Market utopianism supposes a price-setting market in human beings without a society. Photo: Getty
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Greece and the birth of fiscal colonialism

Greece is caught in a vicious debt cycle that leads to a perpetual need for stimulus.

It is often noted that Athens is the birthplace of democracy. The city is less often credited as the cradle of the market economy. Maritime trade linked the port towns of the ancient Mediterranean, between which cargo was transported according to an insurance system beyond political control. Over time, Athens became dependent on imported food for survival. Regulations were brought in to stem rising inequality, including restrictions on usury, fixed prices for bread and constraints on property sales. And yet inequality increased.

As the volume of maritime trade grew, so did the wealth of its merchants. The link between the maritime economy and territorial democracy was debt. Free citizens lost their oikos, or family home, and became indentured slaves. Power, land and wealth was concentrated among a group that the Greeks called oligarchs. To this day, there is a constitutional guarantee that the Greek state will not tax shipowners on their earnings.

The origins of globalisation – the face-off between territorial democracy and international capital – are to be found in Athens. This power struggle intensified under the Roman empire. The sea lanes were every bit as important in the formation of the imperial system as the Roman roads.

Yet, as the nation state ultimately replaced the city state, free-flowing capital remained difficult to domesticate. This underpins the left’s enthusiasm for the European project, which developed in the 1980s as a transnational means to constrain promiscuous capital. It has not worked out that way.

There is something degenerate about the politics of Greek debt. It is as though nothing has been learned in 2,000 years – as if the left had forgotten the powers of capital and imperialism and the right cannot make a distinction between the financial economy and productivity.

We are being asked to choose between two failed dogmas: debt-based socialism and market utopianism, neither of which is capable of generating value, neither of which resists the reduction of human beings to commodity status by developing labour value and the virtues of loyalty and trust essential to any relationship.

The narrative that suggests that fiscal discipline was the cause of German economic success after the Second World War, without reference to workers on boards, a vocational labour market, self-governing cities and regional banks, is a distortion. Germany has not established its system of democratic vocational and corporate governance practices. In Gramscian terms, it is dominant without being hegemonic.

Unsustainable contradictions are now in play. Without a recognition of what was wrong with the formation of the euro and the overall direction of the EU, there will be no resolution to the conflict between debt and democracy. Political violence and mass unemployment are now possibilities in Europe. Fascism is the logical next step.

Market utopianism supposes a price-setting market in human beings without a society. Welfare statism, which is what left politics has become, has no place for society or capital. Both are bankrupt. Permanent Keynesianism and limitless debt spending are a nasty place for a political economy to be, in permanent bad faith and servitude. There is a double tragedy here. Since joining the EU, Greece has become an entirely monetised economy and so the value of its currency is of fundamental importance. In other words, it has become dependent on subsidies and imports. Outside the EU and the euro, it would have a standard of living closer to that of Bulgaria than of Belgium.

Syriza has pursued an entirely incoherent strategy of simultaneous resistance and surrender. Greece is caught in a vicious debt cycle that leads to a perpetual need for stimulus. The result is what we now have: fiscal colonialism without political reciprocity. The wiser strategy would have been to surrender a semblance of national democracy in favour of the German social market system. The German system is pro-worker; its foreign policy is not. This is what the UK Labour Party should be challenging.

After the Second World War, the British occupying power in North Rhine-Westphalia, under the supervision of Ernest Bevin, the Labour foreign minister, was a crucial force in brokering free and democratic trade unions, worker representation on boards and a vocational economy that defined the social market economy. It promoted labour value rather than debt in its political economy and a social democracy rather than an administrative state in its politics. Where is that British Labour Party now?

This article first appeared in the 16 July 2015 issue of the New Statesman, The Motherhood Trap

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The Brexit Beartraps, #2: Could dropping out of the open skies agreement cancel your holiday?

Flying to Europe is about to get a lot more difficult.

So what is it this time, eh? Brexit is going to wipe out every banana planet on the entire planet? Brexit will get the Last Night of the Proms cancelled? Brexit will bring about World War Three?

To be honest, I think we’re pretty well covered already on that last score, but no, this week it’s nothing so terrifying. It’s just that Brexit might get your holiday cancelled.

What are you blithering about now?

Well, only if you want to holiday in Europe, I suppose. If you’re going to Blackpool you’ll be fine. Or Pakistan, according to some people...

You’re making this up.

I’m honestly not, though we can’t entirely rule out the possibility somebody is. Last month Michael O’Leary, the Ryanair boss who attracts headlines the way certain other things attract flies, warned that, “There is a real prospect... that there are going to be no flights between the UK and Europe for a period of weeks, months beyond March 2019... We will be cancelling people’s holidays for summer of 2019.”

He’s just trying to block Brexit, the bloody saboteur.

Well, yes, he’s been quite explicit about that, and says we should just ignore the referendum result. Honestly, he’s so Remainiac he makes me look like Dan Hannan.

But he’s not wrong that there are issues: please fasten your seatbelt, and brace yourself for some turbulence.

Not so long ago, aviation was a very national sort of a business: many of the big airports were owned by nation states, and the airline industry was dominated by the state-backed national flag carriers (British Airways, Air France and so on). Since governments set airline regulations too, that meant those airlines were given all sorts of competitive advantages in their own country, and pretty much everyone faced barriers to entry in others. 

The EU changed all that. Since 1994, the European Single Aviation Market (ESAM) has allowed free movement of people and cargo; established common rules over safety, security, the environment and so on; and ensured fair competition between European airlines. It also means that an AOC – an Air Operator Certificate, the bit of paper an airline needs to fly – from any European country would be enough to operate in all of them. 

Do we really need all these acronyms?

No, alas, we need more of them. There’s also ECAA, the European Common Aviation Area – that’s the area ESAM covers; basically, ESAM is the aviation bit of the single market, and ECAA the aviation bit of the European Economic Area, or EEA. Then there’s ESAA, the European Aviation Safety Agency, which regulates, well, you can probably guess what it regulates to be honest.

All this may sound a bit dry-

It is.

-it is a bit dry, yes. But it’s also the thing that made it much easier to travel around Europe. It made the European aviation industry much more competitive, which is where the whole cheap flights thing came from.

In a speech last December, Andrew Haines, the boss of Britain’s Civil Aviation Authority said that, since 2000, the number of destinations served from UK airports has doubled; since 1993, fares have dropped by a third. Which is brilliant.

Brexit, though, means we’re probably going to have to pull out of these arrangements.

Stop talking Britain down.

Don’t tell me, tell Brexit secretary David Davis. To monitor and enforce all these international agreements, you need an international court system. That’s the European Court of Justice, which ministers have repeatedly made clear that we’re leaving.

So: last March, when Davis was asked by a select committee whether the open skies system would persist, he replied: “One would presume that would not apply to us” – although he promised he’d fight for a successor, which is very reassuring. 

We can always holiday elsewhere. 

Perhaps you can – O’Leary also claimed (I’m still not making this up) that a senior Brexit minister had told him that lost European airline traffic could be made up for through a bilateral agreement with Pakistan. Which seems a bit optimistic to me, but what do I know.

Intercontinental flights are still likely to be more difficult, though. Since 2007, flights between Europe and the US have operated under a separate open skies agreement, and leaving the EU means we’re we’re about to fall out of that, too.  

Surely we’ll just revert to whatever rules there were before.

Apparently not. Airlines for America – a trade body for... well, you can probably guess that, too – has pointed out that, if we do, there are no historic rules to fall back on: there’s no aviation equivalent of the WTO.

The claim that flights are going to just stop is definitely a worst case scenario: in practice, we can probably negotiate a bunch of new agreements. But we’re already negotiating a lot of other things, and we’re on a deadline, so we’re tight for time.

In fact, we’re really tight for time. Airlines for America has also argued that – because so many tickets are sold a year or more in advance – airlines really need a new deal in place by March 2018, if they’re to have faith they can keep flying. So it’s asking for aviation to be prioritised in negotiations.

The only problem is, we can’t negotiate anything else until the EU decides we’ve made enough progress on the divorce bill and the rights of EU nationals. And the clock’s ticking.

This is just remoaning. Brexit will set us free.

A little bit, maybe. CAA’s Haines has also said he believes “talk of significant retrenchment is very much over-stated, and Brexit offers potential opportunities in other areas”. Falling out of Europe means falling out of European ownership rules, so itcould bring foreign capital into the UK aviation industry (assuming anyone still wants to invest, of course). It would also mean more flexibility on “slot rules”, by which airports have to hand out landing times, and which are I gather a source of some contention at the moment.

But Haines also pointed out that the UK has been one of the most influential contributors to European aviation regulations: leaving the European system will mean we lose that influence. And let’s not forget that it was European law that gave passengers the right to redress when things go wrong: if you’ve ever had a refund after long delays, you’ve got the EU to thank.

So: the planes may not stop flying. But the UK will have less influence over the future of aviation; passengers might have fewer consumer rights; and while it’s not clear that Brexit will mean vastly fewer flights, it’s hard to see how it will mean more, so between that and the slide in sterling, prices are likely to rise, too.

It’s not that Brexit is inevitably going to mean disaster. It’s just that it’ll take a lot of effort for very little obvious reward. Which is becoming something of a theme.

Still, we’ll be free of those bureaucrats at the ECJ, won’t be?

This’ll be a great comfort when we’re all holidaying in Grimsby.

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Brexit. You can find him on Twitter or Facebook.