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We are still being mentioned in the context of this (though the merger between the two groups to form a “mass” party is looking less and less likely).
Here is Andrew Northall in last week’s Weekly Worker:
“The TAS group (now) chooses to use the words interchangeably, but when they talk of socialism/communism, this does not appear to be what (say) the Socialist Party of Great Britain or the WWG in its Draft programme would define as ‘communism’: ie, a stateless, moneyless, free association of producers, where people would work voluntarily as a pleasure, choose to produce the necessary goods and services in relative abundance to enable all needs and wants to be met, and people would freely access all the goods and services they require. People would consciously choose to work responsibly and would equally consciously (and conscientiously) choose to access goods and services responsibly.
This would seem to me to require a very high level of socialist/communist consciousness and among a very high proportion of the population and I suspect would take a number of generations of what communists would generally call ‘socialist society’ to be able to meet all these necessary conditions of full communism. (Incidentally, the question of full communist consciousness is one the SPGB comrades conspicuously fail to respond to, when challenged on their own version of the “world socialist revolution” and “immediate transition” to full socialism/communism).”Actually the deleted link could have been posted here too as the practices of Islamic banks are also relevant for the discussion here.
“Murabaha or cost plus selling: This is the most common product in asset portfolios and applies only to commodity purchase. Instead of taking out an interest loan to buy something, the customer asks the bank to purchase an item and sell to him or her at a higher price on instalment.
Ijara or leasing: Instead of issuing a loan for a customer to buy a product like car, the bank buys the product and then leases it to the customer. The customer acquires the item at the end of the lease contract.”
These practices of Islamic banks raise an awkward question for Thin-airists: where does the bank get the money from to buy what it re-sells or leases to customers? Does it simply decide to create it from nothing or must it have the money already? The answer is obvious.
It is also poses a problem for the conventional theory that banks create money when they make a loan: does an Islamic bank do so when it buys something for a customer since no extra deposits are created?
More on how the central bank in Britain gets more money into circulation from David Smith, Economics Editor of the Sunday Times in his column into today’s Times.
“Commercial banks, overwhelmingly the high street banks we all use, always retain some reserves at the Bank [of England]. Under the regulatory environment in which they operate, they need to hold high-quality liquid assets to draw on when they need liquidity, and reserves at the Bank are perhaps the easiest form of such assets. Those normal reserves were swelled by quantitative easing (QE). Under what was colloquially known as ‘printing money’, commercial banks’ reserves were created at the Bank. Andrew Bailey, its governor, describes them as ‘ultimate form of money’”.
What happened was that the Bank bought government bonds off the banks and paid for them by increasing a bank’s reserves with it. That solves Link’s mystery of how new electronic money gets into circulation. It is created by the central bank and distributed via the commercial banks.
This Islamic hypocrisy has been going for a long time, as this news item quoted in the September 1946 Socialist Standard shows:
3 Per Cent, by Another Name
“New York, Friday.—A U.S. agreement to lend £2,500,000 to Saudi Arabia, announced to-day, contains no mention of interest payments.
The word ‘interest’ was omitted because Moslems oppose on religious grounds the charging or paying of interest. Under the heading ‘Thanksgiving,’ however. Saudi Arabia will pay the usual 3 per cent.” (Daily Mail, 10/8/46.)“Ex-IAEA chief warns Israeli attacks may encourage countries to seek nukes
Mohamed el-Baradei, who won a Nobel Peace Prize as the head of the UN nuclear watchdog in 2005, says Israeli attacks on Iran’s nuclear facilities are illegal.
He warned that the assault on Iran “is a sure way to destroy” the Treaty on the Non-Proliferation of Nuclear Weapons, saying that it “sends a clear message to many countries that their ‘ultimate security’ is to develop nuclear weapons”.”
I think that’s right. Under capitalism where relations between states are based on “might is right” Iran’s fate at the hands of Israel will lead other medium-sized states to draw the conclusion that they need the “might” of nuclear weapons to deter being attacked.
That Treaty was only scrap of paper anyway.
Israel, the US’s rogue proxy in the Middle East with its own agenda, initiated the current war by attacking Iran with the declared aim of physically preventing it acquiring the nuclear bomb.
According to Netanyahu, Iran’s possession of the nuclear bomb presents an existential threat to the state of Israel. The suggestion is that, if Iran had the bomb, it would use it annihilate Israel. This is just propaganda as Iran wants the bomb for the same reason as the United States, Britain, France, China, India and Pakistan have it — as a deterrent against being attacked. If Iran did have the bomb it would be very foolish of it to use against Israel as Israel itself is a nuclear state.
The real reason for the war — and why the United States, Britain and the others are behind Israel in practice — is to maintain the current the balance of power in the Middle East. In relations between capitalist states ‘might is right’ and Iran’s possession of nuclear weapons would increase its ‘might’ and so shift the balance in its favour. It’s this that the Western states, who currently dominate the area because it’s the source of much of the oil and gas they need to power their production, wish to prevent, ideally by diplomacy but Israel has forced their hand.
To maintain their own domination of the Middle East is why the Western powers are so concerned that Iran should not have nuclear weapons.
I am not sure where to post this. Here or on the thread about the black record of the Starmer Labour government.
Anyway, it looks as if Britain is ready to support the most aggressive capitalist state towards its neighbours since Nazi Germany.
Everybody certainly does not accept the Bank of England’s (accurate) description of a bank’s business model. Some of those you quoted in your book don’t. Aaron Sahr, for instance, who you summarise as saying
“money is quite simply a product of using a keyboard as the banks create money by making and recording loans on their computer”.
and
“The whole financial system is based on creating money out of thin air. The whole financial industry really is just based on creating electronic assets (ie, virtual money) that are loans on which interest can be charged”.
He, for one, thinks (if you have summarises him correctly) that a bank’s business model is not to make money by borrowing at one rate of interest and lending at a higher one. He thinks that a bank doesn’t need to borrow money at all but can simply create it by a keyboard stroke and then lend it at interest. There is no “spread” between the two rates of interest; to calculate its income, the interest from lending does not have to be reduced by what the bank pays as interest to those it borrows from. Its income is the whole of the interest from lending.
The difference between the two models is that, in the one case, a bank’s income is its interest from lending net of the interest it pays; in the other case, it’s the whole interest from lending.
The question people who argue like him should ask themselves is: why does a bank borrow any money? Why does it seek deposits or loans from other financial institutions? That would seem to be pointless even counter-productive as the interest it has to pay reduces its income.
I think that the Bank of England’s point is that a bank is not a simple intermediary as, today, the commercial banks are part of a banking system centred on the central bank. They are arguing that it is the banking system as a whole, not single banks on their own, that create money. That may be true but it doesn’t mean that a single bank is not an intermediary between lenders and borrowers.
No wonder, in the context of capitalism where the relationship between capitalist states is based on the principle of “might is right”, that the Iran regime wants to develop its own nuclear bomb.
Look what happens if you get into a conflict with another state and haven’t got one. And of course it’s the only reason why no other state, not even the US, doesn’t attack North Korea.
As the Romans said, if you want peace, develop a nuclear bomb.
Link, you say “I remain unconvinced by the intermediary theory”. But in fact you implicitly accept it, that is if you agree that
“Banks receive interest payments on their assets, such as loans, but they also generally have to pay interest on their liabilities, such as savings accounts. A bank’s business model relies on receiving a higher interest rate on the loans (or other assets) than the rate it pays out on its deposits (or other liabilities). (…) The commercial bank uses the difference, or spread, between the expected return on their assets and liabilities to cover its operating costs and to make profits.”
(https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy).Marx had noted this 150 years ago (it wasn’t a great discovery but simply described a generally accepted fact):
“A bank represents a centralisation of money-capital, of the lenders, on the one hand, and on the other a centralisation of the borrowers. Its profit is generally made by borrowing at a lower rate of interest than it receives in loaning.”
(https://www.marxists.org/archive/marx/works/1894-c3/ch25.htm)This is not incompatible with calling bank loans “bank money” (if you want and the Bank of England does) as long as you don’t think that this is new money. That’s just a question of definition.
On the alternative view — that banks are “new money creators” — a bank’s business model would be that a bank creates the money it lends and uses the interest to cover its operating costs and to make profits. But this is neither credible nor in accordance with the facts.
Why don’t you take the next step and come out and explicitly reject that view.
Here’s a survey of typical RefUK voters conducted in February on their attitude to the war in Ukraine:
https://www.politico.eu/article/nigel-farage-reform-voters-uk-help-ukraine-war-donald-trump-us/
I doubt they feel strongly about it enough to organise anti-war rallies. People will give an opinion on foreign policy issues if asked but that’s all they will do. Foreign policy is way down the list of things that sway voters.
Wom’t the answer be that, Judaism being a tribal religion, its rules only apply to members of the tribe, so there is no ban on members of the tribe lending money at interest to non-Jews?
It is worth recording that the Communist Party of Britain, the legitimate political heir of the old CPGB, is changing its policy of how it advises workers to vote.
In the June issue of their paper Unity, their General Secretary Robert Griffiths is reported as saying that
“it was clear that the traditional advice to vote Labour where no Communist is standing could no longer apply”
and that there were “a growing number of socialist, progressive and Communist candidates” who would deserve support in future elections.
This represents a major change of policy on their part.
Incidentally, the same issue confirms that the CPB now supports the present Chinese government saying that “China are now building a modern socialist nation”.
If you believe that you’ll believe anything.
Looks as if Reform is trying to outflank on their left not just Labour but the Trotskyists too. Here’s a report of what Farage said yesterday in speech in Port Talbot in South Wales:
“He went on to say that a Reform government in Cardiff would reopen coal-mines in the South Wales valleys…”
I don’t know if any Trot promising that not even as “transitional demand”. Mind you, it is not self-evident that people there will want their kids to have to work down the pits to earn a living.
Meanwhile his deputy, Richard Tice, has been having a go at the bankers that the Left likes to hate, with his “attack on Bailey [the Governor of the Bank of England] for creating money out of ‘thin air’ to enrich City bankers”.
It sounds as if Reform might be a good hunting ground for Trotskyist “entryists”.
There is a serious point here, though. Left Populism and Right Populism use the same demagogic promises in a bid to lead “the masses”. It could even be said that Left Populism paves the way for their Rightist rivals.
Two articles on this here:
