Casino capitalism

In last month’s Socialist Standard, in an article on the price of bread (http://www.worldsocialism.org/spgb/feb08/index.html), we commented on the fact that under capitalism a basic foodstuff such as wheat was “a world commodity traded on world markets and so subject to international speculators betting on its future price going up or down”.

Last week the news broke that a “rogue trader” calling Dooley working for a firm called MF Global had lost his employers $141.5 million. Rather foolishly, it might be thought, he bet that the price of wheat would go down. But it went up:

“He had bet on the price of wheat declining by entering into about 4,000 futures contracts, which would require him to deliver about 20 million bushels of wheat at an agreed time and price. The greater the decline in the price between agreeing the contract and delivering the wheat, the cheaper the cost of satisfying the delivery and the larger the profit Mr Dooley stood to make. But instead, the price of wheat kept on rising . . .” (Times, 29 February)

It should not be thought that MF Global is in the business of delivering wheat. It doesn’t run a fleet of ships or trucks. It is a financial institution specialising in speculating on how the price of wheat - and anything else - moves. When the delivery date of, in this case, wheat comes near they pass the contract on to a shipping or delivery firm. As Marx once pointed out, the capitalist is not interested in any particular product. All they are interested in profit and they don’t care whether they make it from producing and selling bibles or producing and selling whisky. Firms like MF Global, with no connection with actual production, illustrate this point well.

In the Middle Ages this sort of thing was frowned on and was even illegal. In his other socialist utopian novel A Dream of John Ball William Morris has his visitor from the future explain to John Ball, the priest with communistic views who supported the Peasants Revolt, that the feudal society he opposed would eventually be replaced, but not by a society, as Ball wanted, where people could “have the goods of the earth without money or without price” but by capitalism.

John Ball has difficulty in understanding capitalism and, to give him an idea, Morris’s character says that, unlike under feudalism, “forestallers and regraters” will be praised as benefactors. Morris explains in a footnote what a “regrater” was:

“one who both buys and sells in the same market, or within five miles thereof; buys, say a ton of cheese at 10 a.m. and sells it at 5 p.m. a penny a pound dearer without moving from his chair”.

This is not a description of an industrial capitalist, but it was the best example Morris’s character could find to explain to someone living under feudalism what a capitalist was. It is, however, an accurate description of what firms like MF Global do. Their “traders”, whether rogues or not, buy and sell without leaving their computer desk. A mediaeval peasant would have regarded them as worse than regraters. They are the equivalent of a man sitting in a marketplace inn betting on what price a regrater would be selling at 5 p.m the cheese he had bought at 10 a.m. In fact, MF Global’s traders would also bet on what price that the regrater would pay at 10 a.m. In other words, they are mere gamblers, gambling on the price of an essential foodstuff for millions throughout the world - while millions starve.

Here’s proof, as if any more were required, that capitalism is not a system geared to meeting human needs but one where profit always come first.