Of Krug and Krugman: Why National Identity is A Major Obstacle to Social Reform

By Dadu Moussavi

Reverence to the nation

The appearance of the Nobel-Prize-winning, Princeton economist, Paul Krugman on Newsnight last week was a hopeful blow to the public image of the Tory agenda. His vast understanding of what are, as he reiterates, “very simple concepts” provided the ammunition for a blitzkrieg on the bastions of conservative ideology and corporate self-interest. His opponents, one Conservative MP and a venture capitalist, wheeled on to provide ‘debate’, hardly stood a chance.

Yet his presence revealed more than merely the disconnect between political leadership and political understanding; the reactions to his criticisms of the current economic model in Britain raise the important question of how we covet our intellectual sovereignty. The assault (of the most placid kind) of an across-the-ponder on the modus operandi of British economic recovery was seen by some as entirely unjustified and, more importantly, invasive.

The timing of the Diamond Jubilee is almost absurd. While Krugmanites (new and old) toll the death knell of the British economy, with status quo thinking we engage in celebration of perhaps the most opulent tradition in British history. The event is totemic for those who consider monarchy to provide the kind of stability that separates Britain from those republics which lack such an apparently fervent national cohesion (David Cameron alluded to this argument under the cover of pageant fanfare on the Andrew Marr show). But we must not blindly revere the nation – a manifestation of which is kneejerk deference to the monarchy – for it blinds us to the forces that are behind its workings. Indeed, it is these forces that are responsible for our current predicament.

Great Minds Think Alike… Sort of

Disraeli could hardly have expected his words to be so prophetic

In the 1960s, a significant intellectual battle was fought between Ralph Miliband and Nicos Poulantzas over the role of the state in the nation (two very separate concepts). The former asserted that the state was highly political and was controlled by a small, select minority of a capitalist and intellectual class that was rarely permeated by socially mobile reformers from outside. The latter contended that such capitalists were too caught up in their own desire for short-term profit to be concerned with commandeering the state. Whatever the reality, the important conclusion that they both drew was that the government is not a neutral body as it ideally would be in a perfect democracy (a notion based on the Democracy Index, created by the Economist Intelligence Unit – the UK is at 8.16 out of a possible 10). It is in fact influenced heavily by economic forces and is thus liable to making irrational decisions when things go wrong (to the extent that they may deny the very existence of a depression and need a stern reminder that they live in an economic bubble like a gold bar in Fort Knox: utterly protected from the outside world and the calamitous economic conditions in surrounding Kentucky). What this means is that the national identity projected upon us by the incumbent government and transcendent establishment of the monarchy is in fact a miasma – when Disraeli referred to the Two Nations (of British society) he could hardly have appreciated the longevity of his words.

Who’s Driving?

The more disturbing point, however, is that it may not be the governments at all that are swinging the arrow of our economic compass; the symbolism of Britannia is exploited by the economic movers and shakers of our society – the veneer of national unity creates social stability. We are made to believe in a strong national identity, but this conceals the clandestine economic machine that benefits from this illusion. That same machine has grown exponentially in strength since the Reaganomics and Thatcherism of the 1970s and 80s, influencing government agendas in every continent, with similar effects that all fall under the umbrella term of inequality. The pernicious extent of Murdoch’s media empire and the reluctance to radically curtail the power of the financial industry in the wake of the crisis illustrate the hold that corporatism has had over the governments of the UK since the Iron Lady.

Can Keynes make a comeback? Paul Krugman hopes so

We cannot allow the notion of ‘national sovereignty’ – one that has caused far more trouble in history than good (just think of the geopolitics of Europe in the first half of the 20th century) – to shroud our field of vision or openness of mind to the perspectives from the past or from beyond our borders. Both the esteemed, but much maligned, economist, John Maynard Keynes, and the equally besieged stalwart – of common interest rather than self-interest – Professor Krugman have imparted much wisdom upon us. The frightening collapse of economic progress and the level of social indicators between the thirty years prior to 1975 and those after is indisputable evidence that the neoliberal ‘minimal’ state is flawed.

Governments do not ignore the precepts of Keynesian economics because they are fools. It is not the naivety of the many, but the ideology of the few, that is currently weakening rational, socially beneficial economic policy (David Harvey delivers a destructive one-two combo on this subject in his must-read book, A Brief History of Neoliberalism) and we must not expect the apparent stability brought about by our unified jubilance to let us believe anything else.

The sum of these parts is the realisation that holding on to the intangible idea of the nation blinds the people to the polarised nature of society. It acquits advocates of neoliberalism from causing economic crises and instead finds governments culpable. These governments are, in simple terms, at the mercy of the footloose corporation that can simply relocate if conditions are favourable elsewhere. By strengthening national identity and rejecting international communities like the EU we weaken the ability of governments to serve popular rather than minority interest. Ignorance is not bliss, it is masochism. This is why we need people like Paul Krugman to take the pain, so we no longer have to.

Bubbly in the shareholder’s meeting

So, while we recover from the uncorked Krug as part of this asinine, transient exultation of monarchy, let us remember that it is the same walls that create our nation-state, cloaked in their golden lore, that enables the amoral lustre of money to harm the society in which we live. Our heads are pushed into the wall of the cave, leaving us with only shadows of the reality. We must transcend nations and focus on building a global economy whose focus is not economics, but the betterment of society. Forget Chicago, let’s have Princeton.


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