The cost of sustaining the current financial system – Editor
The following is an extract from a 2014 interview by Cris Menon with Prof Steve Keen (Kingston University, London) .
CM: Many of the reforms you recommend are predicated on reform of the banking sector, cutting the banking sector down to size. How realistic is that given the nexus between the political class and the banks?
SK: We have to break that political nexus. It’s false, because the reality is that finance is a cost of doing business; it’s not a profit centre. Finance of course has to make a profit in its own right to be viable; you need a financially successful banking sector. But you don’t need one that’s 30-40% of the profits of the economy, because at that level it’s actually siphoning off money being generated in real production — of the industrial sector, the agricultural sector and the minerals sector.
Ultimately the financial sector should be the servant of the rest of the economy, not the master. But at the moment it’s the master of not just the economy but of the politicians as well. So to break the nexus, we need a complete political shift …