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I’m sure you’ve heard a lot, too much even, about the economic crisis and how it affects the European Union. But in the short bursts of news, the larger picture usually remains hidden or misunderstood. I don’t claim to be an expert on the matter, but macroeconomics do intrigue me. They’re an incredibly fun complex system to try to comprehend and affect our lives much more directly than most imagine.
The latest piece of news is that the EU is deciding on another 15 billion Euro bailout of Portugal with extremely dim economic prospects and on the edge of default or quitting the Euro.
Portugal like a big elephant in the criris room
EU officials will hold a fresh round of talks in Lisbon this week to check whether Portugal deserves the next 15 billion Euro tranche of bailout. Experts say the future of the country worries investors even more than Greece.
via: rt.com
As usual, the problem lies in what doesn’t get said. That one of the principal forces behind the decision on the bailout is the Europan economic giant, Germany. Germany has benefited greatly because of the Euro, it’s true that it’s recent economic success has been in large part due to economic reforms and discipline they have pursued in the last 10 years. Kudos to them on that. It’s true, that more of European countries should be able to pursuit such a path with such rationality and efficiency. That does not mean however that only austerity is necessarily the right path in this moment when economies are in need of more stimulus.
While the German reforms and discipline are commendable, they are far from the only reason for their success. The dirty truth is that Germany profited greatly on the back of peripheral EU economies such as Greece and Portugal. How?
Had Germany had it’s own currency, it’s value would have risen on their good economic performance. That would have slowed exports as they would be more expensive elsewhere because of the higher price of German currency. Needless to say Germany is a very export-oriented economy. As Germany has had the Euro which has been held down by the poor performance of the worse performing countries it has kept the price of the Euro, down thus fueling the German economy. At the same time, that has harmed peripheral countries, because the currency was higher than it would have normally been, plus it enabled an overheating of the e.g. construction sector, due to low interest rates, tied to the Euro stability. You can read more about it in Jean Quatremer’s excellent blog Coulisses de Bruxelles (in French).
At the same time, the Germans insist on not issuing Euro-bonds to ensure the stability of the Eurozone and stable cheap credit for embattled countries. It’s true that it would have raised Germany’s cost of borrowing, but it pales in comparison in what they have gained with the Euro-fueled export boom.
Their policy of running around with a water gun trying to put down individual fires as they flame up is thus incredibly short-sighted. To continue with the fireman metaphor, they’re barely putting down small fires on their way to a giant gas tanker. Unsuccessfully.
It boggles my mind that they are so short to mid-term focused and cannot see that solving the Euro crisis with bold actions is in their long-term self-interest.
If we go beyond that, it’s also morally reprehensible in terms of building the European project. Where is the long-sightedness of German politicians in the after-war years. Where is the solidarity? Where is the Konrad Adenauer of modern times?!
Adam Smith, the well known 18th century author of The Wealth of Nations is today thought of as one of the core authors and proponents of free market capitalism. But while he did emphasise the commercial society, he was far from being the one sided zealot such as the current impressions suggest. I invite you to read the article Recovering Adam Smith’s ethical economics and gain a new appreciation for the work of Adam Smith. The topic is deeply connected with my recent article Freedom from freedom, on how the US is ideologically trapped in misinterpreted 18th century ideology.
I took a walk on the streets of San Francisco yesterday. It was Christmas day. I don’t hold much emotional attachment to the day, let alone religious one and I find the mandatory shopping sprees absurd. It would have been a day like any other had it not emptied the streets of the majority of it’s usual tenants, who were most likely celebrating Christmas at home somewhere in suburbia.
That void was filled with extra waves of homeless and insane people. Walking on Market street, the main avenue of San Francisco going straight through financial district, there seemed to have been more homeless and crazy people than the ones who were not. A lot of them murmuring to themselves, shouting at passers by, asking for money. I must have gotten asked for change at least twenty times on this short stroll. A lot of these people seemed like they simply needed treatment in a mental institution. But nobody made them go, let alone pay for the treatment. They should. Society should.
A society should be judged on how it treats its weakest members. These people on the streets hold a mirror to the American society. If its citizens see the real picture, not the one filled with empty rhetoric of “greatest nation on Earth”, the picture is deeply disturbing. I’m not saying we don’t have homeless people in Slovenia or Europe in general. Of course we do and we should all strive to do better, nut nowhere in my travels in Europe have I seen homeless and ill on the streets on a scale such as here. Mind you, United States are supposed to be one of the wealthiest countries in the world. They rank 7th in GDP per capita, adjusted for purchasing power parity. So the lack of means surely isn’t a problem, the ideology and the lack of will emanating from it are.
One of the core tenants of American ideology is freedom. It’s the buzzword of political campaigns. They export their concept of freedom worldwide, along with a host of other ideological underpinnings. Who could be against it? Freedom is always good and an end it itself, right? It’s not that simple and here’s how the American perception of it goes horribly wrong.
Freedom can be divided into negative and positive freedom. Negative and positive are not value judgments, but simply terms for different types of freedom. Negative freedom means freedom from something. Freedom from oppression, control, the freedom to do what you like, go wherever, speak whatever. It’s more focused on the individual.
Positive freedom however, usually comes from being part of a community, collective and the possibility of self-realisation in that community. It provides us with freedoms that come with a communal life, life in a society. We forfeit some of our negative freedoms in exchange for positive ones by living in a society. We give up our negative freedom in exchange for living in a society being protected by laws and other social norms.
To give a banal example, we could have the negative freedom to kill other people, but as societies can’t function that way, we have made social norms and laws deeming that unacceptable, and for forfeiting that negative freedom we get the positive freedom of being protected by those same norms and laws against us getting killed. Another example could be giving up the freedom of having sex with whoever for the benefits of a family life (nothing personal against polygamous arrangements, simply giving an average societal example :)). For more reading on positive and negative freedom (or liberty) check out the Stanford Encyclopedia of Philosophy and of course, Wikipedia.
How does that relate to the homeless people on the streets of San Francisco? Well there’s always a balance between negative and positive freedoms. Shift towards the extremes of negative freedoms and you get a Hobbesian world of “Homo homini lupus est“, meaning men being wolves to fellow men, a world of constant conflict among egotistic individuals. Shift towards the extremes of positive freedoms and you get a collectivist society where individual freedoms are trampled for the supposed benefits of the collective, sort of an Orwellian 1984 dystopian world.
The problem with American society is that it perceives freedom mostly according to the definition of negative freedom. The individualistic sense is very strong and that precludes the establishment of more community based mechanisms which would generate positive freedoms for its citizens. Positive freedoms emanating from solidarity and even long term self-interest, like guaranteeing people free education and healthcare. Picking up mentally ill people from the streets, curtailing some of their negative freedoms in exchange for the positive freedoms of care and being an active member of society.
On the other hand, American focus on negative freedoms has had some benefits in helping to produce a vibrant and dynamic economy. After all, I am here, raising funding for our enterprise, because there is a vibrant technology and investment ecosystem here. But that ecosystem exists as much as a result of negative freedoms of enterprise free from disruptions, as of the positive freedoms of establishing a legal framework of fair competition and society actively investing in its development (Silicon Valley can trace a lot of its roots to government military research).
My point in all of this is that the United States have missed the balance and lean too much towards the negative freedoms. The result are homeless people on the streets and a host of other issues who would not have to exist on such as scale had some more pragmatic reason been applied. The loss of some negative freedoms could be minimal compared to the positive freedoms gained. American people are being presented a false choice of freedom versus no freedom. Cling to outdated or misunderstood 18th century ideals at your own peril.
Governments around the world are mostly clueless about how to deal with the changes that the internet is bringing and even more clueless about where all this is heading in the long run. A point made excruciatingly clear by Sarkozy’s naive speech at the recent eG8 summit. Those misapprehensions then result in dysfunctional and counterproductive legislation like HADOPI which invariably results in failure. Civil society on the other hand is more empowered than ever by internet and changing radically to adapt to new realities. It’s fun and inspiring to think where all this is going, so I wrote an article about it, including some funky new examples like Bitcoin. It was originally written as a university assignment, hence the un-blog-like style.
With the growing complexity of modern society also grows the need of people to organise outside of the existing, and sometimes too rigid, organisational structures. Due to the continuing expansion of global interdependence this need is being ever more fulfilled in a global framework, less bound by regional and national borders than ever. Thus, international civil society and the organisations that constitute it have been on a great rise in the past few decades. From the humble beginnings of only a few such organisations at the beginning of the 20th century, past about 5000 such organisations in the mid 1970s we have come to almost 25000 international organisations in the year 2000 (Anheier and Themudo, 2002). Yet most of these organisations, although international in scope, still think in terms of a sum of nations and not fully embracing the evermore global viewpoint from the start. As an example of such thinking let’s point out United Nations’ system of economic statistics called the System of National Accounts (SNA). As Anheier, Glasius and Kaldor (2001) point out: “Adding the gross national product of all national economies of the world’s 180 plus countries would yield the approximate monetary value of global economic activity. Yet this value would not be the same as the size of the globalised economy, nor would it be identical to the value of the total international economy.” While the United Nations are not the best example when we talk about civil (therefore non-governmental society), it illustrates the kind of thinking that is typical for the old type of international organisation.
Organisational development
My hypothesis is that the vast majority of international civil society organisations will not only have to switch to a more modern and global viewpoint to stay relevant, but also adapt a more flexible and decentralised organisation model. Organisations of all types (governments, companies, NGOs) have already went through an extensive evolution of their institutional forms. The first phase was identified by Max Weber in 1924 (Anheier and Themudo, 2002) as the full development of the modern bureaucracy with its hierarchical order, predictability, stability etc. The second phase in the industrial era morphed the organisational structure in a slightly more horizontal shape, with organisation along the lines of functional activities (e.g. accounting, research & development, production…). The third phase that we are witnessing in organisations now brought the network type of organisation. Network organisations are more fluid and decentralised, with greater autonomy of it’s constituent parts. Therefore there is also greater power equality among the parts of an organisation and the hierarchical structure is flatter. This type of organising can be even more pertinent to international organisations due to differing conditions on the ground locally and fast changing circumstances which call for greater autonomy. The more centralised manner of decision making also carries with it a large time penalty which can seriously affect the operational capability of a diverse international organisation.
Enhanced ways of international organisation with the internet
While many international organisations have adopted the network principle to their benefit, we’re beginning to see new types of global organisations take take the principles of network organising to the next level.
The key element that enables further decentralisation, flexibility and fluidity is the internet. It enables organisations to adapt to circumstances in real time, bypassing long procedures typical for centralised organisations. They are able to do that because communication is instant and can also be delivered to greater number of people simultaneously. While all civil society organisations of this type use the internet to their benefit, their scope as well as type of activities varies greatly. Some only use the internet as a communication tool in a local or regional scope to organise on the ground activities. Others utilise it in a more global scope, but again with the aim of organising activities that involve physical presence. Fine examples of such practice are the many revolts in the Arab world which were greatly aided by the tools of online organisation, but ultimately achieved with on-site protests of people who were in part organised and motivated using internet-based tools.
Online-based communities and the weakening of the nation state
But there is also a new type of civil society that takes this concept further. We are talking about purely internet-based communities where almost all the communication, as well as the actions of the community or organisation are carried out online.
As with the rest of civil society, internet communities are based on the shared interests of their members and the causes they wish to advance. While they occupy an entire spectre of organisational arrangements, it is safe to conclude that most are very decentralised, some to the point of seeming anarchic.
Since they are based online, the physical location of individual members is often of little importance. Never in human history has physical location carried so little weight as it is able to in this type of online-based civil society. This delocalisation will prove revolutionary in the long term as it turns on its head the basis of organising of our society. All human societies so far have been based on the principle of locality, or better said, territoriality. The State is founded on the principle of territorial sovereignty, the ability to establish a monopoly of violence on a certain territory, the ability to collect taxes, to impose legislation etc. Once every person has the ability to partake in civil organising that is not based on location, the state loses in its importance and has to surrender many legal monopolies it currently holds.
This is made possible by the decentralised nature of the internet which limits the State’s coercive power which is much more effective in the physical world. At the same time the state is so dependent upon the internet that it cannot throttle it in a meaningful way without drastically hurting it’s economy and everyone who depends on it, i.e. everyone. The internet is therefore truly a democratising force to be reckoned with, but its contribution to democratisation on a national level, like with the Arab revolutions or empowerment of national civil society groups, is only a short to mid-term effect. In the long term, save for some large catastrophic event, the internet will most likely lead to democratisation on a global level, with the weakening of nation states in the process. It is also very likely that various kinds of global communities and organisations which constitute the global civil society will gain in importance, as they will be the ones facilitating the changes. This may seem far fetched and it is important to keep in mind that these are long term processes.
Free software movement
Let us therefore take a look at some mostly internet-based civil society movements that reveal the trends that lead towards a more delocalised world. First, it’s important to point to the Free software movement, based on the hacker culture of the 1970s and philosophically and institutionally framed by Richard Stallman in 1983 with the GNU Project and the Free Software Foundation in 1985. This movement helped cement the principles of sharing and community contribution in the software community. That is hugely important as that spirit still fuels the rapid communal development of software that is an important factor in the decentralisation of all types of public activity and is itself produced in a decentralised way. This type of approach to intellectual property ensures the preservation of civil liberties that would probably not have been possible had only proprietary software existed. Most of the internet infrastructure today relies on open source software in one form or another and it would probably be fair to say, that the nature of the internet would be quite different today had the Free software movement never existed.
Bitcoin – monetary democratisation or threat to sovereignty?
A second example of a civil society community, based on online collaboration and the principles of open source software is Bitcoin. Bitcoin is the first truly digital currency. It is a currency that is not based in any nation state, only exists on the internet and in no physical form. There is also no central bank, other than the open source algorithms that power it. It is freely interchangeable with other currencies and can be used as a method of payment on a growing number of e-commerce websites. Most importantly, it’s transaction network is peer-to-peer based, transactions are encrypted, cannot be traced and the open source code on which it is based ensures that anyone can verify that the encryption is valid and that backdoors for e.g. governmental agencies do not exist. The project was started by a Japanese man who contributed the idea and the first algorithms. His identity has never been completely verified since no one involved with the project has ever actually met him in person. The running of the project is now being continued by the community with programmers and users from all over the globe. The pattern for this type of online community project is abundantly clear: decentralised, community based, almost exclusive online presence, completely delocalised. Yet this is only one case, and numerous projects such as this exist and the numbers are growing each day.
Bitcoin is a great example because it clearly illustrates the results of work of an global civil society organisation of the new type which we discussed above. Best of all, it demonstrates the impotency of nation states when their territorial currency is being encroached upon. Bitcoin has not yet gained in popularity to really get on the radar of nation states (except for some recent CIA interest). But even when they do try to prohibit it in the future, there is no effective way for them to do it. They can of course make it harder for people to use it with some local regulations, but due to the decentralised nature of the internet, there will always exist a way around it, even-though it may mean jumping through a hoop or two more. Even in the hypothetical chance they would be able to block it, how will they be able to block all the new alternative digital currencies that would appear to take its place?
That is why the global civil society organisations of its kind are likely to increase in importance in the coming years and command an ever larger presence in global governance. Naturally, they will keep evolving and will have to somehow institutionalise to preserve stability, predictability and other Weberian positive qualities, but even so, they are unlikely to end up looking like the international organizations of yesterday.
Sources:
Bitcoin official site http://www.bitcoin.org/
Bitcoin Wiki https://fr.bitcoin.it/
Helmut Anheier, Marlies Glasius, Mary Kaldor (2001) Introducing Global Civil Society.
Helmut Anheier, Nuno Themudo (2002) Organisational Forms of Global Civil Society: Implications of Going Global.
Jeroen Van Laer, Peter Van Aelst (2009) Cyber-protest and civil society: the Internet and action repertoires in social movements.
Richard M. Stallman (1985) The GNU Manifesto.
What happens when you apply basic usability principles to how public administrations operate.
