9 October 2008

'Let Finance Be Primarily National'

In recent weeks we have probably all looked back wistfully to the days of John Maynard Keynes. It just feels like a world where stability was a normal state of existence, not a chimera that seemed unavailable no matter how many billions we were prepared to spend to achieve it.

It seems to me that Keynes was always right about economics. I really wish I had more time to read his lucid and insightful writings about money and inflation. Sadly, the academic's life was not what it was in Keynes's day - and besides, like Ricardo before him, he made a fortune from the stock markets that funded his life of thoughtful leisure.

I sympathize, therefore, with those who would minimize, rather than with those who would maximize, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel--these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national.

The quotation from which the title of this post is taken is a favourite amongst greens, who usually cite it because of its emphasis on economic self-reliance. But Keynes's focus is on the importance of national governments having control over finance.

Once finance is no longer national we have lost effective control and no longer live in a democracy. Our government can do nothing about the lending policies of US mortgage dealers or insurance companies. If these companies can bankrupt our banking system which we then have to subsidise with our own money, what is the point of voting? The fact that the three main parties simply congratulate each other about their ability to prop up capitalism is only a complacent confirmation of the reality of politics since the globalisation of finance and deregulation of the money markets in the 1980s.

I feel similarly reluctant about giving my money to people who sent their money overseas to invest in countries beyond their democratic remit for an extra half percentage point of interest. Guaranteeing rich people's savings in our banks is one thing; guaranteeing rich people's savings in Iceland, Bulgaria or the Cayman Islands feels quite different.

The 1930s was a time when men who modelled their sartorial style on Mr Cholmondley-Warner, spoke like Trevor Howard and were exclusively white, dominated economic and political life. Although we feel ourselves infinitely more sophisticated and cosmpolitan we haven't solved the problem of our powerlessness in a world dominated by global capital. Credit and exchange controls, giving us as voters power over our national economy, seems increasingly attractive.


  1. I like your post molly. But too much regulation is going to stop foreign investors putting money into our banks, shares and our industry.
    Though some regulation needs to be enacted.

  2. Molly, I enjoyed reading your post... but there's really nothing wrong with dressing like Mr Cholmondley-Warner ( not my kind of thing, but each to their own ), or speaking like Trevor Howard, or wearing a zebra design coat. Nor indeed does it matter whether the economists were all white, female, tall, short, fat, thin, tattooed, bearded or a mixed bunch.

    All that matters is what the economists had to say for themselves, and what they did.

    The rest comes across as prejudice.

    No offence intended.


  3. Steve - nothing would make me more proud than to drift through the streets of Stroud with a CW lookalike on my arm as I sport a zebra-style coat. The pamphleteering tone that blogs require necessitates some satirical flourishes like this. I'm less sure about the Trevor Howard manner, which I think may reveal unpleasant repressions which are the true sources of prejudice.