The re-emergence of crisis theory as Europe faces new calamity: Don Pittis
Will Europe's intractable economic problems benefit from crisis or is there only more turmoil ahead?
To Canadian political economist Daniel Drache, Europe feels like it could be on the verge of a crisis. Yesterday's violent killings at the Charlie Hebdo newspaper offices in Paris did nothing to change that feeling.
"I think there's lots of turmoil ahead," said Drache, who I called to talk about something called crisis theory. "And when you move to highly ideologized mentalities, then all sorts of shit can happen."
Drache is former director of Canada's Robarts Centre and author, most recently, of Defiant Publics: The Unprecedented Reach of the Global Citizen.
When institutions fail to adapt or change, then new policies and practices become possible in the crisis. It's a door opener and a door closer. You can't go back.- Daniel Drache, economist
When I had arranged the interview the day before, the attack in Paris hadn't yet happened. Our subject was going to be the rise of a radical left party in Greece, Syriza, that the research group Oxford Economics says is heading for a "decisive victory" in the country's snap election now only 17 days away.
As I wrote last month, the Greek election was almost an accident after Prime Minister Antonis Samaras played chicken with the Greek parliament and lost. Now the establishment coalition, carefully patched together by way of financial support from the European Union, has fallen apart.
- 12 dead after gunmen storm newspaper's HQ in Paris
- Political uncertainty in Greece could threaten financial bailout
There are growing signs that Syriza and its stridently leftist leader Alexis Tsipras could sweep to power in Greece, changing the entire political landscape in Europe. Suddenly the term Grexit, coined nearly three years ago as a shorthand for Greece's departure from the Eurozone, is back in the business headlines.
Turning on the rich
Tsipras has affirmed his commitment to the euro, but not at the expense of continued austerity that is causing suffering among his millions of supporters. Now in an interview splashed on the front page of Wednesday's Financial Times, Syriza says it will begin a "crackdown" on the country's elite, the wealthy oligarchs who, among other things, control Greece's media.
According to the Financial Times, a move against the Greek establishment will be "welcomed by international lenders." But some of the planks in the Syriza platform may not be so appealing, especially if they spread to other parts of Europe. Tsipras has pledged to renegotiate the country's bailout agreement with Europe, tossing out austerity, increasing the minimum wage, and delaying the sale of government assets. And he wants to write off Greece's debt.
If the rich countries of Europe stick to their guns, there is only one way that can lead. To Grexit. And thus the crisis.
While no one knows for sure, there are serious worries that a departure of one country from the euro currency zone (for which there are no legal provisions) could lead to something worse. With weeks to go before the Greek election, already global markets are quaking.
Interest rates on bonds in Greece and southern Europe are shooting up. Rates in North America, Germany and Switzerland are plunging as the global rich look for safer places to put their cash. Fears about the future of Europe are the other reason, in addition to plunging oil prices, that the world's stock markets have turned volatile.
Most analysts seem to think that when it comes right down to it, Europe will figure out a way to bail out Greece to avoid the risk of a destabilizing crisis. Effectively, if Tsipras wins the election and Europe concedes to his demands, a crisis created by the Greek electorate will have forced Europeans to solve what has been an intractable problem. They will transfer wealth from the rich of Europe to the poor of Greece.
The crisis solution
And according to Fernand Braudel, founder of the Annales School in France, Drache explains, that is what crisis theory is all about.
"When institutions fail to adapt or change, then new policies and practices become possible in the crisis," says Drache. But he says moments of crisis create changes that can't be undone. "It's a door opener and a door closer. You can't go back."
The trouble with crisis as a tool for solving problems is that one crisis can lead to another. Thus, the worry that other European voters will demand the same concessions that Greece gets. Voters in other countries may be outraged, because as we have seen in the past, crisis is not just a tool that can be used by the left.
Right-wing populism has risen across the continent. Anti-immigration movements have emerged in Germany and other parts of Europe, including France and Italy, that will only be stoked by the shootings of Charlie Hebdo editorial staff. Political and economic systems shaped by crisis do not always end well.
"It's a wild roller-coaster ride," says Drache of a system that depends on crisis for change. "And it might go off the tracks."