Die Neue Zeit
7th February 2009, 01:19
Before proceeding to the main link, why do I get the feeling of being reminded by Mike Macnair's thoughts a couple of weeks back?
http://www.cpgb.org.uk/worker/751/crisisand.html
Certainly, a recession like the early 1990s, or even one like the early 1980s, would not produce mass political support for radical ‘action programmes’ like those currently widely offered on the far left: the result in a year or eighteen months’ time would look like the far left crying wolf yet again.
[...]
At the other extreme, a generalised collapse would require as minimum action the introduction of World War II-style systematic directive planning control of all economic activities and generalised rationing of food and other essential supplies. It is likely that the capitalist state would itself introduce such measures in the hope that they would allow it to survive. The demands currently raised in far-left ‘action programmes’ derived from the 1938 Transitional Programme would then appear insufficiently radical.
I never thought someone else besides the ironically market-socialist David Schweickart (http://www.zcommunications.org/znet/viewArticle/18962) would suggest bank expropriation as an immediate economic measure to stabilize the bourgeois-capitalist free-fall, but here he is:
Bank expropriation is rational, but neither socialist nor sufficient (http://www.oid-ido.org/article.php3?id_article=711)
That takes me to the question of nationalisation, which, for all the recent hand wringing in the financial press, is a monumental non-issue. Bank losses will continue to mount and private appetite for investment in banks is unlikely to improve for many years. Gone are the good old days when Western states could count on their wealthy political clients in the Persian Gulf to pitch in the odd billion to support their private banks. In this setting, states will have little choice but eventually to nationalise weaker banks. That, in turn will likely send remaining private investors in other banks running for the exits, as recently argued in the New York Times.
The question is how banks will be nationalised and run. The Economist demands that any necessary nationalisations be undertaken ‘at market prices’, without seriously considering what those would be had states not supported banks. And both British and US governments have noted their commitment to run their investments on arms-length bases, leaving control to the officers and major shareholders that created the current financial mess.
There is a simple, rational alternative that needs urgent public discussion. Expropriate the banks-or, for those partial to more diplomatic language, nationalise them at the market prices that would prevail had the public not poured hundreds of billions into them. Then run the banks under the sole imperative of stabilising the financial system and paving the way for economic recovery, with no constraints imposed by the need to attract private capital or maintain future private franchise value.
Expropriation would lower the fiscal impact of state intervention. It would also curb the massive hoarding currently taking place as banks try to build up capitalisation levels. State banks could maintain lower capital reserves-after all, the only thing maintaining public confidence in the solvency of banks are state guarantees. This would allow additional room for credit creation, and render recent interest rate cuts effective.
State banks would also be able to provide relief on the debts currently saddling many households, helping provide a welcome boost to aggregate demand. Lastly, state banks could curb the more egregious practices of private banks: exorbitant account, overdraft and transaction fees; interest rates on credit to households; gains made on trading and own accounts at the expense of retail savers; and, of course, bonuses.
These measures are unlikely to be taken by currently dominant political forces, even though such policies are neither socialist nor in themselves steps towards socialism. They are just rational attempts to stop the current economic bloodletting. Economic recovery will require taking on the long-term systemic economic imbalances that conditioned the current meltdown. Those include falling real investment by non-financial corporations, mediocre productivity growth, growing private provision of pensions, health and education, and rising inequality. Addressing those issues will require significant socialist inroads into the functioning of the economy and dramatic political changes. They also require an integrated, long-term understanding of the current crisis and secular developments in the real economy. Stay tuned.
http://www.cpgb.org.uk/worker/751/crisisand.html
Certainly, a recession like the early 1990s, or even one like the early 1980s, would not produce mass political support for radical ‘action programmes’ like those currently widely offered on the far left: the result in a year or eighteen months’ time would look like the far left crying wolf yet again.
[...]
At the other extreme, a generalised collapse would require as minimum action the introduction of World War II-style systematic directive planning control of all economic activities and generalised rationing of food and other essential supplies. It is likely that the capitalist state would itself introduce such measures in the hope that they would allow it to survive. The demands currently raised in far-left ‘action programmes’ derived from the 1938 Transitional Programme would then appear insufficiently radical.
I never thought someone else besides the ironically market-socialist David Schweickart (http://www.zcommunications.org/znet/viewArticle/18962) would suggest bank expropriation as an immediate economic measure to stabilize the bourgeois-capitalist free-fall, but here he is:
Bank expropriation is rational, but neither socialist nor sufficient (http://www.oid-ido.org/article.php3?id_article=711)
That takes me to the question of nationalisation, which, for all the recent hand wringing in the financial press, is a monumental non-issue. Bank losses will continue to mount and private appetite for investment in banks is unlikely to improve for many years. Gone are the good old days when Western states could count on their wealthy political clients in the Persian Gulf to pitch in the odd billion to support their private banks. In this setting, states will have little choice but eventually to nationalise weaker banks. That, in turn will likely send remaining private investors in other banks running for the exits, as recently argued in the New York Times.
The question is how banks will be nationalised and run. The Economist demands that any necessary nationalisations be undertaken ‘at market prices’, without seriously considering what those would be had states not supported banks. And both British and US governments have noted their commitment to run their investments on arms-length bases, leaving control to the officers and major shareholders that created the current financial mess.
There is a simple, rational alternative that needs urgent public discussion. Expropriate the banks-or, for those partial to more diplomatic language, nationalise them at the market prices that would prevail had the public not poured hundreds of billions into them. Then run the banks under the sole imperative of stabilising the financial system and paving the way for economic recovery, with no constraints imposed by the need to attract private capital or maintain future private franchise value.
Expropriation would lower the fiscal impact of state intervention. It would also curb the massive hoarding currently taking place as banks try to build up capitalisation levels. State banks could maintain lower capital reserves-after all, the only thing maintaining public confidence in the solvency of banks are state guarantees. This would allow additional room for credit creation, and render recent interest rate cuts effective.
State banks would also be able to provide relief on the debts currently saddling many households, helping provide a welcome boost to aggregate demand. Lastly, state banks could curb the more egregious practices of private banks: exorbitant account, overdraft and transaction fees; interest rates on credit to households; gains made on trading and own accounts at the expense of retail savers; and, of course, bonuses.
These measures are unlikely to be taken by currently dominant political forces, even though such policies are neither socialist nor in themselves steps towards socialism. They are just rational attempts to stop the current economic bloodletting. Economic recovery will require taking on the long-term systemic economic imbalances that conditioned the current meltdown. Those include falling real investment by non-financial corporations, mediocre productivity growth, growing private provision of pensions, health and education, and rising inequality. Addressing those issues will require significant socialist inroads into the functioning of the economy and dramatic political changes. They also require an integrated, long-term understanding of the current crisis and secular developments in the real economy. Stay tuned.