21 March 2018

The Attempted Suicide of Capitalism – Abolition of Moral Hazard and the Rise of the Oligarchs

"In 2016 the famously “consumer friendly” Wells Fargo, one of the few US banks to have survived the financial meltdown of 2007-2008, was revealed to have fraudulently opened over a million new accounts for existing customers without their knowledge in order to generate fees from them. Wells Fargo employees were under such pressure from their managers to sell up to twenty “financial products” a day that many succumbed to stress (frequent weeping, vomiting and panic attacks)."


The goose that lays the golden eggs has been considered a most valuable possession. But even more profitable is the privilege of taking the golden eggs laid by somebody else’s goose. The investment bankers and their associates now enjoy that privilege. They control the people through the people’s own money.

Louis Brandeis, Associate Justice on the American Supreme Court from 1916 to 1939.1


Finance and money are discussed as if they were purely technical matters that those without the requisite training cannot hope to understand. The widespread propagation of this falsehood makes it easy for those with policy control to pursue their objectives without informed democratic debate.

Lena Rethel and Timothy J. Sinclair: The Problem with the Banks.2


Ill fares the land, to hastening ills a prey
Where wealth accumulates, and men decay.

Oliver Goldsmith: The Deserted Village, 1770







Thou shalt not steal: an empty feat, When it’s so lucrative to cheat.

Arthur Hugh Clough: The Latest Decalogue, 1862


Here are ten diverse but correlated facts and figures that may help us to understand why faith in capitalism has recently been waning, not only among the victims of turbo-capitalism, but also among the better-off who are disillusioned by its recent excesses:

(1) Penalties paid out by the banks in the USA and Europe for various forms of malfeasance in the preceding decades are estimated to rise to $400 billion by 2020. The cost of public bailouts associated with the sub-prime crisis in the United States may be as high as $5 trillion.3

 (2) Respected international corporations, such as Siemens ($1.6 billion for one of several offences), Glaxo Smith Kline ($3 billion for ditto) and Alphabet, the parent company of Google (€2.42 billion), have been fined eye-watering sums for corruption and anti-competitive practices in various jurisdictions. Volkswagen is expecting costs of $23.9 billion relating to its falsification of emissions tests and several other leading car-makers are being investigated for the same offence.4 A loophole in US tax law has ensured that some of these enormous penalties could often be offset against tax. For example, BP was fined $42 billion for the Deepwater Horizon disaster, but “earned” a $15.3 billion tax write-off. The motto seems to be “we commit the crimes, the taxpayer pays the penalties.”5

(3) The same can be said of banking and financial services. Professor David Friedrichs in his analysis of Wall Street points to the disproportionate penalties levied on “fundamentally criminal and criminogenic” practices in the financial sector and “conventional crime”, especially considering that the harm done to society by the former is “exponentially greater” than that caused by the latter, whose perpetrators often pay for their crime with a lengthy gaol sentence. This is partly due to the fact that powerful and well-connected interests with batteries of top lawyers have successfully resisted the criminalisation of what the rest of us perceive as “white collar crime”. If a case does come to court it is hard to prove under present laws that a crime has been committed (rather than bad judgement), and in any case many cases are settled with fines involving no admission of wrong-doing. The Brechtian quip is relevant here – if you want to rob a bank, begin by being its owner. Up to $60 million dollars over the last two decades have been lost to old-fashioned bank robbery, but from 1980 to 2000 $500 billion was extracted by investment banking from shareholders and customers, often by dubious means.6

(4) The financial services industry in Britain makes around £413 million every working day £105 billion a year by skimming commissions and fees from its customers’ savings and pensions. For an individual to achieve an inflation-protected annual retirement income of around £3,500, a private pension pot of £150,000 would currently be needed £100,000 to provide the annuity and £50,000 handed over to the intermediaries who administer the pension.7 A recent report in the Financial Times revealed that “active” fund managers for pension schemes (i.e. those that did not just track an index) pocketed three quarters of any value they created over the last quarter of a century. Pension scheme clients received just 16 pence of growth from every 100 pounds invested (and even that may overstate their gains, as transaction costs – high with active funds – “would have been deducted before returns were known”).8

(5) A millisecond is a long time in the life of a high frequency trader.9 A nanosecond’s advantage in a dark pool” (itself a questionable trading practice whereby huge blocks of shares are traded off-market) can yield huge profit to anyone with a faster network who can spot the big orders and deal before they are executed. Some days, up to 910 million shares are traded in dark pools. Needless to say, the losers in such a system are retail investors.10

(6) Globally there are around fifteen thousand companies suitable for investment by unit trusts (called “mutual funds” in America); yet there are more than eighteen thousand of the latter. Research in the USA found that the S&P 500 index out-performed almost 90% of mutual funds over a ten-year period. The total charges of trusts are opaque, but taking into account an admitted “Total Expenses Ratio (TER) of 2.3%”, plus transaction charges (easily increased by “churning” stocks), plus the handsome offer/bid spread of 4 to 5%, the cost to trust investors is often in excess of 4% per annum. According to consultant David Craig, if the value of a UK unit trust increases from £100 million to £108 million, the trust manager takes £4.6 million of that increase in charges.11 Actively managed” trusts charge higher fees than those that track an index, supposedly because performance is more impressive (though generally it is not). Recently it has been revealed that many of these are anyway “closet trackers” and not “actively managed” at all.

(7) In 2000, the CEO of the US toy company Mattel was relieved of her post after what The Wall Street Journal called a “turbulent three years marked by disastrous acquisitions and a stream of earnings disappointments”.12 The board forgave her a loan of $4.2 million, adding a cash grant of $3.3 million to pay the tax on forgiveness of another loan, plus making a contractual termination payment of $26.4 million and throwing in retirement benefits in excess of $700,000 a year.13

In 2013 RBS Chairman Sir Philip Hammond described a conversation with a £4 million-a year banker in which the banker expressed “outrage” at discovering that “somebody doing a comparable job at another bank was getting £6 million a year.14 The banker’s rage may be put in perspective when you consider that he is paid huge sums supposedly for his skill in financial risk-taking, yet the risk has actually been transferred elsewhere to clients, depositors or investors. Moreover the huge bonuses paid to bankers often materialise in years when the bank has done badly; nor, usually, are they clawed back if short term profit proves to be longer term liability. In 2014 recidivist offender Barclays announced previous year’s profits down by £1.8 billion, but set aside £2.4 billion for bonuses, up 10% on 2013. At a stroke, Barclays created 431 millionaires.”15

(8) According to economist John Kay, British banks have assets of about £7 trillion with matching liabilities, but the latter are mostly obligations to other financial institutions. As he puts it: “Lending to firms and individuals engaged in the production of goods and services which most people would imagine was the principal business of a bank – amounts to about 3% of that total.”16 In the 1980s banks discovered that illiquid consumer debt could be “securitised” and sold on as bonds. At least for a time [i.e. until the crash of 2008], financial alchemists had succeeded in their endeavour to turn base metal (subprime loans) or even air (synthetic credit products) into gold (AAA-rated certificates).”17

(9)In 2016 the famously “consumer friendly” Wells Fargo, one of the few US banks to have survived the financial meltdown of 2007–8, was revealed to have fraudulently opened over a million new accounts for existing customers without their knowledge in order to generate fees from them. Wells Fargo employees were under such pressure from their managers to sell up to twenty “financial products” a day that many succumbed to stress (frequent weeping, vomiting and panic attacks).18 Of course banks all have codes of ethics and “mission statements”. The Co-operative Bank in the UK wrote its code into its Articles of Association just weeks before its chairman was arrested for buying illegal drugs. The Parliamentary Commission on Banking Standards pointed out that the code of conduct for serial offender Barclays was “remarkably similar” to that set out in criminal enterprise Enron’s 2000 Annual Report, one year before it filed for bankruptcy due to systematic accounting fraud. As an academic study puts it: “Banks are not what they want you to think they are. What is interesting is how often we actually go along with the banks and accept their image of themselves despite the weight of historical experience.”19

(10) Tax “avoidance” by companies with much potential tax to avoid is itself a major world industry employing hordes of expensive accountants and lawyers. The current head of the European Commission, Jean-Claude Juncker, seems to have built his career as Luxembourg’s Finance, then Prime, Minister in offering tax breaks to multinationals. While the rest of us have to pay enough tax to finance inter alia the salaries and pensions of persons like Juncker, tax dodges with picturesque nomenclature became business as usual for multinationals. For example, according to the website Investopedia, the “Double Irish with a Dutch Sandwich involved sending profits first through one Irish company, then to a Dutch company and finally to a second Irish company headquartered in a tax haven. The enormous complexity of tax codes in the western democracies (the US one runs to just under 75,000 pages) reflects the influence of vested interests which have managed to manipulate the codes for the purposes of corporate welfare or to assuage political donors. Where it was not possible to bully the legislature (for example in the case of America’s 35% corporation tax) the solution had been to remove profits from the relevant jurisdiction altogether. According to a 2015 report by Citizens for Tax Justice and the US PIRG Education Fund, until Donald Trump’s tax reform lowering the tax rate by 15%, American multinationals held an estimated $1.4 trillion of profits offshore, allegedly enough to wipe out the huge federal deficit if brought onshore and taxed. Apple topped the list, with $181 billion in offshore profits, a cash pile that would generate nearly $60 billion for the Treasury if subject to US taxes. Now Apple is proposing to repatriate enough to funnel $38 billion towards the Treasury’s coffers, which is at least a start. Pfizer, the world’s largest drug-maker, operated 151 tax subsidiaries that held $74 billion in offshore profits.20 After Trump’s tax reform, it claimed it would pay $15 billion in so-called repatriation taxes over the next eight years to shift foreign earnings back to its home market. However “the exact amount the company plans to bring back was not immediately clear”. Moreover the company said its “reported income” in 2017 was now $10.7 billion higher because of tax reform.21 So it would seem the Treasury and ordinary taxpayers are at best (and uncertainly) $5 billion better off…

A lot of these companies seem conveniently have forgotten about the taxpayers’ funds they have swallowed in the course of building their business – as one commentator puts it: “The fact that most of the innovations in Silicon Valley can trace their source back to federal support for research seems to escape these folks. In fact, Silicon Valley would still be full of apricot trees without federal support for research.”22





Financial regulators are vigorous in youth before rapidly approaching complacent middle age and then either becoming senile or an arm of the industry they were set up to regulate…

John Kenneth Galbraith, The Great Crash, 1929 (1954)


It would be perfectly possible to fill a whole article simply by listing startling revelations such as the above. Some of them are well known, others less so. The common thread that runs through them, however, is the escape of finance, banking and international corporations from social or political control. Shareholders have lost control of the companies they theoretically own to the managers, customers have lost control of their money to the banks where they deposit it and taxpaying citizens have lost control of tax equity that should be administered by elected governments. It is no wonder that those who do not benefit from this bonanza for bankers, billionaires and Bonzen feel angry and rebellious, turning to radical populists who promise to do something about it.

All scams have their own ideology. That of the bankers, Bonzen and many contemporary politicians is Neo-Liberalism – the doctrine that the “market knows best”, ever and always, even when blatantly anti-social and dysfunctional. Neo-Liberalism’s triumph in the so-called Washington Consensus, together with the emergence of the technology which have made its workings so ruthless, have starkly divided national populations into winners and losers. While it is certainly not true that Neo-Liberal policies have produced no benefits where they were applied, the backlash now taking place against them reflects the fact that much of the “wealth” ostensibly produced proved to be illusory, as revealed by the financial crash of 2008 and its aftermath; moreover a huge amount of “rent” was extracted by speculators working in supposedly respectable institutions, who ruthlessly exploited access to the funds of savers, depositors or investors. “Very smart people in the financial sector”, observed the former Governor of the Bank of England later, “thought it was fun and completely acceptable to use the fact that you were very smart to exploit people who were less smart.”23 A Financial Times journalist has put it even more bluntly: “financial innovation is something that makes insiders rich, then blows up”. Furthermore the victims of massive financial misconduct (also as taxpayers) have had to pay the bill for the misdeeds of greedy and often criminal players in the financial sector. In a broader (and controversial) perspective, Thomas Piketty in his bestselling book on Capital also attributes the widening gap between the untouchable super-rich and the rest to the fact that the rate of return on capital has long outstripped the rate of economic growth in the western world.24 Certainly rich people have benefited from rising share prices in the last few years while small savers have been hammered by zero, or even negative, interest rates and a still-stand in wages.

In a companion article to this one I described the way a liberal elite has come to neglect the interests of those outside its narrow political and moral purview. As Sue Cameron noted in a remarkable but little noticed book: “Despite the glitz and bonhomie, today’s elite is becoming progressively more authoritarian, more impatient of democratic controls, more determined to dictate what others may say and more ruthless about strengthening its own grip on public life, often by stealth.” Its members, she says, “for all their gifts and good intentions, … can not help a tendency to arrange things to suit themselves”.25 While I believe this is true of the patronising politics I described in my piece already referred to, I believe it is even more true of today’s corrosive casino capitalism, some of whose aberrations I have listed above. The political revolt against the patronising liberal establishment is manifest right across Europe, and so far only Emanuel Macron has stemmed the tide, not least by himself adopting the techniques of political populism in the service of a “centrist” political programme. The revolt against irresponsible capitalism is harder to bring about bankers (Macron excluded) do not stand in elections. The dysfunctional nature of casino capitalism is evident enough both to its beneficiaries, who are determined to resist real (as opposed to cosmetic) change, and to its victims who now realise that they are powerless to “change the culture” of the financial sector. A new oligarchy of plutocrats has formed, its power reinforced by the revolving doors between business and politics. This has resulted in occasionally surreal governmental scenarios, particularly in the USA, where Goldman Sachs has supplied three US Treasury Secretaries in as many decades. That includes Robert Rubin, who presided over the repeal of the Glass–Steagall Act (of which more below), and Hank Paulson who devised much of the strategy to bail out erstwhile colleagues in the banking sector that had nearly destroyed the US economy. GS Treasury Secretaries have even taken former GS colleagues with them into government to staff US regulatory agencies.26 The firm’s tentacles still stretch everywhere – alumni are prominent in the Trump administration and include central bank governors Mario Draghi and Mark Carney, as well as the Prime Minister of Australia, Malcolm Turnbull.27

It is worth reminding those who argue that these are able and talented people (which they are) what Goldman Sachs actually does for a living. In 2001 it expensively helped Greece to conceal the real state of her finances, so as to qualify for the euro, and then made handsome profits from shorting the Greek economy. Its notorious Abacus 2007 deal involved selling “securitised” sub-prime mortgages to gullible investors, omitting to mention that a hedge fund planning to make money by shorting the stock had helped to select the mortgages bundled into it. It has sold dodgy “structured investment vehicles” to US municipalities or counties with predictable results for the same. It has indulged in “pumping and dumping” dud stocks or laddering (manipulating) share prices in new offerings or spun the said shares to crony insiders. The GS CEO has claimed that all this is “God’s work”, whereas Professor Friedrichs at the University of Scranton, who made a forensic examination of GS activity, came to the conclusion that much of it may “more properly be regarded as a form of organised crime”.28 A great deal of literature has been produced detailing the scams or other legal but questionable activities that led to the crash of 2008. The key element underlying all of them was the notion that practitioners in financial and investment activities had escaped from the bonds of “moral hazard”. The phrase simply means that the practitioner in finance bears the consequences of wrong (or dishonest) decisions he or she has taken. Adam Smith, no less, pointed out that, where partners were looking after their own money invested in an enterprise, they were very cautious indeed; but when they were merely administering funds as agents, there was less or no incentive to exercise such caution. The joint stock company with “limited liability” was a brilliant innovation that enabled money to be raised for potentially risky enterprise, but it needed a strong regulatory framework if it was not to be used merely as cover for swindles.

In the case of banks, a regulatory framework was provided by the Glass–Steagall Act passed (1933) in the aftermath of the Wall Street Crash, which was designed to prevent the savings of the public that were invested in “retail” banks being plundered or used as collateral for the risky activities of “investment” (or “merchant”) banks. The Clinton administration abolished Glass–Steagall in 1999, following the similar relaxation of London’s “Big Bang” (1986), which, under the slogan of deregulation”, swept away the traditional cartel-like structure of the City of London – and with it most of the restraints on system-damaging behaviour. The resultant wave of mergers and consolidation created behemoths where the principles of depositor protection, conflicts of interest and ethical behaviour in regard to clients simply got lost in an avalanche of greed.

Continental Europe, it is true, had long followed the “universal bank” model or “bancassurance” which mixes investment activity with deposit-taking and insurance. However these entities had been quite well regulated and conservatively run, and (crucially) were quoted on relatively small stock exchanges. Unfortunately the Anglo-American model began to penetrate Europe as a by-product of globalisation and deregulation. Consequently almost everywhere (outside Asia) institutions rapidly became “too big to fail”. Indeed academics Rethel and Sinclair make the point that one of the incentives for banks to merge into vast entities was the implicit understanding of their directors that this made them system critical, compelling governments to bail them out in the worst case scenario.29 Freed from systemic restraint and the socio-political restraint of “moral hazard”, the banks were able to “privatise gains and socialise losses”; and just as banks were now deemed “too big to fail”, so influential bankers also became “too big to gaol”. As one academic has drily commented: “Whereas for a long time [in history] banks had had to deal with defaulting sovereigns, now states came increasingly to incur the cost of defaulting banks.”30

The demise of moral hazard in finance has been paralleled in a pervasive corruption and commodification of public life elsewhere, whether it is in the governing bodies of football (FIFA), the Olympics and international athletics, or the arguably more worrying corruption of academe, for example in its work for “big pharma”,31 or the enlistment of economists as putatively objective (but mightily well paid) cheerleaders for casino capitalism.32 Money has corrupted individual sportsmen, as well as their administrative bodies, leading to ever more sophisticated efforts to evade discovery of drug-taking, and even attempts by betting syndicates to fix football and cricket matches or pull racehorses. But the fish rots from the head down and it is hardly surprising that individuals will take any opportunity to cheat when they see that today’s oligarchs of finance, politics and (especially transnational) bureaucracy so obviously have their snouts in the trough.




It is difficult to get a man to understand something, when his salary depends on his not understanding it.

Upton Sinclair.33


It is important to keep in mind that the rise of an oligarchical society is a willed event, not simply the product of some inevitable evolution. As Ferdinand Mount puts it elegantly “We need once again to remember the other great book written by that much maligned genius, Adam Smith. The Wealth of Nations cannot continue to grow without a Theory of Moral Sentiments”.34 The remedy lies not in process alone, which is mostly how the reforms so far advanced have tried to tackle abuse, but in a fundamental change in culture. Anonymous markets have… replaced personal relationships”, writes John Kay, and there has been a shift from “agency to trading, from relationships to transactions.” The German sociologists Ferdinand Tönnies and Max Weber described this shift as one from Gemeinschaft to Gesellschaft, words that (significantly perhaps) do not translate very distinctively into English, but which broadly imply the difference between relationships that are intra-personal (and therefore reliant on trust) to those that are transactional and governed by increasingly powerless regulation. Trading has replaced agency.35 One of the secrets of German economic power is indeed that it has retained a strong element of Gemeinschaft in its preservation of the famous Mittelstand, whereby dispersed local financial relationships are plugged into a broader Sozialstaat. By contrast mega-swindlers bred by behemothic Anglo-Saxon casino capitalism have been wont to speak of “victimless crime”, meaning that their victims were at several removes from the action and therefore invisible to the plunderers.

Changing the culture is more easily said than done but a start is being made. There is now real shareholder pressure to stop the obscene “rewards for failure” handed out to CEOs, even if the latter still often take home four hundred times what their workers at the coalface earn (J. P. Morgan’s view in 1920 was that a CEO should not earn more than twenty times the average salary of his workers.) Also, damaging conflicts of interests are slowly being addressed: for example, those of the market-critical ratings agencies like Moody’s and Fitch, which gave major banks top credit ratings just before they collapsed, and furthermore are paid to provide a rating by the institution wishing to obtain one for its bonds or other financial “product”. Even the vicious cartel of the big accountancy firms can no longer hide from public view their now lengthy record of whitewashing company accounts because the “services” they sold their clients (often tax avoidance schemes of borderline legality) were much more valuable to them than the mundane audit. The great Adam Smith had already put his finger on the root problem behind financialisation as it has recently occurred when he observed that law reflects the differential power of those who are the legislators.36 Even now the powerful banking lobby is pushing back against the one obvious and immediate reform that is necessary, namely the restoration of something resembling the Glass–Steagall Act. But the UK’s supposedly independent Vickers Report on banking reform shied away from this and recommended a “ring fence” (Chinese walls?) for retail funds in a universal bank which, on closer inspection turned out to be a “fence that would not deter a rabbit”. If undemanding minimum capital requirements are adhered to, cash can slop over the fence – and has already done so when the subsidiary Natwest lent £92.4 billion to its parent company, Royal Bank of Scotland and other subsidiaries.37

Restoration of trust has hardly been helped by the fact that no leading bankers have been prosecuted for behaviour that has nearly ruined economies and destroyed the livelihoods of thousands. Indeed they have all remained very rich indeed and a few have even remained at the helm and continue to extract huge bonuses and pay. Their mission statements read like gratuitous insults to their victims – the one from Barclays Plc (2011) is an irony-free zone that promises to be “customer focused”, to deliver “superb products and services” and “contribute positively” to the community. This from a bank with fifteen judgements against it ranging from massive tax evasion to rigging the LIBOR and FOREX interest rates. Silver-haired and silver-tongued Jamie Dimon, the bankers’ banker, still presides at J. P. Morgan, despite the bank having shelled out $28.7 billion for malfeasance of various kinds.38 “In no other business”, wrote Philip Stephens in the Financial Times, “would a chief executive survive such expensive ignominy. Bankers have made themselves the exception. The fines make only a small dent in the vast rents they extract from the productive sector. They may even be tax-deductible.”39

This judgement is echoed by banker Leonhard Fischer (J. P. Morgan, Dresdner Bank, Crédit Suisse), who writes as follows in the epilogue to his book on the financial crisis: “A financial system, which claims to be based on the market, but which discarded any ethic of personal responsibility long before 2008, and which swiftly had recourse to systemic blackmail [i.e. of governments] so that particular interests should be secured with public money, lacks any future credibility.”40

With stock markets recently nudging all-time highs and property prices in the great cities spiralling, the rich did well out of the financial crisis, while many of the poor lost their jobs, their homes, their savings and (due to Quantitative Easing) any income they might have received on their cash deposits. It is perhaps a tribute of sorts to the resilience of capitalism that this has not (yet) resulted in sans-culottes parading through the streets of the western capitals with the heads of bankers and fat cats stuck on pikes. Instead, held in contempt as they are by the people who have robbed them, and publicly insulted by affluent liberals for the views they hold, the cannon fodder of financialisation has opted for populist parties at elections. “Lessons have been learned” is the corporate-speak mantra of firms that have been called out for “gaming the system”: it remains to be seen whether that is true, and whether they will now go back to “playing the game”. The survival of capitalism, free markets and personal liberty may well depend on their willingness to do so.



1 This quotation is from a book by Louis Brandeis entitled Other People’s Money and How the Bankers Use It, which suggested ways of curbing the power of large banks and money trusts. “He fought against powerful corporations, monopolies, public corruption, and mass consumerism, all of which he felt were detrimental to American values and culture” (Wikipedia).

2 Lena Rethel and Timothy J. Sinclair: The Problem with the Banks, Zed Books, 2012, p. 47.

3 Rethel and Sinclair: op cit., p. 7.

4 The New York Times, 15 Dec. 2008 (Siemens), The Guardian, 3 July 2012 (GSK), CNBC 27, June 2017 (a summary of fines levied by the European Commission) and Bloomberg 24, February, 2017 (Volkswagen). Detailed stories of the cheating that led to these penalties have appeared in the mainstream western press, notably the Financial Times, The Economist, The Guardian and The New York Times, as well as the leading European newspapers.

5 See a report by Patricia Cohen in The New York Times, 3 Feb. 2015, and a summary of the loophole in Forbes, 17 May 2017.

6 See: David O. Friedrichs: “Wall Street”, in: How They Got Away With It, Ed. Susan Will, Stephen Handleman and David C. Brotherton, Columbia University Press, 2013, pp. 3–25.

7 I have paraphrased the relevant passage from David Craig’s racy exposé Pillaged: How They Are Looting £413 Million A Day From Your Savings & Pensions and What to Do About It, Gibson Square, 2011, pp. 11–13.

8 Active funds: managers keep 75% of gains”, Financial Times (fm supplement), 29 January 2018.

9 John Kay: Other People’s Money: Masters of the Universe or Servants of the People?, Profile Books, 2016, p. 94.

10 See Alex Brummer: Bad Banks: Greed, Incompetence and the Next Global Crisis, Random House Business Books, 2015, pp. 310–313. “What the forex and dark pools scandals demonstrate is that long after the lessons of the financial crisis have theoretically been learned, bankers and their clients are still seeking to game the system” (Brummer, p. 313).

11 David Craig: op cit., pp.152, 157, 163–4.

12 The Wall Street Journal, 4 February 2000.

13 L. A. Bebchuk and J. M. Fried: “Executive Compensation as an Agency Problem”, in the Journal of Economic Perspectives, 2003, Vol. 17, No. 3, quoted in Ha-Joon Chang: Economics: The User’s Guide, Pelican, 2014.

14 Brummer: op cit., p. 280.

15 Brummer: op cit., p. 113.

16 John Kay: op cit., pp. 282, 1, and 188–194.

17 Rethel and Sinclair: op cit., p. 65.

18 See, for instance, reports in The New York Times of 20 Oct. 2016 (“Voices from Wells Fargo”) and NPR, 4 Oct. 2016 (“Wells Fargo Employees Describe Toxic Culture”)

19 Rethel and Sinclair: op cit., p. 31.

20 CNBC report, 6 October 2015.

21 USA Today, 30 January 2018.

22 Robert D. Atkinson in an article for The Globalist, 15 March 2012.

23 Lord Mervyn King, former Governor of the Bank of England in an interview with the Weekend FT, 2/3 September 2017.

24 Thomas Piketty: Capital in the Twenty-First Century, translated by Arthur Goldhammer, Harvard University Press 2014. It was originally published in French (Éditions du Seuil, 2013) as Le Capital au XXIe siècle.

25 Sue Cameron: The Cheating Classes: How Britain’s Elite Abuse their Power, Simon & Schuster, 2002, Introduction, p. 2.

26 See: Lena Rethel and Timothy J. Sinclair: The Problem with the Banks, Zed Books, 2012, p. 102.

27 See a report in Investopedia, 18 April 2017: 26 Goldman Sachs Alumni Who Rule The World.

28 David O. Friedrichs: op cit., pp. 12–15.

29 Rethel and Sinclair: op cit., p. 107.

30 Rethel and Sinclair: op cit., p. 15.

31 See for instance the chilling 482 pages of Ben Goldacre’s exposé of the practices of the pharmaceutical industry and its corruption of doctors and medical academics: Big Pharma: How medicine is broken and how we can fix it, Fourth Estate, 2013.

32 The way this worked is well exposed in the interviews carried out in Charles Ferguson’s documentary Inside Job (2010), where compromised academics become increasingly furtive and blustering in their answers to questions about conflicts of interests raised by the interviewer.

33 From Upton Sinclair’s account of his campaign to become governor of California during the Depression: I, Candidate for Governor: And How I Got Licked (1934, reprinted by the University of California Press in 1994).

34 Ferdinand Mount: The New Few or a very British Oligarchy, Simon & Schuster, 2012, p. 268. Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations was published in 1776 and The Theory of Moral Sentiments in 1759.

35 Ferdinand Tönnies: Gemeinschaft und Gesellschaft, Leipzig,1887. Max Weber translated this as Economy and Society (University of California Press, 1978).

36 See: Jerry Z. Muller: Adam Smith In His Time And Ours, Princeton University Press, 1993, p. 117.

37 Ferdinand Mount: op cit., pp. 223–225, citing a report in The Telegraph, 10 June 2011.

38 The wrongdoing included the so-called London whale affair, which cost the bank $920 million, and had been dismissed by Dimon as a “tempest in a teapot”; and most of the rest was penalties for cynical mis-selling of products. See: Alex Brummer, Bad Banks: Greed Incompetence and the Next Global Crisis, Random House Business Books, 2014, pp. 142–3.

39 Philip Stephens: “Nothing Can Dent the Divine Right of Bankers”, Financial Times, 17 January 2014.

40 Leonhard Fischer and Arno Balzer: Es waren einmal Banker: Warum das moderne Finanzsystem gescheitert ist, Ecowin, 2017, p. 242.

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