For our extraordinary crises to be solved the left and right must abandon their historical constrictions, writes TONY KINSELLA
SO HOW do you find living in the midst of a revolution? While less melodramatic than those of Petrograd in 1917, or the Paris of 1789, ours is more global and more universal.
Global in that it affects all countries. Those who predicated their futures on “lightly regulated” financial services are hurting.
GDP is forecast to decline by almost 6 per cent in the UK and 4 per cent in the US. Economies built around manufacturing and exporting goods are faring little better. German exports fell by almost 21 per cent in January, while Chinese exports for February were down by nearly 26 per cent.
Austrian banks mostly steered clear of US subprime mortgages and their highly toxic derivatives, while their German counterparts plunged in. The German government has had to, so far, provide €480 billion in guarantees and capital to its sickly banks. Their Austrian counterparts anxiously monitor their eastern European loans totalling some €293 billion.
Our economic and social models are metamorphosing, or crumbling, and we need to grasp two realities, one occluded, the other obvious.
The occluded one is the false, though oft-parroted and loudly-trumpeted, assertion that nobody foresaw, nor could have foreseen, this revolutionary collapse. Alan Schwartz, the former CEO of the late unlamented Bear Stearns, epitomised this approach when he told the US Senate’s banking committee last April: “I just simply have not been able to come up with anything . . . that would have made a difference.”
Schwartz, like our own Brian Cowen, has an obvious personal interest in peddling this impossibility of foresight nonsense. Admission of warnings ignored would replace the accusations of incompetence they currently face with ones of negligence.
Wall Street firms such as Evercore, Greenhill, Lazard and Brown Brothers Harriman all refused to touch a single mortgage-backed security. None of them has requested a cent of federal assistance. The International Monetary Fund warned. The Bank of International Settlements warned. In 2003 Warren Buffet wrote that "derivatives are financial weapons of mass destruction". George Soros tried to sound a systemic alarm, as did Post Washington, the 2005 book I wrote with Fintan O'Toole.
Nassim Taleb, author of the 2007 book The Black Swan: The Impact of the Highly Improbable,warned: "Fannie Mae . . . seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup." His black swan analogy speaks volumes. Everybody "knew" all swans were white, until Europeans encountered black swans in Australia.
The obvious reality is that the solutions to our crises must be politically decided. This requires that our political options liberate themselves from their historical constrictions. Parties of the centre-right place their emphasis on the free market, albeit recognising to varying degrees the need for regulation and equity. Parties of the centre-left tend to emphasise the need for a socially equitable framework, within which individual liberty should flourish.
The centre-right needs to confront the demise of what the political philosopher and former London School of Economics professor John Gray describes as “the fag end of debt-based financial capitalism”.
James K Galbraith, in his 2008 book The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too, talks of a US conservative approach that replaced ideology with a strategy "that would bring to them, individually, and as a group, the most money, the least undisturbed power, and the greatest chance of rescue should something go wrong". Sound familiar?
The centre-left must urgently replace class nostalgia with a celebration of its triumph – and move on.
The three leading occupations in England and Wales in 1911 were domestic service, agriculture and coal mining. Some 3.5 million people, or almost 10 per cent of the overall population, worked in these three sectors.
A 2008 survey gave sales personnel, middle managers and teachers as the three largest occupations in Britain today. Those millions of maids, muck-spreaders and miners combined to develop a Labour movement that succeeded in creating the educational access and social justice which ensured that their children and grandchildren were not obliged to enter service, labour on farms or toil deep underground. They could instead become teachers, doctors, nurses and managers.
The shape of our politics, and the conditions of our survival, depend in no small measure on our collective abilities to build a different, better, fairer and sustainable global social and economic reality.
The G20 summit meets in London next month, bringing together the leaders of countries which collectively account for more than 85 per cent of global GDP.
The Put People First platform is working to welcome them with one of the biggest demonstrations in British history. Will answers emerge from the summit or from the streets? Most probably from both, and neither is likely to have a monopoly on radical solutions that would have been rejected out of a hand even a year ago.
Such is the nature of revolutions.