Bad Bank, Bad Capitalism!

Mark Featherstone

The day after I posted my most recent piece on the Sociology Criminology Blog concerning the credit crunch I spoke to my father about the current economic situation. Although he is technologically illiterate and had not read my post, he asked me what I thought about the American Treasury’s proposal to open a ‘bad bank’. He told me that he thought it was problematic that the tax payer was being expected to bail out private banks that had made enormous profits from the boom economy over the past twenty years. More especially he explained that he was surprised that the Bush Administration, which has always championed Friedmanite neo-liberal economics, would turn away from free market ideology in order to embrace socialistic principles of state managed economics.

Given that my father completed his formal education at the age of 15, I was surprised that he had immediately grasped the problem with the American Treasury’s multi-billion dollar proposal to set up a publicly funded bad bank. I responded that I thought the current situation, which has seen the nationalisation of various private banks, presented Anglo-American society with a choice: either our political leaders will recognise the moral dimensions of the credit crunch and democratise the economy, by providing the public with economic rights equal to the financial outlay required to stabilise the crashing market, or they will use tax payers’ money to stabilise the economy only to allow the robber barons of capitalism to go about the business free of regulation once political intervention has successfully rebooted the failing markets.

The problem with the second option is that it will not only restart the unsustainable credit boom, but also leave the Anglo-American political elites with no money to fund the already minimal welfare states they currently operate. If the former political champions of neo-liberalism, who are currently conveniently condemning the banking elites for their reckless behaviour, choose the second option we can therefore expect to see cut-backs in public provision and the subsequent condemnation of outsider groups, such as the unemployed, single mothers, and refugees, over the next couple of years. In much the same way that it is prudent for our politicians to scapegoat the banking elites at the moment, because they need public money to stabilise the market thrown into chaos by deregulated bankers who were simply following the economic ideology laid out by a generation of neo-liberal politicians, it will be necessary to condemn welfare scroungers in the near future, when it becomes clear that there is no money left in the public coffers to pay for social security.

At this point, the credit crunch will be forgotten. Instead, we will be confronted with new ‘social’ problems – overblown myths concerning the evils of unemployed welfare cheats who want to get paid for sitting on the backsides, single mothers who have children in order to get a council house, and refugees who want to come to our country to ‘steal our jobs’. It may even be the case that global terrorism will make a serious come back in the media in order to unseat economic uncertainty in the pecking order of public fears and re-establish radicalised Islamic youth as the key internal enemy. What better way to deflect our attention from the identity of the real internal enemy, the political-economic elite, what Naomi Klein calls the corporatist class, who are set on making money whatever the social cost, than by invoking the racist fear of the other, the outsider masquerading as insider.

Following our short discussion, my father and I agreed that the Anglo-American political elites should not be allowed to take the second route out of the credit crunch and that the result of any public rescue package should entail the democratisation of the economy: regulation of the market, restrictions on private credit, and the redistribution of resources from rich to poor in order to fund new welfare programmes. But how can we ensure that this happens when it is likely that Klein’s corporatists will simply play the masses and re-establish the existing balance of power? The answer is that we, the citizenry, must ensure that we are not robbed by the corporatists who have led us into the credit crunch. Whether we are capable of this critical action is a different matter.

What we need to make sure the credit crunch ends with the correct, moral, outcome is sociological intelligence or sociological vision. Clearly, this is a faculty that my father possesses, probably because he was schooled in the class politics of post-war Britain, and never bought into Thatcherite ideology in the 1970s. Unfortunately, the children of Thatcher and Blair cannot fall back on such everyday critical faculties, which is probably why I was so surprised by his insights, and must learn our sociological vision through engagement with the old masters in the classroom. This is what I have understood through a combination of early socialisation and higher education.

Finally, let me reiterate the key point of my previous post on the credit crunch which was reinforced by my conversation with my father: we need sociological thought more than ever today in order to provide some kind of moral / ethical / social vision in a world which has been emptied of any sense of responsibility for other people. Under current conditions, characterised by neo-liberal Thatcherite ideology which undermines every form of critique, it is unlikely that we will seize the opportunity for redress provided by the credit crunch. However, this is what we must insist upon. Neoliberalism may be over, but we cannot allow the corporatist robber barons of capitalism to restart their unsustainable programme of global plunder with public money. The fallacy of scientific monetarism, the belief that the market will run itself, has been exposed. Akin to the 1930s, when laissez faire thought was first laid bare, and Keynesianism appeared on the scene, we must seize this opportunity to evolve a new redistributive social order. In short, we must impose sociological thought upon the current situation. We must use the bad bank to kill bad capitalism.