Today’s announcement that HSBC and Barclays made nearly £3bn each in the second quarter of the year says it all. They are now returning with ill-concealed lip-smacking glee to the discredited bonus culture – bankers’ bonuses are expected to be an almost unbelievable £4bn this year – heedless of the destruction their greed caused last time round. The State doled out £1.4 trillion (little short of Britain’s entire GDP) in the last year to bail them out of collapse, and they have trousered it all and learnt nothing. None of this gigantic subsidy of taxpayer support is to be repaid. The Government tut tuts, then looks the other way, doing precisely nothing to cap either bankers’ bonuses or pay. The banks have not even been made to honour the deal rapidly thrown together a year ago, that they would maintain lending to the real economy in exchange for the most expensive bail-out in history. Lending to business has actually contracted and lending to mortgage-holders has only seen a miserly rise. The banks claim there is a lack of demand for their credit, while the evidence abounds there is a lack of affordable supply.

Nobody else and nothing else has such a relentless grip on the jugular of the nation and its top decision-makers, with the possible exception of Murdoch. The Government has allowed the banks to grow far too big to be safe, with bank assets over 4 times the size of GDP, larger than in any other State except Switzerland and 5 times bigger relatively than in the US. The only pressure exerted to bring the banks into line are voluntary guidelines which the State would never tolerate as a sanction in any other sector of public life. Bankers are chosen to head up inquiries into every aspect of government concern – be it welfare privatisation, trade development, pension reform, or skills training – as though their instincts were omniscient and reliable rather than avaricious and fallible.
Neo-liberalism has given birth to a power within the State which is mightier than the State. It will not be controllable until neo-liberalism is itself changed. The recipes being touted to restrain the banks gorging on their own extravagance – capping bonuses (the Tories), transparent publication of top bonuses (the Liberal Democrats), or even a Standing Commission on Top Pay – do not come near to dealing with the problem at its roots. A wholly new contract with the State is required which restrains markets within the wider public interest, makes finance the servant of the economy and not its master, settles rewards on the basis of individual effort and not the idiosyncratic power of finance capitalism, and reintroduces real public accountability across the whole spectrum of government, parliament, the public sector and major private services.

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