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Andrew Glyn

No retreat: Nationalise the banks!

(October 1978)

From Militant, No. 426, 6 October 1978.
Transcribed by Iain Dalton.
Marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Banking was the only major sector included in Labour’s 1945 programme which was left in private hands, only the Bank of England being taken over. Now the Labour leaders are again ducking away from any confrontation with the City.
 

Socialist plan

The most important proposal of the National Executive’s Statement in 1976 was for: “A major publicly owned stake in the financial system comprising the top seven insurance companies (sufficient to account for 30% of premium income) a merchant bank and the four major private clearing banks.” (i.e. Lloyds, Barclays, Midlands, National Westminster). But this demand is missing from the TUC-Labour Party liaison committee document Into the Eighties.

The implementation of a real socialist plan of production for the economy is inconceivable without government control of the financial system. To produce for need rather than profit requires the whole financial system to be used for mobilising society’s resources wherever they can most usefully be put to work.

The weakness of the National Executive’s Statement, however, was that it tended to exaggerate what could be achieved simply by taking over the banks.

It stressed the low rate of investment in British industry and argued that the key to success in reaching the target of doubling manufacturing investment “lies in developing a publicly owned stake in the very areas of the financial system where critical lending and investment decisions are made: then banks and the insurance companies.”
 

Higher profits

But simply channelling more funds in their direction will not cause the capitalists to invest. In their evidence to the Wilson Committee, the banks pointed out that manufacturing industry was borrowing less than one half of what the banks had made available. The CBI said that:

“The clear conclusion of our members is that it has not been a shortage of external finance [for example bank credit] that has restricted industrial investment but rather a lack of confidence that industry will be able to earn a sufficient return.”

In other words, they did not require even more unused borrowing facilities, but rather higher profits.

The NEC’s statement contrasted the lack of government control of finance in the UK with the situation in other major capitalist countries like France, Italy and even Japan. But over the last four years fixed investment has actually fallen or stagnated in all these countries, just as in the UK.

Publicly owned banks by themselves will not generate investment where the economic crisis makes it unprofitable for the industrialists to borrow money to invest in new factories which will not have a market.

The real conclusion from this is that securing the full use of society’s resources requires nationalisation and planning not only of the financial system, but of industry as well. The two sectors are inextricably linked in the economy and have to be combined in a socialist plan of production.

The TUC-Labour Statement, however, abandons nationalisation of the financial system. It calls for the Bank of England “to act on behalf of the government in monetary affairs and not as an independent body; and for the Department of Trade and Industry to “take the lead in ensuring proper connection between the financial institutions and the industrial strategy.” These are both entirely vacuous suggestions while the financial system stays in private hands.
 

Equal terms?

It does see “a need to regroup certain institutions notably Giro and the National Savings Bank, so that a new publicly owned bank can compete on equal terms with the big four clearing banks.” But as a concession to those who voted for the NEC’s statement, this is derisory.

Look at the pathetic size of suck a bank! Whilst the Clearing Banks in 1976 controlled nearly £24 billion capital, other banks £8½ billion and Building Societies £33 billion, the National Savings Bank could muster £2 billion and the Giro a mere £176 million. Some competition!

The profit figures for the financial giants show how they have prospered despite the economic crisis. Conference must reaffirm the policy of renationalising the banks and insurance companies as a central part of a socialist plan of production, alongside nationalisation of the 200 industrial monopolies.

Moreover, it must instruct the NEC to launch a massive campaign to counter the fears of workers in the finance sector that nationalisation would mean loss of jobs and to explain how it is only a socialist plan based on such a programme of nationalisation that can end unemployment and provide necessary improvements in living standards and public services.

 
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