And that would be fine if it was how traders were mostly rewarded. But the trouble is that 'to each according to his abilities' (a) historically was never the case, and (b) has become distorted to something akin to rewarding each, not according to his ability, but to his propensity to take silly risks with other people's money and get lucky.
The historical background to the bonus culture is a major reason why investment bankers take home fat bonuses and, say, teachers or nurses don't. Companies in the risk-taking part of the City used to be partnerships where partners were rewarded not by their ability - perish the thought - but by the amount of capital they put into the business. Bonuses, therefore, were the excess profits from good years. The quasi-monopoly status of much of what the City did meant that excess profits accrued often enough for bonuses to filter down to the employees who did have the ability, but not the capital, the Uriah Heeps and even the Bob Cratchits of these firms. Eventually, as is the way of human affairs, the origin of bonuses was forgotten and their function became distorted.
In that distorted form, big bonuses were - and are - paid for the same reason that propels feast and famine in the financial markets. That propelling mechanism is also called the herding instinct. People herd together because they don't know what's going to happen; they pretend they do, but they don't really. Thus there is safety in numbers. Not just that but, much of the time, herding together makes common sense, too, because, if enough people do the same thing, it strengthens the feedback loop that causes whatever is most greatly desired - usually the rising price of something or other - to come to pass.
Similarly, among the City's investment banks, big bonuses are paid at Morgan Stanley because they are paid at Merrill Lynch because they are paid at Goldman Sachs and so on. In other words, each firm pays them because everyone else does; because each fears what would happen if it did not; because there are many talented people on its payroll, but no one is quite sure who is more talented than whom, so the bosses feel obliged to pay all these talented people - of whom, of course, they themselves are among the most talented - piles of moullah just for turning up in the morning, and woe betide any firm that doesn't.
It's as if there is a tautology at work - big bonuses are paid because they are paid. Although, on second thoughts, perhaps it's less a tautology and more an addiction - City firms are addicted to paying big bonuses. Small wonder, therefore, that the UK's financial services regulator, the Financial Services Authority (FSA), acknowledged that its new remuneration code "is not going to change the bonus culture overnight".
Yet, arguably, the interesting thing is that an industry regulator should feel the need to have a code for pay in what is, after all, just a small part of its regulatory demesne. Either this tells us that there really is something deeply perverse about the incentives behind City pay packets, or it indicates that the regulator is delving down to a level of micro-regulation that will surely have counter-productive effects.
Indeed, it may be that the FSA's appetite for micro-regulation is on the way to becoming as gargantuan as the City's appetite for bonuses. If so, then it may pay to invest in those City firms that are likely to benefit from more intrusive levels of regulation. They may be hard to find. They are unlikely to include the clearing banks whose proprietary trading desks are being radically scaled back. Nor will it necessarily be the London Stock Exchange, as well-publicised problems with over-the-counter (OTC) markets won't be solved by shifting trading to a monopoly supplier, such as a stock exchange.
However, various trends may benefit the world's biggest money broker, ICAP. For example, tighter regulations may move more OTC trading onto ICAP's electronic trading platforms. Second, the fallout from the credit crunch has meant a shift away from complex structured products, such as collateralised debt obligations, towards the simpler derivatives that ICAP brokes. Third, deficit financing by governments on a scale not seen since the 1980s means more government bonds are being issued and subsequently traded via brokers.
Sure, the effect of deleveraging globally will mean less activity in financial markets of all sorts, but this is not affecting ICAP to the extent that City analysts expect this year's profits to fall - on the contrary. More encouraging for me, when I ran ICAP's numbers through the Bearbull valuation factory, which uses the average of the past five years' profits and cash flow to generate valuations, I could comfortably justify paying 400p a share. True, that is short of the current price - 447p. Yet that price has doubled since March and I would not be surprised if the coming months saw some sort of reaction.
If so, then - slightly belatedly - I will be waiting. Marx would not have approved. Then again, didn't the Communist Manifesto say: "Communism deprives no man of the ability to appropriate the fruits of his labour"?
