Among the more perceptive and, indeed, prescient books in my collectionis Voltaire's Bastards by John Ralston Saul. The main thesis of the book, which came out in 1992, is that much of what ails the modern world derives from the dark side of the Enlightenment: the "dictatorship of reason", the appropriation of rationality by amoral, technocratic process. Saul's thought resembles the post-liberal ideas of John Gray, or the ideas Adam Curtis plays about with in his documentaries. One particularly good chapter, entitled The Miracle of the Loaves, begins thus:
Inflation has always meant flatulence... It was only in the 1860s that inflation focused itself on economic phenomena. With hindsight, the 19th century clarification that uncontrolled money was nothing more than uncontrolled farting made perfect sense. From that moment on it became almost impossible to confuse inflation with growth.
Just as our structures and elites prefer corporate manipulation to real production, so financial manipulation comes more naturally to them than the creation of new capital. The result has been the gradual conversion of our economies into myriad forms of inflation, most of which are not measured by our many measuring institutes...
These abstract methods are so widespread and sophisticated that, as in the 1980s, they can create the impression of general prosperity when the reality is one of continued decay in both economic and social infrastructures. Our elites seem often to be the most perplexed by the inability of their systems to create real wealth. But then, they are themselves the products of the rational system and not its creators. They therefore live in the profound expectations that their methods will work. Their isolation from reality is such that they believe their systems can produce growth where in the past only inflation has grown.
Even more interesting is the lesson Saul draws from Athens in the days of Solon. Athens in his day was in the midst of... I'm tempted to say a Greek-style debt crisis, but that would be doubly anachronistic. But yes, a Greek-style debt crisis. Archaic Athens was controlled by a financial elite, the Eupatridae, landowners who acted as bankers, lending money to poor farmers who, unable to pay it back, lost their land. "This debt situation spun further and further out of control." Austerity and Draconian repression -- Draco being the lawmaker responsible for the clampdowns -- didn't work. Faced with the final collapse of Athenisan society (and their rule) the Eupatridae sent for Solon:
Solon's first act on taking power was to redeem all the forfeited land and to free all the enslaved citizens. This he did by fiat. That is to say, he legislated immediate default. The Athenians called it the shaking off of burdens, but in practical terms what he had done amounted to simply ripping up the debt papers.
Having released both the people and the nation from their paper chains, he was able to re-establish the social balance. From there he went on to create a code of fair laws (in place of Draco's) and to lay the foundation for a democratic constitution. Athens immediately began its rise to glory, spewing out ideas, theatre, sculpture and architiecture, democratic concepts and concrete riches.
"Immediately" is a bit misleading. A century separated Solon's settlement from the democracy established by Cleisthenes, and a vital chapter in Athens' rise to power and glory occured under the rule of the tyrant Peisistratus. But still, it's an interesting parallel. Today's problem is not confined to the actual debts of countries like Greece or of publics like that of the UK, however. If it were, default would be an attractive option. The problem is that most of the "debt" takes the form of financial instruments such as Credit Default Swaps that were largely imaginary to begin with, being at several steps remove from any economic activity in the real world. The financial crisis exists in the realm of ideas. It is all hot air - which is, of course, an inflationary substance.