Common Good Finance working towards true Democracy
Oct 23 2008 04:37
There's this project I thought people here would like to know about. It's called the Common Good Bank project. A group of people in Massachusetts are working on a new kind of bank that gives all profits back to the community. The beautiful part is, the community gets to decide exactly what to do with the profits.
There's so much more to the project, like local currency and collaboration with worker-owned cooperatives to further democracy in its fullest sense.
I visited Massachusetts for a couple weeks over the summer and the people working on it are intensely dedicated.
Check it out and sign up. [url=http://www.commongoodbank.com]
Looking forward to being a part of the site. I'm surprised it's taken me so long to find.
Oct 23 2008 08:02
#2
hi metacometa, welcome to the site.
i have to admit though that i'm skeptical of 'peoples banks' and the like - the problem with capitalism isn't just that we don't own it (however democratically), it's that the imperative for money to make more money over-rides our needs and desires. for any bank to stay afloat it needs to lend only to borrowers who can repay plus interest (which is neccessary to cover overheads/bad debt even if you're a non-profit - but this isn't a non-profit per se anyway), it needs to be plugged into this imperetive.
i think the whole strategy of out-accumulating and out-competing capitalists is flawed for a number of reasons. i mean i would go into them (and will if you want), but since the project is explictly designed to "be good for local business" and "create entrepreneurial opportunities" and partners with several organisations that explicitly want to promote dialogue and understanding between masters and (wage-)slaves rather than abolishing (wage-)slavery renders the other criticisms somewhat moot. it's explicitly pro-capitalism, so showing how an anti-capitalist bank or currency is a contradiction in terms is superfluous.
but er yeah, welcome to the site... 
Oct 24 2008 19:33
#3
Hey. You make a good point, that this whole idea of money making money is what's gotten humanity into such trouble - to succeed you have to exploit somebody along the way. Sometimes they don't mind it, sometimes they have no choice, and sometimes they have no job at all.
Now, to be pragmatic about all of this, we need a transitional organization that can operate on a mass scale and promote economic democracy. This is exactly what the bank will do when it opens. There is such a thing as more people-oriented and less people-oriented, there is such a thing a better for the community and worse. If people were to directly own, operate, and direct the investments of a community bank, the businesses would have to compete for what the community wants. Of course then you get into this whole discussion about what people want, but I really believe that for the most part people know what is best for them.
We cannot at once produce a society absent of authority and abuse, but we can at once support organizations that push us in that direction...to be Thoreau-esque. Progress must come in degrees; this bank can be one hell of a jump.
This is what the project needs, serious debate about the direction the progressive population as a whole wants to follow. We've gotta try something...
Thanks for the welcome!
Oct 24 2008 21:48
#4
metacometa wrote:
If people were to directly own, operate, and direct the investments of a community bank, the businesses would have to compete for what the community wants.
see i don't think this really works. the only way a 'community bank' could get significant capital would be by competing with other banks on rates etc (otherwise it would only have ideologically motivated depositors), which it couldn't do by avoiding investment in profitable but unwanted (by 'the community') activities. like i say trying to outcompete capitalism is doomed from the start. therefore i think our opposition to the endless imperitive to grow/make profit can't take the form of 'alternative' banks or businesses, since they're just niche market versions of the same thing. ditto for 'ethical consumption.' instead i think our opposition is at a more radical level; the fact our needs and the needs of the economy - as enforced by bosses and the state - are incompatible. therefore i agree with this:
metacometa wrote:
We cannot at once produce a society absent of authority and abuse, but we can at once support organizations that push us in that direction
but the organisations i have in mind are ones of working class self-organisation - so that we organise on the basis that those without capital who therefore have to sell themselves for a living have an interest in getting rid of this system, while those who do own/control capital have an interest in maintaining it. this opposition between our needs and the needs of the economy needs to be pushed, ultimately to breaking point, by asserting our needs - against wage or service cuts, for shorter hours or better conditions etc - to ultimately create a society based on 'from each according to their ability, to each according to their need', as opposed to a slightly nicer or fairer version of the status quo.
Oct 25 2008 11:44
#5
metacometa wrote:
There's this project I thought people here would like to know about. It's called the Common Good Bank project. A group of people in Massachusetts are working on a new kind of bank that gives all profits back to the community. The beautiful part is, the community gets to decide exactly what to do with the profits.There's so much more to the project, like local currency and collaboration with worker-owned cooperatives to further democracy in its fullest sense.
I visited Massachusetts for a couple weeks over the summer and the people working on it are intensely dedicated.
Check it out and sign up. [url=http://www.commongoodbank.com]
Looking forward to being a part of the site. I'm surprised it's taken me so long to find.
I pretty much agree with JK here,but I think its also worth adding that this idea of a ''community bank'' isn;t new, its been tried and has failed. In the US, where you guys never really had social democracy i can sort of see why it seems new and why you think it would work, but looking at the UK, where we had the co-op as one of the main food distrbutors for a long time and have lots of co-operative banks, co-opeative businesses and credit unions its fair to say that none of these have brought about radical change or brought us any closer to a better society. The ones that have tried to head on compete with capitalism are the ones who most clearly resemble its practices. http://en.wikipedia.org/wiki/Co-operatives_UK
Also we could take a good look at argentina recently or russia and eastern europe for an example of the failures of co-operative enterprise and ''shareholder democracy'', both examples show these models competing with capital in the middle of recessions something worth bearing in mind in te current economic climate.
This is not to say co-operative industry and finance don;t sometimes (not always) improve peoples lives in the short term, but its important to be aware of their limits.
Oct 26 2008 00:15
#6
Non capitalist banking is essential, absolutely fundamental, to any socialist project and it is genuinely heartening to see it being worked on like this. So I wouldn't want my criticisms to be seen as anything other than constructive.
That said, mutual banks, credit unions, and micro credit organisations already do the sort of thing being proposed here. The perceived advantage of this seems to be take exploit the current unfair advantage that stock issuing (capitalist) banks have in the regulatory framework.
But stock comes with drawbacks too:
Quote:
Also, by design, stock will be so easy to buy and sell, through simple transfers to and from a checking account, that depositors will be happy to choose a higher interest rate than they receive for their ordinary deposits.
Hmm. I wonder about that. Someone wishing to sell stock will first need to find a buyer. The bank itself will be unable to buy back stock easily or quickly because of the requirement to keep 8% (in Massachusetts) of deposits as capital. So the person wishing to sell stock will have to sit around and wait for a private buyer to turn up, or for the bank itself to shrink its deposits and lending enough to have spare capacity to retire stock. For a small bank, that could be a long wait. Realistically share swaps in small banks would perhaps be performed one day a year, say on the 1st April, only. And even then there would be no guarantee sellers would be able to get all their money out. They might have to wait for the next year to come round. That'll scare away a lot of potential small scale investors, like me. Pretty much only rich people can afford to sink money away for years in long term investments. If you're poor, you need liquidity.
So is this really going to work better than credit unions for small scale local democratic banking? Well, I don't know: I've only skimmed through the proposals so far, maybe that's already been worked out somehow. But that no bank, even a small one, has yet been set up after several years of dedication and commitment suggests the problems I am foreseeing could be real.
For a big state wide bank with millions of depositors it would work though. There a big enough market in shares would develop for them to be liquid investments. Perhaps that is the way to take this idea?
But another problem is that stock ownership is inherently risky. It is not (or at least it should not be, $700 bn bailouts aside) insured by FDIC (US) / FSCS (UK).
Whether or not the bank aims to pay a dividend of prime-1.5% or not, hard times like now may prevent it from doing so. And in the event of a bank failure even the initial purchase price of stock would be lost. For example, stock in this, otherwise similar, Community Development Bank has dropped from a constant $10 down to $4 in the last 4 months http://www.snl.com/irweblinkx/stockinfo.aspx?iid=1024752 with the deflation of the housing bubble.
Community Development Banks are big and successful in the US, and they already issue stock and more or less attempt to do some good with their lending. They try to pay serious dividends to stockholders, which we none of us like, but maybe that is the best that can be done in trying to square the circle of capitalist stock-issuing banks with socialist aims.
If we want socialist banks (and I for one do) then I think we maybe have to bite the bullet and dispense with stock ownership for those. That credit unions and the like are hobbled from competing on an even playing field against capitalist banks by state regulation and legislation, is outrageous, but maybe seeking to change the rules through political action is the best way to deal with that problem.
Oct 28 2008 08:57
#7
afraser wrote:
Non capitalist banking is essential, absolutely fundamental, to any socialist project
yes, but you consider a market economy with nationalised banks 'socialist', like Vietnam with self-managed sweatshops.
...