Nationalize Banking? Or Apologize for the Suggestion …
By Staff News & Analysis - January 28, 2013

Breaking Up the Big Banks is Not a Solution: Make Them Public Utilities … Leo Panitch: Global capitalism needs massive banks, but big private banks have the power to prevent regulation and threaten more crisis; the solution is not breaking them up but making them public – The Real News

Dominant Social Theme: Since we can't regulate these too-big-to-fail banks, let's nationalize 'em.

Free-Market Analysis: Leo Panitch has the idea that because "private banking" is not working very well, banks ought to be turned into purely public facilities. Say what?

In our humble view, this is akin to the neo-Nazi idea of late that has to do with nationalizing central banking in order to ensure that the "people" gain maximum advantage from the debasement of their money. Didn't the USSR try something like this?

Where do they get these guys? What planet, exactly, do they live on? The power elite that wants to run the world – formally as opposed to informally – delights in the idea that the gullible public will attempt to remove its influence by moving Money Power to the public sphere. So why are they encouraging it?

Since Money Power thrives on mercantilism – using government for private purposes – more government and more public power suits the elites just fine. One can make the argument that those advancing these solutions are actively working on behalf of the same Money Power they purport to despise.

The concept does have one advantage: It is simple. The idea that fiat money systems can somehow be made better if their destructive attributes are wielded by "the people" rather than "the banksters" is a beguiling one for those who don't understand economic history, or purposefully misconstrue it.

Add in the truly nutty idea that these banks ought to be forbidden from charging interest and you have achieved the illusory goal of free money for everyone. Rhetorically, it sounds good. Realistically, wherever it's been tried, it's been a disaster.

Just who is Panitch? According to the article, an interview actually, Panitch is "the Canada Research Chair in Comparative Political Economy and a Distinguished Research Professor of Political Science at York University in Toronto." He is also the coauthor of Global Capitalism and the American Empire and The Making of Global Capitalism.

Panitch was interviewed by The Real News Network on the "state of the global economy" among other topics. Here are some excerpts:

Americans have less and less control over their economic lives and almost no say on the direction of the economy. Their jobs are insecure, wages are stagnating, debts are growing, retirement is underfunded and a health care crisis could wipe them out. At the same, the wealthiest are getting wealthier, controlling a greater share of the wealth than any time in U.S. history. Their connections to political leadership ensure that economic elites face little risk in our crony capitalist economy.

While many Americans are in a race to the bottom, the tiny percentage at the top of the economy is racing to the stratosphere of unimaginable wealth.

What is the next evolution of the U.S. economy? How can it be reshaped so that people gain greater control of their lives and greater influence over the economy? Democratizing the economy would move the United States away from crony capitalism and create an economy where wealth is more equitably shared. People are already putting in place programs that democratize the economy, giving them greater influence and control over their economic lives.

Around the world in Spain, Greece, Egypt, Tunisia . . . the people are revolting against austerity and oligarchs controlling wealth. In fact, the wealth divide in the U.S., where the top 1% has wealth equal to the bottom 95%, is even greater than in these other nations.

We're at that juncture where it looks like there ought to be more regulation of these massive financial institutions. But the type of regulation that they've been operating under for a very long time now is a type that facilitates the kind of role they play in … is, greasing the wheels of global capitalism, including, I might say, ensuring that states are able to sell the bonds they need in order to cover their own expenditures, not least the American state …

The only way in which one can get out of this—and, you know, one doesn't say this in any sense for ideological reasons any longer. It's quite pragmatic. The only way you can get out of it is to turn these financial institutions into public utilities.

Build sustainable local living economies Democratize the money supply Create publicly owned banks Create worker and consumer owned businesses Develop participatory budgets Fight and prevent foreclosures Fight for health care reform and alternative health delivery systems …

The much more pragmatic and possible thing to do is to take these very large banks into the public domain and turn them into public utilities and have them serve the functions that are needed, in terms of a financial market, in a way that is determined by state policy and by a system of democratic planning, so that the decisions they now make about where things will be invested and into what they'll be invested would be made in relation to democratic public policymaking, that to—of course, I entirely grant, to imagine democratic public policymaking would entail a fundamental change in the American state and the party system.

This is really incredible. The problems in the world are mostly the result of a lack of competition. The Invisible Hand has been chopped off at the elbow. Without restraint, the four horsemen of the financial apocalypse – Cronyism, Mercantilism, Corruption and Authoritarianism – ride abroad and leave ruin in their wake.

Each of these is a direct result of the conflation of the public with the private. Lacking the coercion of government power, those who abuse the public trust would be denuded of the necessary weapons.

But that's not Panitch's solution. Seeing the mess that's been created by too-big-to-fail banks, he proposes … more of the same. He wants to take a bad situation and make it worse.

In the end, with the bombs falling, Hitler simply instructed his bankers as to what interest rates he wanted and how much money should be printed. Roosevelt, grinning, fixed the price of gold every morning from his bed. These two men spoke for "the people" and were doing the will of the people – or so they claimed, and who was left to dispute? That is how "the people's" business often ends up. A single thug maneuvers himself into a position of authority and purports to speak for everyone else.

Much better, isn't it, to pursue a system of DECENTRALIZATION where no single individual can assume the mantle of authority to speak for all?

After Thoughts

Panitch is an academic and this apparently means he never has to say he's sorry. He should.

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