With the torrent of revelations from the Banking Royal Commission — sweet perversity that Turnbull has had his BEST NEWSPOLL RESULT IN 31! TURNED THE CORNER! HAD A RANDOM STATISTICAL VARIATION! — there have come calls from some on the left to “break up the banks”. This was a refrain taken up by Bernie Sanders in the 2016 primary and presidential campaign, a decade after the 2007-8 crash, for the lack of prosecutions or much transformation in the financial sector.
Australia missed anything like that. We would have got it, had the Coalition been in charge, and imposed austerity. But, as the commission is making clear, we got something else: a regime of poking, prodding, lying to, and bullying some less savvy and often vulnerable customers into borrowing more than they could afford.
This was a form of depredation founded on continuous growth: the relentless piping of money from the street-level economy to the financial heights, by a sector that had lost any connection to social ends that it might once have had. The big banks have become an expression of the nihilism that cannot but creep into every part of life, when the market is put at its centre. That is especially so when it is the market of oligopoly finance capital (yes, markets can be non-competitive; they just require a single buyer and a single seller).
But in calling for the break up of the banks, sections of the left — largely here the centre-left, or left-centre-left perhaps — are misdiagnosing the problem, and implicitly agreeing that the problem is somehow one of “the culture” of the banks. The problem is not that; the problem is that private banks want to accumulate on a vast scale, do so without price competition, as a cartel, and thus rely on marketing, psychological manipulation, bullying and criminality to increase their market share. To call for a break up of the banks is to buy into the fiction of capitalism: that competition will crowd out dishonest players, that information sharing between buyer and seller is sufficiently good to defeat the “shell game” aspect of multiple providers.
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How many terrible contracts are hidden among the hundreds of mobile phone contracts you can get? 10%, maybe. How do you know you’re not on one? Unless you’re willing to spend a lot of time, you don’t.
Breaking up the banks takes us backward; it uses the powers of the state to try and create a Jurassic Park of big beasts, freezing capitalist development at a certain stage, which is taken to be the natural order. For those of us on the left, the only demand is that the banks be socialised; that a wholly owned government bank be established, with workers, consumers, and community representatives on its board; that the major banks be socialised in various ways, some being turned into de facto community banks, in whole or part, with others having a mix of private, state and community ownership.
With these different profiles of ownership, and a change in the laws governing return to shareholders as the sole benchmark of corporate governance, different strategies, pricing and services will emerge. Finance and capital are a social resource; the fact that capitalism has consolidated them for us, should be taken as a gift, not as something to be beaten back down. The form of economic democracy has been delivered to us — now is the time to fill it with a new content. This may look, erm, ambitious now. In five years’ time, it’ll either be standard, or Malcolm Turnbull will still be Prime Minister, and it will look insane.