Austerity is not incompatible with social unrest

26/04/2012 § 1 Comment

French President Sarkozy pulled back the curtain, briefly, then let it fall back. His statement, ‘Le Pen isn’t incompatible with the French Republic’, revealed his core consideration: power. Le Pen and her father before her marked the outer edge of French politics on the Right. The National Front wins small percentages of the popular vote, but its real function is to be the bit outside the ‘reputable’ Right. With this heavily-contested election and Sarkozy’s weakness, he is flailing around for any weapon with which to beat Hollande.

Sarkozy just moved the outer edge of what is acceptable. He has since retreated, but his statement can’t be unsaid.

It is a stark reminder that economics has ramifications for the real world. Keynes noted the same issue in ‘The Economic Consequences of the Peace’ after the Treaty of Versailles. That’s the potential failure of the technocratic, expert position: it fails to account for the impacts on and reactions of citizens. And then, it is blind to the reactions of politicians keen to hold onto power.

The success of Le Pen and Sarkozy’s subsequent reaction are symptoms of how people are reacting to the European economy. They are symptoms of people’s dashed expectations about well-being and fairness.

They are also analogous to the protests in Greece. They indicate a breakdown in larger social agreements. The economy rests on these larger social agreements. The economics literature likes to talk about ‘trust’, but it really is something more than that. It is expectations for the wider fair-play in society and the impacts on each person’s individual well-being now and in the future.

The difference between a normal recession and the present situation is this: people expect and live with normal recessions, even when they are personally harmed. There is a sense that, yes, things are bad, but either ‘that’s the way things go’ or ‘it’ll get better’. In the present situation — the Great Recession, the Lesser Depression, whatever you call it — Greeks, Spanish, French, and others are starting to say, ‘This isn’t right. This isn’t what I agreed to. I want — I demand — something different.’

The danger is that something different could be something worse.

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