In recent months we have been exposed to a new concept - toxic assets. Apparently the financial system was poisoned by various investments that released toxins into the money markets, causing the symptoms of credit squeeze, falling dividends, bank failures, and the like.
The analogy goes something like this. In the case of a sick person, their otherwise healthy body develops a reaction to some poison, a toxin, that has entered the body. The body, despite valiant attempts to fight off the effects of the poison, succumbs to the destructive forces and becomes ill. It's not the fault of the patient of course, because the patient is the innocent bystander. It's the toxins that are the problem.
In the case of people, we use various drugs, antibiotics, even surgery in extreme cases, to restore the patient to health. There's no question of blame because it wasn't the fault of the patient. We are merciless in eradicating the source of the toxin. The bacteria are destroyed and we try to immunise the patient against future infection.
We are encouraged to think about the financial system in the same way as patients but let's think about that and see whether the analogy is actually valid. We are expected to accept certain assumptions about the financial system that makes it the same as a patient.
Assumption 1. The patient is healthy until it suffers from the effects of some toxin. So the analogous assumption is that capitalism is healthy until some toxic asset causes problems. But capitalism is riddled with crises, and only keeps going by increasing the areas of exploitation. Most recently globalisation was an attempt to force third world countries to subvert their own economies to increase capital flow into the first world countries. Multinational capitalism accumulates at the expense of the third world. Without that exploitation, international capitalism would be in much deeper crisis.
Assumtion 2. The patient is innocent. The patient has done nothing to deserve these problems. The analogous assumption is that capitalism is innocent too. The financial system is neutral and is just suffering the effects of the toxins. But finance capital is organised and controlled by people for their own financial gain. It is not a social service, but an accumulation mechanism for rich people to get richer. The fact that working people are locked into the mechanism does not turn it into a social service. Far from being politically and morally neutral, it is deliberately exploitative and coercive. Ask anyone who has tried to get a mortgage!
Assumption 3. Removing the toxin will allow the patient to recover. In the case of finance, the idea is that once these toxic assets are removed, and capitalism is allowed to recover, everything will be back to normal - the patient will be healthy. But the truth is that the cause of financial crises is the mechanism of capitalism itself. Using the medical analogy, we can reduce the patient's temperature with drugs, but the illness generating the symptoms still needs to be addressed. The motor of capitalism is the circulation of capital and financiers and the owners of capital take their profits off each circuit. Regardless of the social good, the larger and faster the circulation of capital, the more they will take. The consequence is that on each cycle it becomes harder to invest profitably so the rate of profit drops until eventually it is no longer profitable to invest - and then we have a crisis. Some capital is destroyed (typically owned by working people - closures, job losses, wage cuts, social service cuts, etc), until the rates of profit are artificially pushed back up and the cycle starts again.
That's the sickness of capitalism itself. Capitalism isn't the patient - it's the illness. Blaming toxic assets for the inherent madness of capitalism is like treating a tapeworm by giving the patient more food!
The analogy between a sick patient and the financial system doesn't bear scrutiny but it's incredibly useful for politicians. Don't question the system, just defend it. For Labour politicians who once might have defended working people, their jobs, their interests, now they are all committed to propping up the capitalist system.
And if curing the capitalist patient means feeding the tape-worm of financiers, then the food will come from working people. And they will try to tell us that the medicine that takes away our food is for our own benefit. The capital that is being used to bail out the banking system will come from working people - to use the politicians' own analogy, we will be starved to feed the illness and we are being told that it will make us better!
