Finance must be transformed. The G20-Finance will be a bitter hoax
Riccardo Petrella* – Agora of the Earth’s Inhabitants
appeal to the G20-Finance deserves attention. Here are two reflections.
The first is of a general tactical nature.
For years I have been convinced that alternative movements must stop asking the
dominant powers to take partial and “pragmatic” measures that are
acceptable to them. In my opinion, the more violent and brutal the system is
(as it has been for the last 30 years), the more alternative movements need to speak
to citizens, to inform them, to raise their awareness, to mobilise them for
“radical” solutions, to actively participate in political, economic
and social struggles with the aim of changing the power relations, and not to
make the system “more humane” or “less brutal”. This is what the long struggle of the workers
teaches us (their successes and, in recent years, their decline) as well as the
total failure, disastrous for the world, of the “third way” and
“benevolent capitalism” in the USA.
The second, more important, is systemic. It
concerns the central role of finance in the current world system of domination
and inequality. The proper function of finance is to ensure the good governance
of the links between savings and investment, intervening at the beginning of
the cycle of conception and production of wealth and not only at the stage of
its redistribution and consumption.
At present, the financial system is
characterised by the predominance of the power of private entities over money
and finance to the detriment of public entities. States have lost their
sovereignty over money and monetary policy, with a few exceptions. Decisions on
the creation of the money supply and its circulation have fallen into the hands
of private financial companies (banks, insurance companies, investment funds,
etc.). Currencies have become commodities.
The large majority of central banks are
privately owned and even when they are ‘public’, they pursue policies that obey
the imperatives of capital and private markets. The ECB is even legally and
politically independent of the Eurogroup states. Central banks recognise that
their power to intervene in money is expressed in reaction to the decisions
taken by private actors regarding interest rates and their operations on the
As far as finance and financial policy are
concerned, it is well known that in the last 40 years (following the
“reorganisation” by the dominant players of the international
financial system after its collapse in 1971-73), private financial and
technology companies (with high market capitalisation) have dominated the
capital markets without rival. They condition savings and determine the ‘risk’ of
investment. They decide the priority
areas of investment: which products, which processes, which services, for whom,
when, where, how….). The use of capital is a matter for the global private
owners of money.
The financial policy behind the global policy
against the Covid-19 pandemic is a dramatic demonstration of the abandonment of
public financial sovereignty and responsibility towards billions of human
beings. The ‘western’ states, the most powerful economically and financially,
have put themselves at the service of the financial interests of a handful of
large private global corporations behind the mystifying alibi of national
health security. Their violent and hypocritical defence of private ownership of
knowledge on living organisms is a scandal.
The same behaviour is evident in the
financial policy to combat climate change, loss of planetary biodiversity,
pollution of land and sea, deforestation, global water scarcity. This explains
the insignificant progress made by the 25 COPs held so far. Contrary to their
proclamations, governments and powerful multinational corporations are leaving
hundreds and hundreds of millions of people behind.
In the last 30 years, governments have
commodified, privatised/liberalised/deregulated all the common goods of nature
and life; they have transferred the ownership and governance of life to
industrial and financial entities. Lately they have even left to speculative
finance (derivatives, leeches of the economy) the destiny of water, the life
source of the Earth.
Therefore, we cannot be happy, satisfied,
with the small crumb that the G7 countries promise to drop from the table of
the ever-increasing number of billionaires (a few thousand), in favour of the
world’s impoverished, who are also on the rise (they now number more than 3.6
billion). While the proposed tax crumb may seem like a small positive step, it
is an affront to the lives and dignity of nearly 4 billion impoverished people.
Similarly, we cannot be entirely satisfied
with a tax measure on international financial transactions of the Tobin Tax
type, whose only benefit, as we know, would have been to reduce financial
instability somewhat. But this objective has become more difficult because of
very high-frequency technological finance (to the millionth of a second) and
the general privatisation and financialisation of the economy and politics.
The measures mentioned (the G7 tax under
discussion) and proposed (FTT) are clearly worthy but insufficient in the
current dramatic state of relations of domination and inequalities between
people and peoples. The decisive measures that could trigger a process of
financial transformation are not primarily to be found in taxation, although
this remains important. Our societies are no longer those of the time when the Scandinavian
welfare state developed. Solutions must be sought at the level of property as
an alternative to the commodification and privatisation of the property of
life, of the ‘res publica’, on a global scale. The measures must above all
overturn the private ownership of money, the private ownership of the state,
the private ownership of the common goods essential to life, the private
appropriation of nature, the private appropriation of knowledge.
A “better” taxation introduced on
pharmaceutical activities or on the agro-chemical industry or on the
computer/digital industry, in the absence of the abolition of patents on life
and on AI, will have multiple structural limits that will prevent the
conception, production, diffusion and use of the money saved and invested in a
sense favourable to Justice, Equal Rights, Solidarity/Responsibility.
We must (re)begin to re-establish the
public community of goods essential to life, the priority of investments for
the realisation of universal human rights and nature, the planetary
responsibility of humanity. How can this be done? We must increasingly denounce
the theft of peoples’ wealth and demand the immediate cancellation of the debt
of low- and middle-income countries. We must relentlessly call on citizens and
the major civil and moral organisations, including the world of religions and
artists, to fight even harder than they are doing for the drastic reduction of
military spending and to denounce the criminality of states that maintain tax
havens and do not outlaw devastating speculation, derivative products and
predatory investment funds. We need to change the financial system at its roots
and not just mitigate its harmful effects. It is necessary to intervene at the
level of the ‘brain’ of the system and not only at the level of the ‘heart’. In
the first case, it will be possible to change. In the second case, we will help, maybe.
* Riccardo Petrella (La
Spezia, Italy, August 5, 1941) . Founder of the International
Committee for the World Water Contract, Prof. Emeritus of Globalisation at the
Catholic University of Louvain and member of The WPFâ€™s Scientific Committee,
Italy. Article sent to Other News
by the author.