The People’s Bank; a way out of the current crisis for Britain – and Ireland

Posted on January 12, 2011 by | 2 Comments

By Rupert Read

The Dail voted through Ireland’s Euro-bailout package. The Irish Greens wanted an election in January: they haven’t got it. But Cowen, the Irish PM, did say in November that; “It is my intention at the conclusion of the budgetary process, with the enactment of the necessary legislation in the New Year, to then seek the dissolution of parliament.” So we may now be very close to the onset of elections in Ireland.

Given that context, where now, for Irish political economy, and in particular for we on the Left and in the Green movement, to whom surely the chain of events that led to the baiout looks particularly wrong, particularly venal and disastrous?

So: I was phoned up recently at random by MORI, for an opinion poll. One of the main questions was: “Do you think that Britain help should bail out Ireland to stop it going bankrupt?” This question helpfully brings out an insane inconsistency in the current British governmental approach to debt and pump-priming. According to Osborne, Cameron, Clegg and Cable, the British government must pump a few billion into the Irish economy in order to stop it from going under …while it is taking a lot more billions out of the British economy … to stop it from going under.  Is that a contradiction?  Is the Pope Catholic?

If something’s good for the Irish goose, then it’s also good for the British gander.

Here then is the germ of a suggestion for how the Irish Green Party, which faces to say the least a difficult electoral challenge, might put clear green water between itself and Fianna Fail, in the run-up to the likely upcoming General Election in Ireland. Why not stand firm on the kind of rejection of cuts that the Green Party over here in Britain has stood firmly on; and argue that, if there is to be a bail-out in Ireland, then it should be accepted only on the basis of the nationalised banks being truly nationalised, truly run in the public interest?

To the objection that this kind of proposal is unfeasible in modern capitalist economies, we can reply simply by pointing people to the example of

Brazil, where around half of all banking takes place through the national Banco do Brasil. This doesn’t seem to have held back their development…

So: Greens in Ireland could fight the election promising to work for a solution like that that is, since I proposed a motion that was successful to Green Party Conference this autumn, party policy in England and Wales. Namely, that there should be at least one large permanently nationalised bank (say RBS, in our case) truly government-controlled and setting its interest-rates in the public interest, and consistent with macro-economic policy. The key point here of course being: Banking is a public service. The other remaining commercial banks would have to follow suit to a large extent, if they wanted any substantial amount of business from ordinary retail lenders and borrowers. The permanently-nationalised retail bank might be called the Bank of Britain. (In Ireland, the name the Bank of Ireland suggests itself…) Or: the People’s Bank.

Standing up firmly in favour of banking being run as a public service and against bail-outs that allow continued private dominance of profits even when the losses have been socialised would be a way in which the Irish Greens, like their British counterparts, could gain the moral and political high ground. It would set them radically apart from Fianna Fail. If the Irish banks are going to get bailed out, then Ireland needs to think about how a solution can emerge from that that does not simply create the conditions for a new crisis, and that preserves [creates] banking as a genuine public service for the Irish people.

This proposal offers a way to do this.

And, excitingly, it could help pave the way to what many of us believe is the only longer-term solution to the kind of crisis that has gripped the world in the last 3 years: changing the role of the banks in making money. The role of creating the national money supply should be moved away from private banks, firmly back toward the state. Creating genuine People’s Banks will make this goal of monetary reform — now somewhat-astonishingly even on Mervyn King’s agenda, as an alternative to the mad privatised monetary system that we have at present — more achievable, and much more natural-looking, than it currently is.

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