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It's Time for Citizen Controlled Banks

Citigroup, Property and Theft

by JONATHAN M. FELDMAN

Like Halliburton shipping off to Dubai or the travel happy transnational enterprises, Citibank also has accelerated its abandonment of the United States. It will cut thousands of jobs, sending them outside North America to India and other international locations where most of its growth is supposed to come from. Downsizing, outsourcing, short term oriented stockholders are the culprits. Et tu Citibank? I remember making serial payments to good old Citibank as part of my college loan pay off. Now, all that profit turns out to have simply been used to grease the wheels of this transnational to pick up and leave town-New York City that is. While outsourcing in the financial services sector is nothing new, it ought to be a wake up call for New York City planners, academics, and politicians who thought they could build a Brave New World on the backs of Daniel Bell’s Post-Industrial Society. What about The Coming Post-Services Society?

Are we supposed to chalk all this up simply to what the sociologist Zygmund Bauman calls, Liquid Times, or what his counterpart Ulrich Beck calls The Risk Society, or Richard Sennett terms The Culture of the New Capitalism? The basic theme of such works is that the welfare state, nuclear family, and corporations offer less and less of a safety net as the protections they once afforded increasingly erode. Well, risky for whom you might add? Citibank is mighty popular in Mubai, India these days. That’s where some of the jobs will be going. So much for economic patriotism as William Greider and Jeff Faux might tell us.

What are we to make of the globalization of everything? It has to do with these old, and out of fashion social science concepts, class and alienation. The problem begins very simply when we take our cash or make our loans from economic entities that we, the people, do not control. We are alienated from these banks and their financial capital. The philosopher Proudhon said it well a long time ago: property is theft. Their ownership is the other side of thievery from us, particularly when the profits organized around their property and our investments is used to benefit them and not us.

There is an alternative. When we invest in banks we control, we can expect that their profits will redound to the benefit of us, not the whims of some short term hungry investor on Wall Street. When we invest in such banks, we can expect its lobbyists to work for us, not for centrifugal global migration. The U.S. increasingly looks like it was just a stepping stone for Citibank and its corporate brethren to some greener pastors elsewhere, maybe a kind of transition date for global finance capital.

What might an alternative to Citibank look like? The Caja Laboral Popular (CLP) plays an important role in the network of cooperatives in the Mondragon region of Spain:

The CLP serves as a source of capital for investments by the cooperatives. The institution functions like a commercial savings and investment bank and is also prepared to accept deposits and other business from people outside the network, but it is owned solely by the cooperative. Indeed, the flow of funds gives the bank finance resources far in excess of the financial needs of the group’s enterprises, so capital flows are activated for housing cooperatives and schools. Finance capital is also available for individual credit and for additional investing by co-op enterprises (Seymour Melman, After Capitalism, Alfred A. Knopf, 2001: 352-353).

Who might patronize such a bank? Well trade unions for one could place their deposits in a bank loyal to U.S. workers and consumers-not far flung investments and constituencies. Local and state governments are another key actor. Why, after all, should such states invest in banks that will destroy jobs as part of The Coming Post-Services Society? Scholars like Fred Block have argued that economic elites have tremendous leverage because they can engage in capital strikes against unruly governments. Yet, the continuing economic crisis means that governments can likewise engage in capital strikes against capitalists, banks and any economic interests lacking the sufficient economic patriotism.

That is not all. Environmentalists and every day citizens seeing market failure abound, might want to patronize a bank making investments in mass transportation, sustainable energy, and people friendly investments like cooperatives, worker controlled enterprises or even "pro bono" investments in local neighborhood projects. Why not require our NGOs to invest in such a bank with the cooperation of Working Assets and other such socially responsible firms? There are related models like the South Shore Bank in Chicago or the National Cooperative Bank, but what is needed is a flagship franchise (cooperative) bank as ubiquitous as Citibank, Bank of America or Wachovia are today.

A final role can be played by such a socially responsible bank and that is the most dramatic one of all. Large scale consumer deposits can come because the existing system suffers from a growing legitimacy crisis. The average citizen holding dollars is in trouble, particularly as the value of the dollar has steadily dropped against the Euro in recent years. More affluent citizens, however, can hold more diversified financial portfolios, the hedge their bets against the "risk society." In fact, the sociologist Richard Breen implies that one way to sidestep some of the worst parts of the "Risk Society" is to engage in various kinds of diversification moves or hedges.

The "Hedge Society" can come if citizen accounts are made that hedge against the dramatic currency fluctuation which has eroded the Bush-wacked dollar. Of course, many people can sill loose by betting unwisely against the dollar. Yet, citizen banks could help citizens by stabilizing at least some of their savings with more diversified portfolios. This might be a way to protect the average citizen against a deflated currency. The irony is that the dollar is being now used in the least patriotic of ways, to prop up imperial adventures that rob America. It’s becoming like an overworked mule in danger of exhaustion in the face of a $1 to $2 trillion bill for the Iraq War and related adventurings. In contrast, a citizens’ bank could open up Patriot Accounts that invested in industrial America, albeit stabilized with foreign currencies. Such is the strange logic of global financial capitalism.

I am not suggesting that we "dump the dollar" as some have argued (see Paul Craig Roberts in CounterPunch.) Rather, we need a way to stabilize citizen wealth so that it can work for us, through sustainable reindustrialization. Right now, the banks and those holding much of the dollar flows are not engaged in such patriotic economic development. They are betting on the fantasies of a post-industrial or post-services society. We need a more realistic approach. We need, new, citizen controlled banks investing in a Patriotic Hedge Society.

Jonathan Feldman is a lecturer at Stockholm University and previously worked as Program Director at the National Commission for Economic Conversion and Disarmament in Washington, D.C. He is part of the alternative network, www.economicreconstruction.com.