Tuesday, 24 May 2011

Sex, Money and Power

What's the link between current celebrity sex scandals - should they be able to protect their privacy with super-injunctions? - and the threatened financial crisis in Europe? Obviously it is the arrest of the managing director of the International Monetary Fund (IMF), Dominique Strauss-Kahn, on charges of attempted rape of a chambermaid, as he was about to take off from New York to attend a meeting about the euro-crisis in Brussels. If you were trying to write a blockbuster with all the ingredients of sex, money and power, you couldn't make it up.

But this is no random connection. There is a crucial thread joining the revelation that Strauss-Kahn had a history of sexual harrassment with the feared collapse of the European currency. It is the new form of unaccountable power that is built into the global economy, and amazingly it all started with science fiction.

The BBC2 tv documentary 'Watched Over by Machines of Loving Grace' on Monday evening revealed what I had always suspected - that the fantasy of radical individual freedom through new technology created the posssibility of such power. The novels of the Russian-born American author Ayn Rand anticipated the invention of computer networks and the internet, claiming that they could free people from the need for government control, regulation and authority. She and a devoted group of followers spread the dream of personal liberation in a global society, mechanically co-ordinated through feedback from electronic systems. Set free to follow their sexual desires, individuals could create their own paradises of prosperity and self-fulfilment - a project which she and her acolytes lived out with disastrous consequences for their relationships and emotional well-being.

One of the leading members of the Rand clique was Alan Greenspan, who went on to chair the US Federal Reserve (their central bank) in the 1990s and early 2000s. But before this, the young entrepreneurs who launched Silicon Valley were fervent adherents to Rand's message, called their children after her, and their companies after characters in her novels. One of them even conducted a social experiment to show that people's actions could be rationally co-ordinated without any external direction or direct communication between them in a computer game.

So a fantasy, dreamed up by a creative genius with no economic education, became the guiding gospel for the most influential players in the game of globalisation. Drawing on the work of two elderly Austrian advocates of free markets, Hayek and Von Mises, they elevated these ideas into an orthodoxy for how the whole world should be re-organised, first through the US financial community, and then through the IMF. When the Soviet Bloc collapsed, the scope for global economic integration seemed infinite; the economic world could become a single, self-regulating unit, running on electronic adjustments in entirely automated processes, making governments redundant and liberating individuals for self-realisation.

Ever since the early 1990s this has been the ruling global ideology. Different variants have been the basis for the Washington Consensus and the Third Way; financial markets have been deregulated and governments have retreated almost everywhere (China has been an important exception). As gullible customers of the banks, people have enjoyed the opportunity to borrow far more than they could afford. Power has not disappeared - it has become concentrated in the hands of an unaccountable plutocratic elite, running the global economy in its own interests.

Through the Federal Reserve and the IMF, with US interest rates held low for many years, a series of bubbles hve inflated and exploded all over the world, but the outcome has always been the same. First the financial crashes in Asia, Russia and South America, then the dotcom bubble, and finally in the subprime crisis and the global credit crunch, bailouts have been followed by a downward plunge in the living standards of ordinary people, as they have been forced to pay for the mistakes made by the financial masters of the universe.

The cause of these bubbles has always been the same delusion - that the new information technology, high-speed global communications and complex new products could eliminate risk and human self-deception. Each time a new foolproof system is developed, its failure has to be paid for by the public, not the speculators.

What started as the power of a few individuals is now built into the system of global capitalism; even if we want our governments to hold their financial overlords to account, they cannot. Until this situation is challenged, we are waiting for the next crash.

So what started as science fiction and wishful fantasy is now hard reality. And the remedy is still the same, whether it is the power of the rich to flout the laws of sexual conduct or their power over our economic prospects. First we must abandon our dreams of perfect freedom and unrestrained prosperity. Then we must recognise that democracy and its rules are not artificial ways of limiting our chances to discover our personal potentials. They are essential ways to limit power, by holding the powerful to account.

1 comment:

  1. And now, 'democracy' is shouted by all the Western powers and others too, but it is not democracy that we have.
    In the recent UK referendum, much has been made of it being a 'democratic' decision. This is true inasmuch as it was a decision taken by the people.
    But under what conditions? There was no serious debate prior to the vote, and the two-party system shoved its way into every discussion. Lamentable. Like asking a dog-trainer whether they think the space programme should be continued.