Maintaining the supremacy of the financial oligarchy

Let’s assume that there is a financial oligarchy which exerts strong political influence due to the vast amounts of money it controls. Let’s further assume that this financial oligarchy has succeeded in having financial markets deregulated and that this has enabled the financial industry to expand their business massively. Then, in some near or far future, their artfully constructed financial edifice breaks down, because it cannot be hidden any more that the accumulated claims cannot be serviced by the real economy That might be due, for example, to millions of people having bought overly expensive houses on credit without having the income necessary to service this debt. This is the kind of situation we are interested in.

If such a situation occurs, the leading figures of that financial oligarchy might recall that there has been a financial crisis in the 1930s of similar origin, and that during and after this crisis, laws were passed which broke the power of the financial oligarchy and taxed their profits steeply. They might remember that it took their forbearers decades to reestablish the favorable state of the late 1920s, with deregulated finance and very low taxes on incomes and estates, even huge ones.

The financial oligarchy might also recollect that economics is their most important ally in shaping public opinion and policies in their favor. To prevent a loss of power as it happened hence, they might want to make sure first that economics will not challenge the notion of leaving financial markets mostly to themselves and will continue to downplay the role of money, the power of the financial oligarchy, and of power in general.

However, the economic mainstream itself will have lost credibility due to its obvious failure to promote the public good and its rather obvious alliance with the interests of the financial oligarchy. Students will not so gullibly trust their professors and their textbooks any more. Young and bright researchers, who have not yet invested too much into the old discredited theories and methods, might turn to the question of how the financial industry can be made to serve the public interest. This would contribute to turning public opinion against the interest of the financial oligarchy. Thus, it will be important for the financial oligarchy to identify the brightest and most influential critics and leading figures of reform initiatives and to neutralize them.

This can best be done by putting yourself at the forefront of the movement. This requires money, notoriety and credibility. Money is available most plentifully to the financial industry. Many of their representatives are also well known to the public and command a lot of respect because of their spectacular financial success. Credibility, however, is in short supply. It can fairly easily be acquired, though. One of the more famous representatives of the financial oligarchy would have to publicly criticize economics for failing to prevent disaster and also the dealings of their own breed. The failure of economics and the financial industry will have become so obvious to the public already that an industry representative who acknowledges them will gain a lot of credibility without saying much that is not widely discussed already.

After the chosen representative of the financial oligarchy has gained a big public profile in the media, he might found an institute that is dedicated to the renewal of economics. He should provide the institute with very large funds, at least relative to what other initiatives with the same goal can command. Relative to the profits of the financial oligarchy the required sums are negligible.

If the financial oligarchy can get this together, they have almost secured the power to define what will be regarded as viable new theories and methods and what is to be disregarded as outlandish deviations from scientific common sense. They will be able to make sure that only those kinds of new thinking take hold which do not fundamentally challenge the supremacy of the financial oligarchy.

Norbert Haering
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