The Only Way Out

2015 is witnessing what may well prove to be the climax of the greatest humanitarian disaster in modern world history. Its most visible manifestation is the swelling flood of refugees – likely to amount to several millions in 2015 alone – trying to enter Europe from adjacent regions of Asia and Africa in their attempt to escape conflict or economic collapse in their own countries. This phenomenon has been building steadily over many years, but particularly since the onset of the Global Financial Crisis (GFC) in 2007-8 and the political upheavals known as the Arab Spring that began in 2011. By now – in October 2015 – the scale of this mass exodus from these regions has reached such intensity that the flow has become almost uncontrollable, with the forces of law and order in the European countries to which the migrants are mainly fleeing (nearly all illegally) increasingly unable to impose their authority and their governments totally at a loss as to how they should respond. At the time of writing there is no telling how large or sustained this influx will be; but, bearing in mind that the continent as a whole is already severely crippled by seven years of economic recession and stagnation since the start of the GFC, their capacity to assure minimum acceptable standards of living and public services – as well as preserve social peace and stability – is bound to be sorely tested.

At the same time the ability of the world’s leading economic powers – all of which, including the United States, are to some extent subject to similar pressures to those affecting Europe – to take remedial action to stabilise the “developing” countries from which these migrants are so desperate to escape are evidently quite limited. As noted in earlier postings of this blog, this impotence stems both from the growing economic and material weakness of the leading powers and from their ideological incapacity – that is to say an inability to come to terms with the failure of the economic and social model that the West has imposed on the world since the 19th century, and most particularly of the “neo-liberal” version that has been dominant for the last 35 years.

The unravelling of this ideology appears to have come as a huge shock and surprise to the Western ruling élite – at least as much as was the collapse of the ideology of “communist” central planning that fell with the Berlin Wall in 1989 in the eyes of the Soviet establishment. Such a reaction by ruling élites to what they might well have recognised as existential threats to the established order might seem unremarkable given the scale of wealth and power that they stand to lose – as typically in any potentially revolutionary situation. In the case of the Western establishment it may be all the more understandable given that a mere 25 years ago they felt able to proclaim the final triumph of the liberal-capitalist model following their “victory” in the Cold War.

On the other hand as rational beings they might perhaps by now have felt forced to conclude that the multiple disasters we see unfolding across the globe could endanger the very survival of the civilised order that has evolved in the Western world over the last several centuries. Hence world leaders’ continued public denial that there is any fundamental flaw in the still dominant neo-liberal economic model based on “free” global markets can only be explained in terms of either a) a psychological / institutional inability to allow serious exploration of radical alternatives – akin to the totalitarian mindset of their Soviet counterparts in the 1970s – or b) a conscious willingness to risk or even promote conflict on such a scale as to cause destruction of life and civil order – perhaps even to the point of precipitating a world war – in a desperate attempt to defend their own narrow class interest come what may. The latter hypothesis might well be thought consistent with the track record of the notorious “military- industrial complex”, whose malign influence over US foreign policy – viewing expansion of the armed forces and the production of armaments as economically and commercially benign – is traceable from the aftermath of World War II up to the Western invasions of Afghanistan and Iraq in the present century.

The need for a new ideology

Despite the continued danger that such pathological unreason might lead humanity to self-destruct we must believe that a more hopeful resolution to the intensifying crisis is possible. For such optimism to be plausible, however, a critical mass of those with power and influence must emerge to lend support to a radical reset of the global order, which would also need to be quite sudden in view of the advanced state of systemic disintegration that is now apparent. The essential focus of this drastic change in collective thinking would need to be on four central realities:

  1. The entire neo-liberal agenda that has dominated official policy in the West since at least 1980 has been fundamentally misguided and has exacerbated rather than ameliorated the condition of the vast majority of the world’s people, resulting in a decline in living standards for most of the “99%” relative to the “1%” – or even in absolute terms for many – and consequently increased inequality and social division;

  2. The failure of this “free market” agenda – including “globalisation” – has been particularly catastrophic for the poor countries of the Third World and has contributed greatly to converting more and more of them into failed states – starting with Somalia, which has been effectively without a government since 1990;

  3. The need to renounce economic growth as an instrument for advancing human welfare, given that rapid growth is no longer attainable in a world of chronic excess capacity and vanishing scarcity, nor desirable on a finite planet where the biosphere is increasingly threatened by indiscriminate overproduction;

  4. The required remedies in both the short and long term will entail a) massive redistribution of both wealth and income – from the tiny minority who control far more of it than they can possibly either need or put to good use to the vast majority who have virtually nothing and hence must struggle to survive on the margins of existence without hope of improvement in their lot, and b) a fundamental shift in the organisation of the world economy from the anarchic instability of competitive markets to more stable markets based on regulation and cooperation.

Acceptance of these insights, taken together, amounts to a recognition that the attempted revival of laissez-faire capitalism since around 1980 has proved a catastrophic failure. The reasons for this failure, as argued in earlier posts, are to be found in long-term economic and social trends which, like earlier instances of revolutionary change, have been driven largely by technological advance – see https://harryshutt.com/2015/04/08/the-withering-away-of-the-financial-industry/. Failure by the ruling élite to recognise and react to such irresistible tendencies has brought us to a point where emergency steps to implement radical change are unavoidable if terminal disaster is to be averted.

A plausible dénouement

It is obvious that the global ruling establishment is still very far from being able to contemplate such an agenda as that briefly outlined above. Indeed, as this blog and others have frequently suggested, the only way that the powerful might be induced to “think the unthinkable” is under conditions of total breakdown of the existing order, such as is now apparently gathering momentum across the world, and is exemplified by the refugee crisis engulfing Europe. Given the imminent prospect that this catastrophe will combine with intensification of the GFC to precipitate inescapable financial collapse, it could even be imagined that some of the necessary changes in official attitudes and policies will come about by default.

In fact default is, quite literally, the most likely scenario to be involved in easing the unprecedented burden of debt (public and private) now crippling the global economy – which at $200 trillion is 40 per cent higher than at the start of the GFC in 2007, since it is now widely accepted – even by the IMF – that most of this can never be repaid while the attempt to continue servicing it is perpetuating mass poverty and hardship as well as corporate paralysis. Such mass debt default will in turn trigger a collapse in other asset values, including stock markets and real estate, which the authorities will be powerless to prevent – although they will certainly try, probably by resorting to indiscriminate money printing – instead of the selective purchase (monetisation) of assets which is presently practised under the name of quantitative easing (QE) – which is all too likely to precipitate hyperinflation.

Given the steadfast refusal of the ruling élite and the mainstream media even to discuss the possibility of such a scenario, it is impossible to tell what the response of governments and the public at large around the world might be to its realisation, especially as it must be assumed that the official propagandists will continue to use all their ingenuity to distort the truth. Ultimately, however, we may expect that some event or series of events – such as bank failures, currency collapse, outbreaks of social unrest or war – will be the catalyst for a more general financial upheaval and social disintegration in a growing number of countries. This in turn could well lead to a breakdown in the global order such as to bring about widespread political revolution and demands for fundamental ideological change.

Underpinning all the reforming and rebalancing of the global economic order that will be entailed in applying the principles outlined above must be recognition of the need to restore a commitment to the ideals enshrined in the Universal Declaration of Human Rights (dating from 1948), which have been progressively abandoned by Western leaders since the 1970s in favour of a cynical realpolitik more worthy of Hitler or Stalin. This would need to be reflected in a system of international law enforcement which ensures that perpetrators of human rights abuses such as torture or imprisonment without trial, as well as high-level fraud and other financial crimes, are effectively brought to justice – even if this involves punishing the leading officials and businessmen of the United States and other leading Western countries as well as Russia who have hitherto enjoyed almost total impunity. Such a demonstrated commitment to the rule of law and genuine political accountability must be seen as a prerequisite to bringing about an economic and social order that holds out hope of restoring a minimum degree of peace and stability in place of the present deepening chaos and misery.

As the once dominant neo-liberal order – supposedly involving a return to the laissez faire values of early capitalism – now crumbles to dust it is ironic to recall that its early protagonists in the 1980s, led by the Thatcher government in Britain, adopted the slogan “there is no alternative” in support of their ideological crusade. For what is now required is a recognition by world leaders that a pre-condition of our salvation must be a de facto rejection of those values in favour of ones more conducive to the well-being and happiness of the overwhelming majority of humanity. For while, as suggested above, we must fear the possibility of the present systemic chaos ending in a terminal cataclysm for our species, it can also be envisaged that visionary leadership will enable us to realise that, in a world of growing abundance and vanishing scarcity – thanks to technological advances – the mass of the world’s people could easily be provided with the material security that all crave but so few attain under the existing distorted and anarchic world order.

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