I've been going on protests since I was young but I've never chanted about interest rates or debt restructuring deals
"Social change is not mechanical," Ha-Joon Chang, Cambridge economist and iconoclast, tells me. "You don't put in x tons of discontent to get three revolutions." Before we work out what the ingredients for change really are, I'm wondering what an economic revolution would actually look like. Would it start the same way as a regular revolution, with placards and water canon? What would the placards say?
The right always knows what to do with economic turmoil – it blames foreigners, and from there, the trajectory is pretty straightforward (attack foreigners, etc). The left does not know what to do. I've been going on demonstrations since I was very young; I've never chanted a slogan about an interest rate, or a debt restructuring deal, or even about inequality.
I ask for two reasons: the first is Cyprus, in which it looks as though the average citizen has no power at all. The country's dilemma – either be Europe's whipping boy or a "gimp state for Russian gangsta finance" (as Paul Murphy described it in the Financial Times) – was not the result of, nor was it soluble by, any democratic process.
Meanwhile, in this paper, a letter signed by 63 economists, most of them professors, greeted the budget with the conclusion that this government was simply wrong. "We are calling a people's assembly against austerity to bring together campaigns against cuts and privatisation with trade unionists in a movement for social justice." But how would such an assembly come about and, critically, what would we (assuming we're all invited) be demanding?
Chang was not the originator of the letter (that was the economist Michael Burke), but as the author of the magnificent 23 Things They Don't Tell You About Capitalism, was the headline name. Ridiculously, I was surprised by how cramped his office was, in the economics faculty at Cambridge University. Once you'd sold nearly 1m copies of a popular economics book, my subconscious had reasoned, surely they'd give you more space? Apparently not.
His position is a Keynesian one in the short term: "Anyone who is reasonable, which actually excludes most people in the current government, would agree that it makes sense to run more debt in the short run to recover faster. You just cannot get out of this kind of massive debt crisis without growing."
The main challenge from this perspective is to get an understanding of the purpose of debt into mainstream political debate, to which end, Chang uses the analogy of education: "People don't say, he shouldn't borrow money to go to university because he's running a massive deficit. He's earning zero." In the medium term, the question is what to spend that money on – nuclear submarines? Windfarms? Research? In the long term, we need to ask what we want to export, if not financial services.
Ann Pettifor, another signatory, director of Prime (Policy Research in Macroeconomics) shares this position – "What Keynes understood and what very few people give him credit for is the way to deal with a very depressed economy is to revive it" – but calls for something else: an international law on bankruptcy. Like the emphasis on employment, it's radical but obvious. "I think that bankruptcy is one of the most extraordinary advances in civilisation. Because people used to be destroyed by debt, they went to Marshalsea prison and died. Capitalists finally realised, 'we've lost him as a consumer and a producer. Let's put him back on the street'." In individual bankruptcy, the creditor takes a hit as well as the debtor, and everybody moves on. We need to be able to do the same for nations, so that when Argentina, or for that matter, Cyprus or Greece or (as Osborne keeps threatening) the UK go bust, they are not simply penniless, on their knees before the people who still have money. It's unjust, but more to the point, it's crippling its own system.
But if Pettifor counsels a balance in interests between debtors and creditors, Molly Scott Cato, a green economist at the University of Roehampton, puts something else on the table, for which the international law already exists. The notion of "odious debt" was invented in the 19th century (formalised in 1927): it stipulates that when a regime incurs debt that is not in the national interest, the successor to that regime can treat the debt as a personal burden of the outgoing despot, and write it off. If it sounds archaic and unreasonable even to bring it up, bear in mind that America used this when it invaded Iraq, as a justification for taking over the oil rights and not honouring the debts left by Saddam Hussein.
So there are groups across Europe – Who Owes Whom? in Spain, and Not Our Debt in Ireland – making the case that state debt incurred by actions that nobody voted for, rescuing banks, for instance, whose policies nobody even knew about, should be written off, not (only) for moral reasons, but in accordance with international law. "That's the radical answer," Scott Cato says, "to challenge where the debt comes from. Have a citizen's audit." (How do you like the sound of that, demonstrators? "What do we want?" "A citizen's audit!" "When do we want it?" "To cover the tax period 31 March 2003 to 5 April 2007.")
Chang smiles about the clean-slate talk: "Debt cancellation is sometimes necessary when the economy is tangled up and getting suffocated. The issue is which debts to cancel and under what terms. When people hear those words in black and white terms, they think, oh my God, those people are communists … I'm not in favour of revolution; I'm in favour of gradual changes. But that doesn't mean that my goal isn't radical. I want this system to be completely rewired, but to get there, you may have to deploy rhetoric that may not look strong enough to you but will appeal more to more people."
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