Borne of failure and fear, the EU moves toward political union not in strength, but in weakness. The latest proposed treaty for a "fiscal compact" continues this inglorious tradition, says Jason Walsh

And so, 25 European countries will now, we are told, sign a pact, the objective of which is to reinforce the euro by toughening and regularising budget rules. Sold as a step forward, this move in fact underscores just how politically incoherent Europe has become.

At once high-minded and a product of failure, the European Union had its genesis in the maelstrom of the Second World War. Devised as a means of politically and economically aligning the power blocs of France and Germany in the –  quite correct –  belief that they would never again go to war with one-another, plunging the rest of the continent into hell with them, if they shared a common interest. 

European Coal and Steel Community founding father Jean Monnet was remarkably clear about his designs for Europe: political union. Those who followed, however, have been less open.

In fact, the seeds of European Union disregard for the masses we see being played out today are a direct result of the EU's gradualist approach. Instead of taking the bull by the horns and straightforwardly arguing for political union, successive generations of EU leaders have balked at the, admittedly Sisyphean, task of uniting European nations and instead trod a piecemeal path, fiddling here, meddling there and all the while refusing to admit that the ultimate logic of going beyond a mere trade bloc is political union. 

And so, Europe lurches forward, if you can call it that, not as a united social entity or political demos, but driven by the fear and failure of the various national political elites. The latest proposed treaty, or "fiscal compact" if you prefer, ties 25 supposedly sovereign EU nations together under German-led anti-growth economic policy in the name of safeguarding the future of euro and with it, in the darkest and most apocalyptic visions, that of the entire EU.

To some small degree it has already succeeded: markets have rallied in response to the announcement. But in the longer term this plan will not work.

German-inspired "fiscal discipline" is not the only way to run an economy, nor is it the necessarily the right way to run one. For instance, Greece's spending cuts have worsened the country's debt crisis, not alleviated it.

There is, and has been, much that is good in European co-operation, even integration, but this madness must stop. Greece is being immiserated, crushed underfoot by Franco-German diktat that cares only about the country's (entirely imaginary) ability to repay its debts. And so, more money will be thrown at Greece, though it will slide through the country without so much as touching the ground, making its way to Greece's creditors while unemployment and poverty will continue to grow.

Ireland, Italy, Portugal and Spain are all also getting a raw deal, though none quite as egregious as that foisted in Greece, and now the rest of the EU, with the exception of the United Kingdom and Czech Republic, have signed this mutual suicide pact that will do nothing but depress consumer demand and, with it, the wider economy. 

No country being forced to implement swingeing cuts will ever be able to emulate Germany's enviable export-driven economy even if they desired to do so –  and, in truth, few seem so inclined anyway. Germany too will suffer, with the European market for its goods going into decline. Next to the absence of workable industrial policy and the ability to make strategic investment in industry, talk of stimulating the small and medium enterprise and tackling youth unemployment melts into so much blather. What we will get is a longterm slump.

When the warnings start about the growth of far-right and populist movements, and they will surely come soon, the European elites will cast around looking for scapegoats before finding one in the supposedly backward, nationalist and selfish European publics. But they will have no-one to blame but themselves.

Image by Chesi. CC licenced. 

Kodak's filing for bankruptcy protection should give us pause for thought when it comes to our brave, new online world, says Jason Walsh.

Peering into the metaphorical crystal ball for 2012 – in reality looking back over the trends of the last few years – one striking phenomenon is the increasingly rapid rate at which all we considered solid has not so much melted into air, as been shredded into tiny pieces by the behemoth that is the internet.

Speaking recently to Roy Greenslade, former Daily Mirror editor and now professor of journalism, for a forthcoming news story, I was struck by his pessimism. Greenslade says newspapers' business models are finished, wrought low by an internet culture that has rendered them a historical curiosity. 

Clearly I am not happy about this. True, I am not a disinterested observer of the decline of the press, but there is more going on here than newspapers failing to make a profit on the web. The internet, or rather how we use the internet, has blown a hole in more than mere newspapers. 

Eastman Kodak, the company that brought photography to the masses, filed for bankruptcy protection on January 19, finding its lunch had been thoroughly eaten by the digital photography it had invented and consequent online photo sharing that sees fewer photographs printed. The loss of jobs is certainy lamentable, but the issue at stake is not the profitability of any one particular business. Bookshops, the music industry, film… almost all forms of cultural endeavour are under enormous pressure from people who genuinely seem to think they should be able to consume everything they want at no cost, something that represents a distinctive break from the industrial age.

Speaking for myself, conservatism, even of a small-c variety, does not come easily. Progress – social, economic and, eventually, industrial – has been the watchword of human development for as long as we have existed. That the speed of technological development has increased to a blistering pace is no reason to reject it.  

Similarly, traditions need not be thoughtlessly defended simply because they exist. Tradition builds over time for a reason and its overthrow can be a refreshing and vital experience. And yet, it is difficult to escape the feeling that our brave new world is more random destruction than creative destruction.

I cannot find it in myself to mount an argument for preserving things as they are simply because I happen to approve of some or other aspect of them, but there is nonetheless a case to be made for restating the essential reasons why we do things in the first place. It is lamentable that our public sphere is so shrunken that incredibly vague collective activity, such as watching the same television programmes or buying books in a shop, count as participation in society, but we will miss these things when they are gone.

Those who argue that the music industry, bookshops, newspapers and the rest have outlived their usefulness may have a point, but it should not be forgotten that these people are making an ideological argument. That the ideology is inchoate and often heavily disguised does not mean that it is not present. Underlying it all is a disregard for production and, ultimately, labour. This need not be so.  

The recent revelation that production of Apple's iPhone could be undertaken in the United States for a mere $65 more in costs hints at what has gone wrong. It is an item of faith that Western countries cannot compete with China in manufacturing and that the decline of industrial production is a somehow naturally occurring social and economic phenomenon. In truth, we didn't need the example of Apple to know this is untrue: Germany already gave the lie to that particular ahistorical assertion.

But, despite an economic catastrophe intrinsically linked to the fetishisation of immaterial financial services, we remain under the spell of the idea of a "post-industrial society". Since the events of 2008 plenty of people have belatedly popped-up to tell us that, correctly as it happens, that an economy cannot function solely on the basis of financial services, but the internet ideology that sees goods, be they cultural, such as music or news, or material, like iPhones, merely as preexisting items to which we "add value" remains the dominant idea in our culture. This is why so many of us think we can have it all for free: we have no real understanding of just how things are made in the first place.

We get the innovation we deserve. Technology is as much reliant on social forces as it is a driver of them. Make no mistake: that we get Twitter and Facebook, but not missions to Mars is a matter of choice. There were a mere fifty-four years between the first powered human flight and the launch of Sputnik, but it seems that in the network age our horizons have significantly lowered.

Image: Curtiss SB2C "Helldiver" production line in 1943. Via Ryan Crierie. CC licenced. 

The austerity orthodoxy is working all too well when it comes to driving down living standards, says Simon McGarr, and European leaders need to stop inducing economic depression.

Remember when Ireland nearly went bust because we couldn’t afford to pay the interest on the loans we were being offered? You remember it happened because the entities who loan money are run by, basically, sociopathic lemmings and they suddenly realised that we’d promised to cough up enough money to pay off the loans of any banks that went bust. (Well, the then government had promised it on our behalf, but apparently it’s one of those one-way decisions you can’t change once you’ve done it, like drunkenly texting your boss what you think of them in the small hours.)

Anyway, these sociopath lemmings all realised that if that bank collapse actually happened (and they collectively suddenly thought that it would) Ireland wouldn’t actually be good for the cash. That meant that the country would go officially bust – or "default" – not paying its debts as they fall due. All of which takes us to the 2010 bailout, which was basically just us turning to the last set of people who’d give us money and dropping to our knees, wailing “Please save us!”

Ironically, they had to save us, because their banks were the ones who’d loaned our banks all the money they couldn’t pay back: if we sank, their banks would sink with us. It is possible that, if we had a better set of representatives, we might have made something of that fact, but it’s hard to negotiate from a position of strength when your negotiating team metaphorically can’t see for weeping and periodically break off to scream at invisible enemies. And are on their knees.

Still, here we are now. But where is this exactly? Well, we’re in a state which is pursuing a policy of internal devaluation. Yes, you know what that is. You told me you did. I believe you. But you might meet someone who hasn’t entirely got their heads around it yet. What harm if we just run through the basics we’ll be effortlessly conveying in a superior tone to our less informed fellow-citizen?

Let’s start with a definition of internal devaluation:

Internal Devaluation – where a country seeks to regain competitiveness through lowering wage costs and increasing productivity and not reducing value of exchange rate. (From economicshelp.org)

Normally, you devalue by decreeing suddenly that your currency is now worth less against all other currencies. Outsiders can suddenly afford more of the stuff you sell, so you get a bit of a boost.

But Ireland can’t decree that the euro is now worth less. So, the alternative is to force everyone in the country to just charge less – for everything: lower wages, less fees, lower prices – the works.

The thing is, our government can’t actually decree that the private companies of Ireland make their stuff cheaper. And they can’t make private workers agree to be paid less.

So, they’ve been doing what they can to depress what they can reach: whipping up media attacks on the people whose incomes they do control – public workers, people subsisting on social welfare and so on – and then cutting the money going to them.

Of course, this makes these people’s lives very difficult, (Irish suicides are up 13 percent since the crisis began, according to the respected medical journal the Lancet) but the government hoped-for result is to reduce domestic demand enough that price and wage deflation will be forced into the private sector.

Regrettably, deflation is seen as the worst possible thing that can happen to a country. Even more regrettably, the experience of Latvia suggests that trying to devalue your own economy through an induced depression is both socially devastating and economically wrongheaded. The Centre for Economic and Policy Research reported that despite a fall in national production in excess of the US Great Depression of the 1930s, Latvia had only managed to achieve a fall in its effective exchange rate of 5.8 percent from peak. That was with 22 percent unemployment. Ireland has only managed to achieve 14 percent unemployment so far.

Shotgun-wedded to this austerity dream, the new government has brought in a new cycle of measures to try to force private sector labour costs down. They even introduced an ‘internship’ scheme where social welfare recipients are supplied for free to employers for 6 months at a time for training in skills such as stacking shelves in Tescos. JobBridge, as it is called, is, in effect if not by design, a method of forcing wages in the private sector down by introducing an alternative subsidised workforce into the labour market.

The orthodoxy of austerity states that Latvia and Ireland will reap the benefits of a collapsing economy and society. And, since the now infamous summit of the damned, all the lucky citizens of Europe can look forward to joining us. Historically, removing political choices by attempting to bake one set of orthodoxies into political structures has not resulted in the perpetual success of those orthodoxies. Instead people have had a tendency to decide they’ll just abandon the compromised structures.

European leaders should worry about the consequences of failure. But they should fear the consequences of their success.

Britain standing outside Europe is a failure for the EU more than it is for Britain, says Jason Walsh.

The British government has undoubtedly taken a tentative step away from the EU, but in doing so it has accidentally stood up for democracy – not that you'd know this from reading the papers or listening to frustrated European politicians. The European press, and the liberal side of the British press for that matter, has been quick to slap down British prime minister David Cameron. OK, the Independent's front page splash 'Europe leaves Britain' was pretty funny, but is it really true? 

Labour party politician Lord Mandelson, no stranger to technocracy, complained that Mr Cameron chose to buy off his "party critics by endorsing the necessary integration but without the United Kingdom having a seat at the table." Mr Mandelson is quite correct about this, but his understandable focus on how Europe will now treat Britain misses the bigger picture.

Let's look at the facts: opposition to the direction the EU has been heading in is not the preserve of hard-right eurosceptics in the British Conservative party. France and the Netherlands rejected the proposed EU constitution in 2004 – right in the middle of the eurozone's good times. Next up, Ireland vetoed the Lisbon treaty in a 2008 referendum, only to pass it a year later when the electorate was frogmarched back to the polls.

Does this indicate a seething, swivel-eyed anti-European sentiment? Not at all. What it does indicate, however, is a legitimate concern that the EU is paying no attention to what the people want.

Growing anti-German sentiment is not exactly hard to see – and it's not without basis. Granted, blather about "Fourth Reichs" is not only deeply unhelpful, it is also entirely wrong. In the post-war era Germany became a master of subordinating its sovereignty to international institutions in order to further its national economic interests. The end result of the current process isn't the resurgent Germany that lives in the fevered dreams of Tory-voting retired colonels in the Home Counties (or at least in lefties' imaginations of such people), so much as it is as a distinctive new EU order. This on its own is no bad thing. A new, closer EU could easily be argued for, but only if it is sufficiently democratic and there is no sign that this is on the cards. Rather we are witnessing the formalisation of the subordination of national interests to German, and to a lesser degree French, business interests.

Some on the left have had kind words to say about German capitalism versus Anglo-American capitalism and it is certainly true that German industry is a marvel. Nonetheless, such a blasé zero-sum comparison ignores the fact that Germany has suppressed wages in the past decade and supposes that all German workers are employed by the likes of BASF and BMW, ignoring the likes of Lidl and Aldi. Moreover, anyone who thinks the imposition of a "German model" means Greek industrial capacity will boom is sorely mistaken.

What we are going to get, assuming it actually happens, is quite the opposite. What last week's summit proposed was that sovereign governments of the European Union should submit their finances and policies for approval before a panel of unelected bureaucrats. This is no more a strategy for industrial and economic growth than it is a flowering of democracy.

The accidental politician

James Heartfield, researcher at London's Queen Mary University, makes an excellent point when he says that Europe's key failing, exposed by last week's summit, is that it is anti-political in nature.

"Overall it shows that Europe can't do politics because they've reduced all politics to questions of procedure," he said.

In this the EU reflects many contemporary trends. Consider some recent bugbears, many of which I have aired here in PressEurop: the financialisation of the economy, the shallowness of banker-bashing, continual avoidance of public votes, to the Occupy movement being obsessed with process at the expense of politics. A diverse range of complaints, to be sure, but the underlying issue in all of them is a move away from political confrontation toward sub-issues and questions of procedure. 

Politics is hard. It amounts to an argument and often you lose. But that is no reason to give up and try to bypass it with technical procedures. In rejecting this, even if his reasons for doing so were questionable, Mr Cameron has struck a blow for politics.

Desperate to keep its single biggest trading partner on the euro train, the Irish government has said it will make a major diplomatic effort to bring Britain back to the EU table. But Ireland isn't exactly playing a democratic role in this affair. The country's budgets are now set within parameters set down by the EU-ECB-IMF troika and the country's independence has been reduced to trying to hold on to its low rate of corporation tax, which has become a political third rail in the absence of a real industrial policy. Moreover, despite a 1987 Irish Supreme Court decison saying any constitutional changes must be put to a referendum, the Irish government will do anything it can to avoid having to go the polls.

Just prior to the summit, New York based economic commentator Doug Henwood, author of "After the New Economy", stuck an interesting note, telling me the EU would do nothing to resolve the crisis in the eurozone. 

"All these summits are empty showmanship. As they end, they just recycle the previous press release. No one wants to admit that Greece and other debtors can't pay, and some kind of debt restructuring is necessary as part of a long-term recovery and growth strategy. But as long as the German sadomonetarists are in charge, that's not going to happen," he said. 

Strong words, but not wrong. Since then we have seen precisely what Mr Henwood predicted occur.

Tory truculence has precipitated a crisis for the EU that should not simply be dismissed as Britain losing out. What is really interesting is that this latest round of EU negotiations, no different in form to any that went before, was the straw that finally broke Cameron's back. One doesn't have to be a fan of Mr Cameron or his party to see that a return to national governments making decisions brings power closer to the people.

Image by UK government's Department of Business, Innovation and Skills. CC licenced. 

We need to take the role of active citizenship more seriously, argues philosopher Stephen Rainey.

Being a citizen in ancient Greece meant taking part in matters of the city. This meant proposing, debating, opposing, supporting measures or initiatives for the good of the state. If you chose to not be an citizen in this full-blooded sense, you were considered a kind of pariah. One antonym for 'citizen' was barbarian.

Another antonym for citizen was ‘idiotes.’ If you were not an active citizen, you were an idiot. Idiots were people too caught up in their own private affairs to take stock of or contribute to the public life that facilitated that very inaction.

This idea of the private and public realms survived the enlightenment and became a keystone in the idea of how a citizen ought to contribute to society. Immanuel Kant described the distinction like this: Privately we must obey law, but always be ready publicly to challenge it. This way of putting things can seem odd to the contemporary eye.

Generally, it's thought now that privacy involves being master of our own domain – a region of privileged access where we can do, make, say, think what we like. It's something we can protect with appeal to law if we feel it necessary.

The public realm is where we need to obey. It's out there. That's the realm where my ends and yours can clash. We appeal to laws and social norms to anticipate potential problems. We obey in the public realm so that friction is avoided.

Where's the questioning role of the citizen in this tableau? Privately we expect entitlement to hold opinion. Publicly we expect external powers to foreclose on interpersonal clashes. We can think what we like, but are wise to say nothing.

Greco-Roman Wrestling

Not being an idiot in ancient Greece was underwritten by an interpersonal phenomenon. People were physically closer to each other in space, and in terms of social make-up. Getting involved in such a context remains eminently possible.

We now don't have anything like an Athenian democracy. For one thing, we don't keep slaves to exclude. Women are not officially politically subjugated. Our cities, states and constituencies far out-measure anything Athenian. The interpersonal basis of our lot is strained from the beginning. But, in fact, this isn't the real issue.

Europeans think they carry with them a legacy of Greek civilisation in democracy. We're awfully proud of it. Even those who fled to the New World were swift to erect Grecian-looking buildings. Despite that, the democracy we enjoy (to a greater or lesser extent) is Roman democracy.

At the centre of the Greek democratic ideal was the idea of debate. Endless, rarefied debate, usually related to a complex and deeply textured comprehension of 'the good life'. At the centre of Roman democracy is the fasces. The Greek ideal is semantic; the Roman, syntax.

In this contrast we can see why the Kantian sentence could look backwards to us. Kant espoused an enlightenment ideal of Greek reason in public life. The public sphere was the arena for disagreement. For us, that's where control is needed. It's Greece versus Rome, and Rome rules.

A very public privacy

Recently, with the advent of overt market interventions destabilising and removing democratic régimes in Europe we hear national sovereignty is at stake. In the increasingly security-obsessed nations we live in, we feel our privacy is under attack. Personal sovereignty is eroded as well as national. But the problem could be seen the other way around.

The public sphere that does exist for us is eminently Roman. It is where challenge is precluded. But personal sovereignty is coming to dominate the public sphere. We think 'everyone should be allowed to have their own opinion.' But for us the private is free and the public is closed to debate.

Once an opinion is expressed, it is treated as protected. Witness how opposing a view triggers discussion about the ethics of causing offence, not the soundness of that view. As this idea of the private realm encroaches on the public we get instead of argument, unquestionable expressions of taste. We see instead of journalism, gossip. Instead of politics, patronisation.

As long as we presume we have the ancient Greek ideal of democracy, but exist in the Roman, this dissonance will go on. What we need to counter these unsettling tendencies is a swing to the Greek pole of privacy, expressed by Kant. Privately we do what we must, but publicly we take a position, argue, oppose, propose and get involved in the public sphere that facilitates the existence we have.

We need to worry less about protecting our privacy, more about liberating our publicity. Part of this means not waiting for a mechanism to be put in place. It means setting sail fully knowing leaks will spring and have to be plugged at sea. The stake is a revitalisation of the public sphere on Enlightenment terms, and a rebuff of Roman democracy.

If only we weren't such idiots.

Image by Anna Fox. CC licenced.

As Europe’s financial and economic catastrophe morphs into a full-scale constitutional crisis, where is leadership to be found, asks Ben Tonra. 

Two landmark interventions; that of the German philosopher Jurgen Habermas and that of Polish Foreign Minister Radosław Sikorski offer some striking contrasts. Both identify political weakness in Berlin as a major contributory factor but they appear to differ quite profoundly on the appropriate prescription. 

Sikorski’s dramatic call on Germany to shoulder its political and economic responsibilities for Europe’s rescue was framed in an oddly traditional way. Further economic integration – up to and including a fiscal union – is clearly on the table, but Sikorski was working within a firmly intergovernmental model. This would provide for immeasurably tighter monitoring and supervision of national budgets through the European Council and Council of EU Finance Ministers and/or the Eurogroup of ministers. This would be offered in exchange for eurozone burden sharing of national debt and borrowing. Sikorski’s essential critique of the German government was that it had offered no clear map as to how to achieve this, either through existing treaty provisions or proposals for treaty change. Moreover, he seemed to suggest that the scale and pace of the crisis’ development did not lend itself to the unsophisticated game of ‘chicken’ being played by Germany vis-á-vis both markets and other EU member states. The fact that such a call for assertive German leadership was coming from a senior Polish government minister, lent an obvious frisson to the argument.

By contrast, the critique of Jurgen Habermas was that the failure of German leadership rested in that government’s unwillingness to grasp Europe’s urgent need for democracy and accountability. In a useful note, the Centre for European Reform had styled this as the triumph of de Gaulle over Monnet: a Europe des patries rather than a Europe tout court. The emergence of the so-called Frankfurt Group is symptomatic of this shift, being an economic directoire in all but name. For Habermas, however, the danger is much greater. European integration has already moved far beyond anything de Gaulle might have considered and the democratic moorings of the entire European project are coming loose. For Habermas, the European Council and eurozone finance ministers are, in effect, walking away from their essential responsibilities and subcontracting decision making either to markets or to committees of technocrats in thrall to markets. For him, essential political accountability and responsibility is being lost.

Decsion time in Europe

Europe now faces choices whose significance is at least on a par with those taken in the aftermath of the Second World War. Basic social contracts within member states are under extreme pressure and the very foundations of socio-economic policy making are being recast.  This cannot be accommodated in democratic societies without the means by which such decisions are validated and held accountable. If national budgetary decision-making is to be placed within a strong collective European framework, then that framework has also to be made legitimate and accountable. The European Council (and its associated thematic councils), is not fit for that purpose; either in principle or in practice.

The principled arguments surrounding the democratic weaknesses of the European Council are well rehearsed and Habermas pulls no punches in talking about an effective coup d’etat within the European institutions. For those, however, who view the crisis as being so acute as to make principles a luxury we can ill afford, note should also be taken of the Council’s practical weaknesses. Any proposed model of eurozone economic governance has to have both capacity and credibility. The European Council has shown itself to have neither. Over the last few months, its capacity to react effectively to market challenges has been widely, if not universally, denounced. The nature of its decision-making and the political realities which rest behind the need for consensus fatally undermine its capacity to act and, as we have seen in recent months, have contributed substantively to the contagion now gripping the markets. Nor is this simply a function of lacking the requisite tools. The Council was incapable of even implementing its own rules within the Stability and Growth Pact – most notably giving a ‘pass’ to Germany and France when they broke its terms. The Council has thus little or no credibility as forum within which national governments – and, most especially, the most powerful national governments can be held to account.

With even the scourge of the Lisbon treaty, Declan Ganley, calling for a fully federal Europe perhaps the normal laws of political gravity no longer apply. It is certainly true to say, however, that if European governments elect to proceed on a course which creates a fiscal union in support of the single currency, their choices may well have to reflect the realities of international markets but they must also respect the demands of democratic accountability.

Image by ines saraiva. CC licenced. 

Want to escape technocracy? Start listening to generalist thinkers, not just financiers and economists, says philosopher Stephen Rainey.

Recently, as it is hard to ignore, economic matters have come to dominate the headlines in unprecedented ways, and in doing so have come to preoccupy the minds of citizens everywhere. The facts of asset leveraging, debt and the increasing attention paid to credit entitlement are etched in the current zeitgeist and are set to make for an increasingly multi-polar world.

Certainly, this means a shift away from the 'Western' and 'emerging market' assumptions that have hitherto been taken as read. For reasons not limited to simple self-interest, this must be acknowledged should any manner of stability be possible in the future. But why is it that transactions, apparently quite abstract and incomprehensible to most people, could suddenly have such a deep impact on the everyday lives of so many people? Truth is, we’ve all been prey to technocracy for some time, not just Greece and Italy, and will continue to do so until the value of generalist perspectives are taken seriously.

Two reorientations in recent capitalism

As recently as November 2011 in a BBC Radio Four documentary, Adair Turner, former head of the UK's Financial Services Authority was bemoaning "intellectual failures of understanding" among policymakers that he supposed had led to policy decisions being taken in ways that permitted problematic financial activity. Among politicians it had become a commonplace that financial services were somehow a natural next step in the evolution of capitalism, akin to the change to industrial from agrarian capitalism. This tacit assumption was coupled with – or perhaps caused – a change in perception of just what financial services was intended to do in the first place. 

In the same documentary Mohamed El Erian, of major bond market trading company PIMCO, noted how the "financial services industry" started to be referred to as the "financial industry." What might have begun as a shorthand, however, brought about a re-imagining of the purpose of the enterprise. What changed was that the connection between what financial services industries did and the real economies that they serviced broke down. 'Financial industry' took on an air of self-sufficiency – as if the endeavours of those in that industry created finance, rather than the more realistic but perhaps more humble aim of facilitating financial action by means of servicing a real economy. 

The combination of these views leads to a problematic outcome.

In supposing financial services to be a natural step in the evolution of capitalism, it is posited that there is an internal logic to capitalism that, in reaching a crucial stage of evolution, ought not to be stopped for fear of derailing capitalism itself. The principle of capitalism for many reasons is a highly prized achievement of human endeavour. Were it not for the mediation of capital in power and influence it would arguably be impossible to advance as a society beyond traditional structures reliant upon the individual magnetism of charismatic individuals, or authority as imparted by sainted bloodlines and so on. In this respect, capitalism is the great leveller. If Turner is right, then policymakers were feeling the weight of this as they framed policy concerning financial services. It is in such a context that we can see how easily policymaking could come to serve financial services.

The autonomy of financial services is implicit in the position El Erian outlines too, but it is even more strongly manifested in that the change of identity from financial services industry to financial industry obliterates the connection to the real economy that the financial services only really exist to augment.

Again, the connection to the noblest possibilities of capitalism in principle is worth mentioning in connection to this point. On the assumption that financial services were the next step in capitalism, there was formed a policy background that could serve these services. This was so to facilitate the proper unfolding of the logic of capitalism. This itself is predicated in the highest hopes for humanity (rather than malign intent) we can presume. But now, with the disconnection from the real economy that the financial services are meant to serve, the presumed autonomy of these services is suddenly turbo-charged. The newly christened financial industry is assumed to have an internal logic that it is imperative to allow to unfold unhindered, and this unfolding need have no connection to actual economies.

These 'actual economies', moreover are just those relations among real people, retailers, banks, civic authorities and so on, mediated by the institution of capital. In other words, owing to two problematic assumptions flagged by Turner and El Erian, the financial services industry came to be an autonomous sphere of activity, encouraged by policymaking to engage in self-sufficient action unrelated to the everyday comings and goings of human plans and interests. In the name of capitalism, it disconnected from the loci of capitalistic interactions. A peculiar and damaging contradiction indeed.

The consequences of this contradiction have been playing out in the social, political and private spheres since 2008. One need only scan the news media to get a flavour of the tragedy, confusion, anger, spite and vitriol that have flowed from it. What this suggests is that too much faith is currently placed in expertise. When experts make shoddy assumptions, what check is there on them? Laid out as above, the issue is stark and frankly baffling. How could this have been so? The solution must lie in a destablising mechanism somewhere within governance. One good place to start would be to arrest the reliance upon experts as the ordained high-priests of specialist wisdom. The value of generalists is worth investigating.

A view from outside the cocoon of finance might easily have spotted the worrying nature of the posit that capitalism has an internal logic whose unfolding must be facilitated even at the expense of relevance to real economies. It won’t be had from people whose knowledge is undeniably high-level and expert. By definition, these people know in great detail a vanishingly small area of a generally obscure field. Reality doesn’t bend to the abstractions of expertise.

People fear technocracy in the wake of Greece and Italy. It’s been there all along. It got us here.

Image by Alastair Rae. CC licenced. 

Banks acted stupidly, but the fashion for denigrating finance is going too far.

As the interlocking financial and political crises in the eurozone and Occupy movement continue to make headlines – and fill comment pages – around the world, more and more people are lining-up to criticise bankers. Credit where credit is due, banks bear responsibility for the global financial meltdown, but they should not shoulder it alone.

To argue that the economy is in turmoil solely because reckless bankers is to prefer morality to reality. What of the failures of industry? What of the absence of investment in productive activity? And of the various governments' abrogation of their roles in encouraging just such investment?

There is a world of difference between bashing bankers and formulating a systematic critique of political economy, let alone proposing a route out of the current global economic crisis. I myself, no economist, have long advocated major strategic investment in productive industry and complained of the lopsided growth of finance (and continue to do so), but complaining about high-finance is not going to make that investment appear out of thin air. 

A national economy cannot be sustained on the buying and selling of complex financial instruments, but that is not to say that finance is unnecessary. Finance serves to channel capital around and manage risk, capital that is supposed to provide the means for investment in the productive activity that we all want to see more of. That, in the much of West, profiting from this was allowed to become a surrogate for real economic activity, covering up for a longterm decline in productivity, is something that is still not being sufficiently addressed. 

Some curious arguments are beginning to emanate, including from the liberal-left. Quite apart from the rank class snobbery of referring to bankers as 'spivs' (a term only ever directed at working class people who have made money), we are now beginning to see the complete disconnection of politics from economics. Into the void steps morality. This should not be possible from a political movement that counts economists like Marx and Keynes (who didn't at all advocate the same things, incidentally) as its forebears, but the left's abandonment of political economy is now near-total. 

Beyond disgust with bankers' bonuses, availability of credit is the main bugbear, but such arguments often end-up in strange territory. The rising popularity of the likes of Max Keiser among some on the liberal-left illustrates a failure to actually understand not only economics, but what the man is saying. It is easy to see how rhetoric about "banksters" and calling JP Morgan "the biggest financial terrorist on Wall Street" strikes a chord, but it is more difficult to understand why no-one appears to have noticed that beneath this kind of populism lies a fundamentally conservative approach to economics: a return to having currencies based on gold supply. Known as the gold standard, any such act that would mean a lot less money would be out there in the economy.

The current spike in gold prices is a result of people worrying that debt cannot be paid-down by issuing more debt. That is true enough, at least in the absence of growth, but it is surprising that people ostensibly concerned about economic inequality think the solution is going to be found in making money even more scarce. Advocating for the gold standard is a valid position, but it's not a left or liberal one by any stretch of the imagination. In fact, it's the ultimate austerity package. Heretofore, restriction of the money supply, known as monetarism, was the preserve of the free-market right. To hear it echoed in the comment sections of liberal newspapers makes for some very strange bedfellows.

Many people's answer to the problem of sub-prime mortgages, the proximate cause of the financial crisis in 2008, appears to be that poor people shouldn't be allowed to own their own homes. The mistake of flooding the economy with cheap credit is clear enough, but this pump-priming was done in order to make-up for a real decline in capital investment in productive industry where consumer spending was supposed to be the key to spurring growth. In addition, the sub-prime problem had such serious consequences because the original lenders had re-sold the mortgages to major banks – this is a (failed) strategy of risk aversion, not one of casino-like gambling.

Even the argument that the daily banking operations of high street banks should be 'ringfenced' from high finance underscore a failure to really get to grips with what finance is, what purpose it serves and how it does it. Moreover, a return to capricious control of lending by local bank managers does not sound like a progressive move to me.

A recent activist move in the US saw thousands of people announce they planned to close their bank current and savings accounts and move to cooperatively run credit unions. On one level this is all well and good: credit unions are worthy ventures. But the move for a mass change was at best empty rhetoric. The problem is multi-faceted. For a start, operating a current account for a customer is often a loss-making venture for the bank, so by closing the accounts the activists were not, as they hoped, punishing the banks, but in fact helping them. Additionally, systemic risk increases because closing savings accounts amounts to a reduction in available capital, thus making them more, not less, dependent on volatile markets. At the same time it also lowers pressure to regulate banks because less of people's money is invested in them in the first place.

If that alone doesn't give the activists pause for thought, perhaps this will: credit unions in the US already have too much money (US$942,481,000,000 as of June 2011). Loan portfolios have shrunk as saving has increased, a trend that will massively increase if the move is significant (it's too early to tell how many people did close their accounts) and without income from loans… well, you can see the problem.

The critique of finance capital is that it has no sense of moral duty, simply chasing profits wherever they are to be found. This is true, but in this finance capital is really an outgrowth of industrial capital. The distinction between finance capital and industrial capital is real, but it is not moral and neither is unnecessary. 

All-in-all what we have is a sudden rush of concern about money, but very little understanding of how either it, or indeed the real economy, functions. If anyone wants to propose a truly new model for economic exchange that's well and good, but the onus is on them to explain it and argue for it. In the here and how, too many of us are trying to have it both ways.

Banking does need to be examined very closely, but what is needed right now is economic growth, not denunications of bankers.

Image by Alessandro Demetrio. CC licenced. 

Despite fears of technocratic rule, new models of collaboration could lead to a more pluralist Europe. 

The idea that Europe is experiencing a democracy deficit is becoming commonplace. 'Technocratic' rule, implemented due to emergency conditions in Greece and Italy is a hard to ignore symbol of what British Eurosceptics like Nigel Farage have been claiming as the inevitable outcome of European domination. First sovereignty is ceded, then democracy itself, they cry. 

A history of bridging difference

Between the revisions of the Treaty of Rome in the single European Act of 1987 and the Lisbon Treaty of 2009, there has been a concerted effort to shift policymaking in Europe from simple community ‘harmonisation’ in law to representative, pluralistic governance, respectful of difference.

Community harmonisation lawmaking seeks uniformity in law across the union in order to ameliorate trade and national-cultural differences, particularly in cases where national identity or culture cause (or are seen to cause) inequalities. Governance, in contrast, seeks to account for difference by taking into account plurality and seeking authentic, representative dialogues on a ‘thick’ basis.

No one denies the inevitable problems and challenges that will face any attempt to coordinate independent nations. Supranational authority will always jar with national authority. The European Union has the strong mechanism of subsidiarity, meaning national laws are required to interpret supranational directives. Supranational directives are written in self-consciously formal ways precisely to permit latitude in interpretation. The idea is to have a loose community of shared values, with the recognition of local variance. National identity and culture are important here in terms of policy as the principle of subsidiarity means that national self-determination must be respected, not dominated. While supra-national authority can make recommendations and even requirements for nations, it cannot actually enforce change at the national level, according to protocol 30 of the Treaty of Europe:

Any national Parliament or any chamber of a national Parliament may, within six weeks from the date of transmission of a draft European legislative act, send to the Presidents of the European Parliament, the Council and the Commission a reasoned opinion stating why it considers that the draft in question does not comply with the principle of subsidiarity. It will be for each national Parliament or each chamber of a national Parliament to consult, where appropriate, regional parliaments with legislative powers.

A political balancing act

While the EU project seeks a loose community of common values, it has two extreme positions to balance. On the one hand, there are the values. These are pretty much embodied in human rights declarations. These are the essential desideratum for being European. However, given subsidiarity and the desire to recognise national difference, the value régime has to be regulated in a laissez faire manner. The values have to be interpreted at the national level in order to become law. This is the balancing act of European governance, then: communitarianism based in shared values, with liberalism in regulation. It is state vs civil society perfectionism.

One mechanism the EU uses to make this balance is the so called Open Method of Coordination (OMC). OMC is intended as a ‘soft’, i.e. non-law-based, governance approach wherein community deliberations inform policy decisions nationally aimed at converging with policy goals set supra-nationally. In terms of Europe, EU ministers first agree on 'framework goals'. Second, member-states translate these guidelines into national and regional policies. Third, the ministers agree on benchmarks and indicators, to measure and compare best practice within the EU and worldwide. Finally, through evaluation and monitoring, member-states' performances are assessed – relative to each other and to their declared goals.

OMC ensures not only that loose coordination of approaches toward given goals is possible, but permits national popular opinion, mediated by national governmental dealings, to directly influence policy among other EU nations and at the superstate level. More than this, however, OMC can be deployed as a mechanism at smaller scales. Based upon some expressed solidarity of interest, a 'framework goal', horse-trading can be undertaken to hammer out the details. Given the basic notion of this give and take is an expressed mutual interest, however, the whole process has common good as its driving force.

The sort of Farage criticism of the EU has identity at its core. Regardless of who you are, you have needs that the state or that civil society can or ought to address. Using OMC as an approach to construct the means to address needs puts people first, and in a way that undercuts berkish nationalism.

Slow Europe, fast – and loose – critics 

The main problem with Europe is the speed at which it moves. It has a lot of research and ideas on governance and is certainly aware of the serious problems that attend supranational legitimacy. But the knee-jerk reaction to dissatisfaction with Europe tends to bring nationalism to the fore. That's as unrepresentative as blind, supra national forces. Present-day allegiances and identities are structured in ways that don't stop at borders. People identify with networks and ideas that don't necessarily resolve neatly even in the individual. A representative democratic solution will never be satisfactory if it clings to mythological ideas of nationalism.

OMC is one of the good ideas in European governance as it is deliberative and focusses on solidarities of interests. The consequence of such governance would be more legitimacy, but more variance in implementation. A common Europe by various means. the question is how fast institutions can move to accommodate this, or if the will exists to exploit these Made in Europe governance approaches in the interests of Europeans.

And of course it is the national governments who have the authority to implement OMC. Why wouldn't they do so? Likely outcomes of OMC are the dissipation of centralised executive power and the loss of consistency in policy-implementation. These aren't insubstantial worries, but likely outcomes from enacting the will of the population. It could be that the abnegation of democracy begins not in Brussels, but closer to home.

Image by Rupert Ganzer. CC licenced. 

In advance of an online debate, economist Brian M. Lucey asks what would happen if Ireland was forced out of the single currency?

With each passing week it becomes increasingly clear that under present arrangements the euro cannot continue. We have persistently seen political dithering of the worst kind, with the resulting policy vacuum being taken up by the European Central bank (ECB).

Although one can criticise the ECB for many of its activities (not least the bewildering refusal to contemplate the other side of the fence in relation to Anglo Irish Bank, the bank that toppled Ireland's economy) it is to its credit that it has at least stepped into the breach. 

However, of all of the European institutions it is probably the least democratic – as is the nature of independent central banks. Every ECB action, no matter how well-meaning, further undermines the democratic legitimacy of the euro. Trust in the ECB has declined and will continue to do so.  In any case, ECB intervention in bond markets has at best only a temporary effect, and it is ultimately up to governments, at both national and European level, to implement policies that will restore fiscal discipline. 

The action in recent weeks has focused on Italy. Previously, countries that have found themselves locked out of the financing markets have been small, and therefore their problems were sustainable, non-systemic and manageable. Not this time. Italy is simultaneously too big to fail and too big to save. Italian public debt is the third-largest, in absolute terms, in the world:  it has to refinance  €200 billion in the next year. Its GDP is the eighth largest in the world. And yet we have now seen that Italy is, in effect, locked out of the bond markets, at least for anything approaching sensible rates.

We also see this week that, despite there being no formal mechanism for doing so, it has been suggested by leading European officials and politicians that countries can exit the eurozone. It is highly probable that an exit by any country would lead to a cascade, resulting in the effective breakup of the euro. What then for Ireland?

Plans for all possibilities

The first thing that must be said is that hopefully the government has a plan. After all, governments should plan for all eventualities. Planning to deal with an eventuality is not the same as willing it to happen and failure to plan can be catastrophic. Sadly, history suggests a coherent, competent and analytically sound plan is not likely to be found in the county's department of finance.

Secondly, in the event of the euro breaking up, which may be as a result of the cascade outlined above or perhaps due to the German political system not being able to persuade itself or its constituents of the need to foot the bill, there will be significant winners and losers in Ireland. 

The first decision that would have been made by the government would be whether or not they would allow a freely-floating currency (which would almost certainly depreciate significantly and immediately), or to put in place some form of managed float. While depreciation would be attractive, in that it would be a boost to exports and therefore assist in putting the country back on a growth path, it would also result in imports becoming more expensive. A third of Irish imports come from the United Kingdom, and in all likelihood the new Irish pound would be weaker than sterling. It would also likely be weaker than the dollar, which given the country's extreme dependence on imported oil would result in significant increases in the price of petroleum based products.  

All of these would rise in price, bringing inflation and penalising both businesses and consumers. 

The country would also have to very quickly move to achieve a surplus instead of a primary deficit in government finances. This would be necessary in order to pay down the accumulated national debt. When you consider the pain the country is going through in order to reduce its deficit to three percent over four years it is hard to imagine the wrenching dislocation that would be required to achieve a primary surplus over the span of just a couple of years. And yet, that is precisely what would be required. 

Ireland would have to offer significantly higher rates on its debt to potential investors than is the case even now, not least because they would almost certainly be facing into a much more inflationary environment. Bond yields (see here and here for example) are in large part driven by fundamental economic factors.

Losing money

External euro-denominated liabilities would also create losers. External in this context means outside of Ireland. Mortgages, bank loans, any liabilities within Ireland would be converted to the new pound. It is the liabilities in euros to institutions based outside Ireland that would be messy. The most likely option would be that these would be denominated into the currency of the country where they are located. Thus a loan taken out in Germany would be converted into Deutschmarks, which would result in a very significant increase in these liabilities. 

Conversely for multinationals with money on deposit in Ireland, and this amounts to billions of euros, any hint that these would likely be converted into a weaker currency would result in their being withdrawn. This in turn would exacerbate the existing credit crunch. The only feasible solution would be harsh exchange controls and a degree of financial repression for a time – hardly something that will be popular with either voters or business.

Another possible area of concern is the country's banks' dependence on ECB funding, which although declining, remains high. Absent the ECB, the Central Bank of Ireland would have to step into the liquidity breach, further exacerbating inflationary fears. On the positive side it would be much easier to restructure the outstanding payments due on Anglo Irish Bank promissory notes.

It is debatable whether or not Ireland should have joined the euro. At the time I was in favour, more from the perspective ot political economy than pure economics. I felt at the time that on balance European politicians were more likely to behave in an economically sensible manner than Irish politicians, and that the requirement for fiscal discipline as part of a monetary union would be useful for Ireland.

Unfortunately this faith was misplaced on both sides.

Brian M. Lucey will be discussing “Planning for a post Euro Economy” in an online debate Wednesday November 15 at 11.30AM (12.30CET).  He blogs at BrianMLucey.wordpress.com and writes a fortnightly column for the Irish Examiner newspaper.

Image by MrB-MMX. CC licenced.

At least the eurocrisis means –  for once – the EU isn’t dull. Let’s make the most of this opportunity to start taking it seriously.

Having reported on the EU for quite a few years it is with some interest that I have been following the sudden explosion in coverage of matters European. Back in 2006, writing about breaches of EU directives on sewage processing and the Irish national standards agency's reluctance to accept European Technical Approval status for building products seemed not only unglamorous, but downright geeky. Even rather more interesting subjects, such as the conflicting signals the EU has sent out on the issue of privacy online, were hardly the stuff headlines are made of. Like much of what journalists report daily, these were small issues, infinitesimally small when set against the eurocrisis, so it's hardly surprising that my first ever EU-related page one lead was on finance and not whether dwellings in rural Ireland are processing faeces with appropriate regard to groundwater. 

Of course, the eurocrisis is the kind of excitement none of us would wish on anyone.

I do wonder though, should the EU and ECB manage to put all the banks (and national economies) back together again, if we will once again drift off into our euro-slumber, confining the EU to tales of straight bananas, features about how tales of straight bananas are lies and, of course, finance pieces that most of us mere mortals don't read and would struggle to understand at any rate.

Perhaps not though. Perhaps this crisis shaking the eurozone and the very EU itself is enough to make us fundamentally reassess our relationship with Europe. Obviously this is already happening in politics. In Britain, as elsewhere in Europe, the eurosceptic right is getting louder. Less well reported is the fact that the equally eurosceptic left is getting bolder too, certainly in Ireland where I am based. But just as there is more to politics than parliaments, there is more to Europe than the pronouncements of politicians.

As someone who considers himself a eurocritic at the least – I'm in favour of freedom of movement, but less enamoured of unelected commissioners handing down edicts from on-high – I think the only potentially positive thing that can come out of the eurocrisis is that we might read and hear about the EU's machinations a bit more. At times it can be hard to avoid the sneaking suspicion that the EU is tedious by design, that boring electorates (and journalists) into submission is a tactical measure undertaken by EU elites who float above us without much in the way of democratic legitimacy. For now, though, the EU is anything but boring, so those on all sides of the debate would do well to seize the day and get talking.

Yesterday the Guardian's Comment is Free section published excerpts from a new book by Jürgen Habermas. The German philosopher is worried about a democratic deficit in the new, all-singing, all-dancing (but no-voting) technocratic EU. Tempting as it is to lay at least some of the blame for this at the door of thinkers like Mr Habermas who have long argued for tighter European integration, it is at least heartening that voices whose criticism of Europe does not come draped in nostalgia are beginning to be heard.  

Nevertheless, the truth is eurosceptics have been right about one thing all along: love it or loathe it, the EU has always been important, creating and amending as it does so much of national law in member states, setting basic standards for goods and services and, most importantly of all, issuing a currency for seventeen of those states.

Speaking for myself, I'm unlikely to ever become a euro cheerleader. I see too much bureaucracy and disregard – contempt even – for the will of the people, and I have yet to be convinced there is such a thing as a European public. If there is to ever be such a thing, if indeed it would be desirable, we all need to start taking the EU more seriously. Even when it is boring.

Image by Karen Eliot. CC licenced. 

Vice-president of the UN Human Rights Council Advisory Committee, Jean Ziegler has just published Destruction massive. Géopolitique de la faim (“Mass Destruction: the Geopolitics of Hunger” published in France by Seuil). In this essay, the Swiss socialogist recounts his experience as the  United Nations Special Rapporteur on the Right to Food from 2000 to 2008, and analyses the reasons for the current global death toll from malnutrition, which kills 36 million people every year.

Why are people still dying of hunger?

There are five major reasons: first and foremost, financial speculation in in raw materials for food, which have resulted in soaring prices in recent years and made it almost impossible for aid agencies like the World Food Programme (WFP) to fulfill the needs of malnourished populations. Then we have bio-fuels, which have diverted farmland and crops from food production. Thirdly, there is the problem of external debt, which has a stranglehold over the poorest countries and prevents them from investing in subsistence agriculture. Then there is the dumping of agricultural surpluses, which has resulted in the sale of fruit and poultry from countries like France, Greece, Portugal and Germany etc. on markets in places like Dakar and Cotonou, at a third or half the cost of locally produced African products. Finally, there is the monopolisation of land by investment funds and major multinationals, who drive out local farmers to cultivate products that are exclusively destined for western markets.

Is the EU responsible?

It is 100% responsible for agricultural dumping, which is actively supported by France. In 2005, on the occasion of WTO talks in Hong Kong, the Secretary General of the WTO, Pascal Lamy, proposed to progressively eliminate export subsidies over a five-year period. And this proposal met with vigorous opposition from France, which is in favour of sustaining export subsidies, notably because of the political influence of agricultural chambers of commerce. And so the dumping has continued in Africa, which is under populated even though it has an extraordinary peasant class… but this class has been decimated because farmers are unable to sell their produce.

Has the EU played a role in the drive to combat hunger worldwide?

The current European Commission is made up of fully fledged mercenaries in the service of monster corporations in the agri-food business. The power of lobbies in Brussels is incredible. If they wanted to do it they could put an end to agricultural dumping tomorrow.

Brussels is also unspeakably hypocritical: while Europe presents itself as a supporter of global justice and development, the 87 countries of the ACP [the African, Carribean and Pacific Group of states, most of which are former European colonies] are maintained in unacceptably inferior conditions.

The fact that we oblige them to accept investment deals that demand equal terms for local companies and western multinationals beggars belief.

The European Commission says to these countries: "Are you contesting our policy of agricultural and export subsidies? Okay, we are going to reconsider our development aid operations." It is worse than colonialism: it is external facism. Human rights stop at the borders of Europe; thereafter we are faced with a cannibal order that privileges violence and the law of the jungle.

What are the causes of the current crisis in Europe?

The crisis has been caused by enormous debts, that have accumulated in the course of two successive bank bailouts. First in 2008 and now in 2011, governments have recapitalised banks with public money that they do not have, and so they have been obliged to take out loans and cut their budgets. As a result, the purchasing power of workers has declined, and so too has the quality of social services. And the very same states are incapable of imposing risk management standards on their banks! Nothing has changed in this field since 2008.

What are the solutions?

Two things will have to be done: first the banks will have to be dismantled, so that there is a clear separation between "investment" and "deposit" branches with a ban on a individual institutions being involved in both sectors. Then the banks will have to be nationalised. This is not an ideological issue – after all, De Gaulle nationalised banking in the postwar years. Today, the inability of western political leaders to impose decisions and rulings on banking oligarchies in the name of the public good is unbelievable.

What do you think of the “indignados” movment?

We are close to a rebellion of consciousness: on Saturday [15 October], the “indignados” all over the world are going to demonstrate. At the same time it is hard to say where all of this is leading. Revolutionary processes in history are always highly mysterious, and we are unable to anticipate them. As the Spanish poet Antonio Machado put it, "Caminante no hay camino, se hace camino al andar." Collective consciousness knows what it does not want: we do not want a world ruled by a cannibal order, where human beings are directly responsible for the massacre through starvation of 35 million people a year. And we should not be afraid of not being able to make an impact: democracy and mulitlateral diplomacy are not powerless.

Human rights, press freedom, the mobilisation of the people, elections, general strikes… We have weapons that we can use to fight the mechanisms of hunger. The markets are subject ot the rule of law: it is possible to introduce an outright ban on speculation in foodstuffs overnight. We have the power to impose prohibitive taxes on imported bio-ethanol. European agriculture ministers can demand an end to agricultural dumping. The finance ministers in countries that are members of the IMF could effectively vote to write off loans to the most indebted countries.

photo and interview by Gian Paolo Accardo