calm between the storms

I heartily recommend this piece in today's FT, though not on this occasion because it involves a sociologist putting the boot into neo-classical economics. Strangely, I was having a very similar thought only yesterday: whatever happened to the imminent collapse of the Euro, the inevitable Greek default and the doomed obstinacy of the European political classes? Has history been put on hold? Or have Newsnight researchers simply stopped paying attention? The talking heads from the financial world who explained where everything was inevitably heading - betraying a strange, crypto-Marxian historical materialism - have suddenly disappeared from our screens. At least for the time being. No doubt they'll be back.

And this is the strange condition of the present. There is an ongoing Marxist debate regarding neoliberalism's state of existential health, to which David Harvey replies "it depends what you mean by neoliberalism" and Neil Smith that "neoliberalism is dead but dominant". I have posted here previously to the effect that, judged according to its precise political ambitions, neoliberalism is already dead. But this is too simplistic.

The condition of the present, which could last for many years to come, is one of normality interspersed by emergency. The normality persists inspite of the emergency, a sort of pig-headed determination not to be de-railed by events. Under these circumstances, neoliberalism becomes a beligerent form of denial, a pretence that the same policies, regulators and ideas can continue as if everything were OK. An emergency briefly interrupts the calm, before passing once more.

At the same time, one can only be impressed by the emergency-management skills of European politicians, who seem to have put disaster on hold once more. Perhaps so much apocalyptic rhetoric regarding the Euro played into their hands, by increasing their room for political manoeuvre and raising the stakes. With Merkel's task represented as virtually impossible, the political capital at her disposal grew rapidly on the basis that it simply had to.

One way of interpreting this condition is melancholia, in the Freudian sense. The melancholic individual, for Freud, suffers from "constitutional ambivalence" regarding the past, enraged that it has gone, and so clinging on to the memory obstinately so as to avoid confronting the loss. It becomes a form of destructive narcissism, that ties the individual to the past, as an alternative to mourning. Paul Gilroy has applied this theory to Britain's relationship to empire. I wondered if you could adapt it to financial speculation and its aftermath.

Or there is the theory of exception, in the sense meant by Carl Schmitt and Giorgio Agamben, whereby the dependence of rules upon executive decision becomes plain, and the legal constitution or republic becomes subject to emergency political measures for its own benefit. Exception is also a form of ambivalence, in the sense that preservation of the status quo becomes so critical as to demand extraordinary and unprecedented measures.

I have a paper, that I'll hopefully be able to post in the coming weeks, analysing Europe's present economic situation as a state of neoliberal exception. Under such circumstances, political actors are neither inside nor outside the standard economic rules of government, but rescuing them by whatever means necessary. Persisting with 'business as usual' is feasible but only on the condition that entirely unusual measures can periodically be introduced. Hence, neoliberalism is 'alive' to the extent that various elites are still willing to vivify it, but 'dead' to the extent that they remain constantly on guard in order to take action to save it.

Five years after the dawning of the financial crisis, our situation is both critical and stable at the same time. It is stable, but only to the extent that various elites are occasionally willing to take critical action. Once actions are taken, then we return to a form of melancholic attachment to a world that, at some point or other, we will have to agree has disappeared. But in the meantime, I find myself marvelling at the capacity for things to calm down and return to normality, just as much as their capacity to heat up and create emergency.

Comments

[Dick Pountain]

Ringen's article is interesting. I'm currently reading Kahneman and several of his themes crop up here: asymmetrical reluctance to acknowledge losses v willingness to gamble on gains; experts' overconfidence in their own expertise etc. etc.

But another angle worth considering is economists as ideological actors telling horror stories that are intended to be self-fulfilling - to precipitate the crisis they predict - in order to, say, destroy the EU, kill off welfare states, curb public spending and so on. Paradoxically enough, politicians in democracies no longer have the luxury of such ideological recklessness, hence Merkel's admirable sang froid.

[Metatone]

I'm less impressed with Ringer's article than you (which is interesting, because I suspect I have a lower opinion of economists than you do.)

The first problem I have with the article is that it seems to think Europe's politicians have done the right thing, which is hard to square with the fact that serious action at the beginning of the crisis could have put it to bed for 5 or 10 years, which would have made transition in the periphery much less painful. Ringen's celebration of current policy says that he thinks what has happened and will happen in Greece are the eggs that needed breaking to make this omelette. Further, current policy is explicitly neo-liberal and implicitly shock doctrine. We are seeing the death of European welfare states.

The second problem is that Ringen seems to think the crisis is over, when cautious forecasters always expected:

a) Merkel's policy to kick the can down the road to, well, kick the can down the road a couple of years. So here we are a couple of years...

b) That the can kicking hits the real test when it comes to one of the big economies, and it looks like Spain is going to be the one. Austerity, as seen in Greece, damages the economy and exacerbated the debt problem - hard to decrease the debt level as your economy shrinks. So it's really hard to square the triumphalist tone with reality.