It’s less than 18 months since the Occupy protests spread worldwide and already the spotlight they shone on the global financial crisis and the reckless and unaccountable behaviour of the private banks and other powerful global financial actors has begun to dim.
Concrete responses to the underlying causes and drivers of the financial crisis have been feeble and half-hearted at best. Here in the UK the government is still dithering over whether to implement the weak Vickers commission proposal on ringfencing retail banking. Nowhere is there any sign of interest in the kind of co-operative global political action that is needed to gain public control over the financial speculation that is destroying people’s livelihoods. On the contrary, private and shadow finance is increasing its grip over public life and the modes by which it is able to extract wealth from ordinary people, both directly through debt provision and indirectly through our taxes.
Governments around the world are encouraging the growth of public private partnerships (PPPs), known in the UK as private finance initiative (PFI) projects. They feed the growth of a parasitic private finance sector comprised of banks, investment funds and shadow finance actors such as private equity funds, which attach themselves to the state as a new source of secure, low‑risk profits.
PFI increases corporate ownership and control over public services and increases the net outflow of taxpayers’ money into the pockets of private finance – money that could otherwise be invested in improving and extending public services and infrastructure. The government promotion of PFI is contributing directly to increasing inequality and the concentration of wealth, while at the same time reducing democratic control over public services.
On page 20 Nick Hildyard exposes how this is not just happening here in the UK or the rich world. PPPs are now increasingly relied upon to deliver and extend basic services and public infrastructure in much of the global South. In environmental policy too, there is a growing reliance on private finance.
This growing power of private finance is part of the bigger process of financialisation to which we have borne witness over the past few decades. The Marxist geographer David Harvey describes the rapid growth, globalisation and deregulation of the finance sector since the 1970s as leading to the ‘financialisation of everything’, meaning the growing control by finance of all areas of the economy and public life. The global capitalist class is increasingly making its money from finance rather than by investing in production. And the expansion of control and ownership of private finance over public infrastructure, services and resources is part of this process of financialisation. It is essentially a form of primitive accumulation: a new wave of enclosures of the commons.
Tackling this is clearly a long-term project for the left. We are still trying to understand what exactly is happening, to cut through the opaque and complex processes of global finance and divine the real games at play and their wider impacts. Many complications lie in the way of our search for solutions, including the fact that many of the core actors driving these processes operate under the radar, holding unpublicised meetings in anonymous offices and listing their companies in offshore tax havens. Another is that many of the investment funds at the core of this process are using capital from the pension funds of those who are lucky enough to still have pensions to provide the initial equity investments in PFI.
Yet financialisation provides us with an enormous opportunity. It is the common ground for a multiplicity of struggles, a unifying point unlike any that we have seen since the international mobilisations against the Iraq war. Financialisation links the struggles of activists in the UK campaigning to protect the NHS with activists in Brazil campaigning to retain democratic public ownership and control over the forests and the rights of the people who depend on them.
Turning the tide on the power of global finance requires us to remake the case for public ownership and control of the commons in a way that learns from the past weaknesses in bureaucratic and sclerotic state control. It requires us to stop the haemorrhaging of money from public finances into the hands of the private sector parasites by resisting PFI projects and ending the whole PFI agenda. And most importantly, it requires a renewed focus on the redistribution of wealth.
To start with, we must tackle the supposed lack of finance that is pushing governments towards reliance on private investment by demanding a crackdown on the tax evasion by global financial elites and transnational corporations – as articulated so effectively by UK Uncut – and by challenging the low tax regimes of the neoliberal era that let corporations and the super-rich off the hook.
#228 Climate Revolutions ● Transitioning beyond climate and Covid-19 crises ● Conservation without colonialism ● Prisons, profits and punishment ● Surveillance capitalism in India ● The uses of comedy ●Simon Hedges ● Book reviews ● And much more!
And you choose how much to pay for your subscription...
Read the latest edition for free and support our crowdfunder to ensure that we can support our writers and editorial team during this uncertain period.
The stakes could not be higher during this election. Help us cover what's really happening
By Hilary Wainwright
Imagining a better world is the first step towards creating one. Ruth Potts introduces our special utopian issue
Guest editor Rachel Laurence introduces our special focus on devolution
How much has Labour changed, asks Andrew Dolan – and how much can it?