Magazine of Socialist Action in Australia

The case for publicly owned banks

Reading Time: 2 minutes

Labelling Australian banks ‘rip-off merchants’ is putting it mildly when describing the institutions that gouge billions from households every year in fees and charges. Far beyond the everyday extortion of bank customers, the big banks lie at the heart of capitalism and its systematic robbery of working people.

Socialists stand for taking the entire banking and financial system out of the hands of the profiteers and bringing it into public ownership to serve the interests of the majority.

By Kirk Leonard, Socialist Party

Banks operate in the same way as all businesses in a capitalist economy. For them, jobs, rights for workers and everything else comes second to short term profiteering. The Commonwealth bank made a profit of $7.11 billion last financial year, smashing an Australian record for the second year running. At the same time they shed 1200 jobs.

Other banks reported similar profits and similar job cuts. The banks have also held back from passing on interest rate cuts by the Reserve Bank to mortgage holders, choosing to pocket the difference instead.

However, banks are more than normal profit making enterprises. They serve a very special function within the economy. Banks concentrate in their hands command over the economy because they can control credit, finance and investment. Banks penetrate into all aspects of the economy, dictating where resources are invested and where they are not.

Due to their position, banks can hold elected governments to ransom. We have witnessed this with the cowering of European governments before the demands of the ‘market’ i.e. the banks and finance companies. It was these same banks and finance companies that created the crisis through speculation and gambling that are now demanding crippling austerity across Europe.

Controlling the banks is vital in asserting control over an economy. In Australia, as in Europe, private banks and financial institutions are controlled by capitalists. Capitalism is a system whereby a minority capitalist class owns and controls the economy while the wealth producing working class is exploited and owns very little.

Socialism, on the other hand, is a system whereby the factories, the offices, the land, infrastructure as well as the banks and financial institutions are held in common collective ownership.

Public ownership of the banks in no way means the confiscation of personal bank accounts or savings. On the contrary, a single public bank would mean free personal banking and much cheaper loans for ordinary people, small businesses and farms.

In a genuine socialist society decisions would be made democratically and a sustainable plan of production would be drawn up to ensure all needs of the population are met.

On the basis of workers and community control from below the world’s resources could begin to be used for the betterment of people lives, rather than the pursuit of corporate profit.


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