After the United States had lost its surpluses, some time in the late
1960s, the system of fixed exchange rates and highly regulated capital
movements, which had nurtured capitalism’s Golden Age, was condemned.
Its inevitable collapse could not but push the dollar down, release the
bankers from their thirty-year-old restraints, and wind back rights and
services that labour had wrestled from capital since the war.
In 2008, the pyramids of private money, that Wall Street and the City
of London had built on the back of this constant tsunami of capital,
crashed and burned. At first, continental Europeans smiled, allowing
themselves an ‘I told you so’ moment, directed at the Anglo-saxons who
had spent a decade or two sneering at the Continent’s antiquated
commitment to manufacturing. Alas, that moment proved very brief. Soon,
they realised that their own banks were replete with toxic assets and
that their bankers had been allowed to run debts (or ‘leverage’) twice
as great as those in the Anglo-sphere. Put simply, Mrs. Thatcher bubble
had been surreptitiously exported to Frankfurt, Paris, Rome, Madrid,
Brussels etc. As had the ‘model’ of building up competitiveness by
squeezing wages until the local economies, behind the glitzy suburbs and
the globalised jet set, were in a permanent state of slow-burning
recession.
Post-2008, while the United States and Britain sought to bailout the
bankers with a combination of taxpayers’ money and quantitative easing
that aggressively sought to re-inflated the deflated toxic assets,
Europe was making a meal of the same project. Having rid themselves of
their central banks, the Eurozone’s politicians did their utmost to
shift all the stressed bank assets onto the shoulders of the weakest
amongst the taxpayers, thus causing a horrid recession and putting the
European Union on a path leading toward certain disintegration.
Nevertheless, and despite the significant differences between Britain
and the Eurozone, the broad picture remains the same: The establishment
responded to the financial crisis by inflating bank and real estate
assets (that were best left alone) and squeezing the majority of the
population with soul and income sapping austerity. In short, the
Thatcher model on steroids.
Growth is not the issue. The Left understands that there are many things
whose growth must be stumped: toxic waste, toxic derivatives, ponzi
finance, coal production, consumption that leaves the consumer
unfulfilled and the planet worse for ware, etc. No, the issue is
eclectic growth in the technologies and goods that contribute to a more
successful life on a sustainable planet. The Left has always known that
markets are terrible at providing these technologies and goods
sustainably, and in a manner that sets prices at a level reflecting
their value to humanity. What the Left was never very good at was in the
conversion of that gut feeling into workable policy that the
beneficiaries of this policy (i.e. the vast majority) would back.
A spectre is haunting Europe. It is the spectre of Bankruptocracy. A
curious regime of rule by the bankrupt banks. A remarkable political
arrangement in which the greatest extractive power (vis-à-vis other
people’s income and achievements) lies in the hands of the bankers in
control of the financial institutions with the largest ‘black holes’ on
their asset books. It is a regime that quick-marches the majority of
innocents into the trap of austerity-driven hardship that serves the
guilty few, while Parliament and civil society are held at ransom. While
2008 was meant to raise ‘regulatory standards,’ we now know that
nothing of substance has been done to reform finance.
This is not to say that we are anywhere near ready to replace
capitalism. Indeed, realism commands us to recognise that, if anything,
Bankruptocracy is well and truly in command of the European continent
and the only political forces on the march are those of the bigoted,
ultra Right. The Left must not err again, as it did in the 1930s,
thinking that capitalism’s great crisis will naturally lead to something
better. It may very well bring about the most hideous dystopia. This is
why it is of the essence to stabilise capitalism (through banking
regulation, a link between central banks and public investment, and a
wider social safety net) while struggling to revive democracy at the
local, national and European levels. Our success in this limited but
crucial goal is a prerequisite for forging a sustainable future in which
most people are gainfully employed in innovative enterprises of which
they are the sole shareholders.
Read more: Why Europeans should think Big and think Bold
