An elite of clowns

Not a single prominent financier or politician either predicted the economic disaster or has put forward any measure that has the remotest prospect of resolving the crisis.

Chancellor George Osborne and Bank of England Governor Mervyn King.
Chancellor George Osborne and Bank of England Governor Mervyn King attend the Lord Mayor's dinner at the City of London at Mansion House in London. Photograph: Getty Images.

After the occurrence of an air disaster, it is invariably the case that the subsequent investigation will trace the sequence of events which led to that disaster back to a root cause.

 

Sometimes there will be subsidiary causes that contribute to and aggravate the principal one, but nearly always the explanation will be, in the manner of William of Occam, simple.

 

A pitot head freezes. This causes a less experienced pilot to misinterpret the information displayed by the other instruments which leads him in turn to raise the aircraft’s nose too sharply and put the plane into a stall; a particular variety of cabling has a propensity to catch fire spontaneously in certain conditions, and so on and so forth.

 

One single, simple design flaw, pilot error or other mishap - sometimes compounded by additional faults and sometimes not - and the result is catastrophe.

 

Now when it comes to our economies, the single fundamental design flaw which has caused them to nosedive into the sea is the manner in which money is loaned into existence by the banks by means of the fractional reserve system.

 

In this way, banks, not governments, create the vast majority of the world’s money (approximately 97% of it) by lending out many times what they actually hold in reserves – counterfeiting in all but name.

 

While this virtual money, or debt, which the banks create out of nothing, is able to increase exponentially on computer screens, our economies, constrained by physical realities - limits upon our resources and the space available to us – enjoy no such privilege.

 

The extent of this money-debt’s hyper fecundity was demonstrated by the environmentalist Margrit Kennedy. Thus, a single penny invested at the time of Christ at 4% would have bought 8,190 balls of gold the weight of the earth by 1990. Increase the rate of interest to only 5% and it could have bought 2,200 billion of them. 

 

Herein the root cause of our problems: In the real world – away from our computers - we can never grow our economies that fast. This is the simple, fatal flaw in the construct. 

 

Begin then not with one penny, as in the example above, but with trillions upon trillions of dollars of debt, as is the case today, and the reader will understand very quickly what our politicians, bankers and financial analysts dare not admit – that the debts which confront us can never be repaid and no amount of cosmetic surgery can get around this fact. 

 

Mathematics, in a nutshell, is the current system’s most implacable foe and some form of massive debt repudiation, together with the social unrest which accompanies it, is the inevitable outcome.

 

When we strip away the lies and political rhetoric, therefore, the real game being played out is to ensure that the re-distributive consequences of this eventual repudiation are not too painful for vested interests.

 

The chief strategy relied upon to ensure such an outcome is, again, simple: to kick the can down the street as far as possible – to pay off the mortgage with the credit card and leave the mess to be sorted out by our descendants; an “intergenerational fraud” as Neill Ferguson has called it.

 

And fraud it most certainly is.

 

Thus, were you to be in charge of a company and were you to know that there was no realistic prospect of your company being able to pay off its debts but you continued nevertheless to borrow to the detriment of your existing and future creditors by manipulating the figures and all other manner of deception then you would be prosecuted for trading whilst insolvent, defrauding your creditors and so on and so forth. You would also be banned from being a company director and you would be imprisoned.

 

Not so for those within the charmed circle, however.

 

Now, writing in the Daily Mail, Mr Max Hastings has recently threatened the population with de-camping from Britain’s shores were Boris Johnson to become Prime Minister, his argument being that the Mayor of London is a clown, incapable of dealing with the problems that confront us.

 

But the hypothesis struggles because it neglects to consider the 650 alternative clowns currently sitting in the House of Commons.

 

And let us be clear. Not one of the clowns generally referred to as “experts”, whether in Westminster or indeed in the City of London or in the financial media –  - got it right; not the Prime Minister, not the Leader of the Opposition, not the Governor of the Bank of England, not the heads of any of the banks, not the Financial Times, not Reuters, not the London School of Economics, not the IMF, not the OECD, not the Chancellor of the Exchequer, not the Shadow Chancellor, not the Chief Secretary to the Treasury; not a single prominent financier or politician either predicted the disaster or has put forward any measure that has the remotest prospect of resolving the crisis.

 

But how could it be that such individuals and such institutions could all have got it so wrong? What qualities, or lack of them, account for such comprehensive uselessness on the part of our super-remunerated ‘elite?’

 

First, is a complete lack of autonomy.

 

The ‘elite’s’ members are simply too bound to the system – in terms of their positions, their finances, their social bonds, their view of themselves – to be independent; to stand back and see things clearly.

 

Thomas Jefferson understood that autonomy was the true parent of freedom which is presumably why the political commonwealth he envisaged was centred on the small, but above all independent and self-sufficient landowner.

 

In fact, a similar intuition had informed political theory since Classical times: citizenship requiring for the individual a critical mass of wealth, and with it – crucially - economic self-sufficiency, not so much for reasons of social snobbery but because such an arrangement ensured the existence of a class that was genuinely independent and therefore less prone to ‘group-think’ - more capable of rational decision-making.

 

It is fashionable for our politicians to refer to the Classics.

 

I suggest they re-read their Aristotle, in particular passages such as the following from The Politics:

 

“Moreover, the aim and the end (of the State) is perfection; and self-sufficiency is both end and perfection.”

 

In short, our politicians, our financial analysts and our ‘businessmen’ (in which term I include our bankers) – even the wealthiest among them – are as much slaves and are as powerless against the prevailing currents as the rest of us.

 

They are required by virtue of a supposedly ‘democratic’ system – the best system money can buy as the quip goes – to toe the line and think in herd. Original ideas and stating the truth, (for example that “sustainable growth” is an oxymoron or that our current debts can never be repaid as I have argued above) will be crushed. By definition, only mediocrities will be heard.

 

And what is true for the individual holds equally for the nation. What typical incoherence therefore to argue that our ‘sovereignty’ requires independence from Brussels whilst being only too happy to play the role of Washington’s most servile bitch. And what sloppy thinking to trumpet ‘freedom’ when our Government exerts virtually no control over the single most important factor in determining the course of our economy, namely the manufacture and distribution of money, a role that has been contracted out to the banks.

 

It is upon exactly this concept of greater autonomy that our futures must be built, moreover.

 

The looming energy crisis, for example, to which our ‘experts’ seem oblivious and which will eclipse our current financial woes, will mean very simply that those countries which are most self-sufficient will fare best while those countries which like Britain can no longer build things or feed themselves or provide for their own energy needs will fare worst.

 

The results of this lack of autonomy, built into a political system which instils in its participants the constant fear of being voted off like some contestant on a reality TV show, could not be more pernicious:

 

The rise of the nonentity, the suppression of excellence, the erosion of character and the absence of any genuine intelligentsia.

 

Can the reader point to a single politician, for example, who could be described as an intellectual?

 

Can the reader refer to a single genuinely novel, original, game-changing or even ‘big’ idea which these individuals have come up with?

 

The second feature on the part of our elite which determines its cluelessness is a weakness of character among its members

 

Based on my personal knowledge of such people, both from my own and my parents’ generations, they are a particularly unimpressive bunch.

 

I confirm, not out of any hidden agenda since the idea of involvement in British politics turns my stomach, but as a simple statement of fact, that they compare unfavourably with many of the prisoners I met during my stay at Her Majesty’s Pleasure. Certainly if we refer to the list of virtues taught to us by Aristotle or Aquinas or simply our own remarkable history, the current ‘elite’s’ members are neither more intelligent nor harder working; definitely not braver nor more imaginative, nor even more moral. And the fact that they should have been remunerated sometimes thousands of times more than the average citizen is as amusing as it is repugnant.

 

Too timid to put their necks on the line, theirs is a lack of idealism unknown in previous generations.

 

They bought into the neoliberal heresy precisely because it dovetailed so perfectly with their own selfish view of the world and in so doing provided a rationale for their reneging on the sacred duty of a genuine elite – to protect the people, the community, the nation, society itself.

 

Where Social Contract theory had taught them that societies had come about when the people had pooled their rights and vested them in a Sovereign whose role - (via the elite) – was to protect them in return, here was the perfect get-out, a justification for their breach of contract, a way for the State to avoid its side of the bargain and make the Contract a one-way deal.

 

And, needless to say, simultaneously with the State abandoning its role under the pretext that it was relaxing its paternalism, powers to interfere with the citizen’s privacy and freedom, to monitor him in ways that would embarrass the Stasi, continued to be accreted to itself – and all for our own good we are assured.

 

Nor should we be fooled by the explanation that their moral agnosticism is the expression of a pragmatism so welcome next to the idealism of the more dangerous and radical types who populate our history books.

 

For no-one could be less ‘pragmatic’ nor more dangerous than this particular genus which makes up our ‘elite.’

 

The financial construct which they prop up is founded not on pragmatism at all but, as I have explained above, on the fantastical notion that we can expand our way out of a debt trap which grows exponentially; that the real economy consisting of real people and real resources could ever keep pace with a virtual economy that self-replicates at a compounded rate.

 

Add to this a reluctance to admit systemic failure on the part of an edifice of which they are the architects and the beneficiaries. Tinker with the system by all means; but to alter it radically and in so doing to recognise errors so fundamental and so basic that its proponents look asinine, and that would mean the end of their world.

 

Which leads us to the next virtue of Jefferson’s self-sufficient small landowner: a proximity with the Earth’s tactile realities.

 

Thus, a man who has to tend the land, who plants trees not for tomorrow but for the benefit of his great grandchildren, whose very survival hinges on his understanding that he cannot deplete resources faster than he can replace them, who needs to store for the harsh winter ahead, who is constantly reminded of his smallness next to the forces of Nature and who appreciates, above all, limits – such a person could never have made the same mistakes as the member of our current ‘elite’: creature of an urban, utterly virtual world in which the entertainer is king.

 

It is often said that the current Chancellor has no ‘qualification’ for his role of running the country’s economy – as if the ‘expertise’ imparted by a degree in PPE or even an MBA had made the ‘experts’ in the City any more effective. And the same goes for all of them, including the Prime Minister. How does working for some television company or appearing on some quiz show ‘qualify’ anyone for anything?

 

Their greatest shortcoming therefore is that they have no qualification in the business of life itself - real life – as a result of which they have not the faintest notion of how ninety nine percent of the world’s population actually live. Nor from my own experience of such people do they have any interest, despite their protestations to the contrary.

 

I would be far more impressed by David Cameron if, for example, on some trade-promoting trip to China he abandoned his entourage and lived for ten days with a Chinese family and slept on the floor in their overcrowded homes and woke up with them and went to work with them and experienced first hand how they live like slaves for tuppence haypenny and then asked himself: “how can we compete with this? And even if we could, is this the life I want for my children?”

 

Moreover, this subordination of the real to the virtual has another, most unfortunate consequence for the calibre of individual promoted by the system. For in the virtual world authentic hierarchy, and with it authority, become inverted. The celebrity or actor replaces the hero.

 

This was a danger understood by Aristotle who rejects in The Ethics the notion that the good for man consists in the possession of the ‘honour’ rather than the thing which the man is or has done to warrant that honour.

 

Since today the good itself is ranked below the honour – (title, position or other badge) - the inevitable result is a decline in the quality of those who make up the elite.

 

In this way, what matters is not whether someone is a Mozart who composes music from paradise but only the bauble - whether or not they win X-Factor. So too Justice must be seen to be done much more than actually being done. And since appearances are everything, the media must be courted by depressing politicians not on account of its emancipatory power as they argue but because of its manipulative power. The spin doctor becomes the Age’s archetypal character and impressions are fashioned in exactly the same way as are numbers on a bank’s balance sheet and our economies themselves. The base rise. Fair becomes ever fouler and foul ever fairer.

 

Think of Gladstone versus Disraeli, Cromwell versus Charles the First, Thomas More versus William Tyndale. Now think Cameron versus Clegg or Milliband.

 

Or think of an appearance at the Battle of Naseby and then think of an appearance on Have I Got News for You.

 

It makes me want to cry.

 

Finally, the elite’s promotion of the virtual at the expense of the real has its inevitable concomitant in the economy itself: the obsession of the Age - to swap real things – things which by definition perish - for unreal things - money and other financial tokens – which do not perish.

 

As the brilliant economist Nicholas Georgescu-Roegen has pointed out, such a policy - the foundation of our modern economies - can only ever fail since it pits itself against Newton’s Second Law of Thermodynamics.

 

So what will the creation of a new elite capable of dealing with our problems require? What will be its building blocks? What premises will it need to reject and what new ones to adopt?

 

First and foremost it will have to un-learn a great deal what has been drilled into it from the cradle. Its members will need to formulate ideas rather than inherit them.

 

Key will be, as I have already discussed, the concept of self-sufficiency – the visceral understanding that true freedom comes only with a large degree of autonomy, even if that autonomy may entail fewer largely unnecessary consumer goods - a concept deeply problematic for the Bourgeois spirit.

 

We must therefore pay far less heed to the theories of David Ricardo who argued that the greater good comes in specialisation - that if Portugal is better at producing wine than us and we are better at producing wool than Portugal then both parties benefit more by sticking to the things they are good at and exchanging them than by trying to do everything themselves. This is true to a point - and particularly when it comes to ephemeral goods - but as societies become more and more complex and as they jettison their capacity to produce what they need as opposed to what they want, so too their ‘inter-dependency’ morphs into ‘dependency’ pure and simple and with it, into slavery.

 

To use perhaps an overly romantic analogy: compare the Red Indian who can feed himself, clothe himself, build his own home, travel by himself - who has time for his family, his friends and his community - with the banker who cannot change a plug. Which one is the freer and which one – in the true sense – the more affluent?

 

Over-specialisation, in short, turns us into automata because it reduces our ability to control our immediate environment. Our autonomy is sacrificed as we become increasingly dependent on factors over which we have no influence. Are the people therefore really being offered ‘freedom’ as our ‘elite’ constantly drums into us or have we in fact made the most miserable of bargains – our autonomy and peace for debts, gadgetry and a ‘vote’ for some clown?

 

The new elite must therefore understand that excellence is by definition rounded and whole; that the good for man resides in his being complete as opposed to an insect.  

 

The new elite will also need to question far more keenly the version of history which has been indoctrinated into its predecessors, a version in which Liberalism and ‘Democracy’, (whatever that means), have freed most of the planet and have made us better human beings, a version which fails to appreciate just how much the liberation of domestic populations has required the immiseration of populations abroad, a version which from its outset saw no contradiction in clamouring for freedom from the Crown whilst simultaneously owning slave plantations.

 

So too it will need to understand the extent to which that Liberalism was first and foremost expansionary – why it needed new lands and resources and new sources of cheap labour to thrive and keep pace with increasing indebtedness – why growth has been the sine qua non of our economies and our way of life and how such growth, in today’s context, must be considered a relic of a bygone Age.

 

In short, it will need to appreciate the beauty of walls; not just the physical variety but what the Qur’an refers to as ‘hodood’, or limits; limits to our numbers, to our appetites, to the footprints we leave on this Earth, to our behaviour in sum - unpopular as this may be (at least until hooked populations kick their addictions and realise how much better off they are for having done so).

 

Walls or limits bring order and beauty and through them proportion; delineation ensures diversity.

 

They are of course anathema to the neoliberal who claims he serves business in general when in fact he serves only big business. And big business hates walls and diversity.

 

Coca Cola’s heaven is a world in which people drink only Coca Cola, where there are no restrictions on the movement of Coca Cola whether in the form of tariff or cultural barriers, where the standardisation of weights and measures and bureaucracy as a whole make life simple for the Company and where you can buy Coca Cola even at some kiosk on the peak of Mount Everest.

 

Sameness results when walls are torn down to make room for economic expansion, itself necessitated by the creation of money – or debt – out of nothing. The disappearance of languages, the levelling of cultures, the end of small businesses, even the androgenisation of the sexes – ‘progress’ – we are told; all expressions of  liberal, predominantly Western, straight-line thinking.

 

And while for the philosophical liberal the straight line is manifested in unstoppable ‘progress’ – a notion for which there is very little hard evidence - for the economic liberal it is expressed in unstoppable growth.

 

But nature abhors straight lines.

 

Organisms are born, grow slowly at first, accelerate during adolescence and then plateau at a point of stability before slowly declining to make room for the next generation. The line hurtling ever upwards until it crashes suddenly, bringing about the extinction of its host as well as itself, is not the path of the healthy living creature, but of cancer.

 

In short, the cycle not the line is God’s way.

 

And so the member of the new elite will need to throw away his Fukuyama and pick up his Spengler. And he must do so in his centres of learning, where he is taught, in particular, only one type of economics – the neoliberal variety.

 

Where ‘neoliberalism’ may have been more narrowly defined at its inception – based on ideas that had emerged in the late 1930s and were revamped in the 1970s – what had begun as a belief that economies run by the private sector, or the ‘market’, would be more efficient and therefore of greater social benefit than those run by the public sector, it evolved rapidly into a quasi-religion, a worship of Mammon that impinges on every aspect of human existence with hugely destructive consequences because of its total dependence on growth.

 

And if, to borrow from Gandhi, the ‘Age of Reason’ had sought to create laws so perfect that men no longer needed to be good, then neoliberalism reduced this principle ad absurdum by arguing that economic laws – achieving natural fruition is supposedly ‘free’ and ‘efficient’ markets – would create a perfect world.

 

What began as a minoritarian but utterly organised movement, centred on the ‘Chicago school’, rapidly assumed the status of unassailable orthodoxy through its focus on the college campus, analogous to the way in which the Wahabbis understood that the key to controlling the believers’ thoughts was to control the Mosque.

 

At school and at University it always struck me, for example, how notions such as tariff barriers or national economics were frowned upon and dismissed out of hand – odd, I thought, when one bears in mind that countries such as Britain and America where neoliberalism had first taken hold and where it was being championed most fervently, had invariably begun on their path of economic modernisation by protecting their industries and agriculture. Likewise, these same countries which now, paradoxically, protect so vigorously their ‘intellectual copyright’, industrialised precisely by ripping-off each other’s inventions!

 

This is not necessarily to advocate National Economics or Protectionism at the expense of Free Trade but rather to highlight how our educational institutions are less adept at teaching their students how to think for themselves than they imagine and are in fact masters at teaching them how to adopt very particular opinions and to think in very particular ways, ways not necessarily appropriate in all contexts.

 

In short, the creation of a new elite will require, as Heidegger put it, that:

 

“University study must again become a risk, not a refuge for the cowardly.”

 

Actually, one begins to detect a gradual re-positioning on the part of certain of the more intelligent commentators. And, bit by bit, some of the arguments I have outlined here and elsewhere are being smuggled into mainstream discourse - even in a wholly unimaginative financial press.

 

Take, for example, statements such as the following, made recently in a prominent financial journal:

 

“Despite endless bailouts, bankers are still paid far too much. Profits are privatised, while losses get socialised.”

 

This is welcome, despite the fact that the journalist who wrote these words refused adamantly for ten years before the crash to read one page of the growth-sceptical literature which had been recommended to him and insisted only days prior to the Lehman Brothers debacle that the growth of previous decades could go on indefinitely.

 

It goes without saying that over the years he has been showered with all manner of prizes and accolades for his financial analysis.

 

Likewise, Neil Ferguson who recently delivered a series of Reith lectures regarding the crisis should be congratulated for having the guts to call things by their proper name when he refers to the massive “fraud” which has been perpetrated against this and future generations - although it should be pointed out that rather than original insight his hypothesis might be considered a simple re-branding of what had already been termed for decades a “mortgaging of the future” and that those who saw the truth those decades ago did so at a time when Ferguson and so many of our contemporaries were in thrall to the likes of Professor Norman Stone and all those Thatcherites who favoured the dismantling of our agriculture and industry in favour of the City where the very “fraud” they now decry was being constructed.

 

But surely people can be allowed to revise their opinions?

 

After all, didn’t Keynes himself say that “when the facts change, I change my mind?”

 

Indeed.

 

Just so long as history is not re-written à la française and that we are clear:

 

There was no formal Resistance and, in fact, two entire generations of Englishmen (not to mention the West itself) collaborated virtually to a man. And they did so as do all collaborators largely because they thought the side they were backing would win. My own prediction is that at no time will the ranks of the Resistance swell more than just before the end of the war, when they realise that neoliberalism will lose.

 

Actually, what resistance and genuine foresight there was, on the part of those like E.F Schumacher, Donella Meadows, Herman Daly, Edward Goldsmith, Richard Douthwaite, and my own father, was dismissed as un-warranted Malthusian pessimism.

 

Neoliberal commentators scoffed, for example, when the three decades or so which followed the publication of Meadows’s The Limits to Growth saw hitherto unseen economic expansion without appreciating how that ‘expansion’ was little more than a credit boom fuelled by low interest rates – a bubble that was bound sooner or later to burst. This was an argument articulated in 1992 when Richard Douthwaite published The Growth Illusion at the very point that the Celtic Tiger was beginning to make Ireland, where he lived, one of the fastest ‘growing’ economies in the world and he was forced to make ends meet as a part-time cobbler while lightweights picked up Nobel Prizes and became rich.

 

But in their commentary, the neoliberals revealed perhaps the single most important component of their thinking: its short-termism. If Meadows’ predictions were out by a few years they did not appreciate that, in environmental terms, to be out by a century is as good as a bull’s eye; that in their inability to grasp the destructive consequences of unbridled growth they demonstrated their own chronological ineptitude – for while it takes mere days to destroy a rain forest, it takes thousands of years for that rain forest to grow back.

 

When Ferguson speaks of “intergenerational fraud”, therefore, what does he expect? If for the politician a week is a long time, then why on earth should he think ten generations down the line?

 

Similarly, Ferguson should perhaps explore more deeply just how much the activities of the banks which he deplores are linked to the hip with growth, empire and secularism.

 

The thinking is logical enough: if, by destroying a rain forest or polluting an ocean I can buy myself a Caribbean island where I will be able to isolate myself from the ugliness then what do I care if, after I die, I won’t be held accountable nor will I be around to suffer the consequences?