I often make the point in talks that the fictional world that mainstream economists promote…
I have just finished reading a report published by the Transnational Institute (TNI), which is an “international research and advocacy institute committed to building a just, democratic and sustainable world”. The Report (published November 19, 2018) – Democracy Not For Sale – is harrowing, to say the least. We learn that in an advanced European nation with a glorious tradition and history an increasing number of people are being denial access to basic nutrition solely as a result of economic policy changes that have been imposed on it by outside agencies (European Commission, European Central Bank and the IMF). The Report shows how the food supply has been negatively impacted by the austerity programs; how food prices have been forced up at the same time as incomes have been forced down, and how collective and cooperative arrangements have been destroyed by privatisation and deregulation impositions. The Report concludes that the Greek State and the Eurozone Member States violated the Greek people’s right to food as a result of the austerity measures required by three Memorandums of Understanding (2010, 2012 and 2015). In other words, the austerity packages imposed on Greece contravened international human rights law. Not one person has gone to prison as a result of this deliberate and calculated violation of human rights.
You can have various levels of commitment to this:
1. Full Report – 90 minutes reading time.
2. Executive Summary – 5 minutes reading time.
I recommend the full report because it is a very comprehensive statement of what has gone wrong with the Eurozone – from a grassroots perspective.
It does not present the usual critique that I make regularly – at the macroeconomic and monetary level.
It deals with our conception of human rights and basic human dignity.
It forces one to ask questions such as:
How many officials in the Troika, who are comfortably ensconced in their well-appointed offices in Brussels, Frankfurt, and Washington, who regularly drink fine wines and eat sumptuously at official gatherings, conferences, talk fests, who jet around the world and Europe as if there was no tomorrow, have gone hungry as a result of the policies they forced on Greece?
It is a real question.
My answer: not one of them.
I have been to European Commission functions. I have seen the massive food and wine excesses that are served up there to participants. It is a world that is far away from the realities that their mindless policies inflict on people in regions of Europe.
The TNI Report brings this home in stark relief.
Employment as a human right
Early on in my career I wrote about why an empirically based, experiential notion of human rights suggests that governments are violating the right to work by refusing to eliminate unemployment via appropriate use of fiscal deficits.
In several published pieces (some listed below), we argued that mass unemployment is not compatible with fundamental human rights in that unemployment denies those affected access to income and hence participation in markets, it reduces the opportunity for advancement and stigmatises those affected, and violates basic concepts of membership and citizenship.
Without the right to work, afflicted individuals are denied citizenship rights as surely as they were denied the right of free speech or the right to vote.
As long as employment is not considered to be a human right, a portion of the community will be excluded from the effective economic participation in the community
This work drew on a long tradition about the concept of work as a human right, which spans the ideological domain and can be traced back over the past 300 years.
The conclusions that we drew were:
- There should be a right to work.
- This right should be a statutory right.
- The State should bear the responsibility for implementing this right.
- Access to work should not be conditional.
- The right to work and a full employment policy are inexorably linked.
- A full employment program – the Job Guarantee – encompassing the right to work, can be implemented which also guarantees price stability.
Some of my published work on this topic:
J. Burgess and W.F. Mitchell (1998) ‘Unemployment, Human Rights and a Full Employment Policy in Australia’ Australian Journal of Human Rights, Vol. 4, Issue 2, 1998 – Download.
J. Burgess and W.F. Mitchell (1998) ‘Unemployment, Human Rights and a Full Employment Policy in Australia’, in Melinda Jones and Peter Kriesler (eds.), Globalisation, Human Rights and Civil Society, Prospect Press: Sydney – Download.
J. Burgess and W.F. Mitchell (1999) ‘Unemployment, Human Rights and a Full Employment Policy in Australia’, Centre of Full Employment and Equity Working Paper 99-03 – Download.
I summarised that body of work in this blog post – Employment as a human right (June 29, 2017).
We argued that work as a human right can be justified in a number of ways:
1. Labour income constitutes the major income source for the majority of individuals and households. Without income, ability to participate in a market economy is curtailed. This is why income support mechanisms developed for those who are unable to work (aged pensions, sickness benefits, etc).
2. Access to income also governs access to other rights, including minimum requirements of clothing, food and housing. In this regard, paid employment shares a direct relationship with food and water as a requisite for subsistence in many societies.
3. Having paid work enhances the choices available and the opportunities for advancements. The unemployed are often prevented from accessing credit, which limits their consumption possibilities.
4. While the choices of the unemployed are constrained by their lack of income, their exclusion goes beyond this. They are not accorded the status attached to employment and they make no contribution to market activity; the barometer of worth in a market economy.
The TNI Report focuses on all of these points but especially takes up the issues under Point 2 – access to other rights, including food.
The neoliberal dehumanisation process
One of the hallmarks of the neoliberal period has been to progressively dehumanise economic policy and its impacts.
In part, an undergraduate student of mainstream microeconomics falls into this pattern of thinking quite early.
They are confronted with infinitely-lived agents (yes, people) who roam around exercising free choice and are continually attaining ‘bliss points’ where they maximise their utility (satisfaction).
If you are starving, then you have freely chosen not to work, or have freely chosen not to stay at school long enough to get a high wage, or you have freely chosen to be promiscuous too early in life and have too many children and so on.
There are themes that stem from this – such as, young women who apparently f*ck their heads off to build up a fleet of kids so they can maximise their welfare payments – I am being serious here – this theme regularly emanates from conservative ranks in Australia as part of a campaign to deny single mothers pension access.
All of this free choice and bliss is disturbed by government or trade unions who oppress individuals by limiting these choices.
So minimum wages are oppressive. Decent working conditions are oppressive. Pension support is oppressive.
That is the sort of biases that are implicit and less so in a mainstream economics indoctrination at universities around the world.
It is no wonder these students exhibit sociopathological tendencies by the end of their programs.
I last wrote about that topic in this blog post – Economics curriculum is needed to work against selfishness and for altruism (September 19, 2018).
This dehumanisation of people and the rejection of concepts such as society – so that we just live in economies that have their own logic – has been fine-tuned under neoliberalism.
In this blog post (among others) – How to discuss Modern Monetary Theory (November 5, 2013) – I wrote about framing and the way neoliberalism advances this dehumanisation notion.
The neoliberal view that is constantly paraded in the media is one where the ‘economy’ is removed from us and is a moral arbiter, which recognises our endeavour and rewards us accordingly. Those who do not work hard and sacrifice for the ‘economy’ are deprived of such rewards.
Our success then is somehow independent of the success of the economy.
If poverty rates are rising, the construction is that the person is just not doing enough for the economy rather than the economy failing, in its current operations, to do enough for us.
We are to blame for our own failures. They arise because we don’t contribute enough. How can we expect to be rewarded for a sub-standard contribution to the success of the economy?
Progressives get sucked into this narrative and offer up “fairer” alternatives within, for example, the austerity debate.
Prior to the advent of neoliberalism, we clearly understood that systemic constraints impinge on the choices made by individuals in society and rendered them powerless.
The systemic constraints overpowered individual volition.
Mass unemployment occurs when there is deficient spending in the economy.
And individual who is rendered jobless as a result of that deficiency can do nothing about it because even if they say to a prospective employer that they will spend all their wages on that employer’s products, they will still not elicit a job offer.
This is because there is a system-wide deficiency in sales that can only be obviated by government intervening and increasing its net spending.
Fiscal policy has to be understood in that context.
A particular fiscal deficit, for example, is a meaningless goal.
The fiscal balance will be whatever it is – in relation to our goals and the functional relationship that net public spending has in relation to those goals.
Fiscal deficits are neither good nor bad and are required where the spending intentions of the non-government sector are insufficient to ensure full utilisation of available productive resources.
If employment is a human right and our goal is to maintain human rights, then the responsibility of the state is clear and the fiscal positions it takes is the means to fulfill that responsibility.
It is quite simple.
1. The Government is Us!
2. The government is our agent and like all agents we cede resources and discretion to it because we trust that it can create benefits for all of us that each on of us individually cannot achieve. We understand scale.
3. Governments invest in our immediate well-being by providing essential services without the need for profit.
4. Governments invest in the next generation’s well-being through building productive infrastructure such as education and urban structures that deliver services for decades.
5. We empower governments with unique characteristics so that it can pursue our interests without the constraints we face ourselves.
6. We understand that a deficit for us means we have to find funds to cover it, whereas a deficit for our agent, the currency-issuing government means it is funding our spending and saving choices.
7. A government deficit enhances our freedom because it boosts our income and allows us more options.
But if one adopts a position that government is somehow a dangerous and oppressive force that has to be limited by fiscal rules that are divorced from the attainment of goals that actually advance well-being and the maintenance of human rights then we start the slide down the slippery slope that the TNI Report summarises in great depth.
And before we know it, people are starving and the foundations of democracy start to crumble.
A person imbued with a love of humanity sees children going without food, whereas a Troika official celebrates the fact that the primary fiscal surplus is growing and Greece is finally playing by the rules that Brussels enforces (selectively nonetheless).
That is the essence of this dehumanisation process.
Fiscal aggregates become self-fulfilling goals irrespective of the human cost.
Justifications are given about the long-run benefits while a generation of teenagers move into adulthood alienated and poorly equipped for the responsibilities that that phase of life brings to all of us.
And it gets worse not better but we saw the indecency of Troika officials celebrating the end of the third Memorandum of Understanding they imposed on a weak Greek government that ignored the democratic will of the people to reject austerity in 2015 election and the subsequent referendum.
The Greek people voted to end austerity and what they received from their government was a harsher austerity.
The government, of course, was just the puppet. The strings were controlled from Brussels and beyond, serving the interests of capital rather than the Greek people.
The TNI Report
The specific focus of the TNI report is:
… the impacts of austerity in Greece on the right to food.
So it goes to the very essence of humanity – our ability to eat and survive.
It concludes that:
… the Greek State and the Eurozone Member States violated the Greek people’s right to food as a result of the austerity measures required by three Memorandums of Understanding (2010, 2012 and 2015). In other words, the austerity packages imposed on Greece contravened international human rights law.
It provides great detail in the ways the enforced austerity impacted on:
1. Food producers.
3. The concepts of voice and participation in political decision-making – that is, democracy.
You can examine the detailed findings yourselves if interested. By way of summary:
1. “Austerity measures increased rural poverty and food insecurity – An estimated 38.9 % of rural citizens in Greece in 2017 are at risk of poverty” – this was driven by massively rising unemployment in rural areas (from “7% in 2008 to 25% in 2013”) and the commensurate drop in incomes.
2. “food prices increasing at faster rates than prices in the Eurozone during the crisis, despite the sharp fall in domestic incomes and labour costs”.
3. “Overall the crisis prompted a noticeable change in consumption patterns with the substitution of higher cost food items with more inexpensive foods.”
4. “Austerity measures impacted particularly severely on small-scale food producers and traders” – this was because of higher taxes on farmers and their inputs, the abolition of farm support schemes, privatisation of cooperative markets and farming cooperatives.
5. “A steady fall in domestic agricultural production and an increasing reliance on food imports that led to a negative food trade balance” – the three MOUs “accelerated these trends” by privileging “certain sectors of capital such as large (trans)national supermarket chains” over small-scale producers and cooperatives.
6. “The Greek government’s social safety net was insufficient to prevent food insecurity and poverty”.
7. “The right to food has been violated in Greece” – a range of austerity measures (rising taxes, cuts to social security, cuts to minimum wages, etc) have deprived the Greek people of adequate food access, as well as contravening “other economic, social and cultural rights, such as the right to work, housing and health.”
8. “Accountability for violations of the right to food rests both with the Greek government and the Eurozone Member States, with the latter arguably taking a greater share of the responsibility” – so there is no ambiguity here.
There were no “human rights assessments” conducted when the bailout MOUs were designed and imposed.
The Troika knew that their austerity measures would directly impact on food access and deprive a significant portion of the population of such access while driving them into poverty and neglect.
There is no ambiguity here.
The TNI Report implicates:
1. The Greek government – who were just lackeys to the Troika and deserve condemnation for their treason.
2. Eurozone Member States – who participated in the lending schemes under the MOUs.
3. The IMF.
4. The ECB.
The Report concludes that:
… its findings are relevant internationally. Greece is not an exception. Many other countries, in and outside of Europe, find themselves in similar situations, forced to implement austerity-driven, technocratic policies which lead to violations of economic, social and cultural rights including the fundamental right to food.
If you have read the Report in detail, you will surely conclude that this is an indictment of the neoliberal approach and the Eurozone in particular.
It beggars belief that technocrats, securely sitting in Brussels can destroy a whole nation in this way and then cheer because the fiscal surplus is rising.
But macroeconomic constraints have to be understood
A particular point that the Report touches on is worth considering in more detail.
Apart from the impacts of the austerity of food access and who is responsible for that austerity, the Report considers what they term:
Community-led popular responses provide real solutions and point to the emergence of a new food politics
I have written about these sort of community-based developments before under the guise of social entrepreneurship, although I would not want to lump the responses of the Greek people in this instance under that heading.
Please read my blog post – Social entrepreneurship … another neo-liberal denial (November 11, 2009) – for a discussion about the way neoliberalism distorts community action.
While the Greek initiatives documented in the TNI Report may not neatly fit into the ‘social entrepreneurship’ tag (and I don’t fit them into it), the point is that these type of movements share similar weaknesses.
The TNI Report writes:
In the face of Troika-enforced government policies undermining food sovereignty – and a failure to adequately ameliorate its impacts – a range of grassroots community initiatives have emerged to help secure people’s access to food.
These efforts have led to a framework being developed called the “Social Solidarity Economy (SSE)” with a massive rise in the number of “social enterprises … registered” between 2013 and 2016.
These enterprises range from:
… solidarity kitchens, food cooperatives, ‘No intermediaries’ markets, food self-sufficiency collectives and networks, Community-supported agriculture (CSA) schemes, as well as a range of other agricultural cooperatives, alternative farm models, and producers’ ventures.
So the Solidarity Economy aims to subvert the austerity via “popular resistance” combined with “a new, transformative, just food system” and is “challenging the structural power of the corporate agribusiness sector and advancing popular alternatives”.
Which on the face of it sounds progressive and worthwhile. And it probably is.
But the problem is that as an overall solution to the ravages of austerity – these individual, small-scale efforts are relatively limited.
This takes us back to the concept of macroeconomic constraints – the systemic constraints I mentioned earlier in this blog post.
The Social Entrepreneurship movement emerged in the 1990s as the unemployment rose and welfare systems came under attack from the neoliberal ideas that permeated Western governments.
A series of “solution packages” or separate policy agendas, begin with individualistic explanations for unemployment and accept the litany of myths about the fiscal capacity of governments (‘run out of money’ narratives) used to justify the damaging changes in the conduct of macroeconomic policy.
Full employment as we had known it was abandoned as a policy goal.
These ‘false agendas’ abstract from the real causes of the phenomena in focus.
By failing to ask the correct questions, these ‘solution packages’ then appear, on first blush, to have (undeserved) plausibility.
One such false agenda is the so-called ‘new model’ of welfare provision, popularly called Social Entrepreneurship (SE), which emerged in the 1990s.
UBI is another one of these false agendas.
SE was promoted heavily in the UK by New Labour under its ‘end of ideology’ Third Way agenda – where the claim was that class distrinctions such as Left and Right had become meaningless.
It was claimed that the Third Way approach took the best of both into a soft heart, hard head agenda – that is, be kind but impose the market on social problems.
The problem was that SE is infused with neo-liberal constructs and reinforces the abandonment of sound macroeconomic policy and the persistence of high unemployment and rising levels of underemployment.
So we saw a range of institutions (welfare providers, churches, etc) start pursuing ‘businesses’ as a way to make profits, to fund welfare support as governments cut back and/or made it harder for individuals to receive such support.
In ignoring these facts, movements such as SE adopt a characterisation of unemployment, albeit somewhat blurred, that is hard to distinguish from the mainstream claim that individuals make maximising choices and unemployment must reflect a preference for leisure over work – as noted above.
Further, the proponents of SE suggest that governments no longer have the fiscal capacity to deal with social problems and must seek fiscal rectitude to avoid insolvency.
In that environment, individuals have to be empowered with appropriate market-based incentives to look after themselves.
The failure of the SE movement to construct mass unemployment in macroeconomic terms – an inadequacy of spending – represents is its first false premise.
SE highlights local schemes or initiatives, but fails to understand that in a constrained macroeconomy the scale of job creation required is beyond the capacity of local schemes.
Please read my blog post – Social entrepreneurship … another neo-liberal denial (November 11, 2009) – for further discussion.
The point is that while many SE initiatives may produce beneficial outcomes at the local level they can never be sufficient to combat a system-wide constraint on spending imposed by a cautious non-government sector combined with an austerity-prone government.
By failing to address the constraint on aggregate spending that fiscal austerity creates and/or worsens and the implications of this for the state of the labour market, movements such as Social Entrepreneurship ignore the main game.
While individual community endeavour might produce 100 jobs here and there … which are good and necessary … in advanced countries … millions of jobs are needed.
More are needed again in developing countries.
Small-scale entrepreneurial ventures cannot ease a macroeconomic constraint on aggregate demand coming from an inadequate sized fiscal deficit.
Now the problem in Greece is a version of this.
The concept of a Social Solidarity Economy (SSE) is all well and good – and I am not decrying its motivation at all.
It comes out of the desperation of hunger and a lack of hope and reflects the goodwill that people have for each other when they embrace collective action.
All robust societies should be built on that sort of collective will and solidarity.
But to think it will be able to avert the massive constraint on the economy imposed by the fiscal austerity is a pipe dream.
The situation in Greece as conveyed in this Report tells us that the Troika have adopted a sociopathological approach to humanity and economic policy.
There simply is no justification for well-fed and well-paid technocrats to use their financial might to destroy the viability of a nation and the fabric of its society in the name of a fiscal target!
That is enough for today!
(c) Copyright 2018 William Mitchell. All Rights Reserved.