As Rishi Sunak prepares his first budget today, an ‘unexpected’ stalling was reported in British economic growth in January.
In point of fact the accompanying data show a slowdown since the autumn of 2019. But the notion of a setback has only been generally reported this week – and almost exclusively as a consequence of the corona virus epidemic.
So, while he and his Cabinet colleagues bask in their
government’s political summer, Sunak faces one of the worst economic situations
I can remember. Three – or maybe
three-and-a-half – major factors are converging to bring Britain down over the
next year or so. The emerging pandemic
is only the latest of them.
Three factors converge to bring Britain down
The first dates back over ten years to the banking crash in 2008, when the authorities relied on ‘quantitative easing’ (QE) – a huge expansion in the money supply – as its main response, while doing little to prevent a repetition of the excesses of hedge funds and financial derivatives which led to the crash, or reduce the accompanying high levels of private indebtedness.
Since QE began in 2009, the economy has never been strong
enough to put it in reverse, and it has been clear for many years that when the
next downturn came, the monetary authorities would have run out of ammunition
to tackle it. Private debt has continued
to expand, making the situation even more precarious than it was in August
2007, when the credit crunch initiated the great crisis.
In 2009 Gordon Brown’s government, to its credit, embarked
on an unfashionable ‘Keynesian’ policy of fiscal expansion to revive demand. Month on month, economic activity began to
recover – but it suddenly stalled again when David Cameron’s Conservative
government was elected in May 2010. The
new government slammed on the fiscal brakes with the 1930s-style policy of
austerity, leading to the last ten years of stagnation.
And so, to the first element of the banking crash and
excessive monetary expansion, the half-factor of austerity was added.
Then in 2016 came the EU referendum. General predictions of an economic reverse on
leaving the European Union were shouted down by Brexiteers as ‘Project Fear’ –
and they continue to be so. But the actual
shock of leaving has not been felt yet, as the UK remains in the Single Market and
Customs Union until at least the end of 2020.
But a foretaste is there in the GDP figures of the last few months.
Already an air of crisis
Nevertheless, there is already an air of crisis as the stock markets crashed on March 9th, 2020 – only two days before Sunak’s budget. The proximate cause is the non-economic fact of the gathering pandemic, reinforced by a collapse in oil prices after Saudi Arabia and Russia failed to agree on cutting output.
And that pandemic is Sunak’s third big reason to worry. And it is all that we are hearing from most
of the media about the pending state of the economy: the pandemic alone, the
rapid progress of which naturally causes widespread concern on its own account.
Despite the Bank of England’s 0.5 per cent interest rate cut
this morning, the authorities are in no position now to cope with any serious
economic reverse by their long-preferred means, as a result of QE. The only solution from macro-economic policy
is to reverse austerity – and renew the fiscal expansion which stopped dead in
its tracks just under ten years ago.
Even Johnson and Sunak seem to have understood that.
What does this mean politically for their new
government? Ten years of recovery from
the financial crisis (much faster in other countries than the UK) have already
lasted several years longer than most economic upturns, and a recession is
overdue. If it occurs – as seems more
than likely now – the conventional expectation would be that the government’s
popularity would slide.
But will it? After
all, Johnson, Sunak and Dominic Cummings have a ready excuse: the semi-fake
news of attributing it all to the virus which came over from China. The Remainers – or Rejoiners – might lose the
opportunity next year to demonstrate that their predictions about Brexit were
not fear-mongering at all.
The clamour will arise from Brexiteers that this is nonsense. An economic crash may have been predictable
well before the end of 2019, and yet when it happens they will say it had
nothing at all to do with Brexit, or even austerity: it was entirely due to an
Act of God.
A small corner of Europe celebrates Italy’s 1930s heritage
I am sitting on a shaded bench, almost alone in an Aegean public garden, happy to eat a couple of windfall mandarins in lieu of lunch. This nameless little refuge, near the harbour of Kos, is open for just three hours a day during the week.
In the corner, beyond the trees, is what looks like the foundation wall of an ancient stone building, unmarked and unexplained. Signs elsewhere suggest it was a Roman bathhouse, the North Thermae – one of several such places in the town.
Numerous similar town-centre plots were left open to the public for relaxation, and also for future archaeological work, after a devastating earthquake in Kos in April 1933. This delightful one was perhaps too small to be among the excavations carried out soon afterwards.
It should be no surprise to find ancient remains in Greece, but
I did not expect to see so much in a town which lives very well off the simpler
attractions of the sun, the sea and pleasure craft.
Besides numerous well-marked ‘archaeological parks’ in the central area, other small plots with ancient remains are scattered around the town, and open to the public all day. Many of them have no other indications, maybe because they were not excavated and therefore the nature of the former structures has not been identified.
But a huge amount of work was done between the big earthquake in 1933 and the outbreak of war in 1940. And the people who got it done were the Italian occupiers.
The earthquake destroyed the old town centre next to the castle and harbour, exposing the remains of an ancient town below it. In the authoritarian manner of Fascism, a new centre was built further away from the castle, leaving large areas to be explored systematically over the years that followed.
They include the agora, or forum, of the ancient town, which was founded in 366 BC and previously best known as the home of Hippocrates, the medical pioneer. It was one of the biggest forums in the ancient world.
They also found the old port, fortifications, a large gymnasium, a misnamed ‘Nymphaeum‘ (actually public lavatories with marble columns) and later Roman remains such as bathhouses and the 36-room house of an important citizen, which was partially reconstructed and is now a very well-arranged museum.
Next to that house, a Roman Catholic cemetery contains large memorials dated 2002, which commemorate – in Greek, Italian, English and German – 103 Italian officers who were executed on October 9th, 1943, in the early days of the German occupation of Kos. The Battle of Kos came one month after Italy had surrendered to the Allies.
Many splendid mosaic floors as well as statues, pots and coins were found here and there in Kos. Much of this is displayed in a purpose-built Archaeological Museum in the rebuilt town centre. Some of the ancient buildings were also reconstructed, at least partially, but they fell again under later tremors. For this is a major seismic zone: in Roman times alone, the town was hit by big earthquakes again in both 142 and 469 AD.
Offices for the Fascists
The replacement town centre was built in an elegant Italian style, with houses, shops and a surviving kindergarten, still in use as a primary school. A central square provided party offices for the Fascists on its west and a mosque on its east, flanking a fine market hall and the Archaeological Museum. All were designed by Italian architects.
But other, damaged mosques were duly demolished. A Greek Orthodox church, built in the centre only in 1932, survived that earthquake, but it too is now closed due to damage from a more recent tremor.
Besides that mosque I found no evidence of the long centuries spent under Ottoman rule – of Turkish residents or Islam – or even of the millennium or so Kos spent as part of the Byzantine Empire, ruled – as later by the Ottomans – from the city successively known as Constantinople, Byzantium and Istanbul.
If it was not obvious anyway, this all provides clues as to the Italians’ motives. Besides putting an Italian gloss on a distant corner of the Aegean Sea, these excavations redounded to the glory of ancient Mediterranean civilisation – and above all, the Roman Empire, which was central to Mussolini’s mythology. The town’s ancient Greek features were investigated as much as the Roman ones – but the latter, being more recent, were more accessible.
Job done – and then abandoned
All of the archaeological information about Kos can be read on numerous panels by the pavements, with descriptions in Greek and English and photographs taken before 1933 as well as of the 1930s excavations, accompanied by plans and artists’ impressions of the ancient buildings. Much of this excellent presentational work was financed by the European Union.
The panels lavish praise on the Italians – servants of a Fascist state – who rebuilt the town so painstakingly and imaginatively, and also set aside the archaeological zones and did the basic excavations.
Indeed it is hard to imagine any modern Far Right government embarking on such a civilised project even in its own country, let alone another one that it occupied. That seems to be the measure of how far the current Far Right’s horizons have fallen, even from the grim standards of the 1930s.
But there is another conspicuous silence: about the Greek state and its activities throughout the seven decades since it absorbed the Dodecanese Islands. In Kos there is a strong sense of a job done to the highest professional standards by foreigners – and then abandoned 80 years ago.
And yet what a centre could be made here for information and research, tracing the development of a major Aegean town through nine centuries of the Hellenistic and Roman periods, if only someone with suitable authority and enough money to dispense could take the initiative. Archaeological techniques have moved on a long way and it is a shame if they are not applied in this historic place again.
But no doubt many ancient sites await excavation all over Greece. After several years of enforced austerity, the country is probably in no fit state to take this any further for now.
Drafted in Kos, June
2019; edited and posted in Brighton, February 2020
A piece of juvenilia here! Below this, I have typed in a school essay I wrote in 1972, not long before my 18th birthday. Though the product of a teenage mind (with a major historical error in the second sentence), I enjoyed re-reading it and I think that overall it has aged pretty well. My teacher assessed it to be ‘very good.’
I think it is not just a period piece. Nearly half a century later, I am struck by two things in particular:
the way it chides politicians for ‘failing to see that it is this very sustained [economic] growth that has brought on many of our environmental problems.’ It is quite sobering that a schoolboy was able to see that so many years ago; and yet, as the crises of the climate and biodiversity deepen, most politicians and mainstream commentators remain ‘enslaved’ to the same baleful idea even now;
the fact that in Edward Heath’s Britain, it was also possible to write, in all seriousness, ‘that we are anyway moving towards socialism without revolution’ (and not receive any comment on this from my teacher!).
The essay’s title was chosen by the teacher – it is a quotation from a character in the novel we were reading in class. I offer the essay unedited, for whatever it is worth. It is the length of a newspaper opinion column.
‘I would scorn to be a slave, even to an idea’
– Joseph Conrad in Under Western
Human slavery has long been thought immoral by western
society. Feudalism in western Europe
died with the Middle Ages. Subsequently
peasants relying on subsistence farming may have been slaves to the land and
the weather, but they have not been at the beck and call of human masters. One has a degree of choice whether to remain
on the land or not, but to be treated as the thing of another man has been seen
as the denial of God’s great gift, free will.
All one’s human dignity, so important to Renaissance and
post-Renaissance man, is reckoned to have gone; one is humiliated. Hence the feeling that one ‘would scorn to be
a slave’ – it would be such a shame, a degradation, that one could not bear it.
But how can you be a slave to an idea? Slavery to a man comes when he has absolute
control over your body, your property and your actions; sometimes – at least in
principle – he may even direct your thoughts.
Slavery to an idea comes when it not only controls, or motivates, your
actions, but also governs all your other thoughts. You no longer see the idea as your servant,
helping you to achieve certain ultimate ends; it itself is now the guiding
principle of your life. For ideas, like
machines, ought to be the servants of humanity.
They should be the product of reasonable thought about what our
objectives must be and how we should reach them. We ought to use them as means to our goals
and be free to discard them when circumstances change. They must not appear to be the goals
themselves. A good example of ideas
getting such supremacy over men as to enslave them is seen in modern official
economic thought. Aims such as high
growth and high productivity are no longer seen as means to material prosperity and therefore happiness but as ends in
themselves. After decades of worrying
how to achieve the means, politicians have become enslaved to them and see them
as ultimate goals of policy. They now
concern themselves over Britain’s place in the ‘growth league’ and the degree
of change in labour productivity, while failing to see that it is this very
sustained growth that has brought on many of our environmental problems, and
that with a million unemployed, the average working man ought to be producing
less – then there would be more jobs needed for the same production. These politicians fail to register that
circumstances have changed and that these are no long even valid routes to universal
happiness; and they are certainly not happiness itself.
It is significant that they have ‘become enslaved’ to these ideas after ‘decades.’ You do not suddenly become the slave of an
idea in the way that you can of a man.
First of all you yourself have to conceive it, and you are
unquestionably its master then. It can
only gradually take over your mind. It
is this which is the most insidious aspect of slavery to ideas. Since the change is so gradual, you are not
likely to notice it – as yet politicians have not grasped just how they are
trapped by the idolization of their policy of growth. You will be likely to accredit the troubles
brought on by this enslavement to other causes.
Imagine a revolutionary Marxist.
Somebody points out to him that the proletariat are no longer oppressed
as they were in Marx’s day and that we are anyway moving towards socialism
without revolution. His reaction is very
likely to be not a reappraisal of his political thought and a realization that
Marxism is no longer valid, but possibly even a hardening of his views
resulting from a determination to resist this ‘bourgeois propaganda.’ He is a slave to Marxism without knowing it.
But however unaware you may be of your enslavement to an
idea, this enslavement is still your fault.
It is the result of a refusal to think clearly and objectively, if not
at first, at any rate subsequently. It
shows a lack of self-control (the slave is too proud to renounce his ideas and
so deifies them instead) and, ultimately, weakness. It is therefore all the more pathetic. When slave to another man you can maintain your dignity, even if your
free will is removed: you can remain clear-headed about long-term objectives
for mankind and preserve your ideals.
But when you are enslaved by an idea, you are mentally helpless, and you
have, if unwittingly, lost at least some of your dignity.
If, then, he is helpless about it, can the slave of an idea scorn his predicament? As I have already suggested, he does not know
it exists – the modern politician cannot see the muddle-headedness of his
macro-economic views, nor the Marxist the irrelevance of his doctrine
today. And since the idea governs its
slave so closely, he is not likely to be detached enough to make observations
on his condition. If he could see the
position he was in, no doubt he would scorn himself for it – such a
circumstance is all the more shameful since it is your own fault. But he would be likely to try to do something
to change it; this a slave to another man cannot do.
I am certainly no angel when it comes to environmental action – for example, I have taken far too many flights in the course of my life. I have been lucky enough to do a lot of international work and so to some extent this has been unavoidable, but I know it isn’t right.
However, when I heard of Unit-E – as Good Energy used to be called – soon after moving into my present house in 1997, I realised that this was an easy and effective way to reduce my carbon footprint. I would not even have to instal any solar panels or windmills for myself!
A few years later I transferred my source of gas to Good Energy too, because I prefer dealing with this company than the big beasts of the energy market, which are only interested in money. Maybe I should have converted my heating, cooking and hot water supply to electricity instead, but I didn’t.
Not long after transferring my
electricity supply I scrapped my car. This was a little odd since one of
my reasons for buying this house was that it had a garage at the back as well
as a couple of parking spaces where a front garden should be. But after a
while I discovered that living here, I had only driven 300 miles in a quarter,
and so there was little point in continuing with the vehicle.
Now I walk or take a bus or train everywhere and I can’t imagine even wanting a car any more. Why put up with the hassles and expense of driving when I can sit in a comfortable train seat and read a book or watch the world go by? But I realise that I am fortunate to be in a position to choose.
Besides that, I buy organic food as
much as I can, compatibly with my dietary preferences, knowing that the field
rotations it requires help to sequester carbon from the atmosphere by
fertilising the soil with manure rather than minerals or chemicals.
Nevertheless, I can see that restoring the climate and biodiversity are huge tasks which will require strong action by governments – far stronger than any hitherto – since we humans are fallible creatures. Only the most acutely conscientious among us will do everything that we ought to off our own bats, so we need to be placed in a position where we have little or no choice.
This is a slightly edited version of something I’ve written to Good Energy (my energy supplier) since it asked its customers to tell them a bit about why they chose that firm and what other steps they are taking to combat climate change. They promised a prize draw for everyone who wrote in!
In the early years of membership, British opposition to the ‘Common Market’ was led by constitutional conservatives of the Right and the Left, such as Enoch Powell and Tony Benn. They argued against its deficiencies in democracy, which gave them affront in comparison with the United Kingdom’s parliamentary tradition. They thought that parliamentary sovereignty – the fulcrum of British constitutional tradition – could only be upheld by leaving the European Economic Community.
However, since then the EEC has evolved into the European Union, which has a proper democratic shape due to the real power and direct accountability of the European Parliament. I would suggest that its institutions are at least as democratic as those of the United States (with which they have much in common) and a lot more so than the UK’s, with its centralised structure while composed of three-and-a-bit different countries, its appointed and hereditary upper house, distorted electoral system for the House of Commons and hereditary head of state.
And here lies the rub. Unlike other parliamentary democracies, a new British government does not have to win Parliament’s approval before it takes office: confirmation of a new Prime Minister by the Queen suffices. That even applies in mid-Parliament in a situation where the single governing party represents only a minority in the Commons (although supported by the DUP’s confidence-and-supply arrangement), while MPs have already rejected the main plank of the new government’s policy – the threat of crashing out of the EU without a deal.
No confidence but no resignation
But with only a few weeks to go till October 31st, those MPs must now wait for an opportunity to express a lack of confidence. Moreover, we have just learnt that even after a vote of no confidence, a Prime Minister is under no obligation to resign: he can hold on in the hope that the two weeks provided by the Fixed-Term Parliaments Act will not be long enough for the formation of a new cross-party government, and then call a general election at a time of his choosing. And before that election takes place, he will be able to take the UK out of the EU without a deal and without having to seek parliamentary support for it.
I was taken aback yesterday when I read that Dominic Cummings – who seems to be the real leader of the government, Boris Johnson being its political front man – asserted that this was so. But it was calmly confirmed on the BBC’s Today programme by Lord Sumption, a retired Supreme Court judge and constitutional authority. An Old Etonian and former advisor of Margaret Thatcher’s political mentor, Sir Keith Joseph, recent remarks of his nevertheless suggest that Sumption is not a fan of Boris Johnson.
But how can this be? If the elected chamber expresses no confidence in the Prime Minister shortly after he takes office, how can he be in control of the events that ensue, including a general election as well as a fundamental constitutional change, to be achieved by gravely damaging means that to all appearances do not have majority support in the country either?
The answer lies in the two bulwarks of the British political system: parliamentary sovereignty and constitutional monarchy. Parliamentary sovereignty has gradually morphed since 1689 into government by Cabinet and, most recently, centralised personal rule by the Prime Minister – all this in a typically British way, with little or no debate or expressed opposition to the changes. And then, eight years ago, we had an important constitutional change in the Fixed-Term Parliaments Act, passed as ever by simple majorities in Parliament to serve David Cameron’s short-term desire to lock the Liberal Democrats into a coalition for a full five years.
A problem of Hindenburg-esque proportions
This Act allows the follow-up to a statutory vote of no confidence to be controlled by the rejected Prime Minister him- or herself, not a politically detached authority such as an elected President. This brings us to the position of the Queen. It is established practice – another of those far-reaching but unwritten conventions on which British politics relies – that the monarch cannot intervene politically. This has come to mean that in general they must do whatever the Prime Minister of the day advises. This self-serving governmental interpretation of impartiality means that the Queen cannot exercise any power or discretion even when it is most needed, such as a constitutional crisis of the sort we may be about to face. This could become a problem of Hindenburg-esque proportions.
In other countries, if a Prime Minister loses a vote of confidence, they have to resign immediately and the constitutional head of state determines what happens next. Usually, the same person will run a caretaker government, while the President discovers whether there is parliamentary support for a replacement government or if an election is needed instead.
This happened last year in the constitutional monarchy of Spain, where the King used his discretion to ask the previous opposition to form a government after Mariano Rajoy lost a vote of confidence. Unlike his British counterpart, the Spanish monarch is protected from suspicions of bias by the circumscription of his role in a formal, written constitution.
Essential safeguards do not exist
However, no caretaker government in other countries is permitted to pursue any partisan or controversial policy: that has to wait for a replacement government to emerge according to the procedures. Least of all can they carry out a big constitutional change, such as taking the UK out of the EU without a deal.
But if Lord Sumption’s interpretation of the arrangements is correct, such essential democratic safeguards do not exist under the purported Mother of Parliaments.
Some people have called Boris Johnson’s accession to office last week a kind of constitutional coup d’état. However that may be, it seems clear that the ragbag of political conventions and statutes which passes for a constitution in this country is not up to the task at this time. The means provided by the 2011 Act for votes of no confidence seems to have too many loopholes through which a failed government can pass, while the British version of constitutional monarchy provides no protection from such manipulations either. The best we can hope for is that the Speaker of the House of Commons will stand firmly by the rights of Parliament, just as his predecessor had to in the early 1640s.
(I have made a few minor sub-edits here and indicate them with square brackets.)
Did you have any opinions about Azerbaijan prior [to] visiting?
Nothing firm. I worked for a few weeks in Russia (mainly Moscow)
in the spring of 1992, and when I later told my Russian friends that I was
going to Azerbaijan their typical reply was, ‘Тебе не страшно?’ (‘Aren’t you
afraid?’). So before going there, I bought a wallet with a chain which
attached it to my clothes, as a precaution. In general it has been very
useful and I still use one like it (because of it, I always know which pocket
my wallet is in!). But I did not require it for security in Azerbaijan
(or anywhere else). What those friends said to me revealed more about
Russian prejudices than the reality I found in Azerbaijan.
As for politics, I had followed the
break-up of the USSR for my previous job in 1990-91, and Soviet politics
generally for over 20 years before that, and I was familiar with the specifics
of several countries, including the Baltic states and the Ukraine as well as
Russia. In the previous two years I had made working visits to all of
those countries as well as Belarus and Kazakhstan, but nowhere in the Caucasus
region, and so I knew very little about what I discovered to be a very
interesting situation in Azerbaijan.
How would you describe [the] socio-political situation during your stay?
Very unstable. I arrived in September 1992, not long after President Mutalibov was overthrown and replaced by President Elchibey of the Popular Front, and then I lived in Baku through the worst of the war in Dağlıq Qarabağ [Nagorno-Karabagh]. I was evacuated back to Brussels during Heydar Aliyev’s slow-motion coup d’état the following summer, and returned for a few months before finally finishing my job there in about November 1993. Despite the military reverses and political turmoil Baku never felt like a city at war or in serious crisis, but it also lacked the fervour one might expect in a small country that had gained independence for the first time in 185 years. The atmosphere was quiet – almost too quiet in the circumstances, I thought – but subdued. I put that mood down to the defeats in the war, which were reflected in the sad visits that people made to the memorials to fallen soldiers in the city centre. But falling living standards [amid] economic and political confusion after the collapse of the old system may have contributed as much to it too.
remember any interesting events that you found odd?
I’m sure there were lots of them! That’s why I loved being
there. After all, I was in a distant country for the first time, I did
not know the national language and the country was going through a very
difficult time of change. Perhaps the oddest thing was that, as it seemed
to me, no foreign visitor would have guessed the country was at war if they had not known it.
Two other things occur to me right now. One was the experience of
working in an office in part of the former Soviet Union for the first time,
because the arrangements and even some of the tools and equipment were very
different from what I knew. For example, the secretaries and typists who
used to play a big role in Western office life were entirely absent, except for
the occasional ‘референт’ [‘referent’], as were their accompanying skills such
as touch-typing. The same for some basic stationery, such as sticky tape:
papers were attached with pins or glue or string. And when the head of my
office once wrote an important letter to a senior official, he showed me the
draft. I was struck by how little it said and how much space it took to
say it, filled with flattery for the official. That revealed something to
me about the nature of official relationships, at least within the civil
service, in what until just recently was the USSR: back home, business letters
and memoranda deal with facts and generally in as few words as possible.
But in the outgoing culture facts and opinions were dangerous to set down in
writing. That, at least, is how I interpreted it.
My final oddity is a little incident in December 1992. I returned
to Baku after a couple of weeks at home feeling rather low, being in an
unfamiliar place with a new job which had not been set up well by my
employers. The first morning I flagged down an old [two-door] Zaporozhets
car for a lift to the office (under the system of the time in which private car
owners used their cars as taxis to earn some money). I had to sit in the
back seat as the front passenger seat had been removed to make way, as far as I
can remember, for a load of eggs. My spirits immediately rose with that
reminder of people’s lively spirit of improvisation and ‘making do.’
about your contacts with dominant political figures? Have you personally met
Elchibey or elder Aliyev? How would you describe them?
My relations were not that high up. Unfortunately I forget the
names now, but the most senior people I met were the acting Prime Minister (Ali
Masimov?) and the President’s chief economic advisor (Mammedov?) in early 1993,
in Elchibey’s time. Meetings with the latter were due to my own work,
while with the former I was an informal interpreter for a couple of EU
officials who were visiting in connection with humanitarian aid. But I do
not remember very much about the meetings or what the personalities were like.
was your relation with locals? By what means did you communicate with them? How
many of them spoke English?
My relations with local people were good, conditioned by the strong
Azeri and Muslim traditions of hospitality, which would always have protected
me from any harm that might arise (but in fact never did). At that time
there were very few people from the western world in Baku and we could be
immediately identified as such from our style of dress and so on. I made
particularly good friends with a young man in our office and his young family,
who I visited several times. By training he was a physicist but he had
moved to that job like many people who had to change career paths suddenly in
that era (while others simply lost their careers); he was very intelligent and
interesting to talk to. Very few people spoke any English but it did not
matter because I spoke good Russian. I tried to learn Azerbaijani but did
not get very far because not only at work but in the bazaars and everywhere
else everyone knew Russian, so it was not easy to try out the little Azeri that
Did you monitor events in Azerbaijan after your departure? If you did, how would you evaluate [the] Western media’s view of early Azerbaijan? Positive? Negative? Curious?
I have remained curious about Azerbaijan, but at a distance. When I returned home I had to look for other work somewhere, and the next jobs I did, in the first half of 1994, were in the Ukraine [and] Serbia/Montenegro. In the end by 2000 I worked for at least a short time in every ex-Soviet country except Armenia, as well as Mongolia and some countries further west, so Azerbaijan was only one of many countries that I became acquainted with. However, it was special as my introduction to a very interesting series of experiences. So I have fond memories of the place.
As for the Western media, I would describe their attitude as incurious
but also negative, in spite of that lack of knowledge. The USSR had
always been seen through Moscow’s eyes and the wider world had little
understanding of its many complexities. To this day, that Russian
viewpoint often colours the understanding of the Ukraine, let alone smaller and
more distant countries. In England, the famous Azerbaijani linesman in
the 1966 football World Cup Final was until very recently remembered as
Russian: people did not distinguish between Russia and the USSR. The
large Armenian diaspora (especially in the USA and France), Azerbaijan’s Turkic
and Muslim associations and the rather closed nature of Azerbaijani society
(with almost no contact with the world outside the USSR) all led to further
prejudices and misunderstandings, and probably still do to some extent. I
find all of that very regrettable.
Something of this arose only this spring with the Armenian footballer Mkhitaryan’s refusal to play [for Arsenal] in the Europa Cup Final in Baku. English journalists made no attempt to understand the politics of the situation, or what Mkhitaryan had himself done to earn Azerbaijan’s displeasure. They just assumed that he was right and the Azeri authorities were wrong – even though, as far as I could see, they behaved very correctly throughout the affair.
do you think about current situation of Azerbaijan? How much did it change?
Since I have not visited Azerbaijan since 1993, I find it very hard to say. While I was there I sympathised strongly with the Popular Front government in spite of its failings. Alongside it, I was impressed by the deep roots of the country’s independence movement when I found out about it, with (as I understood) working class [people] much more involved than in other Soviet republics, where the demands for political freedom and independence came mostly from middle-class intellectuals. Naturally I was disappointed by Aliyev’s return to power, even though he was a very experienced politician and managed to restore order in an unruly situation. I remain saddened by authoritarian rule there, but enormously impressed when I read of the determined spirit of some activists and journalists in spite of it all.
you like to visit Azerbaijan again?
Of course! I have fond memories of a small, remote country trying to make its own way in the most adverse circumstances. A few years ago the England football team played a World Cup qualifying match in Baku and I thought about going there for it, but unfortunately it wasn’t a practical proposition. Baku is a beautiful [and historical] city and I would love to see it again, although it was in a very poor condition after several decades of neglect at the time. (I am a keen student of architecture.) From everything I hear it has been transformed in the intervening period, with some world-famous new buildings that I would love to see. I would also love to try the fresh sturgeon, the pomegranates, the wonderful fruits, nuts and vegetables, Azeri plov and so many other delicacies again!
Reference to Azerbaijani translation added on July 23rd, 2019.
Tax havens and tax dodging by big corporations and the super-rich have generated much anger in recent years. Most of all, they are a problem for developing countries, and they have long been recognised as such.
However, the biggest international push on developing countries at present is simply to raise more tax. The stated purpose of this is to contribute to the huge costs of the Sustainable Development Goals, which were approved by the United Nations General Assembly in September 2015.
But advocates of developing-country tax reform say more
taxation is also necessary for what they call state-building. They point out how few people in many
countries actually pay direct taxes, and say this weakens accountability
between a country’s government and its population. An example is Tanzania, where in 2008 there were only about 400,000
names in the Taxpayer Identification System for a population of over 45
whilst in 2010 under 400 large taxpayers (mostly companies) contributed about
80 per cent of government revenue.
The Addis Tax Initiative
In July 2015 the aspiration of higher levels of taxation was embodied in the Addis Tax Initiative (ATI), which was launched at the third UN Financing for Development (FFD) conference in Addis Ababa, Ethiopia. Its founding declaration included three separate commitments: for donor countries, aid recipient countries and both groups of countries together, respectively. It is the first of these that really mattered because it alone provided a target: not to increase taxes, but to double by 2020 the value of foreign aid projects in this area (mainly to help administrative capacity-building).
But this did not go down well in all quarters, as tax
justice campaigners saw it as a diversionary tactic. Their demands were not about the SDGs but for
new global tax rules to be determined by all countries together – not just the
rich ones, which were already developing rules under the auspices of the
Organisation for Economic Cooperation and Development (OECD).
Forced financial inclusion
Besides, in many countries – and not just the very poorest – most people have insufficient income and wealth to allow for any significant increase in their tax payments. So where reforms concentrate on taxes on income or consumption, they can look like a form of forced inclusion in the financial system. That is not unlike the taxes used by colonial administrations to force people on to the labour market.
If it succeeds in increasing tax revenues, this aid could also enable developed countries eventually to cut back on aid to developing countries – or alternatively, to reduce the latter’s unhealthy dependence on aid, depending on your point of view. That dependency is huge: for example, in 2017 net receipts of foreign aid were equal to 71 per cent of central government expenses in Mali and 76 per cent in Mozambique, while in Malawi they exceeded government expenditure by 28 per cent. Where few people pay direct taxes, this effectively makes governments more accountable to foreign donors than their own citizens.
Nevertheless, most developing countries’ tax revenues are
well below the levels found in developed countries. Among the ATI’s developing-country members in
2016, tax was worth on average just 15 per cent of gross domestic product (GDP),
while the average in the OECD countries was 34 per cent.
Old warnings about revenue
There were warnings about this during the period of
decolonisation. In 1963 the economist Nicholas
Kaldor wrote this advice (using the terminology that was current at the time):
The importance of public revenue to the underdeveloped countries can hardly be exaggerated if they are to achieve their hopes of accelerated economic progress… foreign aid is likely to be fruitful only when it is a complement to domestic effort, not when it is treated as a substitute for it.
But most newly independent countries were more interested in
nation-building – creating a sense of
nationhood and replacing European officials with national ones – than state-building. Foreign aid was readily presented as a way
not only to pay for services but design them, and it filled the revenue gap
At best a guarded welcome
The jargon name for this push for more taxation is Domestic Resource Mobilisation (DRM) and as a broad aim, it is widely shared among donors. However, it has met, at best, a guarded welcome from potential beneficiary countries. In 2016 there were 98 developing countries with DRM projects in place, but by now only 23 have joined the ATI itself. The ATI’s monitoring report for 2015 commented drily, ‘Other countries have refrained from joining as their current political priorities lie elsewhere too or the topic of domestic revenue mobilisation is considered a highly sensitive issue for such a visible commitment.’
There has been foreign aid for improving tax administration since at least 1985: Tanzania has been in more or less continuous receipt of it ever since. Most such aid goes to countries which – like Tanzania – have always been major aid recipients, and not necessarily those that need it most. But even there it has been very patchy. Thus, in 2016 Ghana received US$18 million worth of aid for DRM, but Ethiopia – one of Africa’s largest countries – got no more than US$1.8 million and its little neighbour, Djibouti, none at all. The US$11 million worth of this aid received by Tanzania in 2015 came in the form of 13 projects from seven donor countries – Canada, Finland, Germany, Japan, Norway, the UK and the USA.
Even without such an evident risk of duplication, it is not
clear whether this aid is effective, even in its own terms. After 30 years of such assistance, Tanzania’s tax revenue was still
only worth 12 per cent of its GDP in 2016.
Sidestepping the issues
urgent need to tackle corporate tax dodging remains. In some DRM programmes (such as Norway’s) it
is one of the ways pursued to raise more revenue. But as long as the rules of corporate
taxation are determined by the countries that transnational corporations come
from, it will fall short of that need.
The OECD’s own package of measures to tackle tax dodging was
‘delivered’ in October 2015 and developed by 44 countries, including every
member of the OECD and the Group of 20
plus an expanded ‘inclusive framework’ of 85 more. Taken together, these 129 countries are said
to represent ‘more than 90% of the world’s economy and more than 75% of the
But the final decisions were left in the hands of the 44 richest
and most powerful countries. Meanwhile,
the problems are most acutely felt precisely in those other countries which
have a quarter of the population but only 10 per cent of the world’s output. Above all, it is that quarter of the planet
that the SDGs were set up for, and their voices need to be heard. The ATI effectively sidesteps these issues
and can even be seen to perpetuate a global system that is inequitable and flawed.
 Fjeldstad, O.-H.
(2013), ‘Taxation and Development: A review of donor support to strengthen tax
systems in developing countries,’ Helsinki: UNU-WIDER, Working Paper no.
(March 2019), p. 10, citing O.-H. Fjeldstad and K. Heggstad (2011), ‘The Tax
Systems in Mozambique, Tanzania and,Zambia: Capacity and Constraints,’ Bergen:
 Kaldor, N. (1963), ‘Will Underdeveloped Countries Learn To Tax?,’ Foreign Affairs, Vol. 41, No. 2 (Jan., 1963), pp. 410-419, www.jstor.org/stable/20029626 (January
2019), p. 410. Cited in Fjeldstad (2013),
I have always voted left of centre – never Conservative. I stood as a parliamentary candidate in 2005, opposing a Liberal Democrat MP.
However, in my views on economics you could say I am a centrist.
Does this mean I stand somewhere between the Tory chancellor, Philip Hammond, and the Labour Party’s John McDonnell? No, my opinions on economics are much closer to McDonnell’s.
I have reported on financial markets and studied both economic development and the USSR – I visited it for the first time in 1971. I saw that the complete repression of markets there was obviously excessive, even though central planning had produced remarkable results in industrialising the country between about 1930 and 1960. But it was accompanied by gross inefficiency, poor quality, a lack of innovation – in short, pretty well everything that market evangelists say of state control in the economy.
So I do think that markets are best?
No. Market evangelists make the same mistake as the Bolsheviks and Stalinists did – or a mirror image of it. Their economic policies over the last 40 years have not been crowned with success either.
For the old dichotomy of ‘state v. market’ is false. A good economic policy makes use of both the state and the market. It is futile to try to make one do what the other is better at. The difficulty often lies in knowing which is better for a particular purpose, or what combination is best. But ever since at least the 1980s, the balance in both domestic British and international policymaking has swung far too far towards the market.
It seems to me that there are in fact three guiding principles of economic organisation:
• Hierarchy, or a pyramid of command which takes authority from above. Typical of state structures, especially undemocratic ones like the Soviet Union, it is also how most companies are organised.
• Horizontal, democratic structures, taking authority from below or alongside – cooperatives and mutual societies, as well as decisions made by elected councils and governments.
• Decentralised monetary exchange, operating through markets. Relations of economic power are mediated through changes in price.
Each of the three has its place, and more than one of them often combine effectively: education was traditionally organised on a mixture of the horizontal and vertical principles, to which the market idea has been increasingly added recently. All three principles must be described and analysed on equal terms, if economics is to lay any claim at all to scientific objectivity and rigour.
Rather laughably, conventional economists do make that claim; but their actual language does not bear it out. Mainstream economics only takes a serious interest in one of the three elements but, more or less explicitly, presents that element as the ideal. Non-market methods are called ‘distortions’ or ‘interventions’ in the proper working of the economy. That language is not impartial and cannot be called scientific. Do orthodox economists ever tell us of the financial markets ‘intervening’ in democratic processes? Yet they do so every day of the working week.
This failing is true of the basic theory underlying nearly every school of economics, except Marxism. It is truest of all in the neo-classical school, which has been dominant since the 1980s. But in 2008 the economic policies of that period, based on neo-classical ideas, brought us close to catastrophe.
And that is why I’m a centrist. I do not believe in the market or the state. I don’t think it is the job of a serious thinker to ‘believe’ in any such principle. The economic analyst should appraise their advantages and disadvantages, and determine where one is fit and where another is. We need an economics which will appraise things as they are, and not start from loaded concepts such as the ‘perfect market’, ‘perfect competition’, ‘general equilibrium’ (where is equilibrium less apparent than in financial markets?), ‘natural prices’, narrow economic ‘rationality’, economic ‘welfare’ and so on.
But to achieve that, economic theory probably has to be rebuilt from the ground up.
This is a revised version of an earlier piece which you can find at http://tomlines.org/wp-content/uploads/2018/04/Lines-Why-I’m-a-centrist-rev.pdf.