Law and Society Blog

Iron Barred Economic Frames Create Breeding Grounds for Fascism


Once upon time in mythical Greek, there were many vicious bandits and highwaymen, who persecuted innocent travellers across the region. The most vicious was called as Prokoptes. He was Thracian blacksmith. He invited travellers to his inn and provide them food and shelter. He claimed that he possess a bed that fits for everyone. When traveller was ready to go sleep, the smith began his atrocities. If a traveller was too short, then the smith stretched the traveller, which killed the traveller. If the traveller was too long, then smith cut the limbs off, which also killed the traveller. Instead of having one bed, the smith possessed two beds, one short and one long. Therefore, his atrocities could have continued either way. Unfortunately for the smith, Theseus visited by him. Theseus matched up the smith to his own beds, hence ending the smith’s atrocities. 

It is late of 1990s and European monetary union has been established. We live in a world where all politics is constrained by the iron cage of economic policy, economic discipline and neoliberal economic discourse. This iron cage leaves little room for politics. European growth and the Stability Pact entered in force 1998. This Pact has created a paradoxical situation. Originally, it was meant to be as a limit for the member states that they would exercise reasonable fiscal politics. Instead, it is a main reason for the iron barred fiscal policy in EU and it creates social issues that remain unsolved. Why is it so? Because a quarter in social politics usually means twenty-five years but these strict frames of the Pact are more hesitant and they do not give any value for human suffering. Welfare societies under the neoliberal economic approach face only one option, if they want to follow the rules of the Pact. They have to dismantle their societies. What I have elaborated here, is just situation here at EU but this phenomenon is global. 

The progress of the far right has usually been blamed on the immigration policy or at least the increased number of immigrants. This explanation is almost certainly wrong. If the number of immigrants were to lead to an increase in the far right, the countries that received the most immigrants would experience the strongest far right avalanche. However, the far-right wave sweeping Europe is strongest in countries where there is virtually no immigration. A moment ago, the far right took the election victory even in Estonia, where the total number of asylum seekers can be counted in couple hundreds. 

Instead of Immigration policy, it is almost certain that a more significant reason for the rise of the far right is the insecurity experienced by the white middle class, and the white man in particular, who has previously lived a secure life. Like the current far right, the phenomenon is global. From the United States to New Zealand, the middle-class white man perceives his position as threatened on the one hand for economic reasons and on the other hand, when groups, which have been previously in subjugated positions, make legitimate demands. The crisis of environment also have a partial effect. With the globalized economy, the middle-class white man is left with an even smaller piece of cake, and there are many more groups that demand their share. It is understandable that the white men feel frustration, even though it is misplaced. 

Even in countries with extremely low levels of immigration, the progress of the neoliberal globalization project has led to a convergence of working conditions and working standards in richer and poorer countries. In poor countries, the position of the workforce is improving - but in rich countries, it is declining. While globalization increases computational wealth, the increase of the wealth increasingly goes to the richest, while the uncertainties in life brought by globalization, which are usually not measured in money, remain on the shoulder of the middle class and the poor. We have traded a safe life for an unequal enrichment. 

This is not a law of nature that this should happen. The fruits of trade and the tremendous increase in productivity over the last 200 years could have been distributed fairly. However, they have not distributed, because the current method of distribution greatly benefits the richest. Any changes to the current situation will collide with the bars of the iron cage of economic policy. 

In a world like this, it is utterly impossible to think the changes that could effectively address the fear of losing a status of middle class. This is perfectly evident, especially in the rhetoric of right-wing economists. There are simply no alternatives. Therefore, there is a desperate attempt to seek medicine against the rise of the far right from economic growth. In the past, economic growth patched up social dividing lines and prevented an increase in experiences of bitterness. The problem is that significant economic growth, as we know it, is unlikely to be possible anymore. Environmental constraints are now seriously limiting the scope for increasing production. 

I see no hope, at least as long as the general public and journalists have internalized the iron cage of economic thinking so well that they don’t even know how to question it. Restoring people's security of life would require enormous changes. No law of nature prevents us. 

Our limitations are largely self-created and are largely based on the belief that the current economic theories are objective truths. However, it is an indisputable fact that economic policy conclusions drawn from economics are very much based mainly on underlying assumptions that depend on belief and prevailing practices, such as what things are counted as costs at all. For example, the benefits of globalization would look very different, if the fear of losing a job or the anxiety of children would get a monetary price or the real environmental damage. 

It is now everyone’s responsibility to challenge the prevailing consensus and participate in breaking of the iron cage. It is will be done, for example, by studying why the economic policy currently pursued is not only one possible economic policy, and not the output of any inevitable natural law. The breaking of the iron cage will hurt the richest and therefore the counterattack will be ruthless. Anyone who questions the iron cage or talks about its existence at all will be loudly labelled as unrealistic moron who “do not understand the facts of the economy” and so on. Therefore, who is the Theseus of our story that remains to be seen? Currently it is going to be either total collapse of the civilization or another far-right order, which make fair global development even harder. However, the last time when an iron cage of economic policy was last broken that was in the 1970s, with the birth of the current iron cage. It is possible to break the iron cage even now, perhaps permanently. The current development give us bad options. The breaking of the iron barred cage is vital for our future as a species. Even if the break of the iron cage would be successful, there is much to be done. Environment issues remain intact and opened fiscal policies are just one tool for the necessary and inevitable change.