How to Socialize the Banking Sector

14 June 2018 by Eric Toussaint , Patrick Saurin

Because capitalists have demonstrated just how far they are willing to go, taking risks (risks whose consequences they refuse to be held accountable for) and committing crimes for the sole purpose of increasing their profits, because their activities regularly result in heavy costs borne by society as a whole, because the society we want to build must be guided by the pursuit of the common good, social justice and the reconstitution of balanced relations between human beings and the other components of nature, the banking sector must be socialised. As Frédéric Lordon proposes, a “total deprivatisation of the banking sector” needs to be carried out. Socialisation of the banking sector in its entirety is recommended by the trade union federation Sud BPCE in France. [1]

Free the people and the public services from the grasp of the financial markets  

Socialising the banking sector means:

  • expropriation without compensation (or compensated by one symbolic euro), of large shareholders (small shareholders will be fully compensated);
  • granting a monopoly of banking activities to the public sector, with one single exception: the existence of a small cooperative banking sector (subject to the same fundamental rules as the public sector);
  • defining, with citizen participation, a charter covering the goals to be attained and the missions to be carried out and which places the public savings, credit and investment entities at the service of the priorities defined by a democratic planning process;
  •  transparency in the financial statements, which must be shown to the public in understandable form;
  • creating a public service for savings, credit and investment, with a twofold structure: a network of small “high street” branches, on the one hand, and on the other, specialized agencies in charge of those activities of managing funds and financing investments not handled by the ministries in charge of public health, education, energy, public transport, retirement, the environmental transition, etc. These ministries will be provided with the budgets necessary to assure their investments and efficient functioning. The specialized agencies will intervene in areas and activities that are beyond the competence and spheres of action of the ministries in order to ensure that all needs are covered.
  • Imagine what this means: the end of private banks —that is, once they have been expropriated (and their small shareholders indemnified), their staff would be taken on in the public banking and insurance sectors, with their length of service and pay levels guaranteed (up to authorised maximums in order to crack down on excessive incomes) and wage increases for the lower paid; and their working conditions would be improved (the end of benchmarking [2] and high pressure selling). New recruits would share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. the advantages enjoyed by public service employees.

Banks which serve the public

The disequilibrium of having a large number of competing bank branches concentrated in the big urban agglomerations and the shortage or lack of branches in small towns, rural and poor neighbourhoods will be rectified. A comprehensive network of local branches will be developed in order to improve the availability, to the population, of banking, insurance and financial services run by competent employees in a context of public service. Nobody should be refused access to free public banking services.

Local public service agencies will manage the current account and savings account deposits which will be fully guaranteed. The savings will be managed without taking risks. They will be used, under citizens’ control, to finance large scale local projects and investments aimed at improving the living standards of the population, combating climate change, abandoning nuclear energy, developing local markets, and financing local land development that respects strict social and environmental standards. The savers themselves may choose which project or projects they wish their savings be used to support.

The local agencies would grant non-risk loans to individuals, households, small and medium companies and private local structures, associations, local institutions and public administrations. A portion of their resources could be used for projects that have wider than local use, of course in a democratically defined framework.

Banks at the service of the community

Local agencies would be managing reasonably sized financial portfolios. This would allow a high level of control of all the elements of the financial markets; objectives, programmes and repayment schedules would be made clearly understandable and make it easier to monitor the different actors.

Local projects would be financed under the best conditions of democratic participation.
Local agencies would also have the possibility of offering insurance services to the public and to companies.

Support the transition towards a social, sustainable and ecological economy

What’s more, the ministers for health, education, energy, public transport, pensions and ecological transition – to name but a few – would also have development funds from the State budget at their disposal.

Specialized transversal agencies would intervene to coordinate projects involving several ministries and interested parties. Their job would be to carry out specific or cross-cutting missions with citizen participation, like the programme to completely abandon nuclear power, including long term treatment of nuclear wastes.

Many aspects of this project still need to be elaborated. We are in a preparatory phase of a completely new system. This work will require ambitious collective efforts to bring together ideas and suggestions. This is only the beginning.

Citizens’ control at all levels

Citizens’ control of banks means control by an instance comprising the employees, customers, local elected representatives, representatives of small, medium sized and micro companies, the self employed and local associations’ delegates. And of course banking oversight authorities.

The word “socialisation” is used in preference to “nationalisation” or “state ownership” to make clear the essential role of citizen oversight, with decision-making shared between directors, personnel representatives, clients, non-profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. associations, local officials and representatives of the national and regional public banking entities. How that active citizen oversight will be exercised will need to be defined by democratic means. Similarly, the exercise of oversight over the banks’ activities by workers in the banking sector and their active participation in the organisation of the work must be encouraged. Bank administrators must issue an annual public report on their clear and transparent stewardship. Preference must be given to local, quality service, breaking with the policies of externalisation currently being pursued. The personnel of financial establishments must be encouraged to provide the customers with authentic counselling and to have done with current aggressive sales policies.

Socialising the banking and insurance sectors into public services will make it possible:

  • for citizens and public authorities to escape the influence of the financial markets;
  • to finance citizens’ and public authorities’ projects;
  • to dedicate the activity of banking to the common good, with among its missions that of facilitating the transition from a capitalist, production-intensive economy to a social, sustainable and environment-friendly economy.

Because currency, savings, credit, borrowing, security of deposits and the preservation of the integrity of payment systems are matters of general interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. , we recommend that a public banking service be created by socialising all the firms in the banking and insurance sectors.

Because banks are today an essential tool of the capitalist system and of a mode of production that is ransacking our planet, generating unequal distribution of its resources, creating wars and impoverishment, eroding, little by little, social rights and attacking democratic institutions and practices, it is essential to take control of them so that they become tools placed at the service of the community.

Socialising the banking sector cannot be conceived of as a mere slogan or demand, sufficient unto itself, and which decision-makers would put into practice once they had understood why it makes sense. It must be seen as a political goal to be reached through a process driven by a citizens’ movement. Not only is it necessary for existing organised social movements (including trade unions) to place it at the top of their agenda and for the different sectors (local governmental bodies, small and medium companies, consumer associations, etc.) to adopt the same position, but also – and above all – for bank employees to be brought to an awareness of the role played by their profession and the fact that it would be in their interest for banks to be socialised; and for bank users to be informed at the point of use (for example, through coordinated occupation of bank branches everywhere on the same day) so that they can participate directly in defining exactly what a bank should be.

The socialisation of the banking sector and popular support are the necessary conditions for profound change

Only very large-scale mobilisation can guarantee that socialisation of the banking sector can actually be achieved in practice, because it is a measure that strikes at the very heart of the capitalist system. If a government of the Left does not take such a measure, its action will not be able to truly bring about the radical change needed to break with the logic of the capitalist system and bring about a new process of emancipation.

Socialising the banking and insurance sector must be part of a much broader programme of further measures which would trigger the adoption of a transition to a new, post-capitalist and post-productive model. Such a programme, which needs to be European-wide but which may first be put into practice in one or several countries, would include abandoning austerity policies, cancellation of illegitimate debt, implementation of an overall tax reform with heavy taxation of capital, an overall reduction in working hours with compensatory hiring and maintaining wage levels, socialisation of the energy, water and health sectors, measures for ensuring gender parity, development of public services and social benefits and the implementation of a strongly determined ecological transition policy.

At this point in history, socialisation of the entire banking system is an urgent economic, social, political and democratic necessity.

Translated by CADTM.


[1Frédéric Lordon, “L’effarante passivité de la ’re-régulation financière’ (The alarming passivity of ’financial re-regulation’)”, in Changer d’économie (Change the economy), les économistes atterrés, Les liens qui libèrent, 2011, p. 242. Note that the socialisation of the whole banking sector is recommended by the French trade union Sud BPCE.

[2Benchmarking is a tool to monitor workers which produces results that anyone can access at any time, and that are constantly compared through ranking, thus stigmatising those considered to be performing poorly. It is a technique of management-by-stress much used by big companies in order to create unhealthy emulation.

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography:
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.

Other articles in English by Eric Toussaint (625)

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Patrick Saurin

He is member of the Truth Commission on Public Debt. Spokesperson for the bank employees’ labour federation Sud Solidaires de la Banque Populaire – Caisse d’Epargne (BPCE) - France.

Other articles in English by Patrick Saurin (6)



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