Mark Blyth is the Eastman professor of political economy at Brown University and the author of Austerity: The History of a Dangerous Idea.
A recent article by him relates the speech he made to German Social Democrats on being awarded a prize in Germany for that book (which I admit I have not read). This, as he noted, presented him with a dilemma, because German Social Democrats have been as guilty as others of demanding austerity in Europe, and this, he thinks is the opposite of what they should have been doing.
As he noted in the acceptance speech for his prize:
What we have done over the past thirty years is to build a creditor's paradise of positive real interest rates, low inflation, open markets, beaten-down unions, and a retreating state – all policed by unelected economic officials in central banks and other unelected institutions that have only one target: to keep such a creditor's paradise going.
That's a remarkably accurate summary of the neoliberal experiment, its enforcement and, by default, the consequent sidelining of politics.
And as he added:
Today it is a profound irony that European social democrats worry deeply, as they should, about the investor protection clauses embedded in the proposed Transatlantic Investment Treaty with the US, and yet they demand enforcement of exactly the same creditor protections on their fellow Europeans without pausing for breath for the money they “lent” to them to bail out their own banking systems' errant lending decisions.
Something has gone badly wrong when social democracy thinks this is OK. It is not. Because it begs the fundamental question, “what are you for – if you are for this?” The German Social Democrats, for we are all the heirs of Rosa Luxemburg, today stand as the joint enforcers of a creditor's paradise. Is that who you really want to be? Modern European history has turned many times on the choices of the SPD. This is one of those moments.
And he was, thankfully, unambiguous in his message:
It's great that my book has helped remind you of the poverty of these ideas. But the point is to recover your voice, not just your historical memory. Your vote share isn't going down because you are not shadowing the CDU enough. Its going down because if all you do is that, why should anyone vote for you at all?
I hope that reading my book reminds the SPD of one thing: that the reason they exist is to do more than simply to enforce a creditor's paradise in Europe.
Substitute Labour for SPD and that speech could have been made here in the UK instead, and wholly appropriately.
It is not the left's job to enforce a creditor's paradise in Europe.
But when will the old social democratic parties take note?
Hat tip: Andrew Dickie
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Thank you so much Richard.
Having just finished reading Richard Brooks “The Great Tax Robbery” which was very powerful and enlightening, I was on the lookout for my next read and you have just brought it to me.
I thought that it would be useful to draw your attention to this analysis, published today, from MMT proponent, Professor Bill Mitchell:
‘Germany is not a model for Europe — it fails abroad and at home’
http://bilbo.economicoutlook.net/blog/?p=30317
I can’t help but wonder about there being another level, a very long term plan underpinning these apparently unreasonable and unsustainable policies.
Philip Mirowski identifies a tripartite neoliberal strategy. For example, in the ‘financialisation’ of climate change. Specifically, the initial short-term phase was/is to confuse the debate with spurious arguments and red herrings. The mid-term strategy is to get policies adopted, like Carbon markets, which are designed to fail, and ensure that fossil fuel and greenhouse gas emissions continue to rise. Both these phases buy time for the development of geo-engineering solutions which will be more likely to be accepted given the gravity of the ensuing climate situation.
A similar pattern can be constructed for the ultimate aim of the global elite vis a vis TTIP, TPP and TISA. In this argument, the EU and Eurozone are the equivalent of the mid-term strategy. The inbuilt contradictions were always likely to facilitate crisis allowing ‘Austerity’ to lower wages and increase the precariousness of ordinary people. As Mark Blyth says above:
‘Today it is a profound irony that European social democrats worry deeply, as they should, about the investor protection clauses embedded in the proposed Transatlantic Investment Treaty with the US, and yet they demand enforcement of exactly the same creditor protections on their fellow Europeans without pausing for breath for the money they “lent” to them to bail out their own banking systems’ errant lending decisions.’
In other words, the EU structures mirror and have prepared the populations of Europe to accept the trade deal that will encompass 40% of the global economy. TTIP along with TPP would comprise 60% of the global economy and recreate a bi-polar world between the Washington consensus and a China-Russia nexus.
I don’t think it requires any belief in conspiracy theory to think this possible
Although it does leave me worried about why the left cannot do this as well as the right
Me too…
That is why many put so much store into the stand the Syriza party in Greece are, apparently making. I say apparently because they appear to be retreating from the position they once held.
Austerity is junk economics and it doesn’t work. does Greece (and Italy and Spain) have to completely collapse before the EU gets the message?
The only thing I question here is the use of the word ‘experiment’. I don’t think this was an experiment it was a deliberate course of action!
Positive real interest rates?
Not according the FT’s weekly supplement, even before tax: to get positive real interest rates for savers you need gross nominal interest rates to be twice, or more, the rate of inflation. Germany has negative nominal interext rates.let alone real ones.
So right now it’s not working – but they’re trying their best to return to business as normal
Who are trying?
BoE rate 0.5%, target inflation rate 2%, real interest rate before tax -1.5%
Sure, it was even worse under Denis Healey with after-tax interest rates of -20%, but if anyone is trying to benefit creditors, they are failing horribly.
You really are time wasting