When discussing the global economy we rather do it from a political perspective. Forget economic theory. The decisions that were made in 2008 to save the world from economic destruction were politically motivated. It was a very small, global power elite consisting of politicians, bankers and multinational corporations CEOs who made the decisions on what and who to save from creative destruction. Retrospectively, it is clear that the aim of these decisions was and remains to defend the positions of the powerful. The decisions were taken at our and the following generations’ expense. We, the overwhelming majority who do not belong to the world’s super small group of super rich, will foot the bill. When the going got tough in 2008, the global power elite chose to save themselves, their wealth and the Frankenstein version of capitalism that they have created since 1971.
It is no longer what happens in the economy that matters most, but what happens in politics. Ever since the United States gave up the gold standard, the world order as we know it, in which free enterprise and middle class were society’s cornerstones creating financial security, trust in the system and hope for the future has now been turned into a casino economy, a plutocracy and a world so unfair that the 28 richest persons are allowed to hold as much wealth as 50% of the world population combined. The Western world is transforming itself into a Banana Republic, characterized by a fragile and failing democracy, growing inequality, unemployment, poverty and popular apathy.
Today, when we analyse the development of the West, we see striking similarities with how we analysed the Third World in the 1970s and 1980s. Back then Robert Chambers discussed the need of an alternative approach to third world development, a movement based on people’s ability to manage their own change processes. Chamber’s ‘people participatory approach‘ was seen as an alternative in the international aid industry to the neoliberal policies that was forced upon third world countries. Today, the people of Greece are experiencing the same ordeal. The global power elite (with the US, the EU, the Federal Reserve, the ECB, the IMF, the private banks and the multinationals in the forefront) is advocating for Greece the same lethal mix of austerity policies and simultaneous repayment of huge loans that they demanded of Latin America countries in the 1980s. What failed in the south yesterday will fail in north tomorrow!
The political decisions taken by the power elite in 2008 had no democratic mandate. Rather the decisions had the purpose to fuel the speculation economy once more and hand the speculators another chance to increase their personal wealth. Deflation, and falling asset prices, is the enemy of the stock exchange speculators. Consequently, more fiat money had to be printed and spent. For us consumers, on the other hand, lower prices on goods and services are always a good thing. So why this war on deflation?
As long as the politically powerful grant monopoly money to private banks at zero interest rates and banks choose to speculate on the stock market rather than give loans to companies in the real economy we can never reduce unemployment in the Western world. Look at Greece, look at Spain! Youth unemployment in Spain stood at 50.1% in March 2015! Only by increasing wages and the total number of wage earners in the Western world, can we stimulate consumption and defeat unemployment. It is clear that this can only happen at the expense of profits and the speculative economy. It is first and foremost about regulating the speculators and punishing greed. It is the moral and ethical question of our time. Or as Chambers writes: The Biggest Challenge of the 21st Century is ‘to find better ways to enable those who are powerful to gain more satisfaction from exercising less power.’ Chambers describes the behaviour of dictators and autocrats in Africa, but he could as well be describing the owners of big banks, big business and the political elite in the Western world today.
What does young people in Spain have to look forward to? Do we need more evidence of the systemic failure that we in the Western world are struggling with today? Hardly. The problem is that our political elite chose not to see. They simply do not care, because their affiliation is no longer with the citizens but with the themselves as members of the plutocracy. This is the result of years of democratic erosion. Democracy, and the right of every citizen to vote in free elections is the plutocracy’s final enemy. Plutocrats have already taken over and control the media. Civil society, another moderator of authoritarian rule in a well-functioning democracy, is indirectly controlled by the political elite and/or the super-rich. To create the perfect Banana Republic for the super-rich in the West, the only missing link is the destruction or belittlement of democracy. And is it not precisely in this terrible situation that we find American democracy today, as it buckles under the multi-million dollar pressure of lobbyists a la the Koch brothers? Is the increasingly centralised and anti-democratic EU next in turn for the plutocrats?