CounterPunchers such as Michael Hudson and Rob Urie have long informed its readers about what goes on in the financial sectors of the US economy in particular and the global economy more generally.

Their writings are usefully complemented for me by valuable accounts of how banking insiders do their work, ranging from the more journalistic (Michael Lewis and Matt Taibbi come to mind) to the more scholarly.  Among the latter, Doug Henwood’s Wall Street: How It Works and for Whom (Verso Press, 1987), although published over two decades ago is still pertinent, especially in view of the Senate’s recent vote, with Trump’s support, to roll back some of the Dodd-Frank legal provisions regulating “too big to fail” banks– thereby of course increasing the likelihood taxpayers will be stiffed yet again in the event of another major banking collapse (deemed to be “inevitable” by Bill Gates).

I have just finished Tony Norfield’s The City: London and the Global Power of Finance (Verso Press, 2016).  Norfield was a banker for 20 years, so a lot of what this book conveys is first-hand knowledge.

If Henwood showed, among other things, why the 2008 crash was virtually inevitable, Norwood’s book indicates, likewise among other things, why another such financial disaster will be just as unavoidable, unless significant changes are made, not just to the financial sector, but to the prevailing system of capitalist accumulation in its entirety.

The City makes four principal claims:

+ “A small group of powerful countries has a privileged position in production, commerce, investment and financial relationships compared to all the others”.

+ “The financial system does not sit on top of, or alongside what almost all economic commentators call the ‘real economy’; it pervades all economic activity”.

+ “The concept of finance is not tied to a particular type of institution, or to a separate ‘financial sector’. All kinds of capitalist companies conduct important financial operations”. Norwood provides the examples of the Ford Motor Company and General Electric, which have units engaging in financial-sector activity.

+ “It is a mistake to treat the UK financial markets as simply being satellites of the US markets. To use a more accurate astronomical metaphor, the relationship is better described as a ‘double planet’ system: rather than the UK simply orbiting the US, each country’s financial market exerts a significant ‘gravitational’ pull on the other, even though the pull of the US is obviously larger. More than that, the centre of gravity for the global system is determined the balance of power among all the major capitalist countries, a balance that will shift over time as their relative power changes” (Norfield’s emphasis).

These claims are substantiated via Norfield’s informative overview of day-to-day operations of the UK’s financial sector in relation to its US counterpart, and the part it plays in global capitalism.

While these financial sectors provide mechanisms which oil the levers and cogs of the real economy, they nonetheless require an important fiction for many of their operations.

Organizations (and the individuals who run them) in the financial sector extract revenues from assets which have not yet created value, and which may never in fact create the anticipated value (because the assets in question “tanked”).  The revenues extracted in this fashion are from asset-prices which move up and down in the market, with a more or less appropriately employed broker then placing a bet on a price, while of course not getting caught out by the market when prices fluctuate.

These are bets, says Norfield, but we should resist the temptation to view the market as a mere casino– the market operates, ultimately, in order to take control of the world’s resources.  The betting element ensues from the fact that no value is created by prices simply going up or down, even if there is a “return” to be reaped by the broker/investor who happened to make a good bet on a particular price movement.

Marx used the notion of “fictitious capital” to describe money gained in this way, and Norfield shows us how fictitious capital works today, rightly characterizing it as a form of “constructive parasitism”.

Norfield’s argument in this book shows why we need to disregard the conventional wisdom that the much-publicized malfeasance and corruption prevalent in the financial sector can only be addressed by draconian punishments for those running banks and investment houses who stray from the “narrow” path of probity and rectitude.

An example of this wisdom is provided by a US congressional aide who, during the 2008 financial crisis, said to Matt Taibbi with reference to Lloyd Blankfein, the egregious CEO of Goldman Sachs: “You put Lloyd Blankfein in a pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street.  That’s all it would take. Just once”.

Punishing individual parasites will not overcome the conditions, intrinsic to capitalism, which conduce to “constructive parasitism”.  With the ready connivance of the political order, ways will be found to maintain this systemic parasitism, while perchance this or that financier, deemed dispensable by the ruling elites, gets pounded in the ass behind bars.

Financialization per se may not generate value, but instead enables its operators and beneficiaries to harvest “earnings” which can then be used to acquire and control resources in the real economy.

For those who know a little religious history (and this is my extrapolation from Norfield), the deployment of these fictions in the creation of fictitious capital is somewhat analogous to the medieval sale of papal indulgences.  Riches accrued to the papacy from their sale, but the indulgences themselves were fictions, despite the pretense they were otherwise.

No pope worth his salt in our somewhat more cynical times would get away with trying to enhance the “earnings” of the Vatican Bank by flogging off these conjured-up indulgences to believers.

If insider accounts are to be believed, the Vatican Bank today espouses realistic banking practices and makes its money from deals with the mafia.  O tempora, o mores!

Norfield’s book shows, in principle, that any effective arrival of this cynicism with regard to capitalism will have to be coterminous with its demise, just as its post-medieval equivalent in Christianity led to the expiry of the sale of papal indulgences, and the breaking-up of the church.

Until this happens to capitalism, those who benefit from these fictions of capital—the Trumps, Waltons, Murdochs, and Kochs of this world– will exert a ruinous command over our lives.

Anyone convinced that our lives are bettered by Trump, Murdoch, and the Waltons and Kochs, in all likelihood had an ancestor or two who believed they secured their salvation by purchasing indulgences from a medieval pope.

Today’s financial capitalism is a systemic racket akin to the one run by medieval Christianity, since each like the other is an occultation, albeit with terribly real effects.

History shows that medieval Christendom bit the dust, so the solution with regard to capitalism’s fictions is thus really so damn simple; and yet its implementation so damn difficult.