“The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.” So said John Kenneth Galbraith, one of the great economists and proponents of liberalism of the 20th century. Aside from seeing virtue in wealth, the converse is also deemed to apply – that poverty is a moral failing. Attitudes to the poor have been characterised by such contempt for several centuries, and they refuse to go away. Indeed, an entire intellectual edifice has long been constructed to explain poverty in terms of fecklessness and idleness. The leading advocates of this approach to poverty over the past few hundred years are of varied background, and include the economist and demographer Thomas Robert Malthus, the economist David Ricardo, the philosopher and biologist Herbert Spencer, the social scientist William Graham Sumner, Republican presidential candidate Barry Goldwater, all the way up to many of today’s cohort of leading conservatives on both sides of the Atlantic.
Conservative lawmakers today are guided by such a worldview in much of their policymaking, particularly in relation to welfare. That is certainly evident in the Department of Work and Pensions in the UK Government, where a £12bn axe is going to fall during the course of this current parliament, and in the rhetoric of its minister, Iain Duncan Smith. He is not the first of his kind in British politics. The response of the British Government to the Irish Potato Famine of the 1840s was heavily influenced by a group of so-called ‘moralists’, including Charles Trevelyan and Charles Wood. They regarded the famine as ‘providential’ and resisted making relief efforts, which they not only felt would undermine the market, but would also prevent the Irish from positively transforming themselves. Therefore the ‘moral laws’ that governed society could not be interfered with.
It can thus be seen this brand of moralising can be projected to encompass whole countries. Looking for another contemporary example of this mindset brings us to the EU, where a not too dissimilar dynamic is at work in Greece. The intense debate about what to do about Greece’s economic travails, and whether or not Greece should leave the euro, has been acquiring more of an existential feel to it during these last few weeks. Even though the cons or staying or going can be guessed at, or even predicted to some extent, it’s still hard to tell whether they’d be better off in or out. Greece’s bargaining position is weaker than it was in 2011. The rest of Europe has been quietly insulating itself more from Greece over the intervening time, and is less exposed to Greek default than it was then. Which means the institutions negotiating with Greece feel in a position to press them harder now, and that is what they are certainly doing. And it’s possibly why the governing Syriza party hasn’t made threatening noises to leave the euro as much as they might have done.
Pervading so much discussion of this crisis is a moralistic tone about how the Greeks got themselves into so much trouble. ‘Moral hazard’ has been a watchword of those promoting the interests of creditors throughout the period since the financial crisis struck in 2007-8. It has been invoked at every scale, from individuals seeking mortgage relief to entire countries. And it has been applied with particularly withering condemnation in the case of Greece. Of course one must acknowledge fecklessness on the part of many Greek governments, particularly the Karamanlis 2004-2009 government. And of course Greece’s negotiators are entitled to press hard for reforms, and they are happening. The tax dodging oligarchy that runs the place needs dismantling, or at least serious taming. Virtually nobody denies that. But the collective punishment of economic crucifixion that the creditors want to continue with seemingly ad infinitum has brought with it avoidable misery to many blameless victims. The terms being offered to Greece require strong growth in the economy to continue indefinitely, with all of the proceeds of growth then to be given away. This isn’t how Germany’s ‘Wirtschaftswunder’ in the 1950s was achieved. Germany was forgiven much of their external debts in the 1953 London Debt Agreement, and given favourable terms for repayment of what was left outstanding. Yet what Germany benefited hugely from in the 1950s is something they insist on denying the Greeks now.
Debt write-off has historically been part and parcel of the risk of borrowing and lending. But there seems to be a new attitude from creditors since the financial crisis. They are exploiting greater leverage that they seem to have, and it has led to an abandonment of the concept of co-responsibility. Forget irresponsible lending, forget equitable settlements and moving on, forget “we’re all in this together”. In this braver new world, what we are witnessing amounts to a unilateral reworking of the rules of capitalism, and it is making the EU into a ‘creditors’ paradise’. In this world, entire countries can be held hostage, some essentially turned into vassal states. This process is being normalised in front of our very eyes, another example being the struggles Argentina – a country locked out of international capital markets since 2001 – has been having with Wall Street ‘vulture funds’.
If you’re from one of Europe’s creditor nations, however, you don’t tend to hear things framed this way. Politicians tend not to tell hard truths to their own people. On the one hand they praise electorates for their sophistication while never educating them on the realities of the wider world. Sometimes the politicians are not especially enlightened themselves. In the case of Greece, whole populations have been encouraged to wallow in a falsely assumed self-serving moral superiority. And with it a weird morality tale has taken hold, which is not only insulting, it is crumbles under the mildest scrutiny. But the resilience of this morality tale is not founded on its logic. And so all that seems to remain in Greece’s favour is that the leaders of Europe don’t want Greece to set a precedent for leaving. It’s also not the case that Greece is without friends, such as Podemos in Spain. With a lot of general elections coming up in the next year or two, the power centres in Europe could take on a different complexion by the end of next year.
Whatever the course of European politics, beginning with the outcome of these tense negotiations, what all this really indicates is that Europe doesn’t function properly, certainly compared to the US when it comes to their currency. Over there, there is a pooling of the debt, such that if a state is in distress, the federal government intervenes to help. That’s how a common currency is supposed to work, but in Europe it hasn’t been allowed to. The European Union should be a vehicle for solidarity, but the populations of Europe aren’t really being educated to feel a common kinship. What we have instead is a lot of unhelpful moralising, which is unlikely to achieve much other than hasten Europe’s decline.