Wednesday, 12 January 2011

Banks are a bigger threat than Socialists

To paraphrase GK Chesterton, the problem with banking is not that there are too many bankers, but that there are too few. Chesterton struggled to define a via media that would prove a viable alternative to both the redistributionism of Socialism and the plutarchy of big corporate capitalism. If Chesterton lived today, his excoriation of the banks would be blisteringly white-hot; the duty of society's institutions should be to serve the interests of that society, based on the unit of the family, on horizontal ties that bind family, neighbourhood and community, on Burke's 'little platoons', those local institutions that give us belonging. Multinational corporates driven purely by greed, with no responsibility to the people they exploit, were anathema to Chesterton. His middle way wouldn't abandon Usury, like the Socialists would, but tame it. Credit Unions, Industrial and Provident Societies, Mutuals and Co-Operatives were the alternatives Chesterton favoured, with roots deep in the communities and amongst the people they served, subservient to local interests, and by Burkean progression, to the national interest. 


Chesterton's beliefs were based on profoundly Christian, and specifically Catholic doctrine. His was the age in which not only did Rerum Novarum (frequently featured on this blog) condemn Socialism as anti-Christian, but likewise condemned unconstrained corporate capitalism, in Quadragesimo Anno;  "Just as it is gravely wrong to take from individuals what they can accomplish by their own initiative and industry and give it to the community, so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do" and "every social activity ought of its very nature to furnish help to the members of the body social, and never destroy and absorb them". 


Socialism is no longer the greatest threat to this nation; the banks are. They support central Statism, because this is the system that suits their interests best. They support the EU, because trans-national governance is in their interests. They favour central economic planning, a high State stake in the economy, and the levers of economic control through tax and investment being manipulated at national level. They are, in other words, profoundly anti-Localist and a profound obstacle to subsidiarity. 

And if you think I'm being a little un-Conservative, well, Chesterton had something to say on that as well;
The whole modern world has divided itself into Conservatives and Progressives. The business of Progressives is to go on making mistakes. The business of the Conservatives is to prevent the mistakes from being corrected.

7 comments:

Anonymous said...

I like Chesterton. I like the way he thinks. So I bought his collection of poems a few months back. He's right. There has to be a road that is different to just segregating left politics from right politics - a road that benefits our nation - or indeed our "common wealth".

I lament the loss of local institutions, especially the ones that were initially set up to benefit their local communities. These institutions almost always carried the local name with pride. Halifax; Leeds and Holbeck; Bradford & Bingley; Cheshire; Derbyshire; Birmingham and Midshires; Cheltenham & Gloucester etc etc etc. You get the picture. Once great names - "familiar in the mouth as household words" - now all morphed into a grey mass of some bank, or obliterated altogether. And for what? A few hundred quid "bonus payout". Indeed it wasn't all big corporate greed; this was about small-town personal greed. We sold our selves out as much as we were sold out. We were given the vote and we voted the wrong way.

Maybe one day, someone will set up a small credit union or other financial institution and name it after their village or town and run it for the benefit of those who live locally. Or will statism and EU rules kill off all such ideas?

Coney Island

Weekend Yachtsman said...

Surely the central issue is the ability of all big businesses (not just banks) to rig the entire system to their advantage, by getting into bed with the Leviathan state.

So the real underlying problem is that we have the Leviathan State in the first place.

But we all knew that.

Gareth said...

Good point Weekend Yachtsman.

Bankers bonuses needn't be legislated away but driven downwards by competition. We were promised more banks - where are they? The regulators and the big banks rig the game in their favour - increased regulation always serves to make it harder for new entrants and smaller concerns.

I recently saw an advert on the telly for the Financial Services Compensation Scheme - bit late isn't it?

Budgie said...

I agree with Weekend Yachtsman but I would put it a little differently. The excessive state is one where the laws are too many and too complex for an individual or small business to comprehend and implement. Hence the excessive state naturally produces big corporations.

Banks are in fact constrained by massive quantities of legislation. It is not lack of regulation but ineffective regulation the explains their behaviour.

Do not forget that when the financial music stopped at Northern Wreck, the FSA, the BoE and the Treasury hadn't the faintest idea who was responsible, or what to do. They just pointed their fingers of blame at each other. We got the banks that Brown deserves.

Weekend Yachtsman said...

And also the moral hazard that the State has created.

If bankers understood, that in the event of a bank failure it would them, personally, who'd be sitting on the pavement hugging their dog to keep warm, while asking passers-by to please spare a little change, then we'd see far fewer bank failures.

Just now they know they can do whatever they like, lose whatever they like, and if they win they keep the profits, whereas if they lose we pay the losses and they get to have another go. With every bailout this message is reinforced, and it's the wrong message.

Budgie said...

"if they win they keep the profits, whereas if they lose we pay the losses"

The direct failures in the banking/debt crisis in the UK were down to the directors of some banks, and they should be held accountable.

The most nauseous aspect (to me) is the way these people, and other corporates' chiefs, whine about how indispensable they are,and so deserve vast rewards. They act like politicians to stab rivals in the back and then innocently claim they are unique. There is too little competition between these people.

At the same time it is clear that in his 13 years in (financial) power Gordon Brown was also responsible. He dismantled the BoE supervision of banks, hit pensions, held BoE rates too low, and toadied to the bullies and incompetents like Goodwin.

Guthrum said...

The derth of competitors to the monopolistic banks caused by regulating Governments is the root cause.

Monopolistic banks are the death of enterprise, banks coupled with Government credit are worse than death, that is why they are called zombie banks.

Progressives - what on earth does that mean FFS