Political education needed for Europe’s role in the world

You should watch The Future of Europe Group carefully. Its nameless Final Report could decide the future of the planet.

How the EU responds to the world economic crisis could decide the state of humanity at the end of this century.  Disastrous decision’s by political elites a hundred years ago led directly to the First and Second World Wars, brutal dictatorship and the slaughter of millions.  More enlightened global leadership after the Second War unleashed decades of growing freedom and prosperity for millions, although much of the Majority World still suffered and the environment took a battering.

Now another economic crisis is again spawning a new political settlement. The question is whether the world collapses into chaos before something better crawls out of the ruins, or whether world leaders can contain the crisis and create a safe and sustainable order without wrecking everything first (I’ve read that Shell’s esteemed Scenario Team are more pessimistic, seeing only two realistic scenarios - "Collapse" or "Collapse and Recovery".)

A lot depends on who ‘we the people’ permit to be our leaders (you can’t really say we choose them). And that depends on people’s understanding of what is at stake.

The eleven Foreign Ministers who wrote the Future of Europe Report know what is at stake. They want to strengthen European institutions to manage national economies and increase Europe’s political clout in world affairs. The President of the EU Commission, Manuel Barroso, wrote : "We will need to move towards a federation of nation states.  ...  In the age of globalisation pooled sovereignty means more power, not less.”

Make no mistake, the EU could set the rules for global finance, trade, climate, energy, human rights and politics - if it wants to. The EU is the world’s largest economic block, with over 20% of global income. It has deeper relationships with most countries of the world than other blocks, through migration, linguistic diversity, trade and institutional arrangements (and it gives out more than half of world aid to poorer countries). It also has the biggest block of representatives in global governance, including two permanent members on the UN Security Council and a majority in the Bank of International Settlements, all with less than 10% of world population.  

If the EU got its act together it could do great things – or cause chaos everywhere, as in Greece.

We the people of Europe need to understand what’s happening and how to use our political skills to create the kind of future we need to thrive, and not the accidental fallout from another crash.

There are many things wrong with the EU, but it does offer three powerful lessons for managing the global economy:

1. democracitc rule of law, binding on rulers, states and the rich as well as ordinaty citizens: it is far from perfect, but it has been crafted over decades to resist the arbitrary power of dictatorship;
2. peaceful mechanisms for problem solving and conflict resolution, at every level from the neighbourhood and workplace to corporate board rooms and country borders: look around the world to see how rare and necessary this is;
3. core values of solidarity, social protection, sustainable development, freedom and democracy which mean that its richest states give billions to help the poorest.   

You may not agree with any of this, but Europe has the political mechanisms for people to openly challenge and influence its rules without fear, unlike most other regions of the world.

The political education we will get is the mighty clash of slogans from politicians squabbling for seats in the parliaments of Scotland, Westminster, Brussels and every nation and region of Europe.  This could create enlightenment and elect wise leaders who steer humanity through its most challenging century. Or it could lead to Britain breaking up, a diminished England bleating outside a Eurozone grinding citizens in austerity while Latin America, Africa and Asia seize the reigns of global governance and prosper (and climate chaos drowns the planet). We are just about smart enough to chose chaos.

But as citizens we can and should be able to see what’s happening and learn how to influence events better. Political education provided a partisan press, polarised parties and vested interests is like health education from drug companies, with no need to provide counter-indications or truth in advertising.

The Future of Europe Group put great emphasis on “full democratic legitimacy and accountability” as well as “strengthening the European Union as a community of values,” but this means little if most people are not listening or feel powerless to take part.

Where are the opportunities for citizens to join the dialogue and set out their visions for the future of Europe? As tax payers, we paid for The Future of Europe Group.  If they want “full democratic legitimacy and accountability” they should also make it easier for all citizens to join the debate and take part in shaping the future of Europe and the world. Our media and adult education should stand back from the political fray and encourage people to question, discuss and probe more deeply into the politics of our place in the world.

If the EU elite get it wrong, its citizens carry the can.

The Flaw: learning economic citizenship and how the world works

The Flaw is a remarkable documentary film about the origins of the financial crisis. It is named after Alan Greenspan’s pained remark to the US Congress that “I have found a flaw in the model that defines how the world works and I was shocked.” As Chairman of the US Federal Reserve bank for 19 years, Greenspan was the most powerful man in the world. His neoliberal free-market model set the rules for the rest of us. The film shows participants at all levels of the financial crisis, from its sub-prime victims to mortgage brokers and bankers. The Flaw presents compelling detailed evidence for how that model redistributes money from poor to rich and created the financial crisis. The film does not cover every aspect of the crisis, such as the role of ratings agencies like Standard & Poor. It may be a bit too long and sometimes repetitive. But it is well worth seeing if you get a chance. The Flaw is set to screen at The Curzon Soho in London on the 7th June - time TBC, and the makers are keen for it others to show it.
This film could be a powerful stimulus for discussion and further reading about the current economic model and alternatives to it. Without informed citizens the causes of the fiancial crisis are likely to continue and create yet aother crash in future. My previous blog suggested further reading on the financial crisis. For a wider analysis, read Ha-Joon Chang’s book 23 Things They Didn’t Tell You about Capitalism for another eye-opening and entertaining look at how the economy really works. Chang shows why the so-called free market is bad for people and bad for the economy, and what to do about it. John Kay’s 2004 book, The Truth About Markets,  is another accessible expose of the flaws in the American business model.

The challenge is to make information and ideas about how the economy really works accessible to citizens and inform our participation in politics.

Lessons from the financial crisis: Understanding Money (1)

Perhaps the biggest task in practical political education is to understand how the financial system works and help bring it under democratic control. Two opportunities to make the case for democratic reform of banking are the Independent Commission on Banking and the UK budget on 23 March: both urgently need to hear from victims of the financial crash and the millions excluded from the banking system whose services and opportunities have been shrunk as a result. Educators have a responsibility to help people understand the system and take part in making it work better.

The 2008 financial crash has already cost vast amounts in lost output, jobs, wealth, public services and personal misery. In the US “Nearly $11tn in household wealth has vanished ... The collateral damage of this crisis has been real people and real communities. The impacts of this crisis are likely to be felt for a generation" according to the official US Financial Crisis Inquiry Commissions (FCIC). Western governments pledged a mind-boggling $11 trillion of public funds to support the banks in their hour of need according to the IMF. Although only some of this was spent, everyone will pay for the bankers' failures. The Governor of the Bank of England said on 25 Jan that living standards will be cut as “the inevitable price to pay for the financial crisis and subsequent rebalancing of the world and UK economies.” Inevitably, the poorest and least powerful are hardest hit, while bankers reap staggering bonuses.
The crisis was entirely avoidable, and yet economic crises will happen again and again until society learns how to manage the financial system better.
Big cities like London suffered repeatedly from cholera and other epidemics in which thousands died until the city authorities understood the source of disease and designed systems for water and sewerage that worked for all citizens. Diseases are part of nature, but epidemics are the result of human actions and therefore preventable by designing healthy systems.
Make no mistake, “this crisis was the result of actions, decisions, and arguments by those in the financial sector. The system that failed so miserably didn’t just happen. It was created. ... Those who played a role in creating the system and in managing it ... must be held accountable.” (Joseph Stglitz, in Freefall, Free Markets, and the Sinking of the World Economy,  Penguin 2010) See Stiglitz speak on Fora TV.  In Fool’s Gold (Abacus, 2010), Financial Times journalists Gillian Tett tells the dramatic story of “how an entire financial system went wrong, as a result of flawed incentives within banks and investment funds, as well as the ratings agencies; warped regulatory structures; and a lack of oversight.”
Oversight and regulation are public duties which dramatically failed the public. Citizens cannot assume that politicians, officials or regulators can repair the system while bankers invest millions in lobbying to protect their interests. Western politicians are hypnotised by the “chunky tax tax revenues” which banks extract from the public (£61bn in 2008-09) without questioning how the money was obtained.
The central problem is not technical but ethical. Gillian Tett concludes that “the financial world’s lack of interest in wider social matters cuts to the very heart of what has gone wrong.” (p298) Without an ethical compass or social conscience, financial regulation alone cannot work. Regulations put in place after the 1929 financial crash and great depression were bypassed and stripped away to make 2008 possible. The world is awash with ‘dark money’, shadow markets, tax havens and the spoils of corruption, contraband and counterfeiting. Some of the world’s largest industries (eg drugs) flourish despite being utterly illegal and hounded across the world by governments with massive enforcement budgets.
Democratic rules and oversight are necessary, but we must start by inculcating moral principles and practices in every banker, financial institution and regulator. At very least, everyone who works in finance should swear a Hippocratic oath, an oath with the moral force of the Universal Declaration of Human Rights and the enforcement powers of the World Trade Organisation, International Monetary Fund and Bank of International Settlements combined.
Finance has an essential and useful role in the economy, but if the system is not brought under effective democratic oversight it could be swept away, like regimes in Egypt, Tunisia or Eastern Europe.
To hold these powerful institutions to account, we need to understand how the system works. Over the coming weeks I will explore key questions for democratic accountability of money and suggest some reading. The challenge for educators is to distil complex material into questions and information in a form that enables more people to discuss, understand and influence public policy on finance: please let me know if you can recommend any courses, books, videos, websites or other materials. 

A short course in money: (1) where it comes from
Money is a simple but powerful tool for economic self-management. It can give people information about the relative economic value of different activities, goods and services, which makes decisions easier and can reward activities which increase value. Value in this case simply means anything that people are willing to pay for, whether it is church services, food, football, heroin or slaves. Money that is not needed right away can be pooled to pay for bigger things like cathedrals, homes, factories, schools and spaceships.
Somehow society has to decide how this powerful mechanism should be used – what can people legitimately buy (alcohol but not cannabis, servants but not slaves), what public goods people value (monuments, roads, sewers, wars), how to pay for them (subscription, fees, insurance, taxes, conscription etc), how to look after people with no money or earning power (infants, the infirm) and how much power should different groups and individuals be allowed to exercise. All societies make these decisions, whether consciously or not. In a democracy, the people should decide these things, and to a certain extent they do.
But money and the financial system seem so mysterious that most essential decisions about money have been delegated to financiers. These “masters of the universe” have probably waged the most successful campaign in human history. They organised globally to persuade elected governments to give them responsibility for the world economy and then, when they screwed up, got governments to bail them out. Tax payers, consumers, workers and public service users will pay the price of their mistakes for decades, in loss of output, opportunities, public services and wealth.
Money has magical powers. When there is enough to go round and more for experiment, risk and frivolity people can act. But when money’s tight, people go slow or even stop. People lose their jobs, companies collapse and spending is cut. Although there is work to be done and people to do it, without the magic of money resources are wasted. People who control money cast a spell over individuals, governments and entire economies, so that an individual like George Soros could turn British government policy on its head, wreck the Conservative Party’s reputation, earn over $1 billion and cost the taxpayer £3.3bn over a few day in September 1992. Then for two decades the City cast a spell on the Labour Party and government. And when the banks failed in 2008, governments pledged trillions of Euros, pounds, dollars, Yuan and other currencies to stop banks from collapsing, then cut public spending to appease the money markets. No other industry enjoys such powers or privileges as finance.


How money works its magic
To understand how money magic works, I will use the example of a babysitting circle of 100 families which uses beans as tokens. Each family gets 10 beans when they join. One bean pays for an hour of babysitting and when they run out people can get more beans by babysitting for others. The system works pretty well. Many families enjoy going out a lot, but some families do more babysitting than others and pile up more beans than they need. The babysitting circle agrees that beans can be used to pay for home improvements and other odd jobs, so people are happy to save beans. One enterprising family, the Banks, offer to pay anyone with spare beans one bean for 20 a year (5%). At the same time, the Banks offer to lend beans to anyone who wants them, at a cost of two beans a year for 20 (10%). The Banks earn a fee from the difference in rates between lending and borrowing, but everyone benefits.


Now a remarkable thing happens. Out of 1,000 beans held by 100 families, 900 are deposited with the Banks family. They lend these to other families for home improvements and babysitting, so more people have fun going out and doing up their homes. But no sooner have they lent out the beans than people give them back to the Banks for safe keeping, who lend them out again. Soon the Banks have turned 900 beans into 9,000 beans and lots more people are doing up each other’s homes, babysitting and going out. The baby economy is booming.
This is known as fractional reserve banking and is one way money is put into circulation. As the economist John Kenneth Galbraith wrote, “the process by which banks create money is so simple that the mind is repelled. Where something so important is involved a deeper mystery seems only decent”. (Money: Whence it came, where it went, Houghton Muffin 1975)
This multiplication of money through credit is the first trick in the money-makers magic box. It works well so long as people repay their beans on time, so the Banks family have to be good judges of characters as well as friends of their neighbours. They need to know who is reliable and will replay. They keep good relationships, inquiring after borrowers’ well-being and the progress of their projects. When someone falls ill or has an accident and can’t repay on time, they encourage people to support each other so that no one fails to replay.
The BBC’s Business Editor Robert Peston describes how these “great conjurors” work in short film about banks.
Banks make billions from their ability to create money through credit, a right that traditionally belonged to the crown and is known as ‘seignorage’, which in a democracy should belong to the people. If as a democracy we decide that banks are best placed to create and manage money on our behalf, then at very least the power create money should be open and accountable to Parliament.


Read more
For other mainstream books on the financial crisis, see
Nouriel Roubini and Stephen Mihm, Crisis Economics: A Crash Course in the Future of Finance Penguin 2010
Anatole Kaletsky, Capitalism 4.0: The Birth of a New Economy, Bloomsbury 2010

Raghuram G. Rajan, Fault Lines: How Hidden Fractures Still Threaten the World Economy, Princeton UP, 2010
and the roundup in Moneyweek


For some good alternative analysis of the financial system, see:
David Boyle, The Little Money Book, Alistair Sawday, 2003, an excellent overview which warned  that "Derivatives need serious regulation before it’s too late."
David Boyle (Ed.) The Money Changers: currency reform from Aristotle to e-cash, Earthscan, 2002
Bernard Lietaer, a former top executive in the Belgian central bank, The Future of Money, Century 2001
Francis Hutchinson, Mary Mellor and Wendy Olsen on the history and thinking of social credit, The Politics of Money: Towards Sustainability and Economic Democracy, Pluto 2002
Michael Rowbotham, The Grip of Death (1998) and Goodbye America (2000), Jon Carpenter publishing
James Robertson & Joseph Huber, Creating New Money: A Monetary Reform for the Information Age, New Economics Foundation, 2000


Practical Politics is a personal view from Titus Alexander and does not represent the views of Novas Scarman, Democracy Matters or any of its members.

Charities and the AV referendum

I hadn’t given much thought to the Alternative Vote referendum until a member of Democracy Matters got a threatening letter  from William Norton of the No to AV campaign. The letter alleged that Democracy Matters supported the Yes campaign and that as an unincorporated association this implied endorsement by all its members and that charities are not permitted to take sides in the referendum and it should therefore provide the No to AV campaign with a “denial of support for the Yes Campaign, for general circulation” and also ask Democracy Matters to disaffiliate from the Yes Campaign. Similar letters had been sent to 42 charities, along with a four page letter to the Charities Commission saying that if this matter is not resolved he will “consider making formal complaints about the charitable status of these organisations.”

My first thought was that the No Campaign must be running scared if it has to frighten organisations from supporting the campaign. Then perhaps this was a cunning wheeze by a young Mr Norton, fresh from law school, to get a clutch of letters “denying support for the Yes Campaign” to promote the No Campaign. Or perhaps he simply was a retired solicitor with time on his hands and a genuine desire to ensure “that the referendum is fought on a fair and legitimate basis with a level playing field for both sides” as stated in his letter.

Mr Norton must have spent a lot of time on these letters, because he researched the aims of each charity as well as Democracy Matters. But at no point did he ask me what our position was. He had jumped to conclusions without double checking his facts. I would have told him that we did not take sides on the referendum question.

The more serious problem is that Mr Norton is wasting the time and money of many charities, which have been forced to discuss the issue, consult lawyers or the Charity Commission, and correspond with me and others to clarify the matter.

Even more serious is the way in which this kind of legalistic threat attempts to close down active involvement in campaigns about the nature of our democracy. The Charity Commission’s guidance on political activities by charities  is reasonably clear and deserves careful reading. In plain English (as opposed to legalise, in which meaning is mangled), this allows a charity to take a position for or against a referendum question where 1), after careful consideration, it believes a yes or no vote furthers their objectives as a charity (but not where the aims of the charity are narrower than the potential impact of the referendum), and 2), and there is not a significant party political dimension to the referendum. Although the Liberal Democrat position on AV could make this seem a party-political issue, the major parties are divided and the democratic process should not be the property of parties but of citizens. Parliament sets the rules for all organisations including charities, so they should be concerned about how Parliament is constituted. Citizens should also be able to exercise their voice through their organisations, many of which are charities. More citizens are involved in charities than in political parties and for many charities reflect their concerns better than any political party. Charities should always give careful thought before taking a position on any issue, because it may compromise their reputation, their ability to deal even-handedly with politicians or breach their charitable objectives. But the risk of losing support as a result of taking a stand is a more important and democratic sanction on charities’ actions than a narrow interpretation of the law and threats of court action. Democracy Matters may have to take up this point of principle with the Charity Commission.

Most serious of all, however, is Mr Norton’s allegation that the views of unincorporated associations are binding on all its members. This would make it almost impossible to form informal alliances of any kind. But in plain English, the Charity Commission’s guidance on coalitions states that “It is open to charities to form coalitions, alliances and consortia for the purpose of lobbying MPs and government for changes to the law. It is not realistic to expect that everything that a campaigning alliance does, particularly if it has a large membership, will fit with every one of its members’ charitable purposes and there are, therefore, some important considerations.”

Mr Nortion is neither a naive young lawyer nor a pedant with a passion for legalese, but a seasoned political activist who led the highly successful NO campaign against the referendum for an elected regional assembly in the North East in 2004. His five part series on How to Win a Referendum offers reflections on practical politics which are relevant to any side in the campaign and makes useful distinctions between party political campaigning and the kind of broad strategy needed to win a referendum.

In this instance, however, Mr Norton’s 42 letters has at least raised awareness of the referendum among these charities and more widely through an artcile in Third Sector magazine, althiough his heavy-handed tactics may be counter-productive and encourage sympathy for the Yes to AV campaign.

That is, if there is a referendum at all this May. The Government’s decision to lump the AV vote with the cut in parliamentary seats has also confused the issue, which perhaps it was designed to do.

Personally I am not wholly convinced by AV. It is not proportional and it can exaggerate representation of one party when there are strong swings. But then AV forces candidates to seek majority support and not just a plurality. So there are merits on both sides and I intend to look at the arguments in more detail later.

This blog contains personal reflections and does not represent the views of Unlock Democracy or any of its members.

Learning from Blair's Journey and the Court of Tony Zofis

Tony Blair is one of the most skilled politicians of his generation and his Journey will be an important source for studying the politics of British governance from 1997 to 2010 (although the story starts earlier, with Neil Kinnock and John Smith), alongside books by Gould, Campbell, Mandelson, Mullen, Seddon and others. For the study of practical politics, three things stand out for me:

• first: war is a failure of politics. Tony Blair chose to throw all his political skills to align his country with disastrous and misguided policies of America’s neo-cons, when he could have used his abilities and access to Bush to guide the world on a surer course for dealing with dictatorships like Saddam Hussein. Hindsight is easy, of course, but we need to mine the lessons of the past to avert disasters in future. 
• second: Blair and Brown re-habilitated the public sector but failed to reform it, because their model for driving change was wrong. For an inside story it is worth reading Michael Barber’s Instructed to Deliver alongside John Seddon’s Systems Thinking in the Public Sector (and The Systems Thinking Review) which shows the negative impact of top-down targets and presents a radically different approach to public service transformation.
• third: the central role of “office politics” in the past 20 years, although it may be more apt to call it the court politics of Tony Zofis (as Ted Wragg called it). The big political battles took place behind the scenes, with teams from Brown, Bush, the Security Council, Europe and other fiefdoms.

Democratic politics was marginalised during the Blair years. Tony Blair would have been stronger and more successful if he had fought Gordon Brown in an open contest for the Labour leadership; if he had engaged his party and the public in an open process of public sector reform; and if he had listened to the public on Iraq.


Of course there were many other areas of practical politics from which we can learn, including both positive changes, such as the peace process in Northern Ireland, devolution in Scotland and Wales, active support for the world’s poorest through DfID and the G8, the introduction of citizenship in schools and increased support for parents and children in the early years. But in many other areas we need to understand why so little progress was made, including issues of income inequality and social justice, health and well-being, drug and substance abuse, criminal justice, reform of parliament (including the upper house and voting systems), local government, pensions, PFI and the financial system, the Middle East, European Union and the marginalisation of the Labour Party itself. But these are now issues for a new generation of political activists, who need to study and learn from what actually happened before it becomes mythology.

What do you want to know about practical political education?

War is a failure of politics. Fifty five years after our governments dropped the first atomic bombs, killing almost quarter of a million civilians, warfare still kills, maims and terrorises millions. Humanity spent $1531 billion on the military last year, about 2.7 per cent of global income (GDP), 50 per cent more than 2000, and was involved in 17 major armed conflicts. Yet in much of the world, most of the time, most conflicts are resolved peacefully by political means. We replace our leaders through elections rather than revolt or execution. Countries change course through political clamour rather than the march of mercenaries. But violent conflict persists and many social problems seem little nearer to solution.

This Practical Politics blog aims to explore ways in which people can influence events and solve social problems. I am particularly interested in how the most powerless, marginalised and excluded people in society can have a more effective voice, on grounds of justice and because society will be better as a result. I also want to explore ways in which people can learn how to become better at doing politics.

Practical politics is about making things happen, from the micro-politics with a family, office or neighbourhood to the global politics of conflict, climate or trade. Many of the skills and strategies of practical politics apply to any level, while the specific knowledge and networks are very diverse. Both can be learnt, through experience as well as study. Politics is above all a practical art.

I’m taking a summer break to rest, write and support a new team of trainee community organisers, but I would welcome your comments on past blogs and suggestions for the kind of topics that would be most useful for the practice of politics by people who are not part of the political mainstream, and ways of enabling people to have a more effective voice. Please use the comment box below or email me at titus@democracymatters.info.

Cooperation for learning and empowered citizenship

As MPs debated the budget, Stephen Twigg, newly elected MP for Liverpool West Derby, hosted a reception for the Co-operative and Workers’ Education Association (WEA) to launch a new partnership to ‘help strengthen civil society, empower citizenship and strengthen democracy.’ John Hayes, MP for South Holland and The Deepings in Lincoln, and Minister for Further Education, Skills and Lifelong Learning, proudly displayed his Co-op; membership card and spoke passionately about the importance of learning for a just and cohesive society. He spoke about a ladder of learning, for self-improvement and social mobility, and also for its own sake, enriching the fabric of life. “Community earning is at the heart of what this government is about.” Hayes pointed to a picture of Wilberforce, reminding us of his mission to abolish slavery, and said that he too was on a great mission to spread social justice through learning, and to help everyone fulfil their potential and be the best they can be. John Hayes recently responded to a letter from Democracy Matters and invited us to meet with him in mid-July, so we are hopeful about finding ways of strengthening learning for citizenship, despite the difficult financial times.

The WEA is a democratic membership organisation and the UK’s largest voluntary sector adult education provider, run through a voluntary movement of 450 branches as well as professional staff. The Co-op is also active in education, through the Co-operative College and numerous cooperative schools, as well as online resources for teaching citizenship, which I was not aware of. Many years ago I wrote a book on how to create ‘citizenship schools’, which included activities and ideas for making schools more democratic and empowering. I would love to work with schools on these issues again.

Events like these are perhaps more important for informal conversations and connections, so I came away with several opportunities for promoting learning for democracy and bringing people together round issues as diverse as monetary reform, economic democracy and citizesnhip.

Several people remarked – with a nod to the green screens and budget debate - that financial austerity will make closer cooperation and sharing of resources even more important. Coincidently, in today’s Education Guardian Michael Bichard writes about the obstacles to cooperation between local agencies – inflexible frameworks and funding, narrow targets, costly auditing procedures, and over-cautious governance. His point was that if cuts are to be fair, they need to involve people at the front line and that agencies need to work together to ensure that services are tailored to local and individual needs.

The renewed partnership between the Coop and WEA is long overdue and should lead to many fruitful and perhaps unexpected innovations to meet the needs of the diverse communities they work with. And significantly, both organisations have positioned themselves to make a positive contribution to the ‘Big Society’ philosophy of the Coalition Government. That’s political skill and astute understanding of what their members and customers want.
Titus Alexander