Sunday, 29 January 2012

What next for Banking?

I'm whipping myself into a frenzy about Stephen Hester's bonus, but the obscene payment to one banker, who is kind of in the pay of the state, is the tip of an iceberg. Robert Peston has argued that this makes sense as the other alternatives are worse,  in a way he is right. Take Hester's toys off him, deny him his bonus and maybe he walks. Maybe he really is that good, but if that's the case, banking has States by the balls and its time to look at ways to  loosen banking's grip.

Socialism was predicated on the idea that taking control of the means of production put the wealth back in the hands of the majority. This was in a time when the wealth was concentrated in the hands of a wealthy and lucky - birth, geography, timing, few. Socialism gave us some things worth saving, but ultimately Capitalism won. Turned out the bankers not manufacturers were the people that ultimately wielded and directed  power and politicans followed the money.

In a way Global Capitalism seemed  fine for a while in the mid to  late twentieth century. It increased standards of living for most massively and whilst its was generating wealth, nobody really minded that a privileged elite were effectively telling our politicians how to run the world, so that they could "keep making everyone richer".

Then the wheels came off the global financial system and they came cap in hand back to the state. As they genuinely believed themselves to be Masters of the Universe even their contrition was pretty aggressive. They used the "Do this or we are all doomed" argument and the politicians fell for it and we are still falling. No sign of a bottom yet. Oh and as the bankers had convinced themselves that nothing had really changed, they kept the bonus culture even though they had sort of bankrupted us all.
So really the failure lies with domestic politics not the bankers, Oddly the bankers won by losing, by not really admitting to  their losses and mistakes. The problem is mainly the way we continue to elect our representatives. Our politicians would like to think global, but beyond the odd war, international financial politics requires agreement. That is really difficult when you have to put your domestic interest first, so you can get re-elected or even stay in power. The multinational banking industry despite it having no ability to effectively control its own risk, is easily able to out manoeuvre nearly all country's political systems. At least in the relatively short term and here I'm talking about years not decades.  Here we have a problem and the solution may  be to look beyond current political systems that are now outdated.

We are all connected now, why aren't our politics?  Social media as tool for control of globalised capital has some merit. It has already helped the Arab Spring to flower faster than it would have done in the past. It can take a simple case of corporate stupidity see the recent LA Fitness twitter storm and get a result quicker than the mainstream media can.

It does seem that we are developing a new liberal consensus on Twitter and the blogsphere, that is educated and  can see through the Politician's bullshit and vested interests. This liberal (small l) Twitterati  can analyse evidence and argument from a huge range of sources quickly and often do at least as good a job of forming a coherent argument  as a government. Twitter's collective mind is not standing for re-election so it may be more interested in truth and justice rather than a messy compromise or an on message policy announcement.

The lack of a rallying point is still an issue we have no flag round which to muster, no martyr to fire us all into a unanimity of action. Perhaps a seed crystal to start this modern international financial revolution is all thats needed. Maybe if we all put our money in one place we would be powerful enough to force the bankers to work for the good of the depositors, not the good of the share holders. Maybe we need a council or  Lord Mayor of Twitter to speak for us all? Perhaps when we have someone to speak for us and we have our own money behind us, governments will have to listen and as they always have, follow the money.

Update 31/1/2012 Found 38 Degrees after writing this and that seems like it might be the start of a process.


  1. I came here from your post on 38 degrees -- Do you still maintain that we have "no flag around which to muster"? :)

    1. No I think 38 Degrees looks like a really good flag to gather round. Wrote this piece and than promptly found 38 Degrees, hilst I was trying to find a place where people might read it. Quite excited about the idea of social media as a means of bringing about change. Alas don't yet feel we have the answers to what is better than the current banking stsyem? Even though it has more flaws than a skyscraper. Think mass participation credit unions have some milleage, but to be honest don't know enough about banking to know what we really need.