Good old political economy

Yanis Varoufakis’ recently published The Global Minotaur – America, the true origins of the financial crisis and the future of the world economy arrived here in the mountains a few days ago and has provoked a lot of thoughts. 
First about the light which such a political economic (and historical) approach throws on the matter – an honourable American elite which had experienced the financial breakdown of 1929 and the savagery of the 2nd World War was determined to create the conditions to ensure it never happened again. 
Most of us (think we) know about the 1944 Bretton Woods Conference and its institutions and the Marshall Plan. Not so well-known is the (behind-the-scenes) American role in establishing the Coal and Steel Community (leading to the EU); and in setting Japan on its path to post-war success. 
And, until I read this book, I had, frankly, not really understood the significance of the 1971 American decision to break the dollar link with gold. As the Far East has supplanted the US and Europe as the productive powerhouse, the American deficit (and capital inflow) has mounted to stratospheric proportions – thereby creating the conditions for new and toxic financial mechanisms. 

At the heart of Varoufakis’ writing (including his incisive blog) is the danger of a common currency (whether at global or european level) without a recycling mechanism. There are quite a few summaries and interviews in the internet about the book – eg this one from Naked Capitalism - 

Philip Pilkington: In your book The Global Minotaur: America, The True Origins of the Financial Crisis and the Future of the World Economy you lay out the case that this ongoing economic crisis has very deep roots. You claim that while many popular accounts – from greed run rampant to regulatory capture – do explain certain features of the current crisis, they do not deal with the real underlying issue, which is the way in which the current global economy is structured. Could you briefly explain why these popular accounts come up short? 

Yanis Varoufakis: It is true that, in the decades preceding the Crash of 2008, greed had become the new creed; that banks and hedge funds were bending the regulatory authorities to their iron will; that financiers believed their own rhetoric and were, thus, convinced that their financial products represented ‘riskless risk’. However, this roll call of pre-2008 era’s phenomena leaves us with the nagging feeling that we are missing something important; that, all these separate truths were mere symptoms, rather than causes, of the juggernaut that was speeding headlong to the 2008 Crash. Greed has been around since time immemorial. Bankers have always tried to bend the rules. Financiers were on the lookout for new forms of deceptive debt since the time of the Pharaohs. Why did the post-1971 era allow greed to dominate and the financial sector to dictate its terms and conditions on the rest of the global social economy? My book begins with an intention to home in on the deeper cause behind all these distinct but intertwined phenomena.

PP: What, then, do you find the roots of the crisis to be?

YV: They are to be found in the main ingredients of the second post-war phase that began in 1971 and the way in which these ‘ingredients’ created a major growth drive based on what Paul Volcker had described, shortly after becoming the President of the Federal Reserve, as the ‘controlled disintegration of the world economy’.
It all began when postwar US hegemony could no longer be based on America’s deft recycling of its surpluses to Europe and Asia. Why couldn’t it? Because its surpluses, by the end of the 1960s, had turned into deficits; the famous twin deficits (budget and balance of trade deficits).

Around 1971, US authorities were drawn to an audacious strategic move: instead of tackling the nation’s burgeoning twin deficits, America’s top policy makers decided to do the opposite: to boost deficits. And who would pay for them? The rest of the world! How? By means of a permanent transfer of capital that rushed ceaselessly across the two great oceans to finance America’s twin deficits.
The twin deficits of the US economy, thus, operated for decades like a giant vacuum cleaner, absorbing other people’s surplus goods and capital. While that ‘arrangement’ was the embodiment of the grossest imbalance imaginable at a planetary scale (recall Paul Volcker’s apt expression), nonetheless, it did give rise to something resembling global balance; an international system of rapidly accelerating asymmetrical financial and trade flows capable of putting on a semblance of stability and steady growth.

Powered by America’s twin deficits, the world’s leading surplus economies (e.g. Germany, Japan and, later, China) kept churning out the goods while America absorbed them. Almost 70% of the profits made globally by these countries were then transferred back to the United States, in the form of capital flows to Wall Street. And what did Wall Street do with it? It turned these capital inflows into direct investments, shares, new financial instruments, new and old forms of loans etc.
It is through this prism that we can contextualise the rise of financialisation, the triumph of greed, the retreat of regulators, the domination of the Anglo-Celtic growth model; all these phenomena that typified the era suddenly appear as mere by-products of the massive capital flows necessary to feed the twin deficits of the United States.

PP: You seem to locate the turning point here at the moment when Richard Nixon took the US off the gold standard and dissolved the Bretton Woods system. Why is this to be seen as the turning point? What effect did de-pegging the dollar to gold have?

YV: It was a symbolic moment; the official announcement that the Global Plan of the New Dealers was dead and buried. At the same time it was a highly pragmatic move. For, unlike our European leaders today, who have spectacularly failed to see the writing on the wall (i.e. that the euro-system, as designed in the 1990s, has no future in the post-2008 world), the Nixon administration had the sense to recognise immediately that a Global Plan was history. Why? Because it was predicated upon the simple idea that the world economy would be governed by (a) fixed exchange rates, and (b) a Global Surplus Recycling Mechanism (GSRM) to be administered by Washington and which would be recycling to Europe and Asia the surpluses of the United States.

What Nixon and his administration recognised was that, once the US had become a deficit country, this GSRM could no longer function as designed. Paul Volcker had identified with immense clarity America’s new, stark choice: either it would have to shrink its economic and geopolitical reach (by adopting austerity measures for the purpose of reining in the US trade deficit) or it would seek to maintain, indeed to expand, its hegemony by expanding its deficits and, at once, creating the circumstances that would allow the United States to remain the West’s Surplus Recycler, only this time it would be recycling the surpluses of the rest of the world (Germany, Japan, the oil producing states and, later, China).

The grand declaration of 15th August 1971, by President Nixon, and the message that US Treasury Secretary John Connally was soon to deliver to European leaders (“It’s our currency but it is your problem.”) was not an admission of failure. Rather, it was the foreshadowing of a new era of US hegemony, based on the reversal of trade and capital surpluses. It is for this reason that I think the Nixon declaration symbolises an important moment in postwar capitalist history.

Immediately after reading the book, I turned to Howard Davies' earlier (2010) book The Financial Crisis; who is to blame? which looked (briefly) at 39 different explanations of the global crisis. Astonishingly - although that book's opening pages mention (positively) the 1980 Brandt Commission's call for reform of the monetary system and other critiques of growth and neo-liberalism, they are then put to one side with the comment that "those arguments go beyond the scope of this book"!!! 
Of course root-and-branch critiques are more difficult to translate into the instantaneous and headline-grabbing policy-making political elites now seem to require. But for someone of Davies' calibre to dismiss proper analysis in this way is quite shocking - and tells us so much about the "commentariat" on whom we depend for our understanding. 
There is, perhaps, a lot to be said for elite, behind-the-scenes manoeuvring!! Except that all elites have their snouts in the swill.

The Global Minotaur makes us think about the different ways we try to make sense of the world; how seldom we change our thinking; and what it takes to make us do that. It will be interesting to see how seriously his analysis is taken by other economists or whether (as I suspect) he will be written off as a .....Greek....bearing intellectual gifts....

what is Europe for?

The USE – United States of Europe – is back. For the eurozone, at least. Such "political union", surrendering fundamental powers to Brussels has always been several steps too far for the French to consider. But Berlin is signalling that if it is to carry the can for what it sees as the failures of others in this global crisis, there will need to be incremental but major integrationist moves towards a banking, fiscal, and ultimately political union in the eurozone.
It is a divisive and contested notion which Merkel did not always favour. In the heat of the crisis, however, she now appears to see no alternative. The next three weeks will bring frantic activity to this end as a quartet of senior EU fixers race from capital to capital sounding out the scope of the possible.Herman Van Rompuy, president of the European council, Mario Draghi, head of the European Central Bank, Jean-Claude Juncker, Luxembourg leader and longstanding head of the eurogroup of single currency countries, and José Manuel Barroso, chief of the European commission, are to deliver a eurozone integration plan to an EU summit on 28-29 June. All four are committed European federalists.

The Guardian 5 June 2012 

This is a rare blog (for me) about the European Union. It tries initially to “fix” the mainstream British attitude to what was once “The Common Market” but which, a couple of decades ago, underwent a name change and resurrected ambitions.

Unusually for a Brit, I try to be objective – since I have always been favourably disposed to things European. This was, actually, one of the reasons I felt unable to go forward in 1983 as a Labour candidate for my hometown to the British Parliament. Neither Tony Blair nor Gordon Brown (in the same year) had any such dilemmas in fighting for election with a manifesto which threatened British withdrawal.

The blog is written in response not only to this news item - but also to a reread yesterday of the powerful overview of the European scene (and of its core academic writing) contained in Perry Anderson’s The New Old World. One of the many fascinating insights the book contains is that the intellectual framework for most of the tens of thousands of academics whose full-time professional occupation is European studies is…..American political science. Rather dryly, Anderson quotes (on page 80) Alfred Cobban’s definition of this branch of learning 50 years ago – a device “for avoiding that dangerous subject (politics) without achieving science”     

The fixation of the European political class on Federalism has been a constant source of puzzlement to even the most highly educated and pro-European Brits. Of course we understood the initial post-war drive to ensure there could be no more bloody conflicts between Europeans; we were reasonably convinced in the 1980s by the arguments about the potential a European system had to mitigate the power of the multinationals (although the sad reality has been that the multinationals have become a powerful but hidden part of the European constitution); and we recognised the powerful role which prospective EU membership had played in creating and grounding the legal, political and commercial institutions and processes of ex-communist countries.

But otherwise, we are not convinced by the relentless drive toward homogeneity; nor of the results from all the time and money spent on closed bureaucratic meetings and summits. Winston Churchill’s comment on the latter “Jaw-jaw is better than war-war” no longer packs the punch it once did. Brits are, of course, famous for being an awkward squad. In European circles we are always ready to puncture overblown rhetoric - although, sadly, New Labour brought its own brand of opaque Newspeak to negotiations.

De Gaulle’s dismissive image of the UK being “a nation of shop-keepers” and of bean counters is sustained by the overriding defence of the British political class of the privileges of the London financial elite; of the country’s 1990s rebate; and by its zealous compliance with European regulations. 

Other countries take a more relaxed attitude to their European obligations, appearing good Europeans at the negotiation stage but less so in their failure to implement. Membership of what became the European Union was always for us a matter of economic calculation rather than political commitment. 

And the calculations continue – alongside growing anxiety about the transfer of powers to a complex and opaque system of bargaining (amongst officials and lobbyists) and questionable judicial judgements in other countries. The previous generation of British politicians seemed to value democracy more than the present lot. After all they had fought a war for it! 

We have always been wary of the Eurocrats – and I was shocked during my (short) experience of working in Brussels in the mid 1990s by the privileges and their curious combination of indolence and arrogance. European structures are modelled on the French system which, in the post-war period, has been governed for the most part by civil servants – with citizens being reduced to the role of protestors.  

In the 1980s it was still possible to believe that the EU might build on the European social model (which owed nothing to the European Commission). Delors, after all, was still imbued with the values of most of the founders of the “European project” but, since then, the Commission officials and policies have become infected with neo-liberalism – a disease which most new member countries have also brought to the European political table since 2004. 

It has always been obvious that "the European project" had no place for the citizen - talk of the "democratic deficit" was so much eyewash (and the German push for greater powers for the European Parliament just a guilt reflex). 
But the scales have only now fallen from people's eyes as they saw the ease with which the European Union powers displaced the elected rulers of Italy and Greece..... 

Since writing this, I've come across an extensive overview of current British attitudes to the EU - which reveals the full scale of the British alienation from Europe.

Scotland as fortress against neo-liberalism?

Neal Ascherson is one of Scotland's few intellectual journalists and visited Greenock last year during the by-election there whose results seemed to halt what had been the powerful onward march of the dominant nationalist party there. His subsequent article in the London Review of Books started with an evocative description of the social changes there and the developed some useful insights into the country's politics -

In my first spell there, the great estuary of the Clyde was lined for mile after mile with clanging, sparking shipyards, and every shop-sign in West Blackhall Street read ‘SCWS’ – Scottish Co-Operative Wholesale Society. When I returned nearly 50 years later, the yards had vanished. There were a few charity shops, an Asda; in grey housing schemes up the hillside, a shrunken population waited quietly for the council to repair broken doors and fences. The young, it was said, traded heroin if they needed cash for clothes and clubbing. The young with the energy to get out of their beds, that is.Greenock is struggling into recovery now. It is a place built for outward vision and hope, a big theatre in which tier on tier of streets look out across the estuary to the mountains. Not only James Watt, but many painters, novelists and poets began here. After utter collapse, small citizens’ groups are trying to rub the old town back to life, to restore hope: a new theatre, the restoration of the huge ropeworks factory, a protest (why use cobbles imported from China, in a landscape of good Scottish stone?).

Apart from independence, the Scottish nationalists and the Labour party whom they have supplanted want much the same things. After all, one way to describe what’s going on in Scotland is that a fortress is being thrown up to keep out the worst of the privatising, state-slashing, neoliberal tide: a northern redoubt to preserve and modernise what’s left of British social democracy and the postwar consensus. But coalition would have been unthinkable. Too long spent in tribal hatred. And real differences. Labour in Scotland has a hundred-year history of sacrifice, comradeship and struggle. The SNP has never been socialist, and came late to social democracy. The paint on its social credentials is still drying. Salmond was a banker, but his minority government sat helplessly as Scotland’s banks and its main building society went the way of Iceland and Ireland. (It’s an unwelcome truth that Scotland escaped the same devastation only because it was inside the United Kingdom, and Gordon Brown rescued its finances.)The fundamental perception of British socialism, and Scottish socialism especially, is about wasted lives, the strangled destinies of ordinary people.

Last summer, I went to Jimmy Reid’s funeral in Govan. Billy Connolly, once an apprentice in the same shipyard, told a story about going for walks with Reid in Glasgow. ‘He’d point to a tower block and say: “Behind that window is a guy who could win Formula One. And behind that one there’s a winner of the round-the-world yacht race. And behind the next one … And none of them will ever get the chance to sit at the wheel of a racing car or in the cockpit of a yacht.”’ Does the SNP see its fellow human beings that way? It certainly sees the nation clearly: it has all the angry confidence, the impatience to get down to the heavy lifting, the bright-morning optimism Labour has lost. But how about the compassion?

Jimmy Reid began in the Communist Party, moved to Labour but ended up in the SNP. Latterly, whichever party he was in, he was fond of saying that ‘the rat race is for rats.’ Alex Salmond might prefer Scotland to win the race first and waste the rats afterwards. But at the funeral he announced that Reid’s words, and the speech that contained them, would be reprinted and distributed to every schoolchild in Scotland. After he said this, Salmond looked up from his text and added, almost to himself: ‘What’s the point of being first minister if you can’t do things?’ And Govan Old Church slowly began to rumble with applause, hands beaten by shipyard workers, bankers, ministers of the kirk, women and men of all the parties including Tories, soldiers on leave, families in black who had come from the isles. On this they agreed: in Jimmy Reid’s name, they wanted this man to do things. Now he can.

The photograph is taken from Customshouse Quay and looks toward what used to be the site of the shipyards.

About small nations

Readers may have been surprised that the previous post on my Scottish visit did not mention the prospect of independence for that country – after all the official start to the 2 year debate (more hopefully “discussion”) on that subject was made during my visit. 

Perhaps as an ex-pat of 22 years’ standing who no longer is entitled to vote, I feel it inappropriate to comment. But no, it is more a matter of my own vacillation on the matter. I have – over the piece – blown hot and cold on the issue. 

In the late 1970s, when there was a referendum on the issue, I campaigned actively against the notion of a Scottish Parliament (believing it a slippery slope to independence) but, in the privacy of the polling both, found myself voting yes! Although a majority of those voting did favour a change, it was not a majority of those entitled to vote and the status quo prevailed at the time. But, as the Thatcherism which was so consistently rejected by Scotland, began to bite there too in the late 1980s, I strongly supported the constitutional campaign which got underway then for a measure of independence - which the Scottish Parliament and Executive has given the country since 1999. 
In the 1950s we mocked the notion of a country of 5 million people being independent but Norway and many EU members now demonstrate its feasibility – let alone desirability. I have worked in many of these countries recently – Czechia, Slovakia, Hungary, Kyrgyzstan, Latvia. And I was fascinated a few days ago by an article After the Velvet Divorce by Martin Simecka which spoke about the linguistic aspects of the two countries which were united until the late 1990s - 

The two languages, indistinguishable to a foreigner, represent two independent entities in my brain. Czech, historically more ancient and rich, is aggressive and domineering, words seem to rush to the lips of their own accord and listening to Czechs speak you feel they are literally revelling in their language and don't know when to stop. This is a feeling I am intimately familiar with: even if you lack any ideas, Czech allows you to spout meaningless nonsense or lies, and still give the impression of speaking wisely and truthfully – that's how enthralling Czech is. It has the enormous advantage of a formalized division between so-called common (colloquial) and standard Czech, both versions of which are acceptable in writing, if necessary. The richness of the Czech language, however, is sometimes more of an obstacle than an advantage, and does not make it any easier in and of itself to understand national identity. Havel was right when he bitterly remarked that "talk of Czech national identity often doesn't go beyond mere chatter".

Perhaps one of the reasons why Czechoslovakia had to split was the fact that the Slovaks felt humiliated by the verbal dominance of Czech politicians, who spoke seemingly rationally but in reality misused their language to suppress the budding Slovak longing for equal rights. Even Havel, one of the few people capable of moulding the Czech language into a most beautiful shape, took far too long to understand the urgency of this Slovak longing.  Slovak is soft and melodious and you can tell Slovak women by their voices, which are higher and more delicate. It is humble yet it doesn't let itself be violated. Of course, you can lie and talk nonsense in Slovak, too, but thanks to the sobriety of the language you are soon found out and your words turn into embarrassing drivel. Lacking a written colloquial form like Czech, Slovak imposes discipline and accuracy on the speaker.
  Unlike the Czechs the Slovaks can now elect their mayors (as well as the country's President) by direct vote, which has curtailed the excessive power of the political parties; the country has been more profoundly decentralized; and the prosecutor's office has been separated from the executive (the Prosecutor General is elected by parliament, whereas in the Czech Republic he is appointed by the government).
In the fight against corruption Slovakia puts greater emphasis on transparency: all state contracts with private companies have to be published on the Internet and for the past ten years anonymous firms have been banned from trading their stocks. In the Czech Republic most companies that are awarded state tenders still have undisclosed owners, many of whom are undoubtedly politicians.

In Slovakia the fight against the grey economy has even managed to override the traditionally more relaxed attitude to money mentioned above. In a Czech pub, a waiter will typically add up your bill on a scrap of paper and you have to rely on his maths skills. On the other hand, even in the remotest corner of Slovakia, if you order a beer you will receive a proper receipt from an electronic cash register. The Slovaks introduced these registers ten years ago as part of the fight against tax evasion, while the Czechs still keep making excuses, claiming this form of oversight is too expensive.

It was understandable that, in the immediate post-war period, people were suspicious of anything which smacked of nationalism. Times have changed. Some time ago I resurrected an important book by Lepold Kohr - 

Two insights I found particularly relevant – one which he produces as one of the reasons for the intense cultural productivity of the small state – “in a large state, we are forced to live in tightly specialised compartments since populous societies not only make large-scale specialisation possible – but necessary. As a result, our life’s experience is confined to a narrow segment whose borders we almost never cross, but within which we become great single-purpose experts”... “A small state offers the opportunity for everybody to experience everything simply by looking out of the window" – whereas a large state has to employ a legion of soi-disant experts to define its problems and produce “solutions”. The other striking comment he makes is – “the chief blessing of a small-state system is ...its gift of a freedom which hardly ever registers if it is pronounced.....freedom from issues....ninety percent of our intellectual miseries are due to the fact that almost everything in our life has become an ism, an issue... our life’s efforts seem to be committed exclusively to the task of discovering where we stand in some battle raging about some abstract issue... The blessing of a small state returns us from the misty sombreness of an existence in which we are nothing but ghostly shadows of meaningless issues to the reality which we can only find in our neighbours and neighbourhoods”

Most people would probably see this as utopian – and yet its argument is ruthless. As he puts it at one stage in the argument – “many will object to the power or size theory on the ground that it is based on an unduly pessimistic interpretation of man. They will claim that, far from being seduced by power, we are generally and predominantly animated by the ideals of decency, justice, magnanimity etc This is true, but only because most of the time we do not possess the critical power enabling us to get away with indecency”.Kohr’s main challenge, however, is to the principle of specialisation and you will find in chapter 6 – “The Efficiency of the Small”. There he is merciless in his critique of the “wealth” of the “modern” world – daring to suggest that most of is useless and counter-productive and that people were happier in medieval times! “The more powerful a society becomes, the more of its increasing product – instead of increasing individual consumption – is devoured by the task of coping with the problems caused by the rise of its very size and power”

This is the bible for both new management and the “slow-food” movement! The writing sparkles – and includes a good joke about a planner who, having died, is allowed to try to organise the time people spend in Heaven into more rational chunks of activity, fails and sent to help organise Hell. “I’m here to organise Hell”, he announces to Satan – who laughs and explains that “organisation IS hell”.

A visit to Scotland

Just returned from my first visit to Scotland for 7 years. Scotland is a small country but in my 11 days I saw four very different aspects.  An important wedding – that of my youngest daughter! - took me south to rural Dumfries county for the initial three days. I stayed in a glorious mansion with a roaring log-fire (needed for the cold) just outside Ecclefechan village – home to Thomas Carlyle whose commentary on the French Revolution lives on. 

For the wedding I hired (fom Annan town) the full kilt regalia – complete with sgian dbu (dagger) tucked in my right sock! 
Of course there are a lot of myths associated with tartan – in which the writer Walter Scott played a significant part – although it is true that its wearing was banned by the English for 40 years after the 1745 uprising. But I do enjoy wearing it (now mainly when entertaining guests) and did indeed buy a new one later in Glasgow.

Wigtown is Scotland’s only booktown – and led me to undertake my first tour of Galloway which hugs the Solway and River Clyde Estuaries and which is highly agricultural. Such well-kept farms and grass – and such large animals! And such narrow roads. Serendipidy pulled me off the road at Gatehouse on Fleet – where I discovered precisely the sort of second-hand bookshop I was looking for – Anwoth Books located in a superbly-restored old mill. Two of the five books I emerged with were by a forgotten writer from my home town – George Blake -  whose novels are based in the shipbuilding town of Garvel (Greenock) in the 1930s and 1940s. Both books covered topics close to my heart. 
My “Late Harvest” was a first edition (1938) from Collins with a suitable elegant old book cover and glorious font (Fontana – “a new typeface designed for the exclusive use of the House of Collins”. The book starts with evocative passages about the handover of a church by a retiring minister to a serious young cleric - just at the time my own father was taking up his new charge in that same town. 
The subject of the second book is the return of an engineer in the late 1930s to Garvel after several deacdes in the Far East to take up retirement (as he had hoped) in a small town on the other side of the river – the arches which are in the title - The Five Arches – refer to the stages of life.
Both books are written in a style we find difficult these days - with people and scenes painted in a detail we seldom now encounter. Evidence perhaps of the effect of television?
For those interested in Britain's second-hand bookshops (one of the few things I miss about the country) a very useful website can be found here.

Two days then followed for me in that same Greenock area – but fast forward 70 years to a town which has known very hard times now for some 30 years with the almost complete disappearance of the shipbuilding industry. IBM has had a presence in Greenock since 1951 and seemed to offer some hope as shipbuilding collapsed. But the labour force there no longer build PCs (IBM sold that division out to Lenovo of China a few years ago); is now reduced to 2,000; and work now only in an international call centre. Official unemployment is just over 10% - but in reality much higher as people give up trying for jobs.  The only booming places are the huge Tesco hypermarket and the Amazon distribution centre. 

I am always depressed when I visit the town centre – bodies and behaviour tell a grim story of hopelessness. And so different from the spirit I felt in the East End of Glasgow a few days later – which has, however, the same history of insecure jobs, low wages, industrial decline and recent property regeneration. 

I was staying in Dennistoun and had the chance to explore, for the first time, Glasgow’s East End which has been experiencing massive physical change over the past 3 decades. Now it is positively exhilarating to see the greenery - where there was once smoky industry – and the superb red sandstone public buildings of the Victorian era – with glorious carvings - now cleaned of their grime.  

In between times I had a day touring in my favourite place - Cowal and Kintyre - starting with the lovely ferry trip to Dunoon. Once the location of the US Polaris nuclear missile base, it is one of several towns and villages now threatened with terminal decline.

Looking Back

I will be on the road for the rest of the month and have only intermittent access to the internet. So please use this break as an opportunity to look at some of the 600 posts on the blog. Most relate to perennial issues rather than to the transient subjects which newspapers and many blogs waste their (and our) time with. For example, quite a few of the posts in May last year were concerned with issues of public administration praxis. One post excerpted from a very useful, critical assessment of international university league tables; another mused about a European network of schools of public administration; and perhaps the most interesting asked some critical questions about what public admin scholars were actually up to these days.

As someone who had high hopes in my youth for social science, this issue of the role and contribution of social science work remains a fascinating subject for me. Queen Elisabeth of Britain is not the only one to have wondered why the economists had not seen the global financial crisis coming. There has been a running debate about the value of academic work in at least some places. And American politicians have recently focused their weapons on political science.

Political arguments for “relevance” in education are always dangerous. The results are to be seen in the horrific growth in mindless courses in business studies which teach only obedience to the received wisdom. Education should endow powers of critical assessment. And professors should (and often do) practice this themselves – but not at the costs (as so often happens) of inculcating a suspicion of if not outright cynicism of the world of action. Oh that the spirit of C Wright Mills were alive still in the hallowed halls of academia!

Here are three examples I’ve come across recently of good academic practice – one which shows the important contribution of one of the guys behind the Limits to Growth publications; another which subjects “knowledge management” to critical analysis (following my own remarks on the subject in February);
and a recent spate of books on “debt”. 

Don't believe a word you read!

An important article in Transitions Online about the politicisation of the Romanian media by Marius Dragomir

 - A week after the old government collapsed, the new one put the squeeze on the public service broadcaster, TVR. The station’s governors voted 3 May to sack the director of editorial production and programming, Dan Radu. The move was made at the request of Claudiu Branzan, a member of the governing council nominated by the Social Democrats, who said Radu should go because programming changes he advocated were bringing down TVR’s ratings.TVR journalists told me Branzan’s move was in retaliation for the refusal of General Director Alexandru Lazescu to hire the Social Democrats’ candidate as head of information and sports programming.The attack is nothing new in the post-1990 history of the public service broadcaster. Run by a politically appointed council, TVR has seen managers come and go during changes in power, and over the years its independence and fairness have been seriously questioned. The main problem for TVR is not the performance of a certain employee. The public broadcaster and the media in general are neck-deep in a serious politicization crisis. For years, independent voices pushed for new laws to bar each new crop of politicians from sticking their fingers into TVR management. But parliament dropped the matter in 2005 without any action. Newly elected Prime Minister Victor Ponta pledged that his government wouldn’t sack TVR’s staff on political grounds. But that is exactly what is happening. Many signs of things to come are in the air. Days after taking over, the new government picked Andrei Zaharescu as its spokesman. Zaharescu is a news anchor at Antena 1, one of the biggest private stations in Romania and part of a media group controlled indirectly by Dan Voiculescu, a politician-businessman who supports the new government.
At the local level, smaller broadcasters are underfunded and remain under the thumb of city halls and politicians.With three elections – local, national, and presidential – coming up in early June, the use of media as a proxy for political fights is likely to take unexpected turns.

Update
It's not only the media which is under political pressure and guidance. Two days after the Education Minister resigned, the National Committee of Ethics in Research was fired for 'incompetence' reasons by the acting E&R Minister Liviu Pop (a mathematics high-school teacher). The new Ethics Committee has been accused of being composed mainly of personnel closely related to the prominent SDP member and former Minister Prof. Ecaterina Andronescu.

And, in mid June, a scheme was hatched to transfer the highly-regarded Romanian Institute of Culture from the Presidency to the Senate 

The Long Descent

I’ve been quiet because I’ve been reading two books which, in different ways, expose the fragility of the world around us; and the theories and images so many people use to sustain their belief that, ultimately, the world is a benign place which can be controlled to ensure the continuation of the way of life portrayed in advertisements.

The first was The Long Descent – a user’s guide to the end of the industrial world which appeared in 2008. The book positions itself in the tradition of the 1972 Club of Rome's "Limits to Growth" and argues that the window of opportunity we had then to take action is closed; that. as fossil fuel production dwindles, the Industrial Age will gradually unravel, leaving humanity where it was about 200 years ago. The "gradual" part is one of the author’s distinctive arguments. As supplies contract, he argues, we'll scale back. Prices then go down, and we begin to use more...resources run low and prices spike...so we scale back again, over and over until we are finally, hundreds of years from now, de-Industrialized. We will then rebuild society in a sustainable fashion. As he rightly observes

Most people in the developed world have never had to feed, clothe, house, or protect themselves with their own hands, and have only the vaguest notions about how to do so. They rely for every necessity of life on the industrial economy. Even the most basic requirements of life are tied to the industrial system; how many people nowadays can light a fire without matches or a butane lighter from some distant factory? The skills necessary to get by in a non-industrial society, skills that were still common knowledge a century ago, have been all but lost throughout the developed world.This disastrous situation results from the modern obsession with progress. When a new technology is introduced, the older technology it replaces ends up in the trash heap. Since new technologies almost always demand more resources, use more energy, and include more complexity than their older equivalents, each step on the path of progress has made people more dependent on the industrial system and more vulnerable to its collapse. 

You can see him presenting his ideas here (don't be put off by his appearance - his arguments are more sound than any in the mainstream) and read his weekly essays on his blog. One of his posts has an interesting reading list. The book complements Orlov's which I wrote about last September here and here.
I remember, forty years ago, being impressed with EJ Mishan's powerful attack on the worship of "growth" which seemed to have become Europe's new religion - The Costs of Economic growth (1967). The books's emphasis was on the social costs of wealth. Then came the environmental critique - the damage we were doing to ecological balance - with a lot of talk about (but little support for) "renewables". Latterly have come the peak-oil arguments which, at last, are recognised and clearly speak more loudly than the first two sets of arguments. The new wave of books such as Greer and Orlov basically argue that it is now too late for political action (as well as being unrealistic to expect it); that "renewables" have been over-hyped; and that we need to prepare individually and at a local level for a new type of living.

The second book was McMafia – crime without frontiers which destroys the illusion that anyone may have had that the mob, triad and Mafia-type operations are a thing of the past. It demonstrates that they are stronger than ever and traces the modern spread of transnational crime to the combination of the break-up of the Soviet Union and Eastern bloc in the late Eighties and early Nineties and the simultaneous deregulation of global markets. The link I have given above is a 20 minute presentation Misha Glenny (an expert on the Balkans) gave in 2009 about the book. There are longer presentations here and here 

One review explained the background succinctly - 

The Soviet bloc incubated such favourable conditions for the development of criminal motivation and expertise. In Bulgaria, for example, the secret service played a key role in arms and drugs smuggling during the communist period. According to Glenny, 80 per cent of western Europe's heroin went through the sticky hands of the Bulgarian DS (equivalent of the KGB). At the same time, the communist system created a management class steeped in corrupt practices. When communism fell, there were suddenly thousands of unemployed cops and spooks in Bulgaria with first-hand experience of international crime. And there were also a great many wrestlers and weightlifters, pumped-up on state-issued steroids, who would make for ideal muscle in the protection rackets that quickly sprung up. Drugs, prostitution, car theft, money laundering and extortion followed on an industrial scale.

The book starts with 2 assassinations – one in a London suburb in 1994 of an innocent woman, the other in central Sofia in 2003 of a gang boss, Ilya Pavlov, one of many characters profiled in the book, revealing the intertwining of crime, government and security in a growing number of countries. Another review explains

- a former wrestler who married the daughter of a high-ranking secret police officer, Pavlov began his career as a small-time thug. In the 1990s, the combination of a collapsing state, unregulated markets, and lawlessness created enormous opportunities, which he exploited with entrepreneurial zest and murderous violence. Misha Glenny explains that in less than a decade, Pavlov had created a conglomerate that spanned many sectors (extortion, prostitution, smuggling, drug trafficking, car theft, and money laundering) and many countries, including the United States, where his subsidiary Multigroup U.S. owned two casinos in Paraguay, then the Latin American epicentre of the illicit trades (since displaced by Venezuela). By describing the thousands of mourners who attended Pavlov's funeral in 2003, Glenny conveys how deeply entangled his criminal enterprise was with Bulgaria's power elite. Everyone who mattered in business, politics, government, trade unions, sports, religion, the media, or the military seemed to be there.

Neal Ascherson’s review brings out well one of Glenny’s underlying points - “Mobs, mafias and global rackets are often performing useful and occasionally vital social functions that no other institution – governments, legal systems, the police, the economy itself – is capable of providing”.

The state had almost given up law enforcement, and organised crime stepped into the gap. In Russia, criminal outfits like the mighty Solntsevo Brotherhood, led by the ex-wrestler Mikhailov, not only provided bodyguards but also took on the enforcement of commercial contracts.In the courtyard of Steam Baths Number Four, on Astashkina Street in Odessa, there are two marble plaques with bunches of flowers laid on the ground beneath them. The first is engraved with the image of a man in his mid-forties, sporting cropped hair and looking sleek in a suit over a T-shirt; the second has on it a poem written by his closest friends after he, Viktor Kulivar ‘Karabas’, was felled on this spot by 19 bullets from an unknown assassin’s semi-automatic: ‘The sacred clay holds the remains/Of Viktor Pavlovich, our dear Karabas’.Karabas was gunned down in 1997. He and his mob had taken over the port city of Odessa as law and order disintegrated in the wake of the Soviet Union’s collapse. One might call his reign a comprehensive protection racket. But, looked at in another way, Karabas became the only reliable source of authority and social discipline. He arbitrated the city’s commercial disputes (10 per cent of net profits was his price); he kept the drug peddlers to one area of Odessa, and prevented the horrific people-smuggling in the harbour district from infecting the rest of the town. Using a bare minimum of thuggery, he kept the peace. Karabas seldom carried a gun. Everyone looked up to him, and levels of violence stayed lower in Odessa than in other Russian and Ukrainian cities. His murderers were probably Chechens hired to break Odessa’s grip on the local oil industry, a grip coveted by Ukraine’s then president, Leonid Kuchma, who ‘during his ten years in power . . . presided over the total criminalisation of the Ukrainian government and civil service’.

Glenny is particularly strong on the bizarre economic liberalisation that took place under Boris Yeltsin and which produced the bloody reign of the oligarchs in the early Nineties. All price restrictions were removed by government, except those of Russia's natural resources: oil, gas, diamonds and metals. Overnight, a vast number of Russians were impoverished, while a tiny minority was able to buy up vital commodities at up to 40 times less than their global market price. 'This process of enrichment,' Glenny writes, 'was quite simply the grandest larceny in history and stands no historical comparison.' In turn the oligarchs required protection, and jailbirds and former KGB agents alike moved into the lucrative if deadly business of the 'kryshy' protection rackets, or 'armed entrepreneurs'.

Nowadays, Glenny quotes a US official as saying, a Russian businessman is as likely to be a member of the intelligence services as a criminal cartel, and quite possibly to be part of both.

The effects of the Russian organised crime boom have been experienced as far afield as Tel Aviv and New York, and all parts of Europe (although Nigeria, Japan, Colombia and China and others all have their distinctive mobs). In this reading, the East is little more than an opportunistic supplier to the West's insatiable demand. 'Organised crime is such a rewarding industry,' writes Glenny scathingly, ' ... because ordinary Western Europeans spend an ever burgeoning amount of their spare time and money sleeping with prostitutes; smoking untaxed cigarettes; sticking €50 notes up their noses; employing illegal untaxed immigrant labour on subsistence wages; admiring ivory and sitting on teak; or purchasing the liver and kidneys of the desperately poor in the developing world.'


The painting is by Zlatyu Boiadjiev (1903-1976) - often known as the Bulgarian Breughel