Capitalism

The Slog Ahead for New Public Banks in California

100 years ago, socialists in North Dakota quickly created a public bank. Things will unfold more slowly in California.

by Matt Stannard
October 7, 2019

Last week I cautiously celebrated the final passage and signing of AB 857 in California allowing municipalities to apply for public banking charters. I cautioned that there were no guarantees that the California DBO would approve public banks at all and that the process would be political-but-unpoliticized: banking board or licensing commission criteria are ideologically laden and rhetorically de-politicized; in other words, these actors hide their market biases but would accuse public banking advocates of wanting to politicize banks. I had other concerns too, but since that post I’ve learned a few other details, thanks to Marc Armstrong and David Jette generously answering some questions I had.

When I asked David what charter applicants might expect from a private-biased DBO, he suggested that the most prudent initial applicants would specifically focus on fixing city debt, credit to government agencies, and possibly green energy banks.

Fiscal soundness would also be important, he said. In a deeper sense, what this means (and I don’t think anybody seriously denies this) is that the banks will be judged according to the very paradigm of fiscal scarcity that public banking advocates rebuke. Well, reformism isn’t easy. Unlike 1919 North Dakota, Californians haven’t formed an agrarian socialist party and won the governorship and legislature. I appreciate David’s candor. This will be a years-long journey, and it will be challenging to keep public demand steadily humming.

The most important accomplishment of 857 is, as Marc told me in an email, that “the taboo has been broken . . . permission has been given.” Marc told me that several NoCal cities are investigating using JPA (Joint Powers Authority) to create a bank or banks. Large cities will certainly be the first to apply for licenses. Smaller cities will follow suit if the big ones are successful.

From what everyone is telling me, I surmise it will take two years at a minimum before we see a public bank open in the best scenario, and five or more years, again best case, before we see a handful of them.

But this is in the best case scenario, where there aren’t mountains of objections and demands made by private banking interests who want to hold onto the private advantage even for those narrow functions David mentioned. On the subject of bias towards private banks, Bob Bows reminded me this morning that one strong manifestation of this–and a potential legal and policy challenge for municipalities as these banks get off the ground, is the neoliberal doctrines that form the basis of anti-competitiveness challenges under global trade agreements. Recall that the ongoing concern with TPP and other regimes was that public utilities would be attacked and potentially become tribunal targets. I put together several sources’ analysis on this question back in 2015 at the PBI blog. Imagine objections being made in the DBO application process, or after the fact via trade tribunals, that public banks will be able to perform financial services without a profit motive, thereby undermining competition in a sector–the financial sector–that trade-in-services advocates view as their market territory. The public is excluded from most of the negotiations that create these rules, negotiations that will undoubtedly be biased against public ownership as a whole and public financial ownership specifically.

A long-term strategy summit, led by the on-the-ground California public banking organizations and activists at the forefront of poor people’s, divestment, and climate justice movements–the people who made 857 happen–may well already be in the works, and certainly should be, and if that happens I would joyfully live blog it, because to overuse the already overused phrasing, the real work starts now.

I’m operations director at Solidarity House Cooperative. You can read a lot of my articles, including several individual pieces and a longer series on public banking, here at Occupy.

California’s New Public Banking Law: Joy and Cautious Optimism

by Matt Stannard
October 3, 2019

Good news this week: California municipalities may now apply to create public banks.

In my work with the Public Banking Institute, I spent many years writing arguments in favor of the social utility and justice-delivering potential of public banks. As a member of the Commonomics USA team I was fortunate to participate in some of the meetings and workshops that built the agendas and grassroots coalitions that culminated in the successful passage and signing into law of AB 857. More recently, I’ve assisted the Rocky Mountain Public Banking Institute in their education and legal efforts in Colorado. Getting public banking bills on the floor for consideration in the first place had proven next to impossible until this happened in California. Heck, New Jersey Governor Phil Murphy campaigned on creating a public bank in the state and now the effort seems tabled. The only other bona fide public bank on U.S. land since the formation of the Bank of North Dakota by a socialist government in 1919 has been in American Samoa, and only via federal fiat, and only because there was an air-tight and purely non-ideological case for it.

So this is a big deal, and the bill’s sponsors have used the language of economic access: “communities and neighborhoods . . . use public dollars for their own public good . . . affordable housing . . . schools and parks . . . accessible loans for students and businesses” in justifying the law, which allows municipalities to apply for banking charters (the law itself doesn’t create or require the creation of any banks).

My own five great years in the thick of the movement were exhausting, and I learned a lot about how good ideas win and lose in political contexts. So I’m cautiously optimistic at the news, even though I take great joy in the movement getting this far. I also have no desire to second-guess the great activists, policy people, and communicators making it happen in California’s here and now. They know more than I do and you should direct your questions to them–and see how you can help, especially if you’re in California, because the battle isn’t over.

Reasons to be optimistic:

1. The law is clearly written to encourage local economic sustainability and push away bigger banks.

“It is the intent of the Legislature,” the Act reads, “that this act authorize the lending of public credit to public banks and authorize public ownership of public banks for the purpose of achieving cost savings, strengthening local economies, supporting community economic development, and addressing infrastructure and housing needs for localities. It is the intent of the Legislature that public banks shall partner with local financial institutions, such as credit unions and local community banks, and shall not compete with local financial institutions.”

So those are goods (and some not-bads) in themselves, steps in the right direction. Although private local bankers can just as likely be greedy little local viceroys as community-minded entrepreneurs or George Bailey-type stewards, local banks generally do better by local folks. It’s incumbent on those communities to demand the best from their local businesses, and a municipal bank can be a tool to do that.  And, of course, credit unions kick ass. They aren’t public banks, but they can do about as well as consumer co-op entities can do in a hierarchical market environment. Public banks will help those entities. And local financing of green energy, worker-owned cooperatives, and nonprofit services could be game changers. The right leaders could make much of these banks.

2. The law sends a message that a public economy, and public finance, exist. Privatized finance isn’t natural or optimal. We can debate about whether private entities can co-exist with public ones (the record of partnership isn’t good), but before we can have that conversation, we need to shift the presumption away from private ownership — particularly of finance. The debate needs to happen on a level, democratic, worker-and-stakeholder-oriented field.

Public banks change the conversation about scarcity and public goods. They inform a new discussion about sustainability and growth. In a sense, public banks do this just by existing. But their successful deployment in an egalitarian and ecologically-positive manner, sooner rather than later, will make California’s victory worth the effort.

Reasons to be cautious:

1. The charter process and other “safeguards” could become poison pills, circumventing or even undermining the success of public banks. The politics of the Commissioner of Business Oversight just became very, very important to California’s financial (and by extension material) future. One harsh criticism of public banks published during the California effort contained this kernel of truth that ought to be useful to the movement’s counter- and pre-emptive strategizing: “the State Department of Business Oversight must review applications for new banks,” the critic writes, “looking at capital, asset quality, management expertise, earning potential and sensitivity to market risk, and given the uncertainty of a public bank’s ability to meet these risk thresholds, it may be years before the DBO could approve a public bank.”

Politically, that’s both a threat and a promise. One might answer—as public banking advocates have effectively and correctly done—that private banks are riskier than public banks in all ways, particularly in the regulatory status quo. But the charter application process contains opportunities for insidious politicization, and very few people have discussed this during the excitement of this legislative push.

Business oversight and banking boards usually have sole or nearly-sole decisionmaking power and applicants have limited ability to seek review of their decisions. The last iteration of the Colorado Banking Board I researched in 2018 included five bank presidents or CEOs, an attorney for a private trust company, a bank V.P., and two members of the public. Courts routinely defer to the decisions of these boards even if they think their decisions were weak. The DBO’s current commissioner is unsurprisingly a veteran of the private financial industry, at Affirm Inc., specializing in high-interest short-term loans.

Activism will have to emerge around that decisionmaking process; it should be openly politicized — and stakeholders should understand that the process is already political; market tests, profitability, even safeguards are already politicized.

The new law also caps the number of public banks allowed in the state at ten, an arbitrary number with no real rationale except to appease the private banking industry, which fears the competition.

If the process of approving and creating public banks can become transparent and include community stakeholders as deciders, then many of my concerns around this would go away. The frustration of such review is that it is so often conducted by industry hacks who refuse to think outside of the box from which they’ve been feeding.

2. A public bank is only as good as the government that runs it–and North Dakota proves this.

Will public banks be chartered with social, economic, and ecological justice-oriented goals and safeguards? The inclusion of such standards was the common demand of every grassroots activist I ever encountered in California’s rapidly growing 2017-2019 public banking movement. Although those standards were not always of precisely defined importance to the PBI crowd that clustered around Ellen Brown between 2008 and now (and far from the concern of some, as I mention below), those concerns drove the motives and conversations of many of us, just as it motivated the original founders of BND in 1919 and in many of public banking’s movements and moments in history.

But such priorities have to be explicit. Otherwise, public banks can actually make fossil fuel consumption, police state violence, and unhinged development worse. California public banking activist David Jette’s insightful and inspiring diary of the origins and successes of California’s public banking fight explains that Wells Fargo helped finance the Dakota Access pipeline and the violent police actions that upheld it. But David doesn’t mention that North Dakota used its own public bank to provide emergency funding to the militarized cops suppressing the Standing Rock protesters. The Bank of North Dakota made fossil fuel fascism easier.

Governments aside, proponents of public banking aren’t all socialists or leftists or liberals or even moderates. Ellen Brown’s early supporters included right-wing anti-monetarists, fans of G. Edward Griffin, a John Birch Society member and co-facilitator of the infamous 2009 conference on Jekyll Island that helped renew the right-wing militia movement. A few somewhat influential contemporary public banking advocates are vocal Trumpians, with all the cheerleading of stormtroopers that entails. Imagine public bank-funded stormtroopers (North Dakota did it). Imagine Trump having a public bank to fund his militarized border wall, or the thousands of other machines of despotism and brutality he would most certainly bring into existence with what public banking’s less rigorous proponents call “free money.”

Obviously I think we should create public banks anyway, and fight the battle against fascism in the streets and the ballot box (although I have to admit that the presence, however minimal, of extreme right-wingers in the movement always made me feel icky). But the reason the California movement succeeded was not that it appeased conservatives—it succeeded because it built an unapologetically left-oriented, social/economic/ecological justice-focused movement inclusive of all the kinds of people and communities currently threatened by Trumpian fascism. California hasn’t always been a perfect bulwark against that threat, but this victory is another reason why it’s been a recently reliable one.

In fact, in the hands of California’s empowered progressive-left coalitions, with an engaged public forcing new paradigms onto old regulatory structures, public banks will do great things in the service of a new, green, egalitarian economy. I like the way David Jette put it:

Everything that a private bank does for local governments and businesses, a public bank can do.  And as these models prove themselves, lawmakers will see how crucial they can be to a thriving, independent economy, and they will expand.  Eventually, a parallel banking system will emerge, one that does not invest in private prisons or fossil fuel extraction, and does not ship profits to Panama or the Cayman Islands to be laundered. Consumers, governments, businesses, everyone will have the option to divest from the old economy and into a new one, one that works for everyone, including the Earth itself.

That’s a world worth fighting for, and the socialization of finance, even to the limited extent that a “public option” in banking manifests, is also worth fighting for.

By the way, the photo here of activists demanding a public bank comes from Kurtis Wu, @kurtis_wu , whose photo contribution has been widely used and deserves a lot of credit for capturing the moment.

Matt Stannard was a communications coordinator, researcher and board member of the Public Banking Institute, was policy director at Commonomics USA, and is operations director at Solidarity House Cooperative, which you can learn about and support here.

Why Poor People Don’t Run for Federal Office

by Yana Ludwig
July 1, 2019

I’m running for US Senate as someone who regularly experiences economic insecurity. Here’s a little of how that has been so far.

A few months ago, one of my housemates said to me, “You do the Millennial hustle better than any Millennial I know.” What she was referring to is my multiple part-time jobs and freelancing gigs that comprise my part of keeping the mortgage paid and the lights on.

It was funny and kinda flattering (I’m too old to actually be a Millennial, but I often find that they are the folks I most easily connect with). But her teaching me that phrase brought part of her generation’s struggle into sharper focus: the painful reality I experience around not having work and economic stability is so common for her age mates that they’ve coined a term for it. Ufdah.

There’s pain in this reality. The constant hustle takes its toll, some months there isn’t enough and we have to do that horrible juggling act (pay insurance or get car fixed? delay the dentist for another couple months or skip getting new groceries and eat pantry dregs?). If it wasn’t for the Affordable Care Act, I’d be one of the millions of people who live in fear of waking up in the morning will illness rising and nowhere to go; as is, the co-pay and deductible still discourages “good” choices sometimes.

I’m running for office because of that economic insecurity, and because climate disruption is a real and rising reality for all of us, but especially people of color and poor people everywhere. I’m running now because there is urgency to both, and because the rise of fascism needs people to stand in its way as powerfully as possible. And for some reason I woke up in February with the notion in my head that maybe I could stand up more formally and actually run for office.

So I’m doing this thing, and I’m committed to seeing it through, whether that means it is over in 14 months, 17 months or 8 years. And I was in no way “financially ready” for this.

In fact, I almost didn’t run because of money. One of the first things I learned when I started talking to folks who know more than I do about elections is that candidates can’t pull any kind of salary from their campaign coffers until after the primary filing date closes: in my case, because I’m in a state with a late primary, that means June 6 of 2020. So running means adding to my hustle a nearly full time additional job. That pays nothing. For a year. When I’m already struggling.

But it gets worse. Once you can pull a salary, you are limited to either what you made last year, or what the office you are running for pays, whichever is less. Think that through for a second. That means that someone who makes the big bucks can pull a salary equivalent to $174K (current US Senator salary), and I can pull a salary equivalent of less than $25K, for the same work. It’s blatantly classist and it is hard to believe there wasn’t intentional favoring of rich people to be able to run for office.

My next inquiry was, “Can I crowdfund to help keep my bills paid while I run?” And the answer was, “Nope. Any help people give you because you are running counts as a campaign contribution and is subject to these restrictions.” So that modern desperation go-to isn’t even available. (I can’t even publish this article on my own blog because it is on patreon and will be interpreted as an “ask”.)

My response to learning these things was first despair (CAN I do this? How does anyone do this?!?) then analysis (THIS is why we are so under-represented! I’m seeing the mechanism laid bare!) to deeper commitment (Godammit, someone has to do this. Let’s go!)

But I’m dragging other people along. The financial stress in my life was already there and it is shared stress with my family and community-mates. I’m going through waves of feeling anxious and guilty for this choice, which was, after all, my choice first and foremost. And the more I show up as a candidate, the less I’m available to help get that mortgage paid. 

I’m also harboring deep fears that this is going to compromise my health. I have chronic Lyme disease, which is held in check by daily doses of herbs and being the party pooper who heads for bet at 8:30 most nights. It’s a precarious balance, and falling off that cliff can mean weeks or even months of increased pain and exhaustion. Plus not being able to work for a while, which just leads to more stress and anxiety as the bills pile up and my partner has to double down on his own already exhausting work life.

Then there is the “birds of a feather” phenomenon: I don’t hang out with millionaires, which makes fundraising for anything a challenge. And I don’t have millions of my own money to throw in to my own campaign. An independent candidate in the last Wyoming US Senate race joked in an interview that his wife had agreed to let him spend $1M on his campaign… but he’d do more if she wasn’t paying attention. Isn’t that sexist and cute? And casually unaware of his own privilege?

Reading that article left me feeling the old shame of being a capitalist system failure. I comfort myself with the story that I’ve always been more oriented toward service than a big paycheck, but the reality is that even if I had tried to play that game in earnest, only a handful of people ever “make it” if they don’t start out in a family with a lot of wealth.

So the crux of the “why” is that the deck is stacked against us, both in general and within the minutiae of campaign finance law. My family is going to go through the squeezebox of economic stress over the next year and a half in the hope that I can win a seat at the table and be part of changing the mess that is our electoral system, and win or lose, being a role model for not accepting the hand we’ve been dealt. 

I want public financing. I want Citizens United dead and gone. I want corporate power blunted so that people with a real commitment to the working class and poor can actually stand a chance in our electoral system. And the deeper I get into the stressful, anything-but-justice-based process of running for a federal office, the more fierce that commitment gets. 

Yana Ludwig is the author of Together Resilient: Building Community in the Age of Climate Disruption, and is a candidate for United States Senate. She is a founder of Solidarity Collective in Laramie, Wyoming. 

Photo credit: https://www.yana4wyo.com/platform

 

Public Banking, State Capitalism and the Collapsing Bridge

January 7, 2018 updated January 8, 11:16 AM

by Matt Stannard

I’ll give away the ironic image-play here. One chief argument for public banks is low-or-no-interest public infrastructure funding, and the exemplar of that argument is the San Francisco-Oakland Bay Bridge retrofit, which cost nearly twice as much as it should have because of interest rates on the money borrowed to complete it. Probably ten people total would get that connection to the title of this post.

The collapsing bridge here is the one between capitalism on the one side and public or democratic control of some financial institutions on the other.

The biggest challenge for the public banking movement is that it was originally conceived –at least in the wake of the Occupy movement of 2011– as a bridge between people who love capitalism and want to save it from the monopolies of the financial sector; and those who believe we need a full-scale transition into cooperative, non-capitalist economics. That bridge may no longer be stable. In a few years, it may not even exist at all, and the movement will have to answer the age-old question of the radical labor struggle: Which side are you on?

Over at Occupy, [EDIT: THE ARTICLE IS HERE] I’ll have an article up later this week (and will edit to add the link) on the ways in which the public banking movement has taken some punches to the gut, from Governor Phil Murphy’s deprioritization of a New Jersey state bank to the defeat of L.A.’s Measure B to the end-of-year news that the report commissioned by California’s Cannabis Banking Working Group strongly recommends against any public option in cannabis banking—bitter (but, as I explain in the article, unsurprising) news for those of us who pushed the public banking option and spoke before the Working Group at its public banking hearing in Los Angeles in 2017.

Deonna Anderson’s good new article on public banking in Yes! magazine doesn’t get into the movement’s recent defeats, but does mention my cautionary report about North Dakota’s use of its state-owned bank to entrench rather than break free from our life-killing dependence on fossil fuels—and the function of that public bank to emergency-fund state repression of protesters at Standing Rock.

Obviously there are different definitions of success, and the anti-scarcity narrative of public banking has tended to use a very generic definition, allowing advocates to tout the success of North Dakota’s extraction industry (made possible in part by the lending of the state-capitalist BND) while also taking some credit for the launch of Germany’s post-carbon transition. In a kind of marshmallow liberal sense, it makes sense that advocates of a type of public entity rather than an entire value system would present their case in value-neutral terms. But humanity is killing itself and major portions of the planet, public control of finance could help reverse course, and there are limits to who we want to spend time and resources winning over in that fight.

For years, the public banking movement has courted the smaller players in the banking industry—particularly community bankers, whom the movement has sometimes flatteringly portrayed as white knights of economic justice–with promises to do what BND does and support small business lending and regulatory compliance among community banks. North Dakota bankers like it and have been willing to say that. Painfully few other leaders in the small-scale end of the financial sector have followed the lead. There are occasionally internal debates in the public banking movement about the utility of continuing to court community bankers, and the “everyone at the table” approach generally wins, though not always by much.

With no community bankers on board, earlier iterations of the movement were often energized by conspiracy theory types (who are sometimes right—I say “conspiracy theory types” more of a description of their political praxis than their particular beliefs) who’d recently read Ellen Brown and learned that, according to a widely supported theory of banking, banks create money by lending it.

But the dominant “banks create money” narrative is a kind of potential red herring to public banking as a political movement. It’s not what chiefly motivates the divestment-oriented eco-justice and new socialist proponents of municipally-owned banks. The language of the narrative, the kind of “look what we discovered about banking that Wall Street doesn’t want you to know,” probably does more harm than good. I get that it’s a compelling and sound argument. But even if banks do not “create money” they do facilitate the creation of value and liquidity, and have the power to erase the practical distinction between having and not having money. Even if “money creation” is more metaphorical than real (there are good reasons to think it’s both), it stands for the proposition that banks are extraordinarily powerful entities in financial infrastructure and for that reason, irrespective of any others, they should be publicly owned.

Mobilizing around that “secret” about banks has made for some strange bedfellows since the beginning, and so at least until the divestment and economic justice movements re-acquainted themselves with public banking, it has been too esoteric, evidenced by the handful of leading public banking exponents who are vocal Trump supporters (in the service of which they make or retweet embarrassingly stupid arguments which I will refrain from linking to here). Some of these people are carry-overs from the section of the movement informed by the anti-banking, anti-federal reserve positions associated with G. Edward Griffin, a Bircher whose 2009 conference on Jekyll Island off the coast of Georgia helped build the white supremacist militia movement. Anti-Semites and authoritarian-fetishists saw public banks as a means to dismantle the imagined “Jewish hold” over private finance capital, or allow strong dictators to quickly fix the economy. Similarly, in many ways, the “free money” section of the public banking narrative is more a libertarian wish-dream than a democratic socialist template. If we’re careless, all of this becomes a way of bypassing democracy, not actualizing it.

But since Trumpism and vaguely antisemitic conspiracy theories are grounded in the same essential worldview as neoliberalism and finance capital, the right-wing public banking advocates can’t effectively defend the movement from attacks by the finance industry in the form of negative feasibility studies. There’s a fundamental disconnect in someone who believes banks should be run by municipalities in the public interest but also stands by Trump. Allies like that are distractions at best. At worst, they represent the desire for a fantasy-world of authoritarian state capitalism, where powerful demagogues or fascistic parties control giant “public” banks so they can control or quickly fix troubled sectors of the economy, eliminating material rivals rather than being subject to the kinds of deliberative and transparent community control characteristic of, say, democratic socialism.

Public banks may provide a means of sustainable growth. Unless engineered by oligarchs, they will not provide the kind of growth that pleases powerful investors or allows speculation and gambling with other people’s money. But those are precisely the things capitalism presently wants. Public banks won’t save capitalism as it manifests today, and there is no political or policy trajectory towards an “ethical” capitalism, a “green” capitalism, or any other kind of non-exploitative, non-extractive capitalism. The individuals and small groups associated with such visions have no political roadmap, even though they are often smart and nice people. There is no mass movement behind them, nor is there the ground to build such a movement. The occasional entrepreneur-with-the-innovative-solution-to-poverty isn’t enough. Elites can’t, and won’t, transform the material conditions that made them into elites.

What all this ultimately means is that we need democratic, public-centered, commons-centered control of our finance, period. It may not matter what that looks like. There are many great models, some transitionary, some that compromise too much in my opinion, and many that don’t.

Ultimately, economic and ecological justice can’t be about “bringing everyone to the table.” It has to be about bringing willing stakeholders to the table, and rendering the unwilling (and materially predatory) parties irrelevant. It’s been encouraging that movements across California, from Los Angeles to Oakland to San Francisco to Santa Rosa, have begun to adopt that more militant, egalitarian, justice-oriented praxis. I really hope the best for them in the face of yet another rebuke commissioned by conservative public officials and written by those for whom economic democracy is foundationally alien.

Matt Stannard is director of Solidarity House Cooperative and writes, researches, and teaches about cooperative law and economics. He served as policy director for Commonomics USA, and was communications director and later a board member for the Public Banking Institute.

Don’t Make Demands on Wage Workers

by Matt
July 27, 2018

So the other day I was having lunch at a restaurant and the service wasn’t good. Non-attentive, took a long time, never asked how I was doing or whether I needed anything. So do you know what I did?

. . . Nothing.

I didn’t stiff the tip. We shouldn’t even have tipping. It encourages harassment and dehumanizes service workers. But as long as it’s a thing, I’ll tip what I can afford regardless of the service.

I didn’t complain to management. That could have gotten a young person in trouble or fired and who knows what effect that might have on their safety or security? Reporting a wage worker to their boss is pretty much like calling the cops on your noisy neighbors. Don’t do it.

Confront the server? Why? If they were occupied with other parts of their job because it was busy there, how would that do anything but make them feel bad? If they were just resting or daydreaming, well good. Wage work is terrible. I have no problem buying them 5 minutes of freedom.

In this world of hierarchy and exploitation, sermons about the “value of hard work” or the “decline of good service workers” are not sensitive to the political and economic realities of our time. My only regret is that I didn’t leave my server a pamphlet about organizing their workplace. Next time.

Don’t discipline wage workers, folks.

Mug Shots and Bankruptcy Proceedings

May 11, 2018
Matt Stannard

The other day I stumbled upon this example of the practice of publishing people’s bankruptcy proceedings. Declare bankruptcy at the U.S. Bankruptcy Court in Spokane, and the Tri-City Herald will publish your name, address, total debts, and total assets.

They’re a matter of public record, of course, but one’s conscience asks why such painful information needs to be publicized in this way (if there are public policy-oriented reasons for disseminating bankruptcy information, surely there are better ways to do it), even as one’s legal mind may understand the theoretical reasoning: Bankruptcy is the public legal forgiveness of debt.

But as I cited in a recent public banking article over at Occupy, debt itself is a political and sociological invention.

In his 2011 book Debt: The First 5000 Years, anthropologist David Graeber chronicles the transition from communal systems of sharing – including shared obligations – to capitalism’s assimilation of all relationships into a system that generates profits for investors. Integral to that process is the individuation (and demonization) of debt, one of the many relationships that are stripped away, often through literal violence.

 

In addition to Graeber, in that article I also cite Linda Coco, a law professor and innovative legal clinician concerned with how debt and financial distress damage us. I learned about Professor Coco’s work when I read her 2016 article on bankruptcy as discipline in the Wyoming Law Review. Concerned with how bankruptcy court procedures construct and reinforce a narrative of fiscal failure, Coco concludes:

The bankruptcy petition codes [petitioner’s] financial life according to a legal and procedural logic found in the bankruptcy legal world . . . [their] financial lives and their identities are properly rendered into a recognizable pattern. Their information is fixed within the grid of the schedules and organized over time in the Statement of Financial Affairs. Their financial life is organized and controlled. It becomes legible in two-dimensional space. It is clearly analyzed and rendered for and in the bankruptcy process . . . a normalizing force in American social and cultural life. The internalization by disciplinary techniques of these dominant discourses results in the collective doxa of a group in which “more and more people must attune their conduct to that of others, the web of actions must be organized more and more strictly and accurately, if each individual action is to fill its social function. Individuals are compelled to regulate their conduct in an increasingly differentiated, more even and more stable manner.’  Therefore, discourses of economic utility and individual responsibility create the standards by which individuals compare themselves to each other, the manner in which individuals distinguish themselves, the way that individuals rank and measure each other, generate ideas of good and bad, and ultimately decide what is normal and abnormal behavior. The social group views individuals experiencing over-indebtedness and financial distress as aberrant. Financial failures are people who have not mastered the requirements of economic productivity and utility. According to the economic utility models, individuals experiencing financial difficulty are believed to be unable to exercise restraint and self-control.

Professor Coco’s article is a profound exposition of an insidious ideological machine. Another law professor, similarly concerned, is Mehrsa Baradaran, whose recent prolific work effort proposes that we create supportive, rather than adversarial, relationships with our financial structures. For Baradaran, this reformation includes a more authentic and class-conscious interpretation of the Bank Holding Company Act’s public benefits requirement, and the creation of postal banks with a mandate to provide credit and liquidity to the economically marginalized.

Those would be relatively modest reforms, if we’re being honest with ourselves. But conventional American economic thinking sees such proposals as pretty much Fully Automated Luxury Gay Space Communism. If such a reconciliation of Americans’ material vulnerability with the building of democratized and compassionate financial utilities is difficult to conceive in the present moment, one reason for this is the not just the ritualized discipline of financial failure, but also its ritualized spectacle. These newspaper bankruptcy notices are a manifestation of that spectacle. They are like, although perhaps not completely like, “mugshots” magazines available for sale (because people buy them) in gas station convenience stores across the Midwest.

“Of all capitalism’s tricks,” I wrote in the Occupy article, “the trickiest is convincing people that debt, credit and currency have an objective existence and power beyond what we give them.” Marching debtors out naked onto the public stage while their debts and assets are called out as dry, existing things is one way to reinforce that topos.

Featured image: Philip Nicholas Bankruptcy Proceeding, signed by John Quincy Adams as Commissioner.

200 Red Balloons

He seems older to me.

Whatever else you want to say about Karl Marx (and there’s a lot to say, he doesn’t actually seem like someone I’d have wanted to be friends with), he had a profound, unprecedented critical sensitivity:

    • he possessed an empathy with the excluded periphery of the material and political world,
    • he was capable of finding the classist metaphysical assumptions, the cruel theology, in conventional assumptions about economics, and
    • he spotted, with precision, the ways in which symbolic, legalistic, institutional reforms failed to address the underlying problems they set out to reform.

Materiality always seems to have the last word, even though materialists have a mixed record on understanding oppression holistically. But you can’t get oppression without understanding how wealth, the generation of wealth, differences in wealth, control of systems of production large and small, contextualize it.

While I won’t defend those who insist that economics always comes first, it seems like the more pressing challenge always is convincing people it comes at all. There is a great material interest in obfuscating materiality.

Just search “Marx at 200” today and you’ll find many interesting reads, but a few that stand out are Andrew Hartman’s “Marx at 200: Just Getting Started” and Nigel Gibson on “why the workers’ way of knowing still matters.” Gibson writes:

In his last years, after the Paris Commune of 1871 when working people rose up against the capitalist state, he became interested in alternative paths to socialism. In his Ethnological Notebooks compiled in 1881, he critically read ethnographers, praising the freedom that the Native American Iroquois women had compared to women in “civilized” societies. It was live human beings and their reason that remained essential – not the mechanical materialism that Marxism is often reduced to. Marx was a revolutionary humanist, open to – and inspired by – the new passions and forces that spring up and open new avenues to a truly human society.

But he was also a materialist, and I think we have to be both and more.

matt

 

7 Reasons Your Economic Insecurity Isn’t Your Fault

. . . and why that matters

by Matt Stannard
January 29, 2018

The sobering assessment at the end of 2017 by Philip Alston, the UN’s special rapporteur on extreme poverty and human rights, concerning the 40+ million Americans living in poverty, left a question unasked: Why have there been so few effective grassroots political revolts against inequality and material deprivation in the United States?

The seeming lack of class consciousness is even more surprising when we consider that economic insecurity doesn’t just affect those below the poverty level: over 215 million Americans–which I count as 66 percent of the population–couldn’t cover a $1000 emergency with the money in their savings account. That’s over five times as many of us who technically live in poverty, and it suggests that economic insecurity is now an intrinsic feature of the American identity.

This knowledge alone, that there are well over 200 million people just like us, should help temper the feeling of failure that Americans tend to feel about their economic insecurity. But the cultural and rhetorical forces of capitalism are strong. The billionaire class invests a lot in teaching us that our material insecurity is our fault. That unique capitalist apologia has an illustrious history.

Such shaming, along with the condition of economic insecurity itself, extracts terrible tolls on our health, and makes us less effective in fighting the underlying socioeconomic and political conditions responsible for the difficult conditions so many of us are in. The shame of economic insecurity demoralizes and weakens us and makes it less likely we will join in struggle with others against unfair economic conditions.

So I actually hope that if you are economically insecure–whether in poverty or swimming a few days above it, as you read this short article, your shoulders will feel less tense, you’ll breathe more deeply, and let go of the guilt that the oligarchs and moralists want you to carry. Then, I hope you’ll find the strength and love to become more resolute in your determination to help create a world without this kind of abuse, and with the opportunities that come from egalitarian, cooperative security–the kind of world that, frankly, the majority of the world wants and has always wanted.

Here goes: This is a meditation. Your economic insecurity is not your fault because:

1. . . . wages aren’t under your control

Wages haven’t kept up with productivity gains or inflation over the last several decades. The work you are doing now could very likely have been enough, on its own, to support you and a few others, and own a house and car. Even low-income work could sustain a decent apartment. None of that is true anymore. The elites have many reasons for wanting to keep wages low in most sectors of the economy, including protection of their profits, but other reasons too. I’ll just let Richard Wolff explain it:

Capitalist enterprises keep moving their operations (first manufacturing, now also many services) from high to low-wage regions of the world to raise their profits. Departing capitalists leave their former host communities with unemployment and all its social costs. Such conditions force desperate competition for jobs that drives down wages and guts job benefits. Public services decline as government budgets suffer. Capitalism no longer delivers a rising standard of living in the regions where it began and developed first: Western Europe, North America and Japan. Instead of goods, capitalism delivers the bads.

Wages suck, the wage economy is designed to suck for most of us, and none of that is your fault.

2. . . . capitalism is like a roller coaster

Our economic system is subject to periodic crises. During those crises, people who’ve been “doing the right thing” all their lives are often ruined. A haunting Wikipedia page, “List of economic crises,” traces economic crisis from first century Rome to the present. The crises proliferate over time, with one crisis in the 14th century (it was a banking crisis), eight in the 18th century (including the Bengel Bubble Crash and the collapse of French enterprise on the Mississippi) to twenty five in the 20th century. Every economic crisis devastates countless lives and re-boots generational economics. Those devastated lives are then dehumanized further by public discourse blaming working class and poor people for the state of the economy.

3. . . . capitalism reproduces itself in social relations

Although pointing this out makes postmodernists cringe, it’s not unreasonable to conclude that the way a society produces and distributes its goods, and the patterns of mass scarcity that may result from inequality, influence the way we interact with each other vis. institutions and cultural behavior. We can debate about how much, but it seems to me that economic determinism is more true the poorer or more insecure you are, which is another way of saying that scarcity “overdetermines” the cultural expression of economic relations.

A description of the important anthology Millennial Capitalism and the Culture of Neoliberalism lists those various relational themes:

how the triumph of the free market obscures rising tides of violence and cultures of exclusion, and the growth of new forms of identity politics. The collection also investigates the tendency of neoliberal capitalism to produce a world of increasing differences in wealth, environmental catastrophes, heightened flows of people and value across space and time, moral panics and social impossibilities, bitter generational antagonisms and gender conflicts, invisible class distinction, and “pariah” forms of economic activity.

4. . . . a few powerful entities could make the system work for us all but won’t do it

Although pointing this out makes revolutionary socialists cringe, a few basic reforms –far from the new paradigms of ownership cooperativists ultimately advocate — could solve many, if not all, current manifestations of economic insecurity. A reasonable regime of taxes on capital and the recovery of the trillions of dollars hidden in tax havens could eliminate the effects of poverty and economic insecurity, if not the root causes. All that would take is a tiny group of Americans deciding to end their intransigence on just taxation–but we all know this is unrealistic.

But please tell us more about how our inability to rent one-bedroom apartments in Denver and San Francisco is our fault.

5. . . . “money” is a construct

The increasing realization among scholars and activists that “fiat currency is a social construct” could not have come at a better time. Economist James Galbraith calls the axioms of Modern Monetary Theory “factually uncontroversial.” Governments choose to order and symbolize their financial endorsements the way they do. Both governments and banks create what can be called money, and the real questions are how to manage that process, how to incentivize social goods and ameliorate social bads and deal with other actors, like workers, businesses, and consumers. As Atossa Araxia Abrahamian explains:

The decisions about how to issue, lend, and spend money come down to politics, values, and convention, whether the goal is reducing inequality or boosting entrepreneurship. Inflation, MMT’s proponents contend, can be controlled through taxation, and only becomes a problem at full employment—and we’re a long way off from that, particularly if we include people who have given up looking for jobs or aren’t working as much as they’d like to among the officially “unemployed.”

Irrespective of what money “is” in either a metaphysical or practical sense, the value of your money is not under your control. When our parents accused us of “not knowing the value of a dollar,” they were more correct than they knew.

6. . . . “work” is a construct

I remember sitting with activists at a community center in Detroit in a snowy January in 2014, talking about their revolutionary approach to inner-city unemployment. The reemergent phrasing was that there’s no jobs but plenty of work. This truth has been pointed out all over the country. Anyone looking around immediately sees things to do–things that would improve life for everybody, things that could make the planet happier, busy work, dirty work, dignified work. Under our current wage-based paradigm, “jobs” are what private shareholders want to extract from us to increase their profits, and whatever public and nonprofit work can be painfully extracted from these powerful interests. As our crumbling infrastructure and shrinking social service networks testify, there’s plenty of genuinely valuable work not being done.

Moreover, a “work week,” a reasonable number of hours to work in a day, the way differently-abled and differently-privileged people are capable of arranging their work lives? You guessed it: all arbitrary and a function of what economic elites want the extraction of your labor power to look like. For this caprice and myth of order, we’ve been shamed for our inability to always do the kind of work they want us to do.

7. . . . “personal responsibility” is a construct

Even if personal responsibility exists, a person can incur neither credit nor blame for endowments they possess or lack. Even if you can trace your financial mistakes–a job you fucked up, a bad marriage, a criminal record, these mistakes fall differently on different people. The late John Rawls caused a stir among philosophers of “moral desert” when, in A Theory of Justice, he argued that people cannot claim moral credit for their natural endowments and tendencies. Sure, Rawls argued, people can expect to get paid well for doing good work, but that doesn’t mean we deserve or do not deserve good things in a general sense based on what we’re good or not good at.

People resist this because they think personal responsibility is important. But, like the foundational assumptions of MMT, the assumptions of Rawls’ dismissal of moral desert are perfectly reasonable, and their consequences are dependent upon what we do with the understandings we have of our moral, material, and political agency. The real question isn’t whether you are genuinely or absolutely culpable for your individual economic condition (have I mentioned you aren’t?), but what we can do, acting together, to achieve real moral agency, which is control over our material lives.

The think tanks and spokespeople deeply invested in making you feel guilty for not having enough money to live are also deeply invested in systems of production and finance that ensure it will stay that way. As we stop feeling guilty, we’ll find new layers of energy with which to defeat and bypass them.

Should you hold yourself accountable for bad choices you made when you know you can “do better?” Sure, if you think it will help you do better. I’m not suggesting you shouldn’t. But we’re all part of a larger set of systems. We’re smart enough to understand that responsibility is dialectical. It’s just that we’ve been pushed so far in the direction of absolute moral desert that we are, per Kenneth Burke, “rotten with perfection.” We should try forgiving ourselves and each other and moving forward together to overthrow the existing economic order.

Matt Stannard is director of Solidarity House Cooperative and writes, researches, and teaches about cooperative law and economics. He served as policy director for Commonomics USA, and was communications director and later a board member for the Public Banking Institute.

Image: The Panic – Run on the Fourth National Bank, No. 20 Nassau Street. Illus. in: Frank Leslie’s Illustrated Newspaper, 1873 Oct. 4, p. 67.

Sears CEO Eddie Lampert F***ed Up & My Friend Paid for It

by Matt

Over at Occupy.com, you’ll find my new essay on the fallout from Sears’ financial debacles (the result, among other things, of Lampert’s decision to do stock buybacks instead of, umm, maintain and repair the physical stores where people were actually showing up to buy things). It’s a personal essay, because my friend, a married father of several young’uns, is now unemployed because of Lampert’s bungling. It’s also an essay about morality. And that’s been on my mind for the last several months: the way that it’s really impossible to have a coherent normative or prescriptive moral theory when one’s practical moral culpability is inversely proportional to the amount of money one has. So give it a read and a share, okay? And I’d love to hear your own thoughts on the way class differences fuck up our ethics.

How Racism and Capitalism Work Together in Policing

by Matt Stannard

Municipal and state police forces’ use of intimidating and lethal superweapons is a result of the private, for-profit production of such weapons and accompanying lobbying to create policing policies that favor those weapons. But that production and distribution couldn’t work except over a backdrop of anti-Blackness, and the ability of police ideologists to interpret disadvantaged neighborhoods and the trauma of historical oppression as Black criminality.

Racism and capitalism work together in tandem again in the training of police officers by private training firms with the same material interests as the weapons makers. The fastest way to turn police forces into consumers of those weapons is to teach cops that they need to be very, very afraid of people of color. The obvious solutions are to take control of the situation and eliminate any threat to the safety of the officer as quickly as possible. This imperative, propped up in the consciousness of police officers even if they aren’t overtly racist, must be constantly replenished.

Matt Stannard is policy director for Commonomics USA. 

Photo: By Daviskorn at English Wikipedia – Fed Up Queers, Public Domain