The response to austerity can't be on the terms which led us into it

The only effective response must be to repudiate the debt, writes Molly Scott Cato

It is disappointing that the response from the Left in Britain to the politics of austerity has been so limp. The brilliant coup from the interests of capital to paint the economic crisis as a crisis of government debt and public spending—and therefore the basis for an attack on the ideology of the left—has seen little in the way of aggressive intellectual response.

The simple explanation for this is that the left is divided. The line taken by the socialist and labour left has largely been one of denial. This is not a high level of debt, they argue. By historical standards, we have survived much higher levels of debt. Why, after the last war we faced debts on a far greater scale and yet that is when we established the health service.

I think this is a mistaken approach to the politics of austerity. For one thing, it will not wash. Citizens have a sense of there having been a vast amount of cash floating around during the Labour years. They also know that consumption, individual and national, was based on untrammelled credit. This is their sense of how life was, and they are not wrong.

Secondly, the parallel between our economy now and in the 1950s does not hold up to scrutiny. At that time we were an imperial nation and the workshop of the world, if a somewhat scruffy one making rather unfashionable products. We could use our empire as a vast ‘internal’ market, sucking in resources and finding compliant customers for our products. We could repay our debts through hard, productive labour—and we did. Now what do we have to offer the world as justification for the debts we have incurred? Our favourite offering of financial services is finding considerably less favour than five years ago.

But most importantly we should reject this line of argument because it is morally wrong. We should not have to live through the 1950s again, working hard to return interest to those who loaned us money. Back then it was US and Canadian capitalists who, through lend-lease, had ensured that the value created by British workers would flow back to them. We would not have won the war without US productive capacity, but we would not have lost the peace as spectacularly as we did had they not insisted that we continue to pay for it right up to 2006, just two years before the credit crisis.

Rather than arguing about how we should pay it back we should be repudiating the debt.

This is what has been happening in other European countries, where Citizens’ Audit have been established, inspired by the examples of the Latin American countries who refused to pay their debts during the last decade. Why should we pay back money loaned to us by financial institutions who have the power to create money by electronic fiat, they asked. And we should be asking the same question. By the time we had paid our wartime debts—the debts we incurred for defeating Hitler and protecting European democracy—we had paid our ‘allies’ the US and Canada, or rather US and Canadian capitalists and financiers, twice what we had borrowed. This iniquitous use of the power of money to extract value should be the real target of the left.

Earlier this week Portugal’s citizens’ audit campaign published a preliminary technical report: ‘Understand the debt to get out of the trap’; the Spanish campaign is called ‘Who owes whom?’ and is part of the work of the indignados. The Irish citizens audit, supported by UNITE as well as debt campaign groups, challenged circular nature of Irish debt-holding, with the government guaranteeing banks which, in turn, hold its debt. It found that Irish debt had been transformed from a safe and boring investment to a vehicle of speculative interest. Its authors used Kissinger’s term of “constructive ambiguity” to describe the deliberate use of recondite language to undermine the citizen’s power to understand the actions of their politicians.

The real purpose of a citizens’ audit is precisely to challenge this “constructive ambiguity”. Most people never question whether it is right that they should pay interest to a bank for the privilege of buying their home, although they will pay around twice the cost of the house by the term of the mortgage. Whether this is just depends on how the bank acquired the money and in these days when the corrupt dealings of banks are becoming revealed in more egregious detail every day, an audit into how our debt was acquired, who owns it, and who will receive the money that we are paying in return for our borrowings is urgently overdue.

Photograph: Getty Images

Molly Scott Cato is Green MEP for the southwest of England, elected in May 2014. She has published widely, particularly on issues related to green economics. Molly was formerly Professor of Strategy and Sustainability at the University of Roehampton.

Photo: Getty Images
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Our treatment of today's refugees harks back to Europe's darkest hour

We mustn't forget the lessons of the Second World War in the face of today's refugee crisis, says Molly Scott Cato.

In the 1930s, thousands of persecuted people fled Europe. Our own press ignominiously reported these as "Stateless Jews pouring into this country" and various records exist from that time of public officials reassuring readers that no such thing would be allowed under their watch.

With the benefit of historical hindsight we now know what fate awaited many of those Jews who were turned away from sanctuary. Quite rightly, we now express horror about the Holocaust, an iconic example of the most shocking event of human history, and pledge ourselves to stop anything like it happening again. 

Yet as Europe faces its worst refugee crisis since the Second World War we are witnessing a deafening cacophony of xenophobic voices in response to people fleeing their own present-day horror. We must therefore reflect on whether there is an uncomfortable parallel in the language being used to describe those seeking asylum today and the language used to describe Jews seeking refuge in the 1930s.

Our response to the current refugee crisis suggests we feel fearful and threatened by the mass movement of desperate people; fearful not just of sharing what we have but also of the sense of disorganisation and chaos. Does the fact that these refugees are from Syria, Libya, Iraq and Afghanistan, and so not part of our continent, provide an excuse to allow them to be bombed at home or drowned during their desperate journey to safety?

We are not helped by the poorly informed public debate which—perhaps intentionally—conflates three quite different movements of people: free movement within the EU, irregular or unauthorised migration and the plight of the Middle Eastern refugees. While our misguided foreign policy and unwillingness to tackle change may give us a moral responsibility for those fleeing famine and conflict, our responsibility towards refugees from war zones is clear under international law.

Due to our commitments to the UN Refugee Convention, the vast majority of Syrian refugees who reach our territory are given asylum but the UK has taken fewer Syrian refugees than many other European countries. While Germany admitted around 41,000 asylum-seekers in 2014 alone, the UK has taken in fewer than 7000.

The problem is that any sense of compassion we feel conflicts with our perception of the economic constraints we face. In spite of being the fifth largest economy in the world we feel poor and austerity makes us feel insecure. However, when actually confronted with people in crisis our humanity can come to the fore. A friend who spent her holiday in Greece told me that she saw local people who are themselves facing real poverty sharing what they had with the thousands of refugees arriving from Turkey.

A straightforward response to the growing sense of global crisis would be to restore the authority of the UN in managing global conflict, a role fatally undermined by Tony Blair's decision to go to war in Iraq. Our role should be to support UN efforts in bringing about strong governments in the region, not taking the misguided ‘coalition of the willing’ route and running foreign policy based on self-interest and driven by the demands of the oil and arms industries.

We also need EU policy-makers to show leadership in terms of solidarity: to co-operate over the acceptance of refugees and finding them safe routes into asylum, something the European Greens have consistently argued for. The EU Commission and Parliament are in clear agreement about the need for fixed quotas for member states, a plan that is being jeopardised by national government’s responding to right-wing rather than compassionate forces in their own countries.

Refugees from war-torn countries of the Middle East need asylum on a temporary basis, until the countries they call home can re-establish security and guarantee freedom from oppression.

The responsibility of protecting refugees is not being shared fairly and I would appeal to the British people to recall our proud history of offering asylum. Without the benefit of mass media, the excuse of ignorance that can help to explain our failure to act in the 1930s is not available today. We must not repeat the mistakes of that time in the context of today’s crisis, mistakes which led to the deaths of so many Jews in the Nazi death camps. 

Molly Scott Cato is Green MEP for the South West of England.

Molly Scott Cato is Green MEP for the southwest of England, elected in May 2014. She has published widely, particularly on issues related to green economics. Molly was formerly Professor of Strategy and Sustainability at the University of Roehampton.