In the months after the financial crisis in 2008, I recall a conversation with an American friend of mine; we discussed the fallout and numerous rescue packages by countries. Financial media outlets, such as Bloomberg and CNBC, described the capital injections into financial institutions as a sign we are “all socialists now” – according to my American companion, this was far from the truth. In reality, Western economies have turned the page to fascism, not socialism.
When he mentioned this to me, I confess, it was rather amusing to listen to; very sceptical of such claims, until the request to research the facts myself led me to a worrying conclusion. The truth of matter is that we are not far off from what British fascists in the 1930s thought the financial sector should administrate to the rest of society.
I assure you this is not hyperbole. As evidence of this proposition, I was referred to The Coming Corporate State (A. Revan Thomson, 1935) which is the manifesto of the British Union of Fascists; as liberals, we will be horrified to discover the similarities. The Financial Corporation envisioned by the BUF paints a society, in which financial activities are monitored and co-ordinated by the Bank of England. Furthermore, the government would set lending targets to ensure the banking sector met the needs of the wider economy and served the national interest.
The state would aim to end ‘boom and bust’ and set-up a credit lending scheme to provide liquidity to businesses, primarily the manufacturing sector. This credit lending scheme was a combination of government guarantees and loans from the Bank of England.
After the collapse in the 1930s, fascism advocated private but centrally influenced banking via the state. If the state was able to construct artificial lending targets and encourage consumption, not just production, it potentially could manipulate the economy to prevent economic declines. This would allow a minister to foresee a potential drop in economic activity and halt it. Sounds wonderful, but this is far from truth; you and I would be pawns in this artificial reality, in which families pensions, savings and homes could fall victim to widespread manipulation – far greater than what already occurs.
The recent LIBOR scandal serves as a warning of what happens when a central bank, government and the banking system engage in false management; hard working people become vulnerable to shocks when interest rates are correctly priced. It should put the fear of God into the hearts of liberals to see how close Britain is to constructing the BUF financial corporate dystopia – vast amounts of control has already passed into the hands of the few in the name of ‘stability’. Do you know, post-2008, the biggest holder of British government debt (which you and I are liable for, not the government) is the Bank of England? That’s right; British families, up and down the country, are debtors to the central bank of this country – that should be enough to wake us up.
Liberal Democrats should rightly advocate a fairer banking system, which does not have the potential to destroy the wider economy. However, this banking system needs to be open, transparent and free from potential centralisation. If we don’t, in the long term, our democracy will suffer and suffer greatly.
* Daniel Furr is a Liberal Democrat member from Canterbury and blogs here