The Occupy Money Cooperative, or the Occupy Bank, recently announced it would be releasing prepaid debit cards to compete with major financial institutions. The bank holds that reform in a system dominated by corporate interests is implausible, and contend that creating alternative democratic structures is the only way to directly challenge the current system. But is it a tenable solution to set up alternative banking systems under capitalism? Although its goals derive from the best of intentions, the approach is a blind alley.

Karl Marx argued we can change human interaction if we can change the fundamental economic system — one that is not based on self-interest and greed. The base, or the infrastructure, determines the superstructure, the social relations. The cooperative’s stated goal is to cause such change, but as one critic noted, it “may ultimately be undermining its own values, fostering illusions that workers can, in fact, buy into a better world.”

Indeed, cooperative movements have been attempted since the early 19th century. All of them ultimately failed because they operate under a mistaken premise that you can have enclaves of socialism within the capitalist system.

The founder of the cooperative, former British diplomat Carne Ross, fired back at his critics, accusing them of ideological purity, which  he contended “is the enemy of the practical good.”

On the contrary, the question is not one of ideology. It is about capitalism subsuming everything within it. All cooperatives end up being small capitals themselves, having to compete in the capitalist economy. Thus, they always fail. There are no shortcuts, and the cooperative schemes do not make it.

The only way a banking system can work in such a way that it lends money like other banks is by accumulating interest. Interest is nothing other than future surplus or profit. In short, it has to become capitalist.

On the other hand, the profit from this cooperative will not be going to a few people at the top since it operates on the values of transparency and participation. There are about 40 million unbanked Americans, most of whom are poor. Wouldn’t it be good to get the unbanked banked? Admittedly, any poor person will probably answer in the affirmative.

But there are already similar organizations like credit unions, which do not appreciably change the social order — the workers are still exploited in their jobs. And they cannot change the fact that the owners of production, as Marx would put it, are accumulating capital.

The cooperative has to invest its capital to make money and to make loans. This means investing in other capitals that exploit workers. The intentions may be genuine, but the cooperative cannot escape the capitalist framework. As long as all parties are in a capitalist system, there are no escapes, no outs and no cooperative short-circuiting.