Deregulating The Banks: What Libertarians and Socialists Can Support

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Banks

Though many will deny it, the typical American libertarian falls prey to confirmation bias as much as the typical voter. A quick glance at the comments in social media shows the quickness of libertarian-leaning supporters to immediately reject any idea mentioning the word socialism, even if it’s an idea from an anarchist vein. It is this phenomenon that led to what appeared to be a fierce division in the Libertarian Party USA between those who were libertarian socialists or allies of that group and the capitalist libertarians who tend to value Austrian economists.

But, if libertarians allow themselves to stick their fingers in their ears and repeat “blah, blah, blah,” at any utterance of supposed opposition, the movement cannot grow and better spread the benefits of the philosophy. One issue that both the Misesian and Proudhonian varieties can use to promote freedom is the deregulation of the banking industry.

I would bet money that every libertarian is aware, even if they are not a fan of the man, of Ron Paul’s 2008 presidential run where he declared to the masses how the US needs to “end the Fed.” The Texas representative explained to many clueless voters how the Federal Reserve’s manipulation of interest rates gives false incentives to many Americans and devalues the dollar. While this was a fresh idea to many at the time, there is actually a political philosopher who advocated for the removal of central banking over 100 years prior and was a socialist: Benjamin Tucker, editor of the anarchist newsletter Liberty and a major advocate for individualist anarchism.

Money and banking were of monumental concern to Tucker, a fact that makes his book Individual Liberty contain a massive amount of excerpts from Liberty and letters responding to critics and questioning readers. A government-sponsored currency is one of his four monopolies (which are the money monopoly, the land monopoly, the tariff monopoly, and the patent monopoly), which he claims prevents citizens from being able to obtain credit and loans in order to pursue their interests. Freeing the money is so important that he claimed: “free land is of little value without free capital.”

The author calls for competition between banks and allowing them to create their own paper notes that can be exchanged for a commodity or combination of any number of things. He claims that this would bring interest rates down to the market equilibrium and allow more access to loans. This deregulation would, of course, include eliminating the Fed and all central banking and goes even further than Paul’s ideas.

“The money problem is essentially very simple and easy to solve. That solution is the abolition of interest, which may be achieved when the issue of money is no longer monopolized through government privilege and when the basis for the issuance of currency is extended to other commodities than gold,” he states. Essentially, cities and states should have the freedom to choose their own kind of banking and monetary system that works best for the community, an idea that I would guess most libertarians could get behind.

Many capitalist libertarians may be scratching their heads at this point because Tucker’s ideas fall in line within what is considered usual, American libertarian views, and not socialist in the slightest. Where Tucker would differ from Mises or Hayek is his support for mutual banking, where the consumers of the banks’ services also have a say and partial ownership in its operations. The English anarchist believed community ownership would the best way to distribute credit and open the market to more individuals.

Despite this disagreement on the system of ownership, Benjamin Tucker’s and Ron Paul’s rhetoric both strive for the same goal: fix the money so that more people can be happy, thriving and free. This issue is just one of a plethora of ideas that all ends of the libertarian spectrum can utilize to imbue the philosophy into the culture of the world. Next time you witness a libertarian socialist speaking, perhaps take the time to hear them out and see which points of agreement can both be ends and tools of freedom.

Read more from Luke at Think Liberty here.

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