(THIS ARTICLE IS MACHINE TRANSLATED by Google from Norwegian)
The City, London and the Global Power of Finance
It is just over a month before the UK referendum on EU membership: A full hall at SOAS (School of Oriental Studies) hears Tony Norfield admit a page to his book on the occasion of the release of City, London and the Gobal Power of Finance. Anastasia Nesvetailova, a political economist who is invited to pose critical questions about the book launch, wonders: How can a book that represents a critical and detailed review of global finance based on the City of London, not to mention the term "financialization" »With one word? The author defends his deliberate omission by claiming that terms such as "financialization" and "neoliberalism" are often used by those who believe it is possible to find a more just form of capitalism. These, he believes, often dream of a time that has never been. As if the time before neoliberalism was better politically regulated and enabled a more moderate capitalism?
Norfields almost 20 yearsHowever, his work as a broker at various investment banks in the City of London, as well as his subsequent doctorate on the subject, has left him few illusions about capitalism. For him it has never been a golden era. Admittedly, he admits that there were some countries, and especially the United States, that experienced a brief period of increased growth after World War II. But, as he adds: The period proved to be short-lived, and neither was there any conflict or crises. He mentions, among other things, the Suez crisis, the Anglo-American coup against Mossadegh in Iran in 1953, and the intensification of the exploitation of the British colonies in the 1950s. Moreover, he adds, the financial world is quickly figuring out how to bypass political regulations.
According to Norfield, the need for financial markets to escape regulation was crucial to the development of the euro markets from the 1950s, when the City of London, with the good help of British politicians, managed to take on an executive and central role as the world's broker capital. However, there is no natural position, and Norfield's book provides a thorough introduction to some of the historical, geographical, and political causes that have facilitated the City of London's current global position.
Colonization. Methodologically, Tony Norfield draws close to Marx's critical understanding of capitalism as a holistic, systematic operation whose main objective is the accumulation of profit. Furthermore, he agrees with Marx when the latter characterizes capitalism as parasitic, as it is not itself productive, but earns its living by extracting added value from labor and social reproduction in general. Since imperialist exploitation via finance is what first and foremost characterizes the capitalism of our time, the relationship between state and capital is central, and Norfield's review of this relationship is, in my opinion, one of the book's most thorough and convincing features. Through occasional references to Lenin's classic work on imperialism as the highest stage of capitalism, Norfield demonstrates how global finance has become monopoly capitalist – with only a small number of global companies and banks dominating and competing against each other. Furthermore, according to Norfield, there is a clear connection between global companies, banks and nation states, where what distinguishes an imperialist corporation, among other things, are the benefits and the support the company generates by its affiliation with a powerful state. With such support, global companies can use their monopoly power to move parts of their business to countries with cheap labor, and then invest the profits in international financial transactions. Mergers and acquisitions of other companies will also be easier with a powerful state behind them. This in turn has led to the fact that today we have a world economy dominated by a few large, powerful capitalist companies, which according to Norfield shows how the human productive side has had to give way to an increasingly dysfunctional capitalist system. Worldwide, for example, only 50 companies control the ownership share to almost 20. And for example, Google controls almost 000 percent of all Internet searches.
British Empire. The relationship between a powerful state and global companies is also evident in statistics that show how companies from dominant states such as the USA, China, Germany, France and the United Kingdom are also the ones with the highest stipulated market value. Norfield refers, among other things, to a statistic from the Financial Times from 2011 on the 500 largest global companies. Here, the United States is not surprisingly on top with a total of 160 companies estimated at a value of 9602 billion dollars. The UK is number two on the list, with a total of 34 companies with a total estimated value of 2058 billion dollars. The three largest UK-based companies such as Royal / Dutch, BP and Vodafone Group held a second, sixth and seventh place on the Financial Times' ranking list in 2011.
Another UN report shows a list of the 50 largest financial companies and their geographical distribution. Here, too, the UK ends up in second place after the United States. British HSBC, for example, had branches across 65 countries, while Barclays Bank was operational in 45. US domination has a lot to do with the dollar's role as a world currency and the way the US can use its own currency to obtain favorable trade deals or use the dollar as a press agent against nation states that do not act in the country's interest.
However, Norfield criticizes those who choose to focus only on America's hegemony. Other nation states, such as the United Kingdom, also enjoy great privileges å dividend the majority of non-privileged states. Although the British Empire has lost its former colonies, global finance allows for a more covert form of imperialism. Here it is also important to understand, he writes, that economics means real political influence.
Without a clear devaluation of the financial markets or a mere write-off of debt that has been created, fictitious capital is highly concrete. Interest-yielding securities place clear, binding and legal requirements on current and future world resources and manpower.
The need to recapture national sovereignty was merely a cover for general xenophobia.
A new imperialist world order. According to Norfield, the emergence of the euro markets was the first real remedy after 1945 for free flow of finance – where the private market found ways to circumvent national regulations. The term "euro" as a prefix to the market may therefore seem somewhat confusing to the uninitiated, as these markets are characterized primarily by being outside a country's jurisdiction.
Here, British politicians asserted themselves early in the imperialist race after World War II. They deliberately nurtured the emergence of the euro markets as part of the UK financial system.
While the pound's role was limited, the US dollar took over as world currency. But the proliferation of euro markets in the City of London maintained Britain's strength as imperialist power. The United States, for example, had far more restrictions on banking, while the UK market allowed for greater tax benefits in international banking. Tax evasion was one of the main attractions of the euro stock market, as shares are paid without tax.
The British financial system allowed large investment banks to trade outside of national regulations.
While, for example, the US market mostly only issues short-term loans where collateral has to be made available, the City of London could offer banks unsecured loans on both a short-term and long-term basis. This has led London to become a global banking center for intermediary trading, focusing mainly on the world currency euro dollars, that is, trading in dollars outside US jurisdiction. As a result, London had already in 1971 been able to attract 160 banks from 48 nations.
Furthermore, the Thatcher government intensified the deregulation of the markets in 1986. Here it was, according to Norfield, to do away with protectionist finance cartels so that it would be easier for international companies to invest in the London stock market. These reforms led to many more foreign companies establishing themselves in London, which due to restrictions could not be carried out in their own countries. In the early 2000s, the City of London accounted for 70 percent of all mid-range trade worldwide.
From 1960 to 1983, total deposits in the euro markets also increased from one billion dollars in 1960 to $ 1050 billion in 1983.
This shattered all attempts to regulate the global capitalist system, and was also a contributing factor to the development of monopoly capitalism after the Second World War.
Brexit. It is precisely this middle position the United Kingdom has traditionally held, which, among other things, makes the relationship between the EU and the United Kingdom so strained. However, continued access to the European common market is essential for the international financial and banking market in London.
The disapproval in the global markets due to Brexit is then also confirmed by Norfield – in connection with a presentation of his book at Housman in London just over a week after Brexit. No, this outcome and the uncertainty that has been raised with Brexit, the markets like poorly. Norfield himself abstained from voting, as he believes that the election itself does not matter when it comes to the global issues we face and which his book touches on. The debate surrounding the referendum was characterized by a reactive nationalism, he claims. The need to recapture national sovereignty was just a scapegoat for general xenophobia and resistance to increased immigration. This is about British imperialism in a world ruled by global monopoly capitalism, where barely 20 nation states dominate and exploit the remaining 180 in the world.
After the meeting, I get asked if he thinks Brexit will mean the end of the City of London's global financial status. To this Norfield answers cash no. For that, he claims, the infrastructure built around London is far too important. Besides, you must not forget the importance of the time zone, he says: No major financial centers have as favorable a position for global trade as London.
And Brexit? The global positioning of capitalism and all its past history testify that they will find a way around.
The book is nominated for the Isaac Deutscher Prize,
which will be decided in November.
Diesen works as an independent critic, writer and lecturer with main emphasis
on applied political philosophy.