowhere to go,
so the rich turned to gambling, in a rigged game which yielded enormous
profits for a while to those in the know. But now the casino has gone
belly up, the system has crashed, and a depression has commenced.

Historically, after a depression, the cycle starts over again. There is
some disagreement among radical scholars, however, as to whether the
cycle will restart this time in the usual way and continue on as before.
Wallerstein, for example, believes that capitalism has reached barriers
to its continued growth which it will not be able to overcome and that
the system will be gone within twenty to forty years. Most analysts do
not go this far, some even claiming that the idea that capitalism will
self-destruct is nonsense.

There is general agreement though that the current crisis has
distinctive features which make it different from all preceding ones.
For one thing, there is the sheer volume of the surplus capital that is
sloshing around the world looking for “investment opportunities.” We’re
talking about tens of trillions of dollars, much of it changing hands
overnight. Also, with high-speed computers, million-dollar bets can be
placed which last only a few minutes. Very little of this betting now
takes place in the stock market per se. Most of it is done in the
commodity, bond, and currency markets, and through over the counter
betting.

Plus, in recent years, the gamblers have invented a whole basketful of
new ways to bet (called “financial instruments,” e.g., derivatives --
forwards, futures, options, swaps, collars). For example, they can bet
that the prices of currencies, commodities, or stocks will rise or fall.
Much of the spike in the price of oil last year was caused by betting.
Millions of dollars worth of bets that the value of a company’s stock
will fall can then become a self-fulfilling prophecy, and a perfectly
normal profit-earning company can be destroyed. Gamblers can buy
insurance to cover the risks of their bets, and then bet on the ability
of the insurance company to pay. These practices strike any normal
person as total madness, but they are completely rational from the point
of view of the financial elite, who will grab profit any which way they
can.

In recent years, in the United States, the financial wing of the
capitalist ruling class, which is now predominant, has further
compounded the madness by getting rid of all government regulations over
its activities. It has gotten the situation back to pre-[World War
I](World_War_I "wikilink") days when the Robber Barons had a completely
free hand to do any damned thing they wanted to, the result being the
[Great Depression of 1929](Great_Depression "wikilink"). So the
Roosevelt wing of the ruling class stepped in, back then, to save
capitalism from itself with the watered-down USAmerican version of the
welfare state – the New Deal. This is not likely to happen again,
because there is no massive socialist movement to exert pressure from
below, nor is the ruling class as divided. Capitalists have never been
in such complete control of everything as they now are in the [United
States](United_States_of_America "wikilink"). They face no serious
opposition.

What is the likely outcome of all this? We can see from the government’s
response to the crisis so far. All steps taken to date serve to cover
the losses of the financial elite (wealthy gamblers). They get to keep
the profits they made when the betting was good, and then have the
government, using general tax revenue, cover their losses after the
betting tanked. This does not mean that the banks are being
nationalized. Quite the contrary. It is the privatization of the
government. Wall Street has simply taken over the US Treasury
Department.

The end result will be the further concentration of capital into fewer
very powerful corporations, and the further consolidation of ruling
class power.

Anarchists can use this crisis to discredit capitalism and organize
campaigns to dismantle it. A good beginning is the emerging Boycott
Banks campaign. (See information at:
\<<http://www.bankstrike.net/organizing-financial-crisis>\>).

<strong>Recommended Reading</strong>

<strong><em>On the Financial Meltdown</em></strong>

Foster, John Bellamy, and Fred Magdoff, <em>The Great Financial
Crisis</em> (Monthly Review Press, February 2009, 160 pages). This is
the best radical analysis of the crisis so far.

Immanuel Wallerstein, “The Depression: A Long-Term View,” October 8,
2008, at: \<www.binghamton.edu\>. See also the long interview with
Wallerstein by Jae-Jung Suh, “Capitalism’s Demise?” January 10, 2009,
online at: \<<http://english.hani.co.kr/popups/print.hani?ksn=332037>\>.

Michael Hudson. A convenient archive of Hudson’s essays on the crisis
can be found at: \<<http://www.globalresearch.ca/>\>. Go to their author
index, click on H, and scroll down to Hudson.

Michel Chossudovsky, “America’s Fiscal Collapse,” March 2, 2009, online
at:

\<<http://www.globalresearch.ca/index.php?context=va&aid=12517>\>.

Doug Henwood, “Reflections on the Current Crisis – Part Two,” <em>Left
Business Observer</em> \#118, April 2008, online at:
\<[www.leftbusinessobserver.com](http://www.leftbusinessobserver.com/Turmoil2.html)\>.

There is a link to Part One.

Silvia Federici and George Caffentzis, “Notes on the Wall Street
Meltdown,” October 10, 2008, online at: \<freeofstate.org\>. \[link
broken\]

Peter Gowan, “Crisis in the Heartland,” <em>New Left Review</em>, \#55,
January-February 2009, online at:
\<[www.newleftreview.org](https://newleftreview.org/?page=article&view=2759)\>.

David Harvey, “Why the U.S. Stimulus Package is Bound to Fail,” February
13, 2009, online at: \< http://www.zmag.org/znet/viewArticle/20559\>.
See also Harvey’s March 13/15, 2009 essay on Counterpunch, “The Crisis
and the Consolidation of Class Power: Is This Really the End of
Neoliberalism?” online at: \<www.counterpunch.org\>. \[links broken\]

Leo Panitch and Sam Gindin, “From Global Finance to the Nationalization
of the Banks: Eight Theses on the Economic Crisis,” February 25, 2009
online at:

\<[www.globalresearch.ca](https://www.globalresearch.ca/from-global-finance-to-the-nationalization-of-the-banks-eight-theses-on-the-economic-crisis/12463)\>.

See also an interview with Panitch, February 18, 2009, at:

\<zcommunications.org\>. \[link broken\]

Paul Bowman, “Financial Weapons of Mass Destruction,” September 2008,
online at:

\<[www.anarkismo.net](http://www.anarkismo.net/article/9850?print_page=true)\>.

Matt Taibbi, “The Big Takeover,” <em>Rolling Stone</em>, issue \#1075,
April 2, 2009. Also online at:
\<[www.informationclearinghouse.info](http://www.informationclearinghouse.info/article22276.htm)\>.
\[link broken\]

James Petras, “Latin America: Perspectives for Socialism in a time of a
World Capitalist Recession/Depression,” online at:

\<[petras.lahaine.org](https://petras.lahaine.org/articulo.php?p=1772&more=1&c=1)\>.

<strong><em>More Generally</em></strong>

Wallerstein, Immanuel, <em>Historical Capitalism</em>

Hudson, Michael, <em>Super Imperialism</em>

Chossudovsky, Michel, <em>The Globalization of Poverty</em>

Henwood, Doug, <em>Wall Street</em>

Ingham, Geoffrey, <em>The Nature of Money</em>

Kindleberger, Charles, <em>Manias, Panics, and Crashes</em>

Hutchinson, Frances (and others), <em>The Politics of Money</em>

McNally, David, <em>Against the Market</em>