Alworth Institute

David Hume, the 18th century Scottish philosopher, and Iran

2009-07-09T17:03:46Z

I caught myself wondering what David Hume, the 18th century Scottish philosopher and mitigated skeptic, would make of the Iranian government and the politics it seems to engender. This may be an unhelpful idea and certainly Iran is a bit of a mystery in many respects. All of this is speculative but it might be interesting to explore. How might Hume have gone about examining the constitutional and political life of Iran?

]]> It is hard to be certain where Hume would have started but it is clear that he would not have started on any a priori basis.

There are certain features of the Iranian Government that Hume would have easily taken notice of. It is a mixed form of government with authoritarian and democratic elements. It is also a theocracy and this would have immediately caused Hume to be suspicious. Such a mixed constitution would suggest to Hume, in line with the analysis he made of 18th century constitutions, the possibility of conflict of interest amongst the supporters of the various elements. He would have started with experience and the most striking experience, an experience in which demonstrations were quickly and readily encountered with violence, is a possible starting point. He would note the passions that were involved on both sides and would wonder at how these came to be unleashed and what forces or means would be available to reconcile them (as a liberal-minded person he would be interested in promoting harmony) in order to restore stability.

To say that the Islamic Republic does not lie and therefore the criticisms that the elections were invalid because of cheating were not justified is to appeal to authority (in this case the alleged moral authority of the Islamic Republic). It has also the potential of reasoning in a circle. The empiricists answer would have been to undertake an empirical investigation of the facts concerning the way in which the election was run, supervised and the results recorded. The Supreme Leader's statement was consistent with his belief but not with the belief of countless others who felt that there was an element of fraud in the election outcome. The very construction of the decision and the terms in which it was communicated (an unexamined faith in the state) substituted an act of faith for an act of reflection or of investigation. This is itself would be enough to generate instability given the number of protesters involved. If the role of the Supreme Leader and the associated Council is really that of a kind of constitutional court or something of that order then the normal order/rules of such a body is that evidence is expected to come before any final decision. Hume would wish to know the rules that constrain actions at this level. The appeal to authority also implied that those involved in protesting were essentially disloyal to an ideal.

Hume would have also looked at the composition of political parties or sects/factions (depending on how he may have adapted 18th century terminology). Hume, in looking at factions in his day divided them into factions "from interest, from principle and from affection". It is clear that the interest of North Tehran differ from those of Ahmadinejad's supporters (poorer people from other parts of the city and country). Interests for Hume are significant, understandable and can be objectively demonstrated. In this there may be the possibility of trade-off between interests. It is in the interests of both the rich and poor in Iran that Iran be stable and prosperous. But there has to be a means by which the trade-offs can be articulated. However support for Ahmadinejad from the poor may also mean that the "affection" principle also applies.

Those factions that stem from principle are more difficult because they cannot readily accommodate any other point of view or easily find a basis in compromise. Iran's governmental structure has strong theocratic and non-negotiable political elements. Hume would suggest that such theocratic minds would be "impatient of opposition" even with respect to minor matters of opinion. There would be, in such circumstances, a general tendency to repression. Challenging the results of an election process in the context of different interests and a well-defined party of principle is likely to result in rigidity and rejection. Hume would not have been surprised on the basis of past experience. For Hume bad constitutions insisted upon when times, circumstances or "manners" change, give rise to ongoing instability as the Roman constitution did towards the end of the Roman Republic.

Where clergy are involved in government, at whatever level, then they can, according to Hume, also become parties of interest. Hume might wonder whether the conflict between the moral authority of the given religion and the actual political practices would rupture or reinforce such associations. Rupturing may be starting to happen in Iran. Hume would probably wish to identify the interests and hence the self-interests of the clergy within the existing government system. His general view of religion was that it itself would engender misguided ideas and hence misjudged and authoritarian political actions. On that basis alone he would hope for their removal. Tranquility, imposed by suppression, for Hume would not mean the elimination of various interests, merely their transformation into something "more real and more pernicious". Suppressing demands for greater democracy will simply prolong the instability. Blaming foreigners, an act which most Iranians must regard as ludicrous, and as evidence of the state's capacity to lie, side-steps the moral issues. Given the authoritarian response (no cheating by definition) the blame has to be allocated somewhere.

Making Sense of the 2009 Iranian Elections

2009-06-25T19:39:52Z

In this guest web log, Dr. Khali Dokhanchi (UWS) writes: The presidential election of 2009 is perhaps the most devastating development to the Iranian regime since the end of the Iran-Iraq war. Most people assumed that the next crisis in Iran would be "external"--namely a military attack on its nuclear installations either by the US or Israel. No one expected that the regime in Iran would nurture the seeds of its own destruction. Irrespective of truth about how many people voted and who they voted for, people who felt that the elections were "rigged" took to the streets to demonstrate their unwillingness to continue with the status quo. What are we supposed to learn from these events? What do they mean?

]]> First, the Iranian electorate is alive and attentive. Eight years of punditry on how we need to export democracy to the Middle East left us with the impression that the people of Middle East were passive sheep that take whatever is meted out to them by their repressive regimes, and they needed the "Westerners" to guide them to the democratic promised land. The pictures of old and young, man and woman, dying, being beaten or detained for their rights, once and for all, end the debate about the passivity of the electorate. Within the limited confines of what is granted to them in terms of rights, they will claim and use their rights.

Second, the demands of the protesters are very specific. The protesters are concerned about having their votes counted and, given questions regarding the legitimacy of the "results," call for a re-election. The fact that they are seeking their rights as specified by the Iranian Government made their campaign far more effective and robust. They point to violations of election laws and merely seek to remedy those violations.

Third, the dispute is about elections and not democracy. Unfortunately for Iranian protesters, that battle for democracy was lost even before the election. There are rather restrictive election rules that often disqualify candidates from running for office, and in a way, the elections are predetermined in Iran. What makes the 2009 election interesting is that despite "pruning" the list of nominees who could run for office, the handling of the voting and subsequent release of "official" results raised a number of questions about the legitimacy of the count. The battle is not between "Islamic hardliners" and "democrats" but hardcore "Islamists" and lite "Islamists". The so-called reformers are very much products of the Islamic Revolution. Iran did have a reformist regime from 1997 to 2005 and there is no indication that if the reformist returns to power, their rule would be any different than that of ex-president Khatami. Namely, they will pass legislation to bring Iran closer to the international community, only to have the rules overturned by one of the semi-elected institutions. The only area of improvement is in the social area, namely the government will back off its "morality police" rule and allow the people to do what they want in the country and give them a bit of "breathing" room. The idea that reformers coming to power will solve some of the problems that Western countries have with Iran is merely wishful thinking.

Fourth, the protesters have already achieved a couple of enormously important objectives. The Iranian regime now knows that the voters are fully aware of their rights and will protect them. Future elections in Iran will be closely monitored, and they will have less room to control these elections. More importantly, however, the crisis highlighted the role of the "Supreme Leader." Oddly, most of the rhetoric of the protesters is not directed at Ahmadinejad but Khamenei. Frequent references to the Khamenei as the "dictator" are a clear personal and institutional challenge to him and to his office. The fact that demonstrations occurred even after he forbid it means a lot in terms of his power and legitimacy in the future. The fractured ruling elite is the necessary first step for change in Iran.

Fifth, the current situation had provided the seeds for future changes in Iran. The strategic choices of the protesters as well as their nonviolent means provide them with a wonderful tool for political change in the future. Failure of the political regime in Iran to satisfy the needs of the protesters may lead these people to articulate more demands and more serious changes to the current system in Iran. Only then, may true democracy emerge in Iran.

The UK political crisis

2009-06-08T15:13:06Z

The transformation from economic downturn to political crisis started slowly enough. At first the Prime Minister, Gordon Brown was a ‘hero’ in the way that he took action to secure the banking system and seek international agreement. But a strange little time bomb was ticking away inside Parliament, the question of MPs’ expenses, and when the details went public, the electorate turned nasty. This gave it a specific emotional focus for a whole set of issues. Gordon Brown has been on the back foot ever since, even although the expenses are a matter for the Speaker’s Office and not for the government. The Speaker has already paid the price and has gone. One blow after another has landed upon Brown: Ministerial resignations, defeat in the local government and European elections. The crisis has two elements: a lack of confidence in Parliament, in the House of Commons in particular, and a slow ebbing away of authority from the Government of the day. What has gone wrong?

]]> Parliament has a number of problems and these problems interact. MPs are not paid enough and have tried to increase their remuneration by manipulation of the expenses system. Most of them have to maintain two homes, one in their constituencies and one in London where house prices and rentals are hugely inflated. Whilst some of the manipulations of the system have been culpable, few have been grossly venal. Nonetheless less, in a recession, the electorate has fixed on this as evidence of those in authority looking after number one. This is not the time to say out loud that MPs are not paid enough to do a good job in scrutinizing government.

There are too many MPs. This has come about in a number of ways. Devolution has reduced the volume of government business coming from Wales and, more especially, Scotland. Scotland is over-represented at Westminster. Even in England, constituencies are of varying sizes and fewer representatives would be appropriate. The fact of the EU has also changed the nature of business. Have fewer MPs, pay them more and give them the resources to undertake the sort of research that would make Parliamentary Committees a more effective means of scrutinizing the executive. These ideas are around but they are unlikely to be pushed until the present mood passes. Voters are simply angry and have expressed their anger at the polls.

Under normal circumstances, the Parliamentary whips are too strong. The Scottish Parliament is elected on a proportional basis, Westminster on a first-past-the –post. Scotland, once a Labour fiefdom, is learning to use the new system effectively. The Westminster system requires strong parties and party discipline is carried out by the whips. The Prime Minister controls a vast amount of patronage and can use this to guarantee support, even in a crisis such as Brown is facing. Power, under normal circumstances, has deserted the Commons and will only return if MPs count on a more independent basis. Giving them resources is one thing (this will help) but changing the underlying power-relations probably requires a change in the voting system. Under proportional representation the Commons would return to life.

The end of a government, and make no mistake, we are witnessing the dying throws of Labour in power, tends to come quickly as power unravels one strand at a time. Brown is in this position at the moment. He is faced with a very cross electorate, upset with the present performance of government and with the political institutions themselves. he is also faced with a restless Parliamentary party. This crisis is not just one of policies but of underlying problems requiring radical constitutional change. Brown is not capable of recovering. He can call an election quickly and put the government and country out of its misery or he can linger on till the bitter end. If this was the approaching end of a Tory government, he would already be gone and a new leader in place but the Parliamentary Labour party does not know which way to jump.

The Financial Crisis and the European Union

2009-04-23T19:06:53Z

Dr. Marek Wroblewski (University of Wroclaw, Poland) Visiting International Fellow at the Alworth Institute has contributed this web log on financial crises. He writes: It is general knowledge that there is a financial crisis not only in the United States but also amongst European economies and in the world more generally. It would be hard to miss such significant news. But what is a financial crisis? How is it experienced, in the various countries of the European Union (EU), and what are its consequences?

]]> A financial crisis is a significant event or circumstance that hinders the routine functioning of financial markets. Financial markets help distribute financial resources to, amongst other things, investment projects. Crisis events may appear in various forms and affect different segments of the market. A financial crisis may be experienced in a variety of ways: as a dramatic fall in the external value of a currency; a breakdown in the banking sector; a crisis in the stock market; a debt crisis. A crisis in one area may have a consequence in another. This may be considered normal since financial markets and processes permeate all aspects of the national and international economy. The very nature of this part of the economic system facilitates a speedy transmission of market information from one country to another. This makes contemporary international economic relations particularly susceptible to financial crises. Their highly destructive implications place a heavy burden on the global economy as a whole.

The financial crisis as experienced in the countries of the EU is highly complex. The financial crisis has impacted all European financial markets. Stock markets have experienced dramatic falls in stock values. Capital markets have been disrupted. The operation of a number of significant financial institutions has been hindered by the lack of liquidity and some banks have been threatened with bankruptcy, leading to special action by the financial authorities. Building sectors, construction and property have encountered problems but only the UK has experienced losses in value in the private housing market that are equivalent to losses in the United States. The consequences of all of this taken together have been felt in the real, as opposed to the monetary, economy. The impact has been significant.

The present economic breakdown in Europe is possibly the most serious economic crisis since the end of the Second World War. Highly destructive effects of the crisis with more expected to come have already been experienced. Industrial production in the EU taken as a whole fell in 2008 by 11.5% (EUROSTAT estimate). GDP in the same period fell by 1.3%. The deterioration in members states has varied with dramatic declines in GDP having been seen in Estonia (-21%), Spain (-19.5%) and Sweden (-18.5%) and less dramatic outcomes experienced in Germany (-2.1%), France (-1.2%) and Italy (-1.8%). During 2008 however the most recent members of the EU maintained slow growth. Since then most of the Central European economies have experienced significant problems as the impact of the financial crisis has come to be felt in Hungry and, given the financial interrelationships, also in Austria. Unemployment grew overall by 1.2%. This overall figures masks significant problems in Spain. Germany is the biggest European economy and if the situation in Germany continues to deteriorate with the further loss of international and regional export markets, further problems will be experienced. European countries outside the EU, particularly Russia and the Ukraine, have also felt the negative consequence s of the financial crisis.

Most European countries are attempting to muffle the impact of the recession. The really significant measures are taken by national governments and these are of an internal and independent nature. Most government expenditures to counter-act the recession are focused on infrastructural projects and to support banks and other financial institutions. There is a problem in that increased government expenditure results in increased government deficits unless fiscal policy is also tightened. Benefits through expenditure must be set against the loss of consumer spending through tightened taxation. Countries in the Euro-zone are constrained to keep any deficit within prescribed limits and this in itself, in principle, imposes a form of financial discipline not applicable, for example, to the UK. Fiscal tightening is, as of this week, now also part of the UK’s approach. The concern is to avoid future inflation. The European Central Bank has acted to reduce interest rates and is prepared to take further action should this be required. It is worth noting that amongst economists, there is no settled view as to the effectiveness or otherwise of the package of measures that have been put in place.

With respect to the EU as a whole, the commission has accepted a stimulus plan but this is, when compared to actions by national governments, relatively modest (amounting to US$ 5 billion). Energy-saving investment projects and rural development projects are targeted. The EU has also accepted a US$50 billion aid package for new member states and has allocated funding to strengthen the International Monetary Fund. Such actions will have potentially beneficial consequences for some Central European economies such as Hungry. The development of a European Institution concerned with financial supervision to help prevent future de-stabilizing bubbles is under investigation.

One clear point of principle has emerged from the otherwise unsatisfactory, and indeed politically disputatious, process of finding a unified and coordinated approach to the various crises. Essentially countries have made their own responses that relate to their self-interest as interpreted by the politicians. The European Commission has made it clear that the Single Market is not to be sacrificed to economic expediency. France, for example, had tried to impose protectionist conditions on any state-aid to industrial firms such as car makers. This is a significant point of principle. There will be further strains to encounter particularly if new members in Central Europe continue to experience long-term problems when the crisis has passed elsewhere.

The Development of the Russian Economy and its Impact on Eastern Europe

2009-04-16T20:49:47Z

In this guest weblog, Visiting International Fellow, Dr. Marek Wroblewski writes: Russia is the largest country in the world as far as the occupied land is concerned, with a great natural resource potential, and a strong political and military position in the international arena. These attributes for a long time predestined Russia to imperialism and global power. Imperial collapse, however dramatic and painful for the country, only temporarily undermined its role of a hegemonic leader. Russia’s marginalization and exclusion of did not deprive the former superpower of effective instruments to influence decision-making processes taking place in the region and in the world. How does Russia use its economy to influence its immediate external environment?

]]> The economic interest of Russia in the Commonwealth of Independent States (CIS) and Eastern Europe is minor, although its activity in the region is characterized by political concerns and fluctuating economic intensity. Russia’s main economic interests are in the countries of the EU. During downturn in the economy and internal crisis, Russia did not have sufficient means to impose significant and permanent pressure on the situation in its region, as it defines it. However, when the prosperous economy was reflected by a visible improvement of public finance, this enabled it to operate actively both in the region and in the international sphere. Therefore, given this link between economic performance and Russian political ambitions, it is worth paying attention to economic evolution in Russia during last two decades and the economic results achieved.

Russia, during the system transformation away from central planning introduced many changes in its economic environment in ways that superficially looked similar to many other countries of Middle and Eastern Europe. Russia started constructing the framework of a market system. However deep-seated cultural characteristics and historical background meant that a more moderate model of transformation emerged in Russia when compared, for example, to Poland. Planned economic reforms concerned large state, economic units which during last decades of central planning almost completely implemented socialist economic guidelines. The first policy actions were accompanied by the severe and deep crisis that was essentially the outcome from the previous and ineffective model of economy. This crisis was observed in all sectors of the Russian economy, the general result of which was a dramatic decrease of the generated GDP or GDP per capita. Significant decreases of industrial production, investment and private consumption took place and strong inflationary pressures as well as rise in unemployment were felt. Despite this “economic shock”, the first stage of implementation of system transformation of the economy was continued largely through the support of international organizations. Internal prices were partly liberalized, gradually widening the scope of market forces; privatization of public enterprises was initiated as well as creation of the basics of the capital market. Russia became more open to the external influences and trade. Foreign trade became subject to limited liberalization and conditions were created for the inflow of the foreign capital. Reorientation in international cooperation was visible. The EU became significant in the supply of capital and of goods. The results of the above actions were a gradual macro-economic stability and the initiation of a slow process of economic growth.

However, those positive trends drastically stopped in the middle of 1998 when a severe currency crash took place in the Russian economy. The profound financial crisis uncovered the weaknesses of transformation process. This crisis resulted mainly from faulty methods applied for reform and for the construction of market mechanisms. Lack of the right institutional arrangements for an effective federal state was of key significance. Public finances went into deficit. System changes, as it turned out, were of an ostensible nature which in reality implied escalation of former malpractice. The appropriation of elements of national economy by the newly-born oligarchic groups was one of the most significant abuses. Strong national control (direct and indirect) in many branches of industry, trade and services reduced the chances of realizing the advantages of market-oriented production. What followed was low competitiveness in the main sectors of the Russian economy. With low prices for the energy exports, problems persisted with respect to maintaining the internal and external balance in the economy.

Visible improvement of the economic situation, observed systematically from 1999, came with increasing export prices of oil and underground gas, a gradual inflow of foreign investments and partial order of internal economic affairs. Taken together, these events created conditions for the restoration of economic growth. Special attention should be paid to terms of trade which were beneficial at that time and enabled Russia to improve economically. Significant increase in GDP and GDP per capita was noticed as well as the abrupt increase of foreign exchange revenues. Over 1996-2007, GDP of Russia increased by 65%; foreign investments amounted to USD 76 billions and the surplus in the current account and central budget appeared.

Russia’s economic growth led to greater pro-activity in the region. Russia mostly undertook efforts towards reintegration by proposing and initiating many integration-focused initiatives. Currently, within the borders of the CIS, there are formally few integration groups most of which Russia is party to, and the main entity. Moreover, along with integration groups there are multiple bilateral preferential economic agreements, which connect Russia in many configurations with many countries of the region. Most significant examples of such economic integration in the region are the Common Economic Space (CES) or Eurasian Economic Community (EAEC). As a result in the area of the CIS there is a complicated network of economic connections, which are not yet transparent. Integration projects undertaken by Russia strengthen its impact on various countries of the CIS and secure the role of the regional hegemonic leader, particularly in Central Asia. The current expansion of Russia, Georgia notwithstanding, is not of military but financial or economic in nature. In particular, energy-related pressure imposed on many countries of that region sets the example. Integration groups being created, despite of the premises of the complete partnership and mutual economic priorities, in reality are a specific tool of Russian politics.

Russia acts to impose pressure not only on the countries located in its direct sphere of influence but also wider afield. Different types of economic pressure, such as the manipulation of the power to control the flow of natural gas, but still with political references are also visible in reference to Central Europe and indirectly in reference to the EU members as a whole. Therefore, there is a great need of an open dialogue and establishing relations based on partnership between the EU as a whole and Russia, which might be beneficial for both parties, and help protect countries such as Poland. Competition in this respect, which sometimes reminds of the Cold War confrontation, is not an appropriate strategy in the modern globalized world. The relationship is one in which the Russian economy needs markets for its oil and gas if it is to experience further economic development and Western Europe needs Russian imports. It seems that Russia with the support of the EU should concentrate more on continuation of the real system transformation, including further economic modernization and diversification of economy and constructive use of its own potential.

Economic Transformation in Poland: Success or Failure?

2009-04-14T15:48:10Z

This guest web log by Alworth International Visiting Fellow Dr. Marek Wroblewski (University of Wroclaw, Poland) looks at changes in the Polish economy. He writes: Economic transformation in Poland is a product of the fall of the communist system and of the spread ofliberal capitalism. In the economic sphere, transformation initiated a difficult and costly process of transforming of a centrally planned economy into a market system. What were the changes and how were they implemented? What have been the outcomes for Poland?

]]> In Poland, the first government after the fall of the communist regime was that of Prime Minister Tadeusz Mazowiecki. He started with the Minister of Finance, Leszek Balcerowicz the reorientation of the economic system. Due to a huge crisis caused by the failure of the previous economic model, it became essential to create, first, macroeconomic stability, which would then, in turn, enable implementation of a set of market reforms. Actions aimed at limitation of the national deficit were undertaken. These included the restriction of the volume of subsidies given to inefficient public companies and stopping the pace of pay increase. Further changes were included in the “Balcerowicz’s plan” covering key principles of the new economic policy and the transformation process. The strategy aimed at fighting inflation (hyper-inflation back then), restoration of the market balance, price liberalization and development of foreign trade. The instruments of monetary policy were actively applied; in particular the increase in interest rates became an important tool in macroeconomic stability. The plan included significant tax reform. The Act on Privatization of state enterprises was introduced and a special Ministry of Ownership Transformation was established.

The devaluation of the national currency started in reference to convertible currencies, enabling introduction of the internal exchange of the zloty. In settlements with the trading partners of the former block of the Council for Mutual Economic Assistance, transition to convertible currencies took place. The government decided to introduce the new exchange rate regime. Initially, it was a regime of the fixed exchange rate (1990-1991), later “moderate devaluation” (so-called “crawling pegs”), meaning fixed and gradual decrease of the zloty exchange and from 2000, the system of fully-floating rate. Liberalization of the trade of goods abroad was performed, breaking the former monopoly of public trade centers.

The whole process of economic transformation was established on the basis of new legal regulations. Private ownership in the economy became the main priority. Administrative reform, also focused on the needs of the new economic system, was implemented. In 1999 the significant changes were introduced to local government management. The institutional framework for a market economy was created.

The transformation was based on shock tactics and in Poland these partly brought the expected results. The policy towards macroeconomic stability turned out to be successful. The inflation rate decreased significantly. Slowly, balance between market and government was achieved in many economic sectors. In particular, on the consumer-related level, a permanent victory over the crisis-ridden, “shortage” economy was visible.

Significant costs of the transformation process were imposed on the society. Personal real income was reduced, which in the conditions of realistic prices, implied impoverishment of the huge part of the society and as a result a forced reduction of demand. At the same time, the process of restructuring, including liquidation of unprofitable entities and privatization of enterprises, led to unemployment. Given the previous system unemployment was a completely new phenomenon. Moreover, unemployment had a clearly structural (long-term) nature and simple methods of limiting its impact did not bring perceptible short and midterm results.

Transformation, at the time, was an unprecedented process. In fact, at the beginning of the nineties, none of the countries in the world was implementing such drastic changes in its economic and political system. Due to lack of both theoretical as practical research, as well as practical experiences Poland was on an extremely risky path.

The transformation in Poland partly brought expected basic effects: The framework for a functioning market economy was built (mechanisms and market institutions), a new financial system was built from the beginning and many legal regulations were introduced. There was a great opening towards the external environment, which meant liberalization and reorientation of foreign trade, as well as creation of conditions for the inflow of foreign capital. Significant changes took place in reference to the structure of economy and the level of its innovation. Moreover, transformation enabled preparation of the economy for meeting the economic conditions for integration with the EU.

The process of transformation also became a source of many serious problems. The introduced changes, though necessary, resulted inevitably in social stress including the rise of unemployment, unequal incomes, un-even development in the regional system and bankruptcy of many enterprises. There were also problems related to ineffective and sometimes controversial privatization, excessive bureaucracy, faults of the legal system and also general weakness of the central and local authorities' administration. Problems related to underdevelopment of infrastructure and too low competitiveness of economy, persist.

The process of transformation in Poland, after two decades, is not yet complete. It is essential to adapt the competitiveness of economy to dynamically changing conditions in the global economy. Further investment, leading to greater modernization of economy is required. The outward migration of skilled labor and visible demographic problems (ageing society and increasingly slower birth rate) are aspects that are worrying. There are those who have benefitted from the transformation process and those who have suffered. Overall, the transformation has been positive especially with respect to consumer interests. Problems remain including the issues of competitiveness, the establishment of an appropriate set of social and economic infrastructure to sustain an equitable market economy and adjusting effectively to international pressures.

Adam Smith is back, in a surprising way, on the ideas agenda

2009-04-08T20:53:16Z

The global economic order is under serious scrutiny. The significant economic philosopher, Amartya Sen, has put Smith back at the centre of the discussion by reminding anyone who will listen that Smith was a moral philosopher, a friend of the poor (as Malthus described him) and interested in ethical issues and the market. He disliked monopolies (particularly monopolies of land and of trade). He admitted the role of “interest” in the motivation of merchants and business people. Smith did not, as far as I can establish, use the term “self-interest” but thought of interest in prudential (hence moral) terms. Sen stresses Smith’s understanding of institutions and the need for trust: repetition and consistency through trust are important in sustaining economic life. Prudent behavior is not to be underestimated as it contains within it the idea of honest-dealing. Sen’s article may be seen at Financial Times, March 11th 2009. This blog is simply going to give a few pointers, rarely quoted, to what I would like to call the radical-conservative Smith who we rarely here about, using Smith’s own words. Smith could be pithy as well as insightful and many of his comments on the behaviors of landlords and merchants are satirical.

]]> Here is Smith looking at laws relating to property: “Laws and government may be considered in this and indeed in every case as a combination of the rich to oppress the poor, and to preserve to themselves the inequality of the goods which would otherwise be soon destroyed by the attacks of the poor, who if not hindered by the government would soon reduce the others to an equality with themselves by open violence. The government and laws hinder the poor from ever acquiring the wealth by violence which they would otherwise exert on the rich; they tell them they must either continue poor or acquire wealth in the same manner as they did”. Lectures in Jurisprudence iv. 23.

Here is Smith on the laboring poor and the notion of relative deprivation. Smith throughout his writings is very good on the idea of relative evaluations.: “The labour and time of the poor is in civilized countries sacrificed to the maintaining the rich in easy and luxury. The landlord is maintained in idleness and luxury by the labour of his tenents, who cultivate the land for him as well as for themselves. The moneyed man is supported his exactions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every savage has the full enjoyment of the fruits of his own labours; there are no landlords, no usurers, no tax gatherers. We should expect the savage should be much better provided than the dependent poor man who labours both for himself and others. But the case is otherwise. The indigence of a savage is far greater than that of the meanest citizen of any thing that deserves the name of a civilized nation” Lectures in Jurisprudence, vi. 26.

Here is Smith on the minimum acceptable social bonds: “Society, however, cannot subsist among those who are at all times ready to hurt or injure one another. The moment the injury begins, the moment the mutual resentment and animosity take place, all the bands of it are broke asunder, and the different members of which it consisted are, as it were, dissipated and scattered abroad by the violence and opposition of their discordant affections. If there is any society among robbers and murderers, they must at least, according to the trite observation, abstain from robbing and murdering one another. Beneficence, therefore, is less essential to the existence of society than justice. Society may subsist, though not in the most comfortable state, without beneficence; but the prevalence of injustice must utterly destroy it”. Theory of Moral Sentiments II.ii.3.3

So there is much more to Smith, as Sen also argues, than his construction as the so-called author of the “bible of capitalism”.

G20 and policy perspectives.

2009-04-02T16:09:12Z

There were differences at the G20. Obama was willing to accept some blame on the part of the United States. Sarkozy wanted to energetically wave the finger and blame that old-French, Gaullist, target the “Anglo-Saxons” though in the face of the first black President of the United States this seemed always a non-starter. Was there a split between Europe and the United States? Policy stances, as outlined below, are taken along domestic political and often historically-determined lines.

]]> Sarkozy stressed international financial regulation and said he would leave if regulation was not addressed, and most of his compatriots just shrugged their shoulders or laughed. The French administrative tradition in economic life, reinforced by Napoleon, goes back to before the Revolution. He did himself some damage by his ill-thoughtout grand gesture. Obama took a very pragmatic view: such big staged political events can be boring and so a little bit of positioning and sparkle simply added to sense of occasion. However Sarkozy is stuck with an inflexible French economy that he himself wanted to change along UK-lines. His reforms have stalled. He then proposed a protectionist policy for re-financing the French car industry. This caused a row in Europe and even the French car-makers seem to have rejected the idea. I doubt if he did himself much good at the summit.

Merkel, the German Chancellor, is a different and tougher personality. Her current political stance is based on a fiscal conservatism that is in marked contrast with the situation facing Gordon Brown. This is merely a current political expression of a long-standing German fear of inflation. In the post-World War II world, Germany, in a difficult economic climate will always chose unemployment over inflation. Its institutional arrangements were designed to avoid the hyper-inflation and instability of the Weimar Republic. UK leaders, especially in the Labour party, will favor inflation over unemployment. Merkel was opposed to a further stimulus package in German because of the long-standing monetarist approach to financial regulation and conservatism. That she became reconciled to increasing the Special Drawing Rights of the IMF, and IMF finance in general, suggest that she feels that a significant (absolute) contraction in World Trade would be deflationary (itself a problem as consumers postpone purchasing decision in the hope of getting the goods even cheaper in the future)with significant consequences for German exports. The prospects for international inflation in the longer-term are significant. Merkel, and Germany in general, do not really like money for poor countries without “strings attached”.

Gordon Brown has had a reasonably good summit. He seemed to be at the centre of the action though the role was very much shared with Obama. Obama seemed to have a good time, if his broad grin on many informal photographs is anything to go by. The President made the most of the diplomatic gathering to meet as the new guy of the block with significant world leaders, including the Presidents of Russia and of China. The world, not just France and Germany, will not be lectured to on economic policy by the Americans as a result of the crisis and it perceived origins in the United States. Obama, going for strong domestic economic stimulation, seems to have stepped with great care, though he was clear that world recovery needed additional action elsewhere. But Brown still has a domestic policy problem. His government is in debt. Further domestic stimulation is problematic. Increasing the debt even further takes away from the flexibility of future governments. Yes, inflation now is not a problem, but what about down the line? The UK preference differs from that of Germany but there is still domestic disagreement. He needs to see the world economy starting to expand as much as for the sake of the UK economy as for the rest of the world. He had a good summit but his political career is still under threat and his policy options are restricted..

John Ruskin, the1860s and the eventual end of laissez-faire.

2009-03-30T16:27:19Z

In 1860 John Ruskin first attempted to publish four essays that he later published as Unto this last. This was a condemnation, in difficult and sometimes stunningly beautiful prose of the state of England. Ruskin saw the glaring contrast between the alleged wealth of industrial production and the pattern of pollution and its long term consequences or of the exploitation of the laboring poor. What briefly (he wrote volumes) did Ruskin argue? Has Ruskin anything to tell us for today? What follows is a summarization of a longer piece on John Ruskin by Willie Henderson.

]]> Formal economics looks at the world and sees “scarcity”, albeit relative scarcity. Ruskin looked at the world and saw “abundance” and wondered why such abundance did not translate into healthy and fulfilled working lives. He observed and reacted to a world in which those who produced did not consume and those who consumed did little in the way of production. The question of the proper uses of affluence has been asked many times since, in particular within the radical tradition of non-mainstream American socio-economic criticism. I am thinking of future theorists as diverse as Thorsten Veblen, the institutionalist perspective of conspicuous consumption and the wastes of advertising, John Kenneth Galbraith, a Keynesian perspective of private affluence and public squalor, and, from a Marxist perspective, Paul Sweezy and the economic waste of monopoly capital. There are hints of some of their ideas in Ruskin’s writing. The protest meetings on the street of London against current market failures and the G20 proposals, seem to have a strong Ruskinian tinge. Ruskin was, for example, deeply concerned that monopolies would wipe out the tradition of the independent artisan or small-scale producer.

Ruskin’s response to the ugliness of capitalism—capitalism, for him, produced ugly and polluted landscapes, ugly and unhealthy townscapes, ugly and greedy economic behavior— was aesthetic, as it was for the twentieth-century writer, D.H. Lawrence. Ruskin’s longer term wish was for a system that was capable of naturally painting the white and worn faces of the London poor with healthy color. Ruskin was concerned that Britain’s factories produced two outputs: goods and broken and divided men. He challenged manufacturers and merchants to take into account a full understanding of the costs of production measured in human terms. Ruskin was deeply concerned that far from moderating the selfish drive, the very image of economic man heightened it in the day-to-day ruthlessness of market oriented production. He was deeply suspicious of what he saw as the greedy fiction of “economic man”. Nature in this respect was capable of imitating art. Set our standards of discourse too low, Ruskin felt, and human behavior would soon follow. Whether intended or not, economic man by its very construction recommended “bad” behavior.

Ruskin is concerned about the true nature of wealth and he attempts to get his ideas though to his middle-class audiences with striking imagery. Thus: "So, also, the power of our wealth seems limited as respects to the comforts of the servants, no less than their quietude. The persons in the kitchen appear to be ill-dressed, squalid, half-starved. One cannot help imagining that the riches of the establishment must be of a very theoretical and documentary character" (UTL, 40).

This domestication of the issue of economic well-being had the potential to shock his middle-class, and servant-employing, readers. For Ruskin, wealth must translate into wellbeing before it can really count as wealth. Here he is referring both to individual households and to the nation as a household or estate. Given this insight, Ruskin moves from what I have called “a heap of things” to people themselves: “Perhaps it may even appear, after some consideration, that the persons themselves are the wealth”.

His arguments for economic regulation and the modification of market principles are based on reason and reasonable administration. The flow of resources in an economy is compared to the flow of rivers, each need “administering intelligence”: "The course neither of clouds nor of rivers can be forbidden by human will. But the disposition and administration of them can be altered by human forethought. Whether a stream shall be a curse or a blessing, depends on man’s labour and administering intelligence "(UTL, 46).

Ruskin’s notion of value is distinguished from price and based upon biological principles and environmental respect and on aesthetics (readily recognized by Adam Smith as part of the judgments involved in moving beyond subsistence). The nature contradiction to “wealth” in this sense was “Illth”. Ruskin was very aware of unregulated capitalism’s potential to take the natural resources of this world and of turning them into dangerous rubbish.

With respect to consumption in a capitalist society, Ruskin was very aware of the need for households to be ethically motivated. Demand, for Ruskin, is romantic in origin. It should be regulated not just by the imagination but by the “heart”, by consideration of the impact that expenditures will have on the “condition of existence” caused for producers, by consideration of a fair price. There is a direct line that goes from Ruskin to the fair trade movement, whether this line is acknowledged or not. Ruskin exhorts his readers to look directly and carefully, as he had done, at the economic world around them and to “raise the veil boldly” rather than filter their impressions through abstract and conventional political economy. His closing acts in Unto this last places the moral responsibility for prevailing economic conditions in the hands of the consumer, in the potentially availing hands of his readership.

Ruskin felt keenly the urgency of improving the lives of poor people for the time span for changing lives is limited by the length of life considered. He would have approved of John Maynard Keynes notion that in the long-run we are all dead. He would have approved of the rise of the fair trade movement and its institutional location in agencies such as Oxfam: their values are his values. He would be shocked to see China and India (to a lesser extent than China) repeating the problems, in their rush for growth, of the Industrial Revolution. The environmental degradation and the abuse of the health of the poor in that context would have astounded him. That product adulteration, a form of dishonesty that Ruskin attacked time and again, could even now claim the lives of babies would have angered him. He would have been appalled at the suicides in India blamed on the impact of corporate capitalism and genetically engineered seeds and the consequent rise of indebtedness in rural lives .

Ruskin would encourage us to look at social phenomenon as directly as we can and respond not simply with conventional analysis but with concern, imagination and compassion. This willingness “to raise the veil boldly” that separates us intellectually, morally and emotionally from the problems of poverty and economic justice is, I think, the enduring legacy, and hence understanding this capacity is the enduring “meaning” of Unto this last. Ruskin's ideas though set in a different time have a lot in common with the ideas of soem of those currently protesting prior to the G20 meeting in London.

Is “economic globalization” worth saving?

2009-03-25T20:48:53Z

The endings of periods of sustained globalization have been dangerous times: the Napoleonic Wars; the First World War. Globalization has its good points and bad points. Its good points have been the dramatic changes in the prospects for sustained economic growth in India and China and the pace at which people have been pulled out of extreme poverty and the relative cheapening of production. Its bad points have been the dramatic increase in inequalities in countries where previous policy has been built around the notion of avoiding huge differences in income and the growth of pollution and waste together with the unevaluated spread of western consumption practices. Some argue that the greatest threat to the world economy is the possibly irresistible rise of protectionism. Some might feel that a pause in the reckless development of China or in the destruction of communities by international economic forces beyond their control are good things, allowing time to reflect on the environmental and social impact of the global economy. Leaders are face with a choice of doing nothing (already rejected but still supported by right wing libertarians); doing something to stimulate demand (though the outcomes are uncertain); protecting that stimulus package in-country by protectionist methods (probably very attractive in the short-run); going for global coordination (difficult to achieve).

]]> Accepting the situation and pausing to rethink looks an attractive proposition at first sight. The potential problems with this idea are huge. In the developing world, many countries have young and growing populations. Some of these countries such as Pakistan are of huge significance and the balance of forces between instability and stability is not assured on the side of stability. Increased unemployment could tip the balance. World-wide unemployment has surged. In this sense there is a pause but major and prolonged economic slumps lead quickly to political instability. If this is going to be as long and as bad as the 1930s, when many countries abandoned democracy, then there are likely to be other significant political consequences. Even capitalists abandoned the market in that period. A demand for protectionist policies to ensure that stimulus policies have the highest possible domestic effect may be inevitable. NAFTA is already strained with respect to Mexican-US transportation arrangements. It is a question of what members of a polity see as the relevant community: the national or the international. Prolonged unrest in strategically significant countries, such as Pakistan or Mexico, will not help the cause of recovery anywhere.

Globalization was in difficulty even before the financial crisis. The promise of the Doha Round to prevent further protection and free-up agricultural trade, withered, lingered and eventually died. There was already a protectionist mood abroad, not only in emerging economies but in the U.S. Congress. Economic policy, like the so-called economic science itself, is contingent on historical circumstances. Economic regulation was out for a long time, now it is back. It is hard to see what the right thing to do is. The British government is seeking to develop another package of measures. The Bank of England is not so sure. Obama’s policies have been criticized by some European politicians though it is denied that there is an EU/US split. It is hard to see how the Unted States can avoid massive inflation down-the-line. There is an intellectual as well as a political confusion. It is hard to see how protectionism can be avoided if national economies try to re-establish growth through stimulus measures. The leakages are enormous. Open economies do not respond well to Keynesian-type policies and current circumstances are not routine.

We will need to wait to see how the G20 meeting will handle the issues. The British Prime Minister, Gordon Brown, has pushed the global line vigorously but even with the EU there is no consensus line. He will need to work hard if he is to get anywhere.

Gordon Brown, United States protectionism and the special relationship

2009-03-05T23:37:53Z

Gordon Brown, the British Prime Minister, was in Washington D.C. this week, telling the Congress things that it likes to hear (how forward looking the United States is) and telling them a few things that on the whole it did not wish to hear. He also sent them a message about the so-called “special relationship” between Britain and the United States. He did not tell it that the present economic crisis originated in the United States though this is the case nor did he add that hence there is an obligation not to make the present situation worse by turning to protectionism. Nor did he tell them that he presided as Chancellor over the UK economy for several years leading up to this crisis. There is wobbly ground all around! What did Brown say and why?

]]> Gordon Brown will be hosting the G20 economic summit in early April and this was one reason for him being in Washington D.C. The summit will discuss the global crisis and will attempt to find a coordinated basis for international action in the face of the recession. The UK economy is a very open economy and needs both imports and exports. Unlike countries in the euro zone it can adjust its economy by adjusting the exchange-rate which it can do indirectly by reducing the level of interest rates. It has just cut interest rates again. this is of course a kind of protectionism: it makes imports dearer and exports cheaper and this has itrritated those in the euro zone who do not have directly this policy option. He is keenly aware of the need for maintaining the international economy and is concerned about the move towards protectionism, already present in the Congress long before the last Presidential election. Monies voted for economic stimulus in the United States need to be politically seen to be helping directly the United States economy but a move to protectionism in the United States will be followed by vigorous protectionist policies in the rest of the world. If world trade is further cut, incomes will continue to fall and resources will move to inefficient rather than competitive production on a world-wide basis. Brown has been consistently calling for a global strategy. Unfortunately sentiment in the United States is moving against such a view whilst he is not in the strongest position to gain any leverage. Moral suasion is not a strong force, nor is Gordon Brown in a stong postion to call for it.

The other aim of his visit was to reinforce the “special relationship”, as Britain describes its foreign policy relationship with the United States. Since the 1950s Britain has looked at its foreign policy in terms of the Commonwealth (a loose association of states of the former Empire); Europe and the special relationship as America’s strongest ally. Most people in the United States know nothing of this relationship and Britain’s sensitivity about its significance looks odd. It is hard to see why the United States would wish to continue this relationship if, in Brown’s own understanding, Europe has the most consistent pro-American leadership in years. If the chances of multilateral cooperation because of a new administration are great, why would the United States need Britain? Of course, the United States could squander this chance by becoming protectionist and the squabbling between Europe and the United States could become intense. I wonder where Britain would be in that context. The United States wants a Europe that it can talk directly with but thus far this is not really available given the rejection of the constitutional proposals.

The ending of intense periods of globalization in the past has been fraught. The war in Afghanistan is moving against the United States and its allies and Britain is significant here. Britain is still needed. The Russian economy is in turmoil and it is not clear when or how the economic situation will impact on political stability there. Eastern Europe is in significant danger of economic collapse. Economic crisis soon becomes political crisis. Who knows what might happen next and who will need what kind of relationship and with whom? Britain should stop posturing about its “special relationship” with the United States. Brown should concentrate on making the G20 meeting effective by whatever cooperative means, particularly within Europe, he has at his disposal. Brown cannot prevent the United States turning to protectionism, but a firm line from all European leaders working together might.

Protectionism and recession

2009-02-19T16:51:38Z

Protectionism has been for a number of years a dirty word. It is now a term that seems to be creeping back into fashion. This tendency is politically understandable in an economic downturn as international trade can be easily represented as putting domestic jobs at risk. International trade is and always has been a domestic political issue, especially in a country such as the United States where protectionism has a long history. Trade involves exports as well as imports and anything that diminishes imports is likely to rebound on exports both as a result of other countries’ policy and also as a result of further downturns in international income levels leading also to a reduced demand for exports. There are forces working for and forces working against the growth of protectionism. Who is saying what and to whom?

]]> The recession has ruffled the feathers of governments all over the world. In an economic crisis there is an almost automatic tendency to look after one’s own. It seems easy to put in a clause, as has happened in the United States, that a stimulus package should, as if is being financed domestically, restrict its direct benefits to domestic industry and businesses. This is politically appealing and, alas, also short-sighted if the principle aims of the stimulus package are to reduce the depth and the duration of a recession. The “Buy American” provision in the stimulus package in the United States has been watered down. The statement about buy American has been matched with a statement about making sure that international trade agreements are also honored. Europe, in the form of the EU, made it clear that it wished to avoid a trade war, an almost inevitable outcome of restrictive measures unilaterally imposed. The package now tries to match domestic actions to international expectations but nonetheless gives a lot of scope for domestic preferential treatment at fairly significant levels. The EU led the international lobbying against the ‘Buy America” clause. Other countries too were concerned about any contraction in world trade that might come about as a result of the protectionist drift in the United States. China was alarmed and given the Sino-US economy it is easy to see why. China is not however an entirely open-door economy. Canada has also been alarmed at the protectionist tone though Obama seems to have reassured the Canadian Prime Minster that NAFTA is safe.

Whilst the EU Commission is trying to ensure no increases in protectionism internationally, there are internal EU problems of a protectionist nature that are threatening the integrity of the common market. In the UK workers have protested against the employment of “foreign workers” (EU citizens working in the UK). It is the case that UK citizens working in the rest of Europe fall just short of the number of EU citizens from the rest of Europe in the UK. The situation with respect to the generation of incomes is complex. It is too easy to blame others for rising domestic unemployment. The President of France has set off an embarrassing row within Europe by developing a stimulus package for the French economy that asks recipients of state aid such as the car industry to protect jobs in France. This means, under falling market conditions, contracting production in other EU countries such as the Czech Republic. This has upset the Czechs. With this and other market developments, Eastern Europe is now suddenly seen as at risk.

Stimulus packages in individual countries, such as France, will work to some extent through the re-generation of state infrastructure. The EU must stick to the principle that such projects are open to EU-wide competition. Protectionism is an attempt to “export unemployment” but it damages export sectors both domestically and internationally, leads to the persistence of economic problems and further misallocation of resources. The same is true for the United States, and all other governments for that matter. Governments need to be very clear headed, even-handed and capable of taking a long-term view if they are to avoid making the economic situation worse. Leadership at times like these is at a premium.

Gordon Brown, Sarkozy and the economic crisis.

2009-02-09T22:10:30Z

The entente cordial is in trouble once more. The President of France in a well-publicized and lengthy television interview publically criticized British Prime Minister, Gordon Brown, and his economic policy towards the recession. Downing Street was not much amused by the statements made though they were made in the context of Sarkozy defending his approach to the recession and the development of French government policy. Sarkozy is intent on boosting state infrastructure rather than manipulating demand directly. Brown, who is on the political slide again, was irritated and Sarkozy’s own performance was seen to be weak and incoherent. Sarkozy’s broadcast was an attempt to gain back some popular support and to reassure the French that his government was actively pursuing the right policy for France. There was none the less a certain amount of diplomatic activity to smooth down ruffled feathers in London as Sarkozy vowed to avoid British government mistakes. Is there anything in this that needs reflecting upon?

]]> France and the UK have different approaches to economic life, not just in the recent past. France has in essence a state directed approach to economic life (even if Sarkozy has set out to modify this before the current recession) and the UK has had a more flexible approach. Sarkozy currently is hankering after protecitonist thinking capable of putting France and French manufacturing first. The UK’s model for economic life has been not the United States as a whole but perhaps more the Californian economy, known for its flexibility and innovation and an economy in which British investment is high. The UK has benefitted from this flexibility but how the UK economy works is often misunderstood in the rest of Europe. True, financial services and services in general are of huge significant to the UK’s standard of living and the recent problems (which originated in the United States) mean that the UK is suffering sharply, especially in the financial sector. Sarkozy insisted that the crisis was caused by the “Anglo-Saxons�? (a curiously old-fashioned reference to the United States and the United Kingdom, but one that has a degree of popular appeal in France) and made significant swipes at the Americans, stating, more or less that the United States should be responsible for its own debt. In some ways the attack was more pointedly against the United States. Brown is very aware of the need top avoid the retreat of banking into lending defined mainly by national boundaries and for continued international cooperation. London needs international financial markets to operate.

But the UK economy is not the “post-industrial economy�? that many Europeans and Sarkozy seem to imply. Apart from the problems in the banking sector, failure in the current economic climate is located mainly on the demand-side of the economy. The big problems are on the High Street or are directly consumer-credit related. The UK is not a “post-industrial society�? in any dramatic sense and manufacturing still has its part, and a significant part, to play in national economic life. Brown’s tax cut is certainly not dramatic and there are those in the UK who would argue, as Sarkozy has done, that the approach will not get anywhere. Nonetheless, reducing tax on purchases, keeping the interest rates low and the falling exchange rate will help the UK economy. The country is experiencing both recessionary pressure and a tug towards growth and recovery. The UK could argue that quick in/quick out will be the growth pattern and that the Euro-zone is yet to experience the full impact of its economic problems.
Sarkozy is faced with the need to stabilize the economy and to pursue his program of reform essential to change the economic balance in France. In trying to do both, he is choosing for himself a very hard road. The whole capitalist system world-wide has taken a turn towards “state capitalism�? hitherto seen as the preserve of Russian and China and certain developmental economies in South Asia. This may be only a temporary phenomenon though the phenomenon may continue even after the present need has passed, in which case Sarkozy may need to fight a different battle.

Both Brown and Sarkozy are in significant political difficulties. Brown’s image recovered when he seemed to be taking an international lead in the development of policy towards the ailing financial sector. Sarkozy is attempting to fight off the prospects of further action in the streets against his government’s policies. Leaders in Parliamentary democracies are very vulnerable (as has already been witnessed in Iceland) during times of economic crisis. This is how such systems and their associated politics work. We must expect some further thrashing around though such swiping from one head of government to another is probably best avoided.

Israel, Gaza and criticisms and controversy in the UK

2009-01-28T15:09:43Z

Israel and the Middle-East are emotive issues and the question of the humanitarian crisis in Gaza is no exception. The BBC has prevented the broadcast of humanitarian appeals for funds for Gaza on the basis that it needs to preserve its “neutrality" as a trusted international broadcaster, a stand that has led to further political controversy. The trouble is that there does not seem to be any “neutral" position to occupy when it comes to civilian deaths and humanitarian aid to Gaza. The BBC has found this to its cost. Its decision is seen to be pro-Israeli rather than neutral, as the veteran labour-party politician Tony Benn argued on BBC news just a few days ago. During the conflict itself, Sir Gerard Kaufman, Labour MP for Manchester Gorton gave a critical and challenging speech in the House of Commons comparing Israel’s policy towards civilian deaths as typical of “Nazi behavior". What was his argument and how has it been evaluated?

]]> Kaufman has been consistently critical of Israel over the years but he is also well-informed of conditions in Israel and Palestine. Kaufman was careful to present his credentials as someone brought up “as an Orthodox Jew and Zionist" and as coming from an immigrant family whose grandmother was shot in bed by a Nazis soldier. He cannot be accused of anti-Semitic behavior though clearly he is not pro-Zionist or at least not uncritically pro-Zionism. This has not saved him from being called a “self-hating Jew", an accusation that would seem, given his record on humanitarian issues, grossly unfair. In the speech he flourished his contact with the Israeli establishment (“Golda Meir was my friend") and used his own family’s experience to reject Israeli policy towards civil deaths in robust and indeed startling language: “My grandmother did not die to provide cover for Israeli soldiers murdering Palestinian grandmothers in Gaza. The current Israeli Government ruthlessly and cynically exploits the continuing guilt among gentiles over the slaughter of Jews in the holocaust for their murder of Palestinian. The implication is that Jewish lives are precious, but the lives of Palestinians do not count". This quote more than any other has rattled pro-Israeli groups. Kaufman is no stranger to controversy and has held for many years to the fact that peace needs justice for the Palestinian and willingness to compromise on the part of Israel. He also turns personal family history against Tzipi Livni (Israel’s foreign minister) who has stated that she will not enter into discussion with Hamas. Livni’s father was engaged in terrorism against the British. Kaufman is concerned about peace and quotes Abba Eban’s words: “You make peace by talking to your enemies.".

The speech has promoted controversial discussion and Kaufman has been covered in abuse and not only by the Israeli right. An Israeli spokesperson pointed to the fact that many of the soldiers who were fighting had lost family members in the holocaust but they saw the need to defend themselves. Others responses, taken from various web sites around the world, compare Hamas to the Nazis and pointed out that Hamas used civilians to hide behind. Kaufman was careful to point out that Hamas “is a deeply nasty organization" though he stopped short of calling them fascist, as many in Israel see it. Others dismissed the idea that the Holocaust has anything to do with Israel attitudes and that Kaufman’s speech was the worst form of historical revisionism. The country was simply responding to the missiles coming from Hamas militants. Even if Israel got it wrong, its supporters argue, it warned civilians of intended strikes in an effort to reduce civilian deaths. Kaufman, on the other hand, insists that Hamas grows in a soil that Israel fertilizes by its everyday treatment of Palestinians. So many civil deaths may intimidate but at the same time such a large number of deaths and the destruction associated with them will only enrich the soil on which Hamas grows. Humanitarian aiud is not only good in itself but it can change the political climate as well.

The philosophy of “an eye for an eye" (an aspect but not the sole aspect of the notion of righteousness) suggests proportionality in violent response and it does seem to many people that Israel has been disproportionate in this respect. Israel has the right to defend itself but the size of the civilian deaths and the unintended consequences of military action has exposed it to high levels of criticism and moral outrage of which Kaufman’s speech, is one of the loudest and most startling. 15, 000 people have complained the BBC about its decision not to broadcast the Disasters Emergency Committee’s appeal for aid to civilians in Gaza. Discussion, according to the New York Times, has been heated with staff in the BBC divided on the issue. Criticism of the BBC's stand has come from all sections of society and on Monday 26th January masses of demonstrators took to the streets in protest. The BBC today has decided to set up a committee of its Governing Body to investigate the complaints.

Wrocław (Poland) and the past in the present.

2009-01-08T19:59:47Z

We can live life in the presence of the past or reject it and start again, as the revolutionary Thomas Payne argued in the late 18th century. The religious reformers who destroyed the Lady Chapels in England in 1548, roughly two centuries prior, chose to rub out the past and destroy with hammers elaborate gothic ornamentation, in passionate acts that subsequent ages would think of as little short of vandalism. The United States of America has been characterized, by Gore Vidal , as the “United States of Amnesia". The Vietnam War is practically unknown to the present generation of college students. World War II is even more remote. The same is not true for European memories of WWII. The European Union was born out of the desire, in the aftermath of the second war, for a peaceful continent. Berlin is still coming to terms, in the sphere of public commemoration, with the fate of its Jewish citizens under the Nazis regime. In Eastern Europe, where borders were disrupted and populations moved the past and the present weave together into the very fabric of life, particularly in the city of Wroclaw, a significant city in modern-day Poland but a city with a complex past. How then does the city cope with the relationship between the present and a Polish past with a "gap", of six hundred years when the city itself was under, in turn, Austrian, Prussian and German rule?

]]> The first generations of Polish school children in Wroclaw were told: “ we were here, we are here and we will be here in the future". Roughly 30% of that Polish population came from Lwow and other Eastern cities now in Ukraine. Wroclaw had been devastated by wartime damage and the urgent need was to re-develop and restore. In the early days, German cemeteries were covered over and built upon. There are still buildings with bullet marks from the fighting that took place between Nazi regime troops, who held out to the last, and the advancing Russian army, though the city is largely restored. Breslau (the former name of Wroclaw) was the last of the significant German cities to surrender.

Such a negative approach to the past was not sustainable. The decision to restore the city’s architectural heritage as accurately as possible implied a different kind of relationship with its history though it took time, and democracy, for the implications to be worked out. Why deny, say, that the German Kaiser attended the opening ceremony of what is now called the Grunwaldzki Bridge? The city in the late 19th century and early 20th century was largely German in origin but with significant minorities of Poles and a commercially active and significant Jewish community, brutally eliminated by Nazi racial policy. This past has been acknowledged in the restoration of the 19th century Jewish, cemetery now maintained as part of the city’s museum. The Nazi period is critically explored in the sinister but compelling detective stories of Marek Krajewski , avidly read, not only by people in Wroclaw but also, in translation, by an international audience. The past to be acknowledged is complex and far from easy. A recently published guide to the city by the publishing house Via Nova compares restored areas of the present day city of Wroclaw with matched postcard images of Breslau. A detailed history by Norman Davies and Roger Moorhouse (2002), a work produced in collaboration with many informants/residents knowledgeable about the city, and given political backing, set out the city’s complex and often dark history. Sensitivities have changed helped by the courageous decision of progressive political leadership in the city. Rather than denying the past, it is now acknowledged and even cautiously celebrated. German tourists, for example, are now a significant part of the tourist trade.

On New Year’s Eve I attended a concert given by the City Orchestra. Central to the concert was the performance of four tenors from the Ukraine. The well-blended tenor voices sang many popular pieces from the classical repertoire but they also sang, with great gusto, a popular Polish song, in Polish, about the beauties of Lwow. Think of it: Ukrainian performers singing a Polish sentimental song about a city that is now in the Ukraine. The irony was not lost on at least some of the more discerning in the audience. The presentation was of great nostalgic significance for an aging audience and became the subject of the enthusiastically received encore. That is all that it was, nostalgia. There may have been a few extreme nationalists, for they do exist, in the audience but for the vast majority this nostalgia was not part of any political program, simply a romanticization of personal memory. It could not have happened outside of Wroclaw’s reputation as city with a sensitive approach to the past. The past is there, but recognized, acknowledged, domesticated, tamed, open for reflection but neither suppressed nor denied. Simple amnesia, so often encountered in the United States, is not an option. Democratic political leadership in Wroclaw has created a good basis for a healthy society.