It is now almost three years since the economic crash, and the global economy, led by China, is growing again. But the political disturbances provoked by that crisis are still rippling around the globe, and no-one believes that this unrest will soon subside. Why so?
Economics is easy, politics is hard. In its broadest sense, every living species practises economics, by adopting a strategy for sustaining itself over generations from a given set of resources. That doesn't need an MBA from Harvard Business School, or even a brain.
These strategies are immensely varied, but only a few of them involve co-operation with a group of others to provide sustenance and resist predation. Ants and bees achieve this by a complex mixture of biology and communication. Chimpanzees, with whom we share 99 per cent of our DNA, use gestures, cries and facial expressions to build social organisation, including patrolling the boundaries of territory and punishing deviants. They live quite well, but they are limited to a jungle habitat, now under threat from human expansion.
Being physically puny, but requiring large quantities of protein to feed our heavy brains, human beings needed to co-operate in sophisticated ways. It seems that size of brain and communication skills evolved together; as populations grew, more social organisation was required, and more brainpower demanded more nutrition. Larger groups relied on a shared understanding of their worlds, a way of agreeing who owned what, and a system for dividing up their spoils, to sustain co-operation and defence.
Archeological and anthropological evidence suggests that most hunter-gatherer bands were loose-knit and egalitarian; they rejected attempts to impose leadership, and preferred informal methods - ridicule, shaming, shunning - to achieve work effort. But gradually larger groups gained competitive advantage, by seizing key assets such as water holes. Eventually rulers, using new technologies and forms of military discipline, took charge, and finally writing, bureaucracy and organised religion made them stronger.
In human ecology, the struggle between tribes as much as the struggle with natural adversities shaped this development, and the sheer size of societies was often a key advantage. Ancient empires were the most advanced civilisations as well as the most prosperous economies of their day. But alternative political structures sometimes proved more resilient and adaptable. Tiny Greek city states defeated the mighty Persian Empire in the fifth century BC, before war with each other led to their decline.
The Roman Empire was a clear example of how an efficient political system could facilitate a flourishing economy, but it too perished when its military organisation could no longer withstand attacks from Germanic and Central Asian tribes.
Europe's prosperity lagged well behind that of China and the new Muslim empire from this political breakdown until the late middle ages. Then banking and trade, followed by science and technology, allowed Europe to forge ahead in the relative secuity of cities and newly-consolidated nation states, despite continual conflicts. Finally, by 1913 Europe ruled the world, its empires trading with eachother and absorbing colonies into an integrated global economy.
What followed was 40 years of war and political instability, slaughter and economic ruin. Globalisation in the late nineteenth and early twentieth centuries had not been matched by political evolution; rivalry between classes and nations over resources and power destroyed Europe's golden age, and allowed the USA to emerge as the world superpower.
Now once again we seem to be entering a period when the global economy has outgrown political institutions, after a long period of rapid growth. During that expansion it was assumed that transnational governance of various kinds would evolve to solve the problems thrown up by the new prosperity. After an unpromising start in the 1950s, the European Community seemed to be achieving this. When the poor and backward dictatorships of Greece, Portugal and Spain achieved democracy, the first thing they did was to apply for membership of the EEC; the same happened when the Central and Eastern European countries escaped Soviet domination ten years later.
Now the streets of Greece and Spain are full of people protesting against euro-austerity. In the UK we face a decision whether to remain a single country after the Scottish election, and the coalition government is committed to a revival of small-scale administration in the Localism Bill.
Politics is difficult because we do not even know the best kind of social unit in which to try to do it. For the past 30 years we have suffered from the delusion that the economy could regulate itself, and politics was dispensible. Historically, the price of that fantasy has always been conflict. If human ecology is not governed by orderly political processes, it will be brutally controlled by war between tribes of one kind or another.
Tuesday, 31 May 2011
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.
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.
Sunday, 22 May 2011
In Search of a New Politics
The enormous crowd of young people which has been assembling in the Puerta del Sol, Madrid, all last week is a protest against Spain's political elite and its failed economic policies. The rate of unemployment among people aged 16-24 is around 42 per cent; this is a well-educated cohort, in danger of becoming a 'lost generation'.
There are obvious echoes here of Tahrir Square in Cairo and earlier demonstrations in Tunis, both of which toppled corrupt, self-perpetuating regimes. But it was only a little over 30 years ago that Spain, like Greece and Portugal, overthrew a military dictatorship and became a modern democracy. Given access to the European Community in the 1980s, they ceased to be authoritarian, backward societies of emigration, and their economies grew faster than those to their north and west, where young people had traditionally travelled to work.
What went wrong? It is far too facile to see the present problems of southern Europe as symptoms of incompetent government, lax public finanacial management and reliance on Euro-handouts. The emergence of a 'Precariat', to use the term coined by Guy Standing in his book of that title published this month, is a global phenomenon. As many as half of South Korea's workforce are temporary workers and a third of Japan's. The process of making labour markets more 'flexible', which has been a defining feature of globalisation, has transformed employment everywhere, and created a new class of mainly younger people who lack the traditional links to job and income security, benefits eligibility, occupational identity, career prospects and pension rights of their parents' generation.
Being on average better educated than their parents were adds to the sense of anger, anomie, alienation and anxiety experienced by this new class. Above all, they feel no identification with the political programmes of the established parties. The gathering in Madrid, now being consolidated into a semi-permanent camp, is like a mass movement-in-waiting, a crowd in search of new ideas. Whereas their Egyptian and Tunisian counterparts had a clear goal, to overthrow discredited autocrats, their European equivalent seems to be looking for a common identity and purpose.
But perhaps the most important aspect of this moment is the collective experience - the coming together of hundreds of thousands of people whose lives and work situations constantly isolate them, fragment their consciousness and make them feel responsible for their failure to achieve security, careers, property-ownership and family formation. The whole thrust of globalisation has been towards breaking up the organisation of the social, political and economic collectives in which people can form solidarities and influence their destinies by acting together. Denied these ways to understand and give meaning to their experiences, they have also been excluded from the political processes of their societies.
If the mass collective action of the precariat can be recognised and can recognise itself as a truly global movement of this generation, then it can acquire a vocabulary for its demands, and can frame specific policy goals. Guy Standing has long campaigned for a universl basic income, a guaranteed, unconditional sum which would allow all the legal residents of any political community to have the means to resist exploitation, to allocate time between paid and unpaid work, study, leisure and political participation. I too have spent 40 years advocating this proposal.
Starting as a protest, these demonstrations may become a movement with a voice, in turn leading to a new politics. Already the Madrid crowds are finding slogans to express their disgust with their situation. One of their largest banners reads: 'Spain Is Not A Business: We Are Not Slaves'.
There are obvious echoes here of Tahrir Square in Cairo and earlier demonstrations in Tunis, both of which toppled corrupt, self-perpetuating regimes. But it was only a little over 30 years ago that Spain, like Greece and Portugal, overthrew a military dictatorship and became a modern democracy. Given access to the European Community in the 1980s, they ceased to be authoritarian, backward societies of emigration, and their economies grew faster than those to their north and west, where young people had traditionally travelled to work.
What went wrong? It is far too facile to see the present problems of southern Europe as symptoms of incompetent government, lax public finanacial management and reliance on Euro-handouts. The emergence of a 'Precariat', to use the term coined by Guy Standing in his book of that title published this month, is a global phenomenon. As many as half of South Korea's workforce are temporary workers and a third of Japan's. The process of making labour markets more 'flexible', which has been a defining feature of globalisation, has transformed employment everywhere, and created a new class of mainly younger people who lack the traditional links to job and income security, benefits eligibility, occupational identity, career prospects and pension rights of their parents' generation.
Being on average better educated than their parents were adds to the sense of anger, anomie, alienation and anxiety experienced by this new class. Above all, they feel no identification with the political programmes of the established parties. The gathering in Madrid, now being consolidated into a semi-permanent camp, is like a mass movement-in-waiting, a crowd in search of new ideas. Whereas their Egyptian and Tunisian counterparts had a clear goal, to overthrow discredited autocrats, their European equivalent seems to be looking for a common identity and purpose.
But perhaps the most important aspect of this moment is the collective experience - the coming together of hundreds of thousands of people whose lives and work situations constantly isolate them, fragment their consciousness and make them feel responsible for their failure to achieve security, careers, property-ownership and family formation. The whole thrust of globalisation has been towards breaking up the organisation of the social, political and economic collectives in which people can form solidarities and influence their destinies by acting together. Denied these ways to understand and give meaning to their experiences, they have also been excluded from the political processes of their societies.
If the mass collective action of the precariat can be recognised and can recognise itself as a truly global movement of this generation, then it can acquire a vocabulary for its demands, and can frame specific policy goals. Guy Standing has long campaigned for a universl basic income, a guaranteed, unconditional sum which would allow all the legal residents of any political community to have the means to resist exploitation, to allocate time between paid and unpaid work, study, leisure and political participation. I too have spent 40 years advocating this proposal.
Starting as a protest, these demonstrations may become a movement with a voice, in turn leading to a new politics. Already the Madrid crowds are finding slogans to express their disgust with their situation. One of their largest banners reads: 'Spain Is Not A Business: We Are Not Slaves'.
Tuesday, 19 April 2011
Debtors and Creditors: Who's Bothered?
Now that the US Treasury has had its warning about its government deficit from the credit rating agency Standard and Poor's, the landscape of the new global capitalism is becoming clearer. It is now not so much that there are debtor and creditor regimes, though this is a feature of the topography. It is more that there are debtors (like the UK and Ireland) who care greatly about their respectability and credit-worthiness, and some (like the USA and Greece) who care far less; and there are some creditors (like China) who are in a strong position to exploit their advantages in global markets, and others (like Japan) which are actually quite vulnerable.
The Americans and the Greeks have insouciance about their credit rating, but little else, in common. In the case of the USA, the bickering between the president and a Republican congress over how to reduce the deficit is an inconvenience, but it is unlikely to damage the living standards of American citizens because the savings-based wealth accumulated in countries like Japan has nowhere else to go; the dollar is still the dominant world currency. So little sleep will be lost in Washington about the Standard and Poor's warning, at least for now; a trillion and a half dollars of debt can continue to mount up for the time being.
In the Greek case, it is the people who refuse to accept responsibility for the government's debt. Acts of resistance, from refusing to pay tolls for roads not yet constructed to witholding council tax payments, are making life hard for the authorities. But they in turn can ultimately afford to shrug their shoulders; everyone knows that it is not a question of whether Greece will default on its debts but when. And that everyone includes its bondholders and its European bail-out guarantors.
Does this mean that Greek stock is plummeting in world markets? Certainly not. Investors recognise that it is only by defaulting that Greece has any chance of achieving economic recovery. If it repays the loans given it as an uncompetitive bankrupt, it will be stuck in a downward spiral of austerity for decades. The resistance of citizen tax-revolters is doing Greece a big favour in the world economy. The compliance of Irish and Portuguese citizens in their collective misery is confirming their continuing impoverishment.
Among the creditor regimes, China can simply go on acquiring the foreign land and infrastructural facilities it needs to supply its export-led boom; others' debts are opportunities rather than constraints. For Japan, the situation is anxious in the short term, because of the cumulative impact of the tsunami and the nuclear accident, but in the medium term the reconstruction programme will stimulate its sluggish economy. Too much saving, not too much debt, has been its problem.
The UK is a more complex case. The 'successful', 'world-class' sector of its economy, the City of London, needs to be seen as solvent and supremely profitable. The government has gone into massive debt to protect its reputation, and must now do an elaborate dance, appearing to enforce a new regime of stricter regulation, while actually allowing it to make its risky fortune in the global financial casino.
Much of the rest of the economy, and the part which supplies employment and income to the majority of the population, is more Portugal or Greece than Hong Kong or Shanghai. While Osborne simpers to the City, Cameron and his Big Society missionaries must persuade the proles to accept a new kind of communal co-operation, the simple pleasures of taking in each other's washing and organising royal wedding street parties.
The problem for the coalition government is to sell this dualised future to the younger generation. Those who run up ruinous debt for the dream of a plum, plutocratic post in the City must eventually accept the reality of the dole queue or a job in a call centre. A career with security, promotion and a pension is a remote prospect; to earn enough to start repaying their university fees and student loan will itself be an achievement. How long before our Tunisian or Egyptian moment?
The Americans and the Greeks have insouciance about their credit rating, but little else, in common. In the case of the USA, the bickering between the president and a Republican congress over how to reduce the deficit is an inconvenience, but it is unlikely to damage the living standards of American citizens because the savings-based wealth accumulated in countries like Japan has nowhere else to go; the dollar is still the dominant world currency. So little sleep will be lost in Washington about the Standard and Poor's warning, at least for now; a trillion and a half dollars of debt can continue to mount up for the time being.
In the Greek case, it is the people who refuse to accept responsibility for the government's debt. Acts of resistance, from refusing to pay tolls for roads not yet constructed to witholding council tax payments, are making life hard for the authorities. But they in turn can ultimately afford to shrug their shoulders; everyone knows that it is not a question of whether Greece will default on its debts but when. And that everyone includes its bondholders and its European bail-out guarantors.
Does this mean that Greek stock is plummeting in world markets? Certainly not. Investors recognise that it is only by defaulting that Greece has any chance of achieving economic recovery. If it repays the loans given it as an uncompetitive bankrupt, it will be stuck in a downward spiral of austerity for decades. The resistance of citizen tax-revolters is doing Greece a big favour in the world economy. The compliance of Irish and Portuguese citizens in their collective misery is confirming their continuing impoverishment.
Among the creditor regimes, China can simply go on acquiring the foreign land and infrastructural facilities it needs to supply its export-led boom; others' debts are opportunities rather than constraints. For Japan, the situation is anxious in the short term, because of the cumulative impact of the tsunami and the nuclear accident, but in the medium term the reconstruction programme will stimulate its sluggish economy. Too much saving, not too much debt, has been its problem.
The UK is a more complex case. The 'successful', 'world-class' sector of its economy, the City of London, needs to be seen as solvent and supremely profitable. The government has gone into massive debt to protect its reputation, and must now do an elaborate dance, appearing to enforce a new regime of stricter regulation, while actually allowing it to make its risky fortune in the global financial casino.
Much of the rest of the economy, and the part which supplies employment and income to the majority of the population, is more Portugal or Greece than Hong Kong or Shanghai. While Osborne simpers to the City, Cameron and his Big Society missionaries must persuade the proles to accept a new kind of communal co-operation, the simple pleasures of taking in each other's washing and organising royal wedding street parties.
The problem for the coalition government is to sell this dualised future to the younger generation. Those who run up ruinous debt for the dream of a plum, plutocratic post in the City must eventually accept the reality of the dole queue or a job in a call centre. A career with security, promotion and a pension is a remote prospect; to earn enough to start repaying their university fees and student loan will itself be an achievement. How long before our Tunisian or Egyptian moment?
Tuesday, 12 April 2011
Increasing Happiness
'Action for Happiness' is a new organisation with members in over 60 countries, though their total numbers amount to a less-than-impressive 4,500. Its website is a mixture of policy manifesto and homily on personal well-being. The latter includes a list of 'Daily Actions' - 'be mindful', 'be kind' and 'be grateful'. A video clip by a famous psychologist tells you to remember the good things which happened in the day just before you go to sleep.
It would be easy to dismiss this stuff with derision, but it has the backing of David Cameron, and is in line with his political vision - that well-being is more significant than consumption, and that government should promote happiness rather than income per head. And the decision to put four questions on happiness in this year's official Household Survey was masterminded by Matthew Taylor, former policy advisor to Tony Blair, and now head of the Royal Society for the Arts, Manufactures and Commerce.
Speaking on BBC Radio 4's 'Today' programme, Taylor pointed out that research on Subjective Well-being (SWB) is broadly supportive of redistributive policies (countries like Sweden and Denmark with high taxes and benefits top the global league tables for happiness), but also of traditional family and community relationships (close personal ties and the sense of belonging are, along with good health and job satisfaction, the biggest factors in SWB). The questions he had put in the survey were on life-satisfaction, anxiety level and the feeling of meaningful activity. He pointed out that highly competitive routes to economic growth, such as the one set by the USA, produce less happiness among populations.
The Action for Happiness home page urges people to join a group to advance well-being. Clearly this is in line with Cameron's Big Society, and reflects the research finding that activists are happier than passive consumers. The Conservative Party manifesto of 2010 declared the aim of getting all citizens involved in local associations, and Cameron spoke of a 'culture shift' towards collective action which would transform our society.
We have already seen that the Big Society does not readily embrace student protesters or anarchist activists. Perhaps even more problematic is the issue of how it creates the large-scale solidarities needed to fund something like a universal National Care Service, or an adequate Educational Maintenance Allowance.
There is also an obvious tension between the market-mindedness of the coalition in relation to the NHS and schools, and the community-mindedness of the Big Society rhetoric. It is hard to see how a cultural transformation in favour of collective action, co-operation and mutuality can be achieved within a collective landscape designed to offer choices and incentives for individuals seeking advantage over others.
Individualism is a deep-seated feature of British society, political and social, and its origins lie far back in our history. Rivalry and conflict can arise through many forms of competition for status and resources; they are found in certain cultures worldwide, at stages of development from hunter-gatherer to post-communist transition.
There is a story about the Archangel Michael appearing in the flat of a Hungarian man to tell him that God would grant him anything he desired, on one condition: whatever he chose, his neighbour would get two of the same. The man clutched his head, rocking and moaning for several minutes in deep distress. Eventually he replied, 'Put out one of my eyes'.
We are fortunate in our civil liberties and democratic rights, but it is easy to overlook the collective struggles and sacrifices which brought them into existence. Sustainable well-being requires a framework in which people are free to run their own lives, but also empowered to hold authorities of all kinds to account. It is far from clear whether we are moving in the direction of real power-sharing and accountability.
It would be easy to dismiss this stuff with derision, but it has the backing of David Cameron, and is in line with his political vision - that well-being is more significant than consumption, and that government should promote happiness rather than income per head. And the decision to put four questions on happiness in this year's official Household Survey was masterminded by Matthew Taylor, former policy advisor to Tony Blair, and now head of the Royal Society for the Arts, Manufactures and Commerce.
Speaking on BBC Radio 4's 'Today' programme, Taylor pointed out that research on Subjective Well-being (SWB) is broadly supportive of redistributive policies (countries like Sweden and Denmark with high taxes and benefits top the global league tables for happiness), but also of traditional family and community relationships (close personal ties and the sense of belonging are, along with good health and job satisfaction, the biggest factors in SWB). The questions he had put in the survey were on life-satisfaction, anxiety level and the feeling of meaningful activity. He pointed out that highly competitive routes to economic growth, such as the one set by the USA, produce less happiness among populations.
The Action for Happiness home page urges people to join a group to advance well-being. Clearly this is in line with Cameron's Big Society, and reflects the research finding that activists are happier than passive consumers. The Conservative Party manifesto of 2010 declared the aim of getting all citizens involved in local associations, and Cameron spoke of a 'culture shift' towards collective action which would transform our society.
We have already seen that the Big Society does not readily embrace student protesters or anarchist activists. Perhaps even more problematic is the issue of how it creates the large-scale solidarities needed to fund something like a universal National Care Service, or an adequate Educational Maintenance Allowance.
There is also an obvious tension between the market-mindedness of the coalition in relation to the NHS and schools, and the community-mindedness of the Big Society rhetoric. It is hard to see how a cultural transformation in favour of collective action, co-operation and mutuality can be achieved within a collective landscape designed to offer choices and incentives for individuals seeking advantage over others.
Individualism is a deep-seated feature of British society, political and social, and its origins lie far back in our history. Rivalry and conflict can arise through many forms of competition for status and resources; they are found in certain cultures worldwide, at stages of development from hunter-gatherer to post-communist transition.
There is a story about the Archangel Michael appearing in the flat of a Hungarian man to tell him that God would grant him anything he desired, on one condition: whatever he chose, his neighbour would get two of the same. The man clutched his head, rocking and moaning for several minutes in deep distress. Eventually he replied, 'Put out one of my eyes'.
We are fortunate in our civil liberties and democratic rights, but it is easy to overlook the collective struggles and sacrifices which brought them into existence. Sustainable well-being requires a framework in which people are free to run their own lives, but also empowered to hold authorities of all kinds to account. It is far from clear whether we are moving in the direction of real power-sharing and accountability.
Friday, 8 April 2011
Uneven Development
So finally Portugal has had to seek a bail-out from the European Central Bank. But this was not, like Ireland, because of a collapse in the banking sector or a construction bubble, but because it has never really been up with the required pace for eurozone club members. Its growth rate has been too sluggish, its competitiveness too slack; its private sector has been borrowing too much just to stay in business and its government deficit has grown wider and wider. In this sense it was more like Greece, but without quite the same defiant bravado.
The pundits shrug their shoulders and point out that the smallish perpheral states which have gone bust so far make up only 18 per cent of the EU's total income. It's sad that they are condemned to years - perhaps an eternity - of austerity, because the bail-out is essentially a bridging loan paid to a national economy which is bankrupt (if they couldn't pay the interest charged by the bond market, they won't be able to afford the charges levied by the ECB either). It would probably have been better to default on their debts, but now of course it's too late for that. And yes, Spain may be next, but then again it might just get by. And then there's Italy....
And then, on the same day, the ECB put up interest rates, not by much, but enough to signal which way things are going. The rationale is to prevent overheating of the German economy, the eurozone's one real success story. So now there is not so much a division between the sound, stable, fiscally solvent north, and the spendthrift, shifty south, with its creative government accounting; it is morea division between Germany and the rest. The monetary policies of the eurozone are dictated by the requirements of the one dynamic, world class, globally competitive member state.
A country like the UK must put on a show of conducting itself by Germany's standards, even as a eurozone outsider. It must strike a pose of conducting an industrial revival, improving public-sector efficiency and observing fiscal rectitude. Nothing less will keep the bond market wolf from the door, even if it means running down everything from libraries, museums and theatres to the armed services.
In this sense, the European economic scene mirrors both the global one and the internal economies of most countries. The tune is called by the super-rich, who stride ahead confidently, and everyone else must try to shuffle along in step, in spite of wonky legs or leaky shoes.
Capitalist economic growth has always relied on uneven development, but this has become an extreme feature of every level of the global economy. It has led to political conflict worldwide, as a new, dispossessed generation, without the prospect of achieving the modest security of employment and income attained by their parents, takes up esistance of various kinds.
Historically, periods of rapid growth relied on a combination of new technologies and organisational forms in the advanced centres of production, and large movements of population away from the most backward ones - as happened in China during the past three decades. The trouble for Europe and North America is that the present phase of technological innovation is Silicon Valley, not nineteenth century Sheffield or Salford; it needs a few highly skilled workers, not a mass influx of muscle.
Nowadays large-scale migrations mostly involve low-paid service workers or others doing jobs with undesirable conditions, such as the movement of those from post-communist Central Europe to the affluent member states of the EU. Ireland, Greece and Portugal, traditionally countries of emigration, had come to be hosts to such migrants, especially Ireland during its Celtic Tiger bubble.
In response to the new austerity, many governments are making gestures at reducing immigration, as part of an attempt to combat rising unemployment. For instance, the UK's Agricultural Workers Scheme, under which a succession of young people from the post-communist countries have come to pick and pack fruit, is to be abolished next year. Poles and Slovaks no longer need this system, but Romanian and Bulgarian youngsters will be blocked from entry, until they are granted free movement two years later, by which time they will want more rewarding work.
So who will pick the fruit next year? Migrants from Portugal or Ireland? Or Serco conscripts, benefits claimants doing forced labour to qualify for their JSA?
The pundits shrug their shoulders and point out that the smallish perpheral states which have gone bust so far make up only 18 per cent of the EU's total income. It's sad that they are condemned to years - perhaps an eternity - of austerity, because the bail-out is essentially a bridging loan paid to a national economy which is bankrupt (if they couldn't pay the interest charged by the bond market, they won't be able to afford the charges levied by the ECB either). It would probably have been better to default on their debts, but now of course it's too late for that. And yes, Spain may be next, but then again it might just get by. And then there's Italy....
And then, on the same day, the ECB put up interest rates, not by much, but enough to signal which way things are going. The rationale is to prevent overheating of the German economy, the eurozone's one real success story. So now there is not so much a division between the sound, stable, fiscally solvent north, and the spendthrift, shifty south, with its creative government accounting; it is morea division between Germany and the rest. The monetary policies of the eurozone are dictated by the requirements of the one dynamic, world class, globally competitive member state.
A country like the UK must put on a show of conducting itself by Germany's standards, even as a eurozone outsider. It must strike a pose of conducting an industrial revival, improving public-sector efficiency and observing fiscal rectitude. Nothing less will keep the bond market wolf from the door, even if it means running down everything from libraries, museums and theatres to the armed services.
In this sense, the European economic scene mirrors both the global one and the internal economies of most countries. The tune is called by the super-rich, who stride ahead confidently, and everyone else must try to shuffle along in step, in spite of wonky legs or leaky shoes.
Capitalist economic growth has always relied on uneven development, but this has become an extreme feature of every level of the global economy. It has led to political conflict worldwide, as a new, dispossessed generation, without the prospect of achieving the modest security of employment and income attained by their parents, takes up esistance of various kinds.
Historically, periods of rapid growth relied on a combination of new technologies and organisational forms in the advanced centres of production, and large movements of population away from the most backward ones - as happened in China during the past three decades. The trouble for Europe and North America is that the present phase of technological innovation is Silicon Valley, not nineteenth century Sheffield or Salford; it needs a few highly skilled workers, not a mass influx of muscle.
Nowadays large-scale migrations mostly involve low-paid service workers or others doing jobs with undesirable conditions, such as the movement of those from post-communist Central Europe to the affluent member states of the EU. Ireland, Greece and Portugal, traditionally countries of emigration, had come to be hosts to such migrants, especially Ireland during its Celtic Tiger bubble.
In response to the new austerity, many governments are making gestures at reducing immigration, as part of an attempt to combat rising unemployment. For instance, the UK's Agricultural Workers Scheme, under which a succession of young people from the post-communist countries have come to pick and pack fruit, is to be abolished next year. Poles and Slovaks no longer need this system, but Romanian and Bulgarian youngsters will be blocked from entry, until they are granted free movement two years later, by which time they will want more rewarding work.
So who will pick the fruit next year? Migrants from Portugal or Ireland? Or Serco conscripts, benefits claimants doing forced labour to qualify for their JSA?
Thursday, 31 March 2011
Stressed Out in Dublin
I'm Irish by birth, and my mother's family played a significant part in Irish political history; so the rise and fall of the Celtic Tiger has been of more than academic interest to me. On frequent visits to Cork and occasional ones to Dublin, I remained slightly sceptical about the fabulous expansion of that pneumatic phantasm, and felt sad when it imploded, shrivelling to a distorted caricature of itself.
But far worse has been the aftermath, as voluntary austerity moved to compulsory impoverishment. The latest turn of the screw, announced on Thursday, was the result of the new 'stress tests' on the Irish banks, which factored in the collapse of house prices, and the losses due to the speculative construction bubble. This implies a new round of bank nationalisation, of taxpayer liability for financial sector debts, and expensive borrowing from the European Central Bank, the IMF, Germany and the UK, who will charge 6 per cent for funds they themselves can borrow at 3 per cent.
This condemns Irish citizens to many years of falling incomes, rising taxes and reduced public services, all because of the grandiose delusions of bankers, politicians and speculative builders, tightly bonded in the close circle of cronies who ran the country. And it raises huge questions about which path Ireland should try to take in future.
The accepted wisdom that prevailed among the Irish elite was that the road to prosperity lay in capturing some of the fruits of global trade - in money and in manufactures. The government encouraged inward investment, especially from the USA, and offered low business taxes to attract the headquarters of international companies to Dublin. The success of these strategies in the 1990s emboldened a new generation of chancers,who then joined the global banking casino to finance the building bubble.
Now Ireland is one of several small European countries that must think about a radically different alternative, looking to its indigenous resources, physical, cultural and human. The clues to how this might be achieved may be found in other regions which sank into poverty after sudden economic catastrophes, but
enjoyed gradual recoveries, pulling themselves up by their bootstraps to achieve sustainable growth.
One example is the Basque country in Spain. As reported in Wednesday's Guardian, that region was devastated by the 1930s civil war (remember Picasso's Guernica), and then suffered the collapse of its traditional industries, shipbuilding and steelmaking, twenty years ago. But - despite a troubled political history with Irish resonances - it is now resurgent, thanks mainly to co-operatives and social enterprises with strong local roots, not to global capital.
The regional government gave tax breaks to these co-ops, not to international companies, but required them to invest 10 per cent of their profits in community cultural resources in return. This sector has thrived, and its success helps to explain the youth unemployment rate half that of Spain as a whole. But the Basque region is not isolated from global markets. Its biggest co-operative, Mondragon, has a turnover of 14 billion euros and 85,000 employees wordwide, with more than 250 constituent companies.
The organisation is a flat pyramid, with top managers earning no more than 5 times the salaries of workers, and around half the profits invested in the healthcare plans and pensions of staff. Its enterprises include manufacturing companies, a supermarket chain and a university.
In other words, the Basque strategy is to scale up indigenous co-operatives and social enterprises, building on local and regional success, rather than trying to attract foreign investment. After all, this was how Ireland's economic expansion started - with firms like Kerrygold, and with the spread across Europe of Irish pubs.
And it is not only the small peripheral countries of Europe that might take a leaf out of the Basque book. That region might provide a model for Scotland, Wales and the North of England, as austerity creeps across thes islands like a new ice age.
But far worse has been the aftermath, as voluntary austerity moved to compulsory impoverishment. The latest turn of the screw, announced on Thursday, was the result of the new 'stress tests' on the Irish banks, which factored in the collapse of house prices, and the losses due to the speculative construction bubble. This implies a new round of bank nationalisation, of taxpayer liability for financial sector debts, and expensive borrowing from the European Central Bank, the IMF, Germany and the UK, who will charge 6 per cent for funds they themselves can borrow at 3 per cent.
This condemns Irish citizens to many years of falling incomes, rising taxes and reduced public services, all because of the grandiose delusions of bankers, politicians and speculative builders, tightly bonded in the close circle of cronies who ran the country. And it raises huge questions about which path Ireland should try to take in future.
The accepted wisdom that prevailed among the Irish elite was that the road to prosperity lay in capturing some of the fruits of global trade - in money and in manufactures. The government encouraged inward investment, especially from the USA, and offered low business taxes to attract the headquarters of international companies to Dublin. The success of these strategies in the 1990s emboldened a new generation of chancers,who then joined the global banking casino to finance the building bubble.
Now Ireland is one of several small European countries that must think about a radically different alternative, looking to its indigenous resources, physical, cultural and human. The clues to how this might be achieved may be found in other regions which sank into poverty after sudden economic catastrophes, but
enjoyed gradual recoveries, pulling themselves up by their bootstraps to achieve sustainable growth.
One example is the Basque country in Spain. As reported in Wednesday's Guardian, that region was devastated by the 1930s civil war (remember Picasso's Guernica), and then suffered the collapse of its traditional industries, shipbuilding and steelmaking, twenty years ago. But - despite a troubled political history with Irish resonances - it is now resurgent, thanks mainly to co-operatives and social enterprises with strong local roots, not to global capital.
The regional government gave tax breaks to these co-ops, not to international companies, but required them to invest 10 per cent of their profits in community cultural resources in return. This sector has thrived, and its success helps to explain the youth unemployment rate half that of Spain as a whole. But the Basque region is not isolated from global markets. Its biggest co-operative, Mondragon, has a turnover of 14 billion euros and 85,000 employees wordwide, with more than 250 constituent companies.
The organisation is a flat pyramid, with top managers earning no more than 5 times the salaries of workers, and around half the profits invested in the healthcare plans and pensions of staff. Its enterprises include manufacturing companies, a supermarket chain and a university.
In other words, the Basque strategy is to scale up indigenous co-operatives and social enterprises, building on local and regional success, rather than trying to attract foreign investment. After all, this was how Ireland's economic expansion started - with firms like Kerrygold, and with the spread across Europe of Irish pubs.
And it is not only the small peripheral countries of Europe that might take a leaf out of the Basque book. That region might provide a model for Scotland, Wales and the North of England, as austerity creeps across thes islands like a new ice age.
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