Editor's Note: Matthias Matthijs is Assistant Professor at the School of International Service of American University and a Lecturer at the Johns Hopkins School of Advanced International Studies. Mark Blyth is Professor of International Political Economy at Brown University.
By Matthias Matthijs and Mark Blyth, Foreign Affairs
"Never did a ship founder with a captain and a crew more ignorant of the reasons for its misfortune or more impotent to do anything about it." This was Eric Hobsbawm's damning judgment of the policy elite's response to the Great Depression. As these leaders reached for the old truisms of balancing budgets, lowering tariffs, and restoring the gold standard, they merely worsened the crisis. The same judgment may soon be passed on Germany for its role in the ongoing European sovereign debt saga.
After watching the economies of Greece, Ireland, and Portugal founder, the world has now turned its attention to Italy, home to the world's eighth-largest national economy and third-largest sovereign bond market. The diagnosis is sadly redolent: Europe should deflate its way to growth by sticking with a gold standard of sorts: the hard-money German-dominated euro. Meanwhile, under enormous international pressure, the Greeks replaced socialist Prime Minister George Papandreou with Lucas Papademos, a former official of the European Central Bank, and the Italians placed economist and former European Commissioner Mario Monti, hailed "super Mario," in the stead of Silvio Berlusconi.Yet despite the EU's coup d'état, the yield on ten year Italian debt went back above seven percent within twenty-four hours of Monti showing up for work. FULL POST
Editor's Note: Matthias Matthijs is Assistant Professor at the School of International Service of American University and a Lecturer at the Johns Hopkins School of Advanced International Studies. He is the author of Ideas and Economic Crises in Britain From Attlee to Blair.
By Matthias Matthijs, ForeignAffairs.com
London is burning. And over four consecutive nights, the conflagration has engulfed multiple cities across the United Kingdom, including Manchester, Birmingham, Liverpool, Bristol, Nottingham, and Leeds. According to some early estimates, the total cost of the vandalism and extra police could run into the hundreds of millions of pounds.
In response, British Prime Minister David Cameron has recalled parliament from summer recess for an emergency session, “to stand together” against the looters. He condemned what he dubbed the “sickening scenes of people looting, vandalizing, thieving, and robbing.”
The unrest traces its immediate roots to last Saturday in Tottenham, a London suburb where a protest to commemorate the death of a man who was shot by police trying to arrest him turned violent. What followed was a viral response across the country that spurred many young people to violence, looting, and general disorder.
The riots are set against the backdrop of Britain’s ongoing fiscal and sovereign debt crisis and the coalition government’s politics of austerity. They illustrate the critical connection between class politics and fiscal retrenchment. In some ways, they resemble the British riots of 30 years ago. But the policy solutions of the past - a strong response by the state together with the fruits of neoliberal deregulation - may no longer be available today.