Maher: The reason why the Federal Reserve was established in the first place was because they needed a more public institution that could coordinate the management of crises and stabilize the financial system. The fact that it didn’t bail out the banks during the Great Depression wasn’t the state saying, “We don’t care, let it crash.” It was the fact that the state hadn’t ever encountered something like that before. And so there wasn’t the capacity to manage the crisis. One common misunderstanding of the Keynesian period is that it was based on just holding down or limiting finance. No—it was rebuilding the financial system after the biggest and deepest crisis of capitalism in history. Eventually, the financial system busted out of its incubator and became hegemonic once more. The 2008 crisis was dealt with by a state that had much more expansive capacities to intervene in the financial system. So the state is always acting to stabilize the capitalist system.
Pick: Your framing of the Fed is that, as an arm of the state, it is always going to act in the interest of capital accumulation, even if as an unintended consequence. Does that risk depoliticizing central banking? Should a climate activist, for example, be trying to hold the Fed accountable?
Maher: It’s not about depoliticizing the state, it’s about politicizing capitalism. Climate activists should absolutely target the Fed, but as part of a broader vision for what it would mean to democratize the state. The problem is not what the Federal Reserve does or doesn’t do, or who lobbies it, but the system that it’s embedded in. The state is what it is because it has evolved as part of the capitalist system—not just because it was corrupted or lobbied against. Clearly the idea that we live in a democracy is a very limited truth at best.
We pose the question: What would it mean to democratize the state? For us that means deepening public control over the Fed and other macroeconomic institutions, to run finance as a public utility.