After Occupy St Paul’s, where next?

It may be important (now that the heat is off in relation to the eviction of protestors at St Paul’s) that some proposals are developed about what needs to be done in the short and medium terms to address the issues they are raising – and that others have been raising for several years. I don’t claim to be an economic expert in any way but recall saying several years before 2008 – and while Labour was lauding the City – that the current system is built on a house of cards, and that we should be much more active in democratically controlling our economic system.

Three main principles lie behind my suggestions:

  • we need to slow down global economic activity, as the febrile search for economic growth always leads to bubbles of the kind which caused the 2008 credit crunch
  • we need to control the type of growth we seek as it has to be ecologically sustainable, and
  • there should be much more democratic control over the world economy.

I would suggest the following as ways forward.

There needs to be a separation between the ‘investment’ and ‘retail’ arms of the banks, to prevent the high risk activities of the investment bankers affecting the more normal processes of banking which most of us use most of the time. To see what happens when there is no firewall between them read ‘All the Devils are Here: Unmasking the Men who Bankrupted the World’ by McLean and Nocera. There also needs to be a tiny tax on all currency deals, the Tobin, ‘Robin Hood’ or Financial Transaction Tax (FTT), which will raise money to address world poverty and slow down the rates at which currency deals take place – often in an atmosphere of frenzied speculation. The Archbishop of Canterbury called for both of these in his recent Financial Times article, and the Christian Socialist Movement has actively supported them. He also urged recapitalisation of the banks with public money – if we do that, as with Lloyds and RBS, we need to specify how much they must lend to small businesses, which is where most of the jobs we need will be provided.

We need to demand much more transparency in the global economy. Wealthy companies and individuals are hiding trillions of dollars in the tax havens’ (read ‘robbers dens’) around the world (see Nicholas Shaxson’s ‘Treasure Islands’, a crucial book for this discussion). We want to know where all this money is – Jersey, Guernsey, Isle of Man, Caymans, Bahamas, Mauritius etc – in all of which the City of London is deeply implicated – and we want it taxed. Christian Aid in its ‘Trace the Tax’ campaign calculates £160 billions a year are lost to developing countries through tax dodging. Banks like Barclays have hundreds of subsidiaries in tax havens to help their customers avoid tax. Some world leaders are reported to have millions, even billions stashed away, while their poor struggle to eat. A proper rate of tax on the wealthy of Greece, Italy, even the UK could wipe out much if not all of our national debt. We want to know where that money is. The Corporation of the City of London could help answer that question.

Church Action on Poverty have also been active on the tax question within the UK. They recently got church leaders handing in a letter to Downing Street urging more action for ‘Fair Tax’, especially on tax avoidance/evasion (lawyers try to create distinctions between the two). Their other campaigning aims in the ‘Close the Gap’ campaign (between rich and poor) are ‘Fair Prices’ for fuel, food and insurance, ‘Fair Pay’ supporting the concept of a Living Wage rather than a minimum wage, and a ‘Fair Say’ listening harder to poorer communities where most of the cuts are falling. To learn more about the cuts visit the CAP website and/or http://voluntarysectorcuts.org.uk/

We need to demand that international companies declare, country by country, where they are making profits and where they are being declared. This is a matter for the International Accounting Standards Board which has already been approached by Christian Aid. We also need a tougher personal tax regime in all countries. Here we already have a 50% tax rate on incomes over £150,000. So what about 70% over £250,000 and 90% over £500,000? It might even be 95% for the bonuses of bankers whose speculative activity got us into the current mess. There used to be taxation like that, and even if it is argued that the subsequent loosening of tax enabled the kind of rapid economic development we have had over the last fifty years, it is time to slow that down – or even stop it (see ‘Prosperity without Growth’ by Tim Jackson, reviewed elsewhere on this site). It may need to be at a global level but that is the kind of world leadership we desperately need. This is also in the type of growth which has to be sustainable on a finite planet. While trillions of dollars are hidden, looking simply for making the biggest buck rather than what would benefit the common good, there is a powerful force of evil in the global economy.

There is also a debate to be had about the nature of money itself and who produces it. The New Economics Foundation has recently published a book ‘Where does Money come from?’ which points out that many economists can’t agree on the answer, but that NEF’s conclusion is that most of it is actually created by the commercial banks, which is what they do ‘when they extend credit, buy existing assets or make payments’. They do not hold reserves commensurate with what they lend. In 2008 banks held only ‘£1.25 in reserves for every £100 issued in credit’. Once this is understood we can ask – how could new money be better created under more democratic control?

Finally we have to reintroduce the ‘S’ word into public debate. Socialism has recently been defined by David Harvey in ‘The Enigma of Capital and the Crises of Capitalism’ as aiming ‘democratically to manage and regulate capitalism in ways that calm its excesses and redistribute its benefits for the common good’. We need new national and global redistributive structures which intervene in the market, control the supply of money (rather than the banks) and when necessary take control of the ‘commanding heights’ of the economy. Doubtless some of these are what at least some of the St Pauls protestors are asking for, hopefully what the Churches will increasingly ask for, and what we and they, with vigorous campaigning, will ultimately achieve.

David Haslam
4 November 2011