Owen Jones and Banks
Owen Jones is a passionately left-wing
journalist, chiefly for the Guardian newspaper, who campaigns eloquently and
honestly for the just causes, of which there are rather too many under this
miserable Tory government, or excuse for a government. True, Owen was a little
wobbly over Jeremy Corbyn at one time, but Jeremy’s success in getting votes
for Labour has brought Owen into line, along with various erstwhile
Blairites who smell power in following
Jeremy these days, together with increasing numbers of business interests
gravitating towards Labour if only because they don’t hold out much hope of
Tories winning the next election, whenever that may be. So Owen Jones is
essentially a camp-follower, but a nice one.
Owen writes, with his usual persuasiveness
(Guardian 20th October 2017) on the urgent necessity of
nationalising the UK’s banking industry. According to a recent poll half of the
electorate are in favour of this. The idea is that banks, ‘an essential public utility’,
are doing much less for the economy and much more for their own shareholders
than even a number of responsible economists would like to see. According to a
think tank called the New Economics Foundation, the troubled Royal Bank of
Scotland could be run by a management board, with ‘a board of trustees [to]
ensure the bank was accountable to the broader economy and customers, not
shareholders.’ Meanwhile, according to
Owen, ‘Labour is right to call for a German-style public investment bank,
backed up by similar publicly run local banks.’ In Germany, KFW, the government-owned
development bank, ‘is crucial in developing national infrastructure as well as
the renewable energy revolution.’
I would sound a note or two of caution
here. Britain is not Germany, which is already – and has been for a long time –
an industrial powerhouse compared to Britain with the latter’s reliance on ‘invisible
earnings’: i.e. FIRE – finance, insurance and real estate. In Germany, too,
there persists a long-time economic ideology entirely different from the
traditionally British laissez-faire approach: ordoliberalism, a theory and
tradition of state management and promotion of private (and public) enterprise
for the good of the nation. In the 19th century Germany – in the
earlier decades – was woefully backward compared to ‘the workshop of the world’
Great Britain and, as in France, the gradual consolidation of the state and
state power both protected and promoted the rapid development of German (and
French) industry and railways. By just past mid-century Germany had overtaken
Britain in the production of chemicals, an overtaking industrial process that
was to continue, indeed up to the present time.
With help from the largest
(poorly-paid) Turkish population outside Turkey, Germany continues to dominate
the continent industrially and in general economically, though France is
rapidly catching up.
Meanwhile what do we have in Britain?
The most spectacular failure of a bank in recent times was, in fact, the
Co-operative Bank, which ended up on its knees after years of incompetent (or
confused) management and is now in the hands of American financial interests
who are running it like any other commercial bank – that is, not according to ‘co-operative’
principles and practices. This example shows in part that co-operative
financial organisations are not easily able to compete and survive against a
brace of aggressively capitalist ones.
A bank is predicated on borrowing
cheap and lending dear. That is its basis in profitmaking, its raison d’etre,
in fact. Banks must be profitable, as embodied in returns to shareholders, so
that others might also profit. And when they aren’t profitable, governments
must step in to shore them up. It is a sound principle that one never goes to a
bank to borrow money if one cannot afford to. Banks are the antithesis of
charitable or non-profit organisations. You can be sure that the German banks
are doing well enough out of their strategic lending, itself based on a
situation much more favourable to ‘ordoliberal’ industry in the first instance
than exists in Britain or is likely to for a long time to come, if ever.
Owen Jones is quite accurate and right
in his broad estimation of the economic basket case that is Britain today. But
this is a process of decline that has been going on for more than a hundred
years. It is not about to be positively transformed by benevolent and ‘co-operative’
banking: that is, in a situation where our financiers dominate the landscape
anyhow whatever their involvement in a long death struggle. You don’t set up capital
to run without a healthy profit, let alone at a loss: capital must always make a (good) profit or it is not
capital at all. Banks, whoever runs them, must make a healthy profit or go
under in time; banks are ‘capital’ organisations in the strict sense that ‘capital’
itself is their stock-in-trade. Only the abolition of the built-in
contradiction of capital will render us the world we need, but I doubt if Owen
Jones has the stomach for what that takes.
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