De-banking – the practice of banks closing accounts, or denying services, on the basis of political belief – seems set to become one of the major battlegrounds of the ‘culture war’. And its salience tells us a great deal about what is at stake in that wider struggle, and its intellectual origins. Sadly, however, this has been obscured by a lot of muddy thinking, which it will take some time to clear up.
Let’s begin with the question: is ‘de-banking’ justified in a free society, or not? This issue is raised, with customary contrarianism, by Matthew Parris in the Spectator this week. Although he doesn’t put the point in quite this way, he reminds us that the problem with de-banking is that it really puts two freedoms in opposition to one another. On the one hand, our instincts tell us that it is wrong for a bank to close somebody’s account – knowing the baleful consequences this will wreak in a heavily financialised society like our own – on the basis of that person having expressed views which the owners of the bank dislike. But on the other, it is distasteful in a free society that the operators of a business should be forced to trade with anybody; the whole point of a free market is that it enshrines freedom of choice.
On the face of it, these two freedoms are not readily reconciled. And here the issue should also call to mind one of the other intractable problems of our current moment – the extent to which privately owned social media companies should be free to censor and/or ban users on their platforms based on the views that they express. There, like here, the question is which freedom we prefer: that to express one’s views, or that to associate freely?
What we are talking about, then, is really a recurrent problem within societies that purport to be liberal, i.e., what happens when freedoms conflict. Leaving aside the obvious truth that proponents of de-banking (and censorship of speech on social media, for that matter) are often disingenuous and only seem to discover a faith in liberal values when it suits them to do so, this should serve to remind us that the culture war between progressives and conservatives is for the most part really a division within liberalism as to which types of freedom are preferred, and in what contexts. Broadly speaking, progressives prioritise the freedom to choose or express – it isn’t always clear which – one’s identity, sexuality, etc., as well as other related freedoms (such as reproductive freedom, the freedom to cross borders, and so on). Conservatives or ‘classical liberals’, meanwhile, tend to prioritise freedom of conscience, freedom of expression, freedom from state interference, and so on. There is more going on in the ‘culture war’ than this, but reflecting on this basic observation should at least help us to dismiss the argument that this is a conflict between liberals and Marxists: it largely is not. The fundamental division is between two types of liberal, if we define liberalism as the doctrine that the role of the state is to promote freedom.
So how do we decide which freedom ‘wins’, in any given context? It is here that critics of liberalism – Carl Schmitt and Stanley Fish being two prominent examples – site their most pointed and acute attack. For such critics, liberalism gives us no principled basis for such a decision. Ultimately, what it comes down to is power. The loudest voices get to decide which freedom matters. Whether de-banking or social media censorship is allowed to proliferate, in what circumstances, and in respect of which views, will just depend on whoever is holding the levers of power.
This makes liberalism itself a big lie, according to these crities: it is not a political system that promotes freedom, but an unstable and vicious struggle between competing preferences and interest groups, to which the victor go the spoils and the losers, nothing. In this perspective, what we are currently witnessing, and what we describe as a ‘culture war’, is simply a playing out of the inherent self-defeating properties of liberalism across the cultural landscape. Whether or not the ‘woke progressive left’, or whatever you wish to call them, will get to impose their vision upon the world is simply a matter of domination versus submission and nothing more.
This leads us back to Matthew Parris. Parris, in trying to make the claim that what is at stake is merely a matter of principle (freedom of association in a free market), is in one sense simply being a useful idiot, pretending to be a good, neutral liberal but really just furthering the aims of one side in the broader power struggle. Lacking any principled basis for preferring freedom of association to freedom of expression in this particular context, he ends up simply ratifying the power play of one side over the other, and unwittingly therefore is just participating in the process whereby purported arguments of ‘principle’ are deployed to beat the other side over the head.
Is this, then, all that we are doing – simply engaging in a glorified shouting match? It can often seem that way. But here it is useful to step back for a moment and reflect on what it is that we think that the law ought to be doing if we value living in a stable, pluralistic society. This will vary. It is undoubtedly true that generally speaking it is preferable if business owners are free to make contracts with those who they wish to, and this is indeed a very old feature of English law (though a complicated one for reasons that I will have to go into elsewhere). But it is also the case that we make many exceptions to that rule – most notably when a business owner is making his or her choice on discriminatory grounds, such as on the basis of race or sex. In those circumstances, we say that the overarching value of pluralism has to win out, and that freedom of association has to give way to the extent that we would like to protect that overarching value. The alternative is that portions of society will be left out, and that resentments – and instability – will brew as a consequence.
In the case of de-banking the same reasoning surely plays out. Thinking of the subject as a war between two freedoms, association versus expression, gets us nowhere. But thinking about it in terms of the vision of society which we wish to secure helps cut through. Do we want to live in a society in which people can be denied access to so basic a utility as banking based on the views they express, however prominent their profile? It takes a special kind of blinkeredness of vision to fail to see that such a practice cannot be consonant with life in a stable, pluralistic democracy – one cannot indeed have a stable polity in which large swathes of the population could at any moment lose access to finance simply on the basis of what they say. Yes, there might be edge cases about which reasonable people can disagree, but the basic position must surely be that banks – like certain other types of actor, such as utility companies – occupy so fundamental and privileged a position in society that the normal rules of freedom of association can’t be allowed to apply. The alternative is simply too potentially destabilising to contemplate.
In debating this issue, in other words, it is helpful if we try to look beyond soundbites and get at the underlying values – the ‘incompletely theorised agreement’ that we all can share. We might not agree on the details, but we can at least agree that it is better to live in a society which is stable, in which a plurality of views are accepted, and in which people are therefore not subject to arbitrary displays of power. From there, it is not difficult to reason our way to the position that de-banking ought not to be permissable except in defined, and limited, exceptional cases.
Dr. David McGrogan is an Associate Professor of Law at Northumbria Law School. This article first appeared on his Substack. You can subscribe here.
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One could also approach it by making a distinction between business that are essential utilities and/or actual or virtual monopolies or oligopolies, and small businesses where alternatives are easy to find. The former should be obliged by law to serve everyone, the latter can discriminate as they see fit.
Exactly, you need a license to be a bank, you can’t just “don’t like it, start your own”, and even if you could, suddenly VISA and Mastercard would decide they also didn’t like your bank and then you’d need to invent you own worldwide payment processing network. It’s a nonsense, certain things must be provided to all who want them.
Anyone can use the BSV Blockchain to send representation of value to anyone, without a middleman.
The tech is proven and already in use.
NOTE: Please do not confuse BSV with BTC. BSV is the real, original Blockchain following the original protocol. Since 2018, BTC is nothing more than a spreadsheet, representing nothing, and under centralised control.
Blockchain is the way out, and the banks know it. They’re terrified.
Agree in the need to distinguish between a natural monopoly e.g utilities vs perceived monopoly. I’d argue that a bank doesn’t fit as a natural monopoly and so should be able to discriminate as experienced (not that I like the reason for the discrimination).
Perhaps a better way forward is to push back against the protectionist regulations (banking license + others) that prevent new entrants from offering a service. This way you don’t force a company to serve and profit from a customer it doesn’t want. If any corporation thinks this is profitable to discriminate like this they can try their luck and let the market decide.
I don’t think a good way forward is more regulation that keeps protectionist policies.
Exactly. Like the baker who finally won his battle to not have to make a gay wedding cake. Just go somewhere else.
Looking at it another way, it used to be illegal to be lots of things that are widely accepted now, and other things that were legal are these days frowned upon. Imagine being a “liberal” and arguing that it would have been ok to de-bank someone for criticising slavery.
Freedom of speech must be protected, when we self-censor out of fear all is lost.
People can ask for a plain wedding cake from a Christian baker and he will likely bake it. When they ask him to dress the cake in words that are against his religion he may well refuse.
This seems logical and sensible, service is not withdrawn as such.
A peripheral point on this: Nat West is 39% owned by the government.
Thus in the specific case of Farage we have an in-large-part government-owned company refusing to offer services to an individual who, in the normal democratic processes, has been and may again be a serious threat to that government.
No excuses here.
The main arguments of the article are surely correct though.
Yes, that may be so. But let’s not underestimate the ESG agenda of the powerful investment banks who own controlling stakes in the national banks. Is it they who are applying pressure on the national banks executives to to further the toxic ESG agenda?
https://www.heritage.org/progressivism/commentary/larry-fink-blackrock-and-his-global-crusade-advance-identity-politics
The reality is in the modern world a bank account is a necessity so the government needs to make a decision.
Either it forces banks to accept anyone who applies (and I can see the issues that could cause).
Or they need to have a “national bank account” that is government issued and ran (either through a deal with a high street bank or maybe post office) that will be available to all regardless of their political beliefs
Maybe those customers could wear a badge to mark them out as ‘unwelcome in polite society’. Banks should be declared utilities, accounts only removable with court order. Or are we taking away water from households who’s views do not align with the current thing now?
I’ll grant you the nuance is difficult, which mortgage rate do they offer a leftie vs a righty? That could fall under discrimination / equality processes though which likely already exist.
I was actually referring to the issue of those who are convicted of things like fraud/money laundering who banks would (reasonably) be concerned about providing services too.
Apologies for not making that clearer
I do not see the options as limited to those two options. Just requiring banks and all other regulated financial services business to treat customers fairly would do it. If a bank wanted to select customers according to wealth, occupation etc on objective grounds that ought to be OK. When all banks refuse an account it suggests collusion or obedience to the same stupid regulation.
Who decides what is “fair”?
What if all banks select according to wealth but decide they wouldn’t take people on minimum wage/benefits? Is that ok?
As I said in my original post either it needs to be a legal requirement for banks to take everyone (and the issues that could cause) or the government needs to provide the fallback to ensure everyone can access an account
‘So how do we decide which freedom ‘wins’, in any given context?’
No need.
The Government simply instructs the Bank of England to set up, or contract out, a subsidiary ‘bank of last resort’ where every British citizen has a right to bank provided their activities fall within the law.
It used to be called the Post Office.
The other point is that the government needs to revisit its own legislation regarding the banks and the financial sector in general.
That is from whence the problem originated.
‘PEPs can be:
PEPs also include:
Check the full list of roles considered to be high-profile positions
You should take a risk-based and proportionate approach to identifying whether you have a PEP as a client.
Situations which might suggest you have a PEP client include:
The Financial Conduct Authority (FCA) expects firms to use information that’s reasonably available to them to help identify PEPs, including:
You do not have to actively investigate whether beneficial owners of a client are PEPs.
However, if you know that a beneficial owner is a PEP, you should consider what extra measures, if any, you need to take when dealing with that client.’
https://www.lawsociety.org.uk/topics/anti-money-laundering/peps
What the Dickens? Huge regulatory overreach……socialist fascism……
The Vicar that responded to a call for feedback from his bank with “why do you waste so much time and money on rainbows?” was de-banked – he was not a “PEP”.
This is a completely flawed view of this issue.
Banks aren’t cancelling people because THEY want to. They cancel customers because they are under enormous pressure from the state to surveil their customers and make sure none of them are falling foul of rules set by the state.
E.g. no transactions with Russians or Russian companies or people or companies that might be associated with Russians. Or Iranians. Or North Koreans.
And when banks have been a bit casual about this they have been hounded by the state and given huge fines. This hits the news as “money laundering” or “ignoring sanctions”.
Banks have become state agents. The idea that they are acting as independent entities in a liberal marketplace couldn’t be further from the truth.
And so the whole “battle between liberals” idea is ridiculous. It bears no relation to reality.
In June, the Rev. Richard Fothergill, who has been a longstanding customer of the building society, sent his bank a letter complaining about its public messaging during Pride month.
Four days later, the 62-year-old said he received a reply informing him of the closure of his internet savings account, The Times reported.
“‘I wasn’t even aware that our relationship had a problem,” Fothergill said, according to the Daily Mail, while accusing the financial institution of “bullying.”
“They are a financial house — they are not there to do social engineering. I think they should concentrate their efforts on managing money, instead of promoting LGBT ideology. I know cancel culture exists,” he continued, “and this is my first firsthand experience of it. I wouldn’t want this bullying to happen to anyone else.”
The retired vicar maintains that his comments were a polite rebuttal to the content on YBS’s website and prepared in such a manner to contest the bank’s involvement in LGBTQ+ ideology.
But the bank wasn’t having it. In response to Fothergill, it wrote that its customer relationship with him had “irrevocably broken down” and that it has a “zero tolerance approach to discrimination.”
Reverand Fothergill should change his name. This chap did a few years ago when in dispute with Yorkshire Bank:
https://www.marketingweek.com/yorkshire-bank-loses-its-good-name/
Again this has nothing to do with banks freely making decisions in free marketplace.
They are coerced into making these decisions by an overreaching state.
I remind you that I the UK now had laws against “hateful” speech.
They know they will eventually get into trouble for allowing their customers to make “hateful” comments, just as they got into trouble for allowing transactions with Iran or someone Iranian or a Russian.
At least until now, cancelling these people has been the lowest risk.
Ordininary people who aren’t involved in banking just aren’t aware of the pressures banks have been under from the state. They’re ignorant.
It is, at the end of the day, up to us to close our accounts with or, stop buying the products of, those businesses who celebrate such deviances. Let’s call it ‘zero tolerance’ if you like.
Do the banks fear the displeasure of the government more than the displeasure of Larry Fink and his mobsters?
https://www.heritage.org/progressivism/commentary/larry-fink-blackrock-and-his-global-crusade-advance-identity-politics
The conflict in Britain and most of the west is not within liberal thought but between freedom and authoritarianism.
It is not correct to say that banks are being restricted in their choice of customer by the Farage campaign. The Regulations made, administered and adjudicated by the FCA require banks and others of its victims to “treat customers fairly”. That refers not just to individual customers but to customers as a class of people and businesses.
Further, the point of a free(er) market and capitalism is not to give employees (however mighty they may think themselves to be) the power of exercising their personal preferences. It is to ensure the efficient allocation of resources and through that to make owners (shareholders, not Directors) a profit.
As usual when there is a scandal the political class reacts with pleading and more rules. In fact they should call the existing head and directorate of the FCA and PRA top account for not handling this matter better. Give them a flea in the ear and threaten to replace said over-paid self-important failures (Howard Davies was in one of those jobs, so you will see what I mean).
Banks are typically not private. They’re publically traded companies and the people who made these debanking decisions were not the owners of the respective businesses but only people supposedly manageing the bank on behalf of its owners, ie, the shareholders. It’s perfectly sensible to require such people to refrain from knowingly making business decisions to the financial detriment of the business they’re manageing. Ie, reject or exit, as the dame-clown put it, solvent customers the bank is making money from or would be making money from because they personally don’t like their political opinions (or hair colour, for that matter).
Banks have a function as utilities too.
The only basis on which utilities&like may discriminate should be on the basis of money.
As for other businesses, the recent baker/gay wedding cake ruling got that sorted.
Well it’s true. Liberalism is incoherent. Herbivores like Ronald Dworkin cite now this principle, now that, whatever suits the current purpose, and clear-headed carnivores like Schmitt and Fish saw straight through them. But liberalism is not so much the mask of raw power as of careerism.
Ex falso quodlibet. Any conclusion can be deduced from inconsistent axioms. That is why liberalism is the creed of journalists and administrators. Entertaining, opinionated nuisances like Farage require to be answered, and what could be more useful than a system which gives its practitioners the ability to refute any argument with seeming learnedness and without any need to be right?
???
Good essay, although I don’t understand the last eleven words of this sentence:
“This makes liberalism itself a big lie, according to these critics: it is not a political system that promotes freedom, but an unstable and vicious struggle between competing preferences and interest groups, to which the victor go the spoils and the losers, nothing.”
I think the author means “… an unstable and vicious struggle between competing preferences and interest groups, to the winner of which go the spoils, and to the loser, nothing.”
In fact, these eleven words (or thirteen in my version) are purely stylistic and add no useful information. I know what he means though – and of course he’s right.
The resolution of this issue depends on “whoever is holding the levers of power” and is a question of submission or domination.
We the people must decide whether we choose to submit and be dominated or whether we will make our views plain.
I know which I choose!
The time for people power is now before it’s too late.
Perhaps it’s already too late …..
Finance is deemed “Critical National Infrastructure” https://www.npsa.gov.uk/critical-national-infrastructure-0 and as such ought to have some form of “Universal Service Obligation”. Perhaps the unit which has custody of CNI ought to weigh in.
I was largely pilloried for expressing a similar view to Parris ie free and unforced association between two private parties deserves legal protection and I suspect I will face similar treatment here, again. Nonetheless…
I disagree with this column’s analysis that there is a conflict between two “freedoms”. “Freedom” as applied to this situation is the protected right to free association FOR BOTH PARTIES – full stop. This: “On the one hand, our instincts tell us that it is wrong for a bank to close somebody’s account – knowing the baleful consequences this will wreak in a heavily financialised society like our own – on the basis of that person having expressed views which the owners of the bank dislike. ” is not a “freedom”. This is merely an opinion but by calling it a “freedom”, you’ve set up a “freedom vs freedom” argument on made up grounds and where there isn’t one.
Anyone (including myself) may disagree with Coutts’ decision on any number of grounds (and also think they were deceitful and disgraceful in how they handled things once Farage made the issue public). But unless it is government force that was the reason for cancelling Farage’s accounts (an argument one can very much make in the case of Big Tech and their heavily government influenced decisions to remove Covid etc content), it is wrong and immoral to fight against Coutts’ right to do so.
“We might not agree on the details, but we can at least agree that it is better to live in a society which is stable, in which a plurality of views are accepted, and in which people are therefore not subject to arbitrary displays of power.” It is GOVERNMENT power from which I wish to be protected. And if Coutts’ (as well as other banks) are subjected to GOVERNMENT power to forcibly be required to provide services, that is the power we should be afraid of.