Thinking the unthinkable

http://mondediplo.com/2008/11/01unthinkable

By Serge Halimi

So, everything was possible after all. Governments could take radical action in the financial sector. The constraints of the European stability pact could be forgotten. Central banks could kowtow to governments and stimulate the economy. Tax havens could be blacklisted. Everything was possible because the banks had to be rescued.

For 30 years, any suggestion that the liberal order might be amended to improve the living conditions of ordinary people, for example, met with the same stock responses: the Berlin wall has gone, didn’t you notice?; that’s all ancient history; globalisation is the order of the day now; the coffers are empty; the markets won’t stand it.

And for 30 years, “reform” went ahead – in reverse. This was the conservative revolution, handing over increasingly substantial and lucrative swathes of national assets to the money men, privatising public services and transforming them into cash machines to “create added value” for shareholders. This was liberalisation, with cuts in wages and social security, forcing tens of millions of people to borrow in order to maintain their purchasing power, and “invest” with brokers and insurance agents in order to cover the cost of education, healthcare and pensions.

Falling wages and social security cutbacks naturally led to financial excesses. Creating risks encouraged people to take steps to protect themselves. Speculation boomed, fuelled by the ideology of market forces, and housing became a prime target for investment. Attitudes changed, people became more selfish, more calculating, less public-spirited. The 2008 crash is not just a technical hitch that can be put right by “learning lessons” or “putting a stop to abuses”. The whole system has broken down.


The would-be repair men are already at work, hoping to restore it, plaster over the cracks, give it a fresh coat of paint, all ready to commit yet another offence against society. The wiseacres who now pretend to be disgusted with the reckless results of liberalism are the very ones who provided all the incentives – budgetary, regulatory, fiscal and ideological – for the ensuing spending spree. They should feel disqualified, but they know an army of politicians and journalists are eager to do a whitewash job.

So we have Gordon Brown, whose first act as Chancellor of the Exchequer was to “liberate” the Bank of England, José Manuel Barroso, president of a European Commission obsessed with “competition”, and Nicolas Sarkozy, who invented the “fiscal shield”, introduced Sunday working and privatised the post office: all, it seems, busy “rebuilding capitalism”.

Their effrontery marks a strange hiatus. What has happened to the left? As for the official left, it just wants to turn the page as quickly as possible on a “crisis” for which it is jointly responsible. This is the left that went along with liberalisation, Democratic president Bill Clinton deregulating the financial sector, François Mitterrand ending index-linked wages, Lionel Jospin and Dominique Strauss-Kahn privatising public services, Gerhard Schröder axing unemployment benefit.
So be it. But what about the other left? Will it be content, at a time like this, to dust off its most unambitious projects, the serviceable but terribly timid plans for the Tobin tax, an increase in 
the minimum wage, a “new Bretton Woods Agreement”, wind farms? In the Keynesian era, the liberal right thought the unthinkable and took advantage of a major crisis to impose it. Friedrich Hayek, intellectual godfather of the movement that spawned Ronald Reagan and Margaret Thatcher, stated the case in 1949: “The main lesson which the true liberal must learn from the success of 
the socialists is that it was their courage to be 
Utopian which… is daily making possible what only 
recently seemed utterly remote.”

So will someone now call free trade into question, free trade which is the very heart of the system (1)? “Utopian”? But everything is possible when it comes to banks…