The EU endgame is illustrating that we now live under not democracy nor even oligarchy but simple bankocracy. If we resuscitated Aristotle, he’d have to rewrite Politics entirely as rule-by-the-global-moneylenders surely never occurred to him as a possibility. No doubt he’d curse us for awakening him from a pleasant 2,500-year sleep for such vulgarity and refuse to enable the (ever more) Dismal Science as dignifying superstition and wizardry.
[cartoon by Martin Sutovec @Jack’s Political Cartoons]
It is remarkable how completely and utterly the core neoliberal presumptions have collapsed in the face of the European debacle: that democratic capitalism signaled the End of History, that this glorious final stage of human development would usher in a permanent state of blissful well-being based on the popular will, the primacy of markets and peace among (roughly similar) nations. But things haven’t quite worked out according to that plan.
As usual, it was biped hubris that monkeyed up the works. Had Merkel and Sarkozy been able to force their banker overlords to absorb the losses of an early Greek default a year or two ago, the rolling EU train wreck probably could have been avoided or at least postponed to more prosperous times (if those ever return again). But this is demanding passion fruits from a sycamore tree. The autistic brains who rule the financier universe, as wonderfully portrayed in the new film Margin Call, are incapable of the long view and want only more, more, more, preferably today but in any case no later than next week.
Geithner and Obama are now demanding of the European ‘allies’ that no peripheral Mediterranean upstarts be permitted to stiff Citibank and JP Morgan as U.S. banks are just as exposed to the new blood-letting as their European counterparts. No doubt Obama’s Democratic team concurs with Merkozy that any hint of putting the Greeks’ fate to a vote by themselves is anathema—another fine Greek word.
Uncertainty and instability have reigned for a good year now, and I read no convincing predictions of what will come next. But this shlumping along cannot go on forever, and I suspect some resolution is approaching, some defining event that, while not conclusive, emphatically points our fragile world in one direction or another. Outright Greek default, of course, is one possibility, an increasingly likely one given the disarray at the top in Greece and the danger that the replacement for the current mortally wounded government will be no government at all. That would cascade through the EU’s and the world’s banks with nasty consequences although it would probably focus the minds of our fractious leadership a good bit.
Another is some form of authoritarianism to get the unruly Greeks (and anyone else getting ideas) back in line. Francis Fukuyama notwithstanding, History has not in fact ended, and the fall-back position of ruling elites has been muscle from the times of australopithecus. One would have to be very innocent to suppose that that option is off the table. Meanwhile, silly assertions of popular sovereignty, like Papandreou’s plebiscite on the debt peonage deal, will not be tolerated.
[Update] I see the economics editor of The Guardian, Larry Elliott, agrees with me. The money quote:
‘The latest phase of Europe's sovereign debt crisis has exposed the quite flagrant contempt for voters, the people who are going to bear the full weight of the austerity programmes being cooked up by the political elites. . . . To the extent that governments had any power, it has been removed and placed in the hands of the European Commission, the European Central Bank and the IMF. What matters to this group is what the financial markets think, not what voters might want. It is as if the democratic clock has been turned back to the days when France was ruled by the Bourbons.’
Elliott adds that this would be disturbing even if the austerity medicine being administered were working. It is not.