Fifteen years after the Stephen Lawrence Inquiry, black people are still six times more likely to be stopped by police than white people.
Newham Monitoring Project (NMP) is an independent grassroots anti-racist organisation that has supported people challenging racist or unfair policing in east London since 1980. Now we need your support to help us continue this vital work and take on a new challenge – monitoring the impact of the government’s new stop and search reforms.
The police are still largely unaccountable for the misuse of stop and search powers and the often devastating impact this has on the lives of individuals – particularly young people – and communities. Research shows a large proportion of Londoners have little faith in the police complaints system. As a result, the level of complaints in London for stop and search is very low – less than 1% on average. Every year, only around 10% of police complaints are successful and allegations of police racism have around a 1% success rate.
Growing pressure has forced the government to introduce reforms to stop and search, to “help local communities hold the police to account for their use of the powers”. The reforms include a new ‘code of conduct’ that promises to measure the success or failure of stop and search by the volume of public complaints about its misuse.
However, making complaints is frustrating and time-consuming. We believe that unless more people are given expert, independent support to hold the police to account by making complaints then these reforms will fail to bring about genuine change.
As one of the UK’s most experienced anti-racist organisations, we are asking you to stand with us in supporting local communities in east London to put the government’s new reforms to the test. It’s time we put stop and search on trial.
The UK government announced new plans to reform the use of stop and search powers by the police in August 2014.
We therefore need to start monitoring the government’s reforms and making a renewed case for greater police accountability as soon as possible. Unless we do, policy-makers may already have been persuaded in six months time that the misuse of stop and search has been ‘fixed’, when the reality on the streets is very different.
What we plan to do
We want to give local people the best opportunity to put stop and search on trial by:
• Providing rights information to young people across east London
• Supporting people to make police complaints with our assistance
• Monitoring the impact of the reforms on people’s experience of stop and search
NMP has one of the best track records in the UK in supporting people to make police complaints for unfair or racist treatment. In addition, if the system treats complainants unfairly, we are able to support people to expose these failings and campaign for greater justice.
How we will do it
Your donation will help fund the costs of a worker who will assist members of the public, especially young people, to make complaints if they are unhappy about the way they have been treated. The worker will also monitor the way the new stop and search reforms are rolled out over the next six months. Our target is a part time staff member, but the more we can raise, the more hours per week we can provide.
NMP will use its strong connections to youth groups across east London and a pool of dedicated volunteers to help spread the message at meetings and youth clubs.
Why are we crowdfunding?
Firstly, this project and the ongoing work of NMP is unique in that it both supports people directly, and builds campaigns from their experiences. Grants from trusts usually support either policy or advocacy work – securing funds for a project that combines both is far more difficult to achieve.
Secondly, east London’s diversity makes it an obvious area to monitor the impact of reforms intended to change the way the police use stop and search powers. However, it is difficult for a local organisation to secure funding for this kind of activity, even when it has a national significance.
Thirdly, the increased competition for mainstream funding mean that the more challenging campaign projects are viewed as a greater risk than services with less potentially controversial aims.
This project will only be funded if at least £7,000 is pledged by 11:29am 10th November 2014
Tom Walker, (now former) Socialist Worker journalist, argues that the time has come to leave the SWP
The Socialist Workers Party is in deep crisis – as it has been for several months now. The reason is simple: an allegation of rape against Martin Smith, the then central committee member now referred to on some parts of the internet as comrade Delta, and the way it was handled by the party.
This case, as several speakers at conference noted, was in reality the sole reason for the four expulsions in the run-up to conference, the sole reason for the formation of two factions, and the sole reason for the split in the CC which resulted in an alternative slate being put to the conference, removing two CC members who had attempted to challenge the way the case was handled.
After much reflection, I have decided the immediate aftermath also means that I have no option other than to resign not just from the paper, but from the party, and encourage others to do likewise.
Before I go any further, I want to say that I will not be discussing any details of the case itself whatsoever, either here or privately. Indeed, I do not know them. I know little more than what was reported to SWP conference, which later unfortunately appeared on the internet. I will not be quoting from that document.
However, I believe that what I know is more than enough to come to some unavoidable conclusions, and the fact that the transcript has been so widely circulated – to the point where every member is facing friends outside the party, in their workplaces and campaigns, asking them about it – makes it impossible to remain silent any longer about what those are.
I will, as the conference session did, refer to some of the awful processes used to hear the case, but – and this is absolutely vital – only the processes. The CC will likely issue a response saying that this violates confidentiality and is a disgrace, but surely the real problem is that the case ever happened in the first place and that it has been allowed by the leadership to develop into a crisis in this way. I believe that what delegates on all sides said within the conference was scrupulous about respecting the confidentiality of the case itself and not for a moment prying into the details of the woman’s testimony, otherwise I would never write something like this.
I will argue four main things:
- The disputes committee should never have been allowed to investigate and rule on a rape accusation, under any circumstances, period. The case should have been investigated by authorities competent to do so. The disputes committee’s extra-legal nature means its finding that this comrade is innocent is meaningless. One person, even on this committee stacked in his favour, believes sexual harassment at least is likely.
- Leftwing parties are institutions that exist within our current society, and they need to put an analysis of gender and power relations at the absolute heart of their structures to avoid replicating that society’s problems. Moreover, a lack of democracy inside left organisations is not just a big political issue, but plays a role in enabling abusive behaviour. Having a good record and theory on women’s liberation turns out to be little defence against this.
- The CC’s determination to ‘draw a line’ under the discussion, to the extent of banning all further mention of it on pain of expulsion, I believe makes it nigh-on impossible to ‘stay and fight’ within the organisation for any sensible interpretation of these events or concrete reforms to the structures to make sure it does not happen again. To stay in the party now means to keep your head down and try to live with yourself.
- For this reason, and because of the incredibly damaging publicity around the case, the party has become no longer fit for its stated purpose. It will surely be unable to attract or hold new recruits. I do not believe anyone sensible will ever join it again. We must think again about our methods of organisation on the left. I propose a few outlines of my thinking, but I am very open to others’ views.
I will now explore these points in more detail.
The disputes committee hearing – and by extension the entire mess that followed – should simply never have happened. To be honest, it is nothing short of incredible that it was allowed to go ahead. What right does the party have to organise its very own ‘kangaroo court’ investigation and judgment over such serious allegations against a leading member? None whatsoever.
Of course, I am dead set against the capitalist police and courts, and the way they treat people. That doesn’t mean we can go off and set up our own. The SWP itself called for Julian Assange to face rape charges in Sweden, in a Socialist Worker article I am proud to have written.1
I do not see why what is good enough for Assange is not good enough for the party’s leaders.
It is stated that the accuser did not want to go to the police, as is her absolute right if that was truly her decision. However, knowing the culture of the SWP, I doubt that was a decision she made entirely free from pressure.
Do not underestimate the pressure the SWP can bring to bear on members by telling them to do or not do things for the ultimate cause of the socialist society the party’s members are all fighting for. Against the prospect of the liberation of the whole of humanity, they will attempt to make even the most serious issue seem less important than the party’s survival. I do not think the CC are cynical cultists, by the way – I think they believe this themselves.
Either way, respecting that wish not to involve the police does not excuse what the party did next. The disputes committee’s project of amateur justice was doomed from the start, with the questions asked unintentionally reflecting the worst practices of the police and courts. The people involved have spoken about the immense distress and traumatisation caused.
I would add that I worry about conference delegates as well after that session. As more than one comrade said, they had never seen so many people in tears as there were in that room.
For many it will have come as a real bolt from the blue. Despite working at the party centre myself, I was under the impression that, yes, we were in for a challenge to the disputes committee, but that we were facing a row primarily about expulsions and democracy. Though some other party workers were getting involved in a faction, I felt it best to maintain a sort of journalistic distance.
In the session itself, my reaction was one of simple, visceral disgust. I was shaking. I still am. I did not know what to do. I walked out of the building in a daze. It is over the last few days of reflecting, and seeing the strong responses to the case from people inside and outside the organisation, that I have come to my conclusions.
From the fact that the disputes committee is not a court flows the fact that, while it found the comrade not guilty of rape and that sexual harassment was “not proven”, those verdicts are utterly meaningless. Sitting in the hall, that was too easy to forget.
The disputes committee says we have not heard the evidence or details. That is true, and nor should we. Yet they admit that the only evidence they themselves heard was two straightforwardly conflicting accounts of what happened – one from the accuser and one from the accused. We do not know why they believed the accused.
As those who raised criticisms pointed out, the disputes committee included five current or former CC members, and all have known comrade Smith for many years. Though I believe they took the case deeply seriously, this was not a jury of his peers, but a jury of his mates. If we were talking about any other organisation we would all consider it obvious that allowing it to investigate itself is unlikely to produce damning conclusions. It seems unlikely that a Wikileaks disputes committee, if it existed, would find Assange guilty.
We should also remember that even this committee had a minority of one, who has faced some very real abuse for his position that it is likely there was sexual harassment. It is not my place to argue one way or the other about either allegation, but one thing that cannot be argued with is that both allegations have not yet been investigated by anyone competent to do so.
I also wonder what on earth the disputes committee thought it was going to do if it found comrade Smith guilty. Expel him and send him on his way?
As others have noted, this DIY investigation will have corrupted the evidence, as well as traumatised the accuser too far for her to want to pursue the case by other means. I am absolutely convinced this traumatisation is very real, as I cannot believe that the issue would have played out the way it has otherwise. The internet may have read the transcript of what the woman comrade’s friends and allies said, but only those who were in the room will have heard the sheer anger with which the words were spoken. If we believe that she was traumatised, then logic dictates that it is very unlikely that the allegations are of no substance.
I really hope both the accusers are not further affected by my writing this, which is fundamentally about attempting to draw lessons from the disastrous process they were subjected to, to make sure it never happens again. From the moment this case became the subject of a faction fight and the leadership refused to row back, I believe the CC must shoulder the responsibility for a series of disastrous decisions that spawned all that has followed and will follow.
Power, sexism and the left
I want to move away for a moment from the process of this case and talk about some of the wider issues it raises. The allegations inside the SWP fit a bigger pattern which should lead us to question the left’s long-term theory and practice in this area.
We might consider a spectrum of misogynist behaviour by leaders of leftwing organisations, with George Galloway’s comments about rape at one end and the horrors of Gerry Healy at the other. You can argue about who else should be included on it – unfortunately it isn’t too hard to think of candidates.
Of course, as nothing is proven either way, we do not know if or where comrade Smith fits on that spectrum. Nevertheless, there is clearly a question mark over the sexual politics of many men in powerful positions on the left. I believe the root of this is that, whether through reputation, lack of internal democracy or both, these are often positions that are effectively unchallengeable. Not for nothing have recent sex abuse allegations in the wider world focused on the idea of a ‘culture of impunity’.
Socialist Worker has pointed to the way that institutions close up to protect powerful people within them. What is not acknowledged is that the SWP is itself an institution in this sense, with its instinct for self-protection to survive. As previously mentioned, its belief in its own world-historic importance gives a motive for an attempted cover-up, making abusers feel protected. Also, leaders are put into positions of power within an organisation with open recruitment but quite a closed culture, and this has a dramatic effect on any relationships that take place. Older male party leader with younger female party member is a triply unequal power relationship, and should be considered so.
That still does not account for how on earth an organisation that has such a good analysis of the way the police and courts effectively put the woman on trial in rape cases managed to replicate the state’s reactionary lines of questioning. How did it fail so badly to put its own politics into practice?
It may shed some light to learn that ‘feminism’ is used effectively as a swear word by the leadership’s supporters. This seems to be a legacy of a sharp political argument conducted decades ago against radical feminism and its separatist methods of organisation, but unfortunately it is being used today against young, militant anti-sexists coming into the party. In fact it is deployed against anyone who seems ‘too concerned’ about issues of gender. A group of women comrades who raised questions over whether the SWP has a sexism problem last year were quietly condemned by the leadership as “feminists”, and the CC has devoted much energy since to fighting this perceived scourge.
Marxist and feminist theory would surely agree, however, that in a sexist society, sexism is a constant danger in any organisation, no matter what its politics. The only way to deal with this is to not only fight hard against sexism at all times, but to accept that if any woman or group of women are not happy with their treatment, then the organisation has a problem, needs to look hard at it (and that is not “navel-gazing”) and needs to change, not claim that the issue does not exist or that the complainants are motivated by political differences.
This leads to an additional issue, which is that the issues of democracy and sexism are not separate, but inextricably linked – the lack of the first creates space for the second to grow, and makes it all the more difficult to root it out when it does. That is surely why people like Paris Thompson, a campaigner for more democracy in the SWP who had just published his own critique in the internal bulletin, were at the forefront of the fight against an attempted cover-up of the case.
Delegates to conference were handed a partial transcript of the Facebook conversation used as evidence to expel Paris and the other three comrades. The CC says it shows evidence of cross-branch coordination and is therefore “secret faction” activity. Yet what the document shows is not at all a group organising in pursuit of political differences – Paris explicitly says he is fighting over those separately – but people trying to make sure that the way the rape case was handled would be discussed properly at conference, not swept under the carpet.
From coordinating motions to party aggregates about the case, to making sure they were elected as delegates, what the four did was not in pursuit of their own agenda, but the agenda of ensuring these serious concerns were heard. Their reward for this, barring a Damascene conversion on appeal by that same disputes committee, is that they have been cast out of the SWP for life.
When you can’t draw a line
What has happened since the SWP conference at the weekend? Despite everything, the CC position is ‘draw a line under it and move on’. The opposition were also told to sign up to this or face expulsion. That applied as of the minute conference ended – and the leadership intends to enforce it.
The CC is shutting down all debate, on the pretext that it is about the rule that factions must dissolve after conference. Party workers are being spoken to individually, and if they refuse to give a guarantee that they will never so much as mention the case again, they are being told they must leave their party jobs. Some have already gone, others may be going as I write.
Meanwhile branches are being told that the criticisms of the disputes committee raised in conference will not be reported to them and cannot be discussed by any member, even in outline. At the behest of the CC, the Socialist Worker report of the conference does not even mention the disputes committee session. For one, this means that the reason behind the alternative CC slate is not explained at all.
Meanwhile, comrade Smith turned up in Hackney on the evening of Tuesday January 8, representing the party at a Unite Against Fascism meeting as if nothing had happened. Next week he is off to Athens, again as part of the party’s work. He may have been booted off the CC, but he lingers on, rubbing it in our faces. Frankly it is sick.
If the leadership is allowed to get away with this, it means the problem just sits there and festers. It means it could all happen again. It means the party cannot further examine just how this went so utterly wrong, or do anything about it, as the official position is that the vote means none of the criticisms made were accepted. A similar accusation tomorrow would be dealt with in the exact same way.
Ticking time bomb
I believe that not dealing with the issue ultimately makes the party’s destruction inevitable. I am not its destroyer – it has already destroyed itself. Maybe it will be days, months or years, but it is now a permanent time bomb. I cannot imagine how it will hold on to any recruit who knows how to use Google. Sooner or later the whole thing will be used against the party in the unions. In the absence at the very least of the most grovelling public apology and a massive process of internal reform, I am afraid I think the SWP is broken for good.
I know there will be many who will want to stay in the party and keep fighting until the bitter end. If they can do that without simply ‘keeping their heads down’ then I absolutely respect it. I hope they, and in particular those who were involved in the opposition to the disputes committee vote, will understand why I felt I had to go now and argue that others should do the same.
You might ask what right I have to jump now. You might say that this is not about us; it is about the people affected. All true. But how can we be expected to just turn off our horror at the whole thing? We are not robots. That is why I cannot stay another second.
Another problem with staying is the likelihood that individuals who opposed the CC at conference will be picked off gradually, one by one. That is not only unpleasant and isolating, but risks diverting a large amount of activist energy into an ongoing internal struggle against victimisations. I hope people will get in touch and discuss it when they feel ready to (or when they find themselves expelled). I will also 100% keep the confidence of any current member who contacts me to discuss this.
To those who will say I should have raised these issues openly before resigning, the CC has made it abundantly clear that to do so means instant self-expulsion. It would also be unfair on others at Socialist Worker to launch some tirade in an editorial meeting and make them choose between walking or ritually condemning me. I hope that they especially – people who have been my friends and workmates over several years – will look at their consciences and decide their own way forward.
To all comrades, I say: it is a wrench, it really is, but the first step is to admit to yourself that it is time to go. I do not know how it will turn out, but at least that way we have a chance to try to create something better. The alternative – for thousands of committed socialists to sit on their hands and keep quiet, wondering if the person next to them is thinking what they are thinking – is too awful to contemplate.
I strongly believe that if everyone who reads this is able to take courage to follow their heart and their principles, then, instead of members slowly drifting off into the wilderness or being gradually drummed out of the party, the SWP can be left on the shelf of history alongside the Workers Revolutionary Party, and something a thousand times healthier built in its place.
There is hope yet. The CC talks with dread about young and student cadre who are “influenced by the movement” bringing such ideas into the party, but on the evidence of conference the ideas coming in are militant anti-sexism and a desire for democracy. The substantial opposition votes show that many members’ politics remain excellent, even while they also frustratingly show that the leadership simply cannot be defeated through the party’s democratic structures, even on this most grave of issues. If it could be, despite everything I would have stayed.
For my part, I am certainly not planning some new ‘Workers Socialist Party’.2 Surely we can do better than that? I intend to discuss, think and write further about how we can take a step back from the specifics of the SWP and learn some wider lessons about sexism, democracy and organisation. I believe that for the good of the whole left, and the class struggle whose course we hope to influence, we ought to be able to find a way to create something that can be a hospitable and enduring home for militant workers, radical students and activists.
I want a left where a case like this simply cannot happen, where no-one will ever have to suppress their unease or disgust thinking it is for the greater socialist good, and where no-one will have to resign because whole areas of discussion have been banned. In that future left, I hope, we will be able to organise together again, democratically, as comrades in the struggle against our real enemies.
SWP CONFERENCE TRANSCRIPT – DISPUTES COMMITTEE REPORT can be found below.
It’s with great sadness we pass on the news, if you haven’t already heard, of the death of James May a.k.a. James Walsh who has taken his own life at the age of 43.
James had been a regular visitor to Norfolk in the last couple of years, and his often controversial but always thought provoking political ideas were in part behind the formation of this very organisation.
Quite simply James realized many years ago the left were stuck in political quicksand with absolutely no where to go unless they stopped crying ‘nazi’ at the drop of a hat and started sorting out there own back yard before attempting to save the world and making a complete arse of themselves in the process. And James was never shy of pointing out the eras of their ways, be it on the street, on a platform, a march or a Class War paper sale.
We will not attempt here to write an obituary as there are others way more qualified to do so. Therefore with that in mind we would pass you over to Paul Stott’s blog for a very moving piece on James’ political life.
Our thoughts go out to his family and close friends at this awful time with a reassurance from all of us at NCAG, James May will never be forgotten and we look forward very much to his thoughts and ideas one day soon being put into print for a much wider audience.
Paul Stotts piece James May-A Political Obituary can be found here http://paulstott.typepad.com/i_intend_to_escape_and_co/2012/12/james-may-a-political-obituary.html
Over 1200 Indian workers have been left stranded, and effectively held hostage by bosses in Angola after their passports and other travel documents were confiscated in revenge for taking industrial action over not being paid anything for over six months.
Despite not paying the workers any money for six months, the factory management have defended the move to confiscate the workers passports, and have declared the strike “illegal”.
A representative of the workers reports that:
“Their passports have been seized… they are wandering in forest without any food and battling for their life… their family members are crying… media is reporting the matter for 15 days but the government is silent on this sensitive matter.”
TO contact ETA STAR INTERNATIONAL :
The current Eurozone crisis is only the spearhead of a wider crisis of globalisation. The neo-liberal economic model which has swept the world over the past thirty years has reached, or is reaching, its limits. Senior capitalist spokespeople are talking of the possibility of ‘deglobalisation’, and the need for a ‘rebalancing’ of the global economy. We are in the early stages of a transition to a post-neo-liberal era. What that era will look like is unknown, but there is no guarantee that it will be progressive.
Just before Christmas, the European Central Bank took the unprecedented step of making almost €500bn available to 523 Eurozone banks in cheap three year loans, the intention being, according to the Financial Times, ‘to provide a “wall of money” to shield the banking system and prevent a European version of the 2008 collapse of Lehman Brothers‘. This was repeated in late February, when a further €530bn was taken up by 800 European banks, taking the total amount of cheap loans issued to over €1trn. The level of fear that was stalking the European banking system is illustrated by the fact that over the Christmas/New Year period, Eurozone banks repeatedly deposited record amounts of cash overnight with the ECB – cresting at €528bn – rather than risk lending to each other at higher interest rates on the commercial interbank market (link). Mario Draghi, President of the ECB, has said that because of these actions ‘we have avoided a major, major credit crunch, a major funding crisis‘.
These actions illustrate the gravity of the situation facing the European financial system. While this massive bridging loan has postponed what was becoming an increasingly imminent moment of reckoning, by itself it cannot resolve the structural causes of the Eurozone crisis, a crisis which threatens the integrity of the world economy as we know it.
When the economic crisis first hit in 2008, we saw major global financial institutions having to be bailed out by states. Now, we are seeing states themselves heading towards bankruptcy, which in turns threatens to take the banks exposed to their debt down with them.
The long-standing fear of a sovereign debt default within the Eurozone has passed the peripheral states of Ireland, Portugal and Greece and has spread to the major economies at the core of the system, toppling Silvio Berlusconi from power in Italy in the process. Simply put, no-one – not even the wisest, greyest heads – knows for certain how this matter will resolve itself. Since the crisis began, what had previously been regarded as unthinkable has happened all too readily. At the start of September 2008 it seemed unthinkable that a major Wall Street investment bank would collapse and that others would survive only through unprecedented levels of state support and giving up investment bank status, but within weeks this is precisely what happened.
Now a break-up of the Euro, and everything that would go with it, is being openly discussed as a possibility. Olli Rehn, the EU’s commissioner for economic and financial affairs, has said that ‘a collapse of Italy would inevitably be the end of the euro, stalling the process of European integration with unpredictable consequences’, while JP Morgan are advising their clients to ”at a minimum hedge the bulk of their exposure to the euro”, and that a break-up of the Eurozone, should it come to pass, would likely be followed by ‘a European depression, a global recession and possibly a global depression’ (link).
No less a figure than General Martin Dempsey, chairman of the Joint Chiefs of Staff and the highest ranking officer in the US military, has said ‘We are extraordinarily concerned by the health and viability of the euro because in some ways we’re exposed literally to contracts but also because of the potential of civil unrest and break-up of the union’, while the Nobel-winning economist Paul Krugman has stated ‘a few months ago I regarded a complete Euro crackup as highly implausible. Now I’m having trouble finding a plausible story about how the thing survives.’ Mohamed El-Erian of PIMCO, the world’s largest bond investor, has said that he expects Portugal to follow Greece in needing a further bail-out (link).
Why is this happening? What has brought us to this pass? How likely is a break-up of the Euro, and what exactly would it entail?
In the first instance, as one of the architects of the Euro, Jacques Delors, has recently stated, the project had fundamental design flaws from the beginning. In an interview with the Telegraph, Delors stated that at the outset of monetary union ‘the Anglo-Saxons’ argued that a single currency and central bank which wasn’t backed by a single state was bound to eventually fail, and Delors now thinks that ‘they had a point’ (link).
The Financial Times’ Martin Wolf – who was one of those ‘Anglo-Saxon’ critics twenty years ago – writes more forensically that “As designed, the Eurozone lacked essential institutions, the most important being a central bank to act as a lender of last resort in all important markets, a rescue fund large enough to ensure liquidity in sovereign bond markets and effective ways of managing a web of sovereign insolvencies and banking crises” (link; see also link).
This is crucial to understanding what is happening. The Eurozone crisis stems from a fear among investors that states will default on their debt obligations. However, this fear does not necessarily stem from the scale of debt held.
Since 2002 Spanish government debt as a percentage of GDP has been lower than that of Germany, and Spain “actually ran a modest budget surplus in the years before the crisis hit… if public debt is your yardstick, then the Spaniards were paragons of virtue. They borrowed lightly despite the fact that their euro-zone membership gave them an all-you-can-eat buffet of financing at bargain-basement rates” (link). Likewise, Irish national debt was relatively low and falling until 2008, when its deregulated ‘Anglo-Saxon’ financial system began to implode; and Italian public debt, while high, was also falling up until 2007.
The US and UK have sovereign debt levels that are comparable to or higher than all of the distressed Eurozone countries other than Italy and Greece (diagram), yet the markets display no fear of default on their part. Quite the opposite, in fact: the interest on government debt for the US and UK is currently at historically low levels, they are regarded as safe havens in the current storm (on the 18th of January UK 10-year yields reached 1.96%, the lowest since records began in 1703). This is in large part because these countries do have the ‘essential institutions’ backstopping their currency in place – in this light their debt looks quite manageable, and in the final analysis they can print money if need be.
The Eurozone does not have this facility: while the European Central Bank has recently been acting as a de facto lender of last resort to Europe’s troubled commercial banking sector, it has no mandate to do the same for Eurozone member states (although much of the €1tr injection of liquidity has in reality been funnelled by the banks into Spanish and Italian government debt, effectively functioning as quantitative easing through the back door).
This is why investors fear a default among one or more of the vulnerable Eurozone nations, which in turn is creating fears for the solvency of the banks holding their debt, which in turn risks creating a self-fulfilling run on those banks. As Paul De Grauwe of the London School of Economics summarises it:
‘National governments in a monetary union issue debt in a ‘foreign’ currency, i.e. one over which they have no control. As a result, they cannot guarantee to the bondholders that they will always have the necessary liquidity to pay out the bond at maturity. This contrasts with ‘stand alone’ countries that issue sovereign bonds in their own currencies. This feature allows these countries to guarantee that the cash will always be available to pay out the bondholders… The nice thing about this solution is that when deposit holders are confident that it will be used, it rarely has to be invoked… Contagion between sovereign bond markets can only be stopped if there is a central bank willing to act as a lender of last resort, i.e. willing to guarantee that the cash will always be available to pay out the bondholders… The reluctance of the ECB to take up its responsibility as a lender of last resort is the single most important factor explaining why the forces of contagion in the eurozone’s sovereign bond markets has not been stopped.’ (link)
So while Con-Dem politicians – and deficit hawks in the US – like to invoke Greece and Italy as reasons why public spending must be cut, the fact is that the US and UK are qualitatively different cases, because they have the necessary institutions guaranteeing their debt which the Eurozone countries do not. If Gordon Brown deserves credit for nothing else, it is for having the foresight to keep Britain out of this doomed institution, otherwise the UK would be in a similar predicament to Greece, Italy and Spain.
‘The endgame for the Eurozone’
These design faults with the Euro are now being exposed by other factors economic and, ultimately, political. The Euro has seen the locking together of countries with very different levels of competitiveness, productivity and other economic fundamentals into a single currency, with a single exchange rate and a single interest rate which may or may not be appropriate for each countries needs. As Thomas Mayer of Deutsche Bank has put it: ‘below the surface of the euro area’s public debt and banking crisis lies a balance-of-payments crisis caused by a misalignment of internal real exchange rates’.
These ‘misalignments’ have driven the wider imbalances inside the Eurozone which are the ultimate economic root of its crisis, imbalances described by Nouriel Roubini of New York University thus: ’For the last decade, the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) were the eurozone’s consumers of first and last resort, spending more than their income and running ever-larger current-account deficits. Meanwhile, the eurozone core (Germany, the Netherlands, Austria, and France) comprised the producers of first and last resort, spending below their incomes and running ever-larger current-account surpluses’ (link).
These imbalances were largely driven by the differences in competitiveness and productivity between the Eurozone nations, meaning countries such as Germany were able to export more than they imported, while the reverse was true of the PIIGS nations.
In Ireland and Spain, like the US and UK, which are also major current-account deficit nations, much of this trade deficit was made up for by a massive expansion of consumer credit largely backed by a housing bubble (i.e.: private debt); whereas in Greece, Portugal and, up to a point, Italy, government spending played a greater role in filling the gap (i.e.: public debt). While the Eurozone has a unifiedmonetary policy – interest rates, exchange rate and money supply – it does not have a unified fiscalpolicy – tax and spend. For this reason the governments of Greece, Portugal and Italy were able to borrow without any oversight, enabled by the credibility they had as members of the Euro. But it was largely because they were members of the Euro that they had to borrow in the first place: the Euro, while perhaps under-valued for Germany and the surplus Northern nations, is over-valued for the Mediterranean countries, which don’t share Germany’s levels of productivity or competitiveness (On how this has effected Italy, see link).
It is this factor which is giving countries reasons to consider leaving the Euro. The current interest rate on 10-year Italian bonds is 4.91%. 7% is the rate which is considered unsustainable: Ireland, Greece and Portugal were forced to seek IMF/EU bail-outs when they breached this level, and it was when Italy did likewise that the democratic process was cast aside, Berlusconi was removed from office and Mario Monti – a career economist, former EU commissioner and adviser to Goldman Sachs – was installed. The markets seem to have been temporarily calmed by this and/or the European Central Bank’s Christmas largesse – Italian 10-year yields were 7.159% as recently as the 10th of January – but Italy’s problems are structural and systemic, and cannot be permanently resolved by emergency hits of cheap money alone.
Roubini’s view is that the best policy option for addressing the Eurozone crisis is ‘significant easing of monetary policy by the European Central Bank; provision of unlimited lender-of-last-resort support to illiquid but potentially solvent economies; a sharp depreciation of the euro, which would turn current-account deficits into surpluses; and fiscal stimulus in the core if the periphery is forced into austerity’, while still undertaking ‘austerity measures and structural reforms’ where necessary. While the PIIGS nations are certainly being forced into austerity, of the constructive policy options only ‘easing of monetary policy by the European Central Bank’ is taking place, and this only on an emergency basis.
This is because, Roubini believes, of ‘the prospect of a temporary dose of modestly higher inflation in the core relative to the periphery’ or, in other words, Germany is acting its own sectional interests rather than the general interest. Germany and the other surplus Eurozone nations are unwilling to give up their competitive advantage, but if the Euro is to survive in its present form this is precisely what must happen.
However, instead of the Euro adjusting, even in part, to the needs of Italy and Greece, Italy and Greece are having to adjust wholly to the needs of the surplus bloc within the Euro, laying waste to much of their economies – and their social fabric – in the process. Greece is a hopeless case – but is also rather a small one: the Euro and the world economy can survive a Greek default. Italy is another matter: David Riley, head of the ratings agency Fitch, has said that ‘The future of the euro will be decided at the gates of Rome’. However, as long as Italy remains within the Euro it is damned if it does or if it doesn’t: it cannot take on any more debt without again triggering the wrath of the bond markets, while cutting spending in the teeth of a recession leads, in the words of Jim O’Neill of Goldman Sachs, ‘to weaker growth which then leads to bigger deficits’.
But if Italy leaves the Euro, they can once again issue their own currency, and it can find (or be manipulated towards) an exchange rate appropriate to the needs of the Italian economy, allowing the Italy opportunity to work its way back to some kind of economic health and eventually regain access to the international capital markets, this time with the correct institutions backing their currency in place.
But as we have seen, should this happen it would likely trigger ‘a European depression, a global recession and possibly a global depression’. Willem Buiter, chief economist of Citigroup and a former member of the Bank of England’s monetary policy committee, has said: ‘A disorderly sovereign default and eurozone exit by Greece alone would be manageable. Greece accounts for only 2.2 per cent of eurozone area GDP and 4 per cent of public debt. However, a disorderly sovereign default and eurozone exit by Italy would bring down much of the European banking sector… If Spain and Italy were to exit, there would be a collapse of systematically important financial institutions throughout the European Union and North America and years of global depression’ (link).
Not an appetising prospect, but for Italy and Greece the alternative as it stands is slow economic death and probable political revolt inside the Euro. The core Eurozone members are not presently concerned with the general interest, so why should Italy or Greece be? Why should they ‘take one for the team’ if Germany and the other surplus nations are unwilling to do likewise?
This brings us to the obvious question to round off this section: why does the Euro not have the ‘essential institutions’ in place to prevent the kind of financial crises we are currently seeing? This takes us back to Delors and the lack of a single state supporting the Euro: only a Europe-wide political authority can provide the essential institutions identified above, but there hasn’t been – and isn’t likely to be – any democratic mandate for such a level of political and economic union.
But with the Euro’s institutional failings now exposed – the Harvard economist Kenneth Rogoff has called it ‘a halfway house which doesn’t work’ – it now must move either forward or back: either it progresses towards full fiscal and economic union – a common Eurozone-wide treasury, with a pooling of taxes and debts, or in essence a United States of Europe – for which there is no popular support; or it falls apart.
This highlights one of the binds the European project finds itself in: at bottom, the drive towards European unification was driven by the need to put an end to the centuries of increasingly bloody slaughter that had characterised European history up until 1945 and to safeguard liberal capitalist values, yet the only way to complete the project now would be through the over-riding of political democracy. Without the political will to move towards the necessary degree of fiscal union, Roubini’s view is that ‘With Italy too big to fail, too big to save, and now at the point of no return, the endgame for the eurozone has begun. Sequential, coercive restructurings of debt will come first, and then exits from the monetary union that will eventually lead to the eurozone’s disintegration.’
‘Ideas, knowledge, science, hospitality, travel – these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible and, above all, let finance be primarily national.’ John Maynard Keynes
What would a sovereign debt default by Italy be likely to mean outside the realms of high finance? For one, it would threaten the solvency of any financial institution holding significant amounts of Italian debt. The size of the Italian economy means any bail-out would have to be of a scale that would threaten the fiscal position of any coalition of Eurozone nations who may attempt to mount it.
An exit from the Euro and a reversion to their own currency by any nation risks rendering contracts denominated in the Euro void; while the inevitable devaluation which would follow any Euro exit puts at risk the value of holdings in that country, which is prompting capital flight from the European banking system (link and link).
In response to this, the Treasury is apparently working on “contingency plans for the disintegration of the single currency that include capital controls” (link) while Christine Lagarde, managing director of the IMF, is currently concerned enough to publicly warn of the risk of ‘retraction, rising protectionism and isolation. This is exactly the description of what happened in the 1930s and what followed is not something we are looking forward to’ (link). This echoes the view of Bill Gross, managing director of PIMCO, expressed in 2009 that ‘[t]he future of the global economy will likely be dominated by delevering, deglobalization, and reregulating’ (link), while PIMCO’s investor forecast for 2012 talks of the ‘slowly creeping but surely rising risks of financial and economic de-globalization, and the constant drum beat of re-regulation, particularly in developed country banking systems’ (link).
It is of tremendous importance that such significant figures are talking in this way. It has been assumed that ‘globalisation’ is something both inevitable and beneficial. To an extent, its inevitability is true: technological advancement has made the world a smaller, more connected place. But ‘globalisation’, when used in the economic sense, refers to one thing: the globalisation of the movement of capital.
The financial crisis has brought with it a realisation, even among some of its cheerleaders, that the globalisation of capital may in fact be neither beneficial or inevitable. A recent Bank of England report on the future of international capital flows began by stating that ‘The experience of the past decade has demonstrated the challenges that international capital flows can pose for financial stability’, before warning that ‘faced with further increases in the magnitude and/or volatility of capital flows, it is likely that some countries will choose to introduce capital controls’ (link). In reviewing this report, Gillian Tett of the Financial Times commented:
‘Back in the halcyon pre-crisis days of the late 20th and early 21st centuries, it was taken as self evident that financial globalisation was a good thing. After all, free capital should enable money to flow to where it is most needed, at the best price; or so the theory goes. But the subprime crisis and eurozone dramas are shaking that belief. Never mind the fact that imbalances amid globalisation can stoke up bubbles; what is the bigger risk now – particularly in the eurozone – is that financial globalisation has created a system that is interconnected in some dangerous ways. This makes it highly vulnerable to contagion, and booms and busts, of the sort that occurred in 2008 when global capital flows collapsed to a mere 1 per cent of GDP. And if globalisation increases, these swings could potentially get worse’ (link).
Why does this matter? Because the defining characteristic of neo-liberalism, above everything else, is the globalisation of capital. This has defined the history of the past thirty or so years: it is the globalisation of capital that has created the conditions for the current crisis, enabled the flight of manufacturing jobs from the West to those countries where wages are lowest, and has helped produce unprecedented inequality and the emasculation of the labour movement across the globe. It is what separates the previous, Keynesian, era of economic history from ours, and now senior capitalist spokespeople are saying that the era may have reached its natural end.
Financial globalisation is a man-made process made up of man-made institutions: it has gone into reverse before, there is no reason why it cannot do so again. As Peter Mandelson has recently said, ‘the shipping container and the internet are genies that can’t go back in the bottle – nor would we want them to. But much of what we call globalisation results from policy choices.’
The American economist Barry Eichengreen divides the development of international finance in the capitalist epoch so far into four stages:
Firstly, prior to World War I, controls on international financial transactions were absent, the value of national currencies were fixed (to the price of gold) and capital flowed freely around the world across international borders to wherever it found most attractive (the gold standard era).
Secondly, the political and economic crises of the inter-war period saw the collapse of this system and the widespread imposition of controls on the movement of capital across international borders, with a corresponding contraction of international capital movements.
Thirdly, the thirty years following World War II were defined by the Bretton Woods system, an internationally-agreed system of highly controlled capital movements and fixed exchange rates tied to the dollar, the value of which was in turn tied to gold.
Fourthly, the neo-liberal period following the collapse of the Bretton Woods system in the seventies, which has seen a restoration of the globalisation of capital seen before World War I, but with a regime offloating exchange rates as opposed to the fixed exchange rates of the pre-WWI period.
The period during which the Bretton Woods system operated has become known as the ‘golden age of capitalism’. The economic historian Angus Maddison has commented that “Within the capitalist epoch [1820 onwards], one can distinguish five distinct phases of development. The ‘golden age’, 1959-1973, was by far the best in terms of growth performance. Our age, from 1973 onwards (henceforth characterized as the “neoliberal order”) has been second best” .
The Bretton Woods system, which underpinned the ‘golden age’, was constructed by the US and the UK – with Keynes himself as the UK rapporteur – as WWII was drawing to a close. It was introduced to provide a stable macroeconomic environment in which the international economy could be nursed back to health, after the disasters of the Great Depression and two world wars had brought the capitalist system to the brink of extinction.
It is the concern of Christine Lagarde, PIMCO and others that Eichengreen’s fourth stage – a stage which has been an unprecedented bonanza for the capitalist class, if no-one else – may be coming to an end, and their concern is fully justified. The political scientist Colin Crouch has written of ‘the strange non-death of neo-liberalism’ (link), but history moves slowly. Neo-liberalism did not vanquish Keynesianism overnight, and neither will it slip from view in the blink of an eye. But the underlying historic and economic trends are clear: the model of neo-liberal globalisation as we have known it is broken and cannot be repaired; and even if it could be repaired, it could not be sustained.
The beginning of the neo-liberal era can be traced back to 1971, when Richard Nixon took the dollar off gold, allowing it to devalue. This led to the complete break-up of the Bretton Woods system in 1973 and helped produce our era of freely floating currencies, something the godfather of neo-liberal economics, Milton Friedman, had been advocating since 1953 (George Shultz, who oversaw much of this process as US Treasury Secretary between 1972 and 1974, was a colleague of Friedman’s at the University of Chicago’s economics department).
This ushered in, and was a pre-condition for, our era of globalised finance. As the Cambridge economist John Eatwell states:
‘Once Bretton Woods collapsed and significant fluctuations in exchange rates became commonplace, then opportunities for profit proliferated, regulatory structures which inhibit flows of capital were challenged as ‘inefficient’ and ‘against the national interest’, and the modern infrastructure of speculation was constructed.
‘Combined with other domestic pressures for the removal of financial controls, the collapse of Bretton Woods was a significant factor driving the world-wide deregulation of financial systems. Exchange controls were abolished. Domestic restrictions on cross-market access for financial institutions were scrapped. Quantitative controls on the growth of credit were eliminated, and monetary policy was now conducted predominantly through the management of short-term interest rates. A global market in monetary instruments was created’.
But the world did not move from the Keynesian era of fettered finance to the neo-liberal era of unfettered finance in one fell swoop: it was a gradual process which wasn’t sealed until the last major industrial economies, Norway, abolished its capital controls in 1995 (link). In between there was the Pinochet coup and the ‘Chicago Boys’ in Chile, the US abolition of capital controls in 1974, the Thatcher revolution in the UK (the first major act of the Thatcher administration was to remove exchange controls in June 1979), the fall of the Berlin Wall, the New Democrats and NAFTA in the US and the birth of New Labour here: all steps along the neo-liberal road. Just as the ‘Nixon Shock’ of 1971 was the beginning of the end for the Keynesian era, so the Lehman’s collapse of 15 September 2008 marks the beginning of the end of the neo-liberal era.
We are in the early stages of the transition to the post-neo-liberal era. What will this look like? That is unknown. When Keynesianism fell, the architects of neo-liberalism had been planning for and working towards their takeover for decades.
Presently, there is no-one so equipped to step into the vacuum. If anything explains the ‘strange non-death of neo-liberalism’, it is that no other contender is currently strong enough to kill the wounded beast. The left, which was unable to seize the opportunity in the 1970s, is even weaker now. In academia, Keynesian economic solutions are beginning to be looked at again with interest. But is there the political will behind neo-Keynesianism as there was behind neo-liberalism? After all, the capitalist objections to Keynesianism were largely political, not economic.
Keynesianism delivered the greatest period of economic growth in the capitalist era; it also delivered the most equitable growth, which is why it was so despised. The restrictions it put on the movements of capital across national boundaries left capital unacceptably vulnerable to attack from the domestic working class, wherever it was. The removal of these restrictions gave capital the whip hand over labour, which largely accounts for the emasculation of the labour movement worldwide in the neo-liberal era.
But the removal of these controls on finance invariably leads to the kind of economic crisis we are currently going through. This is the bind capital finds itself in: liberalised capital is politically secure (because it weakens the position of the working class) but economically unstable; ‘repressed’ capital is economically stable but politically vulnerable.
While the problems with Keynesianism were political, the problems with neo-liberalism are economic. If anything drives the world toward financial deglobalisation, it won’t be political action by the mass of the population, but the actions of capitalist agents protecting themselves and working in their own interests.
Lose-lose for the capitalist class
It is not just the Bank of England now acknowledging the potentially destabilising effect of the free movement of capital: the IMF, in a complete reversal of what it has been preaching and demanding for thirty years, is also publishing research papers stating that ‘capital controls are a legitimate part of the toolkit to manage capital inflows in certain circumstances… following the crisis, policymakers are again reconsidering the view that unfettered capital flows are a fundamentally benign phenomenon and that all financial flows are the result of rational investing/borrowing/lending decisions’.
More significantly, this is happening in practice: a number of emerging economies ‘ranging from Brazil to South Korea to Turkey are limiting capital flows in an effort to control inflation, limit the rise in their own currencies or prevent bubbles in their stock and real-estate markets’ (link). And as we have seen, should a significant default event happen in the Eurozone, capital controls would almost certainly be utilised in order to prevent bank runs and to preserve the integrity of the financial system.
But the recognition that unregulated flows of capital can be destabilising is not the only factor that may force deglobalisation. If the crisis inside the Eurozone is at bottom driven by imbalances between debtor and creditor nations, something similar is also at work in the wider world.
Just as economic growth in the Eurozone has been sustained by one part spending beyond their means and accruing debt (those nations now in crisis) and the other accruing surplus (Germany and a handful of smaller, northern European countries), so the global economy in recent years has been sustained by a similar dynamic: China, Germany, the major oil producers and a few others run large trade surpluses, while the US, the UK, Italy, Spain, France, Australia and a handful of the other major nations run large trade deficits. As seen within the Eurozone, such a situation can only be sustained so long as the debtors are seen as creditworthy, and there inevitably comes a point when the supply of willing lenders dries up and such debt-fuelled growth can no longer be sustained.
For much of the deficit world – whether governments in the Eurozone, or homeowners from California to the Costa Blanca – such a ‘Minsky moment’ has now come. As the governor of the Bank of England, Mervyn King, puts it:
‘Global imbalances helped to fuel the financial crisis. And today they threaten the sustainability of the recovery in global demand… At the time, all the economies seemed to gain: just as the high-saving countries created employment, the low-saving economies enjoyed faster real consumption growth as the price of imported manufactured goods fell. Within their own terms, all these actions were rational. All the main players –countries, regulators, central banks, and commercial banks– were rationally pursuing their own self interest. But what made sense for each player individually did not make sense in aggregate. These actions had collective consequences… The pattern of growth, with the associated imbalances and mis-pricing of risk, was not sustainable: as we know only too well, the ensuing financial crisis threatened the entire stability of the financial system.’ (link)
Astute observers have noted that a global ‘re-balancing’ is an essential prerequisite to the world working its way out of the current crisis. Olivier Blanchard, chief economist of the IMF, writes that ‘there is an urgent need to implement policy changes to address the remaining domestic and international distortions that are a key cause of imbalances. Failure to do so could result in the world economy being stuck “in midstream”, threatening the sustainability of the world recovery’ (link), while Ben Bernanke, head of the US Federal Reserve, has said that ‘the countries of the world must recognize their collective responsibility for bringing about the rebalancing required to preserve global economic stability and prosperity’ (link). Mervyn King notes that ‘the global economy will remain vulnerable to the risks associated with imbalances if they are not tackled at source… All countries accept that global rebalancing is necessary.’
But while all countries may ‘accept that global rebalancing is necessary’, not all countries agree on how this should be achieved, or share the same interests in this process. As King noted, the world reached this point through ‘all the main players rationally pursuing their own self interest’. For rebalancing to occur would require some major players not to rationally pursue their own self-interest, and why should they do that? Why should the Germans or Chinese allow their currency to appreciate and lose their competitive trade advantage? This is, however, what ultimately needs to happen if the imbalances that have so destabilised the world economy are to be removed.
It is for this reason that since the crisis began, there has been talk of the potential for ‘currency wars’. To again quote Nouriel Roubini:
‘A world where over-spending countries need to reduce domestic demand and boost net exports, while over-saving countries are unwilling to reduce their reliance on export-led growth, is a world where currency tensions must inevitably come to a boil. Aside from the eurozone, the US, Japan, and the United Kingdom all need a weaker currency. Even Switzerland is intervening to weaken the franc.
‘The trouble, of course, is that not all currencies can be weak at the same time: if one is weaker, another must, by definition, be stronger. Likewise, not all economies can improve net exports at the same time: the global total is, by definition, equal to zero. So the competitive devaluation war in which we find ourselves is a zero-sum game: one country’s gain is some other country’s loss.’ (link).
Likewise, Mervyn King has called for a “grand bargain” among the ‘major players in the world economy’, but states clearly the difficulties in achieving this, and the likely consequences if such a bargain can’t be struck:
‘The major surplus and deficit countries are pursuing economic strategies that are in direct conflict… Current exchange rate tensions illustrate the resistance to the relative price changes that are necessary for a successful rebalancing… The need to act in the collective interest has yet to be recognised, and, unless it is, it will be only a matter of time before one or more countries resort to protectionism as the only domestic instrument to support a necessary rebalancing. That could, as it did in the 1930s, lead to a disastrous collapse in activity around the world. Every country would suffer ruinous consequences.’
And as the BBC’s Paul Mason has observed:
‘If we get a double dip, then there is no more fiscal stimulus type ammo in the clip: countries will – and Britain as I say effectively already has – devalue in order to boost competitiveness.
‘As all students of the Great Depression know, those who devalued first – by coming off the Gold Standard – escaped recession first. Since everybody has now read the history books on the Depression, and understood the importance of currency (Labour famously “did not know you could” come off Gold pre 1931) we can expect a self-cancelling war of competitive devaluations. And for this reason competitive devaluation is only going to take you so far.
‘So the real endgame comes when countries realise devaluation is a dead end and go for the only escape route left, which is actual physical trade protectionism accompanied by the creation of currency blocks. The world, which thought it had escaped catastrophe in a flurry of state-fuelled remedies after the Lehman crisis, is inching back towards one, and it will be about more than just the value of sterling.’ (link)
The world has already taken some tentative steps down this road. Eighteen months ago the Brazilian finance minister Guido Mantega stated that ‘We’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness’ (link), while in September 2011 the Swiss central bank intervened in the currency markets to drive down the value of their franc (link).
Most significantly, the US and China have long been locked in the early stages of a diplomatic battle over what the US sees as China’s undervalued currency and anti-competitive trade practices. In January, the US Treasury secretary Tim Geithner stated that the Chinese yuan was ‘still below almost all measures of fundamentals’ and that ‘it’s very important that we get China to move comprehensively not just on the exchange rate but on dialling back its subsidies and distortions’ (link).
For now, the major players have stepped back from the brink. The yuan has appreciated a little against the dollar (although not enough for Washington’s liking), the US have stopped short of publicly branding the Chinese as currency manipulators (link) and the priorities of the Brazilians have for now shifted to control of domestic inflation. The healthy US economic recovery has helped, but the underlying tensions remain: Brazil appear to be returning to this particular fray, with their president Dimla Rousseff describing quantitative easing in the developed world as ‘a currency war that is based on an expansionary monetary policy that creates unequal conditions for competition. We will continue to develop (our) country by defending its industry and ensuring that the strategy used by the developed countries to exit the crisis does not cannibalize emerging markets’ (link). Roubini remarks that ‘currency wars eventually lead to trade wars’. More frightening is the rubric that trade wars often lead to real wars.
The current crisis is a lose-lose situation for the capitalist class. Either the global economic system continues on its current track and implodes; or the current crisis is resolved through global co-operation on rebalancing and tighter regulation of the flow of capital, with major countries such as the UK and the US turning away from debt-fuelled growth and embracing more production-led economic strategies. The former would be grim for everyone; the latter runs the risk of allowing the working class to return to the political stage in many of the most advanced economies, and in the world as a whole. Some degree of ‘deglobalisation’ seems inevitable: how progressive it will be is up for grabs, and it is something largely out of the hands of the general populace. How the capitalist order deals with its crisis will define all our futures.
 See Barry Eichengreen (2008), Globalizing Capital: a history of the international monetary system(Princeton, NJ: Princeton University Press).
 Angus Maddison (2006), The World Economy: a millennial perspective (Paris: OECD), p125, table 3-1b, also available to view athttp://blogs2.lesechos.fr/IMG/pdf/Statistiques_historiques_OCDE_par_pays_depuis_1820.pdf
 John Eatwell (1996), International Financial Liberalisation: the impact on world development (New York: UNDP), p5, 6.
 Jonathan D. Ostry, Atish R. Ghosh, Karl Habermeier, Marcos Chamon, Mahvash S. Qureshi, Dennis B.S. Reinhardt (2010), Capital Inflows: The Role of Controls, IMF Staff Position Note 10/04 (Washington: International Monetary Fund), p15. Available at http://www.imf.org/external/pubs/ft/spn/2010/spn1004.pdf.
THE KING EDWARD VII, AYLSHAM ROAD, Norwich, Friday 8th and Saturday 9th June 2012.
In response to the recent victimization of Punks in the Aceh province of Indonesia, Norwich’s own punk singer Emma Keevil of HOTWIRED is launching a two day benefit gig to raise enough money to bring Indonesian punk band DISLAW over so they can tour the UK and raise lots of cash for the street punks back home.
In a statement Emma said
“This benefit is to raise enough money to get the band Dislaw here from Indonesia after all the trouble from the police they’ve suffered. By bringing them here they can tour and it will raise awareness of the discrimination punks are receiving in Indonesia.
We are a huge family and we must unite all over the world. We can raise more money when they get here and send back any clothes boots etc that we might not want to replace the stuff the police have taken from the punks arrested.
I have grown to love the boys in this band, they have not only captured my heart but they are a fantastic band you will not be disappointed so please help us make this happen.
Where can you be arrested and brainwashed for listening to music in mixed company? That would be in Indonesia, where the deputy mayor of the Aceh region recently declared “being punk” a crime punishable by arrest.
Mayor Illiza Sa’aduddin Djamal authorized the arrest and ten-day “reeducation” of sixty-four young people who attended a musical fundraiser in an Aceh park. Their “reeducation” consists of forced incarceration for ten days and having their heads shaved. Also some were hosed down in communal cells.
Illiza told the Jakarta Globe that the punks are guilty of spreading a “new social disease” which in effect undermines the community’s religious practice. However, the only breach of Islamic law that she cited was that men and women had gathered in the same place.
She has also announced her intention to pursue, incarcerate, and “reeducate” another 200 punk rockers in her region.
Tell Banda Aceh deputy mayor Illiza S’aduddin Djamal that punk is not a disease. Tell her to stop punishing punk rockers in her region!”
As a thank you to Hotwired for supporting NCAGs Norwich Justice For Ian Tomlinson Day back in 2010, I’ll be throwing my full weight behind supporting Emma and her endeavors to make this a great success and hope all NCAG members and supporters will take the time to do the same.
The event website can be found here http://punkisnotacrimefest.wordpress.com/
This promises to be one hell of a couple of days!
Rick Dutton, NCAG.
David Graeber responds to“The Cancer in Occupy,” by Chris Hedges
I am writing this on the premise that you are a well-meaning person who wishes Occupy Wall Street to succeed. I am also writing as someone who was deeply involved in the early stages of planning Occupy in New York.
I am also an anarchist who has participated in many Black Blocs. While I have never personally engaged in acts of property destruction, I have on more than one occasion taken part in Blocs where property damage has occurred. (I have taken part in even more Blocs that did not engage in such tactics. It is a common fallacy that this is what Black Blocs are all about. It isn’t.)
I was hardly the only Black Bloc veteran who took part in planning the initial strategy for Occupy Wall Street. In fact, anarchists like myself were the real core of the group that came up with the idea of occupying Zuccotti Park, the “99%” slogan, the General Assembly process, and, in fact, who collectively decided that we would adopt a strategy of Gandhian non-violence and eschew acts of property damage. Many of us had taken part in Black Blocs. We just didn’t feel that was an appropriate tactic for the situation we were in.
This is why I feel compelled to respond to your statement “The Cancer in Occupy.” This statement is not only factually inaccurate, it is quite literally dangerous. This is the sort of misinformation that really can get people killed. In fact, it is far more likely to do so, in my estimation, than anything done by any black-clad teenager throwing rocks.
Let me just lay out a few initial facts:
- Black Bloc is a tactic, not a group. It is a tactic where activists don masks and black clothing (originally leather jackets in Germany, later, hoodies in America), as a gesture of anonymity, solidarity, and to indicate to others that they are prepared, if the situation calls for it, for militant action. The very nature of the tactic belies the accusation that they are trying to hijack a movement and endanger others. One of the ideas of having a Black Bloc is that everyone who comes to a protest should know where the people likely to engage in militant action are, and thus easily be able to avoid it if that’s what they wish to do.
- Black Blocs do not represent any specific ideological, or for that matter anti-ideological position. Black Blocs have tended in the past to be made up primarily of anarchists but most contain participants whose politics vary from Maoism to Social Democracy. They are not united by ideology, or lack of ideology, but merely a common feeling that creating a bloc of people with explicitly revolutionary politics and ready to confront the forces of the order through more militant tactics if required, is, on the particular occasion when they assemble, a useful thing to do. It follows one can no more speak of “Black Bloc Anarchists,” as a group with an identifiable ideology, than one can speak of “Sign-Carrying Anarchists” or “Mic-Checking Anarchists.”
- Even if you must select a tiny, ultra-radical minority within the Black Bloc and pretend their views are representative of anyone who ever put on a hoodie, you could at least be up-to-date about it. It was back in 1999 that people used to pretend “the Black Bloc” was made up of nihilistic primitivist followers of John Zerzan opposed to all forms of organization. Nowadays, the preferred approach is to pretend “the Black Bloc” is made up of nihilistic insurrectionary followers of The Invisible Committee, opposed to all forms of organization. Both are absurd slurs. Yours is also 12 years out of date.
- Your comment about Black Bloc’ers hating the Zapatistas is one of the weirdest I’ve ever seen. Sure, if you dig around, you can find someone saying almost anything. But I’m guessing that, despite the ideological diversity, if you took a poll of participants in the average Black Bloc and asked what political movement in the world inspired them the most, the EZLN would get about 80% of the vote. In fact I’d be willing to wager that at least a third of participants in the average Black Bloc are wearing or carrying at least one item of Zapatista paraphernalia. (Have you ever actually talked to someone who has taken part in a Black Bloc? Or just to people who dislike them?)
- “Diversity of tactics” is not a “Black Bloc” idea. The original GA in Tompkins Square Park that planned the original occupation, if I remember, adopted the principle of diversity of tactics (at least it was discussed in a very approving fashion), at the same time as we all also concurred that a Gandhian approach would be the best way to go. This is not a contradiction: “diversity of tactics” means leaving such matters up to individual conscience, rather than imposing a code on anyone. Partly,this is because imposing such a code invariably backfires. In practice, it means some groups break off in indignation and do even more militant things than they would have otherwise, without coordinating with anyone else—as happened, for instance, in Seattle. The results are usually disastrous. After the fiasco at Seattle of watching some activists actively turning others over to police—we quickly decided we needed to ensure this never happened again. What we found was that if we declared “we shall all be in solidarity with one another. We will not turn in fellow protestors to the police. We will treat you as brothers and sisters. But we expect you to do the same to us”—then, those who might be disposed to more militant tactics will act in solidarity as well, either by not engaging in militant actions at all for fear they will endanger others (as in many later Global Justice Actions, where Black Blocs merely helped protect the lockdowns, or in Zuccotti Park, where mostly people didn’t bloc up at all) or doing so in ways that run the least risk of endangering fellow activists.
All this however is secondary. Mainly I am writing as an appeal to conscience. Your conscience, since clearly you are a sincere and well-meaning person who wishes this movement to succeed. I beg you: Please consider what I am saying. Please bear in mind as I say this that I am not a crazy nihilist, but a reasonable person who is one (if just one) of the original authors of the Gandhian strategy OWS adopted—as well as a student of social movements, who has spent many years both participating in such movements, and trying to understand their history and dynamics.
I am appealing to you because I really do believe the kind of statement you made is profoundly dangerous.
The reason I say this is because, whatever your intentions, it is very hard to read your statement as anything but an appeal to violence. After all, what are you basically saying about what you call “Black Bloc anarchists”?
- they are not part of us
- they are consciously malevolent in their intentions
- they are violent
- they cannot be reasoned with
- they are all the same
- they wish to destroy us
- they are a cancer that must be excised
Surely you must recognize, if laid out in this fashion, that this is precisely the sort of language and argument that, historically, has been invoked by those encouraging one group of people to physically attack, ethnically cleanse, or exterminate another—in fact, the sort of language and argument that is almost never invoked in any other circumstance. After all, if a group is made up exclusively of violent fanatics who cannot be reasoned with, intent on our destruction, what else can we really do? This is the language of violence in its purest form. Far more than “fuck the police.” To see this kind of language employed by someone who claims to be speaking in the name of non-violence is genuinely extraordinary. I recognize that you’ve managed to find certain peculiar fringe elements in anarchism saying some pretty extreme things, it’s not hard to do, especially since such people are much easier to find on the internet than in real life, but it would be difficult to come up with any “Black Bloc anarchist” making a statement as extreme as this.
Even if you did not intend this statement as a call to violence, which I suspect you did not, how can you honestly believe that many will not read it as such?
photo | via In my experience, when I point this sort of thing out, the first reaction I normally get from pacifists is along the lines of “what are you talking about? Of course I’m not in favor of attacking anyone! I am non-violent! I am merely calling for non-violently confronting such elements and excluding them from the group!” The problem is that in practice this is almost never what actually happens. Time after time, what it has actually meant in practice is either (a) turning fellow activists over to the police, i.e., turning them over to people with weapons who will physically assault, shackle, and imprison them, or (b) actual physical activist-on-activist assault. Such things have happened. There have been physical assaults by activists on other activists, and, to my knowledge, they have never been perpetrated by anyone in Black Bloc, but invariably by purported pacifists against those who dare to pull a hood over their heads or a bandana over their faces, or, simply, against anarchists who adopt tactics someone else thinks are going too far. (Not I should note even potentially violent tactics. During one 15-minute period in Occupy Austin, I was threatened first with arrest, then with assault, by fellow campers because I was expressing verbal solidarity with, and then standing in passive resistance beside, a small group of anarchists who were raising what was considered to be an unauthorized tent.)
This situation often produces extraordinary ironies. In Seattle, the only incidents of actual physical assault by protestors on other individuals were not attacks on the police, since these did not occur at all, but attacks by “pacifists” on Black Bloc’ers engaged in acts of property damage. Since the Black Bloc’ers had collectively agreed on a strict policy of non-violence (which they defined as never doing anything to harm another living being), they uniformly refused to strike back. In many recent occupations, self-appointed “Peace Police” have manhandled activists who showed up to marches in black clothing and hoodies, ripped their masks off, shoved and kicked them: always, without the victims themselves having engaged in any act of violence, always, with the victims refusing, on moral grounds, to shove or kick back.
The kind of rhetoric you are engaging in, if it disseminates widely, will ensure this kind of violence becomes much, much more severe.
Perhaps you do not believe me, or do not believe these events to be particularly significant. If so, let me put the matter in a larger historical context.
If I understand your argument, it seems to come down to this:
- OWS has been successful because it has followed a Gandhian strategy of showing how, even in the face of strictly non-violent opposition, the state will respond with illegal violence
- Black Bloc elements who do not act according to principles of Gandhian non-violence are destroying the movement because they provide retroactive justification for state repression, especially in the eyes of the media
- Therefore, the Black Bloc elements must be somehow rooted out
As one of the authors of the original Gandhian strategy,I can recall how well aware we were, when we framed this strategy, that we were taking an enormous risk. Gandhian strategies have not historically worked in the US; in fact, they haven’t really worked on a mass scale since the civil rights movement. This is because the US media is simply constitutionally incapable of reporting acts of police repression as “violence.” (One reason the civil rights movement was an exception is so many Americans at the time didn’t view the Deep South as part of the same country.) Many of the young men and women who formed the famous Black Bloc in Seattle were in fact eco-activists who had been involved in tree-sits and forest defense lock-downs that operated on purely Gandhian principles—only to find that in the US of the 1990s, non-violent protestors could be brutalized, tortured (have pepper spray directly rubbed in their eyes) or even killed, without serious objection from the national media. So they turned to other tactics. We knew all this. We decided it was worth the risk.
However, we are also aware that when the repression begins, some will break ranks and respond with greater militancy. Even if this doesn’t happen in a systematic and organized fashion, some violent acts will take place. You write that Black Bloc’ers smashed up a “locally owned coffee shop”; I doubted this when I read it, since most Black Blocs agree on a strict policy of not damaging owner-operated enterprises, and I now find in Susie Cagle’s response to your article that, in fact, it was a chain coffee shop, and the property destruction was carried out by someone not in black. But still, you’re right: A few such incidents will inevitably occur.
The question is how one responds.
If the police decide to attack a group of protestors, they will claim to have been provoked, and the media will repeat whatever the police say, no matter how implausible, as the basic initial facts of what happened. This will happen whether or not anyone at the protest does anything that can be remotely described as violence. Many police claims will be obviously ridiculous – as at the recent Oakland march where police accused participants of throwing “improvised explosive devices”—but no matter how many times the police lie about such matters, the national media will still report their claims as true, and it will be up to protestors to provide evidence to the contrary. Sometimes, with the help of social media, we can demonstrate that particular police attacks were absolutely unjustified, as with the famous Tony Bologna pepper-spray incident. But we cannot by definition prove all police attacks were unjustified, even all attacks at one particular march; it’s simply physically impossible to film every thing that happens from every possible angle all the time. Therefore we can expect that whatever we do, the media will dutifully report “protestors engaged in clashes with police” rather than “police attacked non-violent protestors.” What’s more, when someone does throw back a tear-gas canister, or toss a bottle, or even spray-paint something, we can assume that act will be employed as retroactive justification for whatever police violence occurred before the act took place.
All this will be true whether or not a Black Bloc is present.
If the moral question is “is it defensible to threaten physical harm against those who do no direct harm to others,” one might say the pragmatic, tactical question is, “even if it were somehow possible to create a Peace Police capable of preventing any act that could even be interpreted as ‘violent’ by the corporate media, by anyone at or near a protest, no matter what the provocation, would it have any meaningful effect?” That is, would it create a situation where the police would feel they couldn’t use arbitrary force against non-violent protestors? The example of Zuccotti Park, where we achieved pretty consistent non-violence, suggests this is profoundly unlikely. And perhaps most importantly at all, even if it were somehow possible to create some kind of Peace Police that would prevent anyone under gas attack from so much as tossing a bottle, so that we could justly claim that no one had done anything to warrant the sort of attack that police have routinely brought, would the marginally better media coverage we would thus obtain really be worth the cost in freedom and democracy that would inevitably follow from creating such an internal police force to begin with?
These are not hypothetical questions. Every major movement of mass non-violent civil disobedience has had to grapple with them in one form or another. How inclusive should you be with those who have different ideas about what tactics are appropriate? What do you do about those who go beyond what most people consider acceptable limits? What do you do when the government and its media allies hold up their actions as justification—even retroactive justification—for violent and repressive acts?
Successful movements have understood that it’s absolutely essential not to fall into the trap set out by the authorities and spend one’s time condemning and attempting to police other activists. One makes one’s own principles clear. One expresses what solidarity one can with others who share the same struggle, and if one cannot, tries one’s best to ignore or avoid them, but above all, one keeps the focus on the actual source of violence, without doing or saying anything that might seem to justify that violence because of tactical disagreements you have with fellow activists.
I remember my surprise and amusement, the first time I met activists from the April 6 Youth Movement from Egypt, when the issue of non-violence came up. “Of course we were non-violent,” said one of the original organizers, a young man of liberal politics who actually worked at a bank. “No one ever used firearms, or anything like that. We never did anything more militant than throwing rocks!”
Here was a man who understood what it takes to win a non-violent revolution! He knew that if the police start aiming teargas canisters directly at people’s heads, beating them with truncheons, arresting and torturing people, and you have thousands of protestors, then some of them will fight back. There’s no way to absolutely prevent this. The appropriate response is to keep reminding everyone of the violence of the state authorities, and never, ever, start writing long denunciations of fellow activists, claiming they are part of an insane fanatic malevolent cabal. (Even though I am quite sure that if a hypothetical Egyptian activist had wanted to make a case that, say, violent Salafis, or even Trotskyists, were trying to subvert the revolution, and adopted standards of evidence as broad as yours , looking around for inflammatory statements wherever they could find them and pretending they were typical of everyone who threw a rock, they could easily have made a case.) This is why most of us are aware that Mubarak’s regime attacked non-violent protestors, and are not aware that many responded by throwing rocks.
Egyptian activists, in other words, understood what playing into the hands of the police really means.
Actually, why limit ourselves to Egypt? Since we are talking about Gandhian tactics here, why not consider the case of Gandhi himself? He had to deal with what to say about people who went much further than rock-throwing (even though Egyptians throwing rocks at police were already going much further than any US Black Bloc has.) Gandhi was part of a very broad anti-colonial movement that included elements that actually were using firearms, in fact, elements engaged in outright terrorism. He first began to frame his own strategy of mass non-violent civil resistance in response to a debate over the act of an Indian nationalist who walked into the office of a British official and shot him five times in the face, killing him instantly. Gandhi made it clear that while he was opposed to murder under any circumstances, he also refused to denounce the murderer. This was a man who was trying to do the right thing, to act against an historical injustice, but did it in the wrong way because he was “drunk with a mad idea.”
Over the course of the next 40 years, Gandhi and his movement were regularly denounced in the media, just as non-violent anarchists are also always denounced in the media (and I might remark here that while not an anarchist himself, Gandhi was strongly influenced by anarchists like Kropotkin and Tolstoy), as a mere front for more violent, terroristic elements, with whom he was said to be secretly collaborating. He was regularly challenged to prove his non-violent credentials by assisting the authorities in suppressing such elements. Here Gandhi remained resolute. It is always morally superior, he insisted, to oppose injustice through non-violent means than through violent means. However, to oppose injustice through violent means is still morally superior to not doing anything to oppose injustice at all.
And Gandhi was talking about people who were blowing up trains, or assassinating government officials. Not damaging windows or spray-painting rude things about the police.