The struggle for democracy and for economic growth
Some countries, such as Britain, which has hitched its prosperity more completely to the wealth generated by the City of London, may wish that their economies were more ‘real’ in 2009. The idea that Britain’s economy can rely solely on finance-exporting banks and importing goods-is surely dead. 1
The UK has been living beyond its means. We have been consuming the product of somebody else’s labour, in the form of loans from the more dynamic countries in the world. The relative over exposure of the UK to the global financial system means that within the current parameters the UK is over dependent on international developments. This is not sustainable in the longer term. The instinct of UK politicians is not to confront this problem but to put off the day of reckoning by finding ways to continue financing consumption. The issue of ‘quantitative easing’,however it is dressed up, is a short term attempt to stimulate the economy by printing money. This could have potentially dangerous long term consequences.
There is always scope for the economy to recover, for example the falling value of the pound may accelerate foreign direct investment. It is also the case that the compliance of British workers in pay freezes and wage cuts gives business more scope to recover. British capitalism will not collapse as a consequence of the recession. Economic activity will revive eventually. But the fundamental problem of the long of a dynamic economic engine will not go away.
The failures of the UK and other western governments to react effectively to this crisis are a product of the lack of real democracy and leadership in the west. The concept of TINA,There Is No Alternative to the market,has lulled politicians into the mistaken belief that the market always works and that governments need merely tinker with the economy. Unsurprisingly interest in politics has diminished. If,after all, economic activity is out of human control,what’s the point in politics?
Even worse is the trend to interpret the many failures of the market as a reason to oppose economic growth. Even in the middle of this recession, when world trade is collapsing and capital flows between countries are drying up, with potentially disastrous consequences for the health and well being of the people of this planet, there are those who argue that falls in consumption are a a good thing. We need to argue that continued economic growth is vital. If the market cannot deliver economic growth then we need to look at alternative ways of delivering it.
We should see this recession as an opportunity to develop arguments for democracy and for economic growth. The economy is the sum total of human activity. We made this mess and we can unmake it. But to do this requires a revolution in our attitude to politics and a renewed belief in our ability to change the course of human activity through conscious activity. The UK requires a political and cultural revolution in order for the economy to recover and thrive into the future. A more innovative business environment cannot thrive in a generally risk averse culture and one which is wedded to welfarism, state intervention and regulation.