TRANSFORMATIONS

https://www.opendemocracy.net/transformation/dan-edelstyn-and-hilary-powell/the-DIY-Central-Bank

The DIY Central Bank

Dan Edelstyn and Hilary Powell 9 Oct 2018

Asserting the moral right to repudiate debt may be the only way of rebuilding democracy.

“Our future is mortgaged, calculated, and owned far in advance, and our democratic right to change it for the better is effectively minimized.” Andrew Ross, Creditocracy.

At the peak of the 2008 banking crisis the UK government had liabilities worth £1.5 trillion. In the emergency bailouts that were agreed at the time by the then-Prime Minister Gordon Brown, the British taxpayer bought £45 billion of shares in the Royal Bank of Scotland and almost £20 billion in Lloyds. It was, as commentators said, a nationalization project that would have put Lenin to shame.

However, while the public owned the lion’s share of these banks the ensuing stimulus packages and sell offs have not been carried out with the wellbeing of the population in mind nor the transformation of the banking system. Ten years of austerity - allegedly to balance the national books - have left the poorest even worse off than before.

Declining government spending in Britain has seen private debts balloon to over £1.6 trillion in 2018, most of which are mortgages. Between 2012 and 2017 unsecured credit increased by 19 per cent, student debt doubled to £100 billion, and Council Tax Arrears increased by 12 per cent. These data are symptoms of a creditor class gone wild.

But what if the crash had been used as an opportunity to reshape the financial system with fresh purpose, and to create space to re-imagine an economy that works for all of us and promotes economic justice? While it’s impossible to correct the debt crisis through local action alone, grassroots experiments can provide both inspiration and concrete assistance to those who are caught at the sharp end of the problem and who are often forced into traditional structures of shame which leave them feeling crushed and even suicidal.

This leap of imagination lies at the heart of ‘Bank Job,’ a team of artists and activists who took over the former Co-Op Bank on Hoe Street in Walthamstow, London, in early 2018, and replaced it with ‘HSCB’ – the ‘Hoe Street Central Bank.’ We were united by a desire to do something about the status quo and to rally against a system we felt had let us down. Our rebel bank is a place to come together and discover the collective power of art, sharing and community action to defy the alienating power that financial capital has in our lives.

In concrete terms we’ve opened our own bank and we’re printing our own art-based banknotes. In place of the Queen and other famous figures from British history, each denomination of our banknotes features the face of a local cause: the ‘Gary’ (after Gary Nash, the founder of local foodbank ‘Eat or Heat’); the ‘Saira’ (after Saira Mir who, together with her family, set up a kitchen for the homeless called “Pl84U-Al Suffa”); the ‘Steve’ (featuring Stephen Barnabis who set up ‘The Soul Project’ for young people after his nephew was fatally stabbed); and the ‘Tracey’ (the headmistress of local Barn Croft Primary School).

Our banknotes are printed on-site and sold at face value for Pounds Sterling, and we’ve raised just shy of £40,000 so far. The proceeds are split into two, with half going to buy up £1million worth of local payday debt (you can buy up people’s debts for as little as two pence in the pound), and half going to the four causes depicted on the notes. People who buy them are supporting those causes and purchasing artwork we produce. The notes are not exchangeable for other goods or services.

The team that’s gathered around the bank has their own stories of how debt has touched their lives. Alison, for example, had worked as a teacher in one of our local primary schools but was laid off due to the school’s debt from the UK Government’s ‘Private Finance Initiative’ or PFI - a way of creating ‘public private partnerships’ in which private firms are contracted to complete and manage public projects using loans  from bond markets or private investors. The firms then charge high rates of interest to the public trust that’s responsible for the assets the project creates.

“I’ve been a primary school teacher for 33 years” she told us, and “Last summer I was made redundant, quite a shock and surprise. The school I was at is a PFI school so it means that every year quite a large proportion of their budget has to go to the PFI company, and so five teachers like myself who were non-class based were made redundant.” Such debts have proved incredibly controversial because the interest rates are widely seen as immoral.

In Walthamstow our health trust, Barts, is the most indebted in the country in terms of PFI. To pay these debts the hospitals have to cut staff and are therefore overcrowded and dangerously under-resourced. An excellent report from the BBC shows that five of the biggest PFI companies are based in tax havens, despite earning more than £2 billion in profit.

Isabell is another member of Bank Job - a banknote printer who is also a recent graduate. “I’ve spent seven years of my life in education,” she says, and “Coming out of uni today, young people are just saddled with this huge debt burden. I’ve got credit cards, personal loans, overdrafts, I’ve got student loans.”

To run our bank we borrowed pieces of equipment and drew on the talent of our community in setting up what we needed to design and print the new currency. It became a sort of ‘DIY uprising’ in which the bank became a space of work and play, with economics talks laid on in the evenings for anyone who wanted to come and learn.  When an article about the bank came out in The Guardian and went viral people travelled from all over Britain and queued around the block to buy banknotes and talk about the impact of the debt crisis and what we can do to address it.

In October 2018 the bank is moving into a new phase - printing gilt-edged paper bonds as part of what we’re referring to as a ‘collectively owned and distributed explosion’ of the £1 million payday debt that we’ve bought so far through bank note sales. The bonds are being sold to finance the literal, cathartic explosion of this debt at the end of 2018 in order to push the message of the project into greater public view. Each bond grants the holder the bond itself as an artwork and a share in the explosion – called ‘Big Bang 2’ - in which a transit van filled with debt will be detonated. What remains will be transformed into commemorative coins to be distributed to bond holders.

In all these ways we feel we’ve made some useful progress, though there’s a long way to go. But how has the project changed people who have come into contact with it?

At one level the answer is clear: having even part of your debts written off through a simple act of citizen intervention feels good. But this isn’t a hack that can be used to fix the entire system; rather, it’s a stunt that draws people into the story of debt and teaches them about the secondary market, perhaps empowering them in the future to have a different conversation with creditors who chase them for debts that are in some sense imaginary.

At a deeper level, the project has given us hope that communities can be resilient and will fight together – that we owe it to one another to shape the sort of world which our children can inherit with confidence and pride. The feeling that we are not alone – or as the Strike Debt campaign puts it “not a loan;” that we can get together and create value that transcends the traditional debtor/creditor relationships that are ripping our communities apart; and that we oughtn’t to feel so ashamed of our debts because they reflect negatively on our characters – have all taken root.  

The project has also allowed us to imagine that the world we want is not just a vague or distant dream, but something that can be achieved in the here and now by getting together to take control of our immediate surroundings and rewrite the rules. If you can get hold of the money supply, you have infinite power. That is what this is really all about - taking back the power to choose the sorts of lives we feel are useful. As Andrew Ross argues in his excellent book Creditocracy:

“Loading debt onto the citizenry creates grievous harm to our democracies - when a government cannot or will not respond on behalf of a citizenry then taking relief for ourselves may be the most indispensible act of civil disobedience. Asserting the moral right to repudiate debt may be the only way of rebuilding democracy.”