The banks and high finance should be converted into a public banking, mortgage, and pension service, under public ownership and democratic and workers’ control.
Public ownership and democratic control will also provide the means to stop a reforming government being sabotaged by a “strike” or “flight” of capital, as France’s reforming government was in the early 1980s.
Britain’s big four banks made about £22 billion profits in 2018-9. That is more than the total of £19 billion per year required, according to the Institute for Fiscal Studies in October 2018, to end the cuts in welfare, schools, and other services brought in by the Tory and Tory-Lib-Dem governments since 2010.
The latest official figures for bankers’ bonuses (for 2016-7) gave a total of £15 billion a year. Again on latest figures, more than 3,500 bankers in the UK are paid more than a million euros (£900,000) in 2017, with total income of almost £9bn between them. The average pay of those money-merchants was nearly £2 million each a year.
World-wide, bank profits in 2018-9 were an amazing £1135 billion.
The banks and the other financial companies do provide us with a convenient way to manage what wages we get and to pay our bills (if we can). But we shouldn’t have to pay anyone £2 million a year for that service.
Banks and high finance are supposed to act as the hub of a system through which spare-for-now financial resources are recycled into productive investment. High finance stands at the crossroads where investment decisions are made.
It does that very badly. In the whole era, since the 1980s, in which high finance has expanded explosively, investment in new equipment, buildings, facilities and so on has lagged further behind the total of profits than ever before.
In other words, a bigger percentage of profits goes to ever-more-unhinged luxury spending by people like those bonus-rich bankers and their equivalents in other industries. In Trump’s USA now, the wealthiest 10% of households do half of all consumer spending.
High finance finds it profitable to lend to top-end property developers and buyers. Thus it drives up housing prices and skews new home-building towards expensive luxury housing.
The control of investment funds by profit-crazed high finance makes it apparently not “realistic” to invest in social housing, health, education, welfare, and other public services, but very “realistic” to invest in luxury. Or in risky, speculative financial spirals.
It is in the nature of an economic system driven by profit — capitalism — that bankers always push into dodgy ventures which offer extra profit. They know some will go wrong, or be found out — but then they’ll be bailed out, or maybe pay a fine, and carry on. That’s business.
In 2008, the bankers’ drive for risky profits brought economic chaps to us all. The British government, like others, poured vast quantities of cash, credit, and guarantees into the banks to keep them afloat: a total of £1107 billion, something like the equivalent of £18,000 for every child, woman, and man in the UK.
There was much talk then of regulating of banks better. Very little has come of it.
A few bankers resigned, with a “golden goodbye” pay-offs, but mostly the top bankers carried on, shamelessly taking home truckloads of loot.
The Trade Union Congress has policy for “full public ownership of the [banking] sector and the creation of a publicly owned banking service, democratically and accountably managed”. The 2019 TUC Congress reaffirmed the policy agreed in 2012. The issue is getting it fought for.
