A Call to Arms: Spenders of the World, Unite!
First posted, here, on Canvas – an award winning student-run online journal at the University of Sheffield. I have been treasurer of Canvas since February 2012.
“This article explores how capitalism itself can be used to force banking reform and how the power of demand can create more ethical high street banking.”
Bankers – possibly the only profession in the world where the most common adjective used to describe them is found by changing one letter. The very mention of ‘banker’ in a national newspaper is sure to promote connotations of selfish white men, who take massive risks that undermine the very society in which we all live, whilst they receive massive bonuses for doing so. The people have had enough, and our politicians are listening. Indeed, Labour has been calling on bank bonuses to be slashed in the wake of (publically owned) RBS chief executive Stephen Hester’s £1.6 million pay-out.  On the other hand, the Coalition has entered agreements with the big banks on bonuses, pay and lending under the banner of Project Merlin. 
However, here’s a novel idea, why don’t we take politics out of the equation all together? Why don’t we refuse to let Westminster decide how our economy should function? Why don’t we take the responsibility to empower ourselves to forge the society that we deserve? Let’s put our money where our collective mouth is and force the market to respond to our demands.
This is possible. Capitalism is essentially a tool we use to meet demand with supply. On a very basic level, if there was demand for x amount of a product, under a perfectly capitalist economy supply of product x shift towards 500 – any higher would cause the producers to lose money through overproduction, whilst any less would mean profits haven’t been maximised. All too often capitalism is seen as something that controls us – governments are forced to act in a certain manner as not to upset ‘the market’, but this isn’t the case. There are examples across the world of governments going against international trends and saying no to ‘the markets’. A prime example is Bolivia’s Evo Morales who nationalised electricity companies in 2010  and again in 2012.  Many other Latin American countries have renegotiated contracts for resource extraction and contrary to predictions capital has not fled the country. Generally speaking, as long as there is some profit to be made firms will stay in the industry. This has once again shown by the policy of Morales, who renegotiated energy contracts with key businesses, some of whom have now agreed to pay up to 82% tax on profits. 
Changing focus from the state to society, there are similar ways in which we can use the tool of capitalism to create a more ethical economy. The method is simple – by shifting demand towards a new ethical alternative to the status quo society thus creates a market for firms to flock to in order to make a profit. Market pressure by consumers to increase standards, reduce negative externalities or invest money responsibly would result in firms changing their behaviour to meet these requirements in order to retain custom. The role for governments in this scenario is to ensure consumers have a greater access to information in order to hold firms to account and they follow through on their promises.
This method of consumerism isn’t a pipedream and examples can be seen see all the time. Companies like Primark are increasingly desperate to show the ethical side of their business after increasing negative coverage of their brand after a series of protests outside flagship stores.  Many may see this as a shameful PR exercise and argue that Primark doesn’t really care about people but rather their bottom line – that may be true, but it isn’t the important factor. It is not the place of a company to care about the world; it is the place of a company to care about profits. The power consumers have is that if they care about the exploitation of workers, they can take their money to a company that doesn’t exploit workers and send a message to offending companies. The point is that by forcing a company to change their behaviour or face a drop in custom, someone, somewhere, is getting a better deal – and all due to market forces. Isn’t it better that these companies do the right thing for the wrong reason than not at all?
There is nothing too big that consumer power cannot tackle, not even the banking industry. It is not the bankers we should be blaming for their actions but rather ourselves. We have allowed the idea of an amoral banking sector to go unchallenged for too long. By consumers withdrawing their money from the high street banks and moving them into ‘ethical banks’ such as the Co-operative Bank they back powerful sentiments such as not investing “in businesses that operate in areas of concern to [the Co-operative Bank’s] customers.”  This is (unfortunately) a radical message being sent to the old-style banks that enough is enough, that practices need to be changed or they will lose their dominant market positions in place of firms that offer society more.
The Co-op Bank is the tip of the iceberg. There are many banks that go beyond businesses in terms of investment, such as Triodos which has a history of investment in wind farms (if that’s your thing) or Shared Interest, which pools money from savings accounts and lends it to the Fairtrade movement.  There is no reason why the amoral, socially tone-deaf banking system has to continue when consumers have the power to craft a better system that puts socio-cultural concerns alongside financial.
All too often capitalism is seen as a negative force for society, something that politics is there to correct for. But capitalism, in and of itself, is nothing more than a tool to meet the demands of individual consumers. If we truly want a better future, the onus is on us, not politicians, to demand one. Supply will meet demand and we will be in the driving seat, a collective master over an industry that has caused so much economic and social pain. Capitalism is what we make it – and we can make it better.