Towards a New Financial Architecture

David Cameron thinks he won the UK General Election on May 7. He didn’t. The people won – assuming that they now use the political space that has been created for the reformist forces to put to good use over the next five years.

If the Labour Party had taken power in Westminster, probably with the support of the Liberal Democrats, it would not have been willing to rethink plans for the future of the UK. But the public has given them the chance, in opposition, to engage in the painful process of questioning their vision of what would restore the nation’s prosperity and social solidarity.

The Conservatives are the unyielding guardians of the rent-seeking culture. In opposition they would not have been willing to depart from their ideology. So it was best for the long-term future of Britain that they formed the government. They will pay the political price for the recession that will strike on their watch in 2019 – one year before the election of 2020.

So the electorate has exercised the “wisdom of the crowd” and locked the potentially progressive forces into the wilderness for a five-year period of contemplation. There is much to be done in that time, starting with learning exactly why the social democratic agenda cannot work and won’t work and must be abandoned. New policies are needed that can deliver sustainable growth on the basis of fairness for everyone.

The public has a major role to play in this project. The political parties cannot hope to regain trust without the renewal of responsible behaviour on the part of everyone. Responsibility towards each other, and toward society at large. But those words are meaningless if they are not made tangible by measures that can be enshrined in a new kind of governance.

A new financial architecture is needed at the heart of a new social contract that must be negotiated by citizens. A similar approach is needed for countries like Greece and Spain, if they are to recover the trust of the people. And in Europe, Germany needs to reassess the policies it is enforcing throughout the European Union, if it wants to safeguard the harmonisation of relationships between nation-states.

The wounds of the 2008 crisis are being deepened by austerity policies that threaten Europe’s geopolitical stability. Policymakers everywhere have a lot of hard thinking to do, but there will be no fresh policies if the people at large fail to engage in the political discourse.