WORLDVIEW:The euro zone crisis and social pressures are going to require fresh political thinking, writes PAUL GILLESPIE
AFTER AWE, property. So Fintan O’Toole summed up a key motif of Tom Murphy’s at the launch of a book of essays this week on the playwright’s work. And one might add: after property, politics.
The end of the property boom has tossed Ireland into a political maelstrom concerning how best to escape from its huge fallout. So much capital has been wasted with so little to show for it. Irish entrepreneurship was in awe of property, drawing on historical assumptions about how it confers status and stability. Surveying the wreckage, many want to see a transformation of the cultures and structures responsible.
We are not alone in this task. Ireland’s boom was funded by vast amounts of cheap money borrowed on European capital markets from 2002 onwards. There was precious little public commentary – or regulatory activity – about this tidal wave of credit at the time. In retrospect we can see more clearly how this occurred and we await several inquiries. But we badly need a better kind of politics more capable of anticipating and preventing future bubbles.
This must have a European dimension. The property boom roughly coincided with the introduction of the euro, along with low interest rates pitched at conditions elsewhere in the euro zone. Irish domestic policy failed to compensate for the loss of sovereignty over interest rates and currency values. There were similar spending sprees in Greece, Spain and Portugal.
The crisis has thrown up a key discrepancy between the economic and political aspects of the common currency. Discussing these recently former Italian foreign minister Tommaso Padua-Schioppa recalled how the economist Joseph Schumpeter answered a journalist’s question about what economic policy is about: “Politics, politics, politics.” Under German insistence the euro was designed without a bailout clause or a political capacity to fund it.
Economists too often dismiss politics as a separate domain, irrelevant to their concerns. Doing so now is to abandon policy-making to the international markets. They had a field day this week betting one way on a Greek sovereign default, the only antidote to which will be a political determination by EU authorities not to let it happen. New rules must be put in place to help not only Greece but any other euro zone state which comes under such pressure, by fresh loans and/or onerous conditions. Otherwise the whole system is threatened, with major implications for the EU’s future.
Such a politics involves a complicated balancing of domestic and European concerns for those like the Greek prime minister George Papandreou caught in the middle of the crisis. There is precious little time for him or his EU interlocutors to elaborate alternatives. A poor political debate means they rely on ad hoc solutions. But the changes made to protect the system will create a new framework of policy-making built on ideas of solidarity.
That this concerns not only political elites is made plain by the general strikes held this week in Greece, Spain and Portugal, as well as in the continuing debates about protest action by Irish trade unions. A new mass politics of fairness and the distribution of costs and benefits is emerging throughout the euro zone. It is highly contentious – but that is the nature of politics, which builds solidarities from disagreement just as much as from consensus.
It also tends to follow two major lines of cleavage: between left and right-wing proponents of effectively alternative transnational solutions; and between different state preferences like those of France and Germany, or groups of states like the northern “parsimonious” ones counterposed to the “profligate” Club Med. Issues of state sovereignty run through both of these cleavages, as some demand the reversal of existing commitments, including withdrawal from the euro, while others refuse to contemplate the common EU taxes and fiscal transfers probably needed to rescue the system.
This reflects the EU’s nature as a union of states and peoples. Those who say there is no European people, as distinct from the particular cultures of its separate member states, overlook the interdependence of the national and the European already achieved. In real life there is no such cut-and-dried distinction between national and European issues. They vary according to level, scope and perceived impact throughout the EU, but there is still a common experience involved.
The overall relationship between economic and political regulation, policy-making and public discourse remains quite discrepant. For example, even though academic economists in Germany have long understood the need for more co-ordination of economic policy in the euro zone to complement its monetary policy, the subject has been virtually taboo in its political class. Thus such debates get translated into a Franco-German disagreement about “economic governance”.
Nor are the political groups represented in the European Parliament much more coherent. Papandreou took time off to address the Socialist International in London last weekend, of which he is chairman. Yet he could find few concrete ideas there about how to handle the crisis from social democrats who were so in awe of finance capitalism that they now have difficulty disentangling themselves from it. He warned: “For conservatives, the market is God and you do what God says.”