Sunday, May 02, 2010

Crime and punishment

Arriving back in the UK, the Greek financial crisis is fresh in my mind and entirely absent from the election campaign. It should not be. The consequences may well be profound for the whole European Union. Mind you, at the moment, you would be hard put to find any politicians prepared to admit that the economics situation is anything other than 'business as usual'.

Most of the press coverage of Greece has been irritating. The bedrock of commonplace analysis is an atavistic view of Greeks as picturesque foreigners in the grip of Mediterranean vices. The reality of corruption and the monstrous bureaucratic inefficiency of the state are undisputed, not least by the Greeks themselves who frequently despair of them. So too is the habit of tax avoidance. After all, the justifications go, why give money to the state when it will simply be stolen? The crisis is real and home-grown. But amidst all the talk of 'lavish' pensions, 'ghost workers' and state jobs for life, where is the coverage of the low wages, the rocketing cost of living, growing poverty, and of the endemic insecurity that provokes people to fight back in defence of their rights?

This lack of respect for Greece makes it easy to indulge in the language of austerity. The government is told to make ever deeper cuts, accept severe and 'painful' measures and make profound sacrifices in return for financial rescue, despite the importance of keeping Greece afloat to the whole European Union. Greeks are to be punished for their sins.

Surely something is missing from this discourse? What has happened to the concept of 'social Europe'? Where is there talk of investing in Greece? Where is the support for the ordinary people whose livelihoods and businesses will be devastated by these measures? Where is the help for the Greek government in reforming and restructuring the state? What about the search for ways to control the markets to prevent speculative attacks on countries? Why are we not talking of investment and reconstruction, avoiding rather than provoking recession and the creation of strong welfare states? Here, in a microcosm, is the crisis of European social democracy, a crisis that is reflected in our own election campaign.

In Britain too, the language is punitive. Calls for vengeance against those who brought us so low are commonplace and plastered on billboards across the country. Bankers? Good god no. Benefit 'cheats' are the villains of the day. (And for a depiction of reality read this excellent article by David Conn, breaking away from his usual beat of football finance).

My pre-election reading is a fine book about the politics of Gordon Brown by one of my old mates from Hull, Simon Lee. It is a little unnerving to read such a serious book by someone you have seen leaping around a football ground like a demented lunatic making gestures at Arsenal supporters, but it is an intelligent analysis for all that. Simon may not have the stylistic flair of the more celebrated Andrew Rawnsley, nor does he deal with any of the gossip about Brown's personality, instead he treats Brown as a substantial political figure, attracted to an insubstantial model of political economy.

Simon charts Brown's intellectual journey from supply-side socialism to supply-side liberalism and his attempt to implement it through a centralised, technocratic model of governance. This meant the acceptance of a neo-liberal economic orthodoxy. And when that orthodoxy failed, what then was there to replace it?

This is the nub of the lack of substance of much of the current election campaign, the absence of alternative political economies. This should be the historic role of the Labour Party. It was created and sustained to act as an advocate of democratic socialism or social democracy, the advancement of collective goals within a capitalist economy and liberal democratic polity. Instead, we have a neo-liberal consensus with differences at the margins between the competing parties. I am not naïve enough to suggest that those differences do not matter. They do, they are real and they will determine how I vote. However, without a choice between coherent and realistic alternative philosophies elections can be reduced to political beauty contests and in one of those, with its decidedly unattractive leadership, Labour is at a disadvantage.

Simon Lee depicts what he sees as the main flaws in the political economy and democratic practice of New Labour and sees them as the platform for the rise of a neo-Thatcherite Conservative Party. I don't think that any of us thought that the Labour Party could be outflanked by a party that is actually supposed to embody Liberalism; the Liberal Democrats. But then, by being unable to offer a social democratic alternative to neo-liberalism, Labour's position was open to challenge by anyone credible describing themselves as 'progressive'.

The one thing that the Liberal Democrat surge has done is to open debates about the nature of British democracy; it has done nothing to question the prevailing economic orthodoxy. This process should form the basis of Labour renewal. I was hoping for it as a consequence of the victory of 1997. Perhaps now it will be the result of the defeat of 2010.


George S said...

Welcome back, Plump. Say more about Greece. Who are the poor? Who gets the lavish pensions? Who got early retirement? Who are the beneficiaries of corruption? How far is any government in Greece in hock to corruption and the corrupt? Can one invest in a society that is very corrupt, that is, if Greece is?

The EU had invested deeply in Ireland, in Portugal and other places. I don't read the calls for austerity primarily as punitive. Isn't it, rather, an attempt to balance the cooked books? How do you do that without hurting the poor? Could the Greek government itself do more to protect the poorest? Could the EU direct aid specifically to the poor?

And there is plenty of desire to punish the bankers here. The debates certainly played on that and everyone feels it. But then it's partly a matter of numbers. Say you stop a hundred bankers getting a million each in bonuses, that's still only £100m. Say you stop a thousand... And then there's the worry about losing the profits of being a world financial centre. Because what do you put in its place?

That is then tied in with what you say about Labour and Brown. Could Labour - or the UK - detach itself from the global financial system (ie neo-liberalism?) or just loosen the ties a little? Is it possible for any major economy to do that?

I say all this with a heavy heart. The difference between the parties here is essentially a matter of tinkering. There remain the broad residual principles on which I will vote, in much the same way as I vote in my local constituency where it makes little difference what I vote.

Welcome back.

The Plump said...

George, you raise so many questions and it needs a book to answer most of them :-)

I am an outsider, not an expert, on Greece. Wages are low. The state pension is based on final salary and, until recently, the retirement age was relatively low. A former quarry worker who grazes his goats in my garden was shocked to discover that my pension is half his. He couldn't understand why a lecturer should get so little compared to him, an ordinary worker. Though, to me, that is a situation worth praising and defending.

The cost of living has rocketed since they joined the Euro, wages have not kept pace and, particularly, young people have real difficulty getting jobs. State employment is enviable as it is secure and security is important in a country that has such a troubled history - Nazi occupation, followed by civil war and then by a military dictatorship that only ended in 1974.

Corruption is endemic and at all levels. Of course, the rich steal more than the poor and the church more than most. In one way it is a rational, if arbitrary, way of managing the difficulties of their bureaucracy. A commission paid or the help of a friend or relative works better than the formal system.

But then again, there are also the small acts of kindness and hospitality that get you through it. And, in an emergency, there is the skill and dedication that has just saved the life of a friend. This is worth investing in, rather than plunging into a desperate recession which will only reinforce the worst as a survival mechanism whilst the best lose their livelihoods.

What is happening is not merely a correction to the cooked books (and they were cooked), it is about preserving the Euro not Greece. What has happened in Greece in terms of credit lead spending is more or less the same as has happened in the rest of the developed world.

This article from the Observer is good:

It is tempting to view the Greek debt crisis as an isolated example of national profligacy and financial ineptitude from a country that should never have been allowed to join the euro. With a record of economic mismanagement and political instability – not to mention a propensity to "cook its books", if you believe the country's most vocal critics – it is hardly surprising that Greece has been forced to seek an international bailout.

But that analysis is probably unfair to Greece, whose excesses are only a few notches higher than other developed nations. And it misses the wider issue of a sovereign debt time bomb that stems from the credit boom of 2003-7.

And now to the UK in the next comment.

The Plump said...

And these are the two main points of my post.

The first is about language. I think that the language we use is important as it is a vehicle for the underpinning assumptions we hold. It deceives us, its users, as much as it fools others.

The language we use to describe the crisis shapes the solutions that are offered and our attitudes to them. When 'poverty' becomes 'medicine' it is so much more appealing - tastes disgusting but does you good. They used to prescribe arsenic for various ailments didn't they? I think they still do in economics.

There is a need to reclaim the language of politics, of common place discourse, that sees equality, welfare and the like as priorities, rather than obstructive luxuries to be abandoned in the face of the tough 'realities' of the global market.

Which brings me to the second point, which is the rediscovery and advocacy of social democracy as an alternative to neoliberalism, rather than as an accommodation with it.

And in answer to Taylorakis' comment under the previous post - I think that he meant to put it on this one - this isn't asking for much of a radicalisation. After all, prior to Thatcher, this was part of the mainstream of the Conservative Party!

Thanks for the welcome back. I think I am looking forward to the next bon voyage (or καλό ταξίδι)