While the Vatican and street protestors attack the foundations of our materialist civilization and call, presumably, for a new order in which a government accountable to the people, not the plutocrats, will run things, the best approximation we have of “popular government” once again invested massively in the status quo.
This week, Europe’s governments committed well over a trillion dollars of their people’s wealth and credit to keep the Euro-zone, its banking system, and the entire European federation afloat.
This is the fourth time in the last four years that major world governments have taken action to keep capitalism afloat: first, the G-20 agreed to introduce stimulus measures equivalent to 2% of their GNP (at that time the US Executive and Congress bailed out the center of the global financial crisis), last summer they agreed to keep on borrowing trillions to protect the US dollar’s global responsibilities, and this week European governments decided to further integrate Europe financially, whether that’s still popular at home or not.
Four times these leaders have righted a ship, without a mutiny and without changing their common idea of where they’re going. In real-time, these conservative leaders look smaller than their counterparts in the 1930s. Nevertheless, they’re more united and have been more effective in stabilizing a much bigger and more complex system of global capitalist growth.
In saving that system, they’ve made other problems more pressing. Martin Wolf outlines eloquently why further support from government—that will be attacked on both extremes—will be required:
“The era of bail-outs must end. Restructuring finance to make this credible is of huge importance for the future. Yet this is not all. Market capitalism creates inherent difficulties. The two most obvious are macroeconomic instability and extremes of inequality. The tendency of a market-oriented financial system to run away with itself has, again, been demonstrated on a large scale. On the free market right people argue that if only we went back to the gold standard or ended fractional reserve banking, all would be well. I question such claims. Instability is inherent in the game of betting on the future. Humans seem prone to self-fulfilling waves of optimism and pessimism. Ways of mitigating the extent and the consequences of such instability always need to be found.”
This is a fragile proposition: government mitigates and the private sector gets excited. It is the proposition fascists, bishops, and left authoritarians have ridiculed for two hundred years as un-adventuresome and amoral.
Furthermore, in a world economy with seven billion stakeholders, even this undramatic role for the state takes government further away from the day-to-day discipline of informed electorates.
Despite the thrilling bestsellers on the flaws of global capitalism, the biggest challenge in Europe and in other developed economies may be quite prosaic: how do we maintain effective representative democracy while expecting our governments to continue to lead even as well as they are leading now?