Surely the ‘Banking Age’ must be nearly over?

History suggests that any society that holds on to its original ideas for ever is surely bound to fail. If we, as we seem to be, are part of the Banking Age is not finance itself the reason for the failure?
We have been operating a financial system based broadly on ideas from the seventeenth century and I don’t think the ideas have changed very much since the burning of the final tally sticks in 1834.

Ever since the foundation of the Bank of England and the establishment of so called Dutch finance in the late seventeenth century, the banks have tried to keep as much money creation as possible to themselves.

Indeed Britain may have got rid of one King and imported another but it was no democracy as we now understand it. Yet then as now, the investment decisions of the bankers were profoundly influential and I can now see that it was long before both Thomas Eddison and Ann Pettifor that taxes were seen as collateral for loans (and ‘taxes’ rather than ‘taxpayers’ was then the better term as income tax, first introduced in 1799 was repealed in 1816 so taxes were again on commodities, and the war with France was their excuse to designate a number of Channel ports as ‘Freeports’ specifically to encourage British smuggling).

Britain may have created an Empire using this system, but it also lost one. We have, as the saying goes, one of the best democracies money can buy, and are now persuaded by our governments, themselves captured by banking interests, that the ideal would be to do without them. In their various neoliberal guises they seem to want largely to diminish themselves and push everything on to the ‘more efficient’ private sector.

With government not financing things themselves, the banks have to create more money. And when the companies they lend to are servicing the state, there is little risk to their banking collateral and yet they always charge handsomely for it. The interest/rent extracted rises happily and inexorably towards the banking 1%. (Now in fact, just over 40 people (nearly all men) who now seem likely hold more wealth than half of humanity, with 82% of global wealth generated in 2017 going to the wealthiest 1%.)
And of course this is merely capturing state income – it does not improve or ‘grow’ the economy one iota. So the usually suggested advantages of capitalism – that it is innovative and even expansionary and inclusive, cease to apply. The emphasis becomes on serving – effectively exploiting – state expenditure which is ever reliable and long lasting. And for the bankers, such a good investment.

So while governments make little effort to direct the economy, capitalists, together with bankers find it most remunerative to exploit state produced income streams.

Three centuries of the banking age is looking to be more than sufficient, and given the final catastrophe of climate change that seems to be looming ever closer and that those investment decisions are still taken – regardless – for the shortest and quickest return, we should surely have a much more democratically controlled economy and not one run largely by monomaniac ‘investors’.

It appears, in fact, that Initiative should have been the last thing ever to be associated with Private Finance.

 

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