At the end of a week that saw Maggie “There Is No Alternative” Thatcher’s funeral, it just might be worth stopping to remember the human disaster that is global capitalism. (video courtesy of The Rules)
International Monetary Fund
The Irruption of the Event
As the inevitable Greek exit from the eurozone seemingly approaches, it’s worth comparing current statements about Greece to how the financial press and regulators considered Lehman Brothers the week before its collapse set the global markets into panic mode. (See below for a selection of illuminating comments from officials about Lehman Brothers pre-collapse and about Greece pre-exit.) Reading these misplaced predictions, one thing becomes clear: the contemporary financial system is far too complex and opaque for anyone to determine the precise consequences of a Greek exit. Add into that the unpredictable nature of crisis politics (e.g. today sees rumors of Greek governing coalitions flying all over the place), and one has a system that quickly surpasses our capacities for forecasting. In this regard it’s interesting to read reports about the current Greek exit fears versus the reports in February when it also looked like Greece might leave (prior to the second of ECB’s long-term refinancing operations (LTROs) that managed to calm markets for a short while). In the earlier reports many commentators considered that French and German banks had largely separated themselves from Greek exposure, while the initial LTRO had purportedly given the financial system the flexibility it needed to survive any temporary disruption. Intriguingly, today’s fears about Greece, after the failure of the LTROs to significantly improve the situation and combined with fears over Spain’s banking system, are much more apocalyptic than in February.
The unfortunate truth is that while a Greek exit will be devastating to the Greek people (of this everyone is confident), it is still a better option than the continued austerity regime. Even the most optimistic IMF estimates of Greece’s economy under the austerity regime only see them returning to 120% debt-to-GDP ratio by 2020 – i.e. the same level that so worries commentators about Italy today. What is being asked of Greece is a state of permanent austerity and permanent social chaos.
Milos Bicanski/Getty Images
September 9, 2008 – http://www.nytimes.com/2008/09/10/business/10place.html?pagewanted=all
Unlike Bear Stearns, which effectively collapsed when customers fled for the exits and the firm could not finance itself, Lehman Brothers has more sources of long-term financing and like other broker-dealers, access to emergency financing from the Federal Reserve. Mr. Fuld said that the existence of that lending facility should take any question of Lehman facing a liquidity crisis “off the table.
September 12, 2008 – http://www.ft.com/intl/cms/s/0/b3506214-80d5-11dd-82dd-000077b07658.html#axzz1mXeJ33ET
While the crisis at Bear stunned the markets, other financial institutions have had six months to prepare for the possible failure of Lehman. In the Bear crisis, the risks were extreme in part because they were unknown and unmanaged. The New York Fed has conducted extensive stress tests in order to attempt to evaluate the impact of a Lehman failure on markets such as the CDS market and it believes the systemic risk is quantifiable and lower than the risk that was posed by the imminent collapse of Bear back in March. Regulators have also evaluated the risk mitigation strategies put in place by other banks and the authorities believe them to be robust. That suggests the risk that a Lehman collapse could trigger a domino effect of failures at other financial institutions ought not to be great.
September 14, 2008 – http://www.ft.com/intl/cms/s/0/f3586ede-80ca-11dd-82dd-000077b07658.html#axzz1mXeJ33ET
Mr Paulson believes that the systemic risks associated with the potential failure of Lehman have been reduced because the market has had time to prepare for its possible demise, and a new Fed funding facility would assist an orderly unwinding of its positions.
February 15, 2012 – http://blogs.channel4.com/faisal-islam-on-economics/eurozone-reaches-its-lehman-moment-as-germany-insults-greece/16278
All the while, the chatter in euro policy circles, as I wrote on Monday, is that the Greek rot will not infect the rest of the euro area. A default could be managed. Even the odd French bank has managed to dispose of much of its exposure. We’ve had months to prepare. And, so the Lehman moment comes full circle. Three and a half years ago we were told exactly the same by Hank Paulson and co re Lehmans: The system, we were told, was strong enough. Finns, Dutch and some Germans increasingly think the same about a Greek default.
Book launch: A Liberal Peace?
Tuesday 14th February 2012, 5.30pm-7.00pm
Westminster Forum, 5th Floor, Department of Politics and International Relations, University of Westminster, 32-38 Wells Street, London W1 (nearest tube Oxford Circus)
Panel with Editors David Chandler and Meera Sabaratnam, followed by publisher’s reception
The 1990s was a weird decade for all kinds of reasons. The dice that were thrown into the air as the Soviet Union retreated landed in a particularly intriguing configuration for those politicians, public functionaries and academics from wealthy countries and institutions concerned with ‘peace’ and ‘development’. Their missions, marginalised for decades under concerns for national (i.e. military) security, were quite suddenly elevated as symbols of the new world order and installed as defining foreign policy priorities of wealthy states. Continue reading
Looking Beyond Spring for the Season: Democratic and Non-Democratic Cultures
This is the fourth part in a series of five posts from Siba Grovogui, Professor of International Relations and Political Theory at John Hopkins University. The first part is here; the second here; the third here. The series considers the character and dimensions of the tension between the African Union and ‘the West’ over interventions in Africa. As before, responsibility for visuals adheres solely to Pablo K.
It is not accurate to say that the African Union has been indifferent to the conflict in Libya. If there has been silence in Africa, it has to do with the extent to which the ‘maverick’ Colonel (Gaddafi) has angered some of his peers over the years by interfering in the affairs of such states as Nigeria, Liberia, Burkina Faso, Sierra Leone and others, with disastrous effects. Even when, as in Sudan and Uganda, officeholders have welcomed his entreaties, large segments of the populations have not appreciated them. Yet, regardless of their personal views of Gaddafi and their political differences with him, African elites and populations have yearned for a more positive, conciliatory, and participatory solution to outright regime change or the removal of Gaddafi preferred by the West. This variance, I surmise, comes from a positive understanding of postcoloniality that include forgiveness, solidarity, and democracy and justice, as exhibited in post-apartheid South Africa and post-conflict Liberia, Angola, Mozambique, and the like.
In opting for negotiated mediation and a new constitutional compact, therefore, the African Union (or AU) aimed to foster a different kind of politics in Libya – admittedly one that has escaped many of the states endorsing that position. As articulated by Jean Ping, the Secretary General of the AU, the Libyan crisis offered an opportunity “to enhance a self-nourishing relationship between authority, accountability and responsibility” in order to “reconstitute African politics from being a zero sum to a positive sum game” toward one “characterized by reciprocal behavior and legitimate relations between the governors and the governed.” Mr. Ping added two other dimensions to his vision. The first is an acknowledgement that events in Libya point to the fact that all Africans “yearn for liberty and equality’ and this yearning is “something more consequential than big and strong men.” The second is that Africa’s destiny should be shaped by Africans themselves based on an actualized “sense of common identity based, not on the narrow lenses of state, race or religion, but constructed on Africa’s belief in democracy, good governance and unity as the most viable option to mediate, reconcile and accommodate our individual and collective interests.”
Coming from a politician, these words may read like slogans. But the uniform refusal of the AU to endorse Western intervention tells another story. Continue reading
Looking Beyond Spring for the Season: Common and Uncommon Grounds
This is the second part in a series of five posts from Siba Grovogui, Professor of International Relations and Political Theory at John Hopkins University. The first part is here. The series will consider the character and dimensions of the tension between the African Union and ‘the West’ over interventions in Africa. Responsibility for visuals adheres solely to Pablo K.
As I indicated in my last post, the decision by the African Union (or AU) to not endorse the current military campaign in Libya has been mistaken by many observers and commentators alternatively as a sign of African leaders’ antipathy to political freedom and civil liberties; a reflexive hostility to former colonial powers, particularly France and Great Britain; a suspicion of the motives of the United States; and more. The related speculations have led to the equally mistaken conclusion that the African Union is out of step with the spirit of freedom sweeping across the Middle East and North Africa (or MENA). The absurdity of the claim is that the only entity that imposed any outline of solution agreeable to Gaddafi has been the African Union and this is that Gaddafi himself would not be part of any future leadership of the country. But the AU has insisted on an inclusive negotiated settlement. The purpose of this series of essays is not therefore to examine the meaning and implications of the absence of ‘Africa’ on the battlefield of Libya, but to point to the larger geopolitical implications of the intervention for international order, global democratic governance, and the promotion of democratic ideals and political pluralism in the region undergoing revolution and beyond.
To begin, it is not just ‘Africa’, ‘African indecision’, and ‘African non-Normativity’ that are at stake in the characterization of African actions or inactions. Much of what is construed as ‘lack’ or ‘absence’ in Africa is also intended to give sustenance to the idea of the indispensability of the West – composed on this occasion by France, Great Britain, the United States, and tangentially Canada – to the realization of the central ends of the MENA Spring. The myth of the centrality of the West to the imaginary of freedom everywhere is inscribed in the name given to the events under description. In the US at least, the Arab Spring evokes many other ‘Springs’ all located in the West (including the 1968 Prague Spring or the 1989 collapse of the Soviet Union and its satellite states). Likewise, ‘Jasmine’, the emblem of the Tunisian revolt has been advanced as evocative of the Ukrainian ‘Orange’ and other colour-coded European events. These allusions have justifications but they are seldom evoked comparatively to elucidate the originality and specificity of the MENA revolutions. In this latter regard, even the suggestion of an Arab Spring assumes that the majorities in the countries involved are Arab. This is not always the case in North Africa but Orientalism obliges!
The fact is that the ongoing revolutions in MENA are at once specific and universal in their own ways. Continue reading
The Politics of Austerity: Emergency Economics and Debtocracy
austerity |ôˈsteritē| noun – sternness or severity of manner or attitude
It was possible, therefore, to commit a sin without knowing that you committed it, without wanting to commit it, and without being able to avoid it. Sin was not necessarily something that you did: it might be something that happened to you.
– George Orwell, “Such, Such Were the Joys”
Why what have you thought of yourself?
Is it you then that thought yourself less?
Is it you that thought the President greater than you?
Or the rich better off than you? or the educated wiser than you?
I do not affirm that what you see beyond is futile, I do not advise that you stop,
I do not say leadings you thought great are not great,
But I say that none lead to greater than these lead to.
– Walt Whitman, “A Song for Occupations,” Leaves of Grass
The Politics of Austerity – Part I
This is the first in a series of posts that look at the political implications of the ongoing global economic crisis. I begin by examining the way that crisis is being used to attack the very idea of democracy through an assertion of the political imperatives of “the market” and the violation, bending and re-writing of the law by capitalist elites. I conclude by laying out how understanding the economic crisis in political terms shapes our ability to respond to it.
In the second post I’ll look at the ethos of austerity, which justifies the pain inflicted on largely innocent people, while suggesting that an affirmative democratic response to the economic crisis must begin with its own ethos, which I suggest should be an ethos of care for the world – which can provide orientation and inspiration for political struggles seeking to address the deeper causes of our current crisis. In the third post, I turn to the structures of the economy and of politics that define the current crisis, looking at the banking crisis, the bailouts, the politics of recovery/austerity and also reflecting of the structural imperatives of capitalism that led us to crisis. This, then, leads to the question of how to respond to the politics of austerity, and of what alternative actions are available to us, which is where the fourth and final post will pick up – with an affirmation of a caring ethos that supports a radically democratic economic vision.
Emergency Economics
In a previous post I briefly highlighted Bonnie Honig’s work, Emergency Politics, to examine the way that the ethical case for austerity is made; most basically, the existence of a supreme emergency, in this case economic, justifies actions that would normally be considered unacceptable. Honig’s work looks at how the appeal to emergency is used to reassert the exceptional political power of the sovereign over and against the law, with a focus on the reassertion of sovereignty witnessed over the past ten years in response to the threat of terrorist attack in the US and Europe.
Rather than accepting the necessarily intractable conflict between the power of the sovereign and the power of the law, Honig attempts to deflate this paradox by turning her attention to the always ongoing contestation that defines democratic politics, a contest over both the content of the law and the institutional embodiment of sovereign power. She suggests, then, that attending to the ambiguities of the “people”, who are both the democratic sovereign and a diffuse multitude, as well as the political element in the law – as new laws come into being through political action – enables us to avoid thinking about emergencies as moments of exception in which the rule of law is lost to the play of political power, while also acknowledging the limits of established law in moments of profound crisis. By undermining the exceptional nature of crises and emergencies Honig alters the challenge we face when circumstances force us to make choices or carry out actions we know are harmful and wrong by asking what we (democratic publics and citizens) can do to survive an emergency with our integrity in tact.
What do we need to do to ensure our continuity as selves and/or our survival as a democracy with integrity? Our survival depends very much on how we handle ourselves in the aftermath of a wrong. We will not recover from some kinds of tragic conflict. But when faced with such situations, we must act and we must inhabit the aftermath of the situation in ways that promote our survival as a democracy.
I continue to find this a useful way to understand our current economic crisis. Appeals to austerity depend upon the exceptional state created by crisis in order to justify the pain inflicted upon masses of people and the priority given to private interests (the markets, investors and bankers) over democratic publics. So, as democratically enacted laws must bow before the sovereign power threatened by exceptional attacks, so economic justice and democratic equality must bow before the commands of market forces, of economic inevitability, in this time of crisis.
The economic version of this argument is stronger still. While the space of political contestation that remains open when we accept the framing of emergency politics is limited, it does exist in the clashing of opposing sovereigns. The prospect of a substantive alternative to neoliberal economic ideology is dim, a light flickering weakly on antiquated appeals for a return to Keynesianism or watered down triangulations of the moderate-middle that sell off dreams of a just economy bit by bit – capitalist realism in action.
Honig awakens us to an important aspects of our current crisis: that “the market” is not in fact supremely sovereign, and the move to re-establish and further neoliberal policies and push through austerity measures requires an engagement in democratic politics – albeit one that undermines the notion of the public itself and seeks to use the power of the law to subvert democracy. Recognising the current crisis in these terms not only challenges us to consider how to survive our current troubles without giving up democratic virtues, it also reinvigorates and clarifies the political challenge we face. Emergency economics – with its assertion of debtocracy over democracy – is not an inevitable response to the crisis, it is a political one that we can, and should, fight against.
The Disorder Of Things 