of unions was crushed and statutorily emasculated. For nearly twenty years, the US promotion of almost unpayable subprime mortgages occurred, spiralling many families down into poverty and once-fine cities (e.g., Detroit) into decline. Traders operated from less-regulated market centers, with insufficient supervision, occasionally with calamitous result. Do you remember the collapse of Barings Bank—and why it happened?
In 2008, all three of Iceland’s national, privately owned banks had huge commercial investments in UK and Dutch infrastructure projects. Then because of the international trading crisis they could not create the necessary short-term refinancing. Therefore the whole Icelandic domestic economy tumbled, forcing austerity upon its people, overseas financial losses, and the nationalization of one of those three banks. Bolstered by its growth through US dollar support, Japan’s economy majorly stuttered as both the “Asian tiger” and Pacific Rim economies slowed by 2008.
The outworking of this was the Great Crash of 2008, regarded as worse than that of 1929, which precipitated a global liquidity crisis. Should governments devalue their currency and print more money? The consequent downturn in economic activity led to a five-year (2008–12) global recession, significant rises in commodity prices (including oil), overwhelmingly contributing to the European “sovereign debt” crisis. Multiple African and Asian nations reported that their previously growing economies had stalled or even entered decline. There were runs on several UK financial houses, including the one that bankrupted Northern Rock, as well as in the USA and Europe. Internationally renowned companies such as Lehmann Brothers went to the wall.
What must be recognized is that we live in an interwoven global economy as one household/oikos. No amount of US legislation, such as the 2010 Dodd-Frank Act (to protect consumers and investors) can reach beyond their national boundaries, nor protect America from the effects of another global recession. Given current economic practice, if the USA cannot protect itself, no other country can—as global recession is spectacularly devastating and one day will be irredeemable.
An even more crass development is the current US-European Union Transatlantic Trade and Investment Partnership, or TTIP, which is opposed by many Europeans, socialist groups, green, and other “people parties.” Basically this will allow transnational conglomerates to sue governments/nations for loss of trade if their national restrictions diminish those transnationals’ profit margins or right to trade.
The question remains—how much has corporate theory got it wrong? And if so, is there a present alternative? What happens to defaulting countries now and how can we arrive at some consideration of an alternative future? That future is the subject of the next chapter, and the journey which answering these questions entails forms the balance of this one.
Did Kropotkin, Marx, & co. get it wrong?
The problem is not necessarily capitalism, in itself, but that voluntary socialism has failed the world and its nations. Commentators speculate as to whether it was this dilemma that caused Marx and Engels to write The Communist Manifesto.
Since my teenage years, I have been an avid reader of Kropotkin and Tolstoy. Kropotkin (1842–1921) was a polymath and philosopher who renounced his aristocratic background to align himself with the peasantry by conviction. The titles of his three major works—The Conquest of Bread,26 Fields, Factories and Workshops,27 and Of Mutual Aid: A Factor of Evolution28 (all on my shelves since I was a teenager) tell of his desire for and advocacy of an egalitarian society, free from centralized government control and organized by local voluntary associations of workers and their families. He was critical of the 1917 Bolshevik Revolution’s violence, having already warned in The Conquest of Bread that any such communistic state, predicated upon violence, had already sown the seeds of its downfall, including an almost logical return to capitalism. Subsequent events in the USSR and China have proved him to be correct in this.
Tolstoy (1828–1910) also renounced his aristocratic background, undergoing a profound Christian conversion in the 1870s to become a fervent anarchist, pacifist, and coworker with his former estate servants (much to the chagrin of his domineering wife). His pacifism influenced Gandhi and Martin Luther King Jr., just as his writings have alerted millions to the plight of the common man or woman when forced to live within the hierarchy and economic system of prevailing Russian society.
It is clear that Marx knew the thought and writings of Kropotkin and Tolstoy (as well as similarly minded others) and, as the notes for his economic work reveal,29 was profoundly affected by the inability of ordinary people to have control of their economic and social destiny. Obviously that sits in diametric opposition to those who believe in self-seeking and capitalist hierarchical societies. But, to the radical Christian, Marx’s economic reflections are clearly on the same page as the egalitarian “reign of God” teaching of Jesus of Nazareth, revealed in the Christian Gospels.
It becomes more than a Greek tragedy when the contest between common humanity and the ruling economic system becomes overwhelming—as our next section reveals.
Agony30
The creation of a common currency—the euro—across the majority of nations of the European Union in 1999 was fraught with many potential and ongoing problems. The participating countries became known as the Eurozone and, without formal political and federal union (such as in the USA or former USSR), relied on each participant nation’s government acting within the defined rules and economic treaties. The latter tied all those nations together with demanded monetary policies, requiring all—whether at the top or bottom of the financial “elastic”—to behave and act similarly. Before joining the Eurozone, EU member countries must spend two years within the European Exchange Rate Mechanism, to help create this compliance.
The EU required its constituent national governments to be strong enough to put their “own house in order.” No longer could individual nations simply decide to lower taxes or increase pension levels without ensuring they could “balance their own books” and not exceed agreed borrowing levels. I was living in France when this really began to bite and noted how the French government had to resist the calls for a statutory “working week” of fewer hours, or for lowering the pensionable age for state workers, or raising pensions but not taxes. This took cross-party strength and philosophical resolve. Other countries such as Ireland, Portugal, and Spain found their economies faltering, requiring strong fiscal remedies upon their own peoples, in order to meet the demands of the European Central Bank and their partner nations within the Eurozone. The fear of domino economic downfall brought forward the word contagion in our economic vocabularies. The nation that fell hardest was Greece.
Following the ending of the Greek military junta in 1974, many restrictions were lifted—including letting long-haired backpackers (like me) travel relatively freely and bring in the so-called tourist dollar, which was traded for a sackful of drachmas. But Greek government policies were at best somewhat erratic. The über-rich could choose whether to join in or how much state taxation they would pay. There was political expedience and laxity in policy, increasing pensions, guarantees of state employment, etc. Some tell me there were allegations of political corruption . . . while those same politicians had to comply with the conditions for becoming part of the Eurozone. Many of the island or rural poor lived in subsistence poverty, hardly earning enough to pay any tax. In any household (Greek: oikos) or nation, the bills have to be paid and Greece’s were not.
I found I was a natural supporter of PASOK, the PanHellenic Socialist Movement, using my visits and increasing Greek fluency to chat with islanders, ferrymen, and small farmers about why this social democratic movement commanded so much popular support. One major reason was that Greeks are proud of the civic understanding of being a polis—a democratic people with a 2,500-year history. Even the illiterate had a stronger understanding of “the people’s decision” than I encountered in Britain, northern Europe, or North America. PASOK only lost their political dominance when the Eurozone’s imposed austerity measures hit the Greek populace in the successive 2010 and 2012 bailouts. It
