Eurozone Financial Satire: “Madmen in Authority and Academic Scribblers.”


Unblogged is unplugged. If I were a Catholic and this weblog a confessional, I’d have to start this with: “forgive me reader for I have sinned. It’s been six weeks since my last confession. Nobody cares about deeds … but plenty of thoughts and words have gone unrecorded and unblogged.” This means I start 2012 several weeks behind schedule with my promise to continue, segment by segment, my three-axis interpretative model of storytelling which has now reached the four modes of Narrativity.

So my January good resolution must be to make up for lost time in describing the remaining pieces of the matrix I devised. Last time I promised to examine the storytelling mode of Satire, as seen through the lens of our responses to the Eurozone Crisis. And I promised to trace this ugly story that affects everyone on planet Earth, right back to its roots in the obscure intellectual struggle between two long-dead economists.

So it’s time to pick up the thread. Here goes, with apologies for the delay.

The Disengaging Power of Satire

Each New Year’s Eve, a significant slice of the population of Germany sits down in front of the TV to watch the annual re-run of a black-and-white short film called “Dinner for One.”  It’s an obscure British satire from 1963, featuring the comic interaction between Sophie, a lonely dowager celebrating her 90th birthday, and her buffoonish butler James. The film has been completely forgotten by the Anglo-Saxon world.

On December 31st 2011, Germany’s AKD network decided to spice up the plot with a new version called “The 90 Rescue Summit – Euros For No One”. The two characters are digitally retouched as Angela Merkel and Nicholas Sarkozy.

As in the original, none of the invited dinner guests appear – and the butler has to “follow the same procedure as last year,” impersonating each guest in turn to please his mistress. Only this year, Sophie/Merkel’s guests are the most important statesmen of Europe. The only problem is that there is no statesman left in the Euro Zone to attend Merkel’s Euro Summit. “No-one is left here except the two of us,” says Sarkozy at one point.

Merkel and Sarkozy chink their glasses to the health of (ex) Greek PM Papandreou and Spaniard José Luis Zapatero, 2011’s principal victims. And so through the power of satire, the Eurozone crisis and its destructive influence have been diminished to a poignant comic interlude with which to close the year.

Ian Hislop, the editor of Private Eye, raised many eyebrows when he said during the veteran British magazine’s 50th birthday celebrations that all those years of bitingly satirical articles aimed at deflating the rich, pompous or powerful had not changed a single thing in Britain’s status quo.

Satire after all, is supposed to change the world by shaming the great and exposing untruths. Satirical writers such as the late, great Czech dramatist (and president) Vaclav Havel, have been feared and locked up dictators of all kinds.

But look a little closer at the way we experience satirical stories and you’ll see Hislop had a point. Give us a Satire, and we’ll shrug our shoulders, laugh at the folly, greed and absurdity of human nature and our resulting inability to change anything. Satire sees only meaningless change in human life; human affairs display no pattern, no progression, and for the most part are governed by folly, cruelty, or mere chance.

Satire is Liberal (in the European sense used in this series – not the word Americans use to describe those who behave like Europe’s Social Democrats). It demobilises us and makes us see we are not responsible for others, only ourselves. Unlike a Romance, we don’t want to start building barricades in Paris or changing the world for the better.

In short, you can’t start a revolution with Satire, however much you can make people laugh and reinforce their ironic perceptions about how power corrupts. As satirical shows become familiar and institutionalised – like Saturday Night Live  – they help us to blow off a little steam, without moving to actually protest.

In a previous post (Narrativity, Metahistory, and the Persuasion Industry) I looked at Satire as it’s defined in the work of the critical theorist Hayden White (84). His proposition was that historians who claim their discipline works with empirical data and disciplined wissenschaft, are really narrators in the grip of the same deep storytelling drives as the rest of us.

All history, says White, is now written in the conventions established in the 19th century. And these conventions, he says, show historians cannot “not choose” to write from anything but a metahistory perspective. Without fully realizing, historians organise facts into convenient sequences that follow distinctive narrative types or tropes. In addition to being (consciously or unconsciously) slaves to convention, historians make particular links between the data they gather, that in turn set the mood for readers.

Now it’s time to apply this theory outside the worlds of literature or history, in the messier field of contemporary events and above all, in the domain where economists struggle to convince us that theirs is anything like an exact science — or that real events follow principles they have developed such as ‘efficient market theory.’

In other words, can we show that economists just make things up too? More than that – can we show that the mood of the dialogue between rival economists and their theories, has helped set the stage for this catastrophe we call the Eurozone Financial Crisis?

Worldwide, stock markets lost a stunning US$6.3 trillion in 2011. Europe’s woes dragged down growth everywhere – bringing recession to the EU, and catastrophe to Greece, Spain, Ireland and Portugal. It looked like Germany was ready to sacrifice the weaker half of the Eurozone, in order to save the Euro. In Swiss bank vaults, nervous millionaires hoarded stacks of Bundesbank-printed EUR 100 notes with the precious X serial number (proof that these were strong beer-belt “Neuros”, rather than potentially worthless olive-oil belt “Seuros”). Britain – ever an unwilling partner – headed for the exits, pleading enlightened self-interest.

The mess is horrific and Europe’s young are suffering an epidemic of joblessness. Fully 48.9% of young Spanish people aged 16-24 were unemployed at end-2011. The rate was 45.1% in Greece, 31% in Ireland and 28% in Portugal. Even in prosperous Germany and stable Holland, the youth unemployment rates were 8.5% and 8.2% respectively. Britain, which has chosen to go its own way outside the austerity pact agreed by 26 EU nations, has 22% youth unemployment. A massive distortion in intergenerational equity is laying the foundations for a coming ‘Young vs. Old’ conflict over resources for pensions, education, and health.

Yet how did we respond to all this? We laughed when cartoonists produced images of “Merkozy” – an amalgam of the French and German political leaders piloting this slow-motion car crash. We sniggered derisively at the number of emergency summit meetings needed to generate the conditions for yet another damp-squib summit meeting.

Yes, “Dinner for One” captures the mood perfectly.

We yawned after reading the level of recession that the EU core countries “disciplinary pact within a pact” would impose on weaker members. We whistled at ivory-towered bureaucrats ploughing blindly on with Commission make-work programmes to make Europe the most competitive and the most on-line of economic blocs, oblivious of the current plight of the Greeks. Seemingly, it matters nothing today that Athens brought us democracy, philosophy and higher values.

Why? Because this whole episode as projected for us as a blockbuster Satire. While this allowed us to laugh at what is possibly Europe’s worst post-war moment, it also demobilized us. With the exception of France’s public servants who have rightly linked the crisis to the undercutting of their pension rights, and as a consequence will punish Nicholas Sarkozy’s re-election hopes in 2012, we remain disengaged.

By any yardstick, Europe’s popular level of calm acceptance of its misfortunes is astonishing. What’s even more amazing is that few seem interested in exploring the roots of stunning bipolar mood swings by governments and central banks.

In December 2011, European policymakers held a summit to impose a “beggar my (southern) neighbour” austerity plan on misbehaving member states that that took the recessionary doctrine of “tough love” to new lows, effectively leaving Greece to its sorry fate. In just the same month, though, European central bankers open the spigot to spray their commercial cousins at “zombie banks” with EUR 480 billion worth of cheap money. Robbing Peter to pay Paul? As the Economist put it: “giving bucket-loads of cheap money to banks is seen as preferable to shoring up governments.”

In a way, the approach mirrors America’s 2008 actions in pouring over $800 billion of state funds into the auto, banking, home loan, and civil aviation industries, while perversely tossing Lehman Brothers and AIG into the shark-tank as symbolic sacrifices. Billions of words have been written on these mysterious acts, but we still haven’t got to the root of why all this happened.

We are perplexed – or I certainly am.

By far the best guide I have come across is the late Tony Judt, a British-born academic who worked in New York. His 2010 swansong, Ill Fares the Land (dictated in 2010 while he lay in paraplegia), is subtitled ‘A guide for the Perplexed.’ The book was developed from an article for the New York Review of Books.

His is a deep, passionate yet forensic analysis of why the world has begun to wobble, tracing the roots of current ills back to a period in the 1970s when profound changes began to take place in the nature of western societies. Until then, argues Judt, there was a rough equilibrium between the powers of untrammelled market capitalism, and state-backed social democracy.

On both sides of the Atlantic, the post-war era was characterised by trust, cooperation, progressive taxation and an interventionist state. These were the bulwarks against a resurgence of the political extremism born of economic desperation that had twice led to war.

America had the ‘Great Society,’ federally-funded highways, Medicare, and a federally-backed home loan system. Europe had universal welfare provision, job stability, and wealth distribution programmes. Political philosophy was about making the Good Society – not about imposing economic arguments. Leaders like De Gaulle, Adenauer, or Bevin might have been dull, yet there patently was such a thing as society.

But although Judt admits “the past was neither as good or as bad as we suppose,” we willfully turned our backs on it in search of something quite new. This began around 1976 and only today are we reaping the fruits of a collapsed global economic model.

What Judt tells, is a most extraordinary story, best summarized by one of the two protagonists, John Maynard Keynes, the influential British economist and father of Keynesianism. The economic system he designed was to prove the bulwark of world stability for almost half a century. Here is what Keynes wrote:

“Practical men, who believe themselves to be quite exempt from any intellectual influences are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.”

So what was the ‘gradual encroachment of ideas’ and what ‘academic scribbler’ has been driving the “madmen in authority” behind today’s Eurozone crisis?

Judt profiles the extraordinary capitulation of the once-mighty Keynesian theory that secured the aftermath of two world wars, and lays it all at the door of one single thinker, Friedrich Hayek.

Hayek’s thinking rose to prominence following his 1972 Nobel Prize for economics. It was he who drove the huge rightward turn in economic thinking that consigned Keynes to the trash-can – and laid the conditions for today’s turmoil of which the Eurozone Crisis is ‘Exhibit A”.

Hayek influenced Milton Friedman and the Chicago School of Economists; he was lionized by British premier Margaret Thatcher, inspiring her to deliver the famous bon mot: ‘there is no such thing as society.”

In turn he was picked up by former US president Ronald Reagan and inspired his conservative “Shining City on the Hill” vision. And so his thinking defined the global trend toward small government, big privatisations, and the unwinding of the welfare state – all to give more space to laissez-faire free market practice. The rest, as they say, is our modern history.

Hayek’s rise to prominence is an extraordinary story, for he passed half his life in near-total obscurity. After fleeing the turmoil of his native Vienna in the early 1930’s he came to London to try and explain what he had seen.  Hayek and his fellow Austrian School of economists believed that the 1934 reactionary coup against a social city administration and economic collapse that led to the rise of fascism in Austria, was entirely the fault of the Left.

The state under left-wing management ultimately was to blame for the rise of Hitler. The only way to defend liberalism was to get the state right out of economic life.  In his 1944 masterwork The Road to Serfdom took a shot at Keynes himself, pointing out “the similarity of much of current English political literature to the works which destroyed the belief in western civilization in Germany, and created the state of mind in which Nazism could become successful.”

To find out exactly why Hayek chose to set himself up in opposition to Keynes, we need to turn to a authoritative book by Nicholas Wapshott: Keynes Hayek: The Clash That Defined Modern Economics” (Published 2011.)

Wapshott profiles Hayek’s flight from Vienna, his 1931 arrival in London to work at the London School of Economics, his period of obscurity – and his earlier, rather sycophantic attempts to attract the attention of the man who was the most famous economist in the world – John Maynard Keynes.

When Hayek wrote Keynes asking for a copy of ‘Mathematical Physics’ (an obscure 50 year old textbook) the Cambridge don brushed him off the young Austrian rudely with a one-line postcard: ‘I am sorry to say that my stock of ‘Mathematical Physics is exhausted.”

Bizarrely, Hayek treasured this postcard putdown – which today sits in the Hayek archive of the Hoover Institution at Stanford University. Although Keynes later told Hayek he considered The Road to Serfdom  ‘a grand book,” the damage was done – and what Wapshott describes as “the most telling duel in the history of economics” was on.

Even as Keynesian thought held sway through the 30’s and 40’s, Hayek began telling the “tough love” story that almost all influential policymakers believe today.  Giving credit to consumers as a cure for economic depression only makes matters worse. Only time – not “artificial stimulants” – can affect a cure when nations have got into the habit of consuming more than they produce.

For Hayek, the market has its own logic and contains its own natural remedy.  Hayek’s big argument was that freedom in economic affairs was the only guarantee of political freedom, and that any state attempts to manage the economy would cause fascism or communism to return.

With notable exceptions – too-big-to-fail banks that regularly get massive doses of Keynesian “artificial stimulants” – Hayek’s 50 year-old remedy is today being meted out to Greece, Portugal Ireland, Spain, Italy and the other EU bad boys.

Keynes died in 1946, worn out by his wartime labours and by the conceptual work he did on creating the Bretton Woods institutions. Hayek lived on till 1992, dying shortly after he collected the Presidential Medal of Freedom from US President George H. Bush.

When Keynes wrote of “Madmen in Authority …and Academic Scribblers,” he could not have known how Hayek’s thinking would eventually eclipse his own, or help to sow the seeds for our current period of global instability.

We are moving into an era potentially as unstable as 1931, when the young and traumatised Hayek fled from the political turmoil of Vienna, to seek a safe haven in London. There Hayek began his life’s work of undermining Keynesian thought through the “gradual encroachment of ideas.”  So 80 years later, his alternative holds sway.

The power of this story affects every single one of us. It shows convincingly how Hayden White’s model is just as applicable to dead 20th century economists as to dead 19th century historians. What works for Hegel, Marx and Nietzsche, works for Keynes and Hayek. And it works today, looking forward.

And it shows convincingly that stories presented in the Satirical trope diminish our power to react strongly or to get excited and engaged. There’s no better way to tell and sell bad news to populations and keep them docile or indifferent, than through Satire.

And so our natural defence against the economic hardships this obscure ideological tussle has brought us, has been demobilised and weakened by the power of Satire. We feel that because these are powers beyond our control, we can only shrug our shoulders at the Eurozone Financial Crisis, and laugh at the playing-out of “Dinner for One.”

But come New Year’s Eve 2012, it’s hard to tell whether the comedy that has entertained Germans since 1963, will still look quite so funny. It’s unlikely James the Butler/Nicholas Sarkozy will survive April/May’s coming elections to “follow the usual procedures” on December 31st.  Sophie/Angela Merkel will have to find somebody else to bang her dinner-gong and pour her champagne.

Richard House

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