History repeats itself

Many of my liberal friends are delighted with Brexit. It is difficult to explain why. The European Union is a project that should please a liberal mentality . From an economic point of view, the principle of expanding the size of the market and reducing barriers to trade is one of the oldest aspirations of the liberal economy, a principle that Adam Smith expressed in The Wealth of Nations with one of his famous phrases : "The division of labor is limited by the size of the market." As for Smith's division of labor was almost synonymous with technical progress, and this amounted to growth, it is clear that one of the axioms of the father of the liberal economy was that, the larger the market, the greater the economic growth. It is not, however, a simple argument of authority: reality confirms daily the validity of the axiom: it is the big countries with big markets that dispute the economic supremacy of the world . Today, the United States and China are the paradigmatic cases. There are historical examples: from the 16th to the 19th centuries Japan remained virtually isolated from the rest of the world. In 1868 he changed his policy radically and opened himself to the world. He then experienced an unprecedented growth process. The case of post-Mao China is very similar. Europe, once the great world power, with the fragmentation of its markets and its intestinal quarrels, was reduced to a secondary role after the two world wars that were, above all, European civil wars. Woodrow Wilson's nationalist principle after World War I turned out to use gasoline to put out a fire. It became clear after World War II that a united Europe around a common market was the solution to the economic and political problems of this region and, therefore, a powerful contribution to solve those of the world.

Like any human work, the European Union has serious problems: among others, and, of course, cohesion is lacking among the member nations . On the one hand, optimism has been sinned by including members that were far from the required maturity and, on the other, disparities and rivalries are as many brakes to the integration necessary for the virtues of the single market to be fully felt; there are regional misgivings and disagreements (especially between the north and the south) that hinder integration, both political and economic. Few citizens have the big vision, which transcends the parish and the bell tower. All these problems tend to accentuate both impatience and skepticism. But all this does not seem sufficient justification to explain British separatism and less support for the separatism of non-British members , let alone those who define themselves as liberals. The problem of cohesion between European nations is something that can be solved over time, as new generations travel and learn languages, so that the inhabitants of some nations and others feel closer. For this, student exchange programs have been created, such as Erasmus, Socrates, Comenius, etc.

The only explanation I can think of what I would call the liberal pro-Brexit aberration is the wave of irrationality that has invaded the world, especially the western community, as a consequence of the recent Great Recession. If we add to this the Anglophilia in which Spanish liberals traditionally commune, perhaps we can glimpse an explanation to the paradoxical position of many of these friends. And it is that recently the two most emblematic Anglo-Saxon countries, the United States and Great Britain, have been invaded by a wave of irrationality that threatens to destroy the building of coexistence and laboriously raised cooperation , largely by these same countries, since the end of the Second World War.

But this is not new. History repeats itself. Marx already said it in Luis Bonaparte's 18 Brumaire : the first time it is repeated as a drama, the second time as a farce (and that he did not know Boris Johnson). The last time that a wave of irrationality invaded the world as a result of an economic catastrophe was during the Great Depression of 1929-1939 . The next one takes place now, as a result of the Great Recession of 2007-2017. By virtue of all this, I would propose a social Archimedes principle with the following statement: "As a result of an economic crisis, every society experiences an attack of passing madness proportional to the magnitude of that crisis, that is, to the fall suffered in the national income per inhabitant ".

In response to the Great Depression of the twentieth century, countries imposed very high barriers to trade, starting with tariffs (in which the United States set an example with the deplorable Hawley-Smoot law), and soon resorting to quotas, quotas, exchange controls, restrictions or prohibitions on capital movements, etc. What at the beginning of the century was a fairly integrated international market was fragmented into small national markets entrenched behind very high walls almost unstoppable. The remedy was worse than the disease. Under the Adam Smith principle, the decrease in market size greatly reduced international trade and with it income, which aggravated the depression. The level of collective madness rose: the Germans elected Chancellor Hitler, fascism spread throughout Europe, civil war broke out in Spain. Roosevelt's triumph in the United States in 1932 was seen by some as the prelude to communism and by others as the Trojan horse of fascism. It was neither one thing nor another, but the collective transitory mental disorder deformed the perception of reality, and people acted according to that perception. The last result of all this general madness was World War II, the most violent and deadly conflict of all time.

Today we are repeating the nonsense of then under the principle of social Archimedes . The English seem to have reached surprising extremes of madness . Two and a half years ago, Brexit supporters tried to make it acceptable to the public by saying that there was no danger of leaving without agreement, because this would be very simple, a matter of months. Today those same supporters, including the brand new prime minister, have changed their tune and shout in favor of hard Brexit, whatever the consequences, and the public seems willing to follow them, despite so many lies.

To such an extent has come the dementia that today there is a strong current of opinion in the United Kingdom that prefers that the country be demolished (that Scotland and the Ulster separate, and therefore cease to be a United Kingdom ) to remain in the European Union. Going back to Adam Smith: of course, the separation of the United Kingdom will have a very strong economic cost, especially for the United Kingdom itself. They don't care, they're not in rational mode; but when they wake up from the temporary madness, it will be too late. Who knows what my liberal friends will say then.

In the United States not only has returned to protectionism. The wall that Trump and his voters want to build is more than legal; It is material, iron and steel. Protectionism, the isolationism that did so much damage during the Great Depression, has returned . In Europe, populist right-wing and left-wing parties that advocate isolation swarm. We are on our way to a political and economic fragmentation similar to eighty years ago.

But there is some hope. You can and should learn from history so as not to repeat the follies of the past. If the Recession did not become Depression, it is because economists and politicians learned from the past and resorted to Keynesian recipes when they were applicable (they are not always). What we would need now are psychiatrists who knew how to cure the disorders of collective madness.

Gabriel Tortella is an economist and historian. His latest books are Capitalism and Revolution and Catalonia in Spain (with JL García Ruiz, CE Núñez, and G. Quiroga), both edited by Gadir.

According to the criteria of The Trust Project

• Europe
• U.S
• European Union
• United Kingdom
• WWII
• China
• Spain
• rest of the world
• Adolf Hitler
• Boris johnson
• Catalonia
• World

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