Christine Lagarde, we salute you!

Christine Lagarde, managing director of the International Monetary Fund, has a talent for communication that should stun us all. In one interview, lasting probably no longer than an hour, she has managed to encapsulate to a developed world audience the real role of the IMF in the world. A feat that, for decades, has eluded assorted socialists, NGO dissidents and apple cart capsizers.

Greece, as everyone knows, is subject to an IMF/EU/ECB austerity programme that has seen its economy shrink by a fifth, public sector salaries drop by 40 per cent, and private sector salaries by a quarter. Conditions, according to one observer, are so desperate they are not third world, but fourth world. Children in Athens schools are too dizzy to do PE because they don’t have enough food.

From the Guardian:  “Asked whether she is able to block out of her mind the mothers unable to get access to midwives or patients unable to obtain life-saving drugs, Lagarde replies: "I think more of the little kids from a school in a little village in Niger who get teaching two hours a day, sharing one chair for three of them, and who are very keen to get an education. I have them in my mind all the time. Because I think they need even more help than the people in Athens."

Lagarde, predicting that the debt crisis has yet to run its course, adds: "Do you know what? As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax." She says she thinks "equally" about Greeks deprived of public services and Greek citizens not paying their tax.

"I think they should also help themselves collectively." Asked how, she replies: "By all paying their tax."

Asked if she is essentially saying to the Greeks and others in Europe that they have had a nice time and it is now payback time, she responds: "That's right."

Thanks to Lagarde, it becomes unnecessary to point to the Cambridge/Yale University study of IMF intervention in former Soviet bloc countries and its finding of 100,000 extra deaths resulting from cuts to public health spending demanded by the IMF’s “strict economic conditions”.

Her “solution” to the crisis, which involves Greek citizens paying their tax, makes it redundant to highlight the good corporate “citizens” fleeing to Luxembourg to avoid paying anything to the state or the third of large companies who pay no corporate tax at all in Britain.

Lagarde’s helpful reference to the IMF’s role in Niger makes it superfluous to draw attention to the “degradation” of health services there, “crippled” in order to meet debt payments. Or the privatization that has put them beyond most people’s reach. Or the 19 % tax increases on flour, milk and sugar, later withdrawn after protests (now there is a lesson in self-help).

Christine Lagarde, you are doing a fantastic job. More interviews please.

The second time as tragedy as well. Is history repeating itself in Greece?

The great events of world history occur twice, said Hegel. “He forgot to add,” corrected Karl Marx, “the first time as tragedy, the second time as farce.”

But perhaps Hegel was right. The Greek trauma shows history repeating itself, but as Dudley Moore once put it, “I can’t see the bloody joke.”

In the 1930s, as the Great Depression spread, the liberal market civilisation that had reigned for a century, swiftly broke down. Into the vacuum came two forces. One was a civilised response to suffering, the conscious subordination of the capitalist economy to the needs of democratic society, exemplified by the American New Deal. The other was Fascism, which caused, in the words of the contemporary historian Karl Polanyi, “sickness unto death”.

In Greece now you have a left-wing grouping, Syriza, falsely labelled “far left”, expressing mass opposition to the austerity of the March Eurozone bailout, that is systematically dismantling the features that made society liveable. 

As they rise, so too do the Neo-Nazi Golden Dawn, a very different response to the same breakdown. Syriza offers the hope, writes one Greek economist, of avoiding “a disaster than might truly lead to the rise of fascism.” 

In the 1930s the upholders of the old order – the economic liberals, the free-marketeers of their day, believed everything would be fine in the end provided people just grinned and beared it. Wages had to be cut, social services slashed and jobs destroyed but if the pain was stoically endured, the economy would eventually return to health.

But this belief in super-human stoicism was always a fantasy. “To expect,” wrote Karl Polanyi, “that a community would remain indifferent to the scourge of unemployment, the shifting of industries and occupations and to the moral and psychological torture accompanying them, merely because economic effects, in the long run, might be negligible, was to assume an absurdity.”

Now we are asked to believe in the same absurdity. The intransigent role of the ‘30s economic liberals is now played by the German government. “The Greek nation knows what it has to do,” said the German finance minister Wolfgang Schaüble last week. “Most Greeks want to stay in the euro. We need to make it clear to them that the terms for that are the fulfillment of the reform requirements of the aid programme.”

What the “reform requirements” mean for ordinary people was brought home by a Greek film-maker, Constantine Giannaris in The Guardian newspaper on Saturday.

“The scenes here at the moment are horrifying, the kind of scenes unthinkable in London or Berlin,” he wrote. “Not third world, but fourth world. Many immigrants and asylum seekers here are looking through rubbish cans [for food], and now impoverished workers, hundreds of them, are having to sift through recycling, taking the scraps of metal and paper to sell in order to make ends meet. We have junkies with no methadone or needle programmes, and prostitution is rife.”

Everything will be alright in the long-run says the German government, echoing ‘30s economic liberals. But in the long-run, as John Maynard Keynes observed, we’re all dead.

Syriza’s “far left” programme, its response to this unnecessary suffering, isn’t radically left-wing. The programme’s features – a moratorium on debt repayments, a debt audit, redistribution of income, bank nationalisation (perish the thought!) and an industrial policy to rejuvenate manufacturing – would have been considered fairly centrist after the Second World War. It’s less radical, in some respects, than the American New Deal.

In Greece now, the orthodoxy has been scorned by most people for the callousness it entails. The centre has been exposed as extreme and unyielding. Into the void comes both a new form of the extreme Right and the radical Left. They are both a rebellion, as Polanyi understood, against the same determinism. But they are completely different.

One side wants a humanitarian response to suffering. The other just wants to take it out on other people, often immigrants. According to the Golden Dawn leader, “The new Golden Dawn of Hellenism is rising. For those who betrayed their homeland, the time has come to fear. We are coming.”

What is happening in Greece may be an extreme example, a 21^st century repetition of the political dilemmas of the 1930s. Or it may be a foretaste of things to come. The awaiting fate of Spain, Portugal and Italy, for example, which all have their own histories of fascism.

But if history is repeating itself, we have the freedom to learn from last time. If they win the next Greek election Syriza will, to be honest, play a role of saving capitalism from itself, as the New Deal did in the thirties. The rationale will be to alleviate colossal suffering and, because the alternative to doing nothing, fascism, would be far worse than neoliberal capitalism.

But after you have preserved civilization, you have to question the logic of reforming and making human an economic system that periodically plunges humanity into unnecessary suffering. The real tragedy would be to humbly wait for the next plunge.

18 years until the economic nirvana of John Maynard Keynes and we're galloping backwards

According to the person some regard as “the greatest economist who every lived” we should, by now, be approaching a state of “economic bliss”.

John Maynard Keynes wrote in 1930 that under the surface of the unfolding gloom of the Great Depression, mankind was solving its economic problem.

In the essay, “The Economic Possibilities for our Grandchildren”, he predicted that in 100 years’ time, Europe and the US would be between four and eight times more wealthy. He thought that his descendants of 2030 would work three hour days and fifteen hour weeks. Their main dilemma would be how to occupy their abundant leisure.

  

Keynesianism is undergoing a renaissance. As growth stutters in the developed world, Keynes’ belief in using the state to expand the economy through funding infrastructure projects, as an alternative to the failure of austerity, is swiftly becoming the conventional wisdom. New French President Francois Hollande is widely thought to be bringing Keynesian salvation to a Europe starving for economic growth.

What is less noted is that Keynes thought we should have outgrown the need for such primitive tools by now.

Keynes believed as the economic problem, the need to survive and produce, relaxed its hold on the human race, a great change in morality would ensue. “We shall honour,” he imagined, not the wealth seeker but “the delightful people who are capable of taking direct enjoyment in things”.

“All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which will now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting the accumulation of capital, we shall then be free, at last, to discard.”

Now, just 18 years before the date of Keynes’ prediction comes to pass, we can see how right and yet, at the same time, how monumentally wrong, he was.

Caligula would be jealous

Right in the bare terms of social wealth. We are in the UK, according to the writer, John Lancaster, who has analysed Keynes’ prediction, 4.6 times more wealthy than we were in the 1930s.

We, in the West, live lives that would be the envy of any Roman emperor or pharaoh, says Lancaster.

“If I had been living in the 19th century and someone told me now most of the population have air conditioning, and enough food to eat and obesity would have reversed its social distribution, I would have thought we are living in some kind of utopian harmony,” said epidemiologist and co-author of The Spirit Level, Richard Wilkinson recently.

But we aren’t living in utopia. Though society has produced immense wealth, we are experiencing a dystopia in various ways.

The unjust and distasteful practices that Keynes thought we could slough off haven’t eased their grip in the midst of greater wealth. Instead we are even more constricted by them. Mankind is further than ever from solving its economic problem.

Private fortunes, no qualms 

There are various names for this process. Marketisation or commodification – the turning of human beings and their relationships into something you can sell on the market. John Lancaster says there has been a “reverse takeover” in British life. The City of London’s relentless obsession with short-term profit, shareholder value and league tables has seeped – or rather flooded - into the arenas of public service such as the NHS, the BBC and education. The public sector in Britain has been remade in the image of the private sector.

One in five British workers are now employed by a private equity company. Private equity funds takeover existing companies, restructure them often in the form of extensive job losses, increase the intensity of work, and then sell them on again for large profits.

“While the directors of these funds make private fortunes,” writes Ignacio Ramonet in Le Monde Diplomatique, “they have no qualms about applying the four great principles of rationalisation to the companies they buy: downsize staff, reduce wages, increase work rates and relocate.”

Strikes in the UK, when they manage to happen at all, are revealingly not just about wage levels, but bullying management. After a strike vote at British Gas in 2010, the union there called for an independent inquiry into the “profit at all costs culture” at the former state-owned utility.

The Institute of Directors wants the state retirement age in Britain to rise to 70. The government is set to save £2 billion by withdrawing benefit from ill and disabled people. We must take “tough decisions”  we are told. Suddenly what we took for granted is now unaffordable. This is poverty in the midst of plenty.

Keynes prediction of a 15 hour working week has proved staggeringly inaccurate. Between 1998 and 2005, the number of people in Britain working more than 48 hours a week more than doubled. And one in six now works more than 60 hours.

Technological damage

This has happened in the midst of a technological development – computerization- that has vastly reduced the need for physical labour. When the need for toil is diminished, and thus the precondition for increased leisure established, but the result is much more labour, the culprit is clearly not the technology itself but the economic system through which it is applied in everyday life.

With technological development, Keynes looked forward to the end of the pretence that foul is fair “because foul is useful and fair is not”. But fair has not triumphed. Foul practices are regarded as indispensable because they are judged to “create wealth”. But there aren’t indispensable. We only think they are.

But under the dysfunctional economic system of capitalism, technological development, far from liberating people as it should, actually damages them.

Intelligent left-wing thought today is aware that people in Europe and the US live in immensely wealthy societies, but that more people do not see the benefits of that wealth: the ability, which Keynes envisaged, of devoting their energies to “non-economic purposes”. Because they are too busy making it for other people.

In the 1940s, the historian Karl Polanyi spoke of capitalism’s genius for creating “unheard of material welfare” but a simultaneous “catastrophic dislocation of the lives of the common people.” We are far closer today to Polanyi’s dystopia than Keynes’ utopia.

Noam Chomsky expressed the contemporary dissonance in an interview about the Occupy movement. Speaking about the US he said, “For the majority, real incomes have pretty much stagnated, sometimes declined. Benefits have also declined and work hours have gone up, and so on. It's not third world misery, but it's not what it ought to be in a rich society, the richest in the world, in fact, with plenty of wealth around, which people can see, just not in their pockets.”

Unreal scarcity

Disputing that the Left Front candidate in the French Presidential election, Jean-Luc Mélenchon, was simply an angry throwback to ‘70s bolshieness, politics professor Philippe Marlière, pointed out that Mélenchon has realised something that neoliberals and Blairite social democrats remain oblivious to.

“Our societies have never been as productive and wealthy as today,” he wrote in April, “but the majority of the population are getting poorer despite working harder and harder. The problem is not a question of wealth production … but of redistribution of wealth.”

To put it in more intellectual terms, what we are experiencing now in the West, is artificial scarcity. The social ecologist Murray Bookchin thought that in the 1960s, the developed world was on the verge of “post scarcity”. In the past, the material fact of scarcity, he believed, provided an objective reason for the re-emergence of privilege and domination, after they were overturned by revolution.

“Any society that could promise little more materially than equality of poverty invariably engendered deep-seated tendencies to restore a new system of privilege,” he wrote in Listen, Marxist! “The ‘masses’ were always compelled to return to a lifetime of toil and were rarely free to establish the organs of self-management that could last beyond the revolution”.

But in 1969, when he wrote that essay, Bookchin believed that the compulsions of scarcity were disappearing. Mankind was solving its economic problem, the predicament Keynes described as “the primary, most pressing problem, of the human race” since the dawn of time, “the struggle for subsistence.” If mankind was on the cusp of “post-scarcity” in 1969, we have certainly entered that state now.

That is why the problem we face not, as Marlière points out, one of wealth production. But it is not just a question of redistributing wealth either, but also of the conditions under which wealth is produced, and who controls, as the Marxists used to say, the means of production. Whether we will continue to allow resources to be controlled by small elites – boards of directors and shareholders – or democratize the economy.

A false choice

In the midst of the Great Recession, we are being presented with a choice, of higher unemployment and its associated malaises, or economic growth. We should rebel against the two sides of that choice. “We suffer from downturns but it is not the same as needing growth. We want stability of economic activity,” says The Spirit Level’s Richard Wilkinson. “People see it as a choice of either higher unemployment or economic growth. Again, we must break that idea and show that there are other possibilities.”

John Maynard Keynes realised the potential for mankind to solve its economic problem. But despite saving capitalism from itself during the Great Depression, he seemed blind as to how the system he helped preserve would stymie the potential for the “economic bliss” he foresaw.  That’s one reason why he wasn’t, as John Lancaster claims, the “greatest economist who ever lived”. Or if he was, it tells you something quite revealing about all the others.