Friday, March 22, 2013

Cyprus, Dijsselbloem and the Need for Democracy

Jan Joost Teunissen

In the case of Cyprus, the error of Jeroen Dijsselbloem, the Dutch finance minister and head of the Eurogroup, as well as of his European colleagues, is that they forgot about democracy. You cannot abolish democracy, even though in the cases of Greece and Italy it appeared that you could replace democratic governments by technocratic governments. Also, Dijsselbloem and his colleagues underestimated the anger and the fear of savers like you and me, as well as the "investor sentiments" of the people operating in the financial markets.

Of course, in principle Dijsselbloem is in favour of democracy. But then he, and his colleagues, should have welcomed that in
Cyprus democracy - the parliament - has triumphed and not the technocracy.

More democracy in economic policy making in European countries is urgently needed, if only because its citizens are rapidly losing confidence in their leaders. Yes, they have chosen them, but not because they trusted their leaders to do a good job but because they had no alternative.

More democracy in economic decision-making and more protests of undignified citizens, are also urgently needed to remind policy makers that they should think better about how to address the crisis of Cyprus, and of the euro. And, last but not least: both the protests and the rethinking should help to change course!

Economic policymaking is too narrow-minded, as it is not embedded in a broader vision of what is at stake in society. Over the last decades, it has lacked that broader embedding and, instead, has left much of the thinking and acting to the players in the financial markets, especially the bankers. This has not only given way too much space to idiotic things that brought our economies to the brink of bankruptcy, but also led to recurrent crises in Latin America, in Asia, in Russia, until eventually the system was hit in its heart, that is, the U.S. and Europe.

One pretends that small countries such as
Greece, Portugal and Cyprus are the problem, but they are not. The problem is the capitalist system with the dollar as the key international currency and the unbridled financial markets with their agents operating in it to enrich at the expense of others. That is the problem.

Not the poor but the rich are the problem!

Greece or Cyprus are the problem, but the United States and the maintenance of the dollar as the key currency of the system, are the problem! And let’s not forget that from the sixties onwards, sensible plans to reform the system have been proposed and even discussed by policymakers in endless meetings (eg in the early seventies by the so-called Committee of Twenty, a predecessor of the current G20). But no action was taken. Instead, an international monetary and financial system was maintained in which the United States and the U.S. dollar play a dominant role.

As we all know, economic policymaking is a matter of balancing political interests and choosing a policy that underpins political interests and keeps them intact - or changes them!

We also know that economic policies support a distribution of power between people and groups, or, to mention an old-day distinction that still applies: between labour and capital.

"The" economy is the result of human action and the power of people and groups who participate in it, and that is almost everyone. Consequently, economic policymaking is not "neutral" or "technical" as technocrats want us to believe, it is political.

What policy makers, politicians, entrepreneurs and journalists present as "sound" economic policies is equivalent to satisfying the needs of people working in the financial markets. In this way, economic decision-making has become dependent on "investor sentiments" and short-term horizons of the people who work in the financial markets.

It is not only the 'day traders' whose capricious behaviour they respect, but also those who make investments decisions for pension funds and other institutional investors.

By adopting "neoliberal" policies, governments have become the slaves of bankers and other powerful people in the financial sector. They have little impact on what is economically happening within countries and between countries. This explains their powerlessness to solve the euro crisis and other crises.

The financial markets not only have a too dominant role in the current world capitalist system, but they are also a major cause of the emergence and persistence of the crisis, both the international and the European crisis.

If one wants to address the crisis in
Europe and the global financial and economic crisis in a more serious way, one should begin by reforming capital markets rather than labour markets.

We need more, rather than less, democracy in economic policymaking. This applies both for individual countries and for the joint international approach to the euro crisis and the international crisis.

Dijsselbloem and his colleagues should welcome the fact that the parliamentarians in
Cyprus and the people who elected them, took action against technocratic decisions made by the Eurogroup and the government of Cyprus.

Without noise, resistance and protests, there is no democracy. Dijsselbloem, as a former parliamentarian, would or should agree with that.

No comments: