Socialism holds that the rational development of the economy, and therefore the welfare of society, can come into conflict with private ownership in the large scale means of production. In such a conflict socialists hold it is the interests of society that must take precedence over the private owners of the means of production.
Two such conflicts are already being seen in the current financial crisis. The first is that the recession threatens a collapse in investment. However both to keep up demand in the economy, that is to be able to carry out effective counter-cyclical measures, and to ensure long term economic growth, maintenance of investment is crucial. For that reason it may be necessary to carry out nationalisations in key industries such as construction in order to sustain investment. Economies with larger state sectors, such as China, are also able to carry out more effective counter-cyclical measures.
But the second key area is with the banks. In order to counter recession it is imperative that interest rates are radically reduced. The rate at which the state lends to banks, set via the Bank of England's base lending rate, has been radically reduced. However the private banks are continuously either dragging their feet or refusing point blank to pass such interest rate cuts on to their borrowers - as shown clearly this week when major banks attempted not to pass on the one and a half per cent Bank of England rate cut. Simultaneously they are attempting to abolish their lowest rate tracker mortgages. The reason is because they are attempting to make profits that are to be passed on to their private shareholders.
As Phillip Inman puts it rather delicately in the Guardian, shareholders: 'want their banks to increase profit margins. If banks can increase the spread between mortgage lending and paying savings interest, then they can recover more quickly. At the height of the boom, mortgage rates were little more than 0.5% above savings rates. Today, banks want that figure to expand to 2%. If mortgage rates track down with further cuts in the base rate to 1%, which some commentators believe will happen next year, it will be difficult keeping the savings rates above 2%.'
In other words policy is not to be set by the needs of the economy and limiting recession, which requires the sharpest possible reduction in interest rates, but by the desire of bank shareholders to make profits.
Many of these shareholders, incidentally, have just been saved from their holdings being make completely worthless by a huge injection of taxpayers money. Now they not only want their share prices propped up by the taxpayer but that bank lending policy should be dictated not by the needs of the economy but by their desire to make the highest profits.
If anyone ever wanted to know why private property in the means of production can come into conflict with economic development, and the case for bank nationalisation, they need merely study current developments.
Having brought the economy to the brink of disaster through their wrong decisions private bankers now demand that the interests of the entire economy be subordinated to their interests.