Distributism and debt in the eurozone DAVID BOYLE


Local solution to Greece’s international crisis


With no sign of the Greek economic crisis abating and fears of its toxicity for the rest of Europe, bankers were this week meeting EU officials to discuss the country’s debts. Here one economist suggests that the lessons of Chesterton, Belloc – and Argentina – might be helpful in finding a way out of the mire


problem. John Paul Getty’s old aphorism was true when he said it and it is true now, and – despite their bluster – the banks and other institutions across the eurozone know it.


I


f you owe the bank $100, that’s your problem. If you owe the bank $100 million – or about 340 billion euros, in the case of Greece – that’s the bank’s


To avert disaster, there has to be a believable process whereby the bankers can extract huge sums from the Greek economy over the next generation. It may well be impossible. Either way, it is the ordinary people of Greece who will suffer the most, even if their Government defaults.


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6 | THE TABLET | 2 July 2011


rendering unto the banks dominates all the debate about this, rather than the realities of ordinary life in Greece for the foreseeable future. But is there an approach to local eco- nomic survival – a kind of Distributist approach – which might have some chance of keeping civilised life going during the process of extraction. Nearly 10 years ago, the New Economics


Foundation’s Jubilee Research team published a proposal called “Chapter 9/11” which suggested a procedure whereby countries could go bankrupt and get protected from creditors as if they were companies. The Jubilee framework would kick in when any indebted country reached the point when debt was undermining fundamental human rights. It was the brainchild of the foundation’s fellow Ann Pettifor, a leader of the Jubilee 2000 debt campaign, and emerged out of the Argentine debt crisis in 2001. The point was that the International


Monetary Fund (IMF) should no longer be plaintiff, judge and jury in these cases. The same might be said in the eurozone about the European Central Bank. The citizens of a bankrupt country should have as much right as the creditors to be involved in the business of deciding how to escape the debt wreckage. Part of the problem in Greece is that the


Greek people are simply confronted with deci- sions made in Frankfurt, rather than being involved in whatever deal might be possible. But “Chapter 9/11” still raised an important question – how on earth can a country recover from virtual bankruptcy, especially when it has no currency of its own that can be deval- ued? Here there is remarkably little debate. The assumption is that decades of serious


austerity lie before the Greeks as they dedicate their work and imagination to satisfying the world’s bankers for years to come. In the absence of bankruptcy protection for nations – or the people who live in them – what can they do? What would Belloc and Chesterton have suggested had they been here to advise us? I imagine they would have suggested learning the lessons of Latin America, a decade after the bankruptcy of Argentina. One of the lessons there has been the ability


of new kinds of money to keep people alive while the bankers extract their pound of flesh. The problem with the euro, in this respect, is not that it is too big, it is because it is the only means of exchange available to Greece. Its interest rates are set to favour the financial centres of Europe. For single currencies – whether they are the pound, the dollar or the euro – don’t measure the local needs and assets in individual economies very accurately. What they miss out gets ignored; then it gets forgotten. It’s as if only what distant bankers and speculators say is important. Currencies are not just measuring systems:


they are eyeglasses. They are the way we see the world. If we only have one vast currency, like the Greeks, the economy will tend towards monoculture and, in their case, a rather quiet one while the money gets extracted. This is not to suggest that the Greek ship- builders, and the other backbones of the Greek economy, should somehow stop earning dol- lars and euros. This is how the bankers will be paid. It is that, like all economies, there are at least two layers. And the local layer, which keeps people alive in the hard times, needs extra help to stay alive.


Communities across Greece will be the


same after national bankruptcy, after all. There will still be things people need and others willing to do the work, but there will be a seri- ous lack of money to bring the two sides together. That is where we need new, local means of exchange. This is a lesson forgotten since medieval times, when alongside the gold and silver


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