Newscast · Social/Politics · Theory

Banks for the people

A call to rethink the financial system from a socialist perspective could have real popular resonance, argues Costas Lapavitsas

The crisis of 2007-9 was a systemic upheaval rather than just the result of poor regulation, or of speculative excesses of finance. It was a crisis of financialized capitalism. Financialization is a structural transformation of advanced capitalist economies, resulting in asymmetric growth of the circulation of money relative to production and allowing finance to penetrate even minor niches of social and personal life. Hence a systemic failure of private banking could become a global crisis.

Low-income workers, for instance, are heavily concerned about pensions, savings, and insurance. The burden of debt – both mortgage and personal – has become a permanent fixture of modern working-class life. Meanwhile, inequality has been exacerbated by bankers and financiers earning astronomical bonuses while shifting the costs of crisis onto society.

Radical activists have long sought to raise demands for improvements in the conditions of workers here and now. In the case of the financial system, such demands could raise broader issues of controlling the economy as a whole. Reorganising the financial system under contemporary conditions could pose a direct challenge to capitalist relations.

It is unfortunate, consequently, that the left has been unable to influence public debate – not to mention policy – in the UK and elsewhere. There are several reasons for this, including prolonged organizational decline.

When the crisis broke out, much of the left turned to the concept of financialization for an explanation. This has been the most promising theoretical development within the socialist movement during the recent period. Indeed, the concept originated within the left – primarily but not exclusively in the current represented by the work of writers such as Harry Magdoff and Paul Sweezy around the US-based Monthly Review.

Rethinking the financial system is a systemic and political task for the left. Given the financialization of capitalist economies – with Britain in the vanguard – reorganizing finance could have major ramifications for both economy and society. There could be immediate benefits for workers and others in terms of employment, housing, education, health and consumption. More broadly, finance could be restructured in ways that facilitate greater popular control, thus helping the struggle to transform the economy in a socialist direction.

Keep reading HERE.

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