The Banks – What is to be Done?

To even be posing the question is quite exhilarating. Prior to the collapse of Northern Rock and Lehman Brothers only starry eyes young socialists and grisly old Marxists would have even contemplated the question. These days everybody has got something to say, right across the political spectrum including the bloke next door. No doubt about it, the times they are truly a changing. Even the very question itself is up for debate. Is it the banks that need something doing to or is it the bankers, or both? Everybody has got an opinion and everybody is getting hot under the collar. Great days.

Solution number one comes from the politicians and what do they predictably call for? An enquiry. The Tories want a parliament led one and Milliband wants an independent judge appointed. As if there is such a thing. In either case, this is the British way. Get an enquiry under way and in two years time it can report back, by which time everybody is either too broke, too bored or too dead to bother. We saw them pull this stunt with the wholly illegal Iraq War. I can barely remember the final findings but I do know that some half a million Iraqis are prematurely and permanently dead and the country has been plunged into a sectarian morass with Al-Qaida hovering in the wings. Still, Britain held its enquiry.

The Leverson enquiry too is ploughing its turgid way through the criminal manoeuvrings of the Murdoch clan yet still he is free to expand his media empire both here and overseas. How he got permission to open the Sunday Sun just months after being forced to close the completely discredited NotW slap bang in the middle of that enquiry, not to mention the ongoing police investigations, beggars belief. So much for enquiries. It will be the same with the banks enquiry. Diamond will walk with a golden handshake worth millions irrespective of the outcome. He is after all one of the untouchable masters of the universe.

Solution two; jail the bastards. Now that would be immensely satisfying particularly after a long and humiliating trial. We’ve seen a few MP’s get dragged off to do some time at her Majesty’s pleasure so why not a few high flying city spivs. If we could show a network of collusion amongst all the major banks dozens if not hundreds could be carted off. How cathartic would that be! It would certainly shake up the City of London and would border on the revolutionary but would it actually get to the root of the problem? Would new faces simply fill the vacuum and before long it would be business as usual.

That brings us neatly to solution number three -regulation. This is a popular call though nobody is quite sure whether it can work. It would be great to regulate the City until they squeal but you know that is not going to happen. Regulation, if it is to be in any way successful, must be on a global scale and every loop-hole and every bolt hole must be closed down. But even the very limited transaction tax that the EU is proposing is being fought tooth and nail by the British government. Despite mounting evidence that the financial sector does very little for the well-being of the British economy, politicians of all persuasions are addicted to the notion that casino capitalism is a vital and integral part of UK Plc. Furthermore, how do you regulate a feral beast whose sole existence is to speculate with other people’s wealth? Close one loophole and these clever criminals will quickly find another.

Solution four – ethical banking, rests on the similar flawed principles to that of regulation. It assumes that capital can be made to act for the common good and that by withdrawing our money from the tainted big hitters and placing it with more ethically minded cooperatives we will finally be able to tame the beast. It’s a nice story to tell ourselves before we go to bed but rest assured when we wake up in the morning global capital will have been behaving exactly as it always has seeking to maximise its returns. In days gone by that was primarily done by buying and selling goods with some degree of investment in capital infrastructure and research built in. These days, as far as Britain is concerned, manufacturing can go to hell. Why make something useful when you can rely on Asian sweat labour to do it for us. Better to gamble with the collective wealth of the nation on a rigged global market and make billions in the process. Humans can aspire to act ethically but capital cannot. It is simply not in its DNA.

Solution number five – nationalisation of the banks, is the most radical of all. Prior to 2008 all talk of nationalisation was fanciful. Then, hey presto, life threw us a golden opportunity. Labour, being the government of the day, was forced to bail out the crumbling banks with gigantic wads of taxpayer’s money. It was a nationalisation without daring to use the term. The obvious next step for a labour party with any balls was to fully nationalise Lloyds and the RBS and create one large public bank that could have provided the necessary loans and investments needed to kick start a moribund economy bled dry by years of light touch regulation. But the Labour Party , still being of Thatcherite mentality, did not have the balls. (no pun intended) A golden opportunity was missed.

I ought to mention solution six, which I came across the other day in the financial pages of the Telegraph. Here the learned commentator was calling not for less capitalism in our banking system but more! By this he meant that governments should not have intervened when the banks went belly up. They should have been allowed to fail as is appropriate for a proper functioning free market economy. Let the bad go to the wall and allow the healthy capitalist enterprise to flourish. What is needed, according to our Tory free-marketeer, is the inner discipline of the market. Cruel in the short-term maybe, but necessary for the longer term heath of the nation. Sounds quite persuasive until you consider the severe hardship such a policy would cause to millions of families and individuals. Clearly this proponent of the free market did not himself risk bankruptcy or homelessness under such a brutal, inhumane policy. Funny how these free-marketeers never object to the huge government subsidies on all aspects of the social infrastructure, subsidies that enable capitalist enterprises to function at all. Hypocrites all.

So where do we go and what do we do? The answer no doubt lies in an amalgam of all of the above, save of course the lunacy as expressed in solution six. Nationalisation, regulation, transparency, accountability and where needed the full force of the law. Put that lot together and you have something approaching a socialist banking system but there is still one central ingredient missing. We have to ask ourselves the right question. And that question is not what we should do with the banks and the bankers but rather, what are banks for? Only when we pose that question will we get close to heart of the problem. In fact, the question should be broadened out to ask; what is the economy for private profit or social need? Or to give it a more economic flavour, how do we move from an age of exchange value back to a new age of use value. Sounds very idealistic I know but we are definitely in strange, unchartered waters. Not so strange perhaps, it was the very same question that the Bolshevik Revolution posed way back in the day. Perhaps even JC dabbled with this conundrum two thousand years ago. An unresolved question for humanity it seems.

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