The
French and Greek elections have given a new twist to Europe's path through the
economic crisis. It is very hopeful that democratic structures are giving the
citizenry a means of expressing their rejection of the strategy of
retrenchment, though it is just funny to see in Francois Hollande anybody's
idea of a socialist firebrand. The 7% vote for the Greek neo-fascists is
worrying, as was Le Pen's showing in the first round, but, sadly, it is hardly
surprising that a variety of soft or hard fascist exit is tempting to at least
some European voters. Some sort of Keynesian expansion is more likely this
morning than it was on Saturday, but that is only the beginning of getting us
out of this mess. So far nobody has even begun to imagine what a better and more
stable economic future would look like.
Much
alternative thinking comes down to a rejection of economic modernity. That can
have a pleasing purity to it, but the road to an ecologically balanced bucolic
utopia remains unclear. The more pressing need is to disaggregate contemporary
life to try to find some solid timbers to frame a more robust economic house.
Debt mediated by sophisticated financial instruments has not proved to be a
solid foundation. The humanities can help us to explore latent contents in
our culture and the English novels of the middle nineteenth century are a great
source of thinking about a commercial order. Caleb Garth in Middlemarch is a
particularly useful figure to think with. Garth is an estate agent (not a house seller but a land agent) and improver
who has the most passionate attachment to business but no head for money;
"the echoes of great hammer where roof or keel were a-making, the signal
shouts of the workmen, the roar of the furnace, the thunder and plash of the
engine, were a sublime music to him,..., but he could not manage finance: he
knew values well, but he had no keenness of imagination for monetary results in
the shape of profit and loss". Garth is a font of entrepreneurial energy,
much of it directed to social ends such as his daughter's happiness, and by
contrast the banker, Mr Bulstrode, who has a very clear grasp of profit and
loss, is morally hollow. Garth is a figure from the technical Enlightenment,
the kind of character Larry Stewart, Margaret Jacob and Jeff Horn write about and it is
worthwhile to be reminded that the project of "improvement" and the
project of capitalism were not originally imagined to be the same thing.
Money is supposed to work as a means of
co-ordination. It is supposed to allow new kinds of work, to channel resources
to encourage new ideas to take material form. The criticism of money has always
been that whoever controlled it had monopoly control over every other kind of
activity and its defense that every other kind of co-ordination contained even
more oppressive possibilities. What is new in America and Europe is that the
asset values that give money meaning, since they are what money controls and
deploys, have become so inflated that most work is now directed toward
sustaining existing value, not making new ideas material or finding new patterns
of communication and co-ordination. Money is getting in the way. Inequality is
a terrible problem that wears through the fabric of democratic societies, but
that could be addressed by obvious kinds of tax policy. More insidious is the
implication of a majority in asset values through home ownership and pension
funds. We are trapped in a vicious circle where profit margins are maintained
by cutting labour costs, which drive down wages and lower aggregate demand.
This should be politically impossible, but the electorate are more frightened
of losing the value of their pensions or the capital in their house, than they
are of their income being depressed. And in any case there are winners in this
kind of spiral. Just how to get out this spiral, and reapportion wealth to work
and not money, is the political challenge of the time. Can we imagine a
market-based economy that does not use money as a means of conducting
transactions? Can we make the world safe for Garth and dangerous for Bulstrode?
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