ADAM TOOZE Historian - Author - Critic - Blogger Tue, 23 May 2017 17:10:00 +0000 en-US hourly 1 ADAM TOOZE 32 32 Modern History: Critiquing Frank Trentmann’s Empire of Things Thu, 18 May 2017 17:29:14 +0000 Read Deborah Cohen's review in the NYRB!

The post Modern History: Critiquing Frank Trentmann’s Empire of Things appeared first on ADAM TOOZE.


Recently, John Terilla, brilliant mathematician and polymath and puppy-walking friend from Riverside park, alerted me to Deborah Cohen’s wonderful review of Frank Trentmann’s Empire of Things: How we became a world of consumers in the New York Review of Books.

Deborah’s review is characteristically elegant, witty and insightful. If you don’t know her work in British cultural history, it is amongst the very best the field has to offer. The two most recent books are Family Secrets and Household Gods.

Deborah’s website is here. She teaches at Northwestern.

Deborah’s handling of Trentmann is deft. She is the right person to truly bring out the strengths of his culturalist approach and to relish the complexity that his book reveals. Trentmann has put together a compendium of an entire generation of research. Reading it leaves, willy nilly, an indelible impression.

But in the conclusion Deborah pivots to deliver a series of telling critical remarks. The first concerns the state as something other than a consumption-promoting machine:

“Trentmann’s argument about the diversity of consumer societies becomes more strained when he extends it to the Soviet Union in the 1930s. Yes, Stakhanovites were rewarded with a suit for their exertions; for the female comrade, there was a crêpe de Chine dress and an electric iron to press it. But such displays were a sideshow to the central reality: the suppression of consumer demand along with the consumer. Trentmann is right to call attention to the state, but he doesn’t go far enough. What’s needed is an account not just of how states furthered consumption but how they managed to shut it down, in some cases for decades. In 1949, as Mao came to power, there were 10,000 restaurants in Beijing, of which only 656 remained in 1979. While Trentmann mentions in passing such efforts to restrict consumption (Nehru’s campaign for autarky—a more frugal self-sufficient economy—and the Khmer Rouge’s genocidal experiment, to take two very different examples), they are dealt with as exceptions that prove the rule of modern regimes promising their subjects more goods. Such omissions matter because in the early twenty-first century it seems likely that environmental pressures will compel states to regulate consumption in a draconian fashion.”

The second crucial point concerns the articulation of the main body of Trentmann’s book with its conclusion in the late 20th-century environmental problematic:

“If Empire of Things were a play, the stage would become in each scene ever more crowded with amiable consumers who have good intentions and better lives. In an explosive final act, though, they would blaze into spontaneous combustion fueled by their own excess—the unhappy place where we now find ourselves. As Trentmann acknowledges, consumption has been a juggernaut, very difficult to restrain except by coercion. Efforts to expand recycling programs have run alongside, not replaced, ways of life filled with more and more stuff. In advocating for “greater historical realism” about the relentless growth of consumption through the ages, Trentmann is making the point that we cannot rely simply on markets and individual choices to reset the metabolism of consumer society. States will need to take a strong hand. There’s a mismatch between the looming environmental crisis described at the end of the book and its sanguine, even jovial, preceding pages. Trentmann is too good a historian to tell his story with a deterministic conclusion always in sight. He avoids a teleological account of the rise of the carbon economy, one invention after another, leading ineluctably to more intensive resource extraction and rapid global warming. But it is precisely because he insists on taking each episode in the history of consumption on its own terms—exploring why particular developments made sense in the moment, giving play to each era’s contingencies, and emphasizing variety, all strong virtues of his historical account—that the finale to his grand story appears so disconnected from the earlier chapters.”

Deborah’s tone is far more measured than mine. But there is no disguising the convergence between her remarks and the less measured critique of Empire of Things I delivered in the Guardian a while back. Here is how I dealt with precisely the same issues that Deborah highlights – mass production/environmentalism/dictatorship:

“As Trentmann highlights in his conclusion what we most urgently need are histories of the consumption of non-renewable resources, first amongst them carbon-based fossil fuels, starting with coal. But coal is barely mentioned in Empire of Things, except with regard to the question of urban gas supplies. What enabled coal to be transported to the farthest corners of the world was steam power and the railway, the driver of market integration on a continental scale, the enabler of far-flung exchange starting with the Sears mail order business in 19th century America and extending down to China’s new overland Silk Road today. In Empire of Things the railway is allotted one single index entry, referring to a discussion of the impact of contact with the outside world on backwoods Mormon communities and the interest this aroused in fashionable handkerchiefs. After the railway, would follow the entire noisy, exciting and polluting procession – mopeds, motorbikes, cars, air travel. Once upon a time, Fordism was a key concept for thinking about the relationship between mass production and mass consumption. It was, no doubt, a simplistic and self-serving myth. But Empire of Things rejects the mass production paradigm to such an extent that Henry Ford is reduced to a cameo appearance as the patron of an anachronistic rural history museum. The Model T, the VW, the products of GM, FIAT and Toyota that shape everyday life all over the world are absent from Trentmann’s account, whilst pages are given over to the idiosyncrasies of GDR consumer culture and its ludicrous Trabant.

As Trentmann rightly emphasizes we write the history of consumption today after the moment at which the equation between affluence, “Anglo-Saxon markets and liberal democracy” can any longer be taken as self-evident. The rise of Chinese state capitalism changes everything. But that begs the question of how Trentmann addresses the deeper history of growth-fixated authoritarian regimes. He does his best to subsume the twentieth-century dictatorships under his capacious history of consumer politics. And it is true, of course, that as in 1930s Britain or New Deal America, one could find cinemas, silk stockings, sweets and new-fangled motor-cars in Mussolini’s Italy and Hitler’s Germany. Stalin’s experts in mass consumption discovered the attraction of disposable cups on a trip West. But when, on the basis of such ephemera, Trentmann describes Stalin’s regime as a state that “pushed “consumption forward”, as did “New Deal America and Nazi Germany”, the hair-raising lack of context becomes evident. In fact, consumption was brutally suppressed and millions starved to “pay” for one of the most coercive industrialization drives in history.”

What is also undeniable is that Deborah’s prose puts mine to shame. She is a beautiful writer. Rereading my Guardian piece was a bit painful, so painful, in fact, that I wondered whether my original, prior to editing could really have been this bad. Somewhat to my relief, it wasn’t. For those interested, my unedited take on Trentmann is here, Tooze Trentmann Guardian Review Original Prior to Editing April 2016.

The post Modern History: Critiquing Frank Trentmann’s Empire of Things appeared first on ADAM TOOZE.

]]> 5
Europe’s Political Economy: Reading Schäuble Thu, 11 May 2017 18:58:46 +0000 The post Europe’s Political Economy: Reading Schäuble appeared first on ADAM TOOZE.


Wolfgang Schäuble, Germany’s Finance Minister is widely seen, as one of the “most consequential European politician of his generation”. Joshua Rahtz’s recent NLR piece is a welcome occasion to revisit this pivotal character.

Rahtz’s essay provides an invaluable English language survey of Schäuble’s thinking. Rahtz’s method is to follow the outline of Schäuble’s career and to read the books that Schäuble has written along the way. It is a simple but highly effective procedure, giving us an overview of Schäuble’s worldview and its development over time, in correlation with his role in German and European politics. The method works because Schäuble is the kind of European politician who regularly publishes books of sufficient heft to warrant close reading. In this sense he has more in common with contemporaries like Joschka Fischer or Oskar Lafontaine than he does with Angela Merkel.

Rahtz, a specialist in the intellectual history of German economics, is particularly good in debunking one of the founding myths of Schäuble’s most recent incarnation: his personal identification with ordoliberalism and the social market economy. Commonly this is traced back to Schäuble’s origins in the South of Germany and his studies in Freiburg, where one might imagine that he mainlined the original wisdom of “ordoliberalism”. But is this obvious? “What was Schäuble’s intellectual formation in these years?”, Rahtz asks. It’s is an excellent question and Rahtz’s answer is illuminating: “With a brief intermission studying economics at Hamburg, he took law at the University of Freiburg. Given his later reputation as a rock of neo-liberalism, it would be a reasonable assumption, one that he has taken care not to dispel, that his convictions were formed by the work of the Freiburg School, often identified with ordo-liberalism as the native German counterpart to the Austrian School of economists headed by Mises and Hayek. In fact, however, of the first generation of ordo-liberal thinkers, none remained at Freiburg by the time Schäuble arrived there.” Freiburg and ordoliberalism were distinct formations. By the 1960s ordoliberalism was widely diffused across the German university system, but it is “open question whether the intellectual climate” at Freiburg was particularly ordoliberal. Schäuble’s supervisor was a legal scholar critical of the lack of empirical heft in ordoliberal research. Its approaches had varied a lot since the late 1930s: there was no one ‘neo-liberal theory of competition’, rather a political outlook of wider social significance, particularly in the early years of the Federal Republic, when the slogan of a Social Market Economy was popularized.

Though Schäuble likes to wrap himself in a cloak of intellectualism and claims that his mother would have been prouder if he had made a career in Freiburg as a law professor rather than as a politician, there is no reason to think that the academic path ever seriously tempted him. As Rahtz remarks, “Schäuble’s own dissertation, on the professional legal status of auditors, bore few signs of much theoretical reflection.” What was clear about Schäuble, even as a young man, was that he was on the make.

Schäuble entered the Bundestag in 1972 at the precocious age of 30 and has remained there ever since becoming the “longest-serving member of parliament in the history of Germany”. He is “now in his twelfth successive legislature, at the age of seventy-four.” In 1976 he joined the clique that pushed Helmut Kohl from Rhineland obscurity to the heart of power in Bonn. “Within a year of Helmut Kohl’s election as Chancellor in 1983, Schäuble was his chief of staff. Promoted to Minister of the Interior in 1989, he managed the swift absorption of the DDR by the Federal Republic in 1990. Rising to leader of the party in the Bundestag on the strength of this success, when Kohl lost his bid for a fifth term, he became chairman of the national CDU in 1998, poised for his elevation to Chancellor when the party regained power. But in 2000, he was caught in the scandal of CDU slush funds, and had to make way for Angela Merkel in the post. With her election as Chancellor in 2005, he became Minister of the Interior once again, and on her re-election in 2009, Minister of Finance. There he remains today.”

For most of his career, Schäuble’s focused on broad issues of domestic policy and questions of social order. This befitted a man, who until his disastrous mishandling of the CDU’s party finance scandal in the late 1990s, was widely tipped as the successor to Kohl as CDU chancellor. Issues of the family, “technology” and social integration were his bread and butter. Schäuble’s positions on these questions are typical of the existentially tinged modernism cultivated by the CDU in the Musterländle of Baden-Württemberg, where the big issues of the 1970s and 1980s were techno-political. Not for nothing this was one of the original stomping grounds of the Green Party – arguably the region’s second great gift to modern politics after neoliberalism. This is the soil out of which grew Habermas’s interest in the politics of technology and Ulrich Beck’s Risk Society. On all of these issues Schäuble’s stance was unambiguous: “It was to this end that a new and more heroic attitude (‘yes to modernity and progress’) should be struck in the field of new technologies, even those that presented clear risks like genetic engineering and nuclear power. Society had to recognize new opportunities amid a changing pattern of work.” The debate about technology in Germany in the age of Heidegger and Heisenberg in the 1940s and 1950s has been brilliantly explored by Cathryn Carson. But there is an interesting history also to be written about Germany’s debates about the question of technology in the 1970s and 1980s. Schäuble’s positions seem typical of the affirmative view of technology developed by conservatives in the wake of the Wirtschaftswunder, in the face of ever more pronounced criticism from the left. .

Harder-edged economic arguments come back to the fore following the 1997 crisis in Asia. As Rahtz puts it: “Turbulence in the Far East made 1998 a ‘fateful year’ for Ordnungspolitik. But rather than registering the dangers of financial contagion under conditions of increasing international economic integration, Schäuble reverted back to a national scale to conceptualize the problem. The newly industrialized economies of East Asia had for a time appeared to outcompete the West by exploiting low labour costs. It could now be seen, however, that ‘the new tigers are by no means the raging wild animals represented for a few years as life-threatening to the Western economies in the jungle of globalization’. They were rather bound for something like the deflated trajectory of Japan in the 1980s. [15] Overheated economies had created unsustainable expectations of accelerating standards of living and expanding social benefits. They would need to learn how to conform to Western models of the market economy. This was not an imperialist sentiment, but knowledge hard-won through experience. At the IMF, Michel Camdessus could hardly have put it better.” In due course, to the horror of Larry Summers and the Rubinite crowd, a non-descript German technocrat would indeed take over as IMF managing director, Horst Köhler (2000-2004), the man who would also pip Schäuble to the ceremonial post of the German Presidency.

Ten years on, when faced with the financial crisis in the US and Europe in 2008, Schäuble returned to these same verities.  At the time he was serving as Interior Minister. Peer Steinbrück of the SPD had the unenviable job as finance minster. Despite the scale of the crisis, Schäuble’s core beliefs were unshaken. It was a crisis not of fundamental order, but of excess and imbalance that ‘should not tempt us to put the social market economy as a system in question’. As Rahtz shows us, for Schäuble, the crisis was part of a grand cycle in which “phases of technical innovation were followed by phases of speculation and then of recession. Just as industrial capitalism had experienced its own first great depression at the end of the 19th century, the significance of 2008 was that it was the first major crisis of a ‘global information society and its economy’. [29] In hindsight, liberalization of financial markets had gone too far. The remedy, however, did not lie in more international regulation of them, but in the teachings of the Freiburg School, which had always insisted the really important rules of economic life were social rather than technical. This was something Schumpeter had understood, too. For a market economy, ‘like democracy, is not in itself a completely regulated and self-reproducing system’ but rather one that requires—Capitalism, Socialism and Democracy had explained—‘extra-capitalist patterns of behaviour’: self-reliant, disciplined, honest conduct.”

The dependence of capitalist modernity on social and cultural conditions that it does not itself reproduce is a theme that runs through German conservative thought. It has been powerfully articulated by legal theorists and constitutional judges such as Ernst-Wolfgang Böckenförde and Paul Kirchhoff. Lines like this from Schäuble are typical: ‘The rationalization of all life leads to unspoken costs in private life, engendering two fateful developments: the ascent of the consumer and the descent of the family. Today we could say: the unfunded consuming precariat increases, the middle class is under pressure, economic momentum is weakening.’ Such arguments have an appeal on the left as well as on the right, as one sees in the arguments in defense of the life-world and against commodification offered by folks as varied as Habermas and Streeck.

To counter such excesses and distortions Schäuble appeals to ‘something higher’. As Rahtz puts it, it is up to “civil society to foster mutual trust and confidence through churches, religious groups and other associations. [32] Germany was a secular society, and would remain so, Schäuble conceded, and he himself was not especially pious. Protestantism did not move in a straight line toward ideals that were partially realized by the late 19th century, without its own dark history. But the Christian faith of the Reformation achieved eventual harmony with the Enlightenment culture of reason. Glimpses of this tolerant Protestantism could be found in the pluralistic religious policy of Frederick the Great, or later in the republican revolts of 1848 in Baden. Noteworthy too was the ‘politically active, liberal Protestantism’ of Leipzig that played such an exemplary role in the fall of the DDR. The Dominican teachings of Bartolomé de las Casas could also serve as inspiration for a politics of human rights, in a Christian understanding of human dignity as a universal value, even and especially in relations with non-believers. [33] Religion in this sense, Schäuble contended, was vital for Western society: Habermas’s notion of ‘constitutional patriotism’ was no substitute. Christianity, so rendered, was less a theology than a functional part of the identity of Europe, where it took the form of a secular state built on the concessions of each religion.”

Who is supplying Schäuble with this narrative? Schäuble is a conventional postwar Christian Democrat. But he is also an avid reader of right-wing SPD historian Heinrich August Winkler, author, as Rahtz aptly puts it, of “leaden hymnal(s) to the West”. This is a theme I harped on in the LRB a while back, in a sketch of the Winkler-Schäuble relationship, which can be read as complementing Rahtz’s far more thorough treatment of Schäuble.

It was when he took Steinbrück’s position as German Finance Minister following the defeat of the SPD in the September 2009 election, that Schäuble catapulted to Europe-wide attention as a key figure in the Eurozone crisis. As a Kohl-era CDU-man, Schäuble is widely seen as the key exponent of Eurofederalism in modern Germany. Any flickering of his interest in wider federal solutions, or their opposite causes tremors in the world’s media. But what exactly does Schäuble’s Europeanism entail? On the one hand it is directly tied to his advocacy of “the West” as a basic cultural, political and geopolitical unit. More specifically, however, Schäuble has a vision of the EU.

As Rahtz argues, Schäuble’s “most pregnant single statement of his political career was a CDU position paper he co-authored with Karl Lamers in 1994. Blandly entitled ‘Reflections on European policy’, its thesis was far from anodyne, at the time or since. Germany’s new geo-political …. required a clear-sighted path to a stronger Europe. Deepening must come before widening. This could only be based on close coordination of monetary, budgetary and socio-economic policies in the ‘core’ of the European Union that consisted of ‘five or six’ countries, briskly reduced to just five: Germany, France and the Benelux trio—Italy pointedly excluded. Within this set, there was ‘the core of the core’—naturally Germany and France. These two powers were the motor of European integration, and agreement between them should precede any Union-wide or extra-Union initiatives. France would have to overcome its unrealistic nostalgia for a national sovereignty that had become an empty shell, and EU institutions must be updated in a new constitutional settlement that made sure the core—so too, the core of the core—was not impeded from moving ahead to greater inner unity by vetoes from other members of the Union.”

The question is how much of this has been realized. How influential has it been? At meeting after meeting of the Eurozone crisis, Schäuble was the dominant figure. But has he been able to impose himself on the Eurozone crisis? Rahtz is surely right to say that “Schäuble … was actually more lucid than his fellow Eurocrats in dealing with” the Greek crisis. But lucid is hardly how one would describe the course of Eurozone crisis management. So does this imply that Schäuble has actually been frustrated? One wishes that Rahtz had had room to expand his illuminating discussion. But driven by his focus on Schäuble’s book-length publications Rahtz focuses our attention on the joint interview with French finance Minister Michel Sapin, published as Anders Gemeinsam. Here is Rahtz’s compressed version:

“… as early as 2011, against furious and ultimately successful American opposition, Schäuble was willing to inflict a haircut on bondholders. [38] Not only that, he urged Athens to take a temporary ‘time-out’ from the single currency, to allow for a devaluation to restore its external balances; this suggestion was rejected by the corpulent PASOK boss Venizelos, and also in 2015, when Tsipras had taken over. Then it was France, not Germany, Sapin and not Schäuble, who insisted on keeping Greece shackled to the euro, with the eager compliance of Tsipras, on the grounds that to allow a time-out could fatally encourage Portugal, Spain and Italy, with their own sky-high debts, to follow suit, undermining the credibility of the Eurozone. Merkel, determined there should be no conflict between Berlin and Paris, overruled Schäuble, allowing Tsipras to return to Athens announcing the calvary to which it was now consigned as a liberation. [39] In their reminiscences of the crisis, the real difference between the two Finance Ministers emerges starkly: not one of ideology or conviction, where scarcely anything separates them, but character—Sapin enthusing over Tsipras’s genius in using the very referendum that rejected surrender to the Troika to give him the authority to accept it, Schäuble expressing his contempt for such double-dealing with voters, against which he warned Tsipras on the very first occasion he met him.”

This is very effective shorthand. But it begs further elaboration. To call Schäuble more lucid only makes sense if one shares the view that debt restructuring was always the key to the Greek situation, that Greece was insolvent from the start. This is the basis on which Schäuble can find common ground with Varoufakis but also such Anglophone critics as Eichengreen, Wypolsz and Martin Sandbu at the FT. It certainly is the best place from which to start a consideration of the Eurozone crisis.

If anything, Rahtz understates Schäuble’s radicalism, by suggesting that the preference for restructuring emerged only in 2011. In fact along with several other German spokesmen, it was pretty evident that Schäuble preferred a restructuring as early as the spring of 2010. This would have been the effect of his European Monetary Fund proposal that would have provided for IMF-style restructuring of all debts beyond a certain pre-agreed percentage. But this proposal was blocked by the coalition that Rahtz correctly identifies i.e. the US and France, plus Merkel. The French – one might have added Trichet at the ECB to the mix – were worried about their banks. So much is obvious. But when one asks why the resistance of the US Treasury was as fierce as it was, one reaches the limits of Schäuble’s lucidity. What would have been needed to contain the risks of a Greek debt restructuring were three things: immediate ECB intervention in bond markets to stop contagion; the creation of a bond purchasing fund collectively backed by Europe’s governments; and aggressive bank restructuring with some element of the costs being pooled (to avoid an Irish-style bank-sovereign doom loop). Without those flanking measures, pushing for PSI, as at Deauville in October 2010 was not so much practical politics, as a strategy of tension. Whether this escalation of market pressure on the weakest Eurozone members was calculated or not, is an open question. The doubts in Washington about the coherence of the German strategy were important in pushing Geithner et al to prefer extend and pretend.

This is the opportunity for leadership that Germany and Schäuble, in particular, allowed to go begging. This was the moment when Berlin lost its grip on the Eurozone crisis. France was not in a position to strike a tough bargain. Sarkozy proved only too willing to go along with Berlin. Schäuble could have had his core European axis. But despite his Euro-federalist leanings, Schäuble is far too conventional a thinker to push for anything like the comprehensive package that would have ben necessary to solve Europe’s financial crisis. Despite his clear recognition that PSI is key he continues to hammer on fiscal rectitude as the ultimate issue in the crisis. Merkel wanted to put off the political cost and did not want to move beyond the confines of the Lisbon Treaty, with which she had rescued Europe from the constitutional debacle of 2005. The Bundesbank, which can mobilize a groundswell of resentful DM-patriotismus on the least provocation, opposed bond-buying by the ECB. Schäuble’s clarity about debt restructuring thus lacked the necessary flanking measures that would have made it a reasonable policy and it is Berlin’s agonizingly slow recognition of this fact that has set the pace of the crisis. In effect, Germany became a veto player rather than a leader. It could afford to adopt this negative position, secure in the relative comfort afforded to it by global demand for its exports. For the rest of Europe it was a disaster of historic proportions.

Merkel is a key part of the problem. But Schäuble’s limitations are also defined by the final passage in Rahtz’s paragraph on the question of leadership in democracy. Sapin applauded Tsipras’s nerve in refusing to see the Greek referendum as a mandate for Grexit. Tspiras struck the best debt deal he could get whilst remaining in the Euro and then went to the electorate for a mandate to continue in office. Whatever one thinks of his strategy, his tactics were remarkable. He was returned to office with the left-wing of Syriza marginalized. By contrast, Schäuble and Merkel have led from behind, pandering to a zero-sum vision of the Euro crisis. Merkel steers by the seat of her pants. In Schäuble’s case his articulation of the presumed state of German opinion drives his relentless insistence on a Europe-wide fiscal discipline along the lines of the “debt brake” that Merkel’s first grand coalition wrote into the German constitution in 2009. Without the promise that everyone will do their “homework” he refuses to ask German voters to back large-scale acts of fiscal collectivism. This, of course, ignores the fiscal wiggle room that Germany itself made full use of in the early 2000s and the advantages that Germany would gain as an exporter from more rapid growth on the European periphery. It also ignores the possibility that with the right leadership German voters might actually be won to a more constructive, less zero-sum vision of Europe. The crisis has made Schäuble popular. It has not shown him to be a leader capable of winning public opinion over to even a modest European vision.

Rahtz concludes his survey of Schäuble’s writing in ringing terms: “Not an original thinker, if an assiduous reader and competent middling writer, Schäuble’s outlook is a compound of socio-economic ideas of a generically ordo-liberal background, and political tropes of essentially Cold War vintage, … But by force of character he has given these an energy and consistency that none of his generation of Union politicians can match. In the land of Euro-mummies, a self-declared cripple is king.”

Much as one may appreciate Rahtz’s subtle reading of Schäuble’s books, is this a convincing judgement on his political position? Certainly the gallery of political personalities in Europe is unimpressive, but if one surveys the course of events since 2009 is it plausible to claim that Schäuble is king?

The policy of extend and pretend embarked on in 2010 was not his. He favored Grexit in 2012 that is not what he got. Instead the Eurozone was held together by an activist push by Italy, Spain and France, backed by the US, and the sudden emergence of Draghi and the ECB as the joker in the pack. Meanwhile, Schäuble the devout Atlanticist found himself fighting a running battle with the Obama administration. In 2015 once again, Merkel overrode him both on Greece and on the Syrian refugees. For a moment it seemed that the refugee crisis might unseat Merkel and allow Schäuble belatedly to fulfill his dream of the Chancellorship. But she recovered. Brexit was a profound shock to his European vision. And where is Atlanticism to go in the age of Trump?

Schäuble remains an influential figure, the most popular politician in Germany no less. On the right-wing of the CDU his popularity is useful in tamping down the fires of the AfD. He sits atop his coveted budget surplus, the “schwarze Null”. He will no doubt claim credit for Europe’s swelling current account surplus and the improving situation in Ireland, Spain, Portugal etc. But in fact the severe austerity imposed on the Eurozone between 2011 and 2013 was a disaster, the full consequences of which were only contained by the preemptive action of the central banks, first the Fed and then the ECB, which Schäuble has repeatedly disowned. After Brexit, sensing the general mood of resentment across much of the EU, he has pulled back from the call for “more Europe”. In response to Trump’s erratic attacks on Europe it has been Merkel who has led the way. Schäuble for his part seems bent mainly on playing American criticism of the German current account surplus back against the ECB, which he demands should  take responsibility for the undervalued euro. Once more Schäuble reveals himself as a street-fighter, competing in an election year for votes on the right-wing of German politics, angling for position against Draghi. Schäuble is certainly no Euro-mummy. But he is no king either. Europe’s Prince, if there is one, rules in Frankfurt not Berlin.

The post Europe’s Political Economy: Reading Schäuble appeared first on ADAM TOOZE.

]]> 7
Notes on the Global Condition: Strike Stops Rocket Launch Sun, 07 May 2017 19:36:47 +0000 How Europe's globalized space program intersects with "post"-colonial struggles in French Guiana.

The post Notes on the Global Condition: Strike Stops Rocket Launch appeared first on ADAM TOOZE.


Strike stops rocket launch. It’s not a headline you see every day. Prompting the question: Where in the world do space travel and labour relations intersect?

Modern space programs have their origins in the mid-century military-industrial complexes of Germany, the US and the Soviet Union. Their labour regimes were those of the military, crash R&D programs, lab science, or coercive forced labour. In its origins, rocketry was associated with slave labour in the ghastly caverns of the Dora V2 production line in 1944. In Sci-Fi of the 1960s and 1970s, fantasies of extra-terrestrial forced labour abound. As it turned out, the advent of commercial satellite launching in 1980s coincided with the decline of industrial militancy and the end of the Soviet Union.

But on March 2o 2017, a launch at Europe’s premier spaceport in French Guiana was stopped dead by a general strike. Barricades thrown up around the launch facility at Kourou blocked the movement of a 180-foot-tall Ariane 5 rocket to its launch pad. Instead of blasting two satellites – one Brazilian and one South Korean into orbit – the rocket waited in the final assembly building under the guard of the fearsome French foreign legion.

Guiana is one of the world’s most important launch facilities for global telecommunications and military space hardware. It is an ideal location because of its proximity to the equator and the low density of local population, which minimizes the risk of collateral damage in case of launch failure. Rockets can be fired into orbit, high across the Atlantic in the direction of West Africa. In 2016 the gigantic 850 square kilometer CSG— Centre Spatial Guyanais— was the second-busiest spaceport in the world after Cape Canaveral in the United States. Arianespace, the operator of the site a joing undertaking of the European aerospace industry, is locked in fierce competition with its American competitor United Launch Alliance and China’s state-backed rocket builder. Arianespace is jointly owned by the.

The timetable is tight. According to space business websites, other payloads for 2017 include: “A Russian-made Soyuz rocket is next in line at the tropical space base, slated to loft the Boeing-built SES 15 communications satellite into orbit to provide in-flight Internet connectivity for airline passengers, and support government, networking and maritime customers across North America. SES 15 also hosts a payload for the FAA’s Wide-Area Augmentation System to enhance airline navigation and safety across the United States. That will be followed by an Ariane 5 launch in early June with the ViaSat 2 and Eutelsat 172B commercial communications satellites. That launch was originally targeted for April 25.”

And the pace of business will only pick up: “The Italian government announced earlier this month that two of its next-generation radar surveillance satellites will launch on Soyuz and Vega-C rockets from French Guiana in 2018 and 2019, and the European Space Agency said a small space telescope designed to study planets around other stars will blast off with one of the Italian reconnaissance platforms on a Soyuz mission next year.”

Arianespace cannot afford to misfire. Its US competitor is rolling out ever-cheaper launchers and Arianespace is pushing its own new vehicle, the Ariane 6. “If we can take up launch campaigns again in the next few days, we could do our initial planned twelve launches for 2017, if all goes well for the rest of the year,” Daniel Neuenschwander, director of space transportation for the European Space Agency, told Quartz. “If we are missing that in the next two weeks, then we are seriously endangering the twelve launches. We will only know at the end of the conflict. I sincerely hope that this conflict ends soon.”

The difficult for Europe’s space entrepreneurs is that though Guiana may be the ideal geographic location, in social and political terms, the former French colony offers a less than steady launch platform.

Colonized by France in 1504, having failed as a sugar plantation, Guiana was converted to a penal colony. It was here that Dreyfus was imprisoned in the dreadful Devil’s Island prison that inspired Papillon. After being liberated from the Vichyites, it was granted the status of an overseas department in 1946. The prison complex was finally closed in the mid 1950s, leaving behind a population of broken men. Construction of the Guiana Space Center began in 1965, when it became clear that France would soon have to close down its first-choice rocket launching facility in the Algerian Sahara. The first launch from Guiana of the rocket, Veronique, took place in April 1968.

Video of Veronique’s launch here:

When the European Space Agency was launched in 1975, France offered Guyana as its main spaceport. And the first Ariane 1 rocket of the ESA blasted off on Christmas Eve 1979.

To provide security the French Foreign Legions 3rd Infantry regiment took up permanent residence in Guyana in September 1973, doing much of the roughest engineering work necessary to open a road to the Brazilian frontier.

In the 1970s Guiana was both the site of abortive French development experiments and served as a dumping ground for Hmong refugees from Laos. Today, its income per capita at 15,000 euros is a fraction that of France. Nevertheless, as a full department of France and a territory of the EU it is hugely attractive for migrants from neighboring Suriname, Brazil and elsewhere in Central America. As a result, Guiana’s population has exploded from 35,000 in 1961 to 125,000 in 1990 and 250,000 in 2017, with neither infrastructure nor employment keeping up. The medical facilities, which were originally built for French astronauts, are now slated for privatization. Schools are so poor that only 13 % of local youth achieve a Bac high school degree and 10,000 kids are without schooling altogether. Around the Kourou space center the settlements are run down and dilapidated. Further out, in the heavily forested territory, conditions are even more basic with 30 % of the 250,000 population getting by without electricity or running water. Conditions are worsened by the dependence of the territory on imported food. Indeed, Guiana even imports lumber, because its rain forest territory is required by Paris to serve as a carbon offset in climate change talks. The only flourishing industries are drug smuggling and illegal gold mining. Deep in the forest, the miners fight a running battle with the local gendarmerie backed up by the foreign legion.

François Mitterand himself put the question in 1985: « Comment pouvons-nous continuer à lancer des fusées sur fond de bidonvilles ? »

A generation later the contrasts persisted. Writing for the Independent in 2009,  Alain de Botton, was moved to this Evelyn Waughesque description of Kourou:

“A high-tech space port was built on a strip of jungle north-west of the capital. A new town, Kourou, was constructed next door, designed to house workers and their families in functional concrete apartment blocks laid out along wide thoroughfares with grandiose names such as the Avenue de Gaulle and the Esplanade des Étoiles. I travelled to French Guiana on a press trip to witness the launch of a Japanese satellite. The group was billeted together in the Atlantis Hotel which, though only newly built, was fast surrendering itself to tropical mould and the incursions of jungle fauna. The space town of Kourou was in no better shape than the hotel on its perimeter. Evoking comparison with Chandigarh and Brasilia, two other examples of modern architectural indifference to issues of context and culture, it was in an advanced stage of decomposition after only a few decades of existence. Beside the man-made lake, unshaded wooden benches rotted unused: they had been deployed to provide respite on the kind of afternoon stroll which it had not yet occurred to anyone in the tropics to take. The concrete façades of buildings had buckled in a climate which from April to July could deliver in a single week as much rainfall as northern France might experience in an entire year. However, once inside the heavily fortified gates of the space centre itself, the situation was transformed. Immaculate buildings were dedicated to the assembly of satellites, the preparation of Ariane boosters and the storage of propellants. There were three control centres, a generating plant, barracks for a division of the Foreign Legion, two swimming pools, and a restaurant specialising in the cuisine of the Languedoc. These were scattered across hectares of marsh and jungle, generating bewildering contrasts for visitors who might walk out of a rocket-nozzle-actuator building and a moment later find themselves in a section of rainforest sheltering round-eared bats and white-eyed parakeets, before arriving at a propulsion facility whose corridors were lined with Evian dispensers and portraits of senior managers.”

For Guianan technicians employed at the space facility, who have to live these contrasts on a daily basis, the experience is painful and increasingly unacceptable. ““Kourou is a political, technological and financial success. It is the flagship of European technology,” Youri Antoinette, an engineer at the space centre and spokesman for the residents of Kourou, told AFP. “But once you leave the space centre, you’re in an under-developed country.” The unemployment rate in Guiana is 23 percent, and nearly twice this for 18-25-year-olds, while per capita income is about half of the rate in mainland France.”

An independence movement emerged in the 1970s and faced violent repression between 1997 and 2000.

The space port has reacted to the tensions by upping it security measures. A rather revealing insight into its security arrangements can be found at the website of the firm that provides it with surveillance hardware. The arrival of Russia’s Soyuz launcher system in Guiana in 2011 provoked a further tightening of security.

The perimeter fences cannot, however, block protests from within the labour force of the space center itself. The first wave of protests to stop space launches in Guiana took place in 1989. In 2011 the operators of the radar tracking system went on strike. In March of 2017 it was the drivers of the shuttle with which the rocket is moved from the assembly hall to the launch pad, who stopped work. As one report commented: “That issue was resolved within a few days, but a wider net of demonstrations across French Guiana spread, with many citizens raising concerns about the privatization of a local hospital, high crime and poor educational opportunities in the region, which is a department with the same political and legal rights as the rest of France.”

The protest was led by a “Collective of 500 Brothers” formed earlier in 2017 to protest Guaina’s shocking disparities. It gathers 37 union and community groups under the umbrella of the Guianese Workers’ Union (UGT). Following the stoppage on the base the UGT voted for an unlimited general strike on March 27. They blocked roads to Brazil and Suriname and closed the airport and public facilities. A mass demonstration on Tuesday 28 March mobilized a giant demonstration. Estimates of the numbers involved vary between 10,000 and 40,000 people, out of a population of 250,000. The 500 freres had grown to 20,000 freres.

When they were invited into the Kourou space launch facility for talks, 30 leading activists staged a sit in refusing to leave the facility until their terms were met. “We won’t move. The situation is stuck and Guiana is blocked. You are blocked. We want the billions we have asked for,” protest leader Manuel Jean-Baptiste told the director of the space centre.

Protest leaders demanded more 3 billion euros ($3.3 billion) in emergency funding to improve conditions in French Guiana.” They called for a “Marshall Plan” for Guiana.

What the protestors demand is that the French authorities recognize the spectacular disparity in Guiana between conditions inside the high tech space center and in the community around it.

The French political establishment has been slow to respond. Macron embarrassed himself by referring to the territory as an island.

Marine Le Pen has been more on point. Indeed, she has visited the territory in person. But the Front gave the situation a characteristic twist. Le Pen indicts the cruel ‘minimum service” offered by France to its Guianan citizens. But demands that this be solved by expelling the third of the population that is foreign born.

The Guianan’s themselves are more far-reaching in their demands. They want comprehensive development. ““There are rails to transport satellites onto a rocket, and there’s no train, no metro, no night bus,” Stéphane Miatti, a receptionist, said at a March 29 protest in Cayenne. This sense of injustice has even informed the name of the group behind the protests: “Pou Lagwiyann Dékolé,” a Creole phrase roughly translatable as “Let French Guiana Lift Off.” It’s a twist on one of the refrains of the movement, pulled from a 17-year-old protest track from the now-deceased Guianese rapper Freaky Fan: “La fusée décolle mais la Guyane reste au sol,”—”the rocket takes off, but French Guiana stays on the ground.””

All told the collective of the protestors outlined an agenda of 400 demands, touching on everything from education to security to fisheries. They turned down an initial offer of 1.1 billion euros from the government, demanding instead an aid package worth €3 billion.

“The foundations—education, health, energy—if we don’t have these things we need, in ten years we’ll have to protest again,” said Rimane, of the Guianese Lighting Workers’ Union, at the April 4 march on the space center. “That’s not logical.” “We knew well that, by blocking Europe’s space center, there would be a global repercussion,” said Mathias, who, nearly a month ago was among the first protesters to block the roundabout. “It’s real pressure.” … Mathias said the message to Europe had been sent. “It was to tell them, look, if you don’t unblock the situation in French Guiana, the space center will stay blocked,” he said.”

Hollande’s initial response was dismissive. But as the situation deteriorated and the blockade held, Paris changed tack. Both the Interior Minister and Overseas Territories Ministers scrambled to Guiana. Ericka Bareigts the Overseas Territories Minister declared on her arrival: ““After so many years, the honor falls to me to give, beyond my small person, beyond the authority I have, my excuses to the Guyanese people”, acknowledging years of under-investment from Paris.

The upshot is a package of 1.1 billion euros ($1.2 billion) of immediate aid, and the announcement on 21 April of a “priority review” of another 2.1 billion euro ($2.3 billion) funding package.”

For sake of comparison the launch activity generates $ 1.5 bn annually, which Arianespace officials believe to be c. 15 % of Guiana’s GDP. So if $ 3 bn were to be delivered from France, this would be rather more significant than the Marshall Plan.

With a fix in place, whilst Guiana awaits its Marshall Plan, on the evening of 4 May Flight VA236 blasted off from Guiana with its 10 ton load. 28 minutes later its Brazilian satellite was deployed into geostationary orbit followed by its Korean sister 8 minutes later. The Brazilian satellite, “will operate from an orbital position of 75 deg. West with Ka- and X-band transponders, providing sovereign and secure means for Brazilian government and defense strategic communications, as well as high-quality Internet services to 100 percent of the Brazilian territory as part of the National Broadband Plan.” The Korean “bird” will cover not only its own country but “the Philippines, the Indochinese Peninsula, India and Indonesia.”

This is how de Botton described such an even 8 years earlier: “At 8pm on the day of the launch, we were driven in the darkness, under armed guard, to an observational site in the jungle only 3km from where the boosters would be ignited. Across the humid night, Ariane launch stood out on its platform, illuminated by a set of arc lamps around which dense clouds of tropical insects were dancing frenziedly. Deeper in the jungle, there were peccaries and spider monkeys, giant anteaters and harpy eagles, while in this unlikely outpost of air-conditioned Einsteinian ambition, something was preparing to leave the planet. All shipping and aircraft had been cleared from an arc extending to the West African coast. Ariane’s engines took their last breaths of oxygen through a thick umbilical cord. Every remaining human had been removed from the area, all commands would from now on be executed mechanically. It was hard not to feel some of the same sadness that might attend the departure of an ocean liner or the lowering of a coffin. Dix, neuf, huit, sept, retrait des ombilicaux… It was peculiar to hear a sequence so indelibly associated, via cinema, with Cape Canaveral being enunciated in another tongue. At cinq, there was a dull sound as if a shell had gone off, and a first puff of smoke rose from the bottom of the launcher. By trois, white billows had enveloped its base, and on the cue of un, et décollage, the rocket ripped itself off its pad in immaculate silence. When the noise reached us a second later, we recognised it as the loudest any of us had ever heard, louder of course than thunder, jets and the explosive charges set off in quarries, the concentrated energies of tens of millions of years of solar energy being released in a few moments. The rocket rose, and there was a collective gasp, a most naive, amazed Ahh, inarticulate and primordial, as all of us for a moment forgot ourselves – our education, our manners, our upbringing, our sense of irony – to follow the fine white javelin on its ascent through the southern skies. There was light, too: the richest orange of the bomb-maker’s palette. The rocket became a giant burning bulb in the firmament, letting us see as if by daylight the beach, the town of Kourou, the jungle, the space centre’s buildings, and the faces of our stunned fellow spectators. The scene brought to mind the moments of smoke and fire that were invoked by the Old Testament prophets to make their audiences shudder before the majesty of their lord. And yet this modern impression of divinity was being generated by the most secular and pagan of machines: science has taught us to upstage the gods. … Just a few days earlier, I had been in a room with the satellite that, right now, was already reaching the upper atmosphere. The rocket boosters had been jettisoned somewhere in between and were parachuting their way down, halfway to Africa by now. An odd quiet settled over us again. A nature-made wind could be heard through the trees, then the call of a monkey.”

What the events of the spring of 2017 have done is to add to this scene populated by gods, satellites, Western journalists and monkeys, the politicized, articulate voices of Guyana’s people, its technicians, nurses, check out clerks, politcos and disaffected youth.


How a handful of South American protestors took Europe’s space program hostage


How a handful of South American protestors took Europe’s space program hostage

The post Notes on the Global Condition: Strike Stops Rocket Launch appeared first on ADAM TOOZE.

]]> 12
Notes on Social Theory: Reviewing Anderson’s H-Word in the FT Sat, 29 Apr 2017 02:31:42 +0000 Exploring Perry Anderson's intellectual workshop.

The post Notes on Social Theory: Reviewing Anderson’s H-Word in the FT appeared first on ADAM TOOZE.


Brief appreciation of Perry Anderson’s latest The H-Word: The Peripeteia of Hegemony Verso (January 2017) in the FT this weekend.


Many thanks to Ted Fertik for helping me get these 1100 words in shape. Credit to Ted. Blame all mine.

I end with the obvious question: “How will the foremost critic of liberal hegemony respond to the jarring displacement of the mellifluous Barack Obama by the crude power-grab of Trump and his entourage? As is commonly remarked, Trump is putting comedy out of business. Will he do the same to sophisticated intellectual leftism? Given the evident threat from the right and its own political weakness, should the left fall in with centrist calls for unity, forming a kind of 21st-century Popular Front? One can hardly imagine Anderson agreeing. At its peak, the liberal hegemony was only too happy to declare, “there is no alternative”. It would be painfully ironic if that hegemonic declaration were to command even greater practical force amid liberalism’s shambolic decomposition.”

To which Anderson has already given answer with his merciless piece in the January New Left Review “Passing the Baton”:


The post Notes on Social Theory: Reviewing Anderson’s H-Word in the FT appeared first on ADAM TOOZE.

]]> 7
Notes on Social Theory: Reviewing Anderson’s “H-Word” in the FT Fri, 28 Apr 2017 17:10:56 +0000 Reviewing Anderson on Hegemony in the FT.

The post Notes on Social Theory: Reviewing Anderson’s “H-Word” in the FT appeared first on ADAM TOOZE.


Brief appreciation of Anderson’s latest The H-World. The Peripeteia of Hegemony (Verso, 2017) in the FT this weekend.

Many thanks to Ted Fertik for helping me to get these 1,100 words in shape. Credit all his. Blame all mine.

I end with the obvious question: “How will the foremost critic of liberal hegemony respond to the jarring displacement of the mellifluous Barack Obama by the crude power-grab of Trump and his entourage? As is commonly remarked, Trump is putting comedy out of business. Will he do the same to sophisticated intellectual leftism? Given the evident threat from the right and its own political weakness, should the left fall in with centrist calls for unity, forming a kind of 21st-century Popular Front? One can hardly imagine Anderson agreeing. At its peak, the liberal hegemony was only too happy to declare, “there is no alternative”. It would be painfully ironic if that hegemonic declaration were to command even greater practical force amid liberalism’s shambolic decomposition.”

It is a question to which Anderson has already given a decisive answer in the January issue of NLR with his merciless reckoning with the Obama-Trump transition, “Passing the Baton”.


The post Notes on Social Theory: Reviewing Anderson’s “H-Word” in the FT appeared first on ADAM TOOZE.

]]> 0
America’s Political Economy: The Fed and the Markets – Putting Your Ear to the Echo Chamber Thu, 27 Apr 2017 11:48:46 +0000 As the Fed plans its next move, back channels to the bond markets are buzzing. What are some of those channels and what is the talk?

The post America’s Political Economy: The Fed and the Markets – Putting Your Ear to the Echo Chamber appeared first on ADAM TOOZE.


Fed is getting serious about shrinking its $ 4.48 trillion balance sheet. The economics and politics of this are extremely delicate. It is both crucial to future outlook for the US and world economy that they get this right and a fascinating case study in the politics of monetary policy in the post-crisis period.

Buying the gigantic bond portfolio was about raising bond prices, driving interests rates down, removing bad assets from fragile balance sheets, providing liquidity, taking a lot of maturity mismatch of private sector balance sheets and stabilizing the bond markets. The Fed hasnt actively traded its portfolio. This has compressed volatility in the bond market. As it unwinds the portfolio all of those variables are in play.

It involves both high-intensity discussion within the elaborate structure of the Fed system and with the outside world.

Bloomberg reports that the Fed is accelerating discussions both through established and new channels with bond market players “to find the right communication and assess market expectations on the size of shrinkage”

“All indications suggest that conversations around the balance sheet have accelerated,” said Carl Tannenbaum, chief economist at Northern Trust Company, a Chicago-based asset manager. “The consideration of everything from design of the program to communication seems to have intensified.”

“Fed staff routinely seek feedback from investors and bond dealers to get a fix on sentiment and expectations. The New York Fed confirmed the discussions and said it is part of regular market monitoring. The Fed is getting closer to disclosing its plan, and conversations have become more intense. “They are gauging what’s the extent of weak hands in the market that will dump these assets,” said Ed Al-Hussainy, a senior analyst on the Columbia Threadneedle Investment’s global rates and currency team. “They are calling all the asset managers. It is not part of the regular survey.””

The highly influential Fed Vice Chairman Stanley Fischer in a recent speech at Columbia University pointed out that “Information gathering is an important part of managing market expectations — for the simple reason that you do not know if you are going to surprise the market unless you have a good estimate of what the market is expecting,”.

The Fed draws input from a regular survey of market participants which has recently included questions about bond market players expectations of balance-sheet reduction. The Fed also channels communication through the “New York Fed’s Investor Advisory Committee on Financial Markets”. This panel was created in the summer of 2009. It currently “includes Ray Dalio, the chairman of Bridgewater Associates LP, and Dawn Fitzpatrick, chief investment officer at Soros Fund Management — included an agenda item on global central bank balance sheets.” New York Fed President William Dudley, the vice chairman of the policy-setting Federal Open Market Committee, and a right-hand man to both Bernanke and Geithner (when he was at NY Fed) chairs the advisory panel. The Committee’s website is here. And here is the membership list as of April 2017.

One could say a lot about this committee and its composition. Perhaps on the occasion of the release of its April minutes. But for one thing and in light of a discussion in another place, it is astonishingly American!

In April, the Advisory Cttee were asked about their “expectations for the normalization of central bank balance sheets, both in the U.S. and abroad, the agenda item said. It also questioned what strategies they expect different central banks to use and the different challenges that may be faced.” The ECB has been building its balance sheet rapidly since the spring of 2015. The Bank of Japan’s balance sheet is absolutely gigantic.

So much for the channels of communication. What are the stakes? The Fed is talking tough, suggesting 2 or more rate hikes. The US labour market is tightening. They seem to want to build a case for short-term interest rate hikes. The bond markets don’t believe the hype. They think long-term prospects are no better than the recent average and so dont actually think a long-term interest rate increase is likely. They are betting in effect not just on the economy, but also on expectation that Fed will in the end come round to their view. It has been described by one analyst as the Fed and the markets staring each other down.

How has it come to this?  Caroline Baum at Marketwatch gives a run down of the disconnect. Fed has talked too much about rate increases but done not enough. The markets doubt that rates will actually go up. The markets see a huge gap between soft data pointing to optimism and real data which suggest that the US economy will continue to chug along at a modest an unexciting 2 % growth pa and therefore expect no dramatic action. Analyst circles are full of talk about a world in which interest rates remain stuck at or close to the zero bound for the foreseeable future. Some of this has recently come from the Fed’s own staff. The market’s ears pricked up when two senior Fed economists gave a paper at Brookings recently arguing that in light of secular stagnation the Fed should raise its inflation target to avoid getting stuck at zero interest bound. As recently reported by Bloomberg San Francisco Fed head Williams has put his authority behind idea that the neutral rate of interest (the rate at which the Fed provides neither contractionary nor stimulative impulses) is bumping along at zero. In other words the current low interest rate position is actually contractionary. So he won’t be voting for interest rate increases any time soon unless wages surge.

Through these kinds of channels intense debate within the Fed over issues in monetary economics spills over into the markets. Whether or not investors believe in the neutral rate of interest they know that key Fed officials do. Meanwhile, at the other end of the spectrum, big speculators went through a phase early in the year of betting heavily against bonds (expecting sharp interest rate increases on the back of the Trump-flation story). When those short-term bets against bonds unwind, the next movement of bond prices will be upwards, lowering interest rates. And even if the Fed starts liquidating its bond portfolio, the banks have huge $ 2.2 trillion cash deposits with the Fed which can easily absorb those bond sales without squeezing the banks in a serious way.

This is a hypercomplex and self-reflexive ecology with huge stakes. One can of course reduce it to a simple story of “bond market pressure”. And there are actors out there who will talk in such crude terms. PIMCO put someone on one of the news channels to  talk tough about “bond vigilantes”. But the “vigilantes” are always other people. And the warning is conditional. The vigilantes could emerge if the Fed doesnt keep inflation under control etc etc.

Vigilantes are a bit of a cliche at this point. More interesting things to watch may be on the technical side. As the Fed draws down its portfolio of Mortgage Backed Securities this is likely to increase volatility in that market. Efforts to hedge risk in the market for mortgage backed bonds may spill over into greater volatility in the market for US Treasuries. And this is where the long-term outlook on inflation/stagnation could come into play. As Bloomberg reports: “It’s not just hedging in the MBS market that could hit Treasuries. Insurers, which have been buying protection against lower yields for years, may now do the opposite, especially if the upswing in growth and inflation continues and share prices keep rising, said Dominic Konstam, Deutsche Bank AG’s global head of rates research. “That switch can flip if there’s a real breakout of the secular-stagnation story,” he said.”

On the other hand there is nothing that financial engineers and investment bankers like more than volatility. It is where trading profits are to be made.

The post America’s Political Economy: The Fed and the Markets – Putting Your Ear to the Echo Chamber appeared first on ADAM TOOZE.

]]> 10
America’s Political Economy: Hunger in America Tue, 25 Apr 2017 10:23:08 +0000 USDA food insecurity figures may severely understate the scale of the problem of hunger in 21s-century America, especially in rural areas.

The post America’s Political Economy: Hunger in America appeared first on ADAM TOOZE.


Food insecurity in the US.

This remarkable post has been rattling around in my head ever since I first clicked the link. I think it has been jogged back to the top of stack by a bizarre encounter last night on Broadway with a man railing about the fact that our local McDonalds franchise does not “honor the $ 1 meal deal”. He was furious and very articulate!

Who would care about a $ 1 meal deal?

According to the USDA: “An estimated 12.7 percent of American households were food insecure at least some time during the year in 2015, meaning they lacked access to enough food for an active, healthy life for all household members. That is down from 14.0 percent in 2014.”

Bad as those numbers are, do they underestimate the levels of hunger in the US? Jayson Lusk a Oklahoma State University agronomist and food policy expert has been conducting an in-depth survey of eating habits FooDS for the last four years. When he inserted USDA style questions about food insecurity into his more detailed survey forms, he found shocking results:

“Data from FooDS reveals a strikingly high level of food insecurity – much higher than what the USDA reports.  According to the criteria outlined at the above link, we found a whopping 46.7% or respondents were classified as having low or very low food security (22.9% of the sample had low food security and 23.8% had very low food security).”

How could this be? The main reason for the startlingly different result turns out to be a question of basic assumptions:

“In short, the USDA assumes that if you make enough money you can’t be food insecure. In their latest report, they indicate in footnote 5:

“To reduce the burden on higher income respondents, households with incomes above 185 percent of the Federal poverty line that give no indication of food-access problems on either of two preliminary screening questions are deemed to be food secure and are not asked the questions in the food security assessment series. ”

What if I take my FooDS data and just assume anyone that has an income that puts them at 185% of the poverty line (based on these criteria) is food secure despite the answers they gave on the survey? (note: my calculations are crude because I only measure household income in wide $20,000 ranges and I simply assign people to the midpoint of the income range they selected).

When I do this, I find that now “only” 22% are classified as having low or very low food security (9% of the sample had low food security and 13% had very low food security).  That’s still a lot higher than what the USDA reports, so maybe my internet survey still has some sample selection issues.  However, it’s still HALF the original measure.

What does this mean?  There are a lot of relatively high income people that would be classified as food insecure if the USDA simply asked them the same questions as everyone else.  There are a lot of relatively high income people that say “yes” to questions like “In the last 12 months, did you ever eat less than you felt you should because there wasn’t enough money for food?”

Upshot: even at income levels above poverty many households in the US struggle to put food on the table. And those in rural areas, especially those involved in farming are worst affected.

The post America’s Political Economy: Hunger in America appeared first on ADAM TOOZE.

]]> 2
Notes on the Global Condition: The UAE and the Geopolitics of the Horn of Africa Sun, 23 Apr 2017 11:43:14 +0000 The post Notes on the Global Condition: The UAE and the Geopolitics of the Horn of Africa appeared first on ADAM TOOZE.



Under the title “Horn of Africa: Pivot of the World” LMD published a great piece by Gérard Prunier last year on the truly mind-blowing force field in that part of the world. HIGHLY recommended. The Economist more recently published a shorter but fascinating piece about the independent geopolitical ambition of the UAE. Very worth reading! This is a meld of an earlier facebook post inspired by Prunier with new stuff from the Economist piece and elsewhere.

Ethiopia, is a population giant undergoing an experiment in “building capitalism from above”, which amongst other things has made it into the #4 exporter of cut flowers and a major arena in the global“land rush”. In 2015 people were worrying about potential implications for human rights. In the fall of 2016 the regime declared a state of emergency as it seeks to get grip on inter-ethnic protests triggered by … uneven and combined development around Addis.

To justify its crackdown, the Ethiopian regime accuses Egypt of fomenting terrorism over water rights on Nile triggered by Ethiopian dam construction.

Simultaneously, Addis is locked in power play with Eritrea over Djibouti, ocean access and Horn of Africa.

Beijing is pumping billions into a China-funded and China-operated regional railway infrastructure, linking Addis to Djibouti where China has constructed its first overseas military base.

Meanwhile, global logistics player Dubai Port Authority is playing Djibouti against the neighboring breakaway region of Somaliland. And this is no more than a first approximation of the complexity of this forcefield, with the nightmarish Saudi intervention in Yemen just across the Red Sea to the Northeast.

Plus the region is overshadowed by the worst drought in 50 years, which puts 18 million inhabitants of Ethiopia at risk of famine in near future.

The Economist fills in the backstory to the expansion of Dubai Port Authority. It is one of the vehicles for the remarkable ambition of the United Arab Emirates. To capture this we need to widen the map from the immediate surroundings of the Horn.


As the Economist puts it: “From Dubai’s Jebel Ali, the Middle East’s largest port, it is extending its reach along the southern rim of Arabia, up the Horn of Africa to Eritrea (from where the UAE’S corvettes and a squadron of Mirage bombers wage war in Yemen), and on to Limassol and Benghazi in the Mediterranean. Fears that Iran or Sunni jihadists might get there first—particularly as the region’s Arab heavyweights, Saudi Arabia and Egypt, seem to flounder—propel the advance. … If we waited to prevent these threats at our borders, we might be overrun,” explains Ebtesam al-Ketbi, who heads a think-tank in Abu Dhabi. The UAE also worries that rivals might tempt trade away from Jebel Ali, awkwardly situated deep inside the Gulf. Rapid port expansion at Chabahar in Iran, Duqm in Oman and King Abdullah Economic City in Saudi Arabia all pose a challenge.”

Apparently the prime mover in the UAE is Abu Dhabi’s 56-year-old crown prince, Muhammad bin Zayed. “He is the deputy commander of the UAE’s armed forces, and the younger brother of the emir of Abu Dhabi, who is also the president of the UAE. … Flush with petrodollars, he has turned the tiny country, whose seven component emirates have a combined population of almost 10m (only about 1m of whom are citizens), into the world’s third-largest importer of arms. He has recruited hundreds of mercenaries, and has even talked of colonising Mars. … “.

SERIOUSLY … UAE the world’s third largest arms importer. Not by much. But yes it is. UAE ahead of China!

And the Mars project is on a longer timeline but it is for real too!

Meanwhile, back on earth, “if you join the dots of the ports UAE controls … some even see the old Sultanate of Oman and Zanzibar, from which the emirates sprang, arising afresh.” What this means in real time is that UAE expeditionary forces are  in the business of putting down pro-democracy movements in Bahrain in 2011 and are one of the most active forces in the bloody war in Yemen.

In July 2015 it was UAE special forces that captured the Yemen port of Aden. “With the help of American SEALs, Emirati soldiers have since then taken the ports of Mukalla and Shihr, 500km (300 miles) east, and two Yemeni islands in the Bab al-Mandab strait, past which 4m barrels of oil pass every day. The crown prince has seen off Qatari interest in Socotra, a strategic Yemeni island, by sending aid (after a hurricane) and then construction companies, which a Western diplomat fancies may build an Emirati version of Diego Garcia, the Indian Ocean atoll where America has a large military base. While Saudi Arabia struggles to make gains in Yemen, Emirati-led troops earlier this year marched into Mokha port and are setting their sights on Hodeidah, Yemen’s largest port and the last major one outside Emirati control.”

On the other side of the Red Sea straits UAE is the main backer of break away Puntland and Somaliland that are seeking independence from the rump of Somalia. UAE ambition and money is transforming Somaliland as a possible gateway for landlocked Ethiopia. As the Economist describes the port city of Berbera, the former British colonial hub: “After the British came the Russians and in the 1980s NASA, America’s space agency, which wanted its runway, one of Africa’s longest, as an emergency stop for its space shuttle. Now the United Arab Emirates (UAE) is Berbera’s latest arriviste. On March 1st DP World, a port operator based in Dubai, began working from Berbera’s beachside hotel. Officials put little Emirati flags on their desks, and refined plans to turn a harbour serving the breakaway republic of Somaliland into a gateway to the 100m people of one of Africa’s fastest-growing economies, Ethiopia. Three weeks later the UAE unveiled another deal for a 25-year lease of air and naval bases alongside. The agreement, rejoiced a Somaliland minister in the hotel café, amounted to the first economic recognition of his tiny republic. It would fill the government’s coffers, and bolster its fledgling army. Businessmen sat at his table discussing solar power stations, rocketing land prices and plans for a Kempinski hotel.”

UAE moves cannily. Before making a major investment in Berbera – $ 442 m is in the agreement – it insisted that the deal be approved by both Somaliland and the President of the transitional authority currently governing Somalia. According to well informed sources: “In order to entice the TFG president into affixing his signature to the contract Somaliland’s president Ahmed Mahmoud Silanyo is said to have promised TFG’s Sheikh Sharif financial and voters for his presidential re-election bid that will occur this coming August when the mandate of the internationally fronted TFG expires.

Will the prospect of really big money and integration into networks of global trade and power bring about the consolidation that so far has eluded Somalia? What new reality will be shaped by this forcefield?

In Somaliland, a relatively successful experiment in regional democracy, the moves towards an embrace of UAE are causing intense tension. The port deal was one thing. The move to allow UAE to open a military base in Somaliland in the former Soviet airfield, thus dragging Somaliland deeper into the wars ongoing both in Somalia and Yemen, caused uproar in Somaliland’s parliament and the expulsion of the opposition including the parliamentary speaker. Good local TV coverage here.

How does this play out?

The imagery of lost African modernities is irresistible.

But that kind of image is apparently taken on shore. The main facility of Berbera port is actually only visible from offshore

As logistics sources make clear: “Maps from Oceans Beyond Piracy (OBP), which is an independent NGO working together with Somali authorities to support investors and donors for the development of Berbera Port, show that the port has recently emerged as an important and strategic logistics hub widely used by humanitarian agencies and industry alike.” The UAE is not buying into a wreck!

With China makings its play in Ethiopia and Djibouti, it would seem that UAE is America’s favored proxy. The Obama administration supplied 63 % of its hardware. General James Mattis America’s new Defense Secretary is a great fan. He dubbed the UAE “little Sparta”. And according to well-informed US sources he clearly intends to use Saudi but above all UAE resources in the escalated war in Yemen and Somalia. UAE was Mattis’s first stop on his first trip to the region. And it was a joint UAE/Seal team that carried out the disastrous botched operation in February. But the larger goal seems to be to put an end to the distracting conflict in Yemen to focus on suppression of AQ-affiliates and a pivot against Iran.


The post Notes on the Global Condition: The UAE and the Geopolitics of the Horn of Africa appeared first on ADAM TOOZE.

]]> 8
Notes on the Global Condition: Conversation with a Bundesbanker Sat, 22 Apr 2017 11:44:30 +0000 A lunchtime exchange with Andreas Dombret on the Eurozone, trans-Atlantic relations and populism.

The post Notes on the Global Condition: Conversation with a Bundesbanker appeared first on ADAM TOOZE.


Earlier in the week I was asked to provide comments on a speech by Bundesbank Executive Board member Andreas Dombret.

His wikipedia bio starts as follows: “Andreas Raymond Dombret (born January 16, 1960 in the United States[1]) is German-American banker. He was the Vice-Chairman of Bank of America Global Investment Banking in Europe, the Middle East and Africa as well as Head of the German, Austrian and Swiss branches. Since 1 May 2010, he has been a member of the Executive Board of the Deutsche Bundesbank with responsibility for Banking and Financial Supervision, Risk Controlling and the Bundesbank’s Representative Offices abroad.[2] Andreas Dombret holds dual German and American citizenships.”

So, he’s as connected a member of the trans-Atlantic banking/central banking fraternity as you can find.

Text of Dombret’s speech at Columbia is available at the Bundesbank website. Dombret strayed only slightly from this script. There were a few more references in his speech to populism and trans-Atlantic tensions, but the jist was very much the same.

I had prepared by reading up on Dombret’s recent speeches, which mainly concerned banking regulation and the on-going crisis in German banking, that being his brief. And I was thinking of asking him what he thought the minimum level of profits was that it was safe for society to ensure that private banks earned. If you have a big bit of crucial infrastructure that is privately operated, how hard do you want those corporations to be squeezed? What are the risks in terms of system maintenance and lack of reserves in case of shocks? If there is some minimum profit level, is there some maximum? Are we at a point where we are effectively defining socially acceptable rates of profit for private banks etc etc etc.? Is there an upper limit as well as a lower bound?

But Dombret went in a different direction, to address broad issues of the Eurozone and global trade. I take this as being part of a piece with German government efforts ahead of the G20 to stake out a defense of free trade and of its dramatic trade surplus. Apparently the SPD controlled economics ministry and Schäuble’s Finance Ministry have painfully agreed a position on this issue.

Of course, I don’t have any problem with Germany stepping up to the plate as a liberal hegemon of sorts. Dombret’s discussion of Dani Rodrik’s position has a passing similarity with arguments made recently by Martin Sandbu on the resilience of globalization. But there are such obvious contradictions even in Dombret’s short speech that I thought it was worth probing a little bit. So I put three questions to which I didn’t receive answers. But I thought it might be noting them down:

1. When Germany replies to the Trump administration’s attacks that it is not manipulating the Euro to boost its exports, is this a lesson in Eurozone/EU governance 101? Or is Schäuble conducting a barely veiled campaign against Draghi’s QE, which is unpopular amongst German conservatives, and also depresses the Euro against the dollar. Will American pressure be used to unhinge the tacit deal that Draghi seems to have struck with Merkel to allow a Eurozone-wide expansion? More generally do the pressures brought to bear on Europe by the US threaten delicate balances within the Eurozone and within Germany’s own political economy? How do German policy-makers manage those? Will they tie themselves to mast of ECB or attempt to manipulate the situation?

2. Dombret made the usual German case for fiscal union or a new regime of bank supervision and sovereign bond risk-weighting that will break the sovereign-bank nexus. I thought it was interesting that he should bring up the issue of sovereign debt as a long-term structural issue of the fiscal constitution and of banking regulation, but not mention Draghi’s QE bond-buying program and its effect in leveling the Eurozone sovereign bond market. A coincidental omission? What would happen in the eventuality that Portugal lost its last investment grade rating and thus dropped out of the bond purchase program?

3. In dealing with the US and Europe Dombret made no bones about his hostility to “populism”. Did this mean, I asked him, that central bankers were now claiming a right to speak out selectively against some political parties? Those being labelled populists were after all more or less legitimate parts of the political system from which central bankers claimed to keep their distance. What did he think of the example of the Bank of England offering analysis that clearly favored one side in the Brexit debate (the anti-populist side) and then, after the referendum result, putting all its firepower on the line to stabilize the ensuing panic. Was this a model for how central banks should relate to “populism”? How did it compare to the ECB in Greece in 2015? Did Europe’s central banks have a plan for the unlikely eventuality of a Le Pen win?

Predictably, the answers left something to be desired. What was most remarkable was Dombret’s mantra-like insistence that central bankers should stick to their  mandate, his equally mantra-like insistence that problems were complex and had no simple solutions (anti-populism) and his manifest preference for the simplest-possible mandate i.e. price stability pure and simple. Quite a set of juxtapositions.

Another interesting tension was that between his clear awareness of the threat of deflation and his enthusiastic embrace of fiscal austerity for the eurozone periphery.

A member of the Dombret team thanked me afterwards for the “interesting” questions. I certainly came away from the exchange with a new appreciation for the resilience of those who have to butt heads daily with the Bundesbank and its “common sense”.

The post Notes on the Global Condition: Conversation with a Bundesbanker appeared first on ADAM TOOZE.

]]> 7
The Russian Revolution and the World. Notes on a Columbia panel. Sat, 22 Apr 2017 02:16:44 +0000 Whose 1917? Which Russian revolution?

The post The Russian Revolution and the World. Notes on a Columbia panel. appeared first on ADAM TOOZE.


A propos of a panel at Columbia with Wang Hui, Susan Buck-Morss, and Harry Harootunian about the Russian revolution, a few remarks on thinking about the anniversary.

In commemorating 1917, even if October 1917 is at the center of our preoccupations, we are commemorating many anniversaries.

An event about “The Russian Revolution and the world” that confines itself without comment, apology, explication or apparently even second thought to October 1917 is clearly inadequate. At the very least we need to recognize the complexity of the February revolution in its amalgam of Menshevik, SR, Liberal, conservative nationalist and early, local Bolshevik elements. We should recognize the revolutions of the major regions and nationalities of the Tsarist empire. We should recognize the Greens and the Kronstadt rebellion. All of these have a legitimate claim to be considered part of the “Russian revolution (of 1917)”. If the focus of attention is indeed to be placed on the Bolsheviks, as well it may be, it is only against this broader backdrop that that choice acquires its political and historical meaning. Insisting on the complexity of 1917 is not an academic, pedantic or liberal quibble. It is only against that broader backdrop that the questions of “success” and “failure” and of “legacies” can be intelligently posed. To proceed otherwise, is historically and politically illiterate. Or it is simply to fall in with the cruder varieties of Bolshevik and Stalinist fellow travelling and/or their conservative and liberal opposites.

This question, as to which revolution or whose revolution we are commemorating goes directly to Wang Hui’s very striking remark that if we are uncertain as to who or what might constitute a revolutionary subject in the 21st century, that uncertainty also prevailed in 1917. If taken seriously that leads directly to a pluralistic and open-ended account of events in Russia and the Soviet Union between 1905 and the early 1930s, which would be well worth our time discussing. It would. for instance, allow a serious consideration of the SRs that is not possible if the “Russian revolution of 1917” is reduced to October.

And as Wang Hui observed the meaning of “failure” and its implications for the present cannot be avoided if we are to comprehend both the 20th century and the 21st.

But ….

Much as we wish to paint a nuanced and complex picture of 1917 and its legacies, there is a political seriousness to the historical event that should rule out the kind of cherry picking and reduction that results from moves like the following: “I prefer to think about the revolution as a marvelously fertile cultural revolution and to talk about what a wonderful impact constructivist impulses had on Taisho Japan, where they helped to stimulate a “wonderful culture” (sic).”

Speaking of cultural influences, has anyone ever seriously argued that the May 4 1919 movement in China was significantly indebted to the Bolshevik revolution of October 1917? Not what came after, not the broad amalgam of revolutionary nationalism and communism that formed in the 1920s, but the May 4 movement?

Can we really casually declare that decolonization is unimaginable without the Bolshevik revolution? Might we actually want to consider where and when that was more or less true and what kind of influence the Soviet project exerted, also in shaping the violent reactions to national liberation movements? Compare India and Indonesia, for instance.

How do you espouse some sub-Benjaminian, broken, non-teleological, anti-progressive, approach to history, or even a critique of history as such (though I may have misheard) and at the same time blithely propose a list of “lessons we have learned from history” that should be applied to current moment of anti-Trump resistance … how do you do that, without descending into utter arbitrariness?

What is the appropriate response to Warren Buffet’s famous declaration that “’There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning”? Is the appropriate lesson that the left should take from history that its aim should be to put an end to the “macho” (sic) business of class war?

Do we really want to say that the position of the white working-class in the post-industrial North/West is today structurally analogous to that of reactionary peasantry at the time of Marx’s writing? Is such a statement merely an intellectual provocation or something else?

Is it worth discussing whether the Mexican revolution and the Mexican constitution of 1917 and its concessions to the Zapatistas have greater actuality than the Russian revolution(s) of 1917? How would one arbitrate such a claim? How should the global enthusiasm for the 1994 Zapatista uprising weigh in the balance? Should that choice – Mexico or Russia’s 1917? – ever be posed as an alternative?

Please don’t all reply at once, I’m just trying to digest the experience.

The post The Russian Revolution and the World. Notes on a Columbia panel. appeared first on ADAM TOOZE.

]]> 9