Market Overview

Financial Stress and Extreme Political Ideologies: Can We Learn from History?


Can humanity afford to have history repeat itself?

In June 2010, economist Paul Krugman discussed parallels between contemporary economic policies and events in the 1930s. At that time, Krugman wrote regarding the prospect of austerity policies in Europe: "How bad will it be? Will it really be 1937 all over again? I don't know." Later on, in August 2011 Krugman wrote that perhaps we are witnessing a disaster that goes beyond economics. Citing news of fascist groups in Greece and fears of the far-right rising onto the political scene, Krugman wrote that he has "that 30s feeling, all the way."'s Tiffany Gabbay discussed on May 7, 2012 that in light of the parliamentary wins of the Neo-Nazi party known as Golden Dawn in Greece, "recent developments across the eurozone might indicate that history is poised to repeat itself." From the article: "When citizens' frustration with government reaches critical mass, a contingent can all too easily use that as an excuse to lash out." Whereas social unrest may be a response to austerity measures, tough economic times would appear to be fertile ground for radical political ideologies to rise up and take advantage of a frustrated populace. From the article: "With a similar theme laying the groundwork for Adolf Hitler some 70-plus years ago, government inefficacy is, again, instigating the populace to take measures it normally would not. Fed-up with poverty, austerity measures, immigration and a host of other problems, citizens of Greece now look for someone to blame."

Even so, one cannot help but notice that the rise of the far-right is also met with the rise of the far-left. Gabbay wrote that "[t]oday, 20% of all Greek political parties comprise either Fascists or Communists. Beck reminded viewers that it only took 30% to elect Hitler." Beck has suggested that in light of ongoing problems with American politics owing to polarization and indecision, America may be headed down a similar path to Greece if the US "stays on its current trajectory". In comparing the Greek elections to political developments in France, Gabbay closed the article in that "[w]ith no wealth or private sector job producers, one of the world's great cultures and countries is poised to live-out a real-life Atlas Shrugged. ...and so might go the rest of Europe." Interestingly, there is reason to believe that Atlas-Shrugged-like developments are already afoot in the US.

In April 2012, Zero Hedge's Tyler Durden posted an interesting video on the topic of a potential global financial crisis. From the video: "It's never happened before, so nobody really knows how bad it will be, how long it will last, or even how we'll eventually get out of it. The house of cards has already been built. There's no painless way to dismantle it now. All we can do is to educate each other about what's actually going on and to prepare for what may be very extraordinary circumstances." In a similar video entitled "Global Financial Crisis explained in 96 seconds", the narrator discussed that in the midst of economic turmoil and overwhelming debt, citizens in various countries begin to get angry over spending cuts for things like social services, infrastructure, and education. From the video: "When that happens, the people who live in these countries get upset that the government isn't doing anything for them and instead sending a tremendous amount of money to foreigners. They then get angry at two sets of people: foreigners and the government. And that's about the time the real unpleasantness begins."

Per Durden's comments on May 6, 2012, "Suddenly the fate of the European experiment is in the hands of the ultra right and the far left ... Neo-Nazis will determine the future of Europe." Whereas Greece elections resulted in a rise in the far left and far right, might we see similar developments in Spain?

On May 17, 2012, Reuters reported that Spain is in the midst of a serious banking crisis. Reuters: "Spain's borrowing costs shot up at a bond auction on Thursday and its troubled bnaks suffered a double blow, with shares in part-nationalized Bankia diving and 16 lenders -- including the euro zone's biggest -- having their credit ratings cut." In light of financial woes and high unemployment, one has to wonder if Spanish politics will evolve in a similar pattern to contemporary Greece and 1930s Germany. Such prospects allude to thoughts of the Spanish Civil War in the late 1930s, which pitted Soviet-backed communists against Nazi-backed fascists. The Spanish Civil War resulted in a fascist dictatorship -- as an ominous prelude to World War II. In light of the fact that we know how politics and economics can develop, shouldn't we use history to our advantage and not our detriment?

In the wake of societal frustration and economic distress, it would appear that something in human group consciousness leads a society down the ugly path of political extremism, authoritarianism, and fascism. Is such a path necessary? Has humanity learned anything from history?

On this topic, I am reminded of a Star Trek episode entitled "Patterns of Force" where in searching for a missing history professor from Starfleet Academy, the starship Enterprise comes upon a planet only to be attacked by a nuclear warhead while in orbit around the planet. Capt. Kirk and First Officer Spock beam down to the planet to discover a civilization that has adopted a Nazi ideology complete with historical Nazi symbols. Whereas Kirk and Spock are confused as to how a foreign planet could have been made aware of Nazi fascism, they eventually learn that the missing Starfleet professor became the leader of this Nazi movement on the planet. It is later revealed that the professor used the National Socialist ideology to unite the lawless, primitive society on the planet and to drive the civilization toward socio-economic prosperity. Even so, it became apparent that the perceived advantages of fascist ideology brought with them dehumanizing aspects leading toward militarism, racism, and genocide. The moral of the episode seemed to evoke the notion that fascist governance in the midst of anarchy and bankruptcy with a drive toward rapid economic growth cannot exist without at the same time giving rise to counterproductive elements that lead to racism, hatred, and war.

We can see this recurring theme throughout history from ancient times to the Middle Ages to today. Extreme adversity, uniting of society, estranging of an "other" segment of society, authoritarian rule, pain and suffering. Fascism and authoritarianism feed off of this notion of an "other" in order to provide cohesion enough to spur rapid growth in a society. Thus, where there are parallels that can be drawn between the 1930s and contemporary Europe, one would hope that humanity has learned from history.

And perhaps there is hope that humanity has learned from history. Foreign Affairs editor Gideon Rose said in a January 2012 interview with NPR's Robert Siegel that even though the world appears to be in an ideological crisis, "the big picture is one of ideological stability, rather than upheaval". Rose reasoned that even though "the current order is fraying around the edges ... it's a matter of going back to what we already know how to do, rather than finding some new Utopian alternative just around the horizon." Siegel referenced a 1944 quote from then-editor of The Economist Geoffrey Crowther, "The dominant doctrines of the 19th century, if not dead, are so battered that they will not serve us any longer as our main props. We are, indeed, living in a vacuum of faith. But the trouble about a vacuum is that it gets filled. And if there are no angels available to fill it, fools or worse rush in." Siegel then questioned Rose in light of Crowther's sentiments whether Hitler would be "hot on our heels for the rest of our lives". In response, Rose suggested that there may always be that "populist response" to domestic and economic crises. Even so, "we're still living in the [post-WWII] world that you would have seen in 1950 ... in a way, that we're not ... living in the world of 1910."

From this perspective, maybe humanity can learn from history. The crux then becomes education and awareness. History has already spoken numerous times on the destructive and disastrous effects of counterproductive authoritarian political extremism, will the world take heed?

Posted-In: Ayn RandPolitics Psychology Topics Economics Media Reviews General Best of Benzinga


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