Behind the veil of combative western political dramas being played out in the United States of America and much of Europe today, is the emergence of an older yet familiar ideological battle about who will control much of the global power and wealth in the 21st century. The crisis of global capital mainly pertaining to the western industrialized countries has dominated much of the early part of the 21st century. Its beginnings are sourced in the naïve politics of economic and financial deregulations which swept the west during the early 1980s. Naïve because the architects of economic reform and financial deregulation never factored in human nature, and its capacity for greed, covertness and an inclination to an idle life. Some thirty years on from the global economic reforms begun in the 1980s, the crisis enveloping Greece and the Euro Zone countries and the wider world attest to this claim.
I remember clearly as a young man who had grown up in the poorer suburbs of the now quake stricken city of Christchurch, how the Labour government of the day elected on a platform of equality and dignity for all, especially the working poor and disenfranchised families of New Zealand, deceived and betrayed their supporters at a critical juncture in the country’s history. The man considered to this day as the great traitor of New Zealand’s labor party principles, Roger Douglas, took a small country with a population of around 3.5 million people, and a diminishing unemployment rate of between 0 and 2.5% to one of upwards of 6 and 7 %. It reached a peak of up to 11.5% in the early days of his great experimentation of economic and financial deregulation. (Economics, 2011). Today it hovers around 6.75%. Douglas was the first of several New Zealand finance ministers to sell off the country’s greatest assets, including lands and forests, to foreign interest.
Similar measures towards lassie faire policies of financial and economic reform occurred in Australia too. In 1985 the former head of the Australian Trade Union movement Bob Hawke, announced major restructuring to that country’s fiscal policy in a move not only considered ironic given Hawke’s left wing trade union background and his subsequent rise to the highest political office in his country, but also because like his New Zealand counterpart, he along with his government deceived their supporters in one of the greatest political betrayals of the 20th century. Many Australians recall with dismay the vehement homophobic rebuff Hawke gave the late Nobel Laureate Patrick White after he rebuked Hawke for compromising on his traditional labor principles and selling out to his constituency. But, such is the character of many politicians. It’s not as if we hadn’t been forewarned from history about the low principles of political purpose, that after it “attains its ambition the climber-upward turns his face; and unto the ladder turns his back, looks in the clouds, scorning the base degrees by which he did ascend.” (Shakespeare, Julius Casear)
Further North, in the United States, Great Britain and Europe a virtual frenzy of fiscal reform took place from the early 1980s. However, for the most part this occurred under the guardianship of conservative governments, who from the outset canvassed on an open and transparent political agenda. Margaret Thatcher made it clear that “pennies didn’t come from heaven…and there was no such thing as a society”, just people linked by an economic imperative. (Campbell, 2009) While Regan in the United States proclaimed “we in government should learn to look at our country with the eyes of the entrepreneur, seeing possibilities where others see only problems” (Regan, 1984). Germany certainly understood and achieved this and managed sustained economic growth and fiscal reform from the mid 1980s up to and after reunification with the East. It was Germany, with the tacit support of France who spearheaded a greater European Union, and it was France in 2001 which embraced Greece into the fold, along with its mounting deficit, poor work ethic and corrupt government and private sector. Other poor former Eastern European countries had also been subsumed, along with their debt and outdated bureaucratic and political infrastructure into the New Europe with Romania, Latvia, Estonia and Lithuania among them.
Back in 1989, in the midst of financial deregulation and the economic enlightenment of the day, Johan Galtung, a Norwegian Europhile argued that a greater united Europe would equal peace and prosperity for the continent’s population. His argument based on an open-minded idealism claimed that a unified Europe based on co-opted social and fiscal policies would lead to greater security and long term peace on the continent. A unified Europe would become a social and economic model for the whole world, a virtual utopia of freethinking values comprising of unity through diversity, multi-culturalism and everyone working towards the greater good of a common financial and trade based marketplace. Moreover, he asserted that a United States of Europe would be a model for the United States of America to embark on its own hegemonic model for the western hemisphere. (Galtung, 1989) Subsequent historical events have since debunked this fairytale wonderland view of humanity, and in retrospect it is difficult to comprehend the gullibility that led to these claims unless they are placed within the historical and social context of financial and economic deregulation.
For Galtung and many Europhiles deregulation of the financial and economic sector equaled an open society, the unlimited potential for a multi- cultural milieu without borders, one in which people would work and prosper together. And where this had the potential to fall apart, a natural insurgency of the disaffected would emerge to protect the Union. Galtung’s naiveté of the human condition asserted that the Green movement would plug all the ideological holes appearing in his vision of a unified Europe and along with the Peace movement and Feminist politics as such, would “challenge monopoly control by the governments over means of coercion in general and military power in particular, in the modern state” (Galtung, 1989) None of Galtung’s and his supporters’ fantastical claims has come about. Today, the European Union is closer to fragmentation than at any time in its short history. NATO has found itself caught up in three military campaigns, in a secular coup-de tat the Peace movement has been subsumed into a Green agenda scaremongering us about an environmental Armageddon, and unemployment in the 27 member Euro zone has reached up to twenty five million men and women.
As the unfolding economic calamity continues, economists and financial commentators focus on investor and corporate behavior as the primary cause of the current sovereign debt crisis embroiling most of Europe and the industrialized West. Investigations into corporate practices which precipitated the 2008 financial debacle and prepared the ground work for the 2011 crisis have shown poor risk assessment, greed and mismanagement of investors’ funds to be at the core of the crisis. Documentaries, films, books and articles have all pointed the finger and laid blame at the feet of someone other than the consumer. It has been asserted via all media that the consumers of capital in all its guises and products are the victim of foul play. This is simply not true. All citizens in the wealthier westernized industrialized nation states are complicit in the global financial crisis. No one in today’s world is untouched by global capitalism. Many ordinary people, who are the consumers of capital, are in one way or another partially responsible for today’s economic mess, although some more than others.
In the early days of financial and economic deregulation, when protectionism was eschewed in favor of creating countries with ‘business friendly’ regulations to their markets, no-one consulted history or gave a lot of thought about the lessons learned from events leading up to and surrounding the Great Depression. In the 1920s, that era of decadence and largesse preceding the Great Depression and World War 2, regulations were changed to open financial markets to everyone, including the poor. Competition and financial access to the marketplace was created to lift ordinary people out of poverty. Such moves were considered innovative for the day, and it was claimed would eventually lead to a golden age of prosperity and well being for all. So heeding the call to become rich like the rich, hundreds of thousands of ordinary Americans invested in the stock market. Many borrowed money to invest and when the whole giant Ponzi scheme tumbled down around their ears, they lost along with their material wealth, their dignity as human beings. No-one wanted to know the poor. Steinbeck still tells a great story. Europe suffered too, as funds were withdrawn from the Continent and diverted to a financially bankrupt American monetary system.
Today we fare no better. Most of us live in permanent debtor nations, some worse off than others, and the statistics are alarming. For the United Kingdom it is in excess of £16,000 per person, in the United States it is above $46,000 per person, in Germany it is €22,000 per person, and in France it is €25, 000 per person. Down under in Australia it is a just over $5000 AUD, while it’s poorer New Zealand neighbors owe a whopping $42,000NZ per person. (Agnew, 2011) Clearly, there are still some important lessons to be learned from an open lassie faire economic and financial sector.
According to Lewis (2011), Icelandic men exchanged their traditional fishing industry to become Reykjavik’s answer to Wall Street, Europe, and the United Kingdom, embraced them with open arms. Ordinary Britons poured billions of pounds into Icelandic banks. He asserts further that when Ireland started borrowing heavily from the Euro Zone, and inventing investment banks like Anglo-Irish, ordinary Irish men and women borrowed at an unprecedented rate from them and started a house building frenzy in the hope that hundreds of thousands of tourist would flock to their country. The Irish built so many houses on borrowed money that there are now more empty houses in Ireland per capita than in any other country in the world. Every Icelander and Irish man and women wanted to be millionaires! His harshest words are for the Greeks, who he claims wanted the easy life, basking in the achievements not of their own making, but on the hard fought gains of old Europe’s twenty years of economic gains. (Lewis, 2011) Elsewhere, ordinary opportunistic folk in other Western nations grabbed at easy credit to “live the dream”. Mortgage free houses were re-mortgaged, credit cards offers and low interest loans were snatched up, and the money came rolling in. New cars, second and third houses, trips of a life time overseas, gleaming jewels and the latest electronic products and gadgets were purchased mainly on credit; that is with other people’s money. Investment and Commercial Banks, Advertising Agencies and consumers all joined in a symbiotic relationship of easy credit and effortless greed.
The current financial turmoil and hardship is of our own making. It is profoundly naïve and hypocritical of the Occupy Wall Street protests and similar movements to claim they have been hard done by when they have tacitly, and more often than not openly been the recipients of their respective country’s wealth gains since they were born. Similarly, it is incredibly selfish to take to the streets and demand entitlements for benefits which may have been used as investments and shown diminished returns, knowing full well that these are the inherent risks of capitalism at work. A great number of ordinary people made choices to burden themselves with debt, for a quick rush of pleasure and the good life, ignoring the universal law of cause and effect. The wealthy too have exploited the situation to make their gains; the more infamous like Bernie Madoff and Raj Rajaratnam are ending their careers in anything but a gilded cage.
In December 2011 German Chancellor Angela Merkel called for a rewrite of the European Union’s treaty so as to create a more tightly controlled fiscal zone. Such has been the lessons learned from the Greece debacle, which could yet still bring the whole European Union to its knees, such is the level of rot and decay within the Greek private and public sector. Merkel wants Brussels to act as a de-facto Board of Directors to member countries and tightly control monetary policy. Membership of the Union will be reviewed too, with candidate countries to be more closely scrutinized as to the level of their sovereign debt, their capacity to repay as well as the soundness of their government infrastructure and the integrity of their population’s work ethic. But we are in for a long contentious battle over these and future new Euro zone rules, if the signing of the Lisbon treaty is an historical marker on which to gauge future successes. Similarly, the United States of America appears at a hopeless impasse with its elected representatives locked in a divisive dispute on how to pay off their monumental and ceaselessly increasing public sector debt.
But it is to Merkel’s credit that she recognizes that financial and economic de-regulation must factor in the greed and covertness of human nature if the European Union and indeed the world economy are to survive in their current form. As for the rest of us with our unavoidable responsibility to the public and private debt of our respective countries there are hard times ahead. Yet, notwithstanding the pain to come, it does seem incredulous that warnings from history were never heeded over 30 years ago. “See, sons, what things you are, how quickly nature falls into revolt. When gold becomes her object. (Shakespeare, Henry IV)
Agnew, S. (2011). Report on National Debt Per Head of Population. Brussels: European Parliament.
Campbell, J. (2009). The Iron Lady. New York: Penguin.
Economics, T. (2011, November 30th). New Zealand Unemployment Rate. Retrieved December 2nd, 2011, from Trading Economics: http://www.tradingeconomics.com/new-zealand/unemployment-rate
Galtung, J. (1989). Europe in the Making. New York: Taylor and Francis.
Lewis, M. (2011). Boomerang-Travels in the New Third World. New York: Norton.
Regan, R. (1984). Regan Quotes. Retrieved December 3rd, 2011, from The Ronald Regan Residential Foundation and Library: http://www.reaganfoundation.org/reagan-quotes.aspx
Shakespeare, W. (1987). Henry IV. New York: Signet.
Shakespeare, W. (1987). Julius Casear. New York: Signet.