Leo Panitch: Can G20 avert crisis Pt.2
Story Transcript
PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. We’re talking to Professor Leo Panitch. He’s a professor of political science at York University, and he’s the author of The American Empire and the Political Economy of Global Finance. Thanks, Leo. So we’re told one of the underlying assumptions of the G20 meetings, of the Obama stimulus and banking-reform plan, is that certain institutions, certain banks, maybe the auto industry, certain other things, are just too big to fail. And so the plan seems to be, because they’re too big to fail, pour public money into them until they’re healthy again, and then sort of hand them back to the people that ran them into the ground in the first place. So if you were describing Brown as defending the old new world order, what’s a real new new world order solution to this?
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LEO PANITCH, PROF. OF POLITICAL SCIENCE, YORK UNIVERSITY: Well, that’s the enormous challenge, and it’s not easy to just pull this out of one’s thumb, one has to say. It is very much the case that not only are these institutions too big to fail, but that everything is being done to make them bigger in a way. You’re going to see a tremendous concentration of banking capital under this. You’re likely going to see not seven major world automakers but three or four coming out of this. You’re going to see a further concentration of capital. One of the things that—the reason the stock market has gone up today is not the G20 communique nearly as much as the announcement from the major accounting standards board internationally that is going to let the big banks value their toxic assets in a way that isn’t marked to market. So they’re going to be able to change the accounting rules. It’s going to make it look like they have more capital on the books than they actually do.
JAY: So how are they going to do it? Are they just going to assign a value [inaudible]?
PANITCH: They’re just going to give a different value to it.
JAY: But, as you said to me off camera, The Real News should start doing this,—
PANITCH: The Real News should, that’s right.
JAY: —’cause we’re going to assign a several-multi-billion-dollar [inaudible]
PANITCH: And if your accountant lets you do it, then you’re going to be able to try to get it—you know, I might give you another donation, Paul, if that’s the case.
JAY: Well, our domain name just got evaluated at $43 million, so who’s to say [inaudible]? So that’s sort of what we’re talking about.
PANITCH: That’s what we’re talking about. Now,—
JAY: Fiction.
PANITCH: —some people will say we ought to let these go down. The effect of that on the world economy would be horrific. You know, not only The Real News resources have to be invested in some of these banks, but ordinary people, what little they have is invested there in their pensions, in their deposits. The roof over their head depends on some of these banks staying in business. Just to let them go is disastrous. Some people say we ought to break them up into smaller units. And this is a typical American liberal response, an antitrust response. It’s not viable in most industries. You know, the size of lending that’s required in terms of international trade, you’re not going to have some small bank in Winnipeg in the north end be able to carry the loan of that. You need very large units of capital for this in order to cover the risk of it. And even so, we saw no matter how big they were, the leveraging was such that they couldn’t do it. No. I think what we’re going to need, the question is: do we have the political forces and the political creativity to do this well? What we’re going to need is turning the banking system into a public utility, taking these big banks into the public domain and making them a public service, and changing its function, but also in the auto industry. That ought to become, including the parts sector, a publicly owned auto industry, which is then converted into the production not only of ecologically sustainable, driven energy cars, hydrogen cars, electric cars, public transit. The enormous skill of the tool and die makers (they can make anything), it’s going to be wasted. It ought to be turned into producing solar panels. The reason we can’t use solar energy is because it’s so expensive right now in terms of that conversion. The machinery that exists in the auto industry, it’s all going to be sold off in bits and pieces as they close down plants in Windsor and in Detroit.
JAY: Which is the plan right now is to downscale hundreds of factories.
PANITCH: And we’ll lose those resources. You’ll lose those skills. It’s a terrible waste to what society has built up. It’s not a matter of what those owners are. So we’re in a situation, which I have to say Marx predicted in the 19th century, that capitalism, which he saw as a very revolutionary system, with the capitalist class as the most revolutionary class in world history, was having the effect, through the enormous growth it was creating, of concentrating ownership and capital, concentrating the resources of society in larger and larger institutions. It was in that sense socializing society. Right? But despite it and the fact that it was being socialized, it was still privately owned. And we’ve now reached a situation in which you’ve got these massive firms, massive resources and skills in them, which are owned as private property by relatively few people.
JAY: And breaking down because of it.
PANITCH: And the society is breaking down because if this. We finally need to find a way to get to the kind of social system that lives with the fact that we live in a socialized society, but one which is democratically run. Now, how do you do that? Because it is true—and I think people are right to be worried about this—it is true that the state as presently constituted is not very democratic. It’s not clear that if you really nationalize the banking system, that you run it on different lines than [if] it was a privately owned corporation. You’re going to have to change the criteria of lending, right? Even when Air Canada was a public corporation, was it run all that differently from a private airline? When the industries were nationalized that went bankrupt in the early part of the century—in the Canadian case, you know, the Grand Trunk Railway went bankrupt, and we created the Canadian National Railways out of this. That became not only one of the world’s great transportation companies, one of the world’s great telecommunication companies, right? But CN wasn’t run democratically.
JAY: It may not have been run democratically, but you could say at the very least there was some public interest mandated.
PANITCH: That’s true.
JAY: And if the United States should take state-owned hospitals—.
PANITCH: There’s some public interest to mandate that. [inaudible] there had been a big struggle, especially in Europe, to have the nationalized companies have elected worker representatives on the boards, and they fought tooth and nail. And who got appointed to them were businessmen, right, retired civil servants, and the odd university professor. Not workers. And that was reflected in the way in which those industries were run. The challenge would be enormous. And in order to do this, we would need to have the kind of political movements [that] hardly exist anywhere, which would not only put this on the agenda but would develop people’s ambitions and capacities, right, to run them.
JAY: But the issue of getting to, for example, public-interest mandate to the banks, public ownership of banks, public ownership of the auto industry with a green mandate, even that’s a step, whether it’s democratized or not.
PANITCH: No. It’s a step in that direction, insofar as it’s public.
JAY: And the real question is: is there any real alternative in the old world order solution? ‘Cause there seems really not to be. They’re putting money back into the corpse of the auto industry.
PANITCH: Well, that’s true. I mean, we’ll have to see. You know, if there isn’t a movement to replace capitalism, capitalism will continue. And it is not impossible that after a very severe depression, with a further concentration of capital and with the state learning how to regulate a capitalist system better, that the thing can revive again. Given its global nature, given its competitiveness, etcetera, it will always be subject to crises, right? It’ll be an incredibly unequal and uneven system, as it’s always been, and a fundamentally undemocratic one. I mean, at least your point is right about being subject to some degree of public accountability, at least, if you have a publicly owned enterprise. That’s true. The great thing about it being on the public system is that we expect our state to be democratic, so it becomes subject to democratic pressures. We don’t expect the private corporations to be democratic, ’cause the bottom line there is who owns it, the bottom line there is private property.
JAY: So there is a fundamental shift, even without this democratizing political movement, even if you take something like PBS. PBS is publicly owned, there’s community input, there’s at least a basis for the conversation.
PANITCH: There’s a basis for the conversation, there’s a basis for better regulation, but, above all, there’s an invitation to democratize, because we expect our public sector [inaudible]
JAY: So your line would be: “Too big to fail? Nationalize.”
PANITCH: Absolutely.
JAY: Thanks for joining us.
PANITCH: Good to talk to you, Paul.
JAY: Thank you for joining us on The Real News Network.
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Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.
