Victims of another war
Ian On Sunday
April 2, 2000
John Maynard Keynes, the great British economist, probably had a bigger impact than anyone on the economic life of the 20th Century. His life story is fascinating - the precocious childhood, a brilliant career at Eton followed by equal success at Cambridge University, his connections with the writers and artists of Bloomsbury, his marriage to a famous ballerina, his years as an influential civil servant in the British Treasury during the First World War, his emergence to world fame through his writings. But perhaps the most intensely interesting part was his contribution to the Peace Conference held in 1919 in Paris at which Keynes played a prominent backroom role as an adviser on the British delegation.
What went on at this Conference is astonishing. It was a disaster. It led to widespread economic dislocation, eventual social disorder in much of Europe, the consequent rise of Fascism and the Nazis, and so inevitably to a renewed World War even more devastating than the one it was supposed to conclude. What is astonishing is that all this resulted from exactly the sort of selfishness, lack of imagination, and short-sighted leadership that lays a curse on the world today. Substitute today's rich countries for the victors at the Peace Conference, and today's poor countries for the defeated at the Conference, and the transactions in Paris in 1919 read like today's tragic North-South dialogue in a nutshell. We see history repeating itself with a vengeance.
Will anyone at last listen to the plea that the poor countries be completely relieved of all their international debt now, immediately, at once, with no further bureaucratic shilly-sahllying and excuses couched in diplomatic jargon
On the face of it there might not seem to be much in common between the trauma of European countries after World War 1 and the continuing trauma of poor countries at the present time. But let us look a little deeper. Then the fundamental problem was the crushing and uneven burden of debt in the aftermath of military disaster - now it is that same burden in the aftermath of economic disaster. Then on one side were the victorious nations holding the upper hand, on the other side countries conquered in war - now on one side are the developed countries with the upper hand, on the other side countries beggared by poverty and debt. Then it was simplistic national selfishness among the top dogs that led to ruin - now it is exactly the same selfishness on an international level which is leading to disaster.
Keynes bitterly opposed the Paris Peace Conference arrangements. His urgent representations then read amazingly like the pleas made now for a fairer deal for poor, debt-crushed countries - and were ignored by his superiors just as such pleas are also now in fact ignored despite the cynical promises of relief that are never really fulfilled.
The view which dominated in Paris was expressed in a speech by Sir Eric Geddes, Britain's First Lord of the Admiralty: "The Germans", he said, "are going to pay every penny; they are going to be squeezed as a lemon is squeezed - until the pips squeak". Listen to that! He could be a tough international banker or a man from the IMF dealing with a Third World country today.
Such men were determined that the losers in the war must pay the maximum in reparations, even if it meant that they would be saddled and crippled by debt payments. Keynes opposed them angrily. In vain he tried to make these great fools see sense. "I do not believe", he told them, "that any of these tributes will continue to be paid for more than a few years. They do not square with human nature or march with the spirit of the age." He sent a minute to his Prime Minister, Lloyd George: "Long before the amounts are collected", he wrote, "the Allied governments will find that such collection is doing them as much damage as the enemy". He circulated a paper pleading for the imposition of minimum reparations, for a general cancellation of debts as far as possible, and for extremely generous credit terms for losers in the war. He saw clearly that impoverishing the conquered would be alarmingly counter-productive.
But no one important listened to him. As no one is listening now to those who point out the inhumanity and absurdity of the debt burden which continues to be imposed on poor countries. When the Conference was over Keynes resigned and set about writing his devastating indictment called "The Economic Consequences of the Peace." It is the sort of indictment that one day will be written about the "great" men who now organise the world's financial affairs. Listen to Keynes:
Will the discontented people of Europe be willing for a generation to come so to order their lives that an appreciable part of their daily produce may be available to meet a payment the reason for which, whether as between Europe and America or as between Germany and the rest of Europe, does not spring compellingly from their sense of justice or duty?
Substitute Third World countries appropriately in that question asked 80 years ago and does it not become absolutely applicable to what is going on around us at this very moment?
The lessons of history are clear to anyone who cares to study them. Squeezing the defeated at the Paris Peace Conference in 1919 until the pips squeaked led to immense tragedy. In our day continuing to squeeze the poor countries in exactly the same way will lead to even greater and more desperate tragedy in the future. Nobody listened to Keynes' warning then. Will anyone at last listen to the plea that the poor countries be completely relieved of all their international debt now, immediately, at once, with no further bureaucratic shilly-sahllying and excuses couched in diplomatic jargon.