Thursday, 22 December 2011

ECB Loans, Three-Card Tricks and the Dangers of Relative Non-Autonomy.

Chris Dillow claims one feature of the crisis of the Eurozone is that 'the markets' have given up on politicians' capacity to solve problems which, in principle, he claims are soluble (his own range of possible solutions are presented in shorthand here). I'm not so sure - not because I have any greater respect for the key politicians involved in all this, but because I'm increasingly beginning to doubt the sense of counter-posing 'politicians' to 'markets'.

Alphaville has an exceptionally clear post up explaining the recent c£500bn loans the European Central Bank (ECB) has offered commercial banks in constituent countries. It is, it appears, a backdoor way of encouraging the commercial banks to use this cheap money to buy up Italian and other sovereign bonds to thus avoid the need for a more obviously 'political' bailout by Germany and the 'hard Euro countries' of Northern Europe. Interfluidity explains in somewhat more graphic detail the purpose behind this:

"..if European states become dependent on bank finance, they become dependent on ECB finance. The ECB would have the power to manufacture fiscal crises for a misbehaving state at will, and with marvelous deniability. Laundered through banks and then through capital markets, ECB actions would be attributed to nameless bond vigilantes rather than unelected technocrats. ECB haircuts would very quickly be self-justifying, and disentangling cause from effect would be nearly impossible as officials might privately telegraph changes before anything is put in writing. Control would be hidden as a market outcome, a fact of nature."
 What this is, then, is a manoeuvre - a means of disguising political relationships between states* and classes as a relationship that is somehow 'neutral', technocractic and market driven. The major beneficiaries of this, it seems to me, are precisely those politicians who wish to disguise these relationships from their own electorates. It is another turn towards a declining relative autonomy of the state, to use a very old fashioned term, and a towards a closer melding together of big capital and formal state and quasi-state structures. 

There are dangers here for our leaders, systemic dangers. It's putting an awful lot of eggs in one basket. If the possibility of inflicting losses on 'sovereigns' is ever evaded - that, is if it proves politically impossible to impose the 'necessary' levels of cuts and tax rises on the population - not only countries but also the European wide banking system might go belly up. & setting up a relationship which is explicitly designed to counter-pose 'democracy' to 'the market' might not, in the medium run, prove a very sensible move for those folk currently running the system.

*Yes, I know the ECB isn't a 'state' - but it is surely the kernel of one, a future Europe of 'ever closer union' if you're an optimist, or simply the Greater Franco-German Co-prosperity Sphere if you're not.


  1. Sorry, I'm going to sound like the really dumb kid in class who always has his hand-up asking the teacher to explain it again.

    But, what this sort of means is that politicians have a choice to make: either they serve the markets or they behave like democrats and serve the people who elect them, isn't it?

    Take the Tories, though. They owe their parliamentary seats to the voters but their party is bankrolled by the city. Hhmmm, what to do?

  2. Hi Rab: seasons greetings and all the best from the toiling masses of Sarf Luhdun to the liberated socialist free zones of, er, the Ards Peninsula....

    Some background:
    1. As it says on the tin, this blog is about me gingerly re-considering the issues of my youth;
    2. When dinosaurs roamed the earth I did my undergraduate thesis on 'Marxist Theories of the State';
    3. Last week, whilst moving a pile of books from one place deemed inappropriate by Mrs Charlie to another she'll find inappropriate after Christmas, a copy of Ralph Miliband's 1977 'Marxism and Politics' fell into my hand. I hadn't opened it for years. But I'm re-reading it now. All very rum of course, and like a window onto a world and a set of operational assumptions which seem like a dream now. He makes the point that a state that wasn't relatively autonomous of the direct influence of Capital wouldn't be much use to it at all. It would be too obvious for one thing, and very much undermine the broadly shared believe in democratic process - and there would be no way of coordinating and harmonising differences within different strands of Capital. Now, you can accept or reject this view as you please - but for me it does seem interesting to look at the machinations around the financial crisis in the Eurozone through this prism. They're engaged in a high stakes and very risky political gambit which reduces state autonomy.

    Traditionally, European states have reduced each other's autonomy by, um, invading them. This didn't work out so well in the long run for just about anyone, thus we have the EU and now the weird sight of an attempt to deny that some states (or nationally based state-capital complexes anyway) are pushing others around through the apparently independent means of 'market'. I'm not sure either Miliband or Poulantzas dreamed of this in the seventies when they had their famous spat.

  3. Charlie,
    I too have been shifting books around under the instructions of Mrs Rab. We need to make way for the 20 guests coming for Christmas dinner. (I know, what were we thinking of when we sent that many invites out? Actually, we weren't thinking at all)

    Many of these books are from my undergraduate and postgraduate years, indeed, as with yours, a number informed by undergraduate dissertation, a scintillating discussion of identity politics as it pertained to Norn Iron in the 1990s. Alas, nothing in this literature is of any use at all when trying to understand the present crisis. So, while you say that you're own 'library' was formed when dinosaurs roamed the earth at least some of the material in it speaks to today's concerns. All my Stuart Hall, Judith Butler and Ernesto Laclau look really quaint. In fact, some of the stuff is just embarrassing.


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