Thursday, May 13, 2010

Milton Friedman's "Full Monty" makes its European tour (soon in theaters near your home)

Deep down, the crisis is yet another manifestation of what I call “the political trilemma of the world economy”: economic globalization, political democracy, and the nation-state are mutually irreconcilable. We can have at most two at one time. Democracy is compatible with national sovereignty only if we restrict globalization. If we push for globalization while retaining the nation-state, we must jettison democracy. And if we want democracy along with globalization, we must shove the nation-state aside and strive for greater international governance.  Professor Dani Rodrik, Harvard University
David Seaton's News Links
"Economic globalization, political democracy, and the nation-state are mutually irreconcilable." You might say it louder, but it would be difficult to say it more clearly. Here, in one sentence, Dani Rodrik has encapsulated the cross currents that are creating the turbulence we are living through today.

If you mull over the entire quote at the top of the page you can see that of all the "trilemma", democracy has the roughest row to hoe.

Right now now the IMF style austerity programs are beginning in Greece, Spain and Portugal, with severe cuts in public spending, pensions and other entitlements, labor rights reform.  Next will be Italy and the United Kingdom. But, carrying the debt it carries, even the United States can expect to see it "playing soon in a theater near your home".

This is perhaps the first time that the IMF's full Monty has ever been performed on  rich and a powerfuldemocracy... not just one, but several simultaneously. The financial disaster brought on by irresponsible, if not criminal, speculators, who are making millions at this very minute, is now going to be paid for by widows and orphans (literally).

As Naomi Klein points out in her groundbreaking book, "The Shock Doctrine", extreme Friedmanism normally is executed (choice of word) by people like Indonesia's Suharto, Brazil's military dictatorship of the 1960s, Pinochet or the Argentinian junta. This could be taken as a working illustration of Rodrik's "trilemma".

Now some of the most developed and democratic and historically creative countries in the world are going to experience the Shock Doctrine in full.

I find it simple to predict that many people in these countries are going to rebel and that the new technologies are going to empower that protest, and that the sort of protests seen in Seattle, instead of being confined to activists, will begin to mobilize the same masses of ordinary folks that filled the streets of Europe's cities before the invasion of Iraq. Will democracy survive? Will globalization? Will the nation state? Very dramatic questions, but as theater people would say, it reads better than it plays.

What all this reminds me of is the fall of the Berlin Wall and the collapse of "real existing socialism". The same feeling of exploring terra incognita.

I wrote this awhile back:
When the USSR went down, most observers read it ideologically, that we in the west had "won". Our merit had caused it all to happen. This was probably a big mistake. Perhaps that collapse did little more than reveal that a huge, powerful, system, one that had industrialized an enormous, backward country and made it into a scientific, political and military superpower, one that had defeated Nazi Germany almost single handed in WWII, a power like that could just simply collapse mysteriously. Just up and die. Just like that. The United States, instead of taking a victory lap, might have been more prudent to murmur then, "there but for the grace of God go I" and gotten busy looking to its own vulnerabilities instead of crowing and preening, because it appears that good ol' Grace is seeing somebody else these days.
What is really happening? It's hard to say, but Rodrik and Naomi Klein have the neatest explanations of this supremely confusing moment that I have seen. DS

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