Greece may be financially bankrupt, but the troika is
politically bankrupt. Those who persecute this nation wield illegitimate,
undemocratic powers, powers of the kind now afflicting us all. Consider the
International Monetary Fund. The distribution of power here was perfectly
stitched up: IMF decisions require an 85% majority, and the US
holds 17% of the votes.
The IMF is controlled by the rich, and governs the poor on their
behalf. It’s now doing to Greece what it has done to one poor nation after
another, from Argentina to Zambia. Its structural
adjustment programmes have forced scores of elected governments to
dismantle public spending, destroying health, education and all the means by
which the wretched of the earth might improve their lives.
The same programme is imposed
regardless of circumstance: every country the IMF colonises must place the
control of inflation ahead of other economic objectives; immediately remove
barriers to trade and the flow of capital; liberalise its banking system;
reduce government spending on everything bar debt repayments; and privatise
assets that can be sold to foreign investors.
Using the threat of its self-fulfilling prophecy (it warns the
financial markets that countries that don’t submit to its demands are doomed),
it has forced governments to abandon progressive policies. Almost
single-handedly, it engineered the 1997
Asian financial crisis: by forcing governments to remove capital controls,
it opened currencies to attack by financial speculators. Only countries such as
Malaysia and China, which refused to cave in, escaped.
Consider the European Central Bank. Like most other central
banks, it enjoys “political independence”. This does not mean that it is free
from politics, only that it is free from democracy. It is ruled instead by the
financial sector, whose interests it is constitutionally obliged to champion
through its inflation
target of around 2%. Ever mindful of where power lies, it has exceeded this
mandate, inflicting deflation and epic unemployment on poorer members of the
eurozone.
The Maastricht treaty, establishing
the European Union and the euro, was built on a lethal delusion: a belief
that the ECB could provide the only
common economic governance that monetary union required. It arose from an
extreme version of market fundamentalism: if inflation were kept low, its
authors imagined, the magic of the markets would resolve all other social and
economic problems, making politics redundant. Those sober, suited, serious
people, who now pronounce themselves the only
adults in the room, turn out to be demented utopian fantasists, votaries of
a fanatical economic cult.
All this is but a recent chapter in the long tradition of
subordinating human welfare to financial power. The brutal austerity imposed on
Greece is mild compared with earlier versions. Take the 19th century Irish and
Indian famines, both exacerbated (in the second case caused) by the doctrine oflaissez-faire,
which we now know as market fundamentalism or neoliberalism.
In Ireland’s case, one eighth of the population was killed – one
could almost say murdered– in the late 1840s, partly by the
British refusal to distribute food, to prohibit the export of grain or
provide effective poor relief. Such policies offended the holy doctrine of
laissez-faire economics that nothing should stay the market’s invisible hand.
When drought struck India in 1877 and 1878, the British imperial
government insisted on exporting record amounts of grain, precipitating
a famine that killed millions. The Anti-Charitable
Contributions Act of 1877 prohibited “at the pain of imprisonment
private relief donations that potentially interfered with the market fixing of
grain prices”. The only relief permitted was forced work in labour camps, in
which less food was provided than to the inmates of Buchenwald. Monthly
mortality in these camps in 1877 was equivalent to an annual rate of 94%.
As Karl
Polanyi argued in The Great Transformation, the gold standard – the
self-regulating system at the heart of laissez-faire economics – prevented
governments in the 19th and early 20th centuries from raising public spending
or stimulating employment. It obliged them to keep the majority poor while the
rich enjoyed a gilded age. Few means of containing public discontent were
available, other than sucking wealth from the colonies and promoting aggressive
nationalism. This was one of the factors that contributed to the first world
war. The resumption of the gold standard by many nations after the war
exacerbated the Great Depression, preventing central banks from increasing the
money supply and funding deficits. You might have hoped that European
governments would remember the results.
Today equivalents to the gold standard – inflexible commitments
to austerity – abound. In December 2011 the European
Council agreed a new
fiscal compact, imposing on all members of the eurozone a rule that
“government budgets shall be balanced or in surplus”. This rule, which had to
be transcribed into national law, would “contain an automatic correction
mechanism that shall be triggered in the event of deviation.” This helps to
explain the seigneurial horror with which the troika’s unelected technocrats
have greeted the resurgence of democracy in Greece. Hadn’t they ensured that
choice was illegal? Such diktats mean the only possible democratic outcome in
Europe is now the collapse of the euro: like it or not, all else is
slow-burning tyranny.
It is hard for those of us on the left to admit, but Margaret
Thatcher saved the UK from this despotism. European monetary union, she
predicted, would ensure
that the poorer countries must not be bailed out, “which would devastate
their inefficient economies.”
But only, it seems, for her party to supplant it with a
homegrown tyranny. George Osborne’s proposed legal
commitment to a budgetary surplus exceeds that of the eurozone rule. Labour’s
promised budget responsibility lock, though milder, had a similar intent. In
all cases governments deny themselves the possibility of change. In other
words, they pledge to thwart democracy. So it has been for the past two
centuries, with the exception of the 30-year Keynesian
respite.
The crushing of political choice is not a side-effect of this
utopian belief system but a necessary component. Neoliberalism is inherently
incompatible with democracy, as people will always rebel against the austerity
and fiscal tyranny it prescribes. Something has to give, and it must be the
people. This is the true road to serfdom: disinventing democracy on behalf of
the elite.
• Twitter: @georgemonbiot.
A fully referenced version of this article can be found at Monbiot.com
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