What Price Democracy In The 21st Century?

OK – you can call me an economic ignoramus if you like, you wouldn’t be too far off the mark – but I have been really struggling to understand why almost every country on the planet allows itself to be dictated to by those vague, shadowy entities known only as “The IMF” and “The Markets”. 

I vaguely understand that that the IMF was set up after WWII with the object of “stabilizing exchange rates and assisting the reconstruction of the world’s international payment system” [thank you, Wikipedia].  I can hazard a rough guess also that “The Markets” refer to the financial institutions such as stock-exchanges which “facilitate:

• The raising of capital (in the capital markets)
• The transfer of risk (in the derivatives markets)
• The transfer of liquidity (in the money markets)
• International trade (in the currency markets)”

[Again – my thanks to Wikipedia for putting my sketchy knowledge into understandable language!] 

All of the above seem perfectly legitimate and laudable aims and/or raisons d’être.  What is not stated anywhere in connection with these institutions is that they should have the power to dictate government policy in Sovereign Nation States – and yet they most assuredly do!  The IMF in particular uses its financial clout to impose ‘conditions’ on any country to which it lends money [and in this day and age, that is just about every nation on earth].  These conditions include “Structural Adjustment Programs” which basically mean that the IMF gets to dictate how the country which borrows the money is run.  There is a widespread belief that these ‘conditions’ retard social stability and increase poverty in the nations to which they are applied – which is very far from the stated aims of the organisation!  It is the IMF which is insisting upon the decimation of public services in the UK, Europe and America – again I am indebted to Wikipedia for the following “The IMF sometimes advocates “austerity programmes,” cutting public spending and increasing taxes even when the economy is weak, in order to bring budgets closer to a balance, thus reducing budget deficits. Countries are often advised to lower their corporate tax rate.”  Does this sound familiar to anyone? 

Now “The Markets” seem to have almost as much power as the IMF, although it is exercised in a less direct manner.  Currency speculators and traders in the ‘transfer of liquidity’ watch national governments like so many vultures eyeing up a buffalo at a water hole!  At the first sign of “weakness” [which seems to me to mean listening to the electorate rather than the IMF] they descend in slavering hordes for the kill.  The value of currency is undermined by their speculative activities – don’t ask me how this works because I don’t understand it myself – and as a result governments the world over live in much greater fear of ‘not satisfying the markets’ than of failing their own citizens. 

Successive UK governments since Margaret Thatcher have allowed our economy to become almost entirely dependent upon ‘The Financial Sector’.  We no longer make anything which we can sell to other countries nor do we produce any raw materials which we can export.  Our entire economy depends upon finance and service industries and no government of recent years has seemed either willing or able to bite the bullet and commit us to a return to a manufacturing and exporting economy.  

The present coalition IS talking about a return to a manufacturing economy, at last.  However, this would require businesses to be able to raise capital – and where does capital come from?  It comes from “The Markets”!  Now, it is obviously not in the interests of the financial institutions to see Britain return to a manufacturing economy, because that would loosen their stranglehold on our government.  So no matter how much the present government may plead with, flatter and cajole the financial institutions, they will NEVER voluntarily finance a resurgence of Britain’s manufacturing and exporting economy.  It suits the markets and the IMF for successive governments to remain in hock to them and therefore to remain THEIR servants and not ours. 

So, all we in the West – who pride ourselves on having a universal franchise and a truly democratic electoral system – aren’t we actually deluding ourselves now?  In the 21^st Century, it doesn’t matter a damn what we, the electorate, want from our government.  It doesn’t even matter who we elect – because in every way that matters to us, policies will be dictated by the unelected, faceless entities known as “The IMF” and “The Markets”. 

So, I reiterate:  “What price Democracy in the 21^st Century?”