Can Capitalism Survive?
Collapse of the banks demonstrates that capitalism can no longer function successfully. State involvement in the economy, along socialist lines, is inevitable.
Collapse 2008
Western capitalism collapsed in 2008. It is still with us, a very lame duck, because governments, mainly in the USA and Europe, bailed it out – by pouring £ Billions into bankrupt banks.
Why did they do this? Their answer is that, without government support, banks and the economy would have collapsed.
But there is no evidence that anybody, except the bankers (who continue to pay £&$ Billions in bonuses), have benefited. Companies collapse, and people lose their homes – because they are refused the loans which the banks, when they received government funds, agreed (we are told) to arrange.
It is obvious that capitalism, which we are told, consistently, is a model for us all to follow, cannot “stand on its own two feet”. Despite the £&$ (and Euro) Billions already provided, the banking system is still extremely shaky.
Enormous Losses
Some banks made enormous losses in 2008: for example, over £10 Billion in the case of Halifax Bank of Scotland (HBOS). This bank has been taken over by Lloyds TSB, with government financial support to the extent that the taxpayer owns over 40% of the new bank.
It is expected that Royal Bank of Scotland (RBS), where the state has a majority shareholding, will announce losses approaching £30 Billion for 2008.
The policy of pouring money into the banks is clearly not working. Thousands of jobs continue to be lost and the number of property repossessions is still rising. An alternative strategy is necessary, and urgent.
An Alternative Strategy
Governments must stop providing money to privately owned banks and develop their own banking systems. For the UK, this means creating a People’s Bank by co-ordinating the institutions which are already state controlled – Northern Rock, Bradford and Bingley, Royal Bank of Scotland and the Post Office.
The existing mutual societies, mainly the building societies (such as Nationwide) which did not convert to banks, should be included in the strategic planning for the new People’s Bank.
If any other banks cannot survive without additional government funds, they should be nationalised; and then become part of the People’s Bank structure.
People’s Bank Priorities
The priority for the People’s Bank would be to provide services, especially mortgages, for people who are currently being ignored by the private banking system. At least 200 £ Billion should be made available by the government – for responsible, and sensible, lending to companies and individuals.
The cost to the taxpayer would be nil: even at a modest rate, the interest charged could easily cover any defaults. It would be extremely likely that, over a five-year period, there would be a surplus for the taxpayer.
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Post CommentYo
On February 26, 2009 at 3:51 pm
You simple can’t nationalize all this stuff. You would wipe out too much exchangable value. Also, you mentioned that 200 million pounds will be made available for mortgages, where would this money come from? If the answer is to simply print it well that would just cause inflation. Markets are the only way we know how to produce value, which can then be exchanged in various capacities. Without the market mechanisms, we would have considerably less value (or wealth if I may) to exchange. The exchanging process allows value to be put to its best uses. What you have proposed would serve to destroy value rather than produce it. No one in their right mind would ever say that there are problems that can be created, even in the use of free markets, but socialized nations are afflicted by many problems as well, and much more aggregious ones at that. But markets give us the best mechanism to fix those problems by allowing us to more properly understand the economic conditions around us, i.e. the pricing mechanism.
Fabian C
On December 5, 2009 at 6:21 am
I find this article somewhat disagreeable, but for different reasons to Yo. I agree that deprivatisation of services ESSENTIAL to the stability of a societal model of human coexistence and the market alike bears some logical rationale. Goods and services produced for human needs should be supplied on a needs basis (what greater form of market forces are there than the democratic fulfilment of needs; i.e. demands?)
However, I question the merit of placing this burden on the source of the public trust: national government. When we consider the multitude of overspanning arms of globalisation, that affect not only the economic, but also cultural, and hence social life, a national approach to economic security falls far short of our economic climate’s global reality. Think here of international investors who own large portions of these essential services. What single national authority can safely claim sovereignty over its own soil in this climate? I’m sure the Murdocks would have much to say.
The other problem about deprivatisation is where to draw the line. Banks are clearly essential to economic stability, but so many services fall into the grey area: utilities, and more controversially, necessities (food, healthcare and shelter). Having grown up midway between industrial and agricultural southern Australia (amidst the “coalfields”), I’ve experienced the aftermath of a generation of Keynesian housing that spawned town after town of fire-wood houses. At the time of construction, these were low-income labourer’s dens, but are now passed off as overpriced health-hazards.
All said though, your neo-Keynesian view is heartening; further integration and less competing will be vital to the future survival of this leviathan known as society. Here’s how my argument goes:
1) More integration (spiritual, cultural and economic) tends towards less violence.
2) Less violence encourages less war, fragmentation and competition.
3) The calming of everyday life tends towards greater harmony, less reproduction (and less strain on natural resources) and therefore a greater change at human longevity.
Of course, there will always be repercussion of less competition in the marketplace, but when the alternative is an eternity of economic depression and emotional aggravation, are these luxuries so much to lose? Time will tell.
Work For Crown
On December 7, 2010 at 10:18 pm
@ Fabian C.
You have no idea what your talking about. More integration? The calming of everyday life tends towards greater harmony?
Dude what are you, A communist? Read 1984. In your world you speak of, Trust me you would be one of the first to be hung, shot, or placed in a working camp. because that what a world like will bring about. People need to go back to the Bible, or they will end up back in the jungle. But people need to do this of their own free will, not because of some government rule. People need to tern away from greed and start caring of their fellow man. This country grew so fast and became the greatest country in the world because it had Gods blessing on it. People cared for one an other, loved God and prayed about how to run a business, and focused on the family and prepared for the future and future generations. No one cares about inheritance anymore. It’a all about numbers and how much more money they can make at the expense of others. What a said state our world is in. And it’s all because of you atheist communist heathens.