Tuesday, November 08, 2011

Bond dealers put a price on democracy

The financial markets that have forced out the Greek government and are on the verge of bringing down Italy’s, now instinctively prefer to sideline what is left of the democratic process if it means they have a better chance of getting their money back.

Not only that, they would rather have a non-government of so-called technocrats in place of politicians in some cobbled together coalition. So whatever you think of Berlusconi or Papandreou's wretched politics, their impending demise is a sinister development with echoes of past European history.

Politics, even of the bourgeois variety, increasingly stands in the way of capital’s interests because it is a time-consuming process. Putting together governments of national unity, agreeing a strategy for spending cuts, holding referenda – all this takes too long when time is not on capitalism’s side.

So Papandreou’s call for a general election in Greece is off the agenda. It would only result in more uncertainty, the markets declared. France and Germany’s leaders agreed and so that was that. A national government without a mandate will take over in Greece.

In Italy, Reuters, the financial sector’s news agency, writes that Berlusconi's departure would offer "no speedy solution to a debt crisis threatening the whole euro zone”.

A “worst-case scenario” could see weeks or months of instability and continued “reform inertia”. The answer? “Markets want an unelected technocrat government appointed to pass unpopular reforms needed to improve growth potential in one the world's most chronically sluggish economies.”

So that’s alright then. If the markets want it – and today they were charging an unsustainable 6.73% to lend to Italy – who are ordinary people to deny them their wish? Elections in January? Far too long to wait. And what would they resolve? Nothing!

In one sense, of course, the markets are right. Elections can’t solve the crisis. Debt reduction requires so much pain through spending cuts, unemployment, lower living standards and rising prices that it can’t be achieved with popular consent.

Which means, logically, that some kind of authoritarian rule, a 21st century European dictatorship, is necessary. Dispensing with politicians, even if they are as obnoxious as Papandreou and Berlusconi, is the first step on a slippery road.

Even the right-wing press is getting the frighteners. Janet Daley, the former left-winger turned commentator for the Daily Telegraph, has noted: “Last week, the European Union effectively undermined the democratically elected government of one member state and put another one [Italy’s] on notice.”

In line with Tory anti-EU sentiment, she blames the “Eurocracy” led by Germany and France for denying Greece a referendum and telling Berlusconi that his time is up, adding:

“All those quaint assumptions about the legitimacy of government coming from the consent of the governed must be cashed in for the ‘economic stability’ that the rules of euro membership will provide.”

Interestingly she contrasts the achievements of the Arab Spring with the decline of democracy in the West, “the wilful dismantling of its political inheritance” with the loss of the “right to choose who governs you”.

While her target in the shape of the EU bureaucracy rather than financial markets and capitalism, smacks of small-time nationalism, Daley is perceptive enough to acknowledge that an historical turning point has arrived.

Capitalism and democracy are not natural bedfellows but in conflict with one another. At times of emergency – and that’s what we are in now – the niceties of elections, parliaments etc come under strain. The next step, to outright dictatorship, is a massive one to take. But don’t for one moment think that the ruling elites are not capable of going down that road.

Paul Feldman

Communications editor

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