[A-List] accumulation/financialisation - a query

Patrick Bond pbond at mail.ngo.za
Fri Jan 27 04:27:49 MST 2006

----- Original Message ----- 
From: "Charles Brown" <cbrown at michiganlegal.org>
> CB: Are you satisfied with the Americans' activism in confronting Wall
> Street and the U.S. Treasury ? I haven't seen too many Yankees 
> demonstrating
> at Wall Street.

Never satisfied, no! But through a coordinated campaign to defund the World 
Bank, for example (http://www.worldbankboycott.org), the potential 
occasionally comes through. Fifteen years ago I thought there was a bit more 
life in the US movement, at the time of S&L, redlining and consumer credit 
scandals. I wrote up an excessively optimistic account, the full version of 
which I'll send you offlist... (and anyone who wants too). The dangers of 
mixing Marxist economic theory with populist politics are rather obvious, in 



Capital & Class 40, 1990
In a complementary article to Cleaver's discussion of the debt crisis in 39, 
Bond considers the explosive growth of debt in us finance and the populist 
campaigns ranged against this new financial

The new US class struggle :
Financial industry power vs. grassroots populism

The Unites States economy, like many others across
the globe, is awash in a sea of debt deeper than in any prior
historical period.1 Increasingly, the concomitant rise in financial
sector power is recognised as a phenomenon worthy of
analytical attention and sustained political struggle . In the US,
a new populism reminiscent of the powerful movements of the
1890s and 1930s, but augmented by `rainbow' and internationnalist
tendencies, is emerging from grassroots campaigns over
who will bear the burden of devaluation of the us debt .
To grasp the potential of existing populist forces to
challenge the financial system and hence ultimately to transform
the economy into one more reflective of their anticorporate,
decentralised and community-controlled politics, it
is useful to begin with a rudimentary glance at us financial
capital flows . A full-fledged analysis, yet to be undertaken,
would explain the roots of the ascendancy of finance ; its
changing relationship to the productive economy ; the exercise
and the limits of financial power, and the alliances and
conflicts that the rise of finance engenders . For the purposes
of this paper, only a skeletal outline of such an analysis is
offered, geared to separating contingencies of the recent period
from what might be considered the necessary, underlying
tendencies of capitalist economies during times of crisis .
Enough should be laid out, however, to show convincingly
that the curious combination of power and vulnerability in the
financial system at the present time is no accident, and
furthermore that such material conditions provide the organising
handles around which a full-fledged progressive political
movement can be, and is being, built...

.. Before considering
resistance to financial capital at such vast scales, it is vital to
examine the local settings in which a populist, anti-finance
movement is grounded in the us - in the opposition to
financial sector power at the neighbourhood and workplace
levels .

Grassroots bank campaigns
Many examples of successful locally-based bank campaigns
in the us can be cited, from the disparate experiences
of housing and community development organisations, trade
unions, religious groups, consumer advocates, farmers, antiapartheid
groups, and other forces . When these groups fuse
their interests and issues in a city - or region-wide alliance,
some very real and impressive victories can be won . For
example, urban 'reinvestment coalitions' typically comprise
large numbers of inner city community groups and civic and
block clubs, and fight for low-income home mortgage and
small business loan agreements from banks through use of the
federal Community Reinvestment Act (CRA). CRA is an
example of a 'nonreformist reform', a law which empowers
activists by providing a handle for delaying bank mergers and
acquisitions until the bank shows its 'ongoing and affirmative
commitment to meeting the credit needs of the entire
community in which it is chartered to do business', i.e . ; until
the bank cuts a deal with its critics . In more general terms,
the question then becomes, what can develop out of community
reinvestment quid pro quos during the present merger and
acquisition wave in the banking industry, and in the event of
periodic, necessary government bail-outs of failing financial
institutions? Can the reinvestment issue be broadened into a
unified critique of financial industry practices and perhaps
even capitalist social relations?
None of the reinvestment coalitions in us cities have been
as broad-based as that of the Maryland Alliance for Responsible
Investment (MARL) in Baltimore, which serves as a good example
of what can be done. There, diverse groups such as the middleclass
consumerist Citizen Action Coalition, a student antiapartheid
coalition, and small political groups joined nonprofit
housing developers and low-income community groups
and important mainstream organisations like the AFL-CIO
trade union federation and the venerable NAACP civil rights
group to fight the local financial industry head on . In its
initial campaign in late 1986 against Baltimore's biggest
bank, Maryland National Bank, MARI demanded and won
concessions before permitting a merger with a Washington,
DC bank to be finalised . These concessions included $50
million in below-market lending commitments for lowincome
neighbourhoods spread over five years, $50,000 per
year in grants to community groups, free checking accounts
for the poor and elderly, and a community monitoring board
to prevent gentrification lending . In addition, under pressure
from MARI's internationalist activists, the bank ended all its
remaining business relationships with South African banks and
even formally endorsed the idea that banks should be penalised
for Third World loans and that debt relief should be granted
(Bond, 1987).
MARI then took on the fastest-growing us bank, one
already exercising substantial political power in the Southeast
and certain to be a major force in the banking industry of the
1990s, North Carolina National Bank (NCNB) . MARI objected
to the bank's maintenance of an office in Johannesburg and its
huge stock holdings in Shell Oil (the subject of an international
anti-apartheid boycott) ; its loans to Guatemala for helicopters ;
its racially-biased lending policies in its headquarter city,
Charlotte ; its role in the deindustrialisation of the North
Carolina textile industry while lending to El Salvador's sweatshop
textile firms ; and lead role in a credit syndication used
by Ford Motor Company to build a 'runaway plant' in Mexico .
New members quickly signed up - textile, steel and auto
workers' unions, several churches, city anti-apartheid activists,
the Central American Solidarity Committee . A mid-1987 rally
attended by more than 1000 Baltimoreans was held outside
the NCNB office in the financial district featuring Jesse Jackson
and exiled Guatemalan labour leader Frank LaRue . Finally, in
1989, NCNB agreed to a multi-million dollar community
reinvestment package, though many international issues
remain outstanding .
The breadth and excitement in these campaigns - the
issue range, the educational potential, the victories, and the
ever growing list of participants - testify to the potential for
bringing structural analysis and progressive grassroots forces
into play against huge financial institutions . There are more
than one hundred independent community reinvestment coalitions
throughout the us like MARI, though only a few are as
internationally-conscious . These coalitions have as roots
thousands of campaigns for better low-income housing and
equitable community economic development . The community
reinvestment movement has won more than $5 billion in
lending concessions for low-income areas during the 1980s,
according to the Washington, Dc-based Centre for Community
Change, which helps co-ordinate bank campaigns across
the us. The most spectacular victories against banks were won
by a state-wide coalition in California which fought for a $350
million package from Crocker and Wells Fargo Banks in 1986 ;
by the Chicago Reinvestment Alliance which forced First
National Bank of Chicago to commit $120 million in 1985 ;
by a Pittsburgh coalition which won a $135 million commitment
from Pittsburgh National Corporation in 1988 ; and by
a Pennsylvania-New Jersey two state coalition which in 1986
forced Midlantic and Continental Banks to provide $85
million in inner city loans with below-market interest rates .
One of the most promising developments in grassroots
struggles against financial capital is the increasing willingness
of trade unions to challenge the power of financial institutions .
To do so in the context of 'corporate campaigns' often
represents the strongest stand unions can take against companies
with which they have come to loggerheads on contract
or certification negotiations, and which simultaneously are
vulnerable to pressure on their lines of credit . This is true
especially for overindebted companies, for those firms which
rely on ready access to liquid funds, and for companies which,
with the prompting of their financiers, terminate worker
pension funds in order to repay loans . 10 For all such companies,
banks and other financial institutions can apply a
crucial pressure point, and thus trade unions have learned to
apply substantial pressure to the banks .
The first and most important example of this approach
was the JP Stevens campaign carried out by the Amalgamated
Clothing and Textile Workers Union in North Carolina in the
late 1970s . Protests, shareholder votes and consumer boycotts
ultimately forced representatives from Manufacturers Hanover
Bank and Metropolitan Life Insurance Company to resign from
Stevens' board of directors . 11 A more recent and especially
innovative example of workers pressing financial capital to
gain concessions was the Hotel Employees and Restaurant
Employees union drive against Las Vegas casino operators in
1989 . The casinos had enormous debt loads - in the form of
the high-cost junk bonds originated by the notorious financier
Michael Milken of Drexel Burnham Lambert - which, the
union claimed, placed the financial burden on the workers .
Their guerrilla theatre outside the entrance to a huge savings
and loan association which purchased the casino junk bonds -
Gibraltar of California, a failing $15 billion s&i . which was
in the process of being taken over by federal banking
regulators - included professional Las Vegas dealers slapping
out cards at blackjack tables, emphasising the theme, 'Don't
Gamble with our Money .' This sent a strong signal to the
casinos that their credit lines were under attack, and aided the
union in its contract talks .
In the late 1980s, the campaigns for community control
of capital waged by inner city reinvestment coalitions were
joined by corporate campaign strategists at the most innovative
unions . Some, like the United Mine Workers of America
(UMWA), moved in this direction in order to woo allies in
places like Omaha, Nebraska ; Brooklyn, New York : and
Washington, Dc where they had no members . In Omaha, the
UMWA pressed Nebraska's largest bank (FirsTier) to put more
money into farming and inner city communities, and, the
bank claimed, to confront the interlocking directorate relation-
ship that the bank chairman had with a mining company
(Peter Kiewitt) that refused the union an acceptable contract .
Thanks to organising by a UMWA staffperson in 1988, the
union's natural allies such as the Nebraska AFL-CIO joined, for
the first time ever, militant community groups in the African
American neighbourhoods of North Omaha (who were, for a
variety of important historical and personal reasons, hostile to
organised labour) . Others in the coalition included farm
advocacy and church groups with concerns about the rural
economic crisis . They ultimately forced the banks to commit
several million dollars in new funds to low-income areas .
Other protests by the UMWA against the Pittston Company,
which denied the union a contract in what became the most
intense labour struggle in the us in 1989, focused on banks
like Crestar in Washington, DC and Manufacturers Hanover
in Brooklyn . In both cases, community coalitions and the
UMWA joined forces to demand that the banks withdraw a
$100 million line of credit to Pittston (essentially a strikebusting
fund) and to reinvest more in low-income areas . While
the union's demands were generally unsuccessful, the communities
did receive concessions they probably wouldn't
otherwise have won, and the unions did at least raise the cost
of doing business with the target company .
The local bank campaigns are portentous not because of
their successes in forcing marginal changes in the way financial
institutions do business, but in linking issues and hence
constituencies . More significant is the development of a broad,
working front - an ever-present but often unrealised goal in
progressive political practice in the us - against financial
capital, with components from different geographical, sectotal,
racial and subordinate class bases . Even traditionally
conservative small business people regularly line up in pickets
outside banks, side-by-side with advocates for the homeless
and trade unionists . These broad fronts and their protests are
successful because they readily lead to material gains for all of
their participants in the short-term . Financial institutions are
sensitive to adverse publicity, since the only major difference
between retail banks is the effectiveness of their marketing
(location of branches matters much less since the advent of
automatic teller machines) . Hence, protests can make a big
difference .
Furthermore, any grassroots movement to gain local
electoral office will eventually confront the power of financial
capital, which at the municipal and regional level exerts strong
control over Democratic Party politicians . 12 Banks play a vital
role in 'growth machines,' coalitions of elites from varied
sectors - especially rentiers, supported by politicians, local
media, utilities, universities, etc . - which aggressively promote
metropolitan growth (Logan and Molotch, 1987) . Bankers
were the main actors in the downfall of one of the us's two
recent big-city populist mayors, Dennis Kucinich of
Cleveland . 13
We might conclude from the recent evidence that at least
two aspects of grassroots struggles against financial capital set
the stage for a deeper, more fundamental challenge to capital
itself. First, the consciousness-raising component of the activist
critique of financial speculation and power is vital to any
further political economic transformation . The issues raised in
many of the bank campaigns move logically from local housing
conditions to apartheid, as activists practice the bumpersticker
slogan, 'Think Globally, Act Locally' . But consciousnessraising
without empowerment can be debilitating, and so
campaigns like those of MAR! only succeed when they provide
both local organising handles and the opportunity to win
incremental victories which simultaneously teach participants
about the irrational nature of the system . As financial institutions
inevitably attempt to realise surplus profits through
destructive and sometimes spectacular speculative investment
processes towards the end of a long-wave of capital accumution
(e .g ., the 1920s and early 1930s, and the mid-1970s to the
present), consciousness-raising will be an integral, relatively
straightforward and fruitful aspect of grassroots, anti-finance
populism .
Second, to eventually restructure the economy in a more
democratic way, the notion of 'community control of capital'
represents a seed-bed theme that can flower and grow under
conditions created by progressive political activists in local and
national campaigns against financial capital . The populist
activists by and large all recognise that collective, democratic
approaches to production and consumption hold the best hope
for ultimately building a society free of financial speculation
and ruin . There are courageous efforts underway to build upon
the nascent models of worker-owned and managed shops, nonprofit
community development corporations, co-operatives of
all kinds, community land trusts, community development
credit unions, and other similar ventures some have called
'seedbed socialism' which are valiantly trying to eke out
grassroots economic development in an increasingly hostile
climate . To survive and perhaps even prosper in the near-term,
access to credit, on their terms, will be critical . Community
control of credit in an era of rising financial capital, is what
the new populist activism described above is most fundamentally
geared to .
Thinking globally, and acting locally, nationally, and globally
The grassroots bank campaigns have, in the past two
decades, even bubbled up from below to affect national
political processes . There have been successful attacks on the
national financial establishment by activists affiliated with
National Peoples Action, the Association of Community
Organizations for Reform Now (ACORN), the Centre for
Community Change, consumer advocacy groups, Ralph
Nader's BankWatch, and more recently, the Financial Democracy
Campaign (FDc) . Mainly concentrating on Washington
legislative reforms, these groups have contributed in impressive
ways to debates over financial policy on issues ranging from
Third World debt to bank bailouts to monetary policy to community
reinvestment to credit card rate disclosure to 'lifeline
banking accounts' for poor customers . Farm groups such as
Prairie Fire, Save the Family Farm Coalition, the League of
Rural Voters, and the North American Farm Alliance have
won concessions in the form of the Farm Credit Act of 1987,
which gives them more leverage in dealing with their local
creditors .
In early 1989, public interest watchdog Nader and the
FDC began a full-fledged national taxpayer revolt to dissuade
Congress from bailing out 1,000 failing S&Ls . With high
profile leadership from Jesse Jackson and Texas Agriculture
Commissioner Jim Hightower, and with populist strategy
developed by ACORN and the Durham, North Carolina-based
Institute for Southern Studies, the FDC's principles were
quickly endorsed by more than 200 organisations across the
us. Protests were organised at dozens of locations, including
sit-ins at bank regularity agencies, squatting in houses
acquired by the government from bankrupt s&Ls, demonstrations
at bank trade association conventions, and a congressional
pressure campaign . The FDC demanded that the $335 billion
that the House Banking Committee estimated would be
necessary to solve the s&L crisis be supplied by those who benefited
 In Jackson's words, 'We didn't go to the party, we didn't
make the mess, and we shouldn't have to pay to clean it up .'
The FDC targeted very rich individuals, who received windfall
interest income in the 1980s, as well as money market funds
which brokered 'hot money' (especially $100,000 certificates
of deposit) to risky s&Ls . Other bailout funds, Nader and the
FDC agreed, should be raised through taxes on speculative
financial activities like leveraged buyouts and stock purchases .
There were, however, some telling differences among populist
and Left critics of the financial system, over, for example,
whether institutional reregulation of the s&Ls was necessary
to address the single most crucial issue for their constituents,
the high cost of housing finance . 14
Ultimately, with the commercial banks and the S&Ls
pumping in millions of dollars in campaign contributions to
Congress, Nader and the FDC were unable to sway enough
votes in mid-1989 to change the terms of the bailout . Thus
the populist critique of finance is turning to the many other
areas in which the government has issued securities or
guarantees to back low-quality credit instruments or other
financial liabilities : pension funds, student loans, the deposit
insurance system for banks, the Third World debt exposure
of New York banks, and others still not visible to outside
observers . According to one populist banking expert, 'Financial
time bombs are ticking away . The Texas insurance
industry is already unraveling . GM and ford are suffering
unprecedented defaults on auto loans . The Northeast real
estate market is going soft . And bankers have been lending
furiously to finance leveraged buyouts . Should a recession
make these loans go bad, all hell could break loose .'
In spite of efforts by some major international banks to
reduce their Third World exposure and raise capital standards
(though often through long-term borrowing), this prognosis
probably remains true at the global level as well. An international
program against financial capital has yet to be organised .
But spurred by reports of 'IMF riots' and other forms of social
unrest in many Latin American, Caribbean, African and Asian
countries (George, 1988 ; Potter, 1988 ; Walton, 1987), the
US Debt Crisis Network - a coalition of several dozen church,
research and development advocacy groups - continues to
work for changes in the brutal system of Third World debt
peonage . The Network's European colleagues have generated
far more popular consciousness on the issue, especially during
the 1988 World Bank-iMF meetings in Berlin, but in the us,
progressive environmentalists have taken on the World Bank's
destructive policies, won major concessions, and continue
fighting . The us anti-apartheid movement, after winning
several battles dating to the late 1970s prohibiting loans of
various kinds to South Africa, is attempting again to plug
financial loopholes left in the 1986 sanctions bill . Indeed,
with $12 billion in South African debt due to be renegotiated
in June 1990, international anti-apartheid activists have
reached consensus that manipulating the leverage that the
financial sector exerts over even sovereign nations will be their
most important pressure point as hopes for ANC-Pretoria
negotiations intensify .
Explicit internationalism by the FDC and other critics of
financial capital may be the most self-interested direction they
will move in . Facing the internationalisation of capital
(Clarke, 1989), socially-destructive entrepreneurialism by
local state managers competing desperately for new investment
(Harvey, 1989), and geopolitical forces far beyond their
control, populist activists in the 1990s will surely need to
think globally, and to act globally, nationally and locally, to
address both their immediate conditions and the political
economic order as a whole . How serious a threat can all this
populist domestic and international activism ultimately make
to the established financial order? Perhaps never again will the
homogenising and devastating effects of speculative, footloose
financial capital create such a unified moment of populist
resistance as happened at the end of the last century in the us
(Goodwyn, 1978) . But spelled out here is enough preliminary
evidence to conclude that finance may be an ideal issue base
for Left politics in the us in the 1990s . The challenge for Left
militants will be to work with and help move the new populist
activists from what can sometimes be splintered, single-issue,
transient half-campaigns against their local banks into larger
critiques, first of the entire financial system and second of the
world capitalist economy of which financial capitalism is only
the latest phase . With or without the participation of the Left,
neighbourhood and trade union organisers will begin this
journey just as they reach the limits of their local strategies
and tactics, and they will move ever rapidly as the reassertion
of underlying tendencies related to the rise of finance in a
crisis-ridden global economy offers them both unprecedented
dangers and promises .
Perhaps the single most intractable challenge facing interna- The end of
tional, national and local managers of capitalism is to engineer
the means by which the unsustainable rise of finance will end
and by which overaccumulated financial capital will be
devalued . There are three basic possibilities : (1) as has happened
so far, a series of 'partial' defaults (e .g ., midwestern farms, the
'Rustbelt' and energy-producing regions, the LTV company,
Texas banks and s&L's, Argentina, etc .), juggled skilfully by
the bureaucrats and money mandarins of the international
financial system (primarily the us Federal Reserve, International
Monetary Fund, Bank for International Settlements), and
backed by easy government 'lender of last resort' liquidity for
highly exposed and especially vulnerable financial institutions
(only unlike as in the past, the partial default option cannot
be accompanied by a continued rise in aggregate global debt);
(2) a full-fledged banking and stock market collapse, as
happened in the us from 1929-33, to wipe overaccumulated
financial assets clean off the books ; or (3) a period of roaring
inflation and negative real interest rates, which would whittle
down the debt mountain (debt is repayed in dollars worth less
than when the debt was contracted), as happened to a very
limited degree through most of the 1970s .
Whichever route is taken in the early 1990s, there will
be enormous social costs . Of the progressive us-based forces
that might be equipped to challenge the process of devaluation
of overaccumulated financial capital, the modern versions of
traditional us populism - the Rainbow Coalition (Navarro,
1988), Alinskyite neighbourhood activism (Boyte, 1980),
resurgent anti-corporate trade unionism (Moody, 1988), Citizen
Action Coalition, etc . (Boyte, Booth and Max, 1986) - offer
the greatest hope (Boyte and Riessman, 1986) . Of course,
alongside progressive economic analysis and the capacity to
appropriate and transform the rhetoric of class struggle (e .g .,
against the 'money trust' or 'corporate barracudas'), populist
programmes have, unfortunately, been infused with racism
and nationalism at different stages . That is why the rainbow
and internationalist components are so critical to populist
politics in this stage of us development, and why campaigns
against financial capital that contain these components will
continue to attract leading progressive activists in nearly every
us city .
John Walton (1987 : 383) posits of recent, widespread
Third World riots against austerity imposed by international
financial capital, 'All of the protests succeeded, in the sense
of shaking their societies into alert appreciation of the
regressive policy effects and deepening urban poverty . In the
longer run mass action has initiated a political transformation
that continues to the present and suggests a realignment of
the global political economy .' That is an ambitious claim, and
if the populist struggles against banks and other financiers in
the us merely achieve such luminous heights as shaking us
society into an appreciation of the damaging effects of financial
capitalism that would be a significant and worthwhile accomplishment.
But if the excesses of financial capitalism do come
to an end, however painfully for poor, working, and middleclass
people across the globe, then there is more here than
meets the eye . Such a development would also imply the
demise of the very motor of the global economy : the financial
sector that in fact has sustained consumption and investment
in the shaky productive sectors . The end of financial capitalism,
may be, as in the early 1930s, the beginning of a period
characterised by depression, extreme interterritorial competition,
the formation of enormous geopolitical economic blocs
(Fortress Europe 1992, the us-Canada-Western Hemisphere
bloc, the ASEAN economies), and quite possibly war and the
widespread resurgence of domestic fascist movements . The
Rainbow Coalition's influential Left strategist Vicente Navarro
writes (1988 : 443), 'A natural rainbow is after all the light of
the sun that struggles to get through the dark clouds . And
there are enormous clouds on our horizons of which the largest
is the overwhelming dominance that the capitalist class of the
us has over economic, political and communication agencies
and institutions in this country .' But if the end of financial
capitalism and the devaluation of overaccumulated international
financial capital substantially reduce the overwhelming
dominance of financial institutions and simultaneously throw
the capitalist class into disarray in the 1990s, that may be the
silver lining that the Rainbow Coalition and other populist
forces need to attempt a full-fledged political economic
transformation .

(Full available from pbond at mail.ngo.za) 

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