our cunning elites

I was skirting yesterday round Plovdiv (which has an old Roman heart – like so many Bulgarian towns) at lunchtime yesterday on the way to a workshop at Assenovograd when I passed a sign (Brestovitza) which is the name of my favourite red wine. I did an about turn, drove through some great-looking vineyards at the eastern foot of the Rhodope mountains and shocked one of guys hanging around the rather decrepit winery into opening a bottle of Sauvignon Blanc and of a Rose for me to taste! I don't think they have such requests very often - although this small village apparently has 10 wineries (including the famous Toderoff one)! I was amazed to discover they they produce the great Erigone wines - which I fell in love with 3 years ago but then couldn't find again! Now I know where! I bought 2 of the Erigone's Cabernet-merlot (4 euros); 2 Rose (3 euros); and 2 Chardonnay. Tomorrow I will pop in to one of the Plovdiv art galleries which started me on my painting collection exactly three years ago - on my way to another workshop in a small spa town which skirts the western side of the Rhodopes. What a life! I’m staying at a superb Hotel (Sani) on the outskirts of Assenovograd with a very sizeable room with a view up a valley between the foothills – and a cavernous supermarket in the basement with rows of products (including one of the best selections of wines I’’ve seen) – but no customers! Smacks of a „cathedral in the desert”. Speaking of which, I was horrified to learn at dinner that municipal elections in November here may make half of the the 120-odd trainings this project is organising abortive! Such is the politicisation that many of the officials will be replaced – and it will take a couple of months for that to work through. And, because this project was 2 years late in starting (the usual Balkan politics), it is impossible to extend its current termination date of end-March. So even more workshops may be crammed into the autumn period before the axes start to fall in the pre-Christmas period! My initial view would be to stick with the schedule – although, in such a climate, noone probably wants to be absent from the municipal office! This is where the Brit in me loses patience – Bulgaria should be booted out of the Council of Europe for having such a level of Sultanism in its municipal systems.

But there are more important things to focus our energies on – eg the banks. A couple of good articles. Many of us had thought that neo-liberalism was on the wane; that the financial crisis had exposed once and for all the inanity of the claims of the financial experts; and that the clear public consensus for root and branch reform of the banks would lead to radical reform. In fact the opposite seems to have happened. The elites have spotted the danger; have been able to put an alternative narrative in place (about government debt – and its needing to be cut back) and have audaciously and, so far, successfully, managed to take things in the opposite direction. George Irvin has a strong piece about the strengthening (rather than weakening) of the neo-liberal agenda this has allowed in Social Europe.
Few of us pretend to understand finance – and that is the achilles heel of Democracy these days. We can talk until we are blue in the face about education, migrants, law and order but all this is just a gigantic diversion compared with the activities of those who control our financial system. And, as long as we fail to try to understand what they are up to, we are doomed. That’s why this amazing paper on what’s behind the Irish financial crisis is so important. It’s also why the Real World Economics blog (written by a group of economists who expose the nonsenses of that so-called discipline and have a commitment to drag it into the real world) is so worth reading (and therefore on the list of my recommended links) – particularly the recent posts by Peter Radford which give us insights into the unreal world which has such a profound effect on our real world.

Perhaps the most devastating comment about the state of economics today came – as a short article on Social Europe recounts - at a recent conference held in Bretton Woods, New Hampshire – site of the 1945 conference that created today’s global economic architecture – came when Financial Times columnist Martin Wolf quizzed former United States Treasury Secretary Larry Summers, President Barack Obama’s ex-assistant for economic policy. “[Doesn’t] what has happened in the past few years,” Wolf asked, “simply suggest that [academic] economists did not understand what was going on?”Here is the most interesting part of Summers’ long answer: “There is a lot in [Walter] Bagehot that is about the crisis we just went through. There is more in [Hyman] Minsky, and perhaps more still in [Charles] Kindleberger.” That may sound obscure to a non-economist, but it was a devastating indictment. Bagehot (1826-1877) was a mid-nineteenth-century editor of The Economist who published a book about financial markets, Lombard Street, in 1873. Summers is certainly right: there is an awful lot in Lombard Street that is about the crisis from which we are now recovering. Minsky (1919-1996) is best approached not through his collected essays, entitled Can “It” Happen Again?, but rather through the use Kindleberger (1910-2003) made of his work in his 1978 book Manias, Panics, and Crashes: A History of Financial Crises. Asked to name where to turn to understand what was going on in 2008, Summers cited three dead men, a book written 33 years ago, and another written the century before last.

For my sins I trained as an economist – although in the Scottish tradition of political economy – and did, for some years, lecture on the subject. But I was always mystified about it and sensed its quasi-religious element.
I have a large folder on the financial crisis – but confess to have read very little of it. There are few writers who can make the subject really interesting. Susan Strange was one – but is sadly lost to us. Susan George used to be another – but does not seem to have written recently. I have always admired the writings of Ronald Dore (who helped open our eyes to the Japanese ways of doing things) and was happy to see that he had written a piece in 2008 about the financialisation of the global economy.

And I’m travelling with the paperback Basic Instincts – human nature and the new economics by Pete Lunn who writes very well and clearly.
The painting is by a different Petrov - Ivan this time!