bank nationalisation (2)

It appears that some still see a future in the banks to solve the problems of the recession - state-owned banks, of course. Alf Young of the Scotsman appears to be a a convert and waxes lyrically about the Bank of North Dakota which is owned by the state. He appears to infer that the low impact of the crisis on the state had something to do with the this bank. Young then nostalgically recalled the widespread trustee savings bank that once existed but fails to mention that at least one still remains.

It is a shame that he never read the Socialist Courier or he would have come across this post which would have enlightened him a bit more to dead-end hope of bank nationalisation. 

Bank Nationalisation

It is no co-incidence that the cries for banking reform invariably comes during economic depressions. The lubrication that keeps the capitalist machine running – the money markets – are dysfunctional.

As Marx identified “So long as things go well, competition effects an operating fraternity of the capitalist class…so that each shares in the common loot in proportion to the size of his respective investment. But as soon as it is no longer a question of sharing profits, but of sharing losses, everyone tries to reduce his own share to a minimum and to shove it off upon another. The class, as such, must inevitably lose. How much the individual capitalist must bear of the loss, ie, to what extent he must share in it at all, is decided by strength and cunning, and competition then becomes a fight among hostile brothers. The antagonism between each individual capitalist’s interests and those of the capitalist class as a whole, then comes to the surface…”

 Marx also pointed out that “the moneyed interest enriches itself at the cost of the industrial interest in the course of a crisis” Bankers are enriching themselves at the expense of industry and workers, in other words. So whats new?

The economist David Harvey has explained that the losses of the crisis are finally distributed between factions of the capitalist class, and between the working and capitalist classes, and whatever the power struggle that ensues, the necessary result will be the destruction of value (closure of workplaces, the laying off of workers, destruction of surpluses, defaulting on debt, cutting of state services, and so on) so that a new round of capitalist accumulation can begin. The sad but inevitable reality of capitalism.

Some in America seek a solution in the likes of the State Bank of North Dakota. That the bank owned by state authorities weathered the recession was perhaps more a reflection that the state’s economy is primarily based on agriculture and oil, both involved in current boom times. Nor was the state particularly exposed to the sub-prime disaster “North Dakota really didn’t participate in subprime to a significant degree. I mean, that was–you know, it was sort of a flyover state. All of the aggressive subprime lenders apparently didn’t think there were enough folks in farms that they could get to lever up to take on these dodgy loans.” explained  Yves Smith. author of the book ECONned and creator of the website NakedCapitalism.com

In Scotland, we have the almost unique bank success story of the Airdrie Savings Bank, the UK's last remaining independent savings bank  The bank was founded in 1835 and was born out of the general "thrift" movement prevalent at the time.

 Bucking the trend of the credit crunch, Airdrie Savings Bank has increased its lending for the third year in a row, according to its latest annual results, it lent a record £48.5m - a 35% increase on 2010.  It lent 24% more in 2010 than it did in 2009. Yet we still witness that “North Lanarkshire has been particularly rocked by the recession, including above-average redundancies, because the economy is not as diverse as some and there remains a heavy reliance on sectors that seem more susceptible to economic shocks” as one report describes. Not much of a success story.

What socialists say about the banks is not regulate them, nor nationalise them, but make them redundant. Abolish them, along with all the rest of the complicated, financial superstructure of the capitalist production-for-profit economy. The mythology surrounding the power of banking helps those who take the view that this vast institution is so necessary that the prospect of a world without money would be unthinkable. Let’s abolish capitalism and live in a moneyless, propertyless world without banks. That means moving from a demand for ‘regulation change’ to one for ‘system change’. Perceived wisdom is that it should be easier to make socialists in a recession when the shortcomings of capitalism are more evident. This capitalist recession will eventually end and the economy at some time in the future will inevitably return to growth. If there are more socialists at that future time, then at least one positive outcome will have resulted from this sorry and preventable mess.

“…no kind of bank legislation can eliminate a crisis” – Marx