The Crisis, especially in Europe (not to mention Greece), is all consuming. Every day our minds are highjacked by its latest twist. Today, here in Athens, a general strike has temporarily suspended the news’ cycle and given me a few moments to reflect. I thought that today’s post, reflecting this… reflective moment, should transcend that which is both depressing and newsworthy and reach for loftier thoughts: for a vision of what the Good Society may look like after the Crisis is over. The following lines (borrowing heavily from the last chapter of our new book) paint a picture of what a decent post-Crisis future may look like. Surprisingly, my utopian thoughts take their cue from the American NFL…
The Crash of 2008, and the economic crisis that it sparked off in the US, Europe and elsewhere, has exposed, among other things, the irrelevance of the economists’ mindset. My co-authors and I have tried to encapsulate this radical irrelevance in our recent book. The simple point is that, as economists (of almost all persuasions), we have been barking up the wrong tree. Suffice to remark on the pointlessness, in the post-2008 world, of our petty squabbles between ‘monetarists’ and the so-called ‘Keynesians’, between those favouring inflation targets and those against the fans of zero inflation; between advocates of microeconomic reform in the labour markets and others paying more attention to the credibility of central banks. All these debates, it turns out, were besides the point. The world was on a trajectory that moved from post-war centrally planned stability (the Bretton Woods era), to designed disintegration in the 1970s, to an intentional magnification of unsustainable imbalances in the 1980s and, finally, to the most spectacular privatisation of money in the 1990s and beyond.
Presently, the world is precariously balanced. The global economy is on the verge of a new recessionary spin, following the sovereign debt crisis that ensued in 2010, after the financial sector was propped up with public money. As it is now obvious, the late 2009 announcement that the global economy was on the mend, that ‘recovery’ was steaming along, was terribly premature. Lest we forget, even if only 25% of the income the world lost in 2008-9 proves permanent, the long term value of these losses for humanity will come to more than 70% (some say 90%) of annual world income.
Meanwhile, no one can seek solace in the thought that the Crash of 2008 had some redemptive effects on the world economy in terms of returning us to a more stable situation and a sounded mindset. It has not! Rather, it has simply transferred more of the burdens of systemic failure on the shoulders of public authorities; which are now tempted to follow Herbert Hoover in cutting deficits at a time of looming recession. [If Mr Schauble’s recent protestations that ‘private investors’ must chip in with the second Greek bailout signify anything, this is it.]
Whether our leaders (especially here in Europe) remain faithful to Hoover’s risible policies, the sands of time are counting down to the moment when the exorbitant privilege of the United States (i.e. the dollar’s unquestionable reserve currency status) will be challenged. Ironically, for now, the dollar’s status may be the only thing that stops us from sliding into a new 1930s style depression. However, the underlying imbalances are due to grow stronger and the only way that a new escalation of the crisis can be averted (one that may even acquire non-economic manifestations) is by means of a major re-jigging of world capitalism.
In this reading, the Crash of 2008 was not just an act of nemesis but a warning of what is to come. It gave us a glimpse of an underlying reality that could only laugh loudly when in proximity to the economists’ theories. Those who want to take advantage of this ‘glimpse’ will discern an international political economy alive with an ultimately geopolitical contest between surplus and deficit sovereign entities. Within those entities themselves, other, more traditional, distributional contests continue and a series of feedback effects are running backwards and forwards between the global and the local contests. The only certainty we have is that the manner in which the Crash of 2008 was dealt with, by infusions of trillions of dollars of public money, has arrested the collapse temporarily, has restored the power of the financial sector and has created the circumstances for greater instability.
In short, I have a hunch that the world is spinning out of control. The Fed is engaged in rear guard action to counter America’s contractionary fiscal policy, the ECB is lost in a parallel universe of its own, China is struggling to maintain growth in the context of anaemic consumer spending and against a real estate and banking bubble.
In this climate, which is brewing heavy weather from West to East and North to South, the only remedy that can stem the forces of global recession is a generous transfer of power and surplus from rentiers (who have been abusing it for decades) to real producers (who can potentially harness it more effectively). In short, the only hope for a rational future is a massive transfer of social power away from the financial markets (i.e. the banks) to those who cannot be captured by them because they are too many to bribe, threaten and extort: Global Labour.
Labour must come to see that the post 1970s variant of global capitalism (what I call the Global Minotaur) has extinguished the postwar dream of a Good Society sustained by balanced growth and social justice. The crisis of social democracy is nothing but a side-effect. Old recipes for social justice and economic growth stand no chance in the post-2008 world. Neither the Nation-State nor the market can help labour claim the share of the global pie that will stabilise the world we live in. The narrative of empowerment through education is bogus; the older idea that trades unions are about wrestling a higher percentage of the surplus from specific bosses grossly inadequate; the hope that new legislation will avert environmental disaster quixotic; the promise of progress through free trade a pipedream.
The new task ahead is as simple as it is daunting: To create a New Global Plan. However, this time there are no New Dealers to design it on our behalf. Judging by what happened when they did, and despite its many successes, it is perhaps a good thing that we cannot bank on the New Dealers‘ successors today. The New Global Plan will have to be democratic, if only because nothing else seems to last. But what does democratic really mean?
It means that those who earn by actually working (and who do not rely on speculating with other people’s money or default probabilities), independently of whether they live in the United States, China, India, Africa or Europe, will have to have a say in the New Plan‘s constitution; that on that basis they must be allowed to tap into the almost infinite wealth doing the rounds in the international capital markets daily. In the long run, there may not be another way of defusing once and for all the current Crisis and of imposing the rule of Reason on our grossly irrational market societies.
And what would the New Global Plan look like? I am tempted to use one of my all-time favourite lines: We are damned if we know! However, the world needs more than splendid indeterminacy to reclaim hope of a future worth fighting for. But is there a future socio-economic arrangement worth fighting for? Can this question be answered in brief without instantly confining the answer to the too-hard, too-utopian basket?
In his little book, The Meaning of Life, Terry Eagleton (2007, pp. 171-174) faced a similarly daunting task: to capture, in brief, the… meaning of life. His answer was: A band like the Cuban Buena Vista Social Club; that’s the meaning of life! Eagleton’s point was that such a band illustrates the dialectic at its best. A ‘community’ with a clear, unifying tune toward which each ‘individual’ contributes by… improvising. Its members do not mechanically play from some given score, written by a despotic musical mind (however brilliant that mind might be), but, rather, integrate their own private freedom into a collective pursuit which enhances the experience of each of its members. Their improvisation confirms their private freedom not by having each note whimsically selected by autonomous players but, rather, when all the various pieces of improvisation fall into place, as if by the nod of some invisible conductor.
The parable that I shall now offer for what a decent future may look like, for a social economy that we think is worth fighting for, also comes from the Americas: The US National Football League! Think of it: The NFL is a paragon of aggressive competitiveness. On the pitch, extremely well prepared players give their all for victory, wealth and glory. Teams pull no punches to win. The road to the Grand Final is littered with injured bodies, broken egos but, in the process, a great deal of satisfaction and camaraderie is shared by everyone, winners and losers, both on and off the pitch.
Meanwhile, the League is based on a Central Plan. Teams cannot spend highly differential amounts on salaries and the best new players are forced to sign with the weakest teams. The market works but to do so it must be severely circumscribed by the Common Pursuit. The constraints liberate the true spirit of competition, preventing the successful from monopolising the best players and killing off the interest of most matches.
Thus, planning and competition are fused into a League that minimises predictability and maximises excitement. Socialist planning lives in sin with unbridled competition right under the spotlight of American show business!
All we need do is think of a way to organise the game of human life along the NFL’s lines, merely substituting the goal of maximising the audience’s excitement with that of minimising humanity’s chances of ending up like a dim, self-defeating virus.
