Bank of England’s Director of Financial Stability Deems Occupy a Success

Around the anniversary of the official birth of Occupy Wall Street, a host of bank affiliated financial reporters used the occasion to designate the movement a failure in surprisingly strident terms. Why the need to kick a dead horse? By any standards, the outcry was peculiar and misguided. First, even if the movement accomplishes nothing else, it had already scored a considerable victory in galvanizing public opinion around the outside role of banks in politics and the economy, and on the related issue of income inequality. The movement even on its comparatively small ongoing scale was perceived to be enough of a threat to elicit a coordinated 17 city paramilitary crackdown. The vehemence of the response was a powerful testament to its impact.

Second, a year is an inadequate timeframe in which to assess the impact of social change movements. Remember, when Chinese premier Zhou Enlai was asked what he thought about the impact of French Revolution and famously responded, “It is too early to say,” he was referring to the 1968 uprisings, which had taken place a full five years earlier. As Columbia professor Suresh Naidu has pointed out, if you look at the history of civil rights protests in the US, during the first five years, the activity was at a very low level. After that period, the level of protests rose sharply and grew from that higher level. It would similarly be easy to have dismissed the anti-apartheid movement in South Africa in its early years, and it took over thirty years to achieve its aims. Even the revolutions of 1848, which were, like the Arab Spring, an uncoordinated set of national revolts that appeared to produce little, actually led to lasting changes in some countries.

Even last September, there were more judicious rethinkings of the impact of Occupy. One came from Reihan Salam, a conservative Reuters writer:

One year on, the encampments that had sprung up in Lower Manhattan and in cities, college campuses and foreclosed homes across the country have for the most part been abandoned. And so at least some observers are inclined to think, or to hope, that the Occupy movement has been of little consequence. That would be a mistake. Occupy’s enduring significance lies not in the fact that some small number of direct actions continue under its banner, or that activists have made plans to commemorate “S17” in a series of new protests. Rather, Occupy succeeded in expanding the boundaries of our political conversation, creating new possibilities for the American left.

And despite the efforts to diss it, OWS found an audience in the corridors of power. FT Alphaville chaired a discussion of socially useful banking, and the keynote speaker was Andrew Haldane, the executive director of financial stability for the Bank of England. Haldane is highly respected both among economists, who regard his work as creative and rigorous, and international banking regulators. He has the potential of being the sort of economist who leaves a lasting imprint on the profession. So his positive remarks about Occupy are a particularly powerful endorsement. From the opening of Haldane’s speech (emphasis his):

The theme for tonight is “Socially Useful Banking”. And what better place to discuss it than tonight’s venue – the main meeting hall of The Friend’s House, traditionally the venue for the annual meeting of the Quakers.

The Quaker movement famously gave us two of the UK’s largest banks, Lloyds and Barclays. Between them, these banks have almost 600 years of history. For most of that period, no-one questioned their social usefulness. They extended loans to businesses and helped families buy homes. Nationally and regionally, they were part of the social fabric. Today, that fabric is torn.

As the CEOs of these two institutions have both recently said, these banks need to rediscover their social usefulness. But this is not only a question for the banks. It is a key issue for wider society too, who have after all felt the financial consequences of banks’ failings and failures. What do we want our banking system to do? And how do we create that system?
This is where Occupy enter the picture. It is now over a year since the Occupy movement commenced its journey and entered the collective conscience of the public and policymakers. One year on, what has it achieved?

Some have suggested rather little, that Occupy’s voice has been loud but vague, long on problems, short on solutions. Others have argued that the fault-lines in the global financial system, which chasmed during the crisis, are essentially unaltered, that reform has failed.

I wish to argue tonight that both are wrong – that Occupy’s voice has been both loud and persuasive and that policymakers have listened and are acting in ways which will close those fault-lines. In fact, I want to argue that we are in the early stages of a reformation of finance, a reformation which Occupy has helped stir.

Let me start with the contribution of the Occupy movement itself. Occupy has been successful in its efforts to popularise the problems of the global financial system for one very simple reason: they are right.

By this I do not just mean right in a moral sense. For sure, Occupy have touched a moral nerve in pointing to growing inequities in the allocation of wealth and incomes globally. The 99% certainly agrees. But so, more interestingly, do a high and rising share of the 1%.

Yet it is the analytical, every bit as much as the moral, ground that Occupy has taken. For the hard-headed facts suggest that, at the heart of the global financial crisis, were and are problems of deep and rising inequality.

Haldane’s comment on analytical ground probably refers to (among other things) the Occupy the SEC Volcker Rule comment letter and StrikeDebt’s Debt Resistors’ Operations Manual. When Sheila Bair met with the Alternative Banking Group, she said that the Volcker Rule comment letter galvanized the SEC, that too often the staff wants to take a position opposed to the generally sloppily made lobbyist comments, and gets little sympathy from the top brass if there are no comments from public groups on the other side. OWS has established a brand that regulators will listen to, and I hope it continues it its efforts to make use of its bully pulpit.