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How to really take on Wall Street

Marxist Analysis · 2026-05-13

Core Argument

The article argues that the post-2008 crisis regulation of the banking sector — exemplified by Obama's proposed 'financial crisis responsibility fee' — is structurally incapable of disciplining finance capital. The central claim is that under capitalism, the state cannot control the banks because it does not own them, and the banks cannot lose because the state will always bail them out. The bonuses, the speculation, the 'too big to fail' blackmail are not aberrations but the normal functioning of a system where the financial sector is the beating heart of capital accumulation. The only coherent response, therefore, is socialist nationalisation — not reformist tinkering, but the expropriation of the banks and their subordination to democratic, social control.

Theoretical Grounding

The analysis draws on the Marxist theory of the state under capitalism, specifically the insight that the capitalist state is structurally dependent on the health of the financial system and therefore cannot act against it in any fundamental way. The article implicitly deploys the concept of the separation of the economic and the political under capitalism: the state can regulate, tax, and cajole, but it cannot direct investment or control credit creation without breaking the logic of private property and the market. The critique of reformism is grounded in the recognition that finance capital is not a parasitic excrescence on an otherwise healthy productive economy, but the central nervous system of capitalist accumulation. The argument also draws on the Marxist tradition's analysis of fictitious capital — the self-expansion of money capital detached from the production of value — and the inevitability of crisis when that fiction collides with reality. The piece sits firmly in the classical Marxist tradition of Lenin and Trotsky on the state, and the post-war tradition of analysing state monopoly capitalism.

Conjunctural Relevance

The article was written in January 2010, at a specific conjuncture: the immediate aftermath of the 2007-2008 financial crisis, when the TARP bailouts had stabilised the banks but the social costs — mass unemployment, foreclosures, austerity — were being imposed on working people. The article names the specific institutions (Goldman Sachs, JP Morgan, RBS), the specific policy proposals (Obama's levy, the Volcker rule, the proposed Wall Street Reform Act), and the specific political actors (Obama, Darling, Reich, Volcker). The conjuncture is defined by a paradox: the banks are rescued, restored to profitability, and paying record bonuses, while millions have lost homes and jobs. The article identifies the key mechanism of this paradox: the state's implicit guarantee means the banks privatise gains and socialise losses. The geopolitical dimension is captured in the competition between financial centres (New York, London) to offer the most deregulated environment, which prevents any single state from imposing effective controls. This analysis remains relevant to any subsequent financial crisis — from the 2020 COVID-induced crash to the 2023 banking tremors — where the same pattern of bailout, bonus restoration, and austerity has repeated.

Where the Argument Continues

The article is a polemical intervention at a specific political moment, not a full theoretical treatment. It leaves open several questions that are developed elsewhere in the IDOM corpus:

  • The theory of financial crisis — the relationship between the tendency of the rate of profit to fall, overaccumulation, and the explosion of fictitious capital — is asserted but not elaborated. This is developed in IDOM articles on Marx's law of the tendency of the rate of profit to fall and in the Against the Stream series on crisis theory.
  • The politics of nationalisation — what socialist nationalisation means in practice, how it differs from state capitalism, and the transitional demands that lead towards it — is stated as a conclusion but not argued in detail. This is taken up in IDOM articles on the nationalisation of the banks in the 2008 crisis and in the broader Marxist literature on the transitional programme.
  • The critique of reformist regulation — why Glass-Steagall, the Volcker rule, and the Tobin tax are inadequate — is made concretely but could be deepened with a more systematic treatment of the state's relationship to finance capital. This connects to the IDOM series on the state and to the Marxist analysis of the 'regulatory state' under neoliberalism.

Connections

  • Marx, Capital Volume 3, Part V — on interest-bearing capital, credit, and fictitious capital. The theoretical foundation for understanding why banks are not intermediaries but creators of credit money.
  • Hilferding, Finance Capital — the classic Marxist analysis of the fusion of industrial and banking capital, and the role of the state in managing the credit system.
  • Lenin, The State and Revolution — on the impossibility of reforming the capitalist state and the necessity of smashing it.
  • Trotsky, The Transitional Programme — on the demand for nationalisation of the banks as a transitional measure that exposes the limits of capitalism and points towards socialism.
  • IDOM articles on the 2008 crisis — including the series on the credit crunch, the bailouts, and the politics of austerity.
  • Against the Stream episodes on financialisation — which develop the argument that financialisation is a response to the falling rate of profit in production, not an autonomous development.

Key Quotes

  1. "All this is because you can't control what the banks do when you don't own them. Under capitalism we can't win and the banks can't lose. That makes the case for socialist nationalisation overwhelming."

  2. "The whole point is, of course, that when the world economy goes down, the big banks know that capitalist governments will always bail them out. It's not them that take the risk – it's the rest of us."

  3. "Banking is to remain a financial wild west, but one with a difference. The Colts will only shoot paint balls. No banker will ever get hurt."

  4. "Obama's fee will have some perverse results. British-owned RBS will probably have to pay it. But RBS is now mainly government owned since it collapsed in the crisis. So it's the British taxpayer who will actually be paying Obama's levy for RBS."

  5. "The banks are sacrosanct because they are the beating heart of the capitalist system. If we want a financial system that works for us, and doesn't blow up in our faces, then we need to get rid of the whole capitalist system."

  6. "Competition between nations is one reason why they won't be effectively controlled in future, despite their manifest failure now. After all, Obama turned down the chance to levy a tax on financial transactions (called a Tobin tax) and a bonuses tax for that very reason. Capital would flee New York for somewhere with 'lighter touch' regulation."