Capitalist economists intensify calls to ‘nationalize’ banks

As the staggering bank losses continue to mount, representatives of the U.S. ruling class are coming to the forced realization that many of the largest financial institutions in the U.S. are insolvent.

The big banks are the heart of the modern capitalist system. The credit that the banks pump out is the system’s lifeblood. Many capitalists fear that if banks as big as Citigroup and Bank of America collapse, it could trigger a heart attack that could potentially prove fatal for the capitalist system. This fear is why a growing chorus of capitalist politicians, economists and pundits are calling for the government to take over the big banks. They want the state to perform an emergency bypass surgery in the collective interest of the capitalist class.

In a recent television interview, the very conservative Sen. Lindsey Graham (R-S.C.) said, “This idea of nationalizing banks is not comfortable. But I think we’ve got so many toxic assets spread throughout the banking and financial community that we’re going to have to do something that no one ever envisioned a year ago. ... If nationalization is what works, then we should do it.” (ABC-TV, Feb. 15)

Senate Banking Committee Chair Chris Dodd said recently, “I don’t welcome it at all, but I could see how it’s possible it may happen. ... I’m concerned that we may end up having to do that.” (Bloomberg, Feb. 20)

And, in a refutation of his own theories, former Federal Reserve Chair Alan Greenspan, who confidently declared in 2005, “The use of a growing array of derivatives and more-sophisticated approaches to managing risk are key factors underpinning the greater resilience of our largest financial institutions,” is also calling for the nationalization of the big banks because of ever growing losses on derivatives, securities and other “sophisticated” approaches to managing risk.

What it means for workers and oppressed

An editorial in the New York Times recently opined, “Americans have a visceral horror of the word nationalization. So call it restructuring or majority ownership. ... We increasingly believe it is the least bad solution to a truly desperate situation.” (New York Times, Feb. 22)

Whatever the bourgeoisie chooses to call it—nationalization, restructuring, conservatorship, etc.—there is no doubt what it would mean for the working class. The state under capitalism is the representative of the collective interests of the capitalist class. If the capitalist state intervenes in the market, it does so in the interest of the capitalist class as a whole, with the objective of ensuring the survival of the capitalist system.

Frederick Engels, in his 1890 book, “Socialism: Utopian and Scientific,” forecast that the ever growing intensity of the regularly occurring capitalist crises would eventually compel the capitalist state to take increasing control of production and finance.

Engels wrote, “But the transformation into state-ownership does not do away with the capitalistic nature of the productive forces. The modern state, no matter what its form, is essentially a capitalist machine—the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers—proletarians. The capitalist relation is not done away with. It is, rather, brought to a head.”

What is the alternative?

The capitalist mode of production is inherently crisis prone. Because of the anarchy of production under capitalism, where each capitalist is compelled by competition with others to continually expand production irrespective of the limits of the markets, crises of overproduction are inevitable. As the capitalist mode of production continues to spread to nearly every corner of the globe, the tendency is for each crisis of overproduction to become more universal and therefore worse than the preceding one.

Crises of overproduction stand as clear indictments of the capitalists’ inability to control modern-day productive forces. Increasing state control of these productive forces further confirms how truly superfluous is the capitalist class.

The capitalist class in the U.S. would like workers to believe that by nationalizing the banks, the current crisis can be brought under control. They assert that “better regulations” can ensure that a crisis like this does not occur again.

But as Engels wrote, “State-ownership of the productive forces is not the solution of the conflict. ... This solution can only consist in the practical recognition of the social nature of the modern forces of production, and therefore in the harmonizing with the socialized character of the means of production. And this can only come about by society openly and directly taking possession of the productive forces. ... By this act, the proletariat frees the means of production from the character of capital they have thus far borne. ... Socialized production upon a predetermined plan becomes henceforth possible. ... In proportion as anarchy in social production vanishes, the political authority of the State dies out. ... When, at last, it becomes the real representative of the whole of society, the State renders itself unnecessary. As soon as class rule, and the individual struggle for existence based upon our present anarchy in production, with the collisions and excesses arising from these, are removed, nothing more remains to be repressed, and a special repressive force, a State, is no longer necessary.”

To accomplish this tall task is the historic mission of the proletariat. With the growth of working-class consciousness, unity and solidarity, this mission becomes more feasible by the day.