Alexander Lucie-Smith delves into the history books to try to discover what on earth is going on AA I write this, Gordon Brown is everyone's hero; by the time you read this, things may have changed once more, so fast and dizzying have the oscillations in the financial world been in the last few weeks. But Gordon is not the first statesman-economist to have been so reviled and loved in equal measure at different times by the same people: his career recalls that of the famous Jacques Necker, the finance minister who dug Louis XVI into a hole, appeared to dig him out of it, only to flee into exile leaving the King deeper than ever in the pit excavated by his supposed saviour.
Jacques Necker (1732-1804) was a Protestant from the Calvinist city of Geneva and started his career as a banker. The 1770s were good times for bankers, and Necker was able to secure huge loans for the French government. When he made the leap into the ministry in 1776 he was able to be the bridge man between the financial world and the French government, running up huge debts to finance the ruinously expensive French intervention in the American War of Independence a war that France had no practical (only ideological) reasons to fight. By 1781 it was clear that the French government was on the edge of bankruptcy. and Necker was dismissed. However, the self-justifying ex-minister was able, through his publication of an account known as the Cowie rendu, to convince the world that he had in fact solved most of the financial problems the government faced, and his popularity with the politically correct (he was after all the friend of American liberty) ensured that he was believed. It was this, a completely erroneous but widespread belief in the probity and genius of Necker, that ensured his recall on the eve of the Revolution by popular demand, after the failure of others to reform the finances, and as the government faced a crisis engendered by an immoveable mountain of debt and the refusal of bankers to give new loans. Necker, however, failed to solve the problems he himself had created, was surprisingly incompetent at handling the Estates-General, and was dismissed once more and then. when that occasioned rioting, immediately recalled. In 1790, by which time he was an almost forgotten figure, he resigned and escaped into ignominious exile in Switzerland, leaving the King he had served so badly to face his doom.
It may seem unfair to compare Gordon Brown with one of the worst economics ministers of all timehhowever, there are parallels. Gordon likes to boast of his Presbyterian probity, his "moral compass-. There is a whiff of the austerity of Calvin's Geneva about him. However, he has presided over a period of huge borrowing, which does not strike one as being particularly austere. Just how much the government has borrowed over the years remains shrouded in mystery: I do not mean that the government is lying to us, but that its talk about the economy is hardly clear. Economics is a mysterious craft, shrouded with jargon. shielded by a veil of obfuscation from the uninitiated public. How many of us really understand the Private Finance Initiatives (Phis)? And what is "off balance sheet" (OBS) accounting? Gordon's record, one suspects. is rather like Necker's Compte rendu: a highly effective and politically slick public relations exercise to convince us that all is well. and that the balance sheet is healthy, when in fact the opposite may well be the case. We are meant to trust Gordon with the things we do not understand; he, like Necker, is the saviour, the solution to the problem; but didn't he create the problem in the first place? Are we not in danger of swallowing a "narrativeon trust,
and being hoodwinked by the spin-doctors?
There is another parallel to note as well: as in the 1780s in France (as also. funnily enough, was the case in Russia on the eve of the Revolution) commodity prices have been rising sharply. This was not the fault of the government then, nor is it now, but the inability of the government to control rising fuel and food prices is frightening. True. oil and grain prices have levelled off of late, but the volatility of these markets ought to alert us to our vulnerability. Just as the era of debt-fuelled growth may be over, so too the era of cheap travel and cheap food may soon be a thing of the past. Likewise our ability to wage two wars in far-off countries may be a luxury we can no longer afford. We may not be heading the same way as Argentina or Iceland or pre-Revolutionary France, but one thing surely must be clear we can no longer carry on as before.
The French Revolution might well have been avoided if the more enlightened and competent ministers of Louis XVI had been allowed to put their plans of reform into action. Both Turgot and Calonne, and in his brighter moments, Necker, proposed fundamentally the same things: reform of the tax system, which just as today laid a crushing burden on those who could least afford to pay, and a huge cutback in public expenditure and waste. Unfortunately both were successfully opposed by vested interests. Today too any real retrenchment seems politically impossible. How about cutting expenditure on education or the health service? Can you imagine the howls of outrage this would produce? What about cutting back on the Armed Forces? Abolishing the government department that deals with overseas development? How about demolishing several royal residences, as Louis XVI did, to avoid maintenance costs? Funnily . enough, that is one thing we have already tried, but turfing Prince and Princess Michael of Kent out of their flat in Kensington Palace is not going to make any real difference to anyone , apart from the blameless royal couple themselves. New Labour-style "eye-catching initiatives" are no substitute for huge cuts in public spending.
In the end Gordon Brown might like to consider the stratagems undertaken by the governments that succeeded the one of Louis XVI. While doing a Napoleon and making money through conquest seems out of the question, there remains the possibility of seizing ecclesiastical property, which Gordon, as far as I know. has not yet considered, but which would certainly please the New Labour hinterland. Finally there is the simplest expedient of all when you need money, print it. In 1790 the French government invented the assignat, essentially a government bond that was supposedly backed by the hiens nationaux of confiscated Church property. The assignat was accepted as legal tender, but rapidly lost value as more and more came into circulation and hyperinflation took off. By the time Napoleon restored fiscal sanity with the institution of the franc in 1803 the assigrzat was trading at a tiny percentage of its face value and was virtually worthless. But, I hear you say, the revolutionaries knew nothing about economics, and we are not likely to find ourselves in a period of state-sponsored hyperinflation. Very well: Gordon will find some other, more honest way, of shifting that debt mountain. Suggestions, as they say, on a postcard. please.
Fr Alexander Lucie-Smith is a moral theologian and author of Narrative Theology and Moral Theology (Ashgate. 2007