09 December 2011
Allowing the Crisis: Europe's Struggle for Discipline
Walker's recent discussion of the European situation is astute and important, especially his account of sovereign debt as an essential part of the continental model of neoliberalism. However, I don't think that it's sufficient to explain why debt is an issue to understand why it's come to a crisis at this moment and led to the kinds of responses we've seen. What I want to emphasize, and what I gestured toward in relation to Scott Walker's putsch in Wisconsin, is that there's been a trading off between the economic crisis and a political crisis. The Eurozone crisis is less about stagnant growth and more about reconfiguring and strengthening institutions of geopolitical discipline. It's not that the problems/solutions are in the political sphere, but that the nature of the crisis is best understood as a political crisis around the economic one.
When I say "discipline" and "political" I am not referring to a class conspiracy, I'm referring to the fact that the crisis is now being played out as a struggle to control the institutions that delimit what is and isn't allowed as opposed to the economic sphere which delimits what is and isn't possible. To be clear I know how problematic that statement is, there are no absolute objective social constraints but under capitalism the economy functions as if it were objective and it's pretty hard to change that.
Consider three moments of the Eurozone crisis: the fact that Italy is running a principal surplus; the installment of technocratic governments in Italy and Greece; and the most recent proposed "deal" to save Europe. At the core of all these is the role that bond markets play in deciding what will be allowed and a strengthening of the relationship between those priorities and the state.
Italy's Principal Surplus
It's a little reported fact that if it weren't for borrowing rates Italy wouldn't have anything to worry about. They're running a surplus before interest. The reasoning behind the skyrocketing rates is simple, investors don't believe Italy will be able to grow enough to pay up when the time comes. Answering this question seems complicated and worthy of some research, but it's actually more complicated than smart people answering that question and then deciding how to invest in Italy. The mechanism that mediates this logic is a market where debt is sold and (less frequently these days) bought. It's the collective intelligence of this market that decides how trustworthy Italy is. So the real question being asked by investors is how likely is it that Italy will grow enough to pay off everyone, given how likely they think it is. Now we get a positive feedback loop of skepticism, doubt means higher borrowing costs, means lower likelihood to pay off, means more doubt. The best way to answer that question isn't to determine how healthy the Italian economy is, but to ask what everyone else thinks a healthy Italian economy would look like. The question is no longer economic, but political.
The bond market in Europe right now is manifesting an ideological feedback loop which acts to discipline the Italian state. An ideology of austerity with visions of fiscal "responsibility," which is code for a tiny public sector, and mass privatization is driving the Eurozone crisis on the occasion of a crisis of accumulation. The economic crisis did not create a debt crisis. Instead the debt crisis is the manifestation of a political struggle around the underlying economic crisis. The bond market is the same mechanism used on the global south to impose neoliberal discipline throughout the last 30 years, only now it's hit the metropole. I have trouble calling it neoliberalism when it's come home to roost like this, it's easier to call it something more plain: a power grab.
Now that sounds like I'm getting conspiratorial again, but not necessarily. It's an ideology and a certain vision for the proper configuration of social institutions that's grabbing power, not a class or cadre. What I'm saying is that to answer "why" the European debt crisis is happening, it's not sufficient to look at the economics, we also have to look at the politics.
Italy and Greece's Automatons
The disciplinary function of the bond market isn't anything new, even if applying it to Europe is (though also that not entirely). However this has historically been a political choice for each state. Certainly most states in the global south were given offers they couldn't refuse under neoliberalism, but it was still elected governments enacting the inhumane and genocidal policies that the IMF or World Bank were asking for. The installation of technocratic governments in Italy and Greece is something new.
My concern is less about the importance of sovereignty and democracy, but about the way the disciplinary function of the bond market and the political nature of the crisis are mediated. Technocrats by definition govern according to technical rules. Whereas elected governments ostensibly weigh the will of their constituency and the imperatives of things like bond markets, technocrats are merely character masks for what appear as the technical (i.e. objective) contours of governing, which of course includes the objective constraints of bond pricing. The collective will of bond markets are no longer one constraint among many for Italy and Greece, they're now objective conditions. We must follow the will of the market which is merely a perfect mediator of social knowledge.
This means two things. First it deepens the elision of economic and the political. Bond markets become both in theory and practice an objective constraint (when, as I argued above, they are actually reflections of dominant ideology). The fact that commentators and "the media" didn't make a big deal about this reflects just how obvious this already was. Second it welds the two political fields of state government and bond investing. Whereas previously Berlusconi or Papandreou chose whether or not to enact the market's will, and had to contest with the fact that "their people" were literally rioting outside their window, the new governments are automatons. They enact the rules that the market-cum-watchmaker decrees. This development means that the gap between the two disciplinary institutions, government and the bond market, has closed. Where they once operated on related logics they now are simply two components to a larger disciplinary system.
The New New "Deal"
This brings me to the recent proposed "deal," which I think is more disgusting than Rick Perry's new ad. The idea is simple: institutionalize the priorities of the dominant ideology in trans-European law. A collective, binding agreement for austerity and dismantling the welfare state. Rather than moving toward clear fiscal union and becoming more like the US, where the ECB would be able to bail out states and balance both inflation and economic growth (not that this system is particularly effective here), the EU will essentially remain structured the same way except with draconian restrictions on state finance. Being part of Europe would mean following the rules set by the ideology of austerity. It doesn't have to be this way, but it's what a certain ideology wants. This is an attempt at check-mate in the political struggle over what will and won't be allowed.
The major question is whether this itself amounts to a strategy for growth, whether the ideology of austerity is the beginnings of an emergent regime of accumulation. I still have nothing to say on this. I can't see how it would be as it fails to solve neoliberalism's fundamental failures, but it does seem to allow rich folks to make a lot of money. That's not necessarily accumulation, but it's not totally unrelated. Determining the societal choice, the regressive and progressive solutions to the crisis that are emerging, is a crucial problem that this blog must tackle.
Now what? Movements of people demanding the right to determine their own lives have grown dramatically in the last 12 months. We've all learned a lot and our capacity has grown dramatically. But riots, general strikes, and even electoral efforts seem feeble. I do still have hope. These movement are still young and we've barely processed the lessons of Greece let alone the Arab Spring, Occupy, or the recent anti-cuts mobilization in the UK. Some would say what's missing is an alternative, but I think that what's missing are the stakes of the dominant ideology not becoming more humane and palatable. Greece has successfully ruined its economy, but it was dispensable, Egypt's military government has only started to feel the people's breath on its neck and Occupy hasn't managed to be more than a spectacle.
The next step is clear to me. We've found ourselves on the losing side of a battle, we have to fight harder. Occupy is already thinking about it, taking over foreclosed homes, and trying to shut down global trade. We have to continue these efforts to make our political force stronger, to make it clearer what we won't allow. Part of why I want to reframe the European debt crisis as a political crisis is to make our struggle more manageable. I'm confident that accumulation will be revived, it's just a matter of whether the new regime will be based on authoritarianism and disregard for humanity or whether it will at least try and be humane. If we need to build a truly humane economy, something not possible inside capitalism, before the attacks will end, I might as well stop organizing and go live in the woods or, worse, go to grad school. But if we have to raise the social costs of choosing an inhumane regime of accumulation, build power and fight like hell, then I'm down.
Just make sure that Riot Dog is around.