A few days ago I found myself watching a TED talk by the Nigerian author, Chimamanda Ngozi Adichie. Adichie is as engaging a speaker as she is a writer and she took to the TED stage to discuss what she calls the notion of a ‘single story’. The idea is a simple one: a single story is created by showing a nation (or continent) and its people as one thing, and only one thing, over and over again until that is what people believe them to be. To illustrate the point, Adichie uses an example close to her heart, that of the poor, sick and war ravaged Africa, crying out for the help of the benevolent white man; a narrative that treats Africans as unfit to control their own destinies. She also points to the stereotype of the lazy Mexican immigrant, any US Republican voter’s worst nightmare. In both cases, the story is blind to the realities of the individuals and communities tarnished by this lazy stereotyping. But within this critique lies the purpose of this single story. Whoever writes the past can control the present, and whoever illustrates the characters can also define the plot. The single story of the Mexican immigrant may be a depressing generalisation but it is also a powerful weapon for the American far right.
As events unfolded in the seemingly never ending Greek ‘crisis’ over the last few days I kept coming back to this idea of the single story. Since the crisis began we have been constantly told that the bloated Greek public sector must pay the price for years of mismanagement; that the Greek people must stop shirking blame and face the full consequences of living beyond their means; that the Greek government must not expect something for nothing from its friends and partners at the eurozone negotiating table; and, most importantly, that the responsibility for the entire mess lies in Athens. While a quick glance on social media sites will of course show that many people have seen beyond this myopic version of events, it is still the voice of the mainstream media that holds influence in the majority of countries. Controlling the narrative is the key to political success.
“Orderly debt restructuring has been done hundreds of times, hundreds, like with Germany in 1953”.
As the leader of Podemos has rightly pointed out on many occasions, sovereign debt restructuring is nothing new. Why, we may ask, should post-war Germany be helped to meet its financial commitments and rebuild its shattered economies, but Greece and other southern European states should not? Well, the standard narrative on the right is that after an initial helping hand, German productivity and fiscal acumen allowed it to become a regional manufacturing powerhouse. After West Germany had sufficiently re-established itself as a responsible and affluent member of the international community, it was then helped to reunite with its crumbling, post-communist sibling. The beauty of this simplistic version of events is that it is essentially a story of redemption and triumph over adversity, and so lends moral weight to Germany’s central role in contemporary European affairs. It does not, however, hold up to scrutiny of the facts. It was Germany’s central position in the cold war, as well as its divisive position in post-war Europe that made the USA aggressively promote it as a new capitalist powerhouse on the continent. By promoting the European Coal and Steel Community (the precursor to the modern EU) with German participation, the USA embarked on a project to strengthen the Deutschmark as an additional pillar of capitalist strength, and work towards the creation of a vast trading block. Nowhere is the commitment to rebuilding the German economy clearer than in the details of the 1953 debt restructuring, where debt repayment was tied to export revenue. Creditor nations therefore had a vested interest in buying German exports, thus allowing the indebted nation to repay its debts and become ultra-competitive on the global scene.
But in the 62 years that have passed since, the rules of the game have changed beyond recognition. The European project has boomed into a vast bureaucracy overseeing a continental marketplace. With the advent of the single currency at the beginning of the century, the Eurozone members committed themselves to the observance of strict financial rules in exchange for the so-called stability of a single unit of currency designed to reduce transaction costs and promote financial security within the bloc. It is now widely known that countries, including Greece, failed miserably to meet the requirements of euro entry but were admitted anyway through a combination of financial fraud and European bonhomie. Although this may look like a tragic mistake in hindsight, it was crucial to the project that the southern European countries join the single currency in an irreversible manner. As soon as Greece, Italy and Spain were locked into a currency position which did not allow for default, they had sacrificed their only effective means of making their economies more competitive in the face of German exports (which, as I previously discussed here, are made so competitive by breaking Eurozone rules). In short, they were therefore doomed to run current account deficits vis-à-vis Germany ad infinitum. But to make matters even worse, the lack of mechanism for fiscal transfer within the Eurozone (with the original rules explicitly removing this possibility) meant that there has never been any way for the German surplus to be recycled within the union in the interest of stability and balanced growth. The single currency has been deeply flawed from the start.
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.
It is well and truly crunch time and this week will be pivotal in defining the future of Greece and the Eurozone. It was interesting to read criticism this morning of Syriza’s approach to negotiations over the last couple of weeks, with at least one commentator pointing out that Varoufakis’ negotiating actions have not matched his academic knowledge of game theory. Let’s not forget though that at least he is showing willingness to resolve the situation in a way that will keep Greece solvent and avoid disaster. This is more than can be said for his Eurogroup partners.
Later today Syriza faces a vote of confidence in the Greek Parliament. Although it is likely to gain enough votes, this is just a precursor to tomorrow’s meeting in Brussels of EU finance ministers which could be one of the last opportunities to take steps towards a compromise before things start to unravel. After the ECB stopped accepting Greek bonds as collateral on loans last week, the National Bank of Greece has been forced to increase its operations through the Emergency Liquidity Assistance (ELA) in order to prop up the Greek banks. This is essentially a form of credit sanctioned by the ECB but with the proviso that it can be cut off at any moment if the ECB feels it is excessive. The end of Greek ELA would be the point of no return, leading to a run on Greek banks, bankruptcy and a certain exit from euro. Even now, Greek bank deposits continue to plummet at an alarming rate, adding to the likelihood of a run on the banks. Unless things change dramatically Greece will surely have to institute capital controls very soon to hang on to what’s left in their financial system. According to the ECB, Greek banks have lost around 21 billion euros since December, amounting to unsustainable losses. Although capital controls would break the European Union Treaty, this is not without precedent, and Cyprus was allowed to introduce this measure, with some success, in 2013. However, this will be an unpopular measure within Greece and is likely to be a severe test for Tsipras and his government.
“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.
As the new Greek Finance Minister, Yanis Varoufakis, travels through Europe to set the ball rolling on Greek debt negotiations, now seems like a good time to remind ourselves that there are more problems within the Eurozone than southern European debt. One of the things that stands out from reading the popular media and internet discussions is that debt reduction is a polarising issue. On the one hand are those who recognise the madness in continuing austerity policies and acknowledge that flexibility on publicly held debt is a pre-requisite for recovery. On the other are those who claim that it is morally and financially unacceptable that hard-working northern Europeans should have to continually bail out southern Europeans from a mess that was of their own making.
My aim here is not to rehash the many, many reasons why this type of austerity policies has been proven to be politically, economically and morally bankrupt. Instead, with Varoufakis in Europe, I’m going to bring up Germany’s colossal current account surplus and ask why Germany feels able to call for structural change in Greece when it refuses to address the imbalances in its own economy.
To round things off after Part 2 yesterday, here is the third and final part of this essay looking at our internal class conflict and its implications for radical left-wing political alternatives in Europe and beyond…
The Inner Class Divide
That we as individuals are subject to various stimuli contributing to development is nothing new. Much has been written on child development and much of this can extend also into adult life in terms of continuous learning and development. Where things have changed in recent years is in the increased intensity and aggression of stimuli relating to late stage capitalism. On the one hand we possess a social brain, allowing us to feel empathy and make emotional connections, and a character forged through a myriad of social connections and interactions. Many of us experience a fundamental need to share our lives with friends, family and community. But on the other hand, we are bombarded with advertising signals and media messages telling us that consumption is the ultimate goal and that this must be driven by aggressive, competitive activity in the market place. Much of what we experience through advertising relates to consumption or the adoption of an idealised version of self to which we should aspire. We are told that that we can have everything as long as we consume. In a ‘post-religious’ world it is salvation through consumption. Our participation in society can be bought instead of fostered through genuine social interaction.
But we are the recipients of contradictory messages. Identity formation through the solitary pursuit of commodities in order to satisfy a conditioned super ego is at odds with our more basic needs as social animals. Capitalism relies on competition whereas our early development engenders the value of cooperation. The (cultural) super ego tells us that to succeed at life we need to compete in the market place, earn money as efficiently as possible, and construct our idealised identities. But our innate characteristics and our basic human needs show us the importance of people over the market. This is class warfare in every sense, with the mind being the battleground. Many individuals therefore experience a subconscious, inner class tension, with a consuming, competitive, aspirational self striving to keep up in the market, and a social self yearning for cooperation and interaction. This ideological battle is internalised and fought daily in a way that has far greater implications than the debate in the political arena.