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Bankers Are Criminals? Yes, Says Conservative MP Steve Baker

05/02/2014 12:55 GMT | Updated 07/04/2014 10:59 BST

Q. What is your position on the criminalization of bankers in the wake of the global financial crisis?

A. Things which were crimes at the time should be prosecuted as such.

However, the most important systemic problem in relation to individuals is that people in the system do not face the commercial downside of their actions. I proposed change in my Financial Institutions (Reform) Bill.

Q. Do you find much support for your views within the Conservative Party?

A. People realise my views are founded on academic literature - Hayek's Monetary Theory and the Trade Cycle for example and Kevin Dowd's work - but the political reality is that everyone needs me to be wrong. If I am right, then the worst of the crisis is before us.

Q. Have you been actively engaged with initiatives to prosecute culpable parties?

A. MPs ought not to prosecute people but I believe I was the first MP to say Bob Diamond should resign.

Q. Have you found a clear demarcation between individual and corporate responsibility for the development, marketing, and sales of financial tools and products?

A. I have not found such a demarcation. My experience working as a software engineer for banks and their regulators, one who had studied monetary theory, was that few in the system understand its implications. Widespread individual and corporate irresponsibility is the consequence.

Q. Does British legislation support the criminal prosecution of either individual bankers or corporations?

A. Yes.

Q. Is there a statute of limitations under British law?

A. Yes. I am not an expert.

Q. Given the fact that many of the culpable parties operate on a transnational basis, and the effects have been felt globally, how does one parse, on the one hand, where criminal activities actually occurred, and, on the other, which legislative bodies should take action?

A. In the first place, crimes should be prosecuted where they were committed: the essence of the state is that it is a territorial monopoly on the legitimate use of force.

However, the question is based on a misleading premise: the idea that this crisis was caused by criminal actions. We ought to ask why our civilisation is critically dependent on a financial system which promotes reckless commercial decision making and which makes it possible to believe that individuals' poor conduct has adversely affected the lives of hundreds of millions of people.

I summarised what is wrong and what to do about it in an essay for Banking 2020, published by NEF. The book is here and my paper is available separately here.

Q. Do you feel that the situation calls for a more coordinated international response rather than leaving it to national governments to sort out on an independent basis?

A. No. A global initiative today would probably just spread the inherent problems of the Eurozone more widely, necessarily promoting ever more centralised and unaccountable government.

Instead, the financial system should operate without privileges granted by the state. In reality, crypto-currencies are emerging spontaneously through human creativity and I expect them to flourish.

Q. Having attended the breakfast meeting you hosted at the House of Commons, it became apparent to me, as an outside observer, that it is difficult to discern the boundaries between government and private enterprise. Economic growth is largely driven by the private sector, yet governments regulate private enterprise and constituents hold governments culpable for the robustness of the national economy. I was also struck by the fluidity of personnel movement between corporations and the government. How does the interconnectedness of the private and public sectors complicate your role as MP, and where do you situate yourself as a public representative?

A. This is "The Third Way" and it stinks. Economist David B Smith in his book Living with Leviathan explained that the economic system gifted to us by New Labour is "functionally hard to distinguish from that of fascism". No wonder most of us hate it.

I take every opportunity to oppose state privileges and promote freedom. It is not a popular path.

Q. Do you feel that special interests and private organizations exercise too great an influence within government?

A. Yes but what are we to expect when the British Government came to spend about half of GDP?

It is bitterly ironic that people worry about what happens in private when the actual privileges given to special interests are a matter of public record defended openly by people who should know better. See my contributions to the Finance Bill 2013 in committee in opposition to favours for video game developers and high-end TV production. Apart from the crass privilege of the financial system, industrial policy is promoted by left and right even though its essence is privilege for the strong at the expense of everyone else.

There is much muddled thinking about the economy and the Government's role in it. We are at the end of a century of faith in the omnipotence of political power: the big question is "Where next?"