Democracy has failed to protect society from the predatory behaviour of global financial markets, writes Ann Pettifor. Drawing on her new book, she explains why the monetary system has made society vulnerable, and how it needs to be transformed.
Ten years after the catastrophic failure of both the global banking system and the global economy, economic disorder is once again threatening a new dark age. Western democracy has failed to protect society from the predatory behaviour of global financial markets – mostly rent-seekers; and from the ideology and impacts of market fundamentalism. In the absence of organised labour unions, and with political parties hollowed out, compromised, and even corrupted by financialisation, those who largely live by hand and brain, and not from rent, have taken measures to protect themselves. And those measures are not always pretty.
High levels of unemployment or under-employment; falling incomes; housing crises and obscene levels of inequality have led, predictably, to the rise of counter-movements in all the leading economies, as foreseen by Karl Polanyi in the 1940s, in his book: The Great Transformation. These counter-movements threaten to further undermine an already enfeebled Western democracy. At the same time, the inability of democracy and our financial system to respond to the threat of climate change, imperils the very future of the ecosystem and therefore of humanity. Our world is dangerously disordered.
It is my view that current economic disorder is largely caused by the invisibility, the lack of transparency, and the intangibility of the international financial system – the cause of recurring global economic failure. The fact that the system cannot be seen or understood, that it is opaque to society, means that it cannot be changed or transformed by society. Widespread ignorance of the workings of the great public good that is our monetary system has made society vulnerable. Ignorance enables those financial interests that have wrested control of the system away from democracies, to continue to undermine the security of society.
If democracies are to once again subordinate the finance sector to the role of servant to the real economy, it is vital that the public gains greater understanding of the monetary system – which I believe to be a great public good. That is the ambition of my modest book, The Production of Money.