The financial bubble crisis of 2007-9 instigated in me an interest in picking up my academic proclivity which I had neglected in favor of commercial pursuits after finishing study at the London School of Economics in 1983. Since then, I studied business at New York University, worked for five years in the financial markets, and then on my own as a financial intermediary and principal, eventually bringing private equity to bank capital underwriting. Looking back, I see that my own career mirrors much of what I will relate here about the financialization of the current world economic order. My decision to write here was instigated by Justin’s article on Rothschild and his response to my response.
In that article the question is asked whether any of the widely held notions about the Rothschild banking family are based in fact. It is difficult to overstate the influence wielded by this global conglomerate on the eve of 1914. How this precursor to the multi-national corporation came to such a position is the stuff of urban myth. The Shylok character in The Merchant of Venice reflects thinly veiled anti-semitism typical of turn-of-the-seventeenth-century Europe, notwithstanding Shakespeare’s parody of contemporary justice, and points to the Venetian ghetto origins of European Jewish merchant banking. The success of the Rothschild banking dynasty is indeed a marvel. By 1914, they were the lenders of last resort for the highly globalized European economy and stood at the center of the international financial system. Niall Ferguson, in his academically acclaimed The House of Rothschild, argues originally that the innovation of the bond market — i.e., financialization — explains explains much of modern European (particularly British imperial) history.
The history of Western international financial systems is largely one of Mediterranean and global empires: Rome, Venice, Britain, the US. All of these are naval and military powers whose economies are geared for international trade. However, it is not until the last of these that gold as the foundation for exchange is abandoned for sovereign fiat credit bringing with it an exorbitant seigniorage privilege. In this lies a tale of a struggle for the soul of the current hegemon: the East India Company imperial system as practiced by the Europeans versus the Hamiltonian system of economic development as practiced by the European Americans. The US was conceived in idealism as a beacon of freedom for the world and a model of nationalist economic development as originally envisioned by Alexander Hamilton, the central figure of a recently popular musical and the first US treasury secretary. Its transcontinental railway and industry inspired others, particularly Wilhemite Germany. Britain’s imperial system, by contrast, was global: African slaves were traded for cotton in Charleston which was traded for textiles in Liverpool which was traded for opium in Calcutta which was traded for gold in Hong Kong. After 1945, the US took Britain’s place. What sort of hegemon would it be? Would it become the senior partner in an Anglo-American system, as TR and Hoover had intended, which exploited the rest of the world as a field to be harvested or, as FDR and JFK had intended, would it invest in the future of human endeavor globally and trade with other united nations as equals? And what does this have to do with Rothschild?
By the turn of the twentieth century, the discovery of diamonds and gold in South Africa had created vast wealth which funded a political organization established by Cecil Rhodes whose purpose was to defend, preserve, and expand the British empire through an amalgamation of its global English-speaking heritage into a like-minded commonwealth. Rhodes and his political organization arguably were a front for the Rothschilds who funded mining operations in South Africa and who became custodians of Rhodes’ bequest. The mastermind behind this political organization was Alfred Milner who modeled its design on Jesuit and Freemason brotherhoods. It was instrumental in the instigation of the two Boer wars, the aim of which was to gain political control of South Africa’s diamonds and gold, and the outbreak of war in 1914, the aim of which was to terminate perceived Russian and German threats to the British empire. In this political calculus, an overarching goal was to incorporate the US into the British imperial system.
By 1945, it was clear that the British empire was doomed, partly because the US would not tolerate its continuation. Yet, much of what the Rothschild-Rhodes-Milner organization had set out to accomplish was achieved. The so-called special relationship between the UK and the US expresses much of this. It suited the US for London to be the center of US dollar hegemony which ensured that the UK would remain at the center of global governance as long as it was willing to go along with the US agenda. Russia and Germany were marginalized and employed as casus belli for the US imperial expansion. The struggle for the soul of the US continued and the tilt in the balance was decidedly in favor of an imperial system founded upon global control of petroleum, the indispensable sine qua non of modern industrial capitalism. In the imperial model, the natural resources of the world, including people, are inputs for the multinational corporate global capitalist system to be taken and used at will rather than the heritage of nation states to be used in service of local economic and human development, oil being the most illustrative case. Others are opium, cocaine, gold, diamonds, and arms. To this end, the imperial system requires free trade, euphemistically known as liberalism or neo-liberalism. Except for drugs and arms, barriers to trade are anathema. Imperial access to natural resources, after 1945, is no longer by military conquest, except when unavoidable, but by debt enslavement. This too, under the imperial system, knows no barriers: debt enslavement is for governments, corporations, and people — Soros’ wall of money. The imperial model has operated as a wolf in sheep’s clothing, funding infrastructure projects in developing countries with London-financed Eurodollar debt and then foreclosing with the IMF.
One can be certain that Rothschild continues to play its part at every level of the imperial system: manic economic crises can be very profitable business propositions. The 2007-9 casino capitalism systemic crisis resulted in further concentration of wealth in a world where wealth was already very concentrated. This pattern has been repeated and repeated: crash the market in order to pick up the pieces for little to nothing. This is the legend of the rise of Rothschild. In the end, it is a game they have played very well as a handmaiden to the British and Anglo-American empires. The struggle for the soul of America continues though it is difficult to understand what is happening — extreme surveillance and an incipient police state — without hindsight. The present proto-fascist era is no exception.