Politics

Ann Pettifor: Can Society Once Again Make Finance Servant, Not Master Of The Economy?

In February 2018, Jeremy Corbyn accused bankers of taking the economy hostage, and said in a speech that Britain’s financial sector will be “the servant of industry not the masters of all” if the Labour Party wins the next election. How realistic is that promise? In this lecture Ann Pettifor will argue that given the dependency of the finance sector on the largesse of the state and its taxpayers, a Labour government could transform the relationship between finance and industry.

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Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital: Financial Products You Should Avoid?

Ann Pettifor
Image source: YouTube Video Screenshot

Ann Pettifor is the author of The Production of Money, director of PRIME economics, and a member of Labour’s Economic Advisory Committee. She was one of a few to predict the Great Financial Crisis in her 2006 book The Coming First World Debt Crisis.

Transcript

I was so impressed that you're all here tonight in the many Australian football fans here. Nigerian football fans because of who they played Australia and New Zealand and Nigeria playing Argentina. So I'm just impressed that that so many of you are here and not watching football. Welden I would say this I was a member of the council that advises four appointed by Jeremy Corbyn. But that was subsequently dissolved when most of the council members resigned after the EU referendum because they felt that the Labour Party had not done enough to win the referendum. So there is no longer a council but I haven't. I didn't resign but I was the only one left. So the thing really dissolved then. So I've got a rather grim title here for you tonight and it's quite a heavy lecture but it's a really really important issue and it's really important now because we're into sort of turning point in history in my view. I think we societies both in Europe and across the United States in the world are under threat under threat of the rise of fascism and nationalism and that this in turn is a threat also to the global economy and to the global financial system. And one of the things I think we have to do to avoid that threat and who knows it might be too late and this advice may not be taken is to stabilize and subordinate the financial system to the interests of society. So that's why this is rather a cynic but it's I believe of extreme importance.

So I want to begin by quoting a wonderful German economic historian Professor philosopher actually Professor Joseph Vogel who with George Soros says Institute of New Economics in 2012 in Berlin which was really a very meaningful event said this about the finance sector despite all appearances the recent collapse of the finance economy does not represent the end of an era. The crisis has proved itself as a way to solidify the existing economic order in consideration of the current situation. One can argue that the financial and economic state of emergency in recent years has given rise to a form of government action that resembles a continuous coup d'etat a continuous coup d'etat a continuous takeover of the state and that I think is really where we are today. So in February 2018 Cuban accused bankers of taking the economy hostage and said if the Labor Party wins the next election that Britain's financial sector will be the servant of the interests of industry and not the masters of old. So in this lecture I want to take up that theme and attempt to outline a strategy for subordinating subordinating finance sector to the interests of society. But first I propose to loosely define the sector next to outline the arenas of contest between finance and society. Finally I will argue that society has powers to subordinate finance but that on the whole and we know it can be done because it has been done before in recent history under the Bretton Woods system. But what it requires is proper understanding by the public of those powers and deliberate monetary action by courageous politicians to manage money and the monetary system rather than leaving both the sector and the system to the capricious impulses of the invisible hand.

No chief executive of a global corporation would abandon the management of their company to forces beyond their control even if they are affected by those forces. But since the late 1960s and since the deregulation of credit and capital mobility the chief executives of nations and the governors of central banks have effectively left the management of the now globalized financial system to self-regulating market forces. Hence in my view the increasingly frequent recurrence of catastrophic financial crises hence the continuous crew day tours of which Professor Vocale speaks. So let's begin by first loosely defining the sect often wrongly limited to the bankers but also including what I would call the old finance literally translated as high finance and as a reference to the 24 hour trading of the globalized community of finances and asset managers bondholders. Stock market investors so-called private equity investors who are really debt investors and financial speculators. So in the past the sector was defined by for example.