On Exits And Hegemony

Paul Collier

Greece is again hovering at the exit door of the Eurozone; Scotland is again hovering at the exit door of the United Kingdom. The impetus for these unanticipated phenomena is the same: hegemony generates potent antibodies.

From the 1980s I have been witness to hegemony through the Structural Adjustment Programs of the IMF in Africa. A pattern developed, which I learnt from psychologists is a standard response to being on the wrong end of power: ‘reactance’. Forced to adopt particular policies, sovereign governments sought to re-establish their freedom of action by adopting other policies that neutralized their purpose, and by reversing reforms whenever opportunity arose.

In Africa, the IMF was inevitably seen as the old colonial powers in new guise: the hegemon. The content of the IMF’s Programs was largely sensible, and indeed essential. But because they aroused reactance they severely impeded social learning. By far the most effective way in which a society learns about which economic policies are good is to try bad ones, suffer the consequences, and correctly attribute the effect to its cause. In Africa the ‘adjustment’ – squeezed living standards as the legacy of earlier bad policies – got blamed not on those policies, but on the good policies forced on governments during the adjustment phase. Greece, of course, has recently been through the same disastrous sequence, hence the election of Syriza: a vote for a return to dysfunction.

But reactance, while disastrous, is only the lesser consequence of hegemony: the more alarming consequence is the growth of oppositional identity. In Africa, with its history of colonialism, the IMF meant the old hegemon, but in Europe the IMF has no such connotations: Europe has run the IMF since its inception. Nor can the European Commission credibly been seen as a hegemon: it is a club. Similarly, the European Central Bank, run by an Italian who will do ‘whatever it takes’ to keep Greece in the club, does not generate the dark fear of hegemonic power. Thus, the ‘Troika’, though detested in Greece, was not the real enemy.

When Greek politicians spit in the face of the hegemon, they travel not to Washington, Brussels or Frankfurt, but to Berlin. The current realities of Europe’s power structure coincide with Greek history to make Germany the dark power that Greeks fear. The reaction is not just to adopt policies such as rehiring surplus civil servants; it is the emergence of a Greek nationalist oppositional identity. Defusing oppositional nationalism was the very purpose of the European Union. Sadly, the Euro has had the opposite effect. The longer Greek membership of the Zone continues, the deeper will oppositional identity become. Ultimately, if nothing is done, this will end in Greek withdrawal from the EU. To avert this fate, Europe’s leaders will need to act responsibly to minimize the transitional problems of Grexit.

In Scotland, the ruling political party (the SNP), has adopted the same course as Syriza: blame adversity on the hegemon. As with Greece, the current realities of the structure of power coincide with history to identify an unambiguous hegemon: London. Again, the lesser evil is its disastrous consequence for social learning. Adversity – in Britain termed ‘austerity’ – is seen in Scotland not as the legacy of irresponsible policies prior to 2010, but as the consequence of policies set in London post-2010. As it happens, Scottish politicians ran British economic policies for the entire period 1997-2010. The Scots are as responsible for the legacy that generated their present economic difficulties as are the Greeks who elected the successive governments that bequeathed their (much deeper) economic crisis.

As Syriza, the SNP has adopted dysfunctional policies of reactance such as eliminating university fees (regressively financed by cutting lower profile forms of youth training). But the most serious consequence has been the triumph of oppositional identity: 56 of the 59 Scottish Members of Parliament are now from a party that seeks to secede from a political union which is 308 years old (and so older than most member nations of the EU). As with Greece, the only realistic way of averting this is to end the hegemonic structure of economic power. In the case of Greece that structure is the rules necessary for the monetary union. In the case of Scotland it is the illusion of grievance arising from fiscal union: Scotland will need to be made as fiscally independent as is possible. However, subject to clear rules, Scotland will be able to continue in the Sterling currency union which Scots overwhelmingly prefer. Unlike Greece, Scotland has had 308 years in which its institutions and expectations have grown to be compatible with the currency which it uses.

What does this imply for the third potential exit: Brexit? Britain will stay in the EU because the crucial difference is that the British do not view Europe as a hegemon. Commission rules trigger a bit of reactance, but not oppositional identity: Juncker is viewed with contempt (the architect of the Luxembourg tax scams), but not with fear. Merkel is liked and respected. Only if she were to insist on imposing ‘European values’ would oppositional identity emerge. Understandably, the British will never take lessons on moral values from the Germans.