I’ve been wondering about the relationship between insiders and outsiders ever since I was at university and then at the BBC, and have concluded (a) that it’s the combination of background and ambition that makes the difference, and (b) the outsider who wants to be an insider is the most dangerous of all combinations, for that way corruption lies.
I’ve assigned these groupings to British politicians because they are sufficiently in the public domain to be able to apply judgments.
It’s fairly clear, if you spend any time doing futures work, that there are some recurring patterns that seem to evolve over one or two generations, or more. As part of a personal research project, I have started re-reading these “long wave” theories to try to understand their similarities and differences, and I’ll be blogging about my reading as I go.
An obvious starting point in this journey is Jim Dator’s long survey of the area, “From Tsunamis to Long Waves and Back”, drawn from the archive of the journal Futures, and published over two articles in Futures in 1999. The essay – recombined – can be found here.
Here I’m just going to pull out some extracts that seem to shape the landscape.
I had a piece a couple of months ago in Market Leader on why political parties represented a particular sort of brand, and what that meant for their freedom of movement. I can’t attach the article here (Market Leader is paywalled), but with the election in full swing it seems worth sharing a couple of extracts.
The Market Leader article was partly a rewrite of my post here in the autumn on the long-term decline of the Conservative party, but I had more space, so could extend the analysis to the Labour Party, and also deepen the thinking.
Of course the election has moved on, but I just wanted to come back to last week’s “business leaders’ letter” to the Telegraph. That letter, which focussed on corporation tax, and the business response to Labour’s zero-hours proposals, tell us more about business than it does about politics. Here’s a quick guide to four things they tell us.
Watching the movie Selma raised the question for me of why non-violence works – or worked – as a political strategy. The obvious answer is that it reveals the violence embedded in the political system without legitimating it. Some of our most famous images of protest have this at their heart: the famous Chinese protestor sitting in front of the line of tanks in Tianamen Square, or the American anti-Vietnam War protestor presenting flowers to the unsmiling ranks of the National Guard. And the “obvious” answer begs more questions. if this is true, why should it be true? And if it was true in the past, is it still true? It may be that the moment when it worked has passed. No obvious spoilers, by the way.
In the previous post on Herbert Girardet’s recent talk at the LSE, I described how he sees us as being on the verge of a transition to a “third age of the city” – from Agropolis to Petropolis to Ecopolis. That post spent more time on the first two – especially the Petropolis, the city’s current dominant incarnation, and its limitations. The chief limitation: the city, as currently designed, is dependent on huge flows of food, energy, and waste, an “urban metabolism” that extends across the planet and is largely powered by fossil fuels. In this post, I’m going to turn to the Ecopolis.
I first read the work of Herbert Girardet in Undercurrents in the early eighties, and his short book Creating Sustainable Cities – published in 2006 by Green Books – was fundamental in shaping my view of the planet’s urban boom. This was the book where he calculated that London’s ecological fooprint was 125 times larger than the city itself, and so larger than the UK. So when I found that he was talking at the LSE as a guest of the LSE Cities programme, I made sure I could go along.
The story he told, based on his book, Creating Regenerative Cities, published last October, is that we are on the cusp of a transition to the third age of the city – or at least we’d better be, if we are going to avert the worst effects of climate change. The first age he called Agropolis; the second Petropolis, and the third, Ecopolis. In this post, I’m going to talk about the first two; in the next post, I’ll look at Ecopolis.
I’ll admit to being a bit obsessed with Syriza and the Eurozone at the moment (here and here): it is by some way the most interesting development at the moment in both politics and economics. And I’m also interested in the idea that Yanis Varoufakis’ background teaching game theory might have some bearing on the outcome of the talks with the Eurozone, especially now that he has gone out his way, in the New York Times to say that exactly the opposite is true. It’s worth spending a bit of time on this.
It seems that the rumbling story about HSBC’s Swiss branch has achieved what political pollsters know as “cut through” – meaning that it’s of interest to voters as well as to those reporters who are sentenced to watch Prime Minister’s Questions each week.
The story reminded me of a passage in Wolfgang Streeck’s 2014 article ‘How Will Capitalism End?’ in which he explores the drivers of change that could bring about, well, the end of capitalism. The article deserves more space here on another occasion, but for the moment I just wanted to quote what he writes about his fifth driver, corruption:
Finance is an ‘industry’ where innovation is hard to distinguish from rule-bending or rule-breaking; where the payoffs from semi-legal and illegal activities are particularly high; where the gradient in expertise and pay between firms and regulatory authorities is extreme; where revolving doors between the two offer unending possibilities for subtle and not-so-subtle corruption; where the largest firms are not just too big to fail, but also too big to jail, given their importance for national economic policy and tax revenue; and where the borderline between private companies and the state is more blurred than anywhere else, as indicated by the 2008 bailout or by the huge number of former and future employees of financial firms in the American government.
So far, fairly familiar, if admirably concise. The more important element here is that what this has done is broken the moral story about capitalism – work and the Protestant ethic and all that – that writers such as Max Weber spent so long trying to assemble at the end of the 19th century and the beginning of the 20th.
Capitalism’s moral decline may have to do with its economic decline, the struggle for the last remaining profit opportunities becoming uglier by the day and turning into asset-stripping on a truly gigantic scale. However that may be, public perceptions of capitalism are now deeply cynical, the whole system commonly perceived as a world of dirty tricks for ensuring the further enrichment of the already rich. Nobody believes any more in a moral revival of capitalism. The Weberian attempt to prevent it from being confounded with greed has finally failed, as it has more than ever become synonymous with corruption.
Of course, the idea that capitalism has a moral purpose still floats around in political discourse such as “wealth creators,” a lost signifier loking for something to signify.
I hadn’t meant to come back to Syriza and the Eurozone so quickly, but The Real News Network has a fascinating interview with the German economist Heiner Flassbeck, conducted after the election, where he makes three valuable points. Here’s some extracts and some notes.
1. The Troika is more interested in imposing conditionality than talking about debt.
FLASSBECK: [T]he most important thing is not debt as such, but it is the reforms, the so-called reforms, the so-called structural reforms, where the countries have the conditionality to do something. And whether the debt is now repaid in the next ten years and next 20 years or so is not important. And that is not what it’s all about. What you have to discuss is the conditionality, and this is not covered by Varoufakis’ proposal. …
JAY: So … this is things like lowering the amount of pensions that are paid, the minimum wages.
FLASSBECK: Everything, all the things, the long list of 100 points, including the privatization of the port in Piraeus or things like that, crazy things that have nothing to do with the Greek performance–or not much, at least. Only under a neoliberal ideology it has much to do with the Greek performance. So these things are very important. And there, is far as I understand, the German finance minister said very clearly, no, no way to change that.
So – if this analysis is right – the two sides are much further apart even than the recent coverage suggests. Greece is talking apples, the Troika is talking oranges. But it’s also a sign of the way in which the election of Syriza has changed the game, and the shape of the Overton window. This is one reason why both sides are negotiating in public, as Peter Doyle pointed out in the FT’s Alphaville blog. When you can’t even agree on what the discourse is, the usual channels and the usual forums break down.
2. Since the European debt problem is still being fuelled by German trade surpluses, it’s not going to go away soon.
FLASSBECK: [T]he German surplus of the current account for this year and the official forecast of the German government is, again, 20-30 billion higher than last year. It’s more than 200 billion–a surplus of more than 200 billion, which clearly means, logically means that the German economy, the German politicians are building their whole model of the German economy on more indebtedness of other countries of the rest of the world, including Europe. So they need new debt from the rest of the world of 200 million for this year to get a small growth of 1.5 percent, which is ridiculous….
JAY: Let me just break this down and make sure I’m understanding it … They’re sitting on all this surplus, and what they need to do with it is loan it to somebody. So they need some debtors to pick up this $200 billion.
FLASSBECK: They need debtors. Germany needs debtors more than anybody in the world, because the whole economy is built on this surplus, on this idea that the rest of the world would be debtors and Germany’s always a creditor, which is a foolish idea … Every reasonable economist knows it’s a foolish idea. It’s mercantilism.
Two points about this. The first is that it goes to the heart of the Eurozone’s low-growth problem – it won’t grow until Germany starts buying more. The second is that this isn’t a problem stemming from the financial crisis. It’s a problem stemming from the way in which Germany is choosing to manage its economy. And generally, mercantilism went out of fashion in the 18th century.
3. The only way for Greece to resolve  and  is to build a coalition.
GLASSBECK: [I]t’s a violation of the rule inside the Monetary Union that you should not have macro economic imbalances that go beyond a certain point. The Germans insisted that it should be 6 percent of GDP, but now the German surplus is even going far beyond that. It would be 8 percent of GDP this year. So I would, if I were Mr. Tsipras, I would take this point. I would say, you see, the Germans are violating everything, and the most important thing under the sun, namely, the current account balance–and at the same time, they’re accusing us of violating other parts of the treaties of the European treaty. So who is the biggest violator, and who’s going to play along the rules or against the rules?
JAY: And this is the logic with which you try to build your coalition.
FLASSBECK: I would build my coalition exactly along these lines, and then it would be very difficult for the Germans to argue and to say, no, we don’t care about that; our violations do not count; only yours count. If you then have a strong political coalition, including Italy and France, they could easily, in my view, easily get a majority in Europe against the Germans. … That’s where you have to go.
Of course this makes political sense, but it also requires time; and political time and the time of financial markets run at different speeds. Indeed, you can go one step further here and suggest that the ECB’s intervention last week might have been designed to accelerate the speed of a Greek financial crisis and reduce the time and the opportunities to build such a coalition.
But all of this is a complex and dangerous game.
In his excellent Alphaville post, Peter Doyle reminds us that everyone has the same aims for the euro:
The issue is not that the ECB and Syriza have fundamentally different aims for the euro: both want it; both want it to secure stable sustainable growth area wide; and, to that end, both agree that policy in it has to be designed and coordinated at area level because everyone working “by and for themselves” above pre-set floors and subject to “no-bailouts” has all-too-clearly-and-all-too-utterly failed.
But the eurozone has been so badly designed that the only way to keep it in the air is for everyone to keep threatening to crash it.
It is like a mid-air jumbo jet, flown by a large one-member-one-veto committee, with one wing on backwards. So orthodox procedures (all engines on forward thrust) spell ruin … In that context, the current pas-de-deux is not a matter of “whether the Greeks or the ECB blink first.” It is a case of whether the fallout from the perpetual dance of death can be contained.
And sitting in the middle of the whirling dervishes, of course, is Angela Merkel. As Peter Doyle argues, she could decide that the markets seem relaxed about a Greek exit, and let them go, to discover that the markets have just been quiet because they’ve been momentarily doped with a-trillion-or-so of quantitively-eased Euros. Or she could decide that’s too much of a risk, and over-rule her hawkish finance minister Wolfgang Schaüble – fresh from his defeat on the quantitative easing – to have him cause political mayhem internally.
Merkel always prefers the less risky option. But in this context, it is not clear what that is for her. Thus is her dance with the markets.
Someone said dismissively of Yanis Varoufakis this week
(sadly I can’t find the link) that he resembled a man holding a gun to his head and demanding a ransom threatening to shoot (a bit like the new sheriff in Blazing Saddles). In such a volatile situation, acting crazy may be the sanest thing to do.
The interview was with The Real News Network. You can view it here.