I woke up this morning thinking about the type of people who are thrown up by our political systems and put before us for election. I have spent the last few days mulling over the surge of support for Jeremy Corbyn’s leadership bid and that alone would have given me reason enough to put this rant down on paper. But the actual spark came from a member of that monument to democracy, the Bush dynasty.
The mantle of political entitlement has now passed to Jeb and he picks up where his celebrated brother left off by completely misunderstanding the world around him. This week he made a few headlines with his outrage at Obama’s plan to extend overtime coverage to managers earning below $50,440 per year (essentially reducing the possibility of lower salaried workers being forced to work additional hours for no extra pay). Jeb was stunned by this frivolity and, on top of claiming that Americans need to work more hours, not less, he showed his finely tuned economic skills by telling us that this new rule would result in less overtime pay and less wages earned. Sensible members of the human race (and a few economists) were quick to point out the many flaws in this reasoning. First of all, by curbing the exploitation of some managers, employers would be forced to use more workers and/or additional overtime to pay to cover the same workload. The argument that companies would cut salaries to compensate for this new rule is just not credible.
The post-2008 political landscape in Europe has been littered with public discontent and protest. In Spain and Greece this has manifested itself in revolt against the European establishment and a refusal to be bound by the financial practices of the past. In England, immigration has raced to the forefront of the political agenda, while in Scotland and Catalunya nationalism has come to the fore in a way that would have been unimaginable only a few years ago. In France the National Front has eroded support for the rightwing UMP while simultaneously appealing to much of the working class. Even Germany has not been immune to an element of political unrest.
Although the principles underlying these movements may differ greatly, it would be foolish not to wonder if there is a common denominator running through European protest. If history has taught us anything it is that the lines separating socialist uprisings from fascist popularity are not as clear as we may like to think. Political movements often thrive on the charisma of their leaders and their ability to build a narrative that chimes with the misery or discontent of the public. In Germany’s broken socioeconomic structure of the 1920’s it could easily have been the communists who came to power on a wave of popular support instead of the National Socialists. But the Nazis were more adept at political maneuvering and public manipulation. One of the many lessons available from this episode however is that most individuals are not remotely concerned with political ideology. Instead they back parties that offer the best guarantee of personal and collective security. This security can and does take many shapes, but it is the desire to protect one’s self and one’s security that is at the core of electoral and public decision-making. But electoral decisions are also often made with rejection in mind – rejection of the incumbent political force and policies. Under these circumstances, a clear and workable alternative vision matters less, since the public desire to oust those who have led them into darker times will often be sufficient to create political change. This is the predominant theme in modern politics and since voters are often hard pressed to identify the core differences between candidates, a vote for one is largely just a rejection of the other.
But the current wave of demonstrations across Europe is about something greater than electoral choice, it represents a rejection of modern politics. The SNP, UKIP and the Catalan nationalists may promote very different ideals but all try to tap into the disenchantment of voters in the face of globalised, neoliberal politics administered from a distant centre of power. All seek to recapture a real or imaginary notion of local identity from the clutches of external bureaucratic institutions. All offer a vision of the future which appeals to those who want a greater say in shaping their local culture and society. As citizens feel increasingly distant from the centre of power they strive to have a greater say in organising their communities in a way which is consistent with their own beliefs and identity rather than those of policymakers in London, Madrid or Brussels.
As I watched Dutch Finance Minister, Jeroen Dijsselbloem, brief the press core on the collapse of yesterday’s Eurogroup meeting, Trotsky’s acerbic put-down of Tsar Nicholas II came to mind: “It seemed as though between his consciousness and his epoch there stood some transparent but absolutely impenetrable medium.”
The stance of the European Finance Ministers in recent days has been close to financial fanaticism. Tied together by a currency union designed to play by German rules of fiscal austerity, the Eurozone countries have all toed the official-line since the election of Syriza in January: The terms of financial bailout enforced by the Troika are non-negotiable. Yes, the Dutch Finance Minister claimed that there is some flexibility in the current programme, but only if it continues to be implemented on the Greek side. As is now being openly discussed in the corridors of Brussels, Greece has long since lost its financial autonomy.
But can this really be the end of the road? This week looks likely to offer a definitive answer to this question and it is hard to see what could unblock negotiations. As I have said over recent weeks, Syriza cannot concede much more from its side of the table. Its extraordinary election success was built on a backlash against austerity and Troika policy. To go back on their electoral promises and swallow whole the medicine being forced upon them by the creditors would be a crushing defeat for national democracy and one which would surely blow Greek politics (and society) apart.
Big countries have a history of making small countries pay their debts. Historically it does not matter whether loans were taken out voluntarily or whether they were imposed via some imperial gunboat diplomacy, but there should be no doubt that economic giants like to uphold a contract. When the once powerful Ottoman Empire defaulted on its obligations to French and British bondholders in the 19th century, the two great European powers promptly set up an Ottoman tax collection agency and effectively launched a financial coup d’etat on the Sultan and his flagging empire. The new Ottoman Public Debt Administration (OPDA) was launched in 1881 to ensure that foreign creditors would receive their dues, and grew into a vast bureaucracy of almost 10,000 employees. In addition to debt collection the OPDA also branched out into wider financial affairs and became an important intermediary for European companies looking to invest in the Empire. Due to its vast reach in the Ottoman public service, the OPDA guaranteed both financial security and favourable commercial opportunities for its partners. What began as a debt default morphed into an imperial occupation in all but name, with contractual obligation and trade opportunity being the core principles. It mattered little that much of the Ottoman Empire’s public debt had been acquired through its role in the Crimean War, a conflict in which it fought side by side with both the British and the French. A deal was a deal, and when the Ottoman Empire ultimately defaulted on its debt, its ‘allies’ swooped in to enforce repayment.
I was reminded of this financial colonisation last week with Wolfgang Schäuble’s offer to send 500 German tax collectors to Greece. The circumstances are obviously different but perhaps there are still parallels we can draw. Greece entered the Eurozone in collaboration with its European partners in celebration of the collective vision of European integration. Countries across the continent came together to become firm economic allies, united by a shared currency. It has subsequently become clear to all however that Greece did not meet the original economic requirements for euro membership. Allegations arose that the Greeks had cooked the books and worked with Goldman Sachs on a deal which involved cross-currency swaps at fictional exchange rates. This enabled them to circumvent the Maastricht rules and ‘meet’ the Eurozone requirements. Military and healthcare expenditures were often left off the balance sheets over the years as accounting fraud helped to maintain the illusion of financial stability. None of this is anything new of course and Angela Merkel has expressed her belief on multiple occasions that Greek euro membership should never have been approved.
With capitalism in the doldrums and a general election nearly upon us it is the season to reflect on how we might manage to convert the neoliberal, market-driven free-for-all of our current society into something we might actually like to live in. Will Hutton set the ball rolling in the Guardian yesterday with a lengthy promotion of his new book, which lays out a new framework for building “smart societies.” Hutton’s critique of the existing order raises some salient points and only those living on the moon over the last generation or three could have failed to notice that “problems in the British economy and society run deep.” He is also right in asserting that, if “there are no networks of reciprocal obligation, and no acknowledgement that human beings associate in a society they can construct, redesign and reform around those principles, then we are all reduced to atomistic consumers and workers – serfs who are no more than notations in the spreadsheets of companies and public bodies alike.”
The problem with Hutton’s analysis, however, is that he still puts business and wealth creation at the heart of society. “The aim of any manifesto for change” says Hutton “must be to create the smartest economy for Britain – it is the only route to prosperity in the decades ahead.” Refining the mechanisms of wealth generation is all very well but surely this should not take precedence over the social and human fabric of the world we live in. Unfortunately, Hutton is a little sketchy on this issue and even though he is adamant that businesses should not solely tools of stock market speculation, he also declares that “companies are organisations of genius, solving problems, innovating and delivering great goods and services.” ICI, GEC and Rolls Royce are all used to show Britain’s great industrial tradition but he conveniently forgets recent allegations of corruption and bribery in the latter.
“There is no moral justification for extreme poverty side by side with great wealth.”
Inequality was the hot topic in economics and political economy in 2014. Thomas Piketty’s magnum opus, ‘Capital’, hit the best-sellers list and brought an overdue and welcome look at the historical evolution of wealth distribution in the developed world. Politicians, business leaders and celebrities all weighed in with their analysis of Piketty’s research and brought inequality discussion firmly into the mainstream. I finally got round to reading it towards the end of 2014 and found myself in agreement with much of what was written, particularly with the compelling case Piketty makes for the historical evolution of inequality. The crux of the matter, says Piketty, is that over the long-run returns to capital (r) are larger than economic growth (g) and so there is a tendency for wealth to outgrow income, leading to increased levels of inequality. This central point of his analysis has made some waves in the economics community and there has been a predictable backlash from some quarters. Nonetheless, it makes for compelling reading up to, that is, the point where Piketty proposes measures to reduce inequality (more about this later).
Although ‘Capital’ is already old news, it is been in my mind over the last couple of weeks due to a few interesting developments. Firstly, it was a shock to see President Obama move towards tackling inequality in his State of the Union address in January with a few Piketty-influenced measures. Raising capital gains tax to 28% for those with incomes over $500,000, closing a popular tax loophole for the rich, and imposing a new levy on firms with assets over $50 billion, were all interesting measures, and not ones we would normally expect from a US President. Although the sentiment is right, it is still hard to justify the wealthy paying less in capital gains than regular mortals pay in income tax.
Like many people I am fascinated by the political changes taking place across southern Europe. Syriza’s victory in Greece has taken us into unchartered political waters and it remains to be seen what the impact of this will be in Greece, Europe and beyond. In thinking about this I have found myself wondering what it is we are really witnessing here – does the Greek election signal a change in the political landscape and a long-term shift to the left or is this just a temporary backlash against corruption and austerity which may be swept away within a matter of months? Is this movement backed by a change in mindset of the electorate or are the people just voting for the most tangible change due to widespread desperation?
This train of thought motivated to write an article on the psychological issues around these emerging left-wing political movements. Although I have already submitted this for publication elsewhere I would like to share it here also, with any feedback being welcomed! Due to its length I’ve decided to post this in several sections over the next few days so today I start with the first two sections…