Workers Solidarity Movement

Eric Cantona, French actor and former footballer, has recently been calling for a run on the banks.  The idea is that the bankers generated this crisis and since our democratic institutions are either incapable or unwilling to hold the bankers accountable, we should take matters into our own hands.

It's generally a good thing when the working class takes matters into their own hands - direct action is empowering and far more democratic than our represenative governments.  However, in this case, the tactic is incredibly destructive and should not be used. 

To put it bluntly, a run on the banks is an incredibly bad idea.  The reason a run on the banks works is because you only need a fraction of depositors to attempt to retrieve their money for the bank to collapse.  Banks are generally regulated to hold some fraction in reserve that amounts to between 1/20th and 1/40th of the total amount of money deposited.  This means that only that small fraction can be withdrawn and the vast majority of people will find themselves completely without money after the bank collapses.  Banks are essentially like musical chairs. As long as the music is running everything's fine, but if every takes their money out, only a tiny number of people will get their money - the rest will be caught out broke.

Who will be caught out broke?  I'm pretty sure that you and I might try to make a special trip to get in a queue at the bank to get our money out, hoping to be in the first 5% of the queue.  However, the rich won't do this.  They have direct lines to power.  They'll be the ones that manage to recover the most from the banks.  They'll have their money managers figure out the best way to get the most out of the banks and they won't do it by standing in a queue.

In Ireland, things are even worse.  We have a bank guarantee which nominally means that any money the banks come up short would have to be paid by the tax payer.  Effectively this would just end up being the working class charging themselves, since they're the ones who bear the tax burden and they're the least likely to get their money out of the banks.

Currently we have a very complex, large and interconnected economy.  The widespread anger against our governments and the financial instituions is completely warranted.  However, the fact is that we have no counter-institutions to take the place of the current banks.  Should we find ourselves without any banks in Ireland, we'd find trade difficult to impossible.  We need banking institutions - at least in the short run - to deal with the circulation of money for goods and services.  We can't dispose of them in such a straight-forward manner. 

Practically speaking we need to have counter-institutions to carry out the role the positive role that banks are in place to do, that is, to create a mechanism by which money is easily circulated and investment coordinated, but without their negative profit making focus.  In the medium term this would mean having democratically run and operated banks on the scale of Europe.  In the short run, we can look to create structures of democratic accountability in the banks and ensure that they are attempting to focus on development for human need rather than solely on profit. 

A run on the banks will not bring us any closer to these goals, but will merely cause widespread suffering to the working class.

EDIT:

I've had a number of comments on this article as it's been very controversial amongst people who describe themselves as communist.  Communism is about the idea of production for use-value rather than exchange-value.  It's about making things for human need rather than for profit motive. 

Capitalism is a collection of various institutions which support the continued power of an elite over society.  It is characterised primarly by two institutions.  One of those is the corporation and the other is banking.  The former (the corporation) is about maximising profits through the production of goods and services.  The second (finance and banking) is about keeping profits circulating in the economy through reinvestment in the most likely profitable ventures.

Banking is currently invested in by those who would like to give the management of investment opportunities to some specialists who will attempt to find those areas where they can best derive profits.  Because of the propensity for modern states to provide indemnity to banks in the event of their collapse, it's also a way to ensure that profits are protected in the event of economic disaster, with the bill being footed to the tax-payers.

If we instead wiped out investors and seized the present assets with the intention of devoting funds for investment in those projects that were most likely to increase the quality of life for people, we'd at least have some place to start working.

One of the funding opportunities should be large scale cooperatives.  Not only could the public fund ventures that produce exchange-value, but also things could be funded which have no obvious exchange-value but which are still productive.  Any sort of knowledge production or production for general social value falls within this scope. 

Such a change would be an attack on the second major institution within capitalism, the corporation.  If we no longer allow institutions unless they have both a democratic internal structure and some democratic accountability to the general public then the corporation as we know it would cease to exist.

Now, this isn't necessarily an ideal world, and it presents some problems of its own.  There may still be internal competition within a market.  There are problems of the managing of wage differentials and the potential for enterprises to fold and what should be done with workers in those events.  It does not present completely free access to the social product.  These deficiencies however are less severe than the deficiencies of an only vaguely conceieved notional alternatives.

If Ireland were, at the present point, to call for the free distribution of goods and services within the island, how in fact would that be managed?  Essentialy the question is a research problem.  It is not more radical to demand something which one has not fully explored, understood or planned and for which no legitimate institutions exist.  It is simply premature.

If we attempt to solve the question for a population of 4 million during an economic crisis, the costs could would likely be catastrophic.  The resulting chaos would encourage people to yearn for an ECB bailout.  There is no better way to fuel a counter-revolution then by an ill thought-out over extention.

People often underestimate the difficulty of putting in place a huge new infrastructure.  The time it would take to deal even with the use of rationing and all of the IT that would be required to implement that would be on the scale of many months.  In the mean time, how would things be managed?

That isn't to say that free distribution is undesirable or impossible.  I believe quite the opposite.  The most likely way in which this will arise, however, is with experiments.  This will mean that resources will have to be devoted to the exploration of the implementation of various different systems and these will have to be discussed.  None of the resources neccessary for such a project will be acquired on loan from our present institutions.  So then how will it come into being?  I suggest at least that this is one relatively concrete way forward.

WORDS: Gavin Gleeson