How should we redesign banking? Are social movements all we have?

What do you think is the potential of CDFI banks like Beneficial State Bank and New Resource Bank in the Bay Area of California to transform our economic system? Can they truly contribute significantly to redesigning the financial system to serve the many, or are the forces of our dominant economic system such that only mass movements that demand worker coops through political mobilization are our only option? I work in a bank like this, and see that it lends to great community organizations and is willing to spend more time being flexible with non-profits. The bank is a B-corp with all economic rights owned by a non-profit, so no profit maximization. However, because traditional credit analysis inherently favors rich investors and not multiple guarantors (coop), I worry that this type of operation is not very additional on it's own. Please provide some insight.

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The existence of entities like CDFIs and B corps is an admission that leaving our society to the profit-driven mercies of the usual capitalist corporations is a recipe for very bad social outcomes. That directly contradicts the promise of capitalism's defenders that it is a system that guarantees, optimizes, maximizes etc.

The problem lies with how a society dominated by capitalist corporations shapes how most people see the world. To go directly to your topic here, what exactly is understood by the "community development" portion of CDFI? How are we to imagine and pursue strategies to get poor, low-income, etc communities out of the sufferings to which generations of capitalism have consigned them? Can CDFI's reasonably be expected to entertain, let alone pursue, strategies that challenge the reigning profit-driven orthodoxies? Your point about CDFI's being uneasy about lending to coops opens up a long list of such problems. What happens when a CDFI is asked to help an enterprise that competes directly with a profit-driven enterprise in its environment? Or when an enterprise that seeks to borrow from a CDFI proposes unorthodox wage, benefits out of a theory that they are better for the longer term development of the enterprise and of an alternative structured and motivated economic system? Had capitalism's profit motive been our only problem, then enterprises freed from that constraint might have been a solution. But the reality is that capitalism's profit-driven organization shapes, influences, etc everything in its surroundings. Let me offer a parallel: letting a few slaves buy their way out of slavery and become free did not suffice to basically change that society, just like having a subset of masters declare they would no longer whip slaves or sell their children etc. Whatever virtues these sorts of acts show, they rarely went beyond being "exceptions to the rule" and the rule was and is the problem.

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  • Richard Wolff
    responded with submitted 2017-03-12 16:19:29 -0400
  • Daniel Haynes
    published this page in Ask Prof. Wolff 2017-03-10 00:04:29 -0500