“Smashing Neoliberal Finance: Banks, Credit, Debt,” by Frédéric Lordon, first appeared on 4 June 2026, under the heading “Politics of the Financial Crisis – 3,” as an installment of “La pompe à phynance,” Lordon’s column at Le Monde diplomatique. Also read on Communis “Smashing Neoliberal Finance: Principles and Methods” and “A Window of Historic Opportunity.”

“There are two paths in finance: the path of debt and the path of equity. As they are currently structured under the neoliberal system, both are harmful. They should be brutally reduced to their primary function: financing the agents of the real economy, without any frills.”

— Frédéric Lordon

What is the purpose of the texts that will follow? They will begin to give “substance” to a plan for a profound transformation of financial structures, for the benefit of a left that has always proclaimed its desire to “do away with finance” without ever having many ideas about how to do so. As with any institutional or structural issue, there’s no getting around the need to get our hands dirty if we’re to transform the status quo when it comes to finance. This may make our texts seem a bit austere at times, but they are intended for anyone who has the desire, and the opportunity, to take action.

We know that a historic opportunity may arise. Should it materialize, we also know the general principles by which to seize it. The task now is to specify the necessary transformations, starting with detailed plans.

In finance, there are two paths: the path of debt and the path of equity. As they are currently structured under the neoliberal system, both are harmful. They will be brutally reduced to their primary function: financing the agents of the real economy, without any frills. We will address the issues from both perspectives: that of savers and businesses, whenever necessary.

Banking and Credit: The Dull and the Boring

The intricacies of neoliberal finance have ultimately made us forget that the vast majority of individuals willing (or forced) to take on debt do so through the most unremarkable of financing solutions: bank credit. By the end of 2025, two-thirds of outstanding financing for non-financial corporations (NFCs) consisted of bank loans. However, this figure lumps together all NFCs regardless of their size. Simply excluding the CAC 40 or the SBF 120 from the statistics would reveal an even more overwhelming picture.

In principle, bank credit is a transaction that is radically different from the securities issuances upon which all the structures of deregulated finance have been built. With bank credit, we are brought back to the very essence of functional finance, stripped of all its trappings, all its folklore of enrichment, all its obscenity—all its way of life. For this is indeed the astonishing twist of neoliberal capitalism: it has transformed finance into a way of life. Daily adrenaline rushes, unparalleled intensity, astronomical bonuses, exorbitantly priced suits, vintage wines, drugs, sex, and frenzies of every kind. Hollywood cinema has never ceased to objectively promote its poisonous charms of the finance world, even under the guise of criticism. Bank credit, on the other hand, is the domain of middle managers dressed in off-the-rack suits at the Romorantin branch of Crédit Lyonnais or Société Générale—not the same high. Yet its net social utility is far greater than that of all the cocaine-fueled traders on trading floors combined. In 2008, when neoliberal finance was on the verge of total collapse, it got scared. Quite wrongly, as there would be Obama, there would be Gordon Brown, there would be Hollande, and everything would be fine. Even The Economist had finally come to terms with the idea that, after all those wild years, it was time for the banking profession to become dull and boring once again. Indeed: that is what it should never have ceased to be—and what it must be once again.

The dull and the boring will at least have the virtue of economic democracy. Under the implicit assumption of a Great Crisis that we will not let pass unchallenged this time, there can be no question—even if all other financial structures were transformed—of leaving the banks as they are: private, that is to say, obsessed with profit to the point of possible irrationality. Ideally, the collapse would occur when the left-wing government corresponding to this scenario is in power. At that point, the banks would be a mess in need of a thorough cleanup, and entirely in the hands of their rescuers—the public authorities. These would have the power to rescue the banks on their own terms. These will be the conditions for the complete de-privatization of the banking system.

Deprivatization does not mean, as ideologues who skim the text might think nationalization, which, in practice up to now, has never been anything other than State control. In the heat of the crisis and the collapse, it is quite possible that the emergency response will have to involve a flash nationalization (State takeover) and the creation of a unified public credit hub. It should be noted, in passing, that such a nationalization would cost the public treasury very little, since private banks would be acquired by the State at their liquidation value—that of a net asset that is likely to be very negative—that is, zero euros.

However, the public credit sector cannot be the new steady state of the banking system. It will be merely a transitional phase until the institutional structures of a new, comprehensive organization emerge in the form of a socialized credit system. “Socialized system” means that sovereignty lies neither with capital nor with the State, but belongs to ad hoc councils, which may well be given a name other than the highly loaded term “board of directors,” but which will nonetheless serve that function. These councils will include representatives of all stakeholders who make up the credit ecosystem: professional bankers, of course, why not representatives from the Central Bank and/or the government (a prefect, for example), but also businesses, households/consumers with a stake in credit decisions and how they are made, as well as environmental organizations, for instance, or others—in short, all stakeholders entitled to steer the allocation of capital according to a diverse and balanced set of criteria: financial (what are the risks?), economic (what are the prospects for development?), social (what are the needs for revitalizing a labor market?), environmental (what are the problematic impacts or what are the benefits?), territorial (what are the planning benefits?), etc. This would replace the sole criterion of private bank profit.

The socialized credit system will necessarily take on a multi-level and federal form, based on the principles of maximum subsidiarity and autonomy. Its units will be as local as possible, since it is at the local level that the agents best informed about local needs are found. Obviously, some credit decisions fall under the jurisdiction of higher territorial levels because the corresponding investment projects are larger in scale. The socialized credit system will therefore have its regional councils. Finally, there are decisions—those concerning the largest industrial or technological programs, that is, the most structurally significant investments spread over the longest time horizons—that cannot be considered at any level other than that of the entire community, that is, the highest level of economic sovereignty, where the State plays the leading role.

The socialized credit system will have its own selection biases, and these will not be those of profit maximization, which is indifferent to the specific activities that achieve that maximization (since, for a private banker, financing the production of glyphosate, NFTs [Non-Fungible Tokens], or bidders on the A69 highway is all the same as long as it maximizes profit). On a national scale, these biases will, for example, reflect Planning (ecological or otherwise). In principle, this bias will also serve to promote the structures—most often local and small-scale—of productive democracy: cooperative societies. After all, it is only fitting that the socialized credit system—itself built on a similar principle—should make it its mission to help spread this model. Among the many difficulties cooperatives face in a capitalist environment is the hostility—one might almost call it ideological—of private financial institutions, whose support would nevertheless be crucial. The current transformation of financial structures would hardly pass for a plan to move beyond capitalism; yet it should be guided by the intention of a kind of “preparation,” systematically favoring all sites of production that decide to break free from capitalist principles in their organization and to align themselves with the principles of productive democracy, which is to say the principles of producers’ sovereignty. Finance is an eminently political vehicle. It embodies a politics that is hidden and denied under capitalism but fully embraced from a genuine leftist perspective—that is, one of transformation. The socialized credit system will therefore serve as the driving force behind the great subduction, as it will be achieved in particular through the widespread adoption of wage preemption. For equivalent “projects,” cooperative structures will receive funding in preference to traditional capitalist structures, and we will see how long it takes for the latter, systematically at a disadvantage in accessing funding, to understand the necessity of their own transformation.

Closing the Bond Markets

Can the banking system—engaged in its most characteristic function, namely lending—even if socialized, single-handedly shoulder the debt of all economic agents, including the State itself? To a very large extent, yes. But only to a large extent. And the rest? The rest, by necessity, goes to a “securities” solution: bonds. Warning: danger ahead. The largest sector of deregulated finance—and the one richest in outlandish innovations and toxic products—is the bond market—also known as the interest rate markets; a.k.a. fixed income, the hub of all excesses.

Fixed income has two passions: fomenting so-called “credit” bubbles (in a loose application of the term “credit”), such as subprime mortgages; and disciplining the State. By “disciplining,” we mean: exerting financial pressure to such an extent that it leads to the impoverishment of public services and their dismantling, ultimately resulting in their commodification. Users suffer, and government employees suffer—the latter, though not directly subject to profit-driven ownership, are nonetheless under the thumb of another form of profit-driven, albeit indirect, ownership: that of financial capital, mediated through debt. Fixed income—understood, in essence, as the power of creditors armed by the structure of deregulated capital markets—is a nuisance.

Speculative ultra-tradability lies at its heart. There is only one way to contain it: the principle of holding, legally enshrined in a law reforming the financing of the economy (a small pleasure in returning the sender’s own lexicon to them). As its name suggests, this principle requires any investor in a bond to hold it until maturity. It is therefore a principle that renders securities non-negotiable, thereby eliminating the very idea of bond markets.

We’re seeing the first signs of trouble. For financial minds, the idea that there might no longer be bond markets is so outrageous and staggering that it provokes attacks. It’s easy to see what it will cost them to shed an image of finance that has been second nature to them for four decades: bond markets exist just as the law of universal gravitation does—it’s much the same thing. For the former to cease to exist is almost as if someone were to announce that objects would henceforth fall from the bottom up: the mind refuses to accept such an obstacle, and the synapses go haywire. And then the outrage, the outcry—the markets are interconnected, they’re global; “shutting down the bond markets” is delusional. Have we gone too far with these products? Are we pretending to shut down markets that are global? Or does this mean we’re going to unilaterally withdraw from international financial circulation? Is that it? It’s absurd; it’s nonsensical.

That’s what it comes down to. Our relationship to international financial flows, and the terms of our integration—or disengagement—from those flows: these are indeed the fundamental questions to which any idea of reversing the structures of deregulation inevitably leads. It is, therefore, a discussion we cannot avoid.

For now, let’s consider only the most immediate cause of suffocation as we can anticipate it: the outcry that it is virtually a violation of human and investor rights to be forced to hold risky securities without being able to dispose of them as one’s judgment dictates. It should be noted, however, that this is exactly what banks do, and without batting an eye: they extend loans and keep them on their balance sheets until maturity. At least that is what they did before securitization was invented, an innovation designed, as its name suggests, to transform loans—which are by their very nature immobile, non-transferable, and illiquid—into tradable, liquid bond assets that could be sold as soon as the underlying loans were originated. Aside from creating an additional source of profitability through “innovation,” the aim was to expand the reach of the “debt machine.” This is because banks’ ability to extend credit was limited by unfortunate regulations and was capped at a certain multiple of their equity capital. Securitization, however, made it possible to remove loans from banks’ balance sheets as soon as they were issued, thereby resetting the counters to zero and immediately issuing new loans for further securitization and debt offloading. As a result, household debt in the United States rose from 86% of GDP in 2000 to 123% in 2008—a trend consistent with the overall logic of the wage-depression accumulation regime, in which debt replaces labor compensation to sustain the solvency of final household demand.

We know how the story ended: with the subprime bubble, which pushed securitization to unprecedented levels—before it burst. The absurdity lies in the fact that no serious re-regulation followed—serious regulation would have meant putting an end to the use of securitization once and for all. “Let’s say we give up on securitization; holding illiquid loans to maturity is the banks’ business, and banks are banks—we, on the other hand, are free investors, and we don’t have to be subject to the same constraints.” In the new world of finance, the idea is, in principle, that—after, incidentally, they’ve been made to see the absurdity of their protest, since in the free world of free investors, the practice of private credit has developed, which consists precisely of investing in portfolios of illiquid loans, full repayment of which occurs only at maturity. It is true that in the minds of the “hurrah-finance” crowd, the same constraint takes on entirely different meanings depending on whether it originates from within the private system itself or from the political sphere, which is, needless to say, a threat to freedom. The irony, then, is that this practice of private credit is one of the very factors that contributed to the financial collapse—and will earn this little clique its own financial reform law. Built on the ruins they have left behind.

So we’ll let them scream without paying much more attention. As for the rest: only large companies—approved by a public rating agency for the quality of their creditworthiness—and, of course, the government, will be eligible to issue bonds. These will follow a standardized range of maturities, with not too many tiers. For example: 1, 5, and 10 years, with possibly one additional, longer-term tier for the government. The holding requirement will therefore apply to these maturities. If individual savers wish to take the risk, they may do so—though these will likely be the wealthiest. For everyone else, the savings options offered will be significantly limited and will consist mainly of savings accounts with capped balances, guaranteed rates, principal, and liquidity. The banks, through which these offers will be made, will bear the risk, as is already the case. The cap—corresponding, for example, to the current savings of the top 90 or 95 percentiles—will be exceeded only by the wealthiest segment of the population (one must go very far down the statistical distribution to find the point where income and wealth begin to rise sharply). What will the bottom 5 percentiles be able to do with their wealth that exceeds the cap? Invest in bonds under these new conditions, of course. And otherwise? As usual: investing in stocks, the other prime arena for speculative greed.

Unfortunately, there will be changes on that front as well.

Featured image: “The Thieves Tormented by Serpents,” Gustave Doré’s illustration for Dante Alighieri’s *The Divine Comedy*, *Inferno*, Canto XXIV (1885 colored engraving). MeisterDrucke.

Translated from the French original by Rolando Prats.

Frédéric Lordon