Finance as Servant

The financial industry should serve the purpose of supporting the increase of the abundance of life by the real economy. Several key passages from my book Rethinking Economy provide insight into the questions I pose in this area.

If money is a means to an end, then finance is a means to obtain the means to an end. As such, the financial sector has a serving function, similar to the axle of a well-oiled and trued wheel. Such a wheel causes virtually no frictional energy loss and allows very easy control of the vehicle: while driving, one hardly thinks of the wheel, let alone the axle. Likewise, a well functioning financial system would make up a minimal portion of the GDP and would contribute to a rapid balancing out of price signals. The present financial sector is light years away from this ideal picture, because it has made itself the ruler of the economy instead of its servant. It devours resources instead of contributing to using resources efficiently in the sense of contributing to greater abundance of life. Here also, means and ends have become inverted. (p. 185)

As a means of circulation within society and as bearer of social value, money is a part of the vitally necessary infrastructure of every currently existing society. Likewise the traffic arteries and ports of money, that is the financial institutions, logically belong to this infrastructure. Whoever is excluded from this infrastructure hardly has any economic opportunity. Therefore, it would be consistent to treat these as a public infrastructure, accessible to everyone. (p. 186)

One could conceive of the financial system as being analogous to a complex public transportation system in which numerous different transport enterprises, including private ones, develop a common system of prices, coordinate their schedules, and negotiate a procedure to share revenues. From the perspective of the customers, the transport system appears as a single system, despite the fact that it consists of numerous separate enterprises. Likewise, the various historically evolved structures of the financial system could be integrated into a public infrastructure. (p. 186)



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