ALB
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I am not singling her out for criticism, nor challenging her sincerity or even integrity. I am criticising those who say that the USA under Trump is heading for “fascism”.
Since, historically, fascism means a single-party totalitarian state (and not just any old authoritarian regime) for America to become fascist would require a change in the US Constitution. When you take into account how difficult it is to change this (two-thirds vote for in both House of Representatives and Senate, three-quarters of states for, i.e a quarter of states could block it) this is just not going to happen. Even to give Trump a third term, let alone abolish the institutions of formal political democracy, would require bipartisan Republican/Democratic support, which it will never happen. If Trump were refuse to leave the White House if he loses the 2020 election, as apparently has been seriously mooted, he would face not only impeachment but also a long term of imprisonment, maybe even the death penalty, for treason. He’s not that stupid.
Certainly, there are and always have been authoritarian tendencies in the US but this is not the same as fascism. As far back as 1928 Togliatti, who later became leader of the Italian Communist Party (and the “Communists” have always been the loudest to cry “fascism”) complained:
“I want to examine first of all the error of generalisation that is commonly made in the use of the term ‘fascism’. It has become customary to use it to designate every form of reaction. A comrade is arrested, a workers’ demonstration is brutally dispersed by the police, a court imposes a savage sentence on some militant of the labour movement, a Communist parliamentary fraction sees its rights infringed or abrogated, in short whenever the so-called democratic freedoms sanctified by bourgeois constitutions are attacked or violated, one hears the cry: ‘Fascism is here, fascism has arrived,'”
Quite.
A “democratically controlled” bank would be in the same position as workers cooperatives. As it would be operating within the context of capitalism it would have to operate according to capitalism’s rules, i.e. to cover costs and more (even none of the “more” went to shareholders).
This means that those running the bank, however chosen, would have to seek money from savers and investors. To do this they would have offer to pay some interest as their bank would be competing with other banks (even if these too were “public”) and savings institutions. In choosing what do with the money they had succeeded in attracting, they will have to lend it a rate of interest that will bring in enough money to cover their running costs and an element to pay interest to their depositors. Otherwise they would either go bankrupt straightaway or gradually as they lost depositors to other banks. The point is that it doesn’t matter how those running the bank are chosen; they would have run the bank on the same principle as existing banks of borrowing money at one rate of interest and re-lending it at a higher rate.
There is another aspect. Many of those advocating this banking reform believe that banks can create money to lend from thin air. If put in charge of a bank, they would discover very quickly that this is not the case, but if they chose to ignore this and began to make loans of more than the money they had they would bankrupt the bank in double quick time , When the borrowers began to spend the money they’d been lent there wouldn’t be enough money for all of them. Their cheques would bounce or there wouldn’t be enough money to transfer to the bank of those they had bought something from. Those who had deposited money with them would lose it and the members of the “democratic board” would be done for fraud or at least criminal negligence.
So (pending the establishment of socialism and the abolition of money, banks and banking) you wouldn’t catch me putting my savings or having my pension paid into one of these banks. I’d prefer to stick with one or more of the existing banks which at least have some knowledge of how a bank is supposed to operate. While capitalism lasts, better the devil you know than the devil you don’t.
As Marx shrewdly observed, while no banking reform can make things better, a bad banking reform can make things worse:
“Ignorant and confused banking laws, such as those of 1844-5, may intensify the monetary crisis. But no bank legislation can abolish crises themselves.”(Capital, Volume 3, Chapter 30, Penguin Books edition, p. 621.)
The lesson: Don’t try to make capitalism work on non-capitalist lines, you’ll only make things worse. End capitalism, not try to mend it.
That’s good news but par for the course as all Leninist outfits are structured and run on that basis. Mindless militantism organised by a self-replicating leadership. Let’s hope it prefigures the demise of SPEW as well.
What I meant was that what a majority in the US wouldn’t stand for would be the changes in the Constitution (right to free speech, Bill of Rights, elections, etc), i.e in effect its abolition, that the establishment of a fascist regime would require. You don’t think that’s on the cards, do you?
More on the anarchist intervention in electoral activity in Burlington, Vermont, here. It is not all that edifying but at least they put aside their anti-election dogma:
https://newrepublic.com/article/154086/bernies-red-vermont
https://anarchyinaction.org/index.php?title=Burlington_Greens
I am sure she is sincere about the conditions in the concentration camps for illegal migrants in the US. Any decent human being will be but her claim that the US is “headed to fascism” is not “a bit of hyperbole” but nonsense. Political democracy in the US (such as it is) is not about to be replaced by a one-party authoritarian regime. That’s not going to happen, not least because people there don’t want it and wouldn’t stand for it.
It seems that the Old Testament has been guilty of anti-philistinism.
Money laundering is always going to be a problem with any international payments system. One way of doing it is for a person to carry cash, which is how the NUM transferred some of its money to Luxemburg during the Miners Strike to stop all its funds being “sequestrated” by the UK government.
Incidentally, I see that David Smith, Sunday Times Economics Editor, writing in today’s Times says of the Libra scheme that it is “a move that may not be as revolutionary as first appears”.
Joseph Stiglitz is a more or less mainstream pro-capitalist economist (rather than a leftwinger with an axe to grind) and he has a valid point when he says that there is no need for Facebook money in a national context since electronic payments within a country like the US are already simple and instantaneous. But the proposal is to introduce a similar system for international payments to replace cumbersome methods like Western Union which involve form filling and are not instantaneous. Migrant workers sending money to their country of origin would benefit from such a system irrespective of who organises it.
As to the two points he raised that you highlight, here’s what the Facebook “White Paper” says on them:
“Libra is fully backed by a reserve of real assets. A basket of bank deposits and short-term government securities will be held in the Libra Reserve for every Libra that is created, building trust in its intrinsic value.”
In other words, no new money is created. It will be like local currencies here in the UK which have to keep the equivalent in pounds in a reserve to cover the total face value of the local currency notes they issue. This strengthen the case for the view that what is envisaged is a new international payments system rather than some world currency to compete with existing state ones.
“Interest on the reserve assets will be used to cover the costs of the system, ensure low transaction fees, pay dividends to investors who provided capital to jumpstart the ecosystem, and support further growth and adoption. The rules for allocating interest on the reserve will be set in advance and will be overseen by the Libra Association. Users of Libra do not receive a return from the reserve.”
This is clear/honest enough: Facebook and the other investing corporations which include Paypal, Visa and Mastercard which put up the capital to start the scheme (listed here) will get interest on the money used to back up the Libra but will not pay any interest to those who will contribute to this by using it. The business model is similar to that of a bank in that income will be from interest and fees, with profit being this less costs.
Stilgitz’s point about Facebook being able to “reap an arbitrage profit” on its reserves deposits is true but this is what banks (and not just banks but any organisation with money reserves) do now.
I’m coming to the conclusion that this is all a fuss about nothing.
Interesting but
- I don’t see why he says other states than the USA won’t be able to impose controls on Facebook money. After all, he himself points out that Facebook is banned in China. Also, the EU is planning measures against it and the other US tech giants.
- No extra money will be “created” (not even in the sense modern economics misuses it). People will only be transforming state money into Facebook money. This could cause problems for states with weak currencies but this would be one of the things they could at least try to regulate as they do now with Paypal, etc., as for instance by requiring banks to report such transactions and/or placing limits on the amount transferred.
The head of the Bank of International Settlements (the Switzerland-based central banks trade association), Augustin Carstens, had told the Financial Times that central banks may shortly have to issue their own digital currencies in response to the emergence of private digital currencies, specially Facebook’s Libra. This would suggest that what is being envisaged, by both Facebook and them, is a more efficient system for international payments.
Actually, the BBC one wasn’t as bad as I thought it was going to be. Pity, though, that they chose to interview a Trotskyist who didn’t know that for Marx “socialism” and “communism” meant the same, i.e. what she meant by “communism”.
I don’t think calling Corbyn and the Labour Party “Marxist” is going to work with the public in general (if only because most people don’t know much about Marx and those that do know this to be ridiculous) but it might with the audience aimed at, i.e. the membership of the Tory Party who are going to elect the new Prime Minister. For instance, the one who had a letter in last Friday’s Times who openly called Corbyn a “communist”. That’s what the mean but daren’t say it because if they did they’d really get pilloried.
There might even be a good side to this, with some people asking “who is this Karl Marx they keep talking about?”
Ed Conway, Sky News’s Economics Editor, raised something similar in the Times last week, though he doesn’t go for Ellen Brown’s idea of a “democratised central bank” instead. Unfortunately, the article is behind a pay wall but you can get some idea from the title:
https://www.thetimes.co.uk/article/facebook-currency-will-help-it-rule-the-world-5ttrsbm0k
Conway argued that, since they would have to pick up the pieces if the scheme goes wrong, national governments would normally move to squash it but, apparently, they are not and goes on to ask why the Bank of England is so relaxed about it. He answers:
“The first reason is that the existing system for transferring money internationally is rubbish. Moving cash from one country to another involves painful paperwork, high fees and long waits … The tech giants have spied an opportunity and the existing banks have only themselves to blame. The second reason is more disconcerting. Privately, the Bank doesn’t think libra is a currency after all. Instead it is something quite different: a jazzed-up payment mechanism rather than a genuine alternative to sterling or the dollar.”
Personally, I’m inclined to agree with the Bank. I don’t see states accepting an alternative currency they can’t control, but a more efficient efficient international payments system, why not? But we’ll see.
