The causes of the mortgage fiasco beginning in 2007 which led to the financial meltdown are admittedly complex. Predatory lending played a significant part, but what was more troubling was the ability of financial institutions to inflate the value of debt that was never really meant to be paid back through various financial tools. Surely, the predatory lenders were acting in their own short-term self-interests. For creating a mortgage you get a commission. As far as the individual lenders can see there was only motivation to increase home sales and mortgages. What is interesting to wonder, though, is whether the “higher level” institution — those buying, repackaging, and reselling the debt in order to make a profit — were able to foresee the effects of what they were doing.<\/p>\n
Marx predicted that as capitalism advanced people would begin to see the economic relations that they personally entered into as being for the purposes of making money rather than for being for the purposes of making a good. Money is supposed to be, in capitalism, the symbolic form of use-value. It is the symbolic dimension wherein the strength of both an economy and an individual to produce useful things is expressed. Banking is an industry which profits by mediating exchanges – it itself is much like money in this regard, its purpose is to mediate exchanges. What is the same with regard to a package of debt (interest bearing capital) and money is that neither is actually useful in the same sense a shovel or a coat is useful. That is, a shovel and a coat have a practical use, money does not have a practical use except to be exchanged for things that do have a practical use.<\/p>\n
Marx also predicted that interest bearing capital would be treated as something which had an objective power to create value for the owner of that capital, which it does, but that value is purely symbolic, it is monetary but does not reflect a use-value. It, like money, doesn’t reflect any particular content. A symbolic value which does not reflect a real value might be thought of as, in modern terms, a “bubble.”<\/p>\n
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The 2007 financial meltdown reflects Marx’s prediction on every level, from the predatory lenders looking to make a quick profitto the highest levels, wherein the qualified economic experts managed to fool themselves into believing that they were actually creating value by repackaging debt into complex derivatives.<\/p>\n
The point of bailing out the institutions was always acknowledged as being for purposes of maintaining belief: belief in the capitalist economies ability to sustain itself. “It’s not based on any particular data point. We just wanted to choose a really large number,” said one treasury spokeswoman to Forbes magazine regarding the Emergency Economic Stabilization Act of 2008, which pledged up to 700 billion dollars to help buy off mortgage backed securities. Regarding the bailouts, critical theorist Slavoj Zizek says:<\/p>\n
Although we always recognized the urgency of the problems, when we were fighting AIDS, hunger, water shortages, global warming, and so on, there always seemed to be time to reflect, to postpone decisions (recall how the main conclusion of the last meeting of world leaders in Bali, hailed as a success, was that they would meet again in two years to continue their talks). But with the financial meltdown, the urgency to act was unconditional; sums of an unimaginable magnitude had to be found immediately. Saving endangered species, saving the starving children\u2026all this can wait a little bit. The call to \u201csave the banks!\u201d by contrast, is an unconditional imperative which must be met with immediate action.<\/p>\n
The panic was so absolute that a transnational and non-partisan unity was immediately established, all grudges between world leaders being momentarily forgotten in order to avert the catastrophe. But what the much praised \u201cbi-partisan\u201d and “multi-lateral” approach effectively meant was that even democratic procedures were de facto suspended: there was no time to engage in proper debate. As Alain Badiou succinctly put it:<\/p>\n
The ordinary citizen must \u201cunderstand\u201d that it is impossible to make up the shortfall in social security, but that it is imperative to stuff untold billions into the banks\u2019 financial hole? We must somberly accept that no one imagines any longer that it\u2019s possible to nationalize a factory hounded by competition, a factory employing thousands of workers, but that it is obvious to do so for a bank made penniless by speculation?<\/p><\/blockquote>\n<\/blockquote>\n
It is regarded as “okay” to question the necessity of people starving in a world where we feasibly have the resources to feed everyone, but in the context of modern society what is unacceptable is to question the system itself which makes it beneficial to have poverty. Brazilian Archbishop Dom Helder Camara’s statement, “When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist,” comes to mind. Poverty serves as a supply of cheap labor for the wealthy, and furthermore institutions such as credit card companies and predatory lenders, by using means such as penalties and higher interest rates for the poor make much of their profit by people NOT being able to afford paying their debt. Of course, poverty only benefits the already wealthy.<\/p>\n
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