Investissements publics nécessaires – Le rôle potentiel des banques publiques

The role of public banks in financing necessary investment should be discussed with reference to a causal system linking public and private expenditure in sequential time. The text starts by presenting a simple variant of such a model and uses it to interpret the causes of the recent financial crisis. The evidence shows that the latter was not caused by public debt but by the fast accumulation of private debt. The facts observed can be interpreted within a simple causality structure where public expenditure plays a causal role in driving economic activity. The model is then used to discuss the role of public banks, introducing the distinction between the creation of primary incomes, or new wealth, and the recycling of past savings, or circulation of wealth already accumulated. The role of public banks is generally discussed only with reference to the circuit of primary incomes, in which banks play only a non-monetary financial intermediary role. The text illustrates a proposal showing that public banks could be used also in their monetary financial intermediary role to create new wealth at European level. Alternatively, one can look at the role of public banks in recycling existing savings for public policy purposes, on which some references are given to the recent literature. The case of investment for climate change mitigation is taken as an example to show that, in the absence of other incentives, the level of environmental investment will be limited to that portion of the necessary investment that the market considers profitable, i.e. it would not be sufficient to reduce the climate change risk. If the necessary investment in environment is to be realized without reducing other necessary public investments, public banks should engage also in monetary financial intermediary’s activities aimed at creating new wealth. The text concludes by examining briefly the main logical consequences of the analysis developed.