What A Load of Trichet

The contrast between the prominent coverage given to a paper presented recently by European Central Bank President Jean Claude Trichet at the Kansas City Federal Reserve Bank’s annual Monetary Symposium in Jackson Hole, Wyoming (Irish Times, Saturday August 28, 2010), and the collective letter written by twenty Irish economists, sociologists and policy analysts advocating an alternative to the government’s current deflationary policies could not be greater.

In the Irish Times, the statements of Mr Trichet seem to be accepted as incontrovertible. Indeed the same might be said of the mainstream Irish media in general. His most recent warning that we face a “lost decade” in Europe unless public spending is cut and the elimination of debt accelerated, irrespective of the employment consequences, fits neatly into the lazy intellectual assumption that present right-of-centre policies constitute the single, inevitable response to the disastrous economic position in which the European Union finds itself.
The silent acceptance of Jean Claude Trichet’s presumed inevitabilities reflects a widespread inability to engage, at intellectual level, with the urgent task of reconnecting economic policy, public welfare and indeed ethics. It is to the credit of the scholars from TASC who signed the letter to the Irish Times that they sought to open a discourse on something that is crucial, not just to the present generation but to future generations also.
The disconnect between economic policy and the society to which it is addressed – or rather on which it is inflicted – is provoked by the thinking of the ECB’s president, to such a degree as to be deeply destabilising of democratic institutions across Europe. The feeling on the street in Europe, in every country, is that unemployment with its consequent misery, limitation of citizenship, and the parallel, drastic reduction in expenditure in local and national economies, is our greatest shared problem.
The Jean-Claude Trichet position has the merit of being an honest statement of a right-of-centre economic strategy. It is, however, a statement of support for a model that has failed and that, if persisted with, will create consequences that are socially disastrous. Indeed it already has.
As their livelihood and households are threatened, the European public rightly turns to its representative institutions seeking answers. If the response is that there is no alternative to poverty for the many, and impunity for the speculative few, the perception will inevitably grow that it is not just thinking like that of Mr Trichet that represents the problem but rather the institutions themselves – of political representation, the intellectual community, and the media, all of which have failed.
Paul Gillespie, the Irish Times’ distinguished columnist on, among other things, contemporary European thought, has frequently drawn our attention to the work of Jürgen Habermas and his advocacy of the kind of public discourse that would enable contemporary democracy to survive and deepen.
The prevailing reluctance to even discuss the recasting of the prevailing versions of economic theory is deeply disturbing. The origins of the unwillingness to restore political economy as an open area for reflection may lie in the hubris that followed the collapse of the Berlin Wall in 1989. While it may have been valuable to record the abuses of Statism and State socialism, the elevation of the market to a realm beyond democratic accountability is now bearing its terrible fruit.
At a time when institutions have abused the trust that was necessary in order to sustain the social contract, the intellectual tools that are necessary to reflect and sustain our common humanity have also been discarded. Language itself has been devalued through the use of collective nouns that suggest that the people in general are responsible for all of the decisions and actions of the few – a minority who never have had to seek a mandate from anything other than the market and its culture of greed.
It is interesting to note that at the top of the tree in economic writing – be it Amartya Sen or Joseph Stiglitz – there is a recognition that the subject itself is in crisis. The former is anxious to recreate the ethical context of Adam Smith as can be seen in the new preface to The Theory of Moral Sentiments; the latter, in column after column, has warned of the consequences of accepting deflationary economic policy as the single solution to our economic position.
It is democracy itself that is being challenged by this failure. The legitimacy conferred on democracy as a system requires an openness to alternative versions of our world, a willingness to engage with what threatens all of our citizens, and a critical awareness of the consequences of choosing one alternative over another.
We are living in the shadow of a dangerous myth. Should Jean-Claude Trichet’s view, supported and imposed by rightwing political thinking from such strong economies as Germany, not be challenged, the misery, the poverty and the exclusion that will flow have the capacity to challenge non-functioning democratic institutions not just in the European Union but globally. Indeed, such a challenge may be morally required.

Michael D.Higgins is President of the Labour Party and Spokesman on Foreign Affairs