The Hamiltonian Moment

In January 1790 Alexander Hamilton presented the First Report on Public Credit to the House of Representatives. His plan called for the federal government to assume the war debts of the states and to meet them by issuing a 4% bond. The plan succeeded and so proper national politics was born, soon represented by the opposition between Federalists and Democratic-Republicans. It had taken from 1783 for debt and a new politics to find their definitive point of equilibrium (not necessarily the optimal one); from the crash of 2008 to December 2011 may be a shorter period of time, but the deal proposed by Merkel and Sarkozy creates the ground for a real European politics in the way Hamilton's plan created the ground on which American politics were conducted for decades.

There are many different and important aspects to this initiative. The technical details will no doubt be haggled over for months, the role of the ECB in issuing bonds is still not clear, the mechanisms for integrating the states' budgets have nowhere been specified, and all of this detail will deeply matter. But if we grant that the parallel to the founding of the United States has some merit to it, then it is probable that this initiative will open a period of political contestation, not close it. The debate will not be between Federalists and Democratic-Republicans, though there will be parallels. As Philip Coggan argues, in his new book Paper Promises, the politics of the next period will pitch debtors against creditors. I suspect, at least in Europe, that we are beginning to see the creation of the political institutions in which such a politics will be played out. When, rather than if, the sentiments that animate the occupy movement break out of the constraints of national politics, they will find expression at the European level, because at that level a resolution/default can be credibly imposed on creditors. How creditors will politically express themselves is not clear. Just where this will leave Britain, which has nailed its future to the City of London and financial services, is anybody's guess. This is where our current circumstance starts to get even more interesting.

Brief encounter

I was traveling up to Cambridge last Wednesday and as I got on the train I noticed the woman on the seat in front of mine crying, not in terrible distress or fear, but crying nevertheless. As we were all traveling through the Downs I couldn't help overhearing her conversation with her companion, who was clearly a colleague as well as a friend. It turned out she was a primary teacher (on strike that day) and had been given the year six class this year. In the UK system this makes you very visible to the headteacher, the governors and the parents as in that year (age 10/11) all children take a national test and schools are ranked by the results. So this was a cause of some considerable stress to her. What was actually making her cry with frustration though were her unsuccessful efforts to get her children to get a grip on the denotative and connotative aspects of words. She described her efforts to get the children to give her examples of words that made them go "wow" and how incredibly difficult she found it when instead they gave her words that meant "wow", (flabbergasted and gobsmacked were the two she her most often).

Two things struck me about this brief encounter. The care and energy this public sector teacher was putting into her profession, and the children for which she was responsible, was really inspiring. To spend your strike day talking about the more recondite elements of your teaching technique, with a companion who was just as focused, though less engaged, than her, speaks to real commitment.  On the other hand the punitive system that she works in is clearly unsurvivable. The terrible ratchets created by the techniques of the new public management rely on the commitment of people like her, but crush it out of them. Our social systems are running in the red and that cannot be sustained. Underneath the crisis of the financial system is a hidden crisis of social capital.