John Gray writes: The Occupy movements have been attacked for being impractical visionaries. In fact it is the established political classes of the west that are wedded to utopian thinking, while the protesters are recalling us to the actualities of human experience. Based on economic theories that left out human beings, the global free market was supposed to be self-regulating. Now a process of disintegration is under way, in which the structures set up in the post-cold-war period are visibly breaking up.
Anyone with a smattering of history could see that the hubristic capitalism of the past 20 years was programmed to self-destruct. The notion that the world’s disparate societies could be corralled into a worldwide free market was always a dangerous fantasy. Opening up economies throughout the world meant ordinary people were more directly exposed to the gyrations of market forces than they had been for generations. As it overthrew existing patterns of life and robbed large numbers of people of any security they might have achieved, global capitalism was bound to trigger a powerful blowback.
For as long as it was able to engineer an illusion of increasing prosperity, free-market globalisation was politically invulnerable. When the bubble burst, the actual condition of the majority was laid bare. In the US a plantation-style economy has come into being, with debt-servitude for the many coexisting with extremes of volatile wealth for the few. In Europe the muddled dream of a single currency has resulted in social devastation in Greece, mass unemployment in Spain and other countries, and even, for some, reversion to a life based on barter: sucking society into a vortex of debt deflation, austerity policies are driving a kind of reverse economic development. In many countries a settled bourgeois existence – supposedly the basis of popular capitalism – has become an impossible aspiration. Large numbers are edging closer to poverty and a life without hope.
History tells us how perilous this process can be. It has been taken for granted that a sudden collapse of the kind that occurred in the former Soviet Union and more recently Egypt cannot happen in advanced market economies. That assumption may be tested severely in coming years. While totalitarian mass movements of the sort seen in the 30s are not going to return, Europe’s demons have not gone away. Blaming minorities and immigrants is a perennially popular response to economic dislocation, and ethnic nationalism can be hideously destructive. In the US the continuing demise of the middle class could engender a style of politics even more rancorous and unhinged than that prevailing today. A figure such as Father Coughlin, the Depression-era radio demagogue, shows what can be expected as the economy continues its slide. With the rise of trigger-happy politicians like Mitt Romney and the need for Obama to act tough, it would be unwise to rule out the prospect of another major war.
“In Europe the muddled dream of a single currency has resulted in social devastation in Greece, mass unemployment in Spain…”
I swear to God, there’s not a single English-speaking commentator that talks sense concerning the dog-and-pony show that is the Eurozone “crisis”. If this gentleman thinks that the primary source of “mass unemployment” in Spain is the euro, he shows that the only muddled thing is his thinking.
The only nationalism that can exist in Europe is the “ethnic nationalism” our intrepid thinker talks about (in opposition to the “social nationalism” of his petit-bourgeois pipedreams, surely?).
The colour of our banknotes has far less to do with our social woes than the real ills of global wage arbitrage and financialisation of our economies (ills which have affected the eurosceptic UK far more than those beastly eurowimps). If the eurozone breaks up, the EU fails, and neoliberals shall have a field day amid the ruins, because political fragmentation is the handmaiden of economic globalisation, and will lead to a deregulatory race to the bottom among Europe’s irrelevant statelets.
-Digression: When this guy and the bargain-basement “Keynesians” of the world wax lyrical about the advantages of sovereign currencies, what they’re really talking about is dropping the “PIGS” (charming name) into a Ricardian trap. David Ricardo’s talk about free international trade was fine, except for the fact that its prescriptions allowed the English to complete the Industrial Revolution (by producing textiles), while the Portuguese were supposed to specialise in remaining agrarian and poor (by selling wine). That’s why open international trade is basically only fair when it’s carried out among developed economies.
Now, when a country like Greece that imports lots of higher value-added stuff from other countries devalues its currency, said stuff becomes expensive and is thus not suitable for the Greek to use in manufacturing stuff of their own. The Greek economy therefore tends to specialise in the business-as-usual lower value-added autochthonous stuff. This is borne out by empirical experience: the drachma dropped to a fraction of its value with respect to the D-Mark between 1970 and the end of the century, and yet somehow the country failed to turn into a highly competitive powerhouse. The pound also lost 2/3 of its value with respect to the D-Mark in the same period, and yet the deindustrialisation of the UK proceeded apace.
One could make a T-Shirt saying, “I devalued my currency and all I got was being called a PIG”.
The crisis of the euro is yet another absurd market bubble (funny how the aforementioned bargain-basement Keynesians fail to condemn the role of rating agencies in this, or to speak of the very real “animal spirits” that are ravaging the sovereign bond markets). The punitive austerity measures that are being imposed on Greece and the rest are either merely a stage of a political power struggle that will have to lead to greater trans-national solidarity within the eurozone…or, alternatively, the first step towards a breakup that will be a monumental, decisive victory for the neoliberals (the financiers bringing the industrial core of Europe to its knees, essentially), not a vindication for the Krugmans and John Grays of the world.
You linked days ago to an article by Krugman in which he does his narcissistic Perfessor Liberal McWeaksauce thing, asking to start a Very Reasonable Discussion about the Real Conclusions to be extracted from a potential eurozone meltdown (which he, in his cluelessness about the political events on the ground, regards as a certainty). As if the right wing won’t deal a massive blow to the welfare state model in the wake of the end of the euro. A liberal Genius Laureate thinking that his reason is what makes the world go round. Hahahaha.
“empirical experience” = “empirical evidence”.
Proofreading is your friend.