I was listening to American Leftie Pete Seeger singing ‘Banks of Marble’ yesterday. It was a video clip from YouTube, and had images of various workers who were poor and starving while the money they earned was piling up in the bank vaults in the form of silver and gold ingots. The original words of the final chorus go as follows:
But the banks are made of marble
With a guard at every door
And the vaults are filled with silver
That the workers sweated for
This is indeed still true today, for whatever real wealth is stored in bank vaults some worker somewhere has sweated to earn. Unearned income is not real wealth since it does not represent any real goods or services; it is simply inflationary, increasing the amount of paper or plastic money chasing the same number of goods and services. Only labor can produce real wealth and value.
However, the images of poor workers in America, including a miner who’d lost his legs, hardly resonate with most workers in the developed capitalist countries today. They would, however, resonate with grossly underpaid workers, including children, working in sweat-shops and call centers in the underdeveloped countries of Asia and elsewhere.
Globalization has meant vast multinationals have increasingly moved manufacturing and services like call centers to non-unionized, cheap labor markets in the underdeveloped countries, at the same time causing workers in the developed countries to become unemployed.
In the developed capitalist countries, however, there are safety nets in the form of social security benefits. Also there is the credit culture whereby people live on bank loans and use credit cards, all income they have not yet earned and so it too is inflationary.
This means few workers in the advanced capitalist countries reach the low levels of poverty known before the Second World War because, initially at least, they can secure goods and services on credit. The crunch comes when they build up debts and interest which they can’t repay. Interest, of course, is also unearned income which adds to the inflationary spiral. The banks are not even providing a genuine service since the money is not theirs in the first place to lend, and in the second place they are doing no real service to give people loans and credit which just gets them into more debt, and is in any case inflationary.
We all know the trouble the banks worldwide have got into because of this policy of encouraging people to accept loans and live on credit. When people can’t pay back even the original debts, let alone the interest, the banks are in deep trouble.
So the words of the old song are still essentially true, it’s just that the banks have realized that instead of just storing the workers’ wealth in their vaults they can lend back to the workers money which has been stolen from their wage packets, plus honestly earned money which people have left in the banks for safe keeping (ha, that’s a laugh!), and charge interest for lending this money which does not belong to the banks in the first place.
All this lending of money and living on credit is not only very inflationary, it is ruining economies all round the world as banks and other companies go bankrupt or have to be rescued with public money from governments. Governments themselves have vast national debts. The whole capitalist system is thus very unstable because there really is no substitute for good, honest labor, the only thing, as Karl Marx pointed out 150 or so years ago, which can create real value.
Banks and the other financial institutions like insurance companies, building societies, etc. just store the fruits of the workers’ labor. They steal a lot of it to pay vastly inflated salaries and bonuses to their directors, and charge interest for loans and credit representing money which does not even belong to them.
The answer is very simple: take all banks and financial institutions into public ownership, use the money invested to keep taxes low and fund public services for everyone, and stop all loans and credit to private individuals. It is one of the first, essential steps in establishing Socialism with its ethic: ‘to each according to their work’ or indeed Communism with its more idealistic creed: ‘from each according to their ability, to each according to their need’ rather than Capitalism’s motto: ‘to each according to what they can grab, steal or borrow and in the process cause inflation and de-stabilize and wreck the whole economy.’