THE New Labour Brown government has come out as the true representative of the biggest banks, as befits a government that has doubled the national debt while saving these same big banks from complete collapse.
In his speech at the Mansion House, Chancellor Darling came out as an opponent of a tighter regulatory regime for the banks, while the Bank of England governor, speaking after him, said that he was tired of being able to give only sermons to the banks that were ignored, and then conduct funerals for banks that collapse under the weight of their own contradictions.
Darling’s stance no doubt shocked Labour’s trade union supporters in the Unite and the GMB trade union leaderships (the latter gave Brown three standing ovations just days ago when he addressed their conference, without facing any political opposition at all).
They have all been – and continue to be – taken for a ride by the Brown bankers’ government, which they continue to politically support and to be its prisoners, by virtue of their open cowardly reformist position, that capitalism is the only possible form of modern society.
In his Mansion House speech to the City, King called for more authority to intervene in the actions of banks to halt ‘risky behaviour’.
Darling told the same function that he had no plans to fundamentally change the system of regulation. Instead, he called for ‘a change of culture’ in which bank staff were ‘rewarded for long-term success, not for failure’.
He added: ‘Bank boards must have the right people of the right skills and the right experience to manage themselves more effectively.’
King told the assembled bosses that the big lesson of the financial crisis was that the present authorities lacked the means to take effective action to prevent excessive risk taking at banks.
He said: ‘Warnings are unlikely to be effective when people are being asked to change behaviour which seems to them to be highly profitable.’
King continued: ‘As far as individual banks are concerned, we face some uncomfortable choices about the structure and regulation of our banking sector. If some banks are thought to be too big to fail, then, in the words of a distinguished American economist, they are too big. It is not sensible to allow large banks to combine high street retail banking with risky investment banking or funding strategies, and then provide an implicit state guarantee against failure.
‘Something must give. Either those guarantees to retail depositors should be limited to banks that make a narrower range of investments, or banks which pose greater risks to taxpayers and the economy in the event of failure should face higher capital requirements, or we must develop resolution powers such that large and complex financial institutions can be wound down in an orderly manner. Or, perhaps, an element of all three. Privately owned and managed institutions that are too big to fail sit oddly with a market economy.
‘One important practical step would be to require any regulated bank itself to produce a plan for an orderly wind down of its activities.’
The logic of King’s statements is that the only way to defend society from a renewed financial crisis is to break the big banks up and go back to the small-time capitalism of the pre-imperialist epoch.
It turns out that Labour under Brown and Darling is the straightforward party of the biggest banks, and believes in doing anything and everything to secure their survival.
King starts from the securing of the market economy and is therefore drawn back towards the superseded epoch of small capital, an epoch that is long gone and can never be recreated.
The working class is however forced to look forward. Its future lies in overthrowing out of date capitalism with socialist revolutions to go forward to a more advanced socialist society where production will be planned to satisfy people’s needs.