This was the week that Ed Miliband decided to deliver plans for the banking sector, just days after the Libor scandal rocked Barclays and the entire banking sector.
Ed’s call is for there to be room made for more competition by the “big five” banks, obliging them to sell up to 1,000 branches to do so.
The speech, made at the London headquarters of the Co-operative Bank, coincided with the publication of Labour’s case for a British Investment Bank to help the business sector.
As former city lawyer Nick Tott, author of the newly published report, notes examples of state backed banking institutions can be found in Canada, France, Germany, Italy, Japan, Russia and the USA – so it is high time the UK caught up.
And plus it is high time we address the issue of inadequate bank lending.
As Duncan Weldon at the Touchstone Blog has pointed out:
“Even during the ‘good years’ around 85% of bank lending was going to either financial companies or property.”
A British Investment Bank could go some way of correcting the inability of today’s banking system, to support small and medium sized enterprises.
When companies such as Wonga, of all places, are starting to offer their own loans to businesses we know the system is in trouble (though when I spoke to one of their spokespeople he could only offer anecdotal evidence that thousands of applications for their business loan had been received).
Something else that Weldon noticed, also picked up by the Financial Times, was Ed’s reference to the Vickers recommendations.
Labour had always planned to implement the Vickers recommendations in full – but now that is only a “starting point”. This has caused a mini-stir, implying that Labour are thinking about setting rather more radical plans over and above Vickers.
So how far could Labour go? Fortunately, not too far behind Ed’s speech was some perfectly timed noises from Lord (Maurice) Glasman. Speaking last week at the London School of Economics with Lord (Robert) Skidelsky, and on the Guardian’s Comment is Free pages, he had some ideas as to where Labour could go in order to move beyond Keynesian economics and rediscover its own socio-economic roots.
For Glasman, there are two major bones of contention with Keynes, especially in the context of the UK’s current financial predicament. Namely that Keynes is the economist for crisis management, and for this he works very well, but where are his solutions for growth that are not reliant on the Treasury or centrally collected taxation/centrally administered spending to generare growth.
Secondly, Keynes is not the economist for local economic genius.
As he puts in his Guardian article:
Apart from the odd flashes of ambiguous insight in chapter 12 of The General Theory of Employment, Interest and Money, there is not much going on in Keynes concerning regional, sectoral or vocational institutions within the economy, or any mediating institutions between the individual and the state.
So to go beyond crisis management, we must go beyond Keynes and build up regional, sectoral or vocational institutions within the economy. Where do we go?
Glasman hints at Catholic Social Teaching on more than one occasion, both in his Guardian article and during his talk with Lord Skideslsky. The main economic philosophy to have been developed out of the principles of this teaching is the economics of distributism.
The basic tenets of distributism are a defense of property ownership as a right, but with ownership being spread across as widely as possible, opposed to centralised state socialism, or indeed democratic centralism, and laissez-faire capitalism, which usually culminates in near-monopolistic levels of ownership.
It is essentially the economics of how Lord Skideslsky described Catholic Social Teaching: as an “anti-capitalist defense of private property.”
(It ought to be noted that Philip Blond, who was to the Tories what Glasman is to Labour, is also something of a distributist. Their friendship and similarities do not go unnoticed, and the conspiritorial among us may even suppose that they’ve chosen to pursue their political philosophy in different parties, in the same way a gambler places bets on two opposing football teams so as to get a reward for whichever team pays out – unless, indeed, it is a no-score draw).
GK Chesteron, the novelist and a proponent of Distributism, once pointed out:
“Too much capitalism does not mean too many capitalists, but too few capitalists.”
In this same way, Glasman, in a glimpse of his own Chestertonian vision, does not want Dover port to be privatised (he said at the LSE that a French company wants to buy it – to which Skidelsky said “they”ll run it better won’t they”), or state-owned, but its assets owned by the people.
It’s Glasman’s mutual moment – we should all own capitalism, from ports to banks. If Miliband is signalling that Labour can go further then Vickers then this could be the ticket.
As Glasman pointed out, Catholic Social Teaching can show us a lot about the differences between predatory and productive capital. Dissenters might want to mull over that for a while. On the left we’ve spent so much time criticising neo-liberalism, rightly, that we’ve failed to develop a modern critique of capitalism distinct from it, such as distributism.
Might it be the case that where anti-capitalism has focused solely on corporatism (the devil you know), to which books like No Logo have been bought lock, stock and barrel, that we haven’t grown wiser about what capitalism might look like separated from it?
People will surely turn their noses up at Glasman (just mention him on Twitter and see what happens). Though I think there has to be something in this. Glasman has begun to develop a criticism of Keynes that isn’t Marxist or lassiez-faire capitalist, but organised it in a distinctively modern way.
To many, that this is possible isn’t a surprise, but it has been off the political table, at least in the UK, for some time.
He has also prompted us to look harder at what capitalism is in theory, in practice, and in potential. And this comes at a time when Labour are starting to get their act together on the way in which the UK organises its financial practises.
These might well be exciting times to be in the Labour party.