Showing posts with label oligarchs. Show all posts
Showing posts with label oligarchs. Show all posts
Sunday 27 February 2022
Tuesday 15 November 2011
Germany has benefitted from the Euro and should protect it.
There is only one alternative to the euro's survival: catastrophe
Little Englanders – and blinkered Germans – need to wake up to the implications of a fractured eurozone
It is hard not to have the gravest of forebodings about the
European and British economies, and about the future of Europe itself.
Nobody would start from here – an ill-designed single currency
interacting with an insupportable burden of private debt created by
oversized, undercapitalised banks. And it's as much a problem in the US
and China as in Europe. There are only least bad ways forward: none
good. This is a crisis in contemporary capitalism as much as a crisis of
Europe's monetary regime and governance. It needs to be seen in those
terms.
But so saturated is British commentary in jingoistic Euro-scepticism that Europe's travails are portrayed as proof positive that it is European visionary delusions rather than contemporary capitalism that is at fault. Greece, and indeed Ireland and even Italy, are urged to get out of the euro, for the euro to be smashed and for the entire EU project to be abandoned. This is the route to prosperity and wellbeing – with no trace of self knowledge as British trade performance deteriorates even after a monumental devaluation while our economy is still years away from recovering to 2008 levels of peak output. That is Europe's fault, or so runs the line – not the fault of our dysfunctional economic structures and policies.
However, Britain's interest is unambiguous: it lies in the survival of the euro. There is too much easy talk about countries leaving. Last week, financial policy committee member Robert Jenkins spelled out the consequences for Britain and for Europe of Greece now quitting the euro. There would be seismic bank runs in Ireland, Portugal, Spain and even Italy as citizens and companies, fearing the same could happen to them, moved their cash out of their countries. Weaker banks, tottering from losses in Greece, would fold. The European Central Bank would be overwhelmed. The European economy would slump – and Britain with it.
Greece's fight is our own. But what is being asked of Greece's new interim prime minister, Lucas Papademos, is impossible. Unemployment is 18.4%. The schedule of its foreign loan repayments over the next five years beggars belief. On the other hand, Greek capitalism, a network of family oligarchs rigging Greek markets and leading a society in which tax evasion is morally and socially acceptable, is in acute need of reform. Europe could have been organised around floating exchange rates rather than a single currency, but the vast overhang of private debt alongside crocked banks demands similar medicine.
And while staying in the euro is in the interest of Greece – and Italy – it is in the rest of Europe's interest too. But there has to be a quid pro quo for all the pain that such severe austerity involves. Private and public debt needs to be radically lowered; and in a world of little growth there are only two routes. Either it has to be forgiven by their creditors, or there has to be inflation. If the eurozone can deliver neither, its future is in question.
In July and, again, in October, the EU signalled it understood what needed to be done and moved towards it – a combination of decisive debt forgiveness, the creation of a European Monetary Fund, substantially financed by Germany and which could bail out stricken banks and even governments, and the empowerment of the European Central Bank to go beyond supplying emergency cash on crisis terms. Instead, it could act as a lender of last resort everywhere in the eurozone.
The system could potentially be put in place fast; the right sentiments have been uttered – but after each summit Germany has consistently blocked making the money flow. It has said no to the European Central Bank operating as a lender of last resort across the eurozone; no to creating a genuine European Monetary Fund on the scale needed; no to the creation of single euro bonds. Ireland, Greece and Italy are all doing their part. Germany must now do its – or the euro will buckle.
Germany's phobias are well-known – inflation and then slump led to Hitler. What's more, the German constitutional court has ruled that the EU is a Staatenbund (a group of states). This means that Germany can only constitutionally make fiscal transfers to other members if each one is agreed by the German parliament. But phobias and constitutional courts cannot trump the agonising choice facing Germany and Europe.
Germany profits richly from the way the eurozone is organised. It is the only country in Europe whose share of world trade has risen over the past 10 years. But it enjoys the same exchange rate as much weaker exporters such as Greece or Spain – a huge boon. Even Britain, with our much vaunted floating exchange rate, has seen our share of world trade fall by a third over the same period.
Germany now has to accept its part of the bargain. The choice must be confronted. One option to secure the euro's future is via widespread debt forgiveness and fiscal transfers backed by Germany; the only other route out is inflation.
Here I make a modest proposal. Instead of delivering purposeless lectures from the sidelines about the need for action while he prepares to blame Europe for the ongoing British stagnation, for which he is primarily responsible, David Cameron should make the intervention of his life. He should travel to Germany and make a speech in German – however embarrassing – spelling out the choices. If Germany is unprepared to accept them, he should argue that the least bad option is not for Greece to leave the euro – but for Germany, whose economy is strong enough to take the shock, to do so.
He should say that while it was right for Britain not to join the single currency as it was previously constructed, if Germany were to act responsibly, Britain would peg sterling to a reformed euro and in the long run even consider joining the regime. Moreover, Britain would do this either way, he could argue – eventually joining a single currency in which Germany accepted its responsibilities or a single currency without Germany.
Such a speech – which, of course, will never be made – would create turmoil in Germany. It fears isolation in Europe even more than it fears inflation. It prizes the undervaluation of its exports priced in euro. It would force its leadership to recognise that there are other potential ways of organising our continent other than around German preoccupations – and perhaps trigger the change in German policy that is needed. It would change the rules of the game at a stroke, and show that Britain is a European force with which to be reckoned. But Cameron is trapped into Little England isolationism. And Little Englanders, along with moralistic and blinkered Germans, threaten to sink both the idea of Europe – and its economy.
But so saturated is British commentary in jingoistic Euro-scepticism that Europe's travails are portrayed as proof positive that it is European visionary delusions rather than contemporary capitalism that is at fault. Greece, and indeed Ireland and even Italy, are urged to get out of the euro, for the euro to be smashed and for the entire EU project to be abandoned. This is the route to prosperity and wellbeing – with no trace of self knowledge as British trade performance deteriorates even after a monumental devaluation while our economy is still years away from recovering to 2008 levels of peak output. That is Europe's fault, or so runs the line – not the fault of our dysfunctional economic structures and policies.
However, Britain's interest is unambiguous: it lies in the survival of the euro. There is too much easy talk about countries leaving. Last week, financial policy committee member Robert Jenkins spelled out the consequences for Britain and for Europe of Greece now quitting the euro. There would be seismic bank runs in Ireland, Portugal, Spain and even Italy as citizens and companies, fearing the same could happen to them, moved their cash out of their countries. Weaker banks, tottering from losses in Greece, would fold. The European Central Bank would be overwhelmed. The European economy would slump – and Britain with it.
Greece's fight is our own. But what is being asked of Greece's new interim prime minister, Lucas Papademos, is impossible. Unemployment is 18.4%. The schedule of its foreign loan repayments over the next five years beggars belief. On the other hand, Greek capitalism, a network of family oligarchs rigging Greek markets and leading a society in which tax evasion is morally and socially acceptable, is in acute need of reform. Europe could have been organised around floating exchange rates rather than a single currency, but the vast overhang of private debt alongside crocked banks demands similar medicine.
And while staying in the euro is in the interest of Greece – and Italy – it is in the rest of Europe's interest too. But there has to be a quid pro quo for all the pain that such severe austerity involves. Private and public debt needs to be radically lowered; and in a world of little growth there are only two routes. Either it has to be forgiven by their creditors, or there has to be inflation. If the eurozone can deliver neither, its future is in question.
In July and, again, in October, the EU signalled it understood what needed to be done and moved towards it – a combination of decisive debt forgiveness, the creation of a European Monetary Fund, substantially financed by Germany and which could bail out stricken banks and even governments, and the empowerment of the European Central Bank to go beyond supplying emergency cash on crisis terms. Instead, it could act as a lender of last resort everywhere in the eurozone.
The system could potentially be put in place fast; the right sentiments have been uttered – but after each summit Germany has consistently blocked making the money flow. It has said no to the European Central Bank operating as a lender of last resort across the eurozone; no to creating a genuine European Monetary Fund on the scale needed; no to the creation of single euro bonds. Ireland, Greece and Italy are all doing their part. Germany must now do its – or the euro will buckle.
Germany's phobias are well-known – inflation and then slump led to Hitler. What's more, the German constitutional court has ruled that the EU is a Staatenbund (a group of states). This means that Germany can only constitutionally make fiscal transfers to other members if each one is agreed by the German parliament. But phobias and constitutional courts cannot trump the agonising choice facing Germany and Europe.
Germany profits richly from the way the eurozone is organised. It is the only country in Europe whose share of world trade has risen over the past 10 years. But it enjoys the same exchange rate as much weaker exporters such as Greece or Spain – a huge boon. Even Britain, with our much vaunted floating exchange rate, has seen our share of world trade fall by a third over the same period.
Germany now has to accept its part of the bargain. The choice must be confronted. One option to secure the euro's future is via widespread debt forgiveness and fiscal transfers backed by Germany; the only other route out is inflation.
Here I make a modest proposal. Instead of delivering purposeless lectures from the sidelines about the need for action while he prepares to blame Europe for the ongoing British stagnation, for which he is primarily responsible, David Cameron should make the intervention of his life. He should travel to Germany and make a speech in German – however embarrassing – spelling out the choices. If Germany is unprepared to accept them, he should argue that the least bad option is not for Greece to leave the euro – but for Germany, whose economy is strong enough to take the shock, to do so.
He should say that while it was right for Britain not to join the single currency as it was previously constructed, if Germany were to act responsibly, Britain would peg sterling to a reformed euro and in the long run even consider joining the regime. Moreover, Britain would do this either way, he could argue – eventually joining a single currency in which Germany accepted its responsibilities or a single currency without Germany.
Such a speech – which, of course, will never be made – would create turmoil in Germany. It fears isolation in Europe even more than it fears inflation. It prizes the undervaluation of its exports priced in euro. It would force its leadership to recognise that there are other potential ways of organising our continent other than around German preoccupations – and perhaps trigger the change in German policy that is needed. It would change the rules of the game at a stroke, and show that Britain is a European force with which to be reckoned. But Cameron is trapped into Little England isolationism. And Little Englanders, along with moralistic and blinkered Germans, threaten to sink both the idea of Europe – and its economy.
Sunday 19 June 2011
Who Is Undermining Parliament? Civil Society or Government?
Who Is Undermining Parliament? Civil Society or Government?
By Tapas Ranjan Saha
19 June, 2011
Countercurrents.org
A debate is raging on the role of civil society and popular movements, and their impact on democracy. In a recent statement, Home Minister P Chidambaram said “Elected members cannot yield to civil society” since this might undermine “parliamentary democracy.” A beleaguered UPA Government is increasingly trying to discredit mass movements against corruption by declaring that civil society cannot usurp the right to legislate – a right which, in a democracy, is the exclusive preserve of elected representatives. This argument needs to be examined closely, because on the face of it, it seems to be premised on well-accepted principles of democracy. Are civil society activists and mass movements really holding Parliamentary democracy to ransom? Or is there a deeper, more shadowy threat to democracy that is kept hidden, with a skilful sleight of hand, by Chidambaram and his colleagues?
In the first place, the accusation that civil society activists are seeking to replace Parliament does not hold water. Civil society activists are seeking to shape the draft of laws, and they also seek to mobilise opinion on the content of the laws and hold elected representatives accountable to such opinion. In the process, common people are more closely informed and involved about specific clauses of laws and specific debates surrounding them, than ever before. But the actual task of enacting the laws still rests with MPs in Parliament; though it is true as a result of the civil society efforts at public participation, the debates within Parliament are more likely to be scrutinised intelligently and alertly by citizens.
Chidambaram and the Congress party seem to be uncomfortable with this continuous process of public participation and scrutiny of the trajectory of laws before they reach Parliament. In an article, Congress spokesperson Manish Tiwari warned against street protests, which he equated with ‘street coercion' and fascism. Chidambaram criticised civil society members for challenging the Finance Minister to a televised debate, saying that after all, Parliamentary debates are televised and “voters exercise their franchise from time-to-time.” What the Government seems to be suggesting is that democracy is restricted to voters' right to elect representatives “from time-to-time.” Once people cast their vote, do they cede away their policy-shaping rights for the next five years to the representatives they elect? In other words, is the government suggesting that democracy be available to the citizens only once in five years? Do the people have no right to tell those representatives, through street protests when necessary, exactly what kind of laws they want enacted, especially when those laws often tend to have irrevocable consequences on their lives?
It is strange that the Govt which does not want civil society to dictate to Parliament, has no qualms about corporate CEOs and lobbyists as well as foreign powers dictating laws, policies and even Ministerial appointments. A glaring example was the Radia tapes revelation of how Mukesh Ambani and his lobbyist could even manage to dictate what stand the chief Opposition party will take in Parliament on a key question of energy policy. Wikileaks revealed the close scrutiny and immense influence exerted on India 's parliamentary processes, choice of Ministers (remember the Wikileaks revelation that Murli Deora's appointment as Petroleum Minister was influenced by the US ), foreign policy stances, economic policies and laws by the US . How come the Government does not consider such influence to be a threat to the sovereignty of India 's parliamentary democracy, but resents the scrutiny and influence by India 's own citizens?
Interestingly, the Government, which is raising its eyebrows about the role of civil society activists on the Lokpal panel, is itself appointing un-elected individuals – almost always corporate CEOs - in extremely strategic policy-making positions in ways that seriously undermine Parliament as well as people's right to know. A crucial instance is that of the National Intelligence Grid (NATGRID) – which has recently secured “in-principle” approval from the Cabinet Committee on Security. NATGRID's CEO is one Captain Raghu Raman, former CEO of Mahindra Special Services Group. Through what parliamentary or democratic process was he appointed? People are in the dark about why he was hand-picked by the Home Minister. Moreover his views and stances are not known to the public.
Civil society activists are public figures, whose ideas are ever open to public scrutiny and debate. We may not agree with everything that Anna Hazare proposes – but his ideas are out there in the open for us to criticize or assess on our own. But things are very different with the likes of Captain Raghu Raman. How many people are aware, for instance, of his views on national security and India 's democracy? When he was the Mahindra SSG boss, he penned an article titled ‘ A Nation of Numb People' in which he opined, “Enterprises would need to raise their own protection units…The idea is to … have private protection units that can work in close cooperation with law enforcement agencies. Think of it as a private territorial army . If the commercial czars don't begin protecting their empires now, they may find the lines of control cutting across those very empires.”
Can Chidambaram tell us why a man who thinks of corporations as ‘czars' with private ‘territories' with the right to command ‘private armies' to wage war on India's citizens is heading the most sensitive, all-compassing intelligence institution in our country? Are India 's Parliament and people aware that NATGRID is headed by a man whose worldview matches those of the worst banana republics?
Another instance Parliament being undermined is in the case of the UID Project. The UID Authority of India headed by Nandan Nilekani – another former CEO - UIDAI came into being without approval in Parliament, let alone wider debate in civil society. The National Identification Authority of India (NIAI) Bill, 2010 has been introduced in the Rajya Sabha, but is yet to be debated or passed, and it is yet to have been placed in the Lok Sabha. With a mere Cabinet approval as its basis, UIDAI headed by Nilekani has already signed MOUs in most states with a range of private agencies and government ministries, and UID cards are already being distributed. Does this not undermine Parliamentary democracy?
What are the credentials of individuals like Raghu Raman or Nilekani? They are not elected parliamentarians. They are not even politicians, who at any rate have to face elections periodically? Neither are they bureaucrats, bound to certain regulations and obligations. They are simply corporate CEOs, accountable only to protecting the interests of corporate profits! Yet we see they are being chosen through sheer discretion and positioned in strategic places to make far-reaching critical changes in our country's policy – that bode disastrous and irreparable implications for country's democracy and citizens' rights.
In a debate on a TV channel, responding to the issue of India signing on the UN Convention on Corruption, Congress spokesperson Manish Tiwari declared piously that even a municipal law would take precedence over international laws if the former was contradicted by the latter. Such respect for India 's democratic institutions and sovereignty is commendable – but one wonders where it evaporates when it comes to economic policies dictated by the WTO? In those cases, why does the Indian Government argue that its hands are tied and it has no choice but to amend India 's laws in keeping with WTO directives? It seems the Government invokes the principles of Parliamentary democracy and sovereignty only according to convenience.
The processes initiated by mass movements and civil society activists – whether we agree with all their views or not – strengthen democracy. Citizens do have a right to tell their elected representatives what kind of laws they want enacted and what laws they want changed or scrapped. The SEZ Act was passed by Parliament without a word of dissent. But when implemented, it became clear that those citizens it would affect most – farmers – would not accept it. Would it not have been far more democratic that farmers should have had a right to scrutinise such a law before it was passed in Parliament? Now, farmers' mass protests against land grab are forcing governments to consider their opinions on existing laws on land acquisition and rehabilitation. Opinion is building in the country against the sedition law; earlier, mass protests have forced a debate on laws like AFSPA. These are all processes that are essential to a healthy democracy – and the Government only exposes its authoritarian impulse by trying to discredit such participative processes.
One reader's comment on the web page of a leading English daily that carried the news story – ‘Elected members cannot yield to civil society – Chidambaram' ( http://www.indianexpress.com/news/elected-members-cannot-yield-to-civil-society-chidambaram/800964/ ) hit the nail on the head. This reader has commented caustically, “Yes, they should yield only to corporates and plunderers of the nation.” It seems the UPA Government's bluster is able to convince fewer people every day, as the corporate-dictated corruption under its aegis becomes more and more obvious.
(The author teaches Economics at Sri Aurobindo College (Eve.), Delhi University )
By Tapas Ranjan Saha
19 June, 2011
Countercurrents.org
A debate is raging on the role of civil society and popular movements, and their impact on democracy. In a recent statement, Home Minister P Chidambaram said “Elected members cannot yield to civil society” since this might undermine “parliamentary democracy.” A beleaguered UPA Government is increasingly trying to discredit mass movements against corruption by declaring that civil society cannot usurp the right to legislate – a right which, in a democracy, is the exclusive preserve of elected representatives. This argument needs to be examined closely, because on the face of it, it seems to be premised on well-accepted principles of democracy. Are civil society activists and mass movements really holding Parliamentary democracy to ransom? Or is there a deeper, more shadowy threat to democracy that is kept hidden, with a skilful sleight of hand, by Chidambaram and his colleagues?
In the first place, the accusation that civil society activists are seeking to replace Parliament does not hold water. Civil society activists are seeking to shape the draft of laws, and they also seek to mobilise opinion on the content of the laws and hold elected representatives accountable to such opinion. In the process, common people are more closely informed and involved about specific clauses of laws and specific debates surrounding them, than ever before. But the actual task of enacting the laws still rests with MPs in Parliament; though it is true as a result of the civil society efforts at public participation, the debates within Parliament are more likely to be scrutinised intelligently and alertly by citizens.
Chidambaram and the Congress party seem to be uncomfortable with this continuous process of public participation and scrutiny of the trajectory of laws before they reach Parliament. In an article, Congress spokesperson Manish Tiwari warned against street protests, which he equated with ‘street coercion' and fascism. Chidambaram criticised civil society members for challenging the Finance Minister to a televised debate, saying that after all, Parliamentary debates are televised and “voters exercise their franchise from time-to-time.” What the Government seems to be suggesting is that democracy is restricted to voters' right to elect representatives “from time-to-time.” Once people cast their vote, do they cede away their policy-shaping rights for the next five years to the representatives they elect? In other words, is the government suggesting that democracy be available to the citizens only once in five years? Do the people have no right to tell those representatives, through street protests when necessary, exactly what kind of laws they want enacted, especially when those laws often tend to have irrevocable consequences on their lives?
It is strange that the Govt which does not want civil society to dictate to Parliament, has no qualms about corporate CEOs and lobbyists as well as foreign powers dictating laws, policies and even Ministerial appointments. A glaring example was the Radia tapes revelation of how Mukesh Ambani and his lobbyist could even manage to dictate what stand the chief Opposition party will take in Parliament on a key question of energy policy. Wikileaks revealed the close scrutiny and immense influence exerted on India 's parliamentary processes, choice of Ministers (remember the Wikileaks revelation that Murli Deora's appointment as Petroleum Minister was influenced by the US ), foreign policy stances, economic policies and laws by the US . How come the Government does not consider such influence to be a threat to the sovereignty of India 's parliamentary democracy, but resents the scrutiny and influence by India 's own citizens?
Interestingly, the Government, which is raising its eyebrows about the role of civil society activists on the Lokpal panel, is itself appointing un-elected individuals – almost always corporate CEOs - in extremely strategic policy-making positions in ways that seriously undermine Parliament as well as people's right to know. A crucial instance is that of the National Intelligence Grid (NATGRID) – which has recently secured “in-principle” approval from the Cabinet Committee on Security. NATGRID's CEO is one Captain Raghu Raman, former CEO of Mahindra Special Services Group. Through what parliamentary or democratic process was he appointed? People are in the dark about why he was hand-picked by the Home Minister. Moreover his views and stances are not known to the public.
Civil society activists are public figures, whose ideas are ever open to public scrutiny and debate. We may not agree with everything that Anna Hazare proposes – but his ideas are out there in the open for us to criticize or assess on our own. But things are very different with the likes of Captain Raghu Raman. How many people are aware, for instance, of his views on national security and India 's democracy? When he was the Mahindra SSG boss, he penned an article titled ‘ A Nation of Numb People' in which he opined, “Enterprises would need to raise their own protection units…The idea is to … have private protection units that can work in close cooperation with law enforcement agencies. Think of it as a private territorial army . If the commercial czars don't begin protecting their empires now, they may find the lines of control cutting across those very empires.”
Can Chidambaram tell us why a man who thinks of corporations as ‘czars' with private ‘territories' with the right to command ‘private armies' to wage war on India's citizens is heading the most sensitive, all-compassing intelligence institution in our country? Are India 's Parliament and people aware that NATGRID is headed by a man whose worldview matches those of the worst banana republics?
Another instance Parliament being undermined is in the case of the UID Project. The UID Authority of India headed by Nandan Nilekani – another former CEO - UIDAI came into being without approval in Parliament, let alone wider debate in civil society. The National Identification Authority of India (NIAI) Bill, 2010 has been introduced in the Rajya Sabha, but is yet to be debated or passed, and it is yet to have been placed in the Lok Sabha. With a mere Cabinet approval as its basis, UIDAI headed by Nilekani has already signed MOUs in most states with a range of private agencies and government ministries, and UID cards are already being distributed. Does this not undermine Parliamentary democracy?
What are the credentials of individuals like Raghu Raman or Nilekani? They are not elected parliamentarians. They are not even politicians, who at any rate have to face elections periodically? Neither are they bureaucrats, bound to certain regulations and obligations. They are simply corporate CEOs, accountable only to protecting the interests of corporate profits! Yet we see they are being chosen through sheer discretion and positioned in strategic places to make far-reaching critical changes in our country's policy – that bode disastrous and irreparable implications for country's democracy and citizens' rights.
In a debate on a TV channel, responding to the issue of India signing on the UN Convention on Corruption, Congress spokesperson Manish Tiwari declared piously that even a municipal law would take precedence over international laws if the former was contradicted by the latter. Such respect for India 's democratic institutions and sovereignty is commendable – but one wonders where it evaporates when it comes to economic policies dictated by the WTO? In those cases, why does the Indian Government argue that its hands are tied and it has no choice but to amend India 's laws in keeping with WTO directives? It seems the Government invokes the principles of Parliamentary democracy and sovereignty only according to convenience.
The processes initiated by mass movements and civil society activists – whether we agree with all their views or not – strengthen democracy. Citizens do have a right to tell their elected representatives what kind of laws they want enacted and what laws they want changed or scrapped. The SEZ Act was passed by Parliament without a word of dissent. But when implemented, it became clear that those citizens it would affect most – farmers – would not accept it. Would it not have been far more democratic that farmers should have had a right to scrutinise such a law before it was passed in Parliament? Now, farmers' mass protests against land grab are forcing governments to consider their opinions on existing laws on land acquisition and rehabilitation. Opinion is building in the country against the sedition law; earlier, mass protests have forced a debate on laws like AFSPA. These are all processes that are essential to a healthy democracy – and the Government only exposes its authoritarian impulse by trying to discredit such participative processes.
One reader's comment on the web page of a leading English daily that carried the news story – ‘Elected members cannot yield to civil society – Chidambaram' ( http://www.indianexpress.com/news/elected-members-cannot-yield-to-civil-society-chidambaram/800964/ ) hit the nail on the head. This reader has commented caustically, “Yes, they should yield only to corporates and plunderers of the nation.” It seems the UPA Government's bluster is able to convince fewer people every day, as the corporate-dictated corruption under its aegis becomes more and more obvious.
(The author teaches Economics at Sri Aurobindo College (Eve.), Delhi University )
Tuesday 28 August 2007
Neoliberalism! - How the neoliberals stitched up the wealth of nations for themselves
A cabal of intellectuals and elitists hijacked the economic debate, and now we are dealing with the catastrophic effects
George Monbiot
Tuesday August 28, 2007
The Guardian
For the first time the UK's consumer debt exceeds the total of its gross national product: a new report shows that we owe £1.35 trillion. Inspectors in the United States have discovered that 77,000 road bridges are in the same perilous state as the one which collapsed into the Mississippi. Two years after Hurricane Katrina struck, 120,000 people from New Orleans are still living in trailer homes and temporary lodgings. As runaway climate change approaches, governments refuse to take the necessary action. Booming inequality threatens to create the most divided societies the world has seen since before the first world war. Now a financial crisis caused by unregulated lending could turf hundreds of thousands out of their homes and trigger a cascade of economic troubles.
These problems appear unrelated, but they all have something in common. They arise in large part from a meeting that took place 60 years ago in a Swiss spa resort. It laid the foundations for a philosophy of government that is responsible for many, perhaps most, of our contemporary crises.
When the Mont Pelerin Society first met, in 1947, its political project did not have a name. But it knew where it was going. The society's founder, Friedrich von Hayek, remarked that the battle for ideas would take at least a generation to win, but he knew that his intellectual army would attract powerful backers. Its philosophy, which later came to be known as neoliberalism, accorded with the interests of the ultra-rich, so the ultra-rich would pay for it.
Neoliberalism claims that we are best served by maximum market freedom and minimum intervention by the state. The role of government should be confined to creating and defending markets, protecting private property and defending the realm. All other functions are better discharged by private enterprise, which will be prompted by the profit motive to supply essential services. By this means, enterprise is liberated, rational decisions are made and citizens are freed from the dehumanising hand of the state.
This, at any rate, is the theory. But as David Harvey proposes in his book A Brief History of Neoliberalism, wherever the neoliberal programme has been implemented, it has caused a massive shift of wealth not just to the top 1%, but to the top tenth of the top 1%. In the US, for instance, the upper 0.1% has already regained the position it held at the beginning of the 1920s. The conditions that neoliberalism demands in order to free human beings from the slavery of the state - minimal taxes, the dismantling of public services and social security, deregulation, the breaking of the unions - just happen to be the conditions required to make the elite even richer, while leaving everyone else to sink or swim. In practice the philosophy developed at Mont Pelerin is little but an elaborate disguise for a wealth grab.
So the question is this: given that the crises I have listed are predictable effects of the dismantling of public services and the deregulation of business and financial markets, given that it damages the interests of nearly everyone, how has neoliberalism come to dominate public life?
Richard Nixon was once forced to concede that "we are all Keynesians now". Even the Republicans supported the interventionist doctrines of John Maynard Keynes. But we are all neoliberals now. Margaret Thatcher kept telling us that "there is no alternative", and by implementing her programmes Clinton, Blair, Brown and the other leaders of what were once progressive parties appear to prove her right.
The first great advantage the neoliberals possessed was an unceasing fountain of money. US oligarchs and their foundations - Coors, Olin, Scaife, Pew and others - have poured hundreds of millions into setting up thinktanks, founding business schools and transforming university economics departments into bastions of almost totalitarian neoliberal thinking. The Heritage Foundation, the Hoover Institute, the American Enterprise Institute and many others in the US, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute in the UK, were all established to promote this project. Their purpose was to develop the ideas and the language which would mask the real intent of the programme - the restoration of the power of the elite - and package it as a proposal for the betterment of humankind.
Their project was assisted by ideas which arose in a very different quarter. The revolutionary movements of 1968 also sought greater individual liberties, and many of the soixante-huitards saw the state as their oppressor. As Harvey shows, the neoliberals coopted their language and ideas. Some of the anarchists I know still voice notions almost identical to those of the neoliberals: the intent is different, but the consequences very similar.
Hayek's disciples were also able to make use of economic crises. An early experiment took place in New York City, which was hit by budgetary disaster in 1975. Its bankers demanded that the city follow their prescriptions - huge cuts in public services, smashing of the unions, public subsidies for business. In the UK, stagflation, strikes and budgetary breakdown allowed Thatcher, whose ideas were framed by her neoliberal adviser Keith Joseph, to come to the rescue. Her programme worked, but created a new set of crises.
If these opportunities were insufficient, the neoliberals and their backers would use bribery or force. In the US, the Democrats were neutered by new laws on campaign finance. To compete successfully for funding with the Republicans, they would have to give big business what it wanted. The first neoliberal programme of all was implemented in Chile following Pinochet's coup, with the backing of the US government and economists taught by Milton Friedman, one of the founding members of the Mont Pelerin Society. Drumming up support for the project was easy: if you disagreed, you got shot. The International Monetary Fund and the World Bank used their power over developing nations to demand the same policies.
But the most powerful promoter of this programme was the media. Most of it is owned by multimillionaires who use it to project the ideas that support their interests. Those ideas which threaten their interests are either ignored or ridiculed. It is through the newspapers and TV channels that the socially destructive notions of a small group of extremists have come to look like common sense. The corporations' tame thinkers sell the project by reframing our political language (for an account of how this happens, see George Lakoff's book, Don't Think of an Elephant!). Nowadays I hear even my progressive friends using terms like wealth creators, tax relief, big government, consumer democracy, red tape, compensation culture, job seekers and benefit cheats. These terms, all invented or promoted by neoliberals, have become so commonplace that they now seem almost neutral.
Neoliberalism, if unchecked, will catalyse crisis after crisis, all of which can be solved only by greater intervention on the part of the state. In confronting it, we must recognise that we will never be able to mobilise the resources its exponents have been given. But as the disasters they have caused unfold, the public will need ever less persuading that it has been misled.
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