Saving capitalism from speculators

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

“Capitalism is under threat from greedy big-time speculators,” fears John Monks, secretary-general of the European Trade Union Confederation (ETUC), writing in the autumn edition of Europe’s World.

“Untold millions are being wielded by unscrupulous speculators to make massive gains in stock markets and off the backs of commodities, like food and oil,” Monks claims. “Trade unions, governments, employers with a conscience and leaders from across the political spectrum need to get together to turn things round” because capitalism itself is under threat, he warns. 

The whole thrust of modern capitalism over the past twenty five years has been to “align companies with the interests of their shareholders or other owners who are often looking for a quick return,” he argues. 

As a result, senior executives are often “paid in shares and share options according to the returns to shareholders,” which affects “the psychology and motivation of managers in large corporations,” Monks claims. 

The ETUC secretary-general laments the change in thinking, because before, managers were usually accountable to a wider range of stakeholders in the business [including trade unions, governments and their employees], not just to the shareholders. 

Monks goes on to complain that for many years it has been the dominant political view in Europe that “business should be freed from all red tape and regulation,” adding that “any attempt to curb the salaries of talented managers would simply mean they would migrate to countries with the highest pay and lowest tax”. 

Nevertheless, he concedes that investors are not just a club of the super-rich, but also include those “who are managing pension funds and life insurance money on behalf of many ordinary people”. 

Against the backdrop of the financial crisis, Monks believes there are “signs of change”, citing German Chancellor Angela Merkel’s assertion that the “robust currency system of the euro has not yet secured sufficient influence over the rules governing financial markets”. Opinion polls across Europe also show that a “majority of people want to see tax increases for the wealthy,” Monks adds. 

While the worst market excesses are in the Anglo-American world, he does not hesitate to add that “continental Europe is also heavily affected – as losses at German and Swiss banks demonstrate”. 

Financial operators that make “excessive gains” on stock markets must be “stopped by social democrats, Christian democrats and trade unions [as well as] by European solidarity and joint action with the US and others,” Monks concludes. 

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