I was asked by a caucus in NYC-DSA to write a position paper on municipal banking, a quick note arguing in its favor. Then it turned out they didn’t need it, so I’m passing it along this week since I articulate some things in ways I haven’t before.

Meanwhile, if you’re in NYC TOMORROW NIGHT I’m giving a lecture for the series Binge Thinking. If you want to come just email me and I can get you in for free. Link: https://luma.com/bqaxgys4

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Solidarity in all things. This is a commitment socialists of most stripes would endorse, but it’s not always simple to understand where and how solidarity exists in the societies we desire to transform in its name. What’s called municipal finance is one example. Resources and their allocations have to be collectivized to ensure a solidaristic society, yet their flows are arcane and hard to understand. Public banking is a tried and true strategy for winning that solidarity at the level of municipal financing.

Charles B. Whitnall, the socialist city treasurer who worked in the Emil Seidel administration in Milwaukee when the municipal socialists won there, who wrote that “it seems strange indeed that the one central necessity with which all enterprises, of whatever nature, must function, has never been put forward as a public utility, namely: the city treasury.”

Mike McCarthy, a sociologist working on democratic finance, defines solidarity in fiscal policy as the collective apportionment of social risk. In other words, where does the risk fall when the shit hits fan? Who’s exposed, and how? Are we exposed to social risks together or individually?

Market-oriented fiscal policy apportions social risk individually. Everyone’s on their own. Sink or swim. When it comes to banking, you get huge private banks making the most they can from their management of money in the form of deposits, credit, and investment. Solidaristic apportionment of social risk pools our resources together, making any one of us more protected, more certain, more taken care of because we’re part of the pool.

Whereas retirement policy manages the social risk of aging, education policy manages the risk of social reproduction, banking manages the risk of public money flows. The city government is a depositor. It needs to put its incomes somewhere. It needs to borrow and repay. It needs to make expenditures. It contributes to its various funds.

The city’s fiscal policy when it comes to its banking needs as a depositor, borrower, and spender is subject to the same differing ideological tendencies. It can either make its banking policy market-oriented and participate in an individualist apportionment of social risk the arterial conduits for the bringing in of money, the storing of money, the accounting and authorizing of money, and the expenditure of money for the city’s people. There’s a social risk in this arterial flow. Will the city’s money be spent well? Will it get a good return? Will it be lost in some cyclical capitalist crash? Will it get expropriated by financiers and consultants via exorbitant fees for service? Will its interest rate be reasonable? Will assumed rates of return reflect inflexible commitments to neoliberal austerity, or will they be generous?

For a private banking policy to manage the social risk of city money management, the answer to that last question will be yes: the private bank will extract what it can for itself on the principle of market-orientation. The city’s money will get expropriated. It’ll vanish in the crises. The money will get a bad return, because a good return is bad for the private bank’s bottom line.

Public banking a solidaristic fiscal policy for municipal money flows. It’s one of the few viable such policies. There have been decades of work put into making a public bank for New York City, and DSA should be involved in that work.