Neoliberlismus

George Monbiot

Neoliberalism – the ideology at the root of all our problems

Financial meltdown, environmental disaster and even the rise of Donald Trump – neoliberalism has played its part in them all. Why has the left failed to come up with an alternative?
Imagine if the people of the Soviet Union had never heard of communism. The ideology that dominates our lives has, for most of us, no name. Mention it in conversation and you’ll be rewarded with a shrug. Even if your listeners have heard the term before, they will struggle to define it. Neoliberalism: do you know what it is?

Its anonymity is both a symptom and cause of its power. It has played a major role in a remarkable variety of crises: the financial meltdown of 2007‑8, the offshoring of wealth and power, of which the Panama Papers offer us merely a glimpse, the slow collapse of public health and education, resurgent child poverty, the epidemic of loneliness, the collapse of ecosystems, the rise of Donald Trump. But we respond to these crises as if they emerge in isolation, apparently unaware that they have all been either catalysed or exacerbated by the same coherent philosophy; a philosophy that has – or had – a name. What greater power can there be than to operate namelessly?
So pervasive has neoliberalism become that we seldom even recognise it as an ideology. We appear to accept the proposition that this utopian, millenarian faith describes a neutral force; a kind of biological law, like Darwin’s theory of evolution. But the philosophy arose as a conscious attempt to reshape human life and shift the locus of power.

Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that “the market” delivers benefits that could never be achieved by planning.
Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive and morally corrosive. The market ensures that everyone gets what they deserve.
We internalise and reproduce its creeds. The rich persuade themselves that they acquired their wealth through merit, ignoring the advantages – such as education, inheritance and class – that may have helped to secure it. The poor begin to blame themselves for their failures, even when they can do little to change their circumstances.

Never mind structural unemployment: if you don’t have a job it’s because you are unenterprising. Never mind the impossible costs of housing: if your credit card is maxed out, you’re feckless and improvident. Never mind that your children no longer have a school playing field: if they get fat, it’s your fault. In a world governed by competition, those who fall behind become defined and self-defined as losers.

Among the results, as Paul Verhaeghe documents in his book What About Me? are epidemics of self-harm, eating disorders, depression, loneliness, performance anxiety and social phobia. Perhaps it’s unsurprising that Britain, in which neoliberal ideology has been most rigorously applied, is the loneliness capital of Europe. We are all neoliberals now.

***

The term neoliberalism was coined at a meeting in Paris in 1938. Among the delegates were two men who came to define the ideology, Ludwig von Mises and Friedrich Hayek. Both exiles from Austria, they saw social democracy, exemplified by Franklin Roosevelt’s New Deal and the gradual development of Britain’s welfare state, as manifestations of a collectivism that occupied the same spectrum as nazism and communism.
In The Road to Serfdom, published in 1944, Hayek argued that government planning, by crushing individualism, would lead inexorably to totalitarian control. Like Mises’s book Bureaucracy, The Road to Serfdom was widely read. It came to the attention of some very wealthy people, who saw in the philosophy an opportunity to free themselves from regulation and tax. When, in 1947, Hayek founded the first organisation that would spread the doctrine of neoliberalism – the Mont Pelerin Society – it was supported financially by millionaires and their foundations.

With their help, he began to create what Daniel Stedman Jones describes in Masters of the Universe as “a kind of neoliberal international”: a transatlantic network of academics, businessmen, journalists and activists. The movement’s rich backers funded a series of thinktanks which would refine and promote the ideology. Among them were the American Enterprise Institute, the Heritage Foundation, the Cato Institute, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute. They also financed academic positions and departments, particularly at the universities of Chicago and Virginia.

As it evolved, neoliberalism became more strident. Hayek’s view that governments should regulate competition to prevent monopolies from forming gave way – among American apostles such as Milton Friedman – to the belief that monopoly power could be seen as a reward for efficiency.

Something else happened during this transition: the movement lost its name. In 1951, Friedman was happy to describe himself as a neoliberal. But soon after that, the term began to disappear. Stranger still, even as the ideology became crisper and the movement more coherent, the lost name was not replaced by any common alternative.

At first, despite its lavish funding, neoliberalism remained at the margins. The postwar consensus was almost universal: John Maynard Keynes’s economic prescriptions were widely applied, full employment and the relief of poverty were common goals in the US and much of western Europe, top rates of tax were high and governments sought social outcomes without embarrassment, developing new public services and safety nets.

But in the 1970s, when Keynesian policies began to fall apart and economic crises struck on both sides of the Atlantic, neoliberal ideas began to enter the mainstream. As Friedman remarked, “when the time came that you had to change ... there was an alternative ready there to be picked up”. With the help of sympathetic journalists and political advisers, elements of neoliberalism, especially its prescriptions for monetary policy, were adopted by Jimmy Carter’s administration in the US and Jim Callaghan’s government in Britain.

After Margaret Thatcher and Ronald Reagan took power, the rest of the package soon followed: massive tax cuts for the rich, the crushing of trade unions, deregulation, privatisation, outsourcing and competition in public services. Through the IMF, the World Bank, the Maastricht treaty and the World Trade Organisation, neoliberal policies were imposed – often without democratic consent – on much of the world. Most remarkable was its adoption among parties that once belonged to the left: Labour and the Democrats, for example. As Stedman Jones notes, “it is hard to think of another utopia to have been as fully realised.”

***

It may seem strange that a doctrine promising choice and freedom should have been promoted with the slogan “there is no alternative”. But, as Hayek remarked on a visit to Pinochet’s Chile – one of the first nations in which the programme was comprehensively applied – “my personal preference leans toward a liberal dictatorship rather than toward a democratic government devoid of liberalism”. The freedom that neoliberalism offers, which sounds so beguiling when expressed in general terms, turns out to mean freedom for the pike, not for the minnows.

Freedom from trade unions and collective bargaining means the freedom to suppress wages. Freedom from regulation means the freedom to poison rivers, endanger workers, charge iniquitous rates of interest and design exotic financial instruments. Freedom from tax means freedom from the distribution of wealth that lifts people out of poverty.

As Naomi Klein documents in The Shock Doctrine, neoliberal theorists advocated the use of crises to impose unpopular policies while people were distracted: for example, in the aftermath of Pinochet’s coup, the Iraq war and Hurricane Katrina, which Friedman described as “an opportunity to radically reform the educational system” in New Orleans.

Where neoliberal policies cannot be imposed domestically, they are imposed internationally, through trade treaties incorporating “investor-state dispute settlement”: offshore tribunals in which corporations can press for the removal of social and environmental protections. When parliaments have voted to restrict sales of cigarettes, protect water supplies from mining companies, freeze energy bills or prevent pharmaceutical firms from ripping off the state, corporations have sued, often successfully. Democracy is reduced to theatre.

Another paradox of neoliberalism is that universal competition relies upon universal quantification and comparison. The result is that workers, job-seekers and public services of every kind are subject to a pettifogging, stifling regime of assessment and monitoring, designed to identify the winners and punish the losers. The doctrine that Von Mises proposed would free us from the bureaucratic nightmare of central planning has instead created one.

Neoliberalism was not conceived as a self-serving racket, but it rapidly became one. Economic growth has been markedly slower in the neoliberal era (since 1980 in Britain and the US) than it was in the preceding decades; but not for the very rich. Inequality in the distribution of both income and wealth, after 60 years of decline, rose rapidly in this era, due to the smashing of trade unions, tax reductions, rising rents, privatisation and deregulation.

The privatisation or marketisation of public services such as energy, water, trains, health, education, roads and prisons has enabled corporations to set up tollbooths in front of essential assets and charge rent, either to citizens or to government, for their use. Rent is another term for unearned income. When you pay an inflated price for a train ticket, only part of the fare compensates the operators for the money they spend on fuel, wages, rolling stock and other outlays. The rest reflects the fact that they have you over a barrel.

Those who own and run the UK’s privatised or semi-privatised services make stupendous fortunes by investing little and charging much. In Russia and India, oligarchs acquired state assets through firesales. In Mexico, Carlos Slim was granted control of almost all landline and mobile phone services and soon became the world’s richest man.

Financialisation, as Andrew Sayer notes in Why We Can’t Afford the Rich, has had a similar impact. “Like rent,” he argues, “interest is ... unearned income that accrues without any effort”. As the poor become poorer and the rich become richer, the rich acquire increasing control over another crucial asset: money. Interest payments, overwhelmingly, are a transfer of money from the poor to the rich. As property prices and the withdrawal of state funding load people with debt (think of the switch from student grants to student loans), the banks and their executives clean up.

Sayer argues that the past four decades have been characterised by a transfer of wealth not only from the poor to the rich, but within the ranks of the wealthy: from those who make their money by producing new goods or services to those who make their money by controlling existing assets and harvesting rent, interest or capital gains. Earned income has been supplanted by unearned income.

Neoliberal policies are everywhere beset by market failures. Not only are the banks too big to fail, but so are the corporations now charged with delivering public services. As Tony Judt pointed out in Ill Fares the Land, Hayek forgot that vital national services cannot be allowed to collapse, which means that competition cannot run its course. Business takes the profits, the state keeps the risk.

The greater the failure, the more extreme the ideology becomes. Governments use neoliberal crises as both excuse and opportunity to cut taxes, privatise remaining public services, rip holes in the social safety net, deregulate corporations and re-regulate citizens. The self-hating state now sinks its teeth into every organ of the public sector.

Perhaps the most dangerous impact of neoliberalism is not the economic crises it has caused, but the political crisis. As the domain of the state is reduced, our ability to change the course of our lives through voting also contracts. Instead, neoliberal theory asserts, people can exercise choice through spending. But some have more to spend than others: in the great consumer or shareholder democracy, votes are not equally distributed. The result is a disempowerment of the poor and middle. As parties of the right and former left adopt similar neoliberal policies, disempowerment turns to disenfranchisement. Large numbers of people have been shed from politics.
Chris Hedges remarks that “fascist movements build their base not from the politically active but the politically inactive, the ‘losers’ who feel, often correctly, they have no voice or role to play in the political establishment”. When political debate no longer speaks to us, people become responsive instead to slogans, symbols and sensation. To the admirers of Trump, for example, facts and arguments appear irrelevant.

Judt explained that when the thick mesh of interactions between people and the state has been reduced to nothing but authority and obedience, the only remaining force that binds us is state power. The totalitarianism Hayek feared is more likely to emerge when governments, having lost the moral authority that arises from the delivery of public services, are reduced to “cajoling, threatening and ultimately coercing people to obey them”.

***

Like communism, neoliberalism is the God that failed. But the zombie doctrine staggers on, and one of the reasons is its anonymity. Or rather, a cluster of anonymities.

The invisible doctrine of the invisible hand is promoted by invisible backers. Slowly, very slowly, we have begun to discover the names of a few of them. We find that the Institute of Economic Affairs, which has argued forcefully in the media against the further regulation of the tobacco industry, has been secretly funded by British American Tobacco since 1963. We discover that Charles and David Koch, two of the richest men in the world, founded the institute that set up the Tea Party movement. We find that Charles Koch, in establishing one of his thinktanks, noted that “in order to avoid undesirable criticism, how the organisation is controlled and directed should not be widely advertised”.

The words used by neoliberalism often conceal more than they elucidate. “The market” sounds like a natural system that might bear upon us equally, like gravity or atmospheric pressure. But it is fraught with power relations. What “the market wants” tends to mean what corporations and their bosses want. “Investment”, as Sayer notes, means two quite different things. One is the funding of productive and socially useful activities, the other is the purchase of existing assets to milk them for rent, interest, dividends and capital gains. Using the same word for different activities “camouflages the sources of wealth”, leading us to confuse wealth extraction with wealth creation.

A century ago, the nouveau riche were disparaged by those who had inherited their money. Entrepreneurs sought social acceptance by passing themselves off as rentiers. Today, the relationship has been reversed: the rentiers and inheritors style themselves entre preneurs. They claim to have earned their unearned income.

These anonymities and confusions mesh with the namelessness and placelessness of modern capitalism: the franchise model which ensures that workers do not know for whom they toil; the companies registered through a network of offshore secrecy regimes so complex that even the police cannot discover the beneficial owners; the tax arrangements that bamboozle governments; the financial products no one understands.

The anonymity of neoliberalism is fiercely guarded. Those who are influenced by Hayek, Mises and Friedman tend to reject the term, maintaining – with some justice – that it is used today only pejoratively. But they offer us no substitute. Some describe themselves as classical liberals or libertarians, but these descriptions are both misleading and curiously self-effacing, as they suggest that there is nothing novel about The Road to Serfdom, Bureaucracy or Friedman’s classic work, Capitalism and Freedom.

***

For all that, there is something admirable about the neoliberal project, at least in its early stages. It was a distinctive, innovative philosophy promoted by a coherent network of thinkers and activists with a clear plan of action. It was patient and persistent. The Road to Serfdom became the path to power.

The words used by neoliberalism often conceal more than they elucidate. “The market” sounds like a natural system that might bear upon us equally, like gravity or atmospheric pressure. But it is fraught with power relations. What “the market wants” tends to mean what corporations and their bosses want. “Investment”, as Sayer notes, means two quite different things. One is the funding of productive and socially useful activities, the other is the purchase of existing assets to milk them for rent, interest, dividends and capital gains. Using the same word for different activities “camouflages the sources of wealth”, leading us to confuse wealth extraction with wealth creation.

A century ago, the nouveau riche were disparaged by those who had inherited their money. Entrepreneurs sought social acceptance by passing themselves off as rentiers. Today, the relationship has been reversed: the rentiers and inheritors style themselves entre preneurs. They claim to have earned their unearned income.

These anonymities and confusions mesh with the namelessness and placelessness of modern capitalism: the franchise model which ensures that workers do not know for whom they toil; the companies registered through a network of offshore secrecy regimes so complex that even the police cannot discover the beneficial owners; the tax arrangements that bamboozle governments; the financial products no one understands.

The anonymity of neoliberalism is fiercely guarded. Those who are influenced by Hayek, Mises and Friedman tend to reject the term, maintaining – with some justice – that it is used today only pejoratively. But they offer us no substitute. Some describe themselves as classical liberals or libertarians, but these descriptions are both misleading and curiously self-effacing, as they suggest that there is nothing novel about The Road to Serfdom, Bureaucracy or Friedman’s classic work, Capitalism and Freedom.


The Guardian, 15.04.2016

Zerbrochene Demokratie

Amol Rajan

Britain’s broken democracy

aus: Politico, 2/16/16

Three decades since the soundbite that made him millions, secured lasting fame, and quickly proved ignorantly myopic, it’s easy to castigate Francis Fukuyama for his naivety in declaring the end of history had arrived.

History never arrives, because it’s never leaving; it has no direction or purpose. Things get better, get worse, get better again; they change suddenly, only to stay the same. Whereas material knowledge — that is, science — is cumulative, moral knowledge is not; human history is largely the permanent effort to devise temporary remedies for insoluble conflicts. Suffering is reduced, wealth is spread, and rights are granted to the weak. This is called progress. It takes courage, intelligence, and industry.

To Fukuyama’s beady eye, writing after the intoxicating footage of the Berlin Wall falling, the stubborn reality of human affairs may have seemed a delusion. It was not just that a liberal — which is to say, capitalist — economic order was spreading, octopus like, through civilization and those parts of our species that still aspired to it. It was also specifically the triumph of democracy that seemed to indicate a mass enfranchisement of mankind and, with it, the universal triumph of what Churchill called the worst form of government, except all the others that have been tried.

Fukuyama saw the charge of democracy clearly enough: After two unbearably hot wars, and one excruciatingly cold one, the story of the 20th century was democracy’s triumph over totalitarianism. One by one, nations fell to the bewitching promise of people power, as the international stage hosted a game of democratic dominoes.

From the defeat of Nazism in 1945 and partition in India in 1948, through to the fall of the Soviet Union in 1989 and the emergence of a rainbow nation that defeated apartheid in South Africa in 1994, nations everywhere seemed to be marching in step to the siren call of ballots rather than bullets. In the 1970s and 1980s alone, juntas fell in Greece, Spain, Argentina, Brazil and Chile. Who could blame our academic friend for discerning in this pattern a certain outcome for all the souls on Earth?

A good job, then, that he has been able to see his myth exposed in this, the tumultuous and deeply unstable 21st century. Every day the news agenda inserts a million pricks into the deflating tire of Fukuyama’s theory, now officially punctured by the evidence of events.

Democracy, far from spreading, faces two profound and possibly unbeatable enemies: first, rival systems of government; second, the disgusting complacency of those it has generally served well. A specific instance of the second is my chief concern here, but before we look inside our castle, it may be wise to shine a spotlight on the enemies at the gates, since their numbers and weapons are multiplying.

Despite the odd grumble and tumble, China has shown that autocracy and capitalism can cohabit. Whether democracy comes to China this century is far from certain, whereas the country’s economic pre-eminence isn’t. In a similar fashion, Singapore, from which the West is currently trying to learn much about government, isn’t much interested in plebiscites. Russia’s economy is hard to read, and while its government is popular, nobody inside or outside the Kremlin would seriously label the country, with its omnipotent president and pervasive corruption, a functioning democracy.

Across the Muslim world, a flowering of democracy has not followed the Arab Spring. Some countries, such as the regional powerhouse Egypt, have arguably gone backwards. There are reasonable grounds for believing that a literalist interpretation of Islam, which makes no distinction between the law and the word of God (unlike the Western distinction between Church and Roman, secular law), is irreconcilable with democracy. Turkey and Indonesia, the two great hopes for just such a reconciliation, are flirting afresh with tyranny.

Meanwhile the Gulf states are hardy paragons of people power; the House of Saud both won’t fall and — given Western interests — may need to be propped up. Syria and Iraq aren’t likely to hold free and fair elections any time soon. Meanwhile, across vast parts of the world, not least in Africa, tyrannies are on the rampage, and war and famine make the prospect of voting a distant concern, bordering on irrelevance.

These, then, are the external threats. Mass migration, globalization and refugee crises have brought them closer to home, but they have not yet caused us to abandon democracy. And yet, at the same time and for different reasons, Western democracies have suddenly become weak and ineffective.

In light of all that’s been said about America’s recent politics, suffice it to say the constitution is a couple of centuries out of date, the White House is now just one of several parts of the legislature that parties covet, the theocratic propaganda of Fox News has undermined the very possibility of truth in political argument and … well, then there’s Donald Trump.

Germany’s Angel Merkel, the most powerful woman in the world, has seen her popularity take a hit by doing the right thing for refugees. The French have made a habit of electing abysmal or eventually corrupt and excessively priapic public figures, and the economy is so sclerotic that few politicians have been able to achieve reform of any meaning.

Yet it may be in Britain, that cradle of civilized values and parliamentary procedure, that modern democracy has taken the biggest tumble. Though perhaps that is too weak a metaphor. To understand the condition of people power and mass enfranchisement in the United Kingdom, imagine a drunk driver hurtling toward a cliff edge with no idea where the brake pedal is.

I may as well admit that I have a preference for democracy over rival systems. It is right that people have a say in how they are governed; that in itself encourages civic virtues that in turn breed better societies and people. I work in the media not despite but because it is politics by other means: A raucous, brave, intelligent media is a pillar of democracy, on which I wish to lean.

Moreover, no two democracies have ever gone to war, either, which seems another sound reason to defend the principle. From what, exactly? From a brutal end — from the harm caused by that drunk driver. Here are the five greatest threats to modern British democracy, in no particular order.

1. No opposition

Labour has ceased to work as an effective parliamentary force. This is not just because of the woeful mismanagement of the party by its current leader, with ludicrous and outright deceitful reshuffles adding to a general woe. Parliamentary opposition is a noble, lonely crusade, in which legislation is scrutinized and countless hours are spent in an empty chamber. Labour has little appetite for this inglorious activity just now. Nor is its current futility owed to Jeremy Corbyn’s mandate coming from new party members whose lofty worldview has never been tainted by power. The Corbyn Gang simply don’t believe in parliament.

Shadow Chancellor of the Exchequer John McDonnell said a few years ago that there are three ways to affect political change: insurrection and revolution; trade union action; parliament. His type of politics venerates the former two and denigrates the latter. And for Labour’s current leaders, politics is about the streets. As a result, we have one-party government in both England and Scotland.

2. A broken electoral system

The First Past the Post electoral system, kept in a referendum, achieves parliamentary majorities and strong government, but only at the cost of absurdly unjust disproportion and mass disenfranchisement. Because of this system, two-thirds of voters live in safe seats, and so even during a general election — the one time in five years they might tune into politics — they are largely ignored.

It is plainly appalling that UKIP, with nearly 4 million votes, should have one MP, whereas the Scottish National Party, with fewer than half the voters, should have 56. Some years ago, Roy Jenkins’ commission looked at how you could obtain the best of First Past the Post — especially the constituency link for MPs — while addressing some of these terrible injustices. His eminently sensible suggestion, the Alternative Vote Plus (AV+) system, is much too clever and theoretical for the British, who object to being made to count to two when stating their electoral preferences. Tony Blair then flunked the chance to introduce it in his first parliament.

3. Fraudulent party divisions

As a result of this absurd electoral system, British elections are always won by coalitions, whether formal (such as the Con-Lib government of 2010-15) or informal, such as Blair’s coalition, between Scotland, the union movement (via John Prescott) and Middle England. But these coalitions have so much crossover that the current distinctions between parties are stupid. Peter Mandelson, Chuka Umunna and Tristram Hunt want to save and reform capitalism. Corbyn and McDonnell want to abolish and replace it. There is no common ground here, and we should stop pretending there is.

A new Liberal party, of social and economic liberalism, would unite the becalmed Orange Bookers on the right of the Lib Dems with One Nation Tories under George Osborne and the Labour trio mentioned above. It ought to exist, and call itself the Whigs, though there is already a party with that name. Next time you hear talk of Labour or Tory splits, ask yourself if those who have split had anything in common in the first place.

4. A farcical House of Lords

Corrupt, venal, and full of placemen, the House of Lords is perhaps the most shameful manifestation of our democratic malaise. These are men (usually men) who are there by birthright, so called hereditary peers. There are bishops too, deciding the law of the land, who take their place on account of their particular variety of superstition. Many if not most who sit on the red benches have paid to be there, if not in hard cash then in dignity. And there are just so, so many of these people: Ours is the second largest legislative assembly anywhere — after the National People’s Congress of … China!

An effective House of Lords, full of the smartest brains in the land, who earned their place through intellectual and professional merit, would be a wonderful thing. There were signs of it in the rebellion over tax credits. Which is why, farcically, David Cameron appointed Lord Strathclyde, a former Tory leader in the Upper House, to review the whole darn thing. Ironic, given that, as someone who inherited his seat, Strathclyde has no right to be anywhere near the Lords in the first place.

5. Shameless gerrymandering

A series of smaller measures, each the luxury of a one-party government, are designed entirely to maintain the Tories’ stranglehold on power. Boundary changes are going to deliver the Tories at least another 20 seats. The so-called “short money” that finances opposition in parliament has been sneakily reduced. Trade unions, the main financial backers of the Labour party (especially under Corbyn), have been ruthlessly pummeled by this administration.

With admirable chutzpah, the Tories are simultaneously extending the franchise to more expats (who are inclined to vote for them), and introducing individual electoral registration, which will probably reduce the number of anti-Tory voters on the electoral roll. On top of all this, the astonishing rise in Statutory Instruments — a way of achieving legislation without full parliamentary scrutiny — has been exposed, not least in the Independent, as an attempt to force through some hugely controversial measures, from cuts to tax credits to the abolition of maintenance grants for students.

Of course Europe, with its intolerable assault on sovereignty and empowering of sundry unaccountable chaiwallahs — the Brussels Bureaucracy —  merits an entire essay of its own.

There is a strong case for EU membership, but there is also a strong case against it; and it does strike me as very bizarre that so many people on the Left, who ought to attach a premium to sovereignty, are willing to abandon it without so much as a whimper.

Democracy, of its very nature, comes by degrees. It has no pure form. Remedy the above ills and we won’t declare, some day years from now, that — hurrah! — Britain is a vibrant democracy again. But, to return to the misty-eyed worldview of Fukuyama, and share his reading of the 20th century if not his prognostications about the 21st, it would be an act of unconscionable negligence to forget that a generation of men and women went to war, and often died young, so that we may vote our rulers in and out of office. When you think of what they fought for, our own complacency is sickening; and that should spur us to action.

Our nearest British ancestors were animated by ideals of freedom and sovereignty that have their fullest and frankest expression in the system devised by the Greeks: demos, kratia — power to the people. Barely two generations on, we are forfeiting that power by sheer indolence, sleepwalking into the very tyranny from which they thought, and prayed, they had delivered us.

Amol Rajan is editor of the Independent.

Wie in den Dreißigern?

Dalibor Rohac

Europe returns to the 1930s. From the EU’s response to refugees to Putin’s belligerence, there are eerie echoes from the past.

aus: Politico, 9/9/15



Czech police intercepted a group of Syrian asylum-seekers on a train headed for Germany. Upon being detained, the 200 or so refugees were marked with ink numbers on their forearms. While clearly a mishap, it was not the first time that Europeans were reminded of a period many would rather forget.

In July of this year, a Polish Member of the European Parliament, Janusz Korwin-Mikke, used the Nazi salute in a parliamentary debate. Two years earlier, members of the Greek Parliament for the far-right Golden Dawn party shouted “Heil Hitler” as their colleague Panagiotis Iliopoulos was being ejected from the chamber for unparliamentary language.

Historical parallels are always wrong or, at best, incomplete. But that does not mean that there is nothing to be learned from juxtaposing the past and the present. Much like in the 1930s, today’s Europe has five distinct elements of a geopolitical disaster in the making.

1. A dysfunctional monetary system

Economists from Milton Friedman and Anna Schwartz to Ben Bernanke concur that the Great Depression of the 1930s was largely a result of inept monetary policy. In the face of a large shock, central banks let Western economies contract and go through a painful period of downward price adjustments, instead of aggressively providing them with liquidity. One reason was their commitment to gold convertibility. In this respect, the euro is today’s equivalent of the interwar gold standard. While it is not anchored to the price of a real commodity and therefore allows for the conduct of countercyclical monetary policy, it prevents individual eurozone countries, such as Italy or Greece, from using exchange rate adjustments to alleviate economic pain.

The interwar gold standard eventually disintegrated. Evidence suggests that this was for the best. Countries that left it first and devalued, such as the United Kingdom and the Nordic countries, experienced more vigorous economic recoveries than those that remained trapped in the “golden fetters” for longer. Leaving the eurozone is both politically and technically a much riskier enterprise than severing the link to gold. That explains the length and severity of the recession in a country like Greece. It does not explain, however, why the European Central Bank exacerbated the economic downturn by systematically undershooting its own inflation target and by letting countries on the eurozone’s periphery slip into deflation.

2. A rising revisionist power

Vladimir Putin is not Adolf Hitler. For one, he does not seem to embrace a murderous ideology that would command him to try to take over the world or annihilate people of a specific ethnicity. However, much like Germany in the 1930s, today’s Russia is emerging as a belligerent, revisionist power. Similarly to Germany’s defeat in World War I, the collapse of the Soviet Union has left an imprint on the Russian psyche, which Putin has leveraged masterfully to strengthen his own hold on power.

Just like Germany in the 1930s, the regime in the Kremlin is trying to reassert itself in its traditional sphere of influence, through militarism and the destabilization of its neighbors, such as Moldova, Georgia, and Ukraine. True, the methods of warfare have changed since the 1930s. Energy prices and propaganda allow the Kremlin to reach even farther West and erode the democratic gains made by European countries that we might think escaped the bosom of the Soviet Union a long times ago.

3. A lack of leadership

International order in the interwar period proved to be fragile because of a lack of leadership by liberal democracies. Following World War I, the U.K. was too feeble to return to its role as a dominant world power. The United States, in turn, displayed little interest in events beyond its border.

Nearing the end of Barack Obama’s two terms in office, many Europeans — especially those in Central and Eastern Europe — feel that America has largely abandoned them, notwithstanding their shared security arrangements. Leadership in the EU is lacking as well: the U.K. is drifting away from the continent and has little appetite to play the role of a great world power again. The EU’s natural leader, Germany, lacks the ambition to come across as truly assertive in today’s world, perhaps due to the lasting trauma of World War II.

4. A crumbling system of international cooperation

The failure of free societies to lead has consequences. Specifically, it opens space for more nefarious forces to step in, and makes it impossible to uphold the norms of the international political and economic order. The 1930s demonstrated that the League of Nations was not an effective instrument to maintain the international rule of law. The organization failed to stop Italy’s aggression against Abyssinia, Japan’s invasion of China, and Hitler’s and Mussolini’s support of nationalists in the Spanish Civil War. The Great Depression was also marked by a failure of international economic governance, as leading Western nations resorted to protectionism.

Needless to say, the free societies of the West have done little to protect Ukraine or Georgia against Russia’s aggression. And while a common European market has not been destroyed by trade barriers, the ongoing refugee crisis in the EU provides an even more striking example of the failure of international cooperation. Because border protection and the processing of asylum requests in the EU has been left to the individual member states, the inflow of refugees into the EU has become a commons problem.

Instead of a unified European response — welcoming refugees — EU member states are re-introducing border controls, marking the end of the freedom of movement within the EU. Needless to say, the refugee crisis brings about other disturbing parallels. In 1938, a Daily Mail headline warned Britons of “German Jews pouring into this country.” Switch the country and the religion, and the headlines today are eerily similar.

5. Losing the battle of ideas

In the 1930s, the defenders of democracy and free enterprise were on the defensive. Many Western intellectuals were convinced of the superiority of the Soviet system under Stalin’s rule, though some of them, such as André Gide or Arthur Koestler, sobered up after actually visiting the USSR. In the U.K., Oswald Mosley’s British Union of Fascists became a respectable political force. Incidentally, the publisher of the Daily Mail, Harold Harmsworth, happened to be a fan too.

Today, populist far-right and far-left political groups are on the rise once more. In Hungary, the governing Fidesz party is stepping up its xenophobic rhetoric in order to capture the electorate of Jobbik, the Neo-Nazi group that has become the second most popular party in the country. In Greece, the economic crisis brought to power Syriza, a coalition of Marxists, Maoists, self-styled “progressive Eurosceptics” and other left-wingers of all possible stripes, with connections to the Kremlin. The U.K.’s Labour Party is likely to elect Jeremy Corbyn, a man with a troubling network of friends and fringe foreign policy views, as its leader. Where there once were mainstream politicians, there is now Front National, Pegida, Podemos, or the anti-immigration Sweden Democrats, currently the leading political group in the country.

While worrying, none of these trends are irreversible. Nor do they mean that Europe is about to relive the most awful episode of its history. Yet, unless the continent changes its course, Europe is more than likely to transform from a harbinger of prosperity and democracy into a far less hospitable and more dangerous place.

Dalibor Rohac is a research fellow at the American Enterprise Institute. He tweets at @DaliborRohac.