March 27, 2011
Anyone following the political debate in the United Kingdom will have realised that yesterday London was filled with demonstrators protesting against the British Government’s public spending cuts. Predictably enough, within a few hours, gangs of hooded and very confused young men wearing black were attacking the symbols of their oppression: the Ritz Hotel, assorted bank offices and Fortnum & Masons (purveyors of fine teas, veal pies and ginger shortbread biscuits). I had to admire their persistence in managing to pulverise large plate glass windows with nothing more than well-aimed kicks and the odd claw-hammer.
While this was happening, the head of the Labour party, a certain mild-mannered and very well educated fellow named Ed Miliband, was standing on a Trade Union Congress rostrum invoking the fight of suffragettes (campaigning for women’s voting right) and the civil rights movement in the United States. The connection between such well-known human rights movements and a demonstration against government policy remained unclear to me, until I reflected on the fact that Miliband is a standard politician accustomed to intellectually patronising his voters, few of whom could possibly have his level of education. But judging by his performance, they may well be better off without it. I can almost see Mr. Miliband sitting in his swivel-chair with a frown on his polished face, telling his scriptwriters to “keep it real, keep it visceral, make it understandable…” Maybe those struggling scriptwriters should have invoked Churchill, the Blitz, the march on Rommel? That would certainly have stirred the buds of British patriotism. One commentator who did fall back on the workhorse of World War Two rhetoric was Liam Halligan – chief economist at Prosperity Capital Management – in an article in Britain’s mainstream broadsheet The Daily Telegraph. Halligan clarified the fact that while George Osborne, Britain’s amazingly schoolboyish Chancellor of the Exchequer, was aiming to balance the budget by 2015, this would only be the “end of the beginning” of the fiscal battle. For if Osborne’s plans go smoothly, that will be the year when his Government stop borrowing money every month in order to balance incoming and outgoing revenues. If the current rounds of savage cuts are applied and maintained for another four years, the country will then find itself in the lovely position of not having to borrow money every month to pay for its functionaries, hospitals and schools. Interest payments on its borrowing are swallowing 6% of tax receipts, and this will rise. Almost a trillion pounds of debt remain to be repaid once the day-to-day financial disorder has been settled.
How amazing it is to realise the scale of the problem not only in the United Kingdom, but also America and throughout Europe and the world. Whenever I sit at the breakfast table opening my bills and frowning at my incompetently managed affairs, I remind myself that I am an indebted individual living in an indebted world. My incompetence is a necessary product, even a requirement, in the world we live in, where people are obliged to buy useless things with the help of credit cards, overdrafts and payment plans.
Ever since the West began its assault on Islamic fundamentalism and our media spouted highly debatable conclusions about Islamic extremists I have been asking myself whether, in fact, the extremists are not the very people who claim to be our leaders? Churchill (let’s not forget him) once said “A fanatic is one who can’t change his mind and won’t change the subject”. Here I think we are getting closer to the point. For in spite of the crowing of Capitalists about the superiority of their system over Marxism, increasing numbers of people are now suggesting that Capitalism has also failed and is only being propped up by banks (themselves propped up by Capitalists). Is it not, in fact, economists who are fundamentalists? – persisting with their flawed ideology even when the evidence is more than enough to put them in the dock. If so, then I think we can safely assert that economics, as a science, has failed.
I repeat, I am no economist, but it seems to me that given that we invented money and the whole system of economics, could we not now simply de-invent it? We are free, after all. Surely money is nothing but an idea, an outmoded idea? Why not simply abolish it altogether and cancel the debts? Milton Friedman (a Nobel Prize winner in the field of Economic “science”) may have established in the 1980s that too much money eroded wealth (an unlikely proposition, right?) but now it seems incontrovertible that “wealth” also takes a bit of a knock when it is nothing but a polite word for borrowed money.
The Royal Mint in the United Kingdom was established towards the end of the 1700s, headed by the stringent figure of Sir Isaac Newton, a Nobel Prize-winning scientist if there ever was one (though he was unlucky enough to be born before Alfred Nobel). Before the existence of the Mint, people used to make their own money out of bits of scrap metal (silver, gold, tin, etc) and the system seemed to work reasonably well. Once the Mint came along, the Government made sure that anyone counterfeiting their production of coinage was swiftly strung up from the nearest tree. The Royal Mint has had 200 years to prove itself, and surely that is long enough?
If it were not for China desecrating its environment and its people’s health in a race for economic development, if we did not have the expansive Indian, Brazilian and Asian systems similarly “developing”, the West’s decline would be even steeper.
Let’s say this very clearly: we are bankrupt. We cannot pay back the debts, because debt-repayment is itself dependent on running up more debts. The consumption model is thoroughly discredited. Banks make profits out of corporate and personal debt. And profits in manufacturing are generated by people running up personal debts to pay for their new acquisitions – this toxic mechanism applies to almost everything.
If, for instance, I went out this morning to set fire to a car, the Gross National Product of my country would increase. Why? Because the subsequent insurance payment would finance the purchase of a new car. Every time an airliner crashes and passengers are killed, we have positive financial results: a new plane is ordered, while the grieving next-of-kin go out and buy new houses and cars with the damages they are paid.
The problem of credit and debt has been debated for a thousand years or more. Economists should be made to read Rabelais, who once (sarcastically) said that debt, rather than the human spirit, was the true measure of man. Saul Bellow, in “Herzog”, once wrote: “Dear Mr. President, Internal Revenue regulations will turn us into a nation of book-keepers. The life of every citizen is becoming a business. This, it seems to me, is one of the worst interpretations of the meaning of human life history has ever seen. Man’s life is not a business.”
I believe the time is now ripe for universities all over the world to heed Mao Tse Tung and send their Economics undergraduates back to the countryside to learn the intricacies of chicken rearing and potato cultivation. Maybe in the bosom of Mother Nature they can learn something about the real creation of wealth and prosperity?