Even though we were keen about how voter repudiation of austerity in the Italian elections last week was throwing a wrench in the Troika’s austerity plans, we also warned, based on the example of Greece, that they’d try to neutralize the results. That effort is already underway. Ambrose Evans-Pritchard’s latest article, “Anger builds in Italy as old guard plots fresh technocrat take-over,” tells us:
Italian officials say the Bank of Italy’s governor Ignazio Visco is front-runner to take over as premier despite warnings that this will be seen as an elitist ploy. It is far from clear whether the Democrats (Pd) in charge of the lower house will back the idea.
The plans amount to a near replica of the outgoing team of Mario Monti, though one greatly weakened by the earthquake upset in the elections a week ago. Almost 57pc of the vote went to groups that vowed to tear up the EU-imposed austerity agenda.
At the moment, this looks like brave talk. Beppe Grillo’s Five Star Movement does not have enough votes to block a coalition. But the Democrats would have to back an the technocrats, and so far, they don’t appear to be willing to buck voters:
Stefano Fassina, the Pd economics chief, said his party is vehemently opposed to “any form of technocrat government, new or old”, insisting that the election result must be respected. Mr Fassina said 90pc of the country had rejected the Monti agenda and warned that it would be a grave error to try to force through the same reviled plans a second time.
Grillo has no doubt further rattled the northern countries by reiterating his campaign proposal of having a referendum on the euro. But at least today, Mr. Market isn’t betting on a technocratic counter-revolution in Italy. Europe is down after a day in Shanghai, where property shares tanked. But as of this hour, the MIB is down 1.65% while the DAX has fallen a mere .57%. The lead story on Bloomberg now, natch, is “Euro Leaders Demand Austerity as Italy Nears New Vote.” This is a clean-up up version of the the hissy fits we described last week. From Bloomberg:
E
uropean leaders demanded that euro members press on with budget cuts to end the debt crisis as Italy edged closer to a new election after an anti-austerity vote last week resulted in political deadlock…. In Rome, a top aide to Democratic Party leader Pier Luigi Bersani said the country may need to hold another election this year after passing new electoral laws.
“Now in Europe, after the Italian election, it seems to be a case of either austerity and savings programs or growth, but that’s a completely false premise,” German Chancellor Angela Merkel said at March 1 event. EU Economic and Monetary Affairs Commissioner Olli Rehn echoed those comments this weekend, telling Germany’s Der Spiegel magazine that there’s no scope for the bloc to let up on budget discipline.
The Italian elections are simply laying bare a dynamic that Michael Hudson described in 2011:
Book V of Aristotle’s Politics describes the eternal transition of oligarchies making themselves into hereditary aristocracies – which end up being overthrown by tyrants or develop internal rivalries as some families decide to “take the multitude into their camp” and usher in democracy, within which an oligarchy emerges once again, followed by aristocracy, democracy, and so on throughout history.
Debt has been the main dynamic driving these shifts – always with new twists and turns. It polarizes wealth to create a creditor class, whose oligarchic rule is ended as new leaders (“tyrants” to Aristotle) win popular support by cancelling the debts and redistributing property or taking its usufruct for the state.
Since the Renaissance, however, bankers have shifted their political support to democracies. This did not reflect egalitarian or liberal political convictions as such, but rather a desire for better security for their loans…But the recent debt protests from Iceland to Greece and Spain suggest that creditors are shifting their support away from democracies. They are demanding fiscal austerity and even privatization sell-offs.
This is turning international finance into a new mode of warfare. Its objective is the same as military conquest in times past: to appropriate land and mineral resources, communal infrastructure and extract tribute. In response, democracies are demanding referendums over whether to pay creditors by selling off the public domain and raising taxes to impose unemployment, falling wages and economic depression. The alternative is to write down debts or even annul them, and to re-assert regulatory control over the financial sector.
It does not take familiarity with Aristotle to recognize financiers as the new oligarchs. Simon Johnson made the same observation in 2009, based on his experience with the IMF, in his article The Quiet Coup. Italy may wind up being the last stand of the democrats. Let’s hope they prevail.
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The elite do not how to stop themselves, and if they are not careful, they are going to be at the tragic end of a Jacobin revolution.
Everythings Jake says:
Not necessarily. There seem to be two routes which revolutions follow. As Michael Hudson put it, the hereditary aristocracies either 1) “end up being overthrown by tyrants” or 2) “develop internal rivalries as some [aristotic] families decide to ‘take the multitude into their camp’ and usher in democracy.” An example of the former would be the Jacobins of the French Revolution. An example of the latter would be the American Revolution. If we fast forward the clock, we find the same thing in the 20th century. The Bolshevik and Nazi revolutions ended in tyranny, and the New Deal revolution ended in greater democracy.
I think we all know the 18th-century American Revolution as well as the New Deal revolution were led by elites. FDR was roundly criticized by fellow elites as being “a class traitor.” What has been erased from history books, however, is that the French Revolution was also led by elites. Hannah Arendt attempts to correct the Big Lie that elitist apologists have so successfully spread across the world, in their attempt to demonize revolution, in On Revolution:
The big question seems to be why some revolutions follow the path of the American Revolution or the New Deal revolution, enhancing democracy, and others follow the path of the French Revolution, the Russian Revolution, or the National Socialist Revolution, destroying democracy.
Whether they are led by elites or not does not seem to be a determining factor. And in fact one could argue that the Russian Revolution was also led by elites. It wasn’t rule by the the hereditary aristocractic elites of old, but a new type of aristocrat: bureaucrats, technocrats and scientific managers.
You said N.azi revolution?
Such a characterization could only be made by someone who wishes to lower the prestige of the word “revolution.” Fascism’s foremost task is the counter-revolutionary crushing of a working-class revolution.
Fascism is the violent assertion of what the middle-class, in alliance with Industry, sees as its interests. It is reaction against both the working-class and finance capital (the persecution of the J.ews was really a means to get out of debt from the “J.ewish bankers” that dominated Finance in Pre-war Germany).
Here we go again.
Let’s be frank. Arendt’s main reason for denigrating the French Revolution and elevating the American Revolution was because it went against the thoughts of her main boogeymen – the scary, scary Marxists – and futher lent credence to her pet theories one of which that Marx=Stalin=Hitler or as you, fromMexico, have repeatedly stated here Communism = Fascism.
Here’s a pretty honest assessment of the inherent contradictions in Arendt’s philosophical stances from a normally non-critical source the Stanford Encyclopedia of Philosophy. Read down to the Section 3: Arendt’s Conception of Modernity for an exposition of her main contradictions.
Although the SEP doesn’t mention Marx directly in the Arendt entry astutue readers will see how much she truly was indebted to the man whom she spent her life trying to also cram into her pet theories.
http://plato.stanford.edu/entries/arendt/#Rel
Furthermore, Arendt has long been criticized as a person who mashed together vastly different historical eras and events in an attempt to show the seeming similarities shared between quite disparate occurences – unique circumstances be damned.
This ends up being manifest in the fallacious line of reasoning that many Americans are beaten over the head with when watching sporting events.
Inevitably, some talking head will bring up the historical records of the two teams playing one another as if it had ANY bearing upon the present game.
Well, Jim, in the overall record the NY Giants have won 32 of the 65 previous matchups against the Packers.
Umm, so what?
What bearing do entirely different teams playing with entirely different players in entirely different circumstances have upon the game that is about to be played?
Absolutely nothing.
The same thing with revolutions.
Entirely different players, entirely different peoples, entirely different.
Certainly, in viewing historical events we might see some similarities and use history to MAYBE offer us insights as to how things MIGHT turn out but in reality it’s all just guessing.
But to flippantly suggest that these massive social upheavals can have pinpointed certain causes as Arendt and – regrettably – Hudson seem to do is silly.
Lastly, the New Deal a revolution?
Are you kidding me?
The New Deal was the capitalists way to squash any real revolution in this country and keep the capitalists completley in control.
No one would call Robespierre a member of the elite in his day. He was a country lawyer from a family of notaries. He was not a prole, if that is what you mean, but in the struggle of the emerging bourgeoisie versus the nobility, no one in the late 1700s would a member of the emerging middle class an “elite”.
Yves Smith said:
Well I suppose if one considers “the struggle of the emerging bourgeoisie versus the nobility” to be an 18th-century phenomenon, then one might come to that conclusion. And some scholars do indeed place the birth of capitalism in the late 18th century.
But most scholars place the birth of capitalism in the 16th century, and that by the late 18th century the bourgeoisie very much had become part of the ruling elite.
C.R. Boxer, for instance, notes that:
And as Boxer goes on to point out, life under the new bourgeoisie elite was probably worse than it had been under the old noble elite:
Boxer, by the way, attributes the rise of the Dutch Empire to the rise of the merchant and burgher oligarcy, and its decline to their “transition from a merchant oligarcy to a rentier oligarcy.”
Before the Reign of Terror, there was the so-called “Brunswick Manifesto”, threatening Paris of destruction if the royal family were molested:
http://fr.wikipedia.org/wiki/Manifeste_de_Brunswick
For anyone interested, MIT, the University of Adelaide. and Project Gutenberg all have Aristotle’s Politics available online. Project Gutenberg also has Kindle and EPUB formats for e-book readers.
Our modern definitions of government are at odds with Aristotle’s. From Book Four:
Emphasis added. Holding elections to fill offices used to be considered oligarchical. Today, our modern oligarchs have convinced us that it’s the essence of democracy.
I dunno man, Sortition doesnt sound like the best plan to me. I cant say that literally picking policy makers out of a hat would be all that much superior.
could it possibly be worse?
Since Plato and Aristotle hailed from a slave society, and not only that but from a slave society that was in its twilight years and in full decadence and decline, and they were themselves aplogists for the status quo oligarchy, what they wrote should be taken with a very large grain of salt.
History is not nearly so deterministic as the philosophers of the late Classical period would have us believe. And there are glaring historical exceptions to Plato’s reduction of political evolution to a sequence of monarchy, aristocracy, democracy, and dictatorship.
What we call “democracy” in the United States certainly makes a mockery of anything resembling honest democracy. To what degree, however, I suppose is open to debate, as well as whether the existing system is reformable or not. To an anarchist like Scott Noble, the situation is extremely black:
My old activist compadre and I used to joke that random selection would get us better politicians than the current system. I didn’t know there was actually and name for it. Sweet, now I can call myself a sortitionist.
Think about it, what’s the biggest problem with our politicians? They’re bought before they take office. Sortition gets rid of that problem. I take it as a given that those those who desire power should not be allowed to obtain it; sortition largely takes care of that.
I don’t think we should even make exceptions for the “cognitively unique.” I, personally, would rather have Benny Stulwicz than Barak Obama running the country. There would be a lot less bombing and WAAAY more hugging!
That’s a good quote. It makes it easy to argue for sortition: better to select randomly than to select the power-hungry.
The question is then if there is a political leadership in Italy with the guts to assume democrat demands against the financial stablishment. That would be great for the rest of Europe, and not only the periphery nations. One of the problems I see is that such leadership would have hard times to find political allies in other eurozone countries, particularly Germany, France or Spain. In the particular case of Spain the main problem is that those leaders do not even exist. Political opposition to austerity is too mild indicating that nobody knows how to change course or has not the guts to do so. The PSOE is sinking in it’s impotence to offer a true alternative. It surprises me how mildly they critizise the current program. They seem to believe that corruption scandals and impopular politics will be enough for them to recover from the abyss. So there is an opportunity for an spanish Beppe Grillo to occupy the absent opposition. So far, nobody seems to be ready to take and carry the torch. Hopefully, Italy shows us the way.
Hi you are not connecting the dots. There is a revolution brewing up in Europe. Italy is only the begining. Over the week-end Switzerland, hardly a hot bed of radicalism, overwhelmingly approved a referendum to outlaw golden handshakes, golden parachutes, financial incentives to sell or merge companies and to subject board and top management compensation to a binding shareholders vote. Over the week-end Dutch trade unions withdrew their support for more austerity measures and the Dutch government had to announce it would not meet its 2013 deficit targets. The French government has already done so. Still over the week-end there were massive demonstration in Portugal where the president has sent the 2013 budget to the constitutional court to rule on the fairness of the tax increases. Angela Merkel and Brussels are facing a general revolt against austerity, that is supported by the IMF: last year it changed its view on the contractionary impact of austerity. As much as last year I thought markets (especially in the US) were underestimating European governments support to the euro, this time around I think the risks of a euro zone break down are real if Berlin does not give up on austerity. You would never guess that eading the establishment medias: the FT only started to mention Grillo the Thursday before the Italian elections. But that makes sense when you look at the increase in European unemployment. The German austerity diktat is no longer politically sustainable and Merkel has to change her policies or risk getting hoisted on her own petard.
Well said. It seems to me that the Switzerland example is an outlier which may be hard to replicate in countries without so much direct democracy (though perhaps such a movement could be sparked in states like CA?). I would suggest an all out blogosphere push to publicize the importance of this vote in terms of saving capitalism from the vulture class. Needs a motto: “Follow the Swiss!”?
The anti-austerity movement in Italy and elsewhere is interesting from an American perspective in that it shows the pain of austerity really can lead to a gain politically, as voters become aware and active. Here the Fed and the Feds have prevened (delayed) the onset of austerity until now, but it is beginning.
Perhaps we are looking at the wrong end of political history for insight. Maybe we should look not to Aristotle but Lenin, who said “the worse it gets, the better.”
Michael Hudson says:
Yes, but liberal internationalism has never worked as its laissez-faire advoaces promised it would. As Jonathan Schell explains in The Unconquerable World:
Or as Hannah Arendt explains in The Origins of Totalitarianism:
What we’re seeing in Europe, with the exception of Greece, is a slight twist on this, as most of the debt that was created by transnational financiers was private debt, and not public debt. But we also saw the ease by which private debt was magically and instantaneously converted to public debt.
This dynamic is what we see playing out before our very eyes in Argentina, which, during its 1999-2002 economic crisis, told the transnational financiers: “Go pound sand!” A United States court has ordered Argentian to pay up 100% to the holdouts — those bondholders who refused to accept the 30 cents on the dollar that Argentina paid to settle most of its foreign debt following the 1999-2002 crisis. Argentina’s president, Cristina Kirchner, in turn, has told the U.S. court — and by implication the United States government — to go pound sand.
Last summer, the CIA and DEA orchestrated the overthrow of Parguay’s government, which sits on Argentina’s border, and installed a puppet regime in Paraguay. The US is now deploying military personnel to Paraguay and doing some pretty serious sword rattling directed toward Argentina, all justified in the name of The War on Drugs.
Many, such as the Council on Foreign Relations, believe that U.S. Hegemony in South America is over:
If one does an internet search on “US Hegemony in South America,” however, one may find this is not a consensus opinion. There does appear to be, nevertheless, a broad consensus that US hegemony in South America is under seige and that there are a growing number of South American nations in open revolt against the US’s liberal imperialistic ambitions in the region.
So it will be interesting to see how the Argentina bond row plays out. The amounts of money are insignificant, but as Scott Noble and others have pointed out, “the empire is like the mafia.” As Noble goes on to explain:
“The Mafia Doctrine” indeed. Arthur Silber, last week:
http://www.informationclearinghouse.info/article34125.htm
Complete with Obama as the Don visual aid. Warning: May contain expletives (not) deleted…but we are all adults here.
“And the U.S. can’t possibly use Rule 9 — “Money cannot be appropriated if it belongs to others or to other families.” How would Wall Street and the finance industry, the health insurance industry, or Obama’s other special friends ever survive with a rule like that?”
Olé
from Mexico, Isn’t “Paraguay” the CIA-BUSH Dynasty’s “safe haven” for crooks?
I very much like the description that “water-boarding” of economies is now taking place around the world. This “water-boarding” is taking place at the instigation of a plutocracy not having the faintest idea what the effect will be on the “victim/patient” economy/economies. This is simply because they don’t understand modern money or Modern Money Logic. J. D. Alt with comments by Dan Kervick explain this MML:-
http://neweconomicperspectives.org/2013/02/real-dollars-and-funny-money.html
As a French economist (C. Gave) said in a paper published today, that the world is divided among three classes of people:
1. those who want to be left alone and who want to conduct their business alone and take their own risks
2. those who want to be taken care of and do not wish to take the slightest risk (civil servants and the like)
3. those who want to take care of other people without really working; these people are to be found in politics and the media. This last category has a simple “modus vivendi”: they diagnose a problem and offer solutions to cure it. Usually it fails, so instead of admitting failure, they suggest new solutions to the terrible situation they have created. And so on: whatever the situation, the solution is always the increase of the size of the state and the number of functionaries.
That is what is happening in Europe. When the state becomes too fat, it takes on more debt just to feed itself and there is no way out but a gigantic default that will ruin a lot of people but from which it will be possible to build a new society. You want to call this a revolution. You may.
Seen in this light, the Euro was only a way to gain some more time.
Ahem! He left out an entire class. Those who want to live high, speculate with other people’s money, privatize any gains and socialize (have everyone else but them pay for) any losses. The parasite class, a tiny minority numerically, but 800 pound gorillas in terms of what we laughingly call “economics” nowadays.
My guess is that C. Gave, like the majority of “economists” nowadays, represents the interests of the gorillas, and is duly rewarded for his propaganda efforts.
But in ANY and EVERY event, the GAIN on “sovereign debt” goes to the .01%DNA.
Are you sure the article is not just a C. Gave translation of something written by Ayn Rand?
As well as Italy and Greece, something similar was done in Ireland, as reported by Philip Pilkington at the time. When the electorate rejected the Lisbon treaty in a referendum, the government made them do it again ’til they got it “right”.
As in Greece and Ireland, so in Italy and Spain: voting doesn’t significantly affect policy, especially economic policy. Even in so-called social democracies.
How much less influence does the electorate have in the United States?
About this much ;-):
http://www.youtube.com/watch?v=WSIUf2hD6Io
The West is now what Latin America was (and still is in many ways) about a decade ago. It is a powder keg. One old fashioned revolution, where the crook bastards in power are dealt with outside of the fixed electoral system, and the idea will spread. People are doing their best to work within the system but the system has no legitimacy anymore. People are becoming increasingly aware of this. Once they give up hope there will be nothing to keep this economic system, along with the crooked political systems that are built upon it, from melting. I am not saying that what follows will be better or worse. I am saying it will be different and these economic policies aren’t sustainable on any level.
I was reading Kalecki yesterday and he talked a decent amout about “intermediate regimes”. These were governments in developing countries that were comprised of lower middle class elements. These governments would align themselves with different classes depending on complex factors but they all had weaknesses that made their power precarious. Big business has had the middle class on its side for some time. Our government has been an “intermediate regime” in its own right. It has been a government of big business for decades but it has been able to hold onto power by aligning itself with middle class elements. For some time the big business interests in charge of the state delivered the goods. It didn’t matter to either group that the poor were left out or that upper income mobility didn’t really even exist. It didn’t matter tons that we were looting poor countries and bombing Asian and ME countries to hell. Well, now big business (especially finance) has begun to destroy the middle class outright and the one sided class war has thrown many that were middle class into poverty. Many others are staring at poverty and are a few paychecks away from losing everything. If those in power lose the middle class, and they are damn close now, there is nothing to maintain their legitimacy. The poor, the working class have never bought into the system and don’t largely vote. From their perspective the system NEVER had legitimacy and always left them out.
Again, I don’t know what this will mean, no one does. However, it is clear that a bond is being broken. I don’t think those in power realize how big of an explosion awaits them once people really catch on. They haven’t caught on with the slow decline of the industrial economy (de-industrialization), income and wealth inequality exploding, the financialization of the economy (which many people fail to understand), amongst other things. However, this is too obvious and too extreme. It could wake people up that the problems are fundamental and that the system is now incapable of doing anything to benefit the majority of the country.
The left couldn’t ask for a better organizing opportunity. Too bad the actual left is dead at this point and the “left” is nothing but a pathetic appendage of the Democratic Party, a party that could give a damn about working people or the poor.
A good opportunity to organize, but too many people within the young adult demographic that is prime organizing material for the left have decided to turn inward — Facebook and Twitter social media masturbation, IPhone gadgetry play, video gaming, as well as Comicon hero worship and fashion poserism. Add to that a government with a vastly improved security apparatus that has improved on its work in the 60’s and 70’s with virtually no limits to its power and you’ve got a huge challenge.
Re: Bugger the Bankers.
Make the minor changes needed and play this in every taverna in Spain and Portugal, every tratoria in Italy, and even every gasthous in many parts of Germany (especially the eastern parts) and really send them a loud, unmistakeable message.
“Since the Renaissance, however, bankers have shifted their political support to democracies…But the recent debt protests from Iceland to Greece and Spain suggest that creditors are shifting their support away from democracies. They are demanding fiscal austerity and even privatization sell-offs.”
True, but this has happened before when the seemingly best strategy has been to protect income streams (which after all is primarily what oligarchies are for). See Europe after World War I or Britain in the early 19th century.