Grave diggers of Capitalism

Francisco Cesar Pinheiro Rodrigues*

According to newspapers, the managing director of IIF – Institute of International Finances, which represents world’s major banks, during an interview held on September, 14, 2009, declared to be against a "fixed limit" of indebtedness, enforced by government, for banks. He suggested this limit to be variable, depending on assets risks, according to the subjective opinion of bankers themselves, which implies on difficulty or no alertness. To acclaim his "advanced" or "ultra comfortable" opinion that banks cannot have any governmental really limiting control, concluded giving a crowning touch on contributor’s shoulders, saying "not being desirable to use moralist behavior to approach the payment problem" of bank top executives. It is really audacious on nowadays circumstances.

In other words, according to him, "no moralist behavior" because "war is war", 'the squeaky wheel gets the grease", "finance is a subject for real males”, “ without competence one cannot settle".

What happens is that, when things go wrong and boat begins to sink, those fearless supporters of the slogan "only a competent person can survive", they are not ashamed of crying, run to government’s "mother lap", asking for a help of trillions of dollars. This money at the end will come from idiot contributors’ patrimony. But, not as could be right, from the patrimony of those hasty executives, not so "competent" as demonstrated, and who enriched with the generous bonuses self given before the facts demonstrated that they were right on loan policy.

Why did they have the courage to risk? Because they knew that if something would get wrong, government could not deny the “safeguarding” loans and donations. On the contrary, it would happen a collapse with unimaginable consequences, demoralizing banking system and, consequently, all the rest of American economy, reflecting internationally. Authentic blackmailing, with chances of succeeding, as really happened.

However, after reaching the top of tidal wave, loaded, “risk” supporters (in theory), they attack once more, arrogantly, pleading that government does not have to be concerned with this story of risks of bank loans and bonus immediately paid to executives. That’s why the mentioned speech of the managing director of the Institute of International Finance is understandable, because each representative from any group feels the necessity of “call to his side or to himself” for his peers benefit. The problem is that, in the case of being analyzed, financial power behind IIF is so, that many heads, in the political and media areas, will hurry, as is happening, to launch doubts to the public about the necessity of imposing limits and responsibilities to the handling of money deposits on banks which cannot allow the luxury of “bankrupting”. They know that medium reader has not much time, or sometimes even cultural conditions, to distinguish with absolute certainty right from wrong.

This article’s title talks about “grave digger”. Could be an exaggeration? Let’s see.

Socialism supports the wonderful ideal of promoting solidarity, enlarged planning, and equality among human beings. The problem is that behind the theoretical and sincere intention of most idealists, some of them murdered by tough realistic ones, also existing, perhaps mixed with the equalitarian ideal, the purest selfishness and power sickness of the “boss”, Stalin, Fidel Castro, Hugo Chávez, etc. and their minor partners in their power enjoyment. This group, due to an impressing “coincidence” “do not leave the sugary”, sorry for the expression, used only because of its force. When strong opposition exists, brutal repression becomes almost inevitable against those who think differently and oppose to the lifetime staying of the “leader”.

The one that is occupying the “democratic throne” knows that if he would leave power and stay in the country could be assassinated. The dictator of the left, or even the one of the right, concludes that there is no “healthy” back path. The eagerness for revenge observes him at each corner. Maintain himself as lifetime dictator becomes, after some years on office, kind of legitimate body self-defense.

The basic failure of “real Socialism” is in restraining citizens’ creativity which all together, summing up individual intelligences, can see better and farther than a bunch of autocrats. Even if among these exist brilliant minds, they suffocate some own ideas, pretty good ones…, because they fear to arise the jealousy of the “big boss”. He will not approve the contrast between his mediocrity and the special intelligence of some subordinates who can ambition his place.

In summary, only a really democratic Socialism, but responsible, with free initiative stimulus, will allow future generations the union of entrepreneurs creativity anxious for some security or protection that saturates all citizens souls. They want the State to take care of them from birth to death, since they work well and obey the laws enforced from their representatives. I do not feel anything wrong on it. Wrong is the State ignoring the necessity of security in unemployment, old age and illness for all hand or intellectual laborers.

With Capitalism, the spontaneous individual creativity even originated at mean greed, or wished of having and being better than the neighbor, meets a favorable field to generate richness which can benefit all, even if this benefit is not in the beginning plans of the “selfish”. The general benefit, though unintentional is a useful collateral effect that justifies the maintenance of Capitalist system. This happens because generates jobs and taxes. But, the legislation must impose limits to human being’s greed, a powerful psychological force, ubiquitous and useful, since being watched or maintained under the limits, as happens with all forces being of any type. If it would not be controlled, apparently, as the IIF intends, it is feared and demoralized. That’s why, the word “grave digger” was used.

By the way, one of the smartest inventions of Capitalism was the creation of the “corporate entity”, namely corporation, a legal fiction at the same time useful and “smart” as it allows the intelligent and balanced entrepreneur to earn unlimitedly when his company has earnings and to loose in a moderate way when there are losses, unless the stockholder would be very careless investing all his money in stocks of the only company which did not work.

When a corporation goes bankrupt, bankrupt is the company, the partnership, the abstract entity, not flesh and blood. The stockholders never become “bankrupt”. Only the bankrupt entity’s properties, when something remains, are seized and sold, for the profit of creditors. The alert, precautious stockholder when previews that the company is going to bankruptcy sells his stocks and does not loose or loose less. Anyhow, his personal status is not affected by the bankruptcy. When the company has earnings, these earnings totally go to stockholders, of course, discounting the taxes that everybody has to pay, rich or poor. In the case of large banks which gave origin to the present situation, one might ask, it was by chance examined if CEOs were much affected by bankruptcy in terms of patrimony?

Such elementary notions, well-known by the reader, are remembered here to stress that judicial world already allows this great privilege of allowing unlimited earnings when the corporation has no problems or minimum losses, or even none, at the moment of business liquidation. And now they want the growth of the irresponsible bonuses?

Ralph Byron Perry, a famous American philosopher, dead in 1957, president of the American Association of Philosophy and Pulitzer prize holder for Biographies and Autobiographies, objectively defined where is the legitimacy for moral support to Capitalism. He said in other words that the fundamental idea of modern Capitalism is not only on the individual right of owning and enjoying what he earned, but on the thesis that exercising this right benefits everybody.

In the case of bankers who rushed to receive high bonuses, before their policies correctness were verified, there were not of general benefit. And now, they want us to allow them to once again go ahead. Another crisis like this and Socialism will feel recovered from the economical failure of the Soviet Union. Therefore, the “grave diggers” of the title, is a relevant qualification. Unless they prove, in a great trial, not necessarily judiciary, that they were victims of fate, an apparently impossible mission. A good criterion to know if there were acting in bad faith or frivolously when verifying this little detail: when crisis became clear, top executives, who earned the bonuses, lost money at the bank they administrated? If they lost plenty, they have acted on good faith. If they would not have lost anything or very little, they deserved to receive an economical punishment.

However, it is not all lost defending, when brightly, Capitalism. The German magazine “Der Spiegel” published an interview with Dominique Strauss-Kahn, managing director of , IMF, that appeared in the “O Estado de São Paulo” newspaper on September15, 2009, B3, where the experienced economist contests Goldman Sachs executive director’s arguments after the crisis. The banker would have said that the “crisis” was inevitable; a “perfect storm” there weren’t any ways to protect from it. Dominique Strauss-Kahn, an expert on the topic, disagreed: “It is a mistaken metaphor. Human society is not a force of Nature. The financial crisis was a catastrophic event, but an event created by human action. The lesson which all of us must learn is that even an economy needs some kind of regulation, on the contrary, its functioning is compromised”.

As can be seen, the opinion of some grave diggers of the system itself can be neutralized by bright minds that can, in this case an obstinacy of Nature, be at any place, even in the polemic International Monetary Fund so many times in the past, attacked by us, Brazilians.


* Retired Justice of San Paolo Court of Appeals.

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