POOR’s SHOW

Ever since the decline of European Socialism in the 1980s and the collapse of the Soviet Union in the ’90s, capitalism has considered itself king of the world and has behaved accordingly. In Britain especially, the triumph of capitalism has been celebrated by successive governments, whether Conservative or nominally Labour. Under the spell of the Chicago school of economic theory, Margaret Thatcher played a key role, greatly accelerating the switch from a manufacturing to a service economy begun by Harold Wilson and James Callaghan. This switch was in part motivated by a desire – yelled by Tories, whispered by Labour – to “smash” the unions that had, in the Westminster demonology, “held the country to ransom”.

This melancholy history reaches its latest chapter in the exercise of the veto by David Cameron at the European summit that was designed to save the euro, the Eurozone and indeed the national economies of the member states. Cameron’s sound-bite summary, parroted endlessly by ministers, is that he stepped out of line “to protect the national interest”. Even were that the whole story, it hardly presents Britain as a welcome player in a mutually beneficial alliance of nations, as communitaire.

But of course his stance does nothing to benefit you and me. Cameron’s only desire has been to protect the interests of the city, which is to say the interests of his party’s paymasters. The banks feared new regulation from Brussels. Cameron claims to intend to impose his own regulation but we will believe it when we see it – don’t hold your breath.

There is nothing in these quixotic dramatics that bodes any good for Britain’s dwindling manufacturing sector, or indeed for our export drive and hence our growth prospects. And as for realpolitik, it is a blunder of astonishing puerility. If the Eurozone does not quickly recover its equilibrium, Merkel and Sarkozy will persuasively blame Cameron. If the Eurozone climbs back onto its feet, no one will thank Cameron and it will occur to no one to reward Britain with increased trade. It’s a lose-lose result. As former President of the European Commission and Italian prime minister Romano Prodi put it, “Britain has gained freedom and lost power”.

The financial sector continues to bewitch politicians, not just in Britain but across the globe. In Durban, the climate change talks inevitably reached the conclusion that international short-termist capital wanted: ineffectual muddle. Despite menacing and even sometimes angry noises from governments, the money markets continue to enjoy a lack of supervision that must make the black economy green with envy.

Why is this? Is the path being made smooth by under-the-counter “considerations”? Or is the general run of ministers too finance-illiterate to know how far the speculators and their accountants and lawyers are taking them for patsies? Why is it that nothing uttered or threatened by banks and financial consultants is taken with a whole sackful of salt? Do politicians not understand that, of all the lobbyists and vested interests with which they deal day in and day out, the city is the most powerful and the most sophisticated, with deep enough pockets to set any hare running, however fantastical, and confidently to expect the desired outcome?

Consider the credit ratings agencies. The best-known, largest and most powerful is Standard & Poor’s, but there are others: last month, the US government tripled the number of such agencies that it recognises. S&P’s has been busy of late. In August, it set the markets on their ears by downgrading the United States from its triple-A rating, the topmost rung. A couple of weeks ago, it downgraded France’s rating. And on the eve of the Eurozone summit, it declared that it was considering the ratings of fifteen of the member countries of the eurozone. These credit ratings determine the cost of governmental borrowing. Downgrading a nation’s ratings heaps vast extra expense on that nation’s costs.

So who are these people at Standard & Poor’s? Why should anybody pay them heed? Well, S&P’s finds its origins in charting and invigilating the books of America’s railroads. For getting on for half a century, it has been part of the portfolio of the dynastic publishing conglomerate McGraw-Hill. It makes its home in Manhattan, a short hop from Wall Street.

It’s important to note that S&P’s is just down the road from the speculators. It is not based in St Patrick’s Cathedral. It is not the voice of god. Nor is it infallible, as Archbishop Dolan would doubtless decree if it were indeed emanating from the Archdiocese of New York. Commenting on the agency’s musing-aloud about the Eurozone, The Wall Street Journal (prop: Rupert Murdoch) noted: “Less than five months after it made its dramatic decision to downgrade the biggest economy in the world, S&P’s has again put itself in the hot seat”.

Despite the ratings agencies’ edicts being unveiled by the news media as if they were carved in stone, these pronouncements are not only the frequent subject of dispute but also sometimes agreed even by the agencies themselves to be mistaken. For instance, Standard & Poor’s conceded a $2trillion error in the calculation that led it to downgrade the US rating. That ain’t peanuts. Perhaps to save a little face, S&P’s cleaved to its downgrade in spite of the error. But it speedily reversed its downgrading of France after the Élysée angrily rebutted the basis for the decision.

A long-term agency decision has occasioned a damaging disenchantment with credit ratings across the world’s markets, especially those in Europe. This was the maintenance of Greece’s status as a good risk for several years before the habitual imprudence of successive Greek governments was finally recognised in 2009 when the country had already experienced several months of civil unrest. Greece’s most supportive agency was Moody’s, another of the so-called Big Three in the credit-rating market (the third is Fitch). Moody’s, be it noted, was being paid half a million dollars a year by the Greek government. How far does a fat cheque condition the fixing of a favourable rating, do you suppose?

I repeat that the ratings issued by the self-appointed agencies do not have the force of either moral law or statutory application. They only become powerful because powerful people pay them heed. I do wonder what exactly constitutes the appeal process against a rating that costs a nation many millions of dollars in increased charges on national debt. Could a government sue an agency for damaging its economy and its freedom to trade? Is it possible to gain reparation for agency findings that impacted the finances of enterprises and individuals? After all, the agencies played a leading and inglorious role in the collapse of the American subprime mortgage market that led to the US government taking over the two leading government-sponsored enterprises in the mortgage field, popularly known as Freddie Mac and Fannie Mae.

The overarching problem with the world of financial services is that everything therein is driven by subjective readings of more or less subterranean manoeuvrings. We are routinely told that the markets are “nervous”, that capital is “in flight” from this or that enterprise, that traders “don’t like” this or that enactment of governmental policy. Those of us who live in a rather starker world of fixed prices and incomes, plying our various trades according to what we can get rather than what we would ask, are apt to lose patience every time the city is in the news. “Man up” we think, reluctantly using a phrase that the boy racers of the markets will perhaps understand.

Why is the security of national economies allowed to depend on the whims of consultants and speculators who anyway have their own axes to grind and who, for all we know, are delivering their verdicts with only the lining of their own pockets in mind? Regulation? We should elect a few governments who are ready to tear down the paper castles of the financial sectors and instead dedicate national economies to the welfare of the people. We should expect our representatives to reclaim what used to be called “the commanding heights of the economy”. Oh dear, I think I may be calling for a revival of Socialism.

The INCONTINENT of EUROPE

“England has saved herself by her exertions,” William Pitt the Younger once declared, “and will, as I trust, save Europe by her example”. As William Hague is something of an expert on Pitt, it surprises me that the Foreign Secretary has evidently yet to point out this superior remark to his leader. That David Cameron sees himself as saviour of Britain by exertion and Europe by example is surely the least part of his self-image.

As a political issue, the management of Europe is never as straightforward as it is deemed to be by those, each as passionate as the other, who espouse or decry the Union. The calamitous G20 summit in Cannes – planned as a great pre-election showcase for Nicolas Sarkozy who is far from assured of winning a second term – left the French president impatient, frustrated and (perhaps worst of all, given his electorate) graceless.

Sarkozy: harrumph

Much (but not all) of the source of Sarkozy’s malheur was the so-called Greek tragedy, wherein the charming and urbane prime minister, George Papandreou, eventually decided (wisely, you might think) to hand on the reins of a bolting crisis for that part of the euro that was once called the drachma.

Ever-genial Papandreou

Meanwhile, the basso buffo of contemporary Europe, Silvio Berlusconi, has said he will go, but (at the time of writing) clings to the wreckage of the Italian economy, having spent the past few years fiddling (evidently with under-age prostitutes) while the Via XX Settembre HQ of the Ministry of Economy and Finance burned.

Berlusconi: the latest official photograph

A week or two earlier, Cameron suffered the humiliation – I don’t think the term is too strong – of a rebuff from very nearly 80 of his own backbenchers over the offer of a referendum on Europe to the British electorate. Cameron, his coalition allies and the Labour opposition are against such a referendum precisely because they all fear that the electorate would vote to opt out of the European Union. It sticks in many a craw, not just those of little Englanders, that Cameron was passionately advocating a referendum on the Lisbon Treaty just two years ago when leader of the opposition.

The Ministry of Economy and Finance in Rome

Referendums on European Union issues have proved treacherous. The new European Constitution, signed into being in Rome in 2004, had to be abandoned once it had been repudiated by Dutch and French voters. The ratification of the Lisbon Treaty was delayed for a year because of an initial rejection of it at a referendum in the Republic of Ireland. And it was Papandreou’s unexpected proposal of a referendum on Europe’s package of measures to tackle the Greek deficit that threw his fellow Eurozone leaders into panic and brought his own premiership to an end. As Israel’s allies could not disguise when the Palestinians elected Hamas, democracy is fine (even in its Greek cradle) so long as it produces the result you want.

On Europe as on so many issues, Cameron is an opportunist rather than an ideologue – what Harold Wilson called a pragmatist. While this is seen by some as a usefully light-footed approach to the “art of the possible” nature of government, the PM does find himself surrounded by ministers and backbenchers who, when push comes to shove, have no intention of trimming on the matter of Europe.

Cameron: I see no Euro-rebellion

Just as the name of Calais would, she averred, be found inscribed upon the heart of Queen Mary, so the names of Brussels, Luxembourg and Strasbourg might well be found slashed onto the pericardium of the Conservative Party … if, that is, the party actually ran to a heart. Most Tory Prime Ministers since the War – Churchill, Macmillan, Heath, Major, Cameron – have been rather more communitaire than large sections of their party and have found this dichotomy to be a running sore, never healed.

The only Tory PM close to anti-European Union backbench opinion was Margaret “no, no, no” Thatcher who summarised her view in the notorious Bruges speech of 1988: “To try to suppress nationhood and concentrate power at the centre of a European conglomerate would be highly damaging and would jeopardise the objectives we seek to achieve”. Her speechwriter (Sir Ronald Millar?) will have chosen the word “conglomerate” to allow his boss to express her scorn. A mere four years later, non-smoker Thatcher was hired at a reputed million dollars a year as “international political consultant” to tobacco giant Philip Morris which, with its beverage-to-processed cheeses portfolio, is nothing if not a conglomerate. But irony is the abiding humour under which European affairs are conducted.

This bizarre image is allegedly of a pre-Eurosceptic Thatcher

Anti-Union sentiment is widely encountered across the member nations. A primary engine of that sentiment is undoubtedly an admixture of xenophobia and racism. If nationalist parties throughout the world have one instinct in common, it is suspicion of and hence hatred for their nation’s equivalent of Johnny Foreigner. This is clearly true of English nationalist parties of varying degree of disreputability. Interestingly, it seems very much less true of Scotland where, although contempt for the English often runs white hot, attitudes to continental Europe are considerably more benign. This may well be a product of the “auld alliance” with France that has held sway in varying degrees for upwards of seven centuries.

Suspicion and hatred can readily be traced back to ignorance. As one who feels perfectly comfortable in the company of any race or nationality, I generally account myself a citizen of the world rather than of England, Britain, the UK or Europe. (Conduct, class and creed are altogether a different consideration). But an instinctive scepticism about Europe, if deplorable, is entirely comprehensible. Such multi-national comfort is perhaps relatively rare.

My own instincts favour continuing to be a part of the European Union. Those instincts suggest that withdrawal would prove a disaster for Britain’s trading position and for those hard-won rights and entitlements that are underwritten by European law. The menaces being made by the Tory half of the coalition against the European Court of Human Rights, for instance, make me even surer that I want us to stay in the Union.

The anti-Europeans have never, to my knowledge, made any coherent economic case for the UK’s departure from Europe, probably because there is no such case. Relying on horror stories about bureaucratic foibles reported in the Daily Mail is not a credible substitute. The most honourable living anti-European, Tony Benn, has (it seems to me) moderated his opposition in recent years or at least found other, more compelling campaigns.

But the anti-Europeans are not alone in failing to make a case that resonates intellectually. I have waited some fifty years to hear an argument that I can fillet and reproduce on behalf of the case for a European role for Britain. I have still to hear it. It is as though the pro-Europeans believe that, to coin a phrase, mere “common sense” makes the case for being in Europe.

The ever-pensive Roy Jenkins

Perhaps it is a prejudice about the supremely pro-European British politician of the modern era, Roy Jenkins, that leaves me feeling that communitaire means in its essence no more than the favouring of Dante and Schiller over Norman Mailer and Jacqueline Suzann, Velasquez and Van Gogh over Andrew Wyeth and Roy Lichtenstein, Dvorak and Sibelius over Edward MacDowell and Nico Muhly, Gewürztraminer and Pont-l’Évêque over Jack Daniels and Chicken McNuggets (you see how brutal are the terms of battle). The suspicion remains that the pull of the Old World commands a sentimental clout that “civilised” people cannot resist. Robert Hughes’ unbeatable description of the “cultural epiphany” that Europe represented for 19th-century Americans catches it exactly: “six weeks of vomiting at sea, and then – Chartres”.

Jenkins’ well-attested penchant for claret was, I assume, not the sole motor for his rise to the Presidency of the European Commission, a role he played from 1977 to 1981. During his tenure, the articles that led to the creation of the Eurozone were put in place. But also during his time in Brussels, Jenkins began to float an alternative to both the Labour Party (his ancestral home) and the Liberals, with whom he had not previously been known to flirt. His Dimbleby Lecture of 1979, entitled (disingenuously, one might think) ‘Home Thoughts from Abroad’, laid down the ground on which was built the new Social Democrat Party, subsequently set up with three other refugees from Labour: David Owen, Shirley Williams and William Rodgers. The most significant mission to unite the so-called Gang of Four was a commitment to the European ideal.

The Gang of Four: Rodgers, Owen, Jenkins, Williams

The SDP survived as a separate political entity only for seven years before merging with the Liberal Party (which is why that party is now known as the Liberal Democrats). It would be hard to argue that anything of the SDP’s much-vaunted “breaking the mould” still may be detected in Nick Clegg’s Lib Dems. Doubtless the Liberals would function as the Euroconscience of the present coalition government even if the SDP blip had never come about.

Meanwhile, those of us who sense – I cannot in conscience put it stronger – that Europe is where the UK ought to be still await Clegg, Cameron or some other European advocate making a case that we can understand and carry triumphantly against the xenophobes, Little Englanders and sceptics. It’s not a big ask.