A “public option” against the banks

by Daphne Lawless, editor
Editorial from UNITY Journal: Bad Banks: what are the alternatives? 
December 2009

A criticism often made of the radical left in this day and age is: “what is your alternative?” With the ruling class offensive against our living standards and the planet which started in the 1970s still going on, so much of our political practice is necessarily negative – protesting, fighting back, resisting. It is sometimes easy to forget that the struggle for a new world needs a positive – a program of concrete demands, based in the here and now, which point the way to what a better world might look like.

This issue of UNITY is an attempt to start the process of doing this for the Bad Banks campaign. If the banks are greedy, corporate vandals, who distort our society’s economic decision-making for their own profit, promote ecological vandalism and wreck lives and communities in the process... then what else might be done?

As socialists, we believe in the “transitional method”. It’s no good dreaming up a “revolutionary” schema of what we’d like to see, and presenting it to the masses as a way forward. The response will be – and rightly so – “who do you think you are?” Marxism isn’t a series of eternal principles, handed down through the generations like religious commandments. It’s a science of analysing a concrete situation and drawing conclusions for political and social activism.

So – the question of what practically can and should be done, here and now, to fight the Bad Banks starts in a clear analysis of what is actually happening. And, as we explained in the last UNITY journal, one of the things that is actually happening is that the banks are losing credibility.

The banks know this better than anyone. The Australian-owned trading banks are frantically trying to make good PR for themselves – to make themselves look less like the corporate criminals they are.

So, Westpac suggests bringing back small “community branches” in suburbs and small towns – those same branches they closed wholesale in the 1990s. Meanwhile, the ASB (owned by Australia’s Commonwealth Bank since 1989) are trying to convince us all that they’ve been “a Kiwi bank since 1847”. By the time UNITY journal goes to press, Bad Banks protests will have been held outside ASB outlets to show this up for the shameless lie it is.

Interestingly enough, though, that piece of ASB spin shows that the state-owned KiwiBank is ruffling feathers. KiwiBank – which, even though owned by the state, acts more or less just like a private bank – has been conducting its own spin over the last couple of years. Its ad campaign suggests that choosing KiwiBank is like being part of some kind of “resistance movement” against Australian bank domination! The clear success of this pretend “revolutionary” branding suggests that the corporate marketing gurus have caught onto a serious revolt against the Bad Banks brewing at the grassroots. So of course, their goal is to harmlessly divert this resentment into making consumer choices which benefit their clients. And our goal has to be to reverse this process.

Even the mainstream parliamentary parties realise that the four Australian-owned trading banks are out of control – gouging the public with fees and exorbitant interest rates, and the whole nation with their tax-dodging schemes. Hence the recent “parliamentary enquiry” into the banks by the Opposition parties. Of course, all these parties – including, sadly, the Greens – have bought into the neo-liberal myth that There Is No Alternative to free-market capitalism. Given that, their enquiry was good for pointing out a few problems, but could come up with no real alternatives – except a forlorn hope that the slavering dogs of banking profit can be brought under control with a verbal ticking off.

Grant Morgan’s piece in this issue of UNITY on the “four legitimacies” should be read in the light of the corporate shenanigans detailed above. Grant says: "On a global scale both leaders and led are losing faith in capi-talism’s destiny, eroding the broad social consensus that the world system needs for survival beyond the short term."

The essence of the Bad Banks strategy, therefore, has to be to accelerate this disintegration of the legitimacy of capitalism. And the weak point of capitalism’s economic legitimacy in the world today, after the economic shocks and convulsions of the last couple of years, has to be the multinational financial institutions, which we call by the short-hand of Bad Banks. Vaughan Gunson's article in this issue sets out this strategy in further detail.

So this issue of UNITY canvasses the spectrum of alternatives to the current financial system. At the basis of all of these has to be a thorough rejection of the global system of human and ecological exploitation that is capitalism. The late Chris Harman put it very clearly, in his article reproduced in this issue: "[I]t is necessary to take control of those corporations and coordinate their investment decisions, subordinating them to the fulfilment of democratically decided priorities.

But this risks being abstract, divorced from the here-and-now. So, in New Zealand of the early 21st century, what does Socialist Worker suggest for concrete steps that could begin to create an alternative to Bad Banks? Here are just a few:

• A Financial Transactions Tax (also known as a “Tobin Tax”).
A tax on “hot money” zipping across national frontiers, wreaking untold social damage as it goes, would not only put more of the economic levers back in our own hands, but earn revenue that could help replace anti-worker taxes like GST. Vaughan Gunson's article mentions this, and Dean Barker from Britain's Centre for Economic Policy and Research develops the argument.

• Bail out bank workers, not bank bosses. 
As it stands, we have the worst of both worlds – taxpayers pay through the nose to keep the banks afloat, but without any say in what they do next. FinSec, the union for bank workers in New Zealand, thinks this has to change. If we are paying to keep the banks in business, they argue, this means that “loan guarantees” for the corporates need to be matched with “job guarantees” for the workers. This just makes sense – a business which has dug itself such a huge hole should not be in a position to dictate its own terms as to how, or even whether, it gets bailed out.

We reproduce two position papers from FinSec, the main union for bank workers, and an interview with union secretary Andrew Campbell. What is particularly heartening about FinSec’s contribution is that the scope goes beyond the immediate interests of their members, to touch on what is good for NewZealand as a whole. Perhaps this is a sign of the new mood which Grant Brookes speaks of at the Council of Trade Unions conference – a growing willingness for unions to debate radical politcal and economic alternatives.

• Promote alternatives to corporate finance. 
The “green dollar” system – where local communities create their own means of exchange – became very popular in New Zealand during the 1990s as a way to hold local economies together during the darkest times of “Ruthenasia” economic scorched-earth policies. Sue Bradford, in her speech to the Socialist Worker forum, promoted this idea, and we include an article from local currency advocate Deirdre Kent. However, since the Bad Banks are an international phenomenon, a patchwork of local solutions in peripheral areas can't be a total solution. So that's why we must...

• Create a “public option” against the Bad Banks. 
In the US healthcare debate, this means creating state-owned health insurance to keep the private sector honest. Sadly, the Obama administration seems to have compromised away even this extremely minimal reform to predatory capitalism. But the principle of creating a socially-oriented corporation to compete with an unaccountable private sector is a good one.

In Venezuela, where an elected socialist government is entering its second decade in power, President Chávez is not letting the “banksters” rip his nation off. The Venezuelan government has over the last month closed down several banks which have been playing fast-and-loose with public funds. While the New Zealand government continues to bank with the tax dodgers at Westpac, the Bank of Venezuela has been nationalised, and financial power has been devolved to the “Community Financial Administrative Units” which have been set up in the neighbourhoods and villages of this Latin American nation. Venezuela shows that, even short of a complete overthrow of capitalism, a movement based on popular power can create reforms which not only make ordinary people's lives bette, but point the way forward to what a new and better world might look like.

But in all this, socialists must keep our heads, and keep things concrete. We print several arguments in this issue debunking assertions which often charge around as soon as the banks are criticised – ideas that fractional reserve banking or even paper currency itself is some kind of “scam” or “conspiracy”. This enables capitalism as a whole to wriggle off the hook, diverting public anger to some kind of imaginary elite.

This right-wing narrative has become hegemonic in the United States, and in the English-speaking internet, precisely because the USA is so desperately lacking a realistic socialist or even social-democratic voice. Bad Banks must put the concrete alternatives here and now to the pressing issues of “bankster” exploitation. But we must also make it clear that the whole system of corporate capitalism is the problem, not just the money side of things. We need a new economy from top to bottom, without corporate bosses or wage slavery, where wealth comes from the people and is spent by and for the people.

To purchase a copy of the 'Bad Banks: what are the alternatives?' contact Len, email organiser@sworker.pl.net, or phone (09)634 3984. Price is $5 plus postage.

To subscribe to UNITY Journal ($25 for four issues a year) contact Grant, grantmorgan@paradise.net.nz. Send a cheque made out to 'UNITY' to Box 13-685, Auckland, NZ, along with your postal details.