By Michalis Zaouras on December 06, 2010

Eric Cantona’s “Economic Revolution”

Tomorrow is going to be the day that Eric Cantona, ex Manchester United superstar, has declared as back-run revolution. His idea is simple and ingenious, use economics tools to influence decision making. Actually someone might argue that any kind of protest can be thought as having an economic effect. For example, strikes cost both on working hours and if there is going to be blockage a network disruption. However strikes and protests might last for weeks or even months and at the end the willingness to work of workers, in order to provide food for their family (this is also a Short run effect), might be stronger than any long run aim that a strike or protest might have. On the other hand I wonder how many days can a financial system cope with a run on its deposits, probably not much given that banks sustain only a limited amount of cash in their accounts.

Apparently, banks representatives worry with this development. BNP Paribas call the action as “ill-founded”. Political leaders; France president, budget and finance minister have all reacted against the action by either downgrading its importance or personally attacking Eric Cantona.

The most important problem, though, is whether people that will follow Cantona’s suggestion have the power to outrun bank’s deposit, probably not. However if a movement develops and the number of people participating day after day soars, in other words if network dynamics play their part, then it might have a serious effect. Another problem is whether people are willing to destroy their countries financial system, in other words whether the threat is credible. To conclude I believe that Cantona’s suggestion adds a bargaining tool to the demonstrators and we are going to find out very soon if it is going to be effective.

4 comments:

  1. I see your point, but I wouldn't worry too much for a number of reasons:

    a) I do not believe that many people would like to hold onto cash whose value erodes when they can keep it safe in a bank for an interest rate, no matter how nominal it will be.

    b) I would assume that people who can afford to have money in the bank are people with a job, therefore any action that might bring the economy to a collapse would be to their expense. In other words, people with a potential to benefit from such a concerted action are people who might not have or cannot afford to have money in the bank in the first place.

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  2. I disagree with adkiaseros: Such mas protests can be effective since as soon as they have any effect, then the banks lower their rates from frankly exorbitant levels.
    I hope it works - i could not get a loan of 4,000 in the uk for a rate better than 22% a year despite having a combined family salary of £50,000 and being in the UK with no debt for over 10 years.

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  3. Thanks guys for your comments.

    As for adkiaseros first point I am not sure whether there is an actual cost on withdrawing your money for 1 or 2 weeks, except if a nation suffers from hyperinflation.

    Now as for the second one, I do agree that it will need a great number of participants to achieve any effect, which means that it is not feasible for small scale protests. However do not forget that in revolutions the unemployed people were not the only ones that participated. Moreover I agree with Alex that a lesson needs to be taught since the reason for nowadays problems are the banks misbehaviour.

    Last, I believe that you dont really need to destroy the financial system in order to achieve changes. In other words, it is the threat that matters than the actual result. Moreover noone will let the system to collapse since everyone would like a smooth transition, if there is going to be any change.

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  4. _____________________________

    Warning! BankRun 2010: Fascism in Disguise.

    _____________________________

    La Nouvelle Économie. (in English)

    http://blog.post-crash.com/p/english.html
    _____________________________

    Attention! BankRun 2010: Fascisme Déguisé:

    _____________________________

    La Nouvelle Économie. (en Français).

    http://blog.post-crash.com/p/francais.html
    _____________________________

    ReplyDelete