University of Akureyri, March 19, 2016
Since the year 2015 I have been working as editor in chief of Nordicum-Mediterraneum: Icelandic E-Journal of Nordic and Mediterranean Studies, published by the University of Akureyri (<http://nome.unak.is>). As such, I have received, read, reviewed and released a number of contributions by foreign and, in particular, by Italian scholars, dealing with Iceland under a broad variety of scientific perspectives. Also, especially during and immediately after Iceland’s 2008 financial meltdown, I was contacted and interviewed by a number of media outlets, primarily Italian. Thanks to these experiences, I can contribute to today’s discussion with an eminently personal yet qualitatively rich account of Iceland’s image among Italian and foreign academic circles. Above all, I believe the materials accumulated in the long life of Nordicum-Mediterraneum to be a truly interesting source of insight in the academics’ interest points, if not even the educated commonplaces, about Iceland.
Albeit in charge of the journal since its inception, I am not its real father, who is instead a scholar that has been working for many years at the University of Iceland in Reykjavík, Maurizio Tani. Eleven years ago, one year short of the title’s twelve, he approached me with the idea of a scholarly journal devoted to the many and diverse historical exchanges between the North and the South of Europe and, in particular, between Iceland and Italy. Nothing of the sort existed on the academic scene. Needless to say, his suggestion was taken aboard. Then, thanks to the small yet vital financial support of the University of Akureyri, plus the crucial help qua webmaster of Mr. Fabrizio Veneziano of Schiller International University in Paris and of Ms. Sigrún Magnúsdóttir qua Akureyri-based editorial assistant, the journal was officially born.
Foreign contributions about Iceland: Numbers and titles
A true pioneer in open-access scholarly publishing in Iceland, the journal aimed primarily at serving as a forum and an archive for scholars interested in Nordic and Mediterranean mutual connections. Progressively, pressured by its growing readership, the journal expanded its scope to Nordic and Mediterranean matters at large, rather than remaining confined to the exchanges between the North and the South of Europe. At the same time, the journal continued to publish a variety of other contributions as well, ranging from reviews of recent literature to interviews and personal memoirs. The break-up of the publications listed below does not include the special issues 11(2-3), due this year and already in the pipes, editorially speaking, and reads as follows:
Regular issues: 11 (2006-2016)
Special issues: 12 (2006-2016 i.e. up to 10(3)/2016)
Conference proceedings: 11 (2008-2016)
Other subjects: 1 (2006)
New articles: 42
Reflections on Iceland’s economic crisis: 13
Conference proceedings: 102
Conference-related notes: 11
Review essays: 5
Book reviews: 121
Republished books: 2
Degree theses: 1
Other contributions (short notes, reports, surveys, non-peer-reviewed articles, etc.): 19
Total publication: 333
Of all these published materials, 45 contributions can be said to deal with Iceland’s image in the eyes of foreign scholars, whether directly or indirectly, e.g. as reported in books reviewed for the journal (in the case of book reviews and review essays, I attribute each entry to either the reviewer’s nationality or the book author’s nationality, depending on who emphasises Iceland more). Longer pieces (e.g. articles, conference papers) amount to 21, while shorter ones (e.g. book reviews) to 24. Most of them are in legal studies (12), linguistics and/or literature (7) and history (5). Then we have contributions in philosophy (4), economics (4), geography (4), politics (3), psychology (2), art history (1) and personal memoirs (3). The countries of relative observation can be listed as follows:
- Argentina: 1
- Faroe Islands: 1
- Finland: 1
- Germany: 3
- Ireland: 2
- Italy: 25
- The People’s Republic of China: 2
- Romania: 1
- Russia: 2
- Scotland: 6
- Spain: 1
True to the original spirit of the journal, publications by Italian scholars on Icelandic or Italian-Icelandic matters stand out as far more numerous than the others. This geographical predominance and the limited overall as well as specific number of published contributions make a quantitative analysis unlikely to provide valuable information. Their qualitative value as academic exploration of Iceland’s heritage and historical experiences persists, however.
The typology, depth and length of these 45 contributions varies enormously. I list them below in chronological order, specifying their category, in accordance with the journal’s internal system of classification. In the pages following the list below, I refer to the underlined authors and the relevant year of publication in the journal; when Icelandic-foreign collaborative projects are included, I underline and count for the country list above only the foreign specialists involved:
Antonio Casado da Rocha, “Narrative Ethics and the Ecology of Culture: Notes on New Italian-Icelandic Sagas”
Note on conference proceedings
Maurizio Tani, “Italo Balbo, Iceland and a Short Story by Halldór Laxness. Notes on the Conference ‘La trasvolata Italia-Islanda del 1933’ (Reykjavík, 7 June 2003)”
Interviews, memoirs and other contributions
Francesco Milazzo, “Teaching Roman Law in Iceland”
Maria Savi Lopez (1848-1940), “Akureyri”, Nei paesi del Nord, Torino: Paravia, 1893
Italo Balbo (1896-1940), “Nella terra dei Vichinghi”, La centuria alata, Milano: Mondadori, 1934
Emanuela Finocchietti & Luca Zarrilli, “Paesaggio naturale e politiche di sviluppo territoriale in Islanda”
Manuela S. Campanini, “Iceland as a Landscape Investigation Pattern”
By Antonio Calcagno: Paolo Borioni, Cesare Damiano & Tiziano Treu, Il modello sociale scandnavo. Tra diritti e flessibilità (Roma: Nuova Iniziativa Editoriale, 2006)
Interviews, memoirs and other contributions
Federico Actite, Ancient Rome and Icelandic Culture – A Brief Overview
Diego Ferioli, “On the Oral-Formulaic Theory and its Application in the Poetic Edda: The Cases of Alvíssmál and Hávamál”
Manuela S. Campanini, “Imagine a Collective Landscape”
Viola Miglio, “Old Norse and Old English Language Contact: Scandinavian Legal Terminology in Anglo-Saxon Laws”
Reflections on the economic crisis
Giorgio Baruchello, “Eight Noble Opinions and the Economic Crisis: Four Literary-philosophical Sketches à la Eduardo Galeano”
Maria Pia Paganelli, “Learning from Bjartur About Today’s Icelandic Economic Crisis”
Interviews, memoirs and other contributions
Antonio Costanzo, “Fyrirlestur um bókina Hávamál. La voce di Odino”
Marinella Lorinczi, “Dracula in Iceland”
Adriana Di Stefano, “Northern Steps of EU Enlargement: The Impact of ‘Cohesion’ Policies on Iceland’s Accession Process”
By Rachael Lorna Johnstone: H. Beale et al., Cases, Materials and Texts on Contract Law, 2nd ed. (Oxford: Hart Publishing, 2010); and T. K. Graziano, Comparative Contract Law: Cases, Materials and Exercises (Basingstoke: Palgrave MacMillan, 2009)
By Rachael Lorna Johnstone, Natalia Loukacheva (ed.), Polar Law Textbook (Copenhagen: Nordic Council of Ministers, 2010)
Fabio Quartino, La Costituzione Islandese: storia ed evoluzione
Garrett Barden, “Responses to the contributors”
Birgir Guðmundsson & Markus Meckl, “’Karlson’ – A Stasi ‘Kontakt Person’. An episode of Iceland’s Cold War legacy”
By Andrea Hjálmsdóttir: Aðalheiður Ámundadóttir & Rachael Lorna Johnstone, Mannréttindi í þrengingum: Efnahagsleg og félagsleg réttindi í kreppunni (Akureyri-Reykjavík: Háskólinn á Akureyri og Mannréttindaskrifstofa Íslands, 2011)
By Anita Einarsdóttir & Tiantian Zhang: Herman Salton, Arctic Host, Icy Visit: China and Falun Gong Face Off in Iceland (Saarbrücken: LAP Lambert Academic Publishing, 2010)
Interviews, memoirs and other contributions
Jorge Mejía, “Some impressions after a quick visit to Iceland”
Hjálti Ómar Ágústsson & Rachael Lorna Johnstone, “Practising what they Preach: Did the IMF and Iceland Exercise Good Governance in their Relations 2008-2011?”
Irina Zhilina, “The Security Aspects in the Arctic: the Potential Role of NATO”
By Carlo Penco: Juha Manninen & Friedrich Stadtler (eds.), The Vienna Circle and the Nordic Countries. Networks and Transformations of Logical Empiricism (Vienna: Vienna Circle Institute Yearbook vol.14, Springer, 2010)
By Gísli Aðalsteinsson: Maurizio Tani, La chiesa di Akureyri: Guida storico-artistica alla parrocchiale luterana della «capitale del nord» (Grafarvogur: Snorri Sturluson, 2010)
By Guðmundur Heiðar Frímansson: Brian Lucey, Charles Larkin & Constantin Gurdgiev (eds.), What if Ireland defaults? (Dublin: Orpen Press, 2012)
By Herman Salton, “‘Arctic Host, Icy Visit’: A Response” (cf. Tiantian Zhang)
By Rachael Lorna Johnstone: Jesús Ballesteros, Encarnación Fernández Ruiz-Gálvez & Pedro Talavera (eds.), Globalization and Human Rights: Challenges and Answers from a European Perspective (Ius Gentium: Comparative Perspectives of Law and Justice, Vol. 13, Leiden: Springer, 2012)
By Rachael Lorna Johnstone: T. Kue Young (senior ed.), Rajiv Rawat, Winifred Dallmann, Susan Chatwood & Peter Bjerregaard (eds.), Circumpolar Health Atlas (Toronto: University of Toronto Press, 2012)
By Tero Mustonen, C. Raudvere & J.P. Schjödt (eds.), More Than Mythology – Narratives, Ritual Practices and Regional Distribution in Pre-Christian Scandinavian Religions (Lund: Nordic Academic Press, 2012)
Luana Giampiccolo, “Leiðarvísir, an Old Norse itinerarium: a proposal for a new partial translation and some notes about the place-names”
Matteo Tarsi, “On Loanwords of Latin Origin in Contemporary Icelandic”
By Federica Scarpa: Natalia Loukacheva (ed.), Polar Law Textbook II (Copenhagen: Nordic Council of Ministers, 2013)
By Giorgio Baruchello: Þorlákur Axel Jónsson, Dagur Austan. Ævintýramaðurinn Vernharður Eggertsson (Akureyri: Völuspá, 2009)
Interviews, memoirs and other contributions
Birgir Guðmundsson & Markus Meckl, “Regaining Iceland for the Catholic Church in the mid-19th Century”
Giorgio Baruchello, “The Picture—Small and Big: Iceland and the Crises”
Thomas Hören, “IMMI and Whistleblowing in Iceland – the new regulatory framework”
By Giorgio Baruchello: Sven-Olof Olsson (ed.), Managing Crises and De-globalization. Nordic foreign trade and exchange 1919-39 (New York: Routledge, 2014 pbk.)
By Giorgio Baruchello: Gaetano Roberto Buccola, Forme del centro. Percorsi analitici dal “Viaggio al centro della Terra” al nucleo dell’uomo (Palermo: Nuova Ipsa, 2013)
By Rachael Lorna Johnstone: Kári á Rógvi, West-Nordic Constitutional Judicial Review: A Comparative Study of Scandinavian Judicial Review and Judicial Reasoning (Copenhagen: Djøf Publishing, 2013)
Interviews, memoirs and other contributions
Roberto Buccola, “The Unconscious and the Island: Fragments of Research on the Self”
Giorgio Baruchello, “Enemies of Interculturalism: The Economic Crisis in Light of Xenophobia, Liberal Cruelties and Human Rights“
Foreign contributions about Iceland: Recurring themes
What sort of recurring themes can be found in this collection of diverse scholarly and scientific texts? I have identified four.
- Iceland as “the land of the Vikings”
This is the title given by the aviator Italo Balbo (2006) to the chapter on Iceland in his 1933 memoirs, who also recalls how the Vikings discovered America before Columbus himself. Spanish-Portuguese philosopher Casado da Rocha (2006) mentions too the Vikings’ “stories of warriors and wise men, poets and politicians of the golden age of settlement and commonwealth.” The marauding hordes, their adventures and their legacy are very much a focus-point for many commentators. They are a reason for distinctiveness, if not distinction. For instance, law professor Milazzo’s (2006) account of his teaching experience emphasises how Iceland is not as much part of the legal tradition based on Roman Law as most other European countries. Legal scholar Johnstone too, in her 2011 review essay on comparative law, mentions the enduring island-centric character of mainstream legal education in Iceland. This is not to say that classical culture did not reach or influence Iceland’s cultural development. Quite the opposite, Actite’s 2009 text offers a concise account of the deep, extensive and sometimes surprising impact of the Latin tradition on this island: “For instance, the Latin phrase Rustycus es, Corydon gave origin to the Icelandic words rusti [farmer] and dóni [rude people]”. Tarsi (2014) offers an even longer account. Even some elements of the later Catholic Christianitas endure, as noticed by Cardinal Mejía (2012) and Tani (2013). Still, the land of the Vikings is distinct and original, which is shown by the interest of foreign scholars, and Italian ones in particular, in the history, development and influence of Old Norse or ancient Icelandic, and its literary accomplishments in the Edda and the Sagas, e.g. Ferioli (2010), Miglio (2010), Costanzo (2010), Lorinczi (2010), Tani (2006), Barden (2011), Mustonen (2013), Giampiccolo (2013),
- Iceland as a Nordic State
Former Italian governmental ministers Damiano and Treu, together with the historian Borioni (2008), lump Iceland together with the other Scandinavian countries, as though Iceland had as strong a social-democratic tradition as Sweden, Denmark or Norway. However, Iceland does not have it. It was never a welfare State, in the sense and to the extent these other countries have historically exemplified. The right-wing Independence Party has marked its history much more than the various incarnations of democratic socialism in Iceland (cf. also Meckl’s 2012 article on Iceland’s Cold-War history and Baruchello’s 2014 book review), as also reflected by the largely unnoticed repression of Falun Gong demonstrators in Iceland in 2002 (cf. Tiantian Zhang, 2012 & 2013). Difference does not mean intransigence, however. Thus, Hören (2015) and Johnstone (2013a) reveal significant changes in a more Nordic direction led by the historically weaker left-wing forces of the country, in freedom of the press and in human rights provisions respectively. Perhaps, the most obvious manifestation of the “un-Nordicness” of Iceland was the neoliberal boom-and-bust hot-money cycle that led to the notorious kreppa of 2008, about which a number of contributions have been published, i.e. Baruchello (2010), Paganelli (2010), Johnstone (2013), Lucey, Larkin & Gurdgiev (2013), Johnstone (2013a & b), Baruchello (2014 & 2015b). Penco (2013) adds another layer of “un-Nordicness” by noticing how Iceland’s philosophical tradition owes more to Anglophone and Dutch academic traditions and establishments than to Scandinavian ones. Still, there exist clear connections with Scandinavian political experience, notably the Danish roots of Iceland’s constitution (cf. Quartino, 2011). In fact, in addition to its linguistic-literary roots and heritage, the legal tradition of Iceland seems to be, at large, the most Nordic feature of Iceland’s culture, at least according to Kári á Rógvi (2015). Baruchello (2015) adds another line of continuity, i.e. the cartelisation of strategic industries during the 1930s.
- Iceland as an Arctic State
Less controversial is this third commonplace notion. Iceland is located in the North Atlantic, after all, which is cold, dangerous to navigate upon, remote. This is the tone of the account by Savi-Lopez (2006), who pioneered the study and dissemination of Icelandic literature in Italy in the first half of the 20th century. As to later accounts, it would appear that being located in the North Atlantic is strategic. It is so for NATO (cf. Zhilina, 2013), for the EU (cf. Di Stefano, 2011), but above all for the Arctic nations and the governance of the region, as emphasised by Loukacheva (2011), Johnstone (2013c) and Scarpa (2014). Indeed, Meckl’s 2014 studies on the Catholic Arctic mission of the 19th century show the Catholic Church being the first international institution to conceive of the Arctic as a geographically, politically and culturally strategic region of the World. The number of submissions and publications pertaining to this third notion have been growingly steadily over the years, reflecting Iceland’s own growing institutional and intellectual self-characterisation as an Arctic State, not least as manifested by the developments within the University of Akureyri, which is part of the University of the Arctic consortium and hosts a most successful Master’s programme in Polar Law.
- Iceland as a dimension of the spirit
Iceland’s unique landscape, the result of equally unique and rather extreme geographic, geological and climatic conditions, lead to awe and deep existential reflection. Scientific observations are the beginning of more profound considerations about the relationship between humanity and the natural environment, the struggle for survival that we have fought throughout our journey on this planet, and the most disturbing question of all: why do we keep fighting? More or less explicitly, this is the tone of the contributions by literary scholar Finocchietti (2008) as well as geographers Zarrilli (2008) and Campanini (2008 & 2010). The same applies to those of Jungian psychologist Buccola (2015a & b). Numerically, we are not talking of a large number of contributions. However, and here the qualitative character of the present account comes to the forefront, the number of authors that have been interested in Iceland because of its mystique is conspicuous. Methodologically unlikely to reflect upon and disclose the motives for their own research, scholars and scientists have often discussed them with me qua editor and a southern European expatriate in the far north. The fascination with Iceland’s lunar vistas and its seemingly prohibitive inhospitality, combined with the sense of authenticity that such conditions inspire, are a frequent reason for Mediterranean minds to develop an interest in Nordic matters, even if these may have little to do with the island’s vistas, inhospitality or authenticity.
The literature by foreign experts published over the years in Nordicum-Mediterraneum pertains to many different disciplines. Prominent are literary, linguistic and legal studies. These disciplinary areas of emphasis are the result of many factors, not least the network of scholars and researchers who have found the journal a suitable venue for their work and that of experts willing to review the books that we receive from publishers. It is difficult, if not impossible, to gauge with certainty how representative they are of the stereotypes of, and commonplace conceptions about, Iceland. Nonetheless, I believe that they do offer considerable food for thought, which is an adequate and relevant aim for the present contribution.
On pretty much any measure of international comparison, Iceland is a little fish. Nevertheless, its geographical location next to the Big Pond that is the Arctic Ocean has put in a position of influence in a region of growing international importance.
In this paper, I will explore Iceland’s influence in the Arctic region based on international relations considerations such as its political alliances; and based on international law: Iceland’s rights and responsibilities.
The paper presents the Arctic Council and Iceland’s role within it before turning to issues that are governed outside of the Arctic Council system, in particular, Arctic fisheries and maritime boundaries. The paper explains Iceland’s approach to Arctic cooperation in light of its published policy documents and explore the tools available to Iceland to defend its interests.
Iceland as a ‘Small State’
Small States seek shelter: usually on a regional basis. They make alliances to advance their objectives and protect themselves from the lions. On hard security issues, Iceland finds this in the folds of NATO. The Arctic Council does not address hard security issues at all – and despite some heated press coverage, Russia is not posing a military threat in the Arctic, to Iceland or anyone else. But Iceland also needs economic and environmental security which it has fostered through Nordic cooperation, EFTA, the EEA and, of increasing importance, the Arctic Council.
International relations provides a number of objective criteria on which to measure a State as ‘small’: population, territory, GDP and military. States may be small by one measure but not by another – for example, having a very large territory but a tiny military; or having a small population but a high GDP.
In a global context, Iceland is very small. Its surface area amounts to less than 0.07% of the Earth’s land; its population less than 0.005% of the World’s; its GDP is under 0.02%. And Iceland has no military as such.
But States are also big or small in a given geopolitical context: the Kingdom of Denmark is a small State in global affairs but not in the Nordic Council. Being ‘small’ or even ‘very small’ is a relative matter rather than an absolute. Therefore although Iceland is a very small State at the international level, within the Arctic Council system, it exerts an influence that belies its small territory, population and economy.
Iceland’s Relative Size in the Arctic Council
‘The Arctic’ has a number of different definitions for different purposes, even within the Arctic Council system itself. For example, the area covered by the sustainable development working group is based on human interests; the protection of the marine environment working group is only concerned with the seas; conservation of arctic flora and fauna is determined by ecosystems. In all cases, Iceland is included in its entirety even if almost all of it sits below the Arctic Circle. By contrast, for the purposes of the Polar Code, agreed through the global International Maritime Organisation (IMO), Iceland is entirely to the South of the protected area: this is based on considerations of the marine conditions – temperature and ice-cover especially.
The Arctic Council consists of the eight States with territory that stretches above the Arctic Circle: Canada, the Kingdom of Denmark, Finland, Iceland, Norway, Russia, Sweden and the United States of America. In addition, there are six permanent participants: these are organisations of indigenous peoples from around the Arctic. Each is transnational in character. Five permanent participants represent peoples that inhabit more than one State: the Aleut International Association, the Arctic Athabaskan Council, Gwich’in Council International, Inuit Circumpolar Council and Saami Council. The sixth is the Russian Association of Indigenous Peoples of the North and represents over 40 small-numbered indigenous peoples in Northern Russia.
When thinking about small State theory, how ‘small’ is Iceland in the Arctic Council?
Iceland is still very small when territory is considered: it is dwarfed by the Russian and Canadian Arctics. However, when looking at population, Iceland is not far from the average with a population of approximately 330,000 (see Figure 1).
However, these figures are based on assuming that the whole of Iceland is ‘Arctic’. This is indeed the position of the Icelandic government and important to securing its legitimate participation in Arctic governance. Foreign Minister Össur Skaphérðinsson stated in his introduction to the Icelandic Arctic Policy statement in 2009 that: “Iceland is the only state that is wholly within the Arctic area, as it is generally understand international affairs or at the Arctic Council.”
The current draft policy, Iceland’s Interests in the Arctic, goes even further and suggests that Iceland is somehow more Arctic than its neighbours – in which the vast majority of the population and the territory (but for the Kingdom of Denmark) lies well south of the 66th parallel.
Iceland is unique when we compare it to other nations that are geographically part of the Arctic. Most other countries, aside from Greenland, are predominantly South of the Arctic according to these definitions and their populations live mostly outside of the Arctic.
If we then stop to consider the observers at the Arctic Council, the Iceland once more disappears – over half the World’s population is now represented in some form at the Arctic Council.
Further, it is not just the observer States and intergovernmental fora that make Iceland look little: WWF, observer at the Arctic Council, has a membership in excess of 5 million people. These are not just people who happen by birth to be affiliated to a particular State; these are people who care enough about WWF’s priorities, including its Global Arctic campaign, to pay an annual subscription.
The History of the Arctic Council
So how can Iceland exert its influence at the Arctic Council? And why was it in favour of the great expansion of observers in 2013? To understand this, we need to explore the Arctic Council’s origins and the way it functions today.
In the 1970s and 1980s, the only international interest in the Arctic was how long it would take to fire an intercontinental missile across it. A diligent doctoral student in the 1980s (now a very well-known professor of law of the sea) was told by his supervisor that he was wasting his time writing about the Northern Sea Route!
Iceland invited Gorbachev and Reagan to meet for disarmament talks in Reykjavík in 1986 and although no agreements as such were agreed, it was sufficient – no pun intended – to break the ice.
It was Gorbachev who then came along with the olive branch: the speech at Murmansk in 1987 in which he identified six areas that he saw as ripe for cooperation:
- A nuclear weapons-free zone in Northern Europe;
- Reductions and restrictions on naval activity in Northern Europe;
- Cooperative development of hydrocarbon resources in the Arctic;
- Scientific cooperation;
- “Cooperation of the northern countries in environmental protection”; and developing “jointly an integrated comprehensive plan for protecting the natural environment of the North”; and
- Opening of the Northern Sea Route to international vessels.
Finland seized on this overture and initiated the Rovaniemi Process which in turn led to the Arctic Environmental Protection Strategy (AEPS) in 1991. Pointedly, this initiative was established at a meeting of 8 ministers for the environment, not foreign ministers. The four original working groups, later joined by Sustainable Development and, under the Arctic Council, Arctic Contaminants Action Program (ACAP), are all environmentally oriented.
The transition to the Arctic Council in 1996 was effected through the Ottawa Declaration. This change indicated a much broader range of interests: this was no longer solely a forum for managing shared environmental threats and clean-up activities – it was now, in theory at least, able to address any shared concerns with the explicit exception of military security. According to the Ottawa Declaration, the Arctic Council is established to “provide a means for promoting cooperation, coordination and interaction among the Arctic States, with the involvement of Arctic indigenous communities and other Arctic inhabitants on common Arctic issues, in particular issues of sustainable development and environmental protection in the Arctic.”
But in 1996, the Arctic Council was still a fairly marginal institution and outside concern with the Arctic did not extend much beyond preservation of polar bears. Even in Iceland, there was little awareness of the Arctic as a geopolitical region as such or Iceland’s place within it. Iceland looked South to Europe and West to North American for trade but it did not really look North.
Between 1996 and 2000, the number of permanent participants rose from two to six and in the early 2000s, there was a slow but gradual increase in the number of observers. Iceland took the rotating chairmanship from 2002-2004; this also happened to be the time when international interest in the Arctic took off. By around 2005, the Arctic was gathering more and more attention in international relations, international law, development, economics and environmental scholarship and activism. The battle lines were being drawn between those that wanted it closed off as an international natural park; and those that wanted to exploit its apparently abundant resources (forgetting, perhaps, that Russia had been exploiting Arctic resources since at least the times of Stalin).
From about 2010 onwards, five rising Asian States, Italy and the European Union were seeking a formal place at the Arctic table: observership at the Arctic Council. This was awarded for the six States in 2013 and effectively for the EU at the same time but followed three years of intense lobbying efforts and heated discussions.
The Operation of the Arctic Council and Iceland’s Influence within it
How can Iceland, then, maintain its influence in the shadow of these giants? To understand this, we need to examine how the Arctic Council operates.
The Arctic States are the members of the Arctic Council and the associations of indigenous peoples are permanent participants. This is a unique format for an international body. The Arctic States and permanent participants sit together at Arctic Circle meetings and have equal rights to contribute to the agenda and debate. Decisions are made by consensus between the member States and in practice, usually the consensus of the permanent participants as well.
The Arctic Council operates at a number of levels (see Figure 2). At the top is the biennial ministerial meeting, the location of which coincides with the chairmanship (which changes every two years on a rotating basis). The Senior Arctic Officials (SAOs) are the member States’ ambassadors who meet alongside the permanent participants and observers twice yearly. A number of subsidiary bodies exist, principally the six working groups which are essentially scientific bodies that can present findings to the SAOs and ministerial meeting but whose policy recommendations must be endorsed by the Arctic States. The working groups are standing bodies but there are also time–limited Task Forces which address specific issues and now the Expert Group on Black Carbon.
Observers at the Arctic Council have much less influence than the members or permanent participants; in short, their role is to ‘observe’ and not to talk. To become and remain an observer, an entity must: bow to Arctic States’ sovereignty; recognize and commit to uphold international law, in particular, the law of the sea in the Arctic; respect the rights of indigenous peoples; demonstrate commitment, including financial commitment, to the work of the permanent participants; and show its capacity to contribute to Arctic interests, including scientific research.
Observers’ have limited rights at Arctic Council meetings and are expected to contribute principally through the working groups. Unlike the member States and the permanent participants, observers may not propose items for the agenda or raise points during Arctic Council meetings (ministerial or SAO meetings) although they are permitted to submit written statements. Even at the subsidiary bodies, the observers are sat apart at the ‘children’s table’, behind the main table and they may speak only after the States and permanent participants have had their say and even then at the discretion of the chair. Observers are also reviewed every four years but can be excluded at any time as their observer status only lasts as long as consensus exists amongst the ministers. In other words, it would require only one member State to exclude an observer. This means that observers cannot exert the influence they have in other international fora within the Arctic Council. To maintain their observerships, they must placate all the Arctic States and most of the permanent participants, most of the time. Iceland might be little but in the Arctic Council it wields a great deal more influence than China.
The Arctic Council punches well above its weight for what is structurally no more than a roundtable for discussion with no law-making powers or compliance mechanisms. Nevertheless, there are two very significant limitations on what it can do. The first is financial: it has no regular funding and seeks contributions on an issue-by-issue basis. This requires States – including observer States – being willing to front cash. Secondly, the consensus model means that it requires only one State to object to anything to take it off the table – whether that be the wording in a recommendation or the initiation of a project in the first place. Iceland can veto anything.
The Arctic Council has also successfully insulated itself from international tensions and disputes that have dampened East-West relations over the past few years such as the crises in the Crimea and Syria. While Iceland ties itself in knots internally over the Russian sanction regime, this is entirely curtained off at the Arctic Council meetings. When tensions have occasionally arisen between Canada and Russia, Iceland can sit back and enjoy the show; it is not forced to take a position. Also, Iceland, having no indigenous peoples of its own, can play the honest broker and be a neutral mediator between the permanent participants and States.
Alliances in the Arctic Council are fluid; there is no obvious ‘Nordic block’ as often occurs at the United Nations and Iceland will defend its own interests on an issue by issue basis. The consensus approach – or the ‘veto’ approach if you prefer – means that fixed alliances are not necessary; no State can be forced into a position that it finds unacceptable.
Beyond the Arctic Council
From Iceland’s perspective, as a very small State, the Arctic Council is a very attractive forum in which to advance its interests. Its official policy, to prioritise the Arctic Council as the key forum, mirrors that of Sweden and Finland, because it is here that the States have the most meaningful influence. A very small State has limited bargaining power in bilateral negotiations with much larger countries; but it also has minimal influence in global fora in which it is outweighed – and outspent – by major powers. Even worse is a forum in which Iceland is not represented at all.
The same consensus-based system that allows Iceland to protect its interests in the Arctic Council allows the other seven States to do the same – and allows them each to keep certain things of the agenda to be dealt with elsewhere. The so-called ‘Arctic Five’ have squeezed out Iceland over two issues: Arctic High Seas fisheries; and the delimitation of the outer continental shelf.
The Arctic Five
Iceland has a small Arctic coastline but it is does not itself border the Arctic Ocean per se. Its exclusive economic zone (EEZ) is met by the Norwegian and Greenlandic EEZ’s in the North. Therefore although Iceland is an ‘Arctic Coastal State’ is it is not an ‘Arctic Ocean littoral State’ – i.e. it does not have a coastline or EEZ that borders the Arctic Ocean.
The Arctic Five – Canada, Denmark, Norway, Russia and the USA – meet occasionally outside of the Arctic Council framework, pushing to one side not only the other three Nordic State partners but the permanent participants as well. The basic justification for this is that the Arctic Ocean is a ‘semi-enclosed sea’ – a debatable claim geographically but one that gives those five States a special responsibility under the Convention on the Law of the Sea to manage the area.
This group met in Oslo in 2007, Ilulissat, Greenland in 2008 and Chelsea, Québec in 2010 to discuss the legal framework for the Arctic Ocean. The Ilulissat meeting culminated in a declaration which was a broad reaffirmation of State sovereignty in the Arctic, an endorsement of the law of the sea as the governing framework for the Arctic Ocean and a message to non-Arctic States that a treaty based on the Antarctic model of environmental protection and internationalization would not be accepted in the North.
Iceland registered its objections and emphasized the importance of the Arctic Council as the principal forum; but the Arctic Council cannot have a monopoly on any topic and nothing can prevent States from meeting and negotiating outside of the Arctic Council system.
The Outer Continental Shelf in the Arctic
The sexy issue in the Arctic today is the grand carve-up of the outer continental shelf. Iceland does not have a stake in this game because it does not have an Arctic coastline. In any case, while it might resemble a colonial land-grab with dramatic flag-planting and grand declarations of sovereignty, the system to resolve and allocate rights over the ocean floor is long settled. It is admittedly slow and laborious but in short: Canada, Russia and Denmark or Greenland will sooner or later sit down and resolve their overlapping map submissions through bilateral negotiations. There is no hurry to do this as all the resources of any near-term commercial interest are far from the contested zones.
In respect of Iceland’s continental shelf, the Dragon Area to the North by Jan Mayen is long settled as a joint development zone with Norway. Iceland has three potential areas of outer continental shelf that are being mapped and of these, the Rockall area to the South is contested as four States (the Kingdom of Denmark (Faroe Islands), Iceland, Ireland and the United Kingdom) jostle for exclusive rights; but this is not an Arctic issue (see Figure 3).
Fisheries are more interesting but not an immediate concern. Iceland has exclusive rights over fish stocks within its EEZ but it has to manage shared and straggling stocks and highly migratory species in cooperation with neighbouring States (see Figure 3). For the most part, this goes reasonably well though there is an ongoing sore point over the mackerel which has been gradually shifting Northward and Westward and competing with the cod stocks.
There are very good reasons to keep this out of the Arctic Council framework. The European Union is a key player in this dispute and the last thing any of the Arctic States want to do is give the European Union equal standing at the Arctic Council.
More speculative is the future governance of fisheries in the Arctic High Seas (see Figure 4). 
Currently, there are no fishing in the Central Arctic Ocean (the High Seas marked dark blue in Figure 4) as it is too far, and mostly ice-covered, to offer commercially exciting fisheries. Existing fisheries are all safely within the 200 nautical mile EEZ of the coasts. They are managed by the Coastal States and various regional fisheries management organisations (RFMOs). The North East Atlantic Fisheries Commission (NEAFC) NEAFC covers a small corner of the High Seas, but otherwise, the Central Arctic Ocean is an international commons.
The Arctic Five have taken the lead – again under protest from Iceland. High Seas are beyond the jurisdiction of any State and under the UN Convention on the Law of the Sea and the Fish Stocks Agreement, to prevent a ‘free-for-all’ and a tragedy of the commons, States with a ‘real interest’ should work together. The difficulty in the Central Arctic Ocean is that there are currently no fisheries and hence it is very difficult to determine who has a ‘real interest’ in the legal sense.
Where the High Seas are concerned, Iceland’s position is that it has just as much interest in the area as the five littoral States; the Arctic Five disagree and began negotiations amongst themselves. This concluded with a moratorium in July 2015 – a temporary ban on Arctic High Seas fishing until such time as scientific studies had evaluated the available stocks and their resiliency.
A moratorium agreed with the Arctic Five cannot bind other States which is why they invited five other entities to a discussion in Washington DC in December 2015 about future governance of living marine resources in the Central Arctic Ocean. The five littoral States attended, alongside five invited participants: The European Union, China, Japan, South Korea and Iceland: the ‘A5+5’.
Russia had expressed scepticism as to the need to include any other States at this point but nonetheless attended the December talks. This indicates the Arctic Five’s recognition that these are all entities with a ‘real interest’ as they are those most likely to have the potential for fisheries in the Central Arctic Ocean. It is also indicative of a view amongst the Arctic Five that no other State or entity has a ‘real interest’ – at least at this time.
Being left on the second tier alongside distant Asian States might be humbling for Iceland but an ‘Arctic Six’ is simply not going to happen. Iceland does have legal interests in the Central Arctic Ocean: but in law, these are no different to those of the EU or China. This is not an urgent matter as there is no immediate economic potential but Iceland nonetheless can be expected to protest any exclusion and to defend the role of the Arctic Council to prevent precedents being set for Arctic governance without its involvement.
The last hot topic in the Arctic that is outside of the Arctic Council system is shipping. Freedom of navigation is a fundamental principle of law of the sea that applies right up to States’ baselines. It is a global right that is managed at global fora, in particular, the International Maritime Organization that developed the Polar Code. Iceland has no special legal or commercial interests in the Arctic shipping. . Iceland’s EEZ has no ice-covered waters so it has no extended authority to protect its marine environment beyond that which applies generally under the Convention on the Law of the Sea. But that will not prevent it examining commercial opportunities should commercial shipping develop.
Iceland’s Arctic Policy
The priorities I have identified are reflected in the development of Iceland’s Arctic policies. Increasing governmental attention to the Arctic can be traced at least to the Icelandic chairmanship of the Arctic Council but this section will look only at the official policy formulations from 2009 onwards.
Former Minister of Foreign Affairs, Össur Skarphéðinsson set the ball rolling in 2009 with the report, Iceland in the Arctic. He followed this up by making the Arctic a key theme of his 2010 report to the Alþingi and then sent them a draft to develop into a formal policy (stefna) which the Parliament then took up and agreed with few changes in 2011.
In May 2015, the new government issued a draft for consultation: Iceland’s Interests in the Arctic: Opportunities and Risks, though this has yet to be finalized and the projected date has been repeatedly put back. The current Minister of Foreign Affairs, Gunnar Bragi Sveinsson, put the Arctic once more at centre stage in his 2016 annual report to Parliament.
In all of these, we see an emphasis on multilateral approaches, the importance of the Arctic Council and the assertion of Iceland as an ‘Arctic coastal State’ that is a challenge to the legitimacy of the Arctic Five.
In Skarphéðinsson’s extensive first report, Iceland in the Arctic, international cooperation is the first priority with particular attention on the Arctic Council. However, the Barents-Euro Arctic Council and the West-Nordic region are also mentioned as important fora. In his 2010 report to Parliament on international affairs, the first region to be addressed is the High North and of the ten Arctic priorities, the first is:
to secure Iceland’s position as a coastal state and a key stakeholder in shaping the future development of the High North. Iceland should be considered a full-fledged coastal state on a par with such countries as the USA, Denmark (for Greenland), Canada, Norway and Russia.
This repeats an earlier rebuke to the Arctic Five for their exclusion of Iceland but it is also noteworthy that for all Iceland’s talk of the importance of the Arctic Council, it is not unduly concerned about the exclusion of Finland, Sweden or the indigenous representatives from the Arctic Five talks.
Defence of the Arctic Council comes later (Arctic priority 4) but all the priorities point to Iceland’s need for multilateral Arctic governance and the importance of securing of Iceland’s role within it.
Until such time as the current government agrees a new policy, the official Icelandic Arctic policy remains the 2011 Parliamentary Resolution. It largely follows Össur’s 2010 report though one interesting change is that the Alþingi changed the order, placing the Arctic Council first. However, it also highlights Iceland’s special status as a ‘Coastal State within the Arctic Region’ in priority two.
One surprising aspect of the draft of the latest Arctic policy is that it follows much of the previous approaches but makes very little direct reference, perhaps reflecting a desire of the governing coalition parties to present the Arctic as their project. It was these two coalition parties who held the reins when the Arctic first hit the radar of Icelandic politics and who actively pursued increased cooperation and investment in Arctic relations and research. The draft highlights once more Iceland’s Arctic credentials, now suggesting that Iceland is somehow more Arctic than the other States (in which most of the land and population are far South of the Arctic).
International cooperation is still the top priority, especially through Arctic Council. However, other fora are mentioned and special relations with Greenland and the Faroe Islands are promoted.
The opportunities (tækifæri) identified are very much business-focused: new fisheries, hydrocarbons and shipping; climate change is not presented as wholly negative. This is reminiscent of Berit Kristoffersen’s concept of ‘opportunistic adaptation.’
Indigenous peoples are overlooked in the report almost entirely; mentioned only once in the introduction, their rights and interests are ignored throughout, even in areas where proposed Icelandic activities can have serious impacts.
Most recently, in March 2016, the current Minister for Foreign Affairs, Gunnar Bragi Sveinsson, delivered his annual report to Parliament. The Arctic is once more the first region to be assessed. The 2011 Parliament resolution remains the key policy and there is no mention of development of the new strategy document (i.e. Iceland’s Interests in the Arctic).
Sveinsson seeks an increase in Iceland’s contributions to the Arctic Council’s activities, especially at the level of working groups, task forces and expert groups and points to the need to begin preparations for the Icelandic chairmanship that begins in 2019. The Arctic Council’s operations are explained in a fair degree of detail to Parliament (given the habitual nature of such reports) some detail (given the nature of such reports) in the following pages.
West-Nordic cooperation is also given special attention, indicating an interest in promoting further cooperation with the Faroe Islands and Greenland. This is a region or sub-region that is not given a great deal of attention in international relations but has the potential to grow in importance. In this context, Iceland is the ‘big State’ and the only one of the three countries to have decolonised from the Kingdom of Denmark (so far). However, the West Nordic Council is significantly limited in its activities in the absence of considerable investment: not easy to come by in three very small and cash-strapped countries.
The Arctic High Seas fisheries issue is not addressed directly in the report and no reference is made to the A5+5 December 2015 meeting in Washington DC. (This may have been a matter of the timing of the drafting of the report or it may indicate that the current foreign ministry no longer wishes to continue to fight this battle.) Nevertheless, within the section on Arctic cooperation, Sveinsson obliquely refers to the dependence on marine resources of the Icelandic economy and the importance for Iceland of ‘actively participating in international cooperation concerning ocean affairs’.
Making Sense of Iceland’s Priorities
The official Icelandic approach does not diverge widely from what might be expected from a very small fish beside a very big ocean. Multilateral cooperation is key and the Arctic Council is the preferred forum as it secures Iceland’s influence. Nevertheless, although Iceland objects to the Arctic Five, it would quite happily accept an Arctic Six – as long as it is in it. Iceland objects to its own exclusion and does not necessarily take a particularly principled stand in defence of broader multilateral cooperation.
However, Iceland has been open to the expansion of observers at the Arctic Council; some of these courted Iceland generously during the application period. Iceland needs its international partners beyond Arctic States but if Iceland can channel them through the Arctic Council, it prevents them from overpowering it.
Iceland continues to assert its interest and demand involvement in fisheries management. Iceland must be practical here and take part in the A5+5 – even if it would prefer an A6+4. The shelf is not so pressing and will be resolved in time. Iceland sees some commercial opportunities in shipping –but this is a very long game and will be managed through the IMO.
The current government’s approach to the Arctic is rather more commercially oriented that its predecessor as it looks to climate change as an opportunity (as well as a risk factor) and seeks to profit from the resources that the receding ice ostensibly presents. Nevertheless, those resources remain very expensive to access and develop irrespective of the state of the ice.
 See, eg, Alyson Bailes, Baldur Þórhallsson, and Rachael Lorna Johnstone, “Scotland as an Independent Small State: Where Would It Seek Shelter?,” Stjórnmál og Stjórnsýsla 9, no. 1 (2013).
 Ibid, 3.
 Össur Skarphéðinsson, Ísland á norðurslóðum, Inngangur, 2009 (translation by present author).
 Ministerial Committee on Arctic Affairs, Hagsmunir Íslands á norðurslóðum: tækifæri og viðsjár (draft), March 2015.
 Mikhail Gorbachev, Speech at Murmansk, 1st Oct.1987, available at <https://www.google.is/search?q=murmansk+speech&rlz=1C1LENP_enIS499IS499&oq=murmansk+speech&aqs=chrome..69i57j0l3.1838j0j9&sourceid=chrome&ie=UTF-8> (accessed 4 April 2016).
 Arctic Environmental Protection Strategy (AEPS), Declaration of the Ministerial Meeting in Alta, Norway, 13 June 1997, available at <http://library.arcticportal.org/1271/> (accessed 4 April 2016).
 Ottawa Declaration on the Establishment of the Arctic Council, 19 September 1996, available at < http://library.arcticportal.org/1270/> (accessed 4 April 2016).
 Ibid, para. 1a.
 Arctic Council, Kiruna Declaration, 15 May 2013, 6, available at <https://oaarchive.arctic-council.org/handle/11374/93> (accessed 4 April 2016).
 Arctic Council, Rules of Procedure, as adopted by the Arctic Council at the First Arctic Council Ministerial Meeting, Iqaluit, Canada, revised by the Arctic Council at the Eighth Arctic Council Ministerial Meeting, Kiruna, Sweden, available at <https://oaarchive.arctic-council.org/handle/11374/940> para 19 (accessed 4 April 2016).
 Douglas C Nord, The Arctic Council: Governance within the Far North (Routledge 2016) 38 & 70.
 United States of America, Department of State, ‘Arctic Council Structure’ <http://www.state.gov/e/oes/ocns/opa/arc/ac/structure/> (accessed 4 April 2016).
 Rules of Procedure, supra note 10, Annex 2.
 Ibid, Rule 38
 Ibid, Rules 12, 19 & 38.
 Arctic Council, Observer Manual for Subsidiary Bodies, as adopted by the Arctic Council at the Eighth Ministerial Meeting, Kiruna, Sweden, revised by the Arctic Council Meeting of the SAOs at Anchorage, Alaska, United States of America, October 2015, available at <https://oaarchive.arctic-council.org/handle/11374/939> para 7.3 (accessed 4 April 2016).
 Rules of Procedure, supra note 10, Rule 37 and Annex 2, Rule 5.
 See, e.g., Nord, supra note 11, 35 & 72-74.
 Parliament of Iceland, Þingsályktun um stefnu Íslands í málefnum norðurslóða (2011) 139th legislative session, 28 March 2011.
 United Nations Convention on the Law of the Sea 1982, 10 December 1982, 1833 UNTS 397 (UNCLOS), Part IX.
 Ilulissat Declaration, Foreign Ministers of Canada, Denmark, Norway, Russia, and the United States of America, The Ilulissat Declaration, 29 May 2008, available at <http://www.arcticgovernance.org/the-ilulissat-declaration.4872424.html> (accessed 4 April 2016).
 UNCLOS, supra note 20, Part VI and Annex II.
 Icelandic Ministry of Foreign Affairs, ‘Viðræðum fram haldið um Hatton Rockall-málið’ 24 November 2004, available at <https://www.utanrikisraduneyti.is/frettir/nr/2472> (accessed 4 April 2016).
 UNCLOS, supra note 20, Part V.
 Ron Macnab, Olav Loken and Arvind Anand, ‘The Law of the Sea and Marine Scientific Research in the Arctic Ocean’ Meridian Newsletter (2007-2008) 3, Figure 2 <http://www.polarcom.gc.ca/uploads/Publications/Meridian%20Newsletter/MeridianFall2007.pdf> (accessed 6 April 2016).
 UNCLOS, supra note 20, Part V; United Nations Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, 4 August 1995, 2167 UNTS 88, article 8(3).
 United States Library of Congress, Global Legal Monitor, ‘Canada; Denmark; Norway; Russia; United States: Fishing Declaration Covering Central Arctic’ 21 July 2015, available at <http://www.loc.gov/law/foreign-news/article/canada-denmark-norway-russia-united-states-fishing-declaration-covering-central-arctic/> (accessed 4 April 2016).
 United States Department of State, ‘Meeting on High Seas Fisheries in the Central Arctic Ocean: Chairman’s Statement’ 3 December 2015, available at <http://www.state.gov/e/oes/rls/pr/250352.htm> (accessed 4 April 2016).
 IMO, ‘Shipping in Polar Waters’ available at < http://www.imo.org/en/MediaCentre/HotTopics/polar/Pages/default.aspx> (accessed 4 April 2016).
 UNCLOS, supra note 20, article 234.
 Skarphéðinsson, supra note 3.
 Skýrsla Össurar Skarphéðinssonar utanríkisráðherra um utanríkis- og alþjóðamál, May 2010; Parliament of Iceland, supra note 19.
 Ministerial Committee on Arctic Affairs 2015, supra note 4.
 Skýrsla Gunnars Braga Sveinssonar utanríkisráðherra um utanríkis- og alþjóðamál, May 2016.
 Skarphépinsson 2010, supra note 32, 15-16.
 Ibid, 12
 Ibid, 16.
 Parliament of Iceland, supra note 19.
 Ibid, 1.
 Ministerial Committee on Arctic Affairs, supra note 4.
 See quotation above, supra note 4.
 Ministerial Committee on Arctic Affairs, supra note 4, 6-8.
 Ibid, 8.
 Ibid, Chapters 2 & 3.
 Berit Kristoffersen, ‘Opportunistic Adaptation: New Discourses on Oil, Equity, and Environmental Security’ in The Adaptive Challenge of Climate Change, Karen O’Brien and Elin Selboe (Eds) (Cambridge University Press 2015).
 Sveinsson 2016, supra note 34, Chapter 2.
 Ibid, 12.
 Ibid, 13-14.
 Ibid, 14.
 Ibid, 12.
Recent events notwithstanding, all things considered, the European Union has proved to be a brilliant success along several dimensions. This is why there are still several countries waiting outside the gates aspiring to membership while only the British are considering exit as if to confirm French President Charles de Gaulle´s initial doubts about British membership. And this is why US President Barack Obama encourages British voters openly to say No to Brexit in the upcoming referendum in June 2016, warning them that Brexit may weaken the “special relationship” between the Britain and the United States.
Peace, prosperity, and open arms
Recent troubles notwithstanding, I see three main reasons why the EU deserves to be regarded as a brilliant success: Peace, prosperity, and open arms.
First, the EU has helped keep the peace in Europe since 1945, the longest continuous period of peace and harmony in Europe since time immemorial except for some skirmishes – some major ones, it is true – in former communist countries in the Balkans. Chancellor Helmut Kohl, one of the chief architects of German reunification as well as of European unification, put the matter well when he declared that Germany wanted to share her sovereignty and her fate with her European neighbors lest her neighbors never again need to fear German belligerency.
Second, the EU has promoted prosperity on the continent by engineering a major economic and social transformation with an unwavering emphasis on human rights. European cities from Helsinki to Lisbon – and, yes, also from Athens to Dublin – have been transformed before our eyes, and the same applies to the European countryside. The EU´s strong emphasis on human rights has involved, among many other things, the abolition of the death penalty throughout the union membership. The Americans have begun to take notice: the number of death sentences and executions in the United States has dropped significantly since the mid-1990s.
Third, with open arms, the EU has welcomed formerly autocratic countries back into the European fold – first, Greece, Portugal, and Spain on the southern fringes of Europe, and then the former communist countries in East and Central Europe – enlarging Europe, making it whole. Thus far, only Iceland, Norway, and Switzerland have opted to stay outside the union. Switzerland is a chapter unto itself, having joined the United Nations as late as 2002. Norway is also a special case in that its voters have twice turned down membership in national referenda against the will of the country’s main political parties and interest organizations, a remarkably inward-looking attitude on the part of Norwegians. I will discuss Iceland toward the end of the article.
To continue with the EU’s open arms, Catalonia is eager to join – or rather, remain in – the EU, as is Scotland, after achieving independence. About a half of the Catalan population wants independence from Spain because many of them feel treated like a minority within Spain without full respect and full rights. The government in Madrid threatens to keep an independent Catalonia outside the EU, a threat that contradicts the EU´s open-arms policy and is, therefore, likely to prove empty. The Scottish situation is different. There, also, about a half of the voters want independence, primarily because they want Scotland to be more like Scandinavia, thus setting England free to become even more like the United States. Scotland joined the United Kingdom in 1707 primarily to gain access to a much larger market. Today, as a member of the EU, Scotland enjoys such access and, therefore, does not any longer need to be part of the UK for reasons of trade even if most of Scotland´s trade is still with England. The threat from Westminster that Scotland will lose its EU membership if it leaves the UK sounds hollow because, again, it is incompatible with the EU´s open-arms policy. The threat from Westminster appears also a bit comical in view of the fact that the Conservative government is just about to hold a referendum that may take the UK out of the EU, a result that would almost surely encourage demands for immediate Scottish independence to enable Scotland to remain in the EU.
In both Catalonia and Scotland, the prospect of continued EU membership holds the key to independence. Without membership, many of those who advocate independence would have doubts as they would fear weakened trade relations as President Obama has warned British voters. As members, however, Catalonia and Scotland, would have continued access to Spanish and British markets through the EU, assuming the UK decides against leaving the EU.
Union of small European states
With time, the character of the EU has changed as it has developed into a union of small European states. If Catalonia achieves independence and joins the EU, it will become the typical EU member in terms of population size. Of the 29 members, there will be 15 countries larger than Catalonia and 13 smaller countries. This shows how unreasonable it is to maintain that Catalonia or Scotland are too small to stand on their own feet as EU members. Denmark and Finland are the size of Scotland and smaller than Catalonia. Denmark has been an EU member since 1972 as well as a de facto subscriber to the euro and Finland has been a member of the EU as well as of the Economic and Monetary Union (EMU) since 1994. If Denmark and Finland were able to do so well by their EU membership, there can be no reasonable doubt about the ability of Catalonia and Scotland to do likewise.
With more small members on the horizon, there is reason also to believe that the common interests of small countries will weigh more heavily in EU policy making and institutions in the future. Clearly, Europe has its political disagreements separating left from right, north from south, east from west, and so on, as does the US and other countries. Even so, Europe´s advanced social model, harking back to Chancellor Otto von Bismarck who can be said to have introduced the first rudiments of the German welfare state in the 1880s, faces no serious challenge within Europe. This makes Europe quite different from the US where the more limited and less ambitious welfare state legislation launched by Democratic Presidents Franklin D. Roosevelt, John F. Kennedy, and Lyndon B. Johnson is under attack by its Republican opponents in Congress, a situation that seems unthinkable in Europe.
The strong parallel emphasis on efficiency and fairness is, as I see it, the key to the economic and social advances accomplished thus far by the EU. This helps to explain the continued attractiveness of EU membership to all but the most eccentric and inward-looking countries in Europe. Further, the minority of voters against EU membership within individual countries includes European advocates of the US Republican extremism that now, with the 2016 US presidential election approaching, seems to threaten the cohesion if not the existence of the Republican Party.
The weaknesses that have emerged in modern America – lack of trust, imploding politics, stagnant wages, and increased inequality – mirror the strengths of the European model. In his seminal book Bowling Alone, Robert Putnam charted the collapse of trust in American society, a gradual process the way Putman describes it.
Let me suggest three related phenomena to highlight some of the current differences between the US and Europe.
- American workers spend 1,800 hours per year at work compared with 1,400 hours in Denmark and Germany, 1,500 in France, 1,600 in Sweden and Switzerland, and 1,700 in UK (source: The Conference Board. 2015. The Conference Board Total Economy Database). Why? One plausible explanation for these differences is that US workers need to put in long hours to compensate for the lack of social security that Europeans can take for granted (Gylfason, 2007). Unlike Americans, Europeans have seen their economic wellbeing rise through higher incomes as well as less work.
- In 1960, the average American was 3 cm taller than the average German. Today, the average German is 3 cm taller than the average American as documented in a series of works by John Komlos and his associates (see, e.g., Komlos and Baur (2004) and Komlos and Lauderdale (2007)). Why this reversal? A likely reason seems to be that tens of millions of US citizens have been left behind, in poverty and without adequate social insurance, unable even to attain normal physical stature, thereby dragging down – or, more precisely, slowing down the natural advance of – the average height of the adult population in the US (Gylfason, 2007). If this interpretation is correct, it constitutes a devastating case against inequality of incomes and wealth on economic grounds quite apart from the ethical issues at stake.
- New research by Nobel-Prize winning Scottish economist Angus Deaton and Anne Case, both at Princeton University, shows that middle-aged non-Hispanic white Americans have faced declining life expectancies since 1999 due to a sharp rise in life-style related diseases and suicides (Case and Deaton, 2015). Declining life expectancies are unheard of in modern times except in Russia after collapse of communism and in Africa due to public health disasters, especially the HIV/AIDS epidemic. The lives thus lost in the US are almost as many as those lost to the HIV/AIDS epidemic since 1981 (0.5 million vs. 0.65 million).
There is no denying that the EU presently faces serious difficulties, some of its own doing, some not, including the recent torrent of Syrian refugees into the EU. While the EU cannot be blamed for the influx of refugees, the extent to which the EU bears itself some of the blame for some of its other current problems is debatable. The EU has looked the other way while anti-democratic tendencies have intensified in Hungary and, more recently, also in Poland. The EU could have reacted by, for example, imposing economic sanctions by withdrawing financial support from Hungary but chose not to do so. Likewise, the EU seems not to have done much to try to rein in rampant corruption in Bulgaria and Romania. The economic troubles of Greece can be said to follow in part from the EU´s flawed fiscal and financial architecture, a problem well understood from the inception of the euro but one which the EU has yet to address satisfactorily. This list could be extended. In view of these issues, it is understandable that some older EU members are inclined to think that now is a good time to slow down the geographic expansion of the EU by sharpening the focus on deepening European integration while putting widening on hold for the time being. Even so, EU would benefit from the admission of new members such as deeply democratic Catalonia and Scotland. If they declare independence, the EU will almost surely welcome both of them with open arms. This would lend an even stronger voice to advocates of the EU as a union of small European states eager to advance economic efficiency and social justice side by side.
Back to Greece. Much has been made recently of Greece´s inability to overcome her financial predicament by devaluing her currency. The argument is that macroeconomic adjustment by other means within the confines of the euro is bound to be more costly than devaluation of the drachma would have been. This may well be true as far as it goes. Even so, several euro countries have managed a significant adjustment in recent years, including Ireland, Portugal, and Latvia where, in 2014, unemployment was in the range between 11% and 14% of the labor force compared with 26% in Greece. In 2007, all four countries had unemployment rates between 5% and 8%. The experience of Ireland, Portugal, and Latvia shows that adjustment by other means – fiscal restraint, wage cuts, and more, sometimes referred to as an internal devaluation – with the euro in place is possible even if it can be quite painful. None of these countries seriously considered leaving the euro zone, nor did Greece. Comparisons of the euro with the Gold Standard are misplaced because the European Central Bank can devalue the euro if it wants to; in fact, the ECB did so recently.
Iceland and the EU
Iceland became a founding member of NATO in 1949. The decision to join was not based on detailed benefit-cost analysis. Details did not matter. Rather, the Icelandic parliament decided that NATO is a club where Iceland inextricably belongs. In other words, Iceland´s parliament decided to share Iceland´s fate with that of other members of the alliance, including most of Iceland’s closest friends and allies. No referendum was held. Profiteering from Icelandic NATO membership came later. The defense agreement between Iceland and the US is considered to have generated incomes equivalent to about 2% of GDP per year from the 1950s until 2006 when the US government unilaterally closed the NATO base in Iceland against the will of the Icelandic government.
Similarly, the Icelandic parliament´s decision to apply for EU membership in 2009 was not based on an explicit benefit-cost analysis. The principle is the same as before: those in favor of membership view the EU as a club where Iceland belongs if only because all of our closest allies except Norway are members. Further, in fact, I believe Iceland should join the EU even if it could be demonstrated that the costs of membership outweigh the benefits, but then, of course, it is impossible to assess the monetary value of political benefits.
From the early 1990s until the crash of 2008 opinion polls showed that Icelandic voters were consistently albeit marginally in favor of EU membership whereas political parties, subservient to the oligarchs they had created by granting them virtually free access to Iceland’s valuable fish resources, and interest organizations stood shoulder-to-shoulder against membership. Here the situation was diametrically opposite to that of Norway. Up against the wall after the crash, Iceland filed an application for membership in 2009. The application could be understood as a way of saying to the rest of Europe: Please excuse us for having permitted our banks to separate you from so much of your cash, but from now on we shall abide by the discipline required by EU membership. With the political parties held primarily responsible for pushing Iceland off the cliff in 2008 through their crony privatization of the banks during 1998-2003 back in power in 2013, an attempt was made to withdraw the application in 2012 as if to say: We did not mean to say we are sorry, we were just kidding. This is, however, a controversial interpretation. While many Icelanders apparently sensed a collective guilt about having voted for politicians who through the corrupt privatization of the banks paved the way into the abyss in 2008, others had no such feelings of guilt, blaming the crash on the bankers or the politicians or even on foreign conspirators. Anyhow, the attempt in 2012 to withdraw the EU membership application failed. Specifically, parliament put in the membership application in 2009 whereas the foreign minister, not parliament, attempted to pull out unilaterally in 2012, a pullout considered invalid by the EU because an individual minister cannot undo a formal decision by parliament. Hence, Iceland’s application remains on ice, like the Swiss one from 1992, waiting to be reactivated by a new parliament which will then put the negotiated membership agreement before a national referendum as promised by parliament and as required by the new constitution that was approved by 2/3 of the voters in 2012 and awaits ratification by parliament.
Recent developments in Greece, Ireland, and Spain make Icelandic accession to EU membership a harder case to sell. This helps to explain why public opinion has swung against membership since 2008 even if developments in Baltic and Balkan countries suggest a different conclusion. Estonia, Latvia, and Lithuania joined the EU in 2004 and by now all three use the euro. Croatia became the EU´s 28th member in 2013, ten years after filing its membership application. Undeterred by events in Greece, Albania became an official candidate for accession to the EU in 2014. Bosnia and Herzegovina applied for membership in 2016.
Another reason for the change in public sentiment in Iceland is that some Icelandic politicians tried to deflect their own responsibility for Iceland´s home-made crash by absurdly blaming it on foreigners and whipping up immigrant-unfriendly chauvinism in Icelandic politics for the first time in history. In terms of economic damage relative to national economic output as well as in terms of fiscal costs, Iceland´s crash was among the greatest ever recorded (Laeven and Valencia, 2012). For example, the damage inflicted on foreign creditors and shareholders was greater than anywhere else relative to the size of the Icelandic economy.
What would be the main benefits and costs of EU membership? The economic benefits are clear even if European Economic Area membership from 1994 has delivered many of them already. Yet, several significant benefits are still missing.
- Many Icelanders see the adoption of the euro as a key benefit in view of Iceland poor record of monetary management which has allowed the Icelandic króna to lose 95.95% of its value vis-à-vis the Danish krone since 1939. Quite apart from the general philosophy behind the EMU, small countries can benefit from outsourcing the least successful parts of their national policy-making just as they should resist outsourcing their most successful procedures.
- The Common Agricultural Policy is far less expensive for Europe´s consumers and tax payers than is domestic farm protection in Iceland as has always been the case. Thus, while producer support in the EU decreased from 39% of gross farm receipts in 1986 to 18% in 2014, it decreased from 76% to 48% in Iceland during the same period (OECD, 2015).
- In view of Iceland´s checkered history of oligopolies and lack of competition in a number of areas, including agriculture, banking, fisheries, and trade, the EU´s Competition Policy and associated monitoring and surveillance could offer significant benefits to Iceland.
- The Common Fisheries Policy constitutes a problem for Iceland, however, that needs to be solved. Iceland needs to understand and respect that the EU was built on the fundamental premise of the original European Coal and Steel Community stipulating joint management of Europe’s natural resources. At the same time, the EU needs to understand Iceland´s significant dependence on her fisheries – a dependence that concerns the national economy of Iceland as a whole and not just local fishing communities as in the rest of Europe. The EU´s toleration of inefficient fisheries policies, tacitly justified by viewing fisheries as a fairly unimportant regional concern, cannot be accepted in Iceland where fishing remains a macroeconomic concern. Even so, Iceland needs a major overhaul of its fisheries management regime which the Supreme Court of Iceland ruled discriminatory and hence unconstitutional in 1998, a verdict confirmed by the United Nations Human Rights Committee in 2007 (Gylfason, 2009a). In the national referendum on a new post-crash constitution for Iceland, 83% of the voters declared support for a provision stipulating national ownership of natural resources, including full charge for the right to fish in Icelandic waters in keeping with the user-pays principle of environmental policy now openly advocated by the World Bank and the IMF as the best way to deal with climate change (Lagarde and Yong Kim, 2015). Whereas Norwegian tax payers have been able to claim about 80% of Norway´s oil rent from the outset, 90% of the fisheries rent in Iceland still accrues to the vessel owners, Iceland’s answer to Russia´s oligarchs (Thorláksson, 2015).
Small can be beautiful. On average, small countries tend to have higher per capita incomes than large ones because various benefits of small size, including cohesion and homogeneity, seem to outweigh the diseconomies of small scope and scale and small pools of talent (Alesina and Spolaore, 2003; Gylfason, 2009b). The EU can expect to benefit from welcoming more small states as members. National boundaries matter less and less when cross-border trade is free. This is why the independence aspirations of Catalonia, Scotland, the Faroe Islands, and others need not be viewed with alarm. Along European lines, ill-designed national boundaries outside Europe would be easier to redraw if trade were free as in Europe, supported by social efficiency, freedom, fairness, and respect for human rights.
Alesina, Alberto, and Enrico Spolaore (2003), The Size of Nations, MIT Press, Cambridge, Massachusetts.
Case, Anne, and Angus Deaton (2015), “Rising Morbidity and Mortality in Midlife Among White Non-Hispanic Americans in the 21st Century,” PNAS, National Academy of Science.
Deaton, Angus (2013), The Great Escape: Health, Wealth, and the Origins of Inequality, Princeton University Press, Princeton and Oxford.
Gylfason, Thorvaldur (2009a), “Hvað segja lögin: Sameignarauðlindir eru mannréttindi” (What Does the Law say? Common Property Resources as Human Rights) in Ragnarsbók (Festschrift for Ragnar Aðalsteinsson), Icelandic Literary Society, Reykjavík, 497-522.
Komlos, John, and Marieluise Baur (2004), “From the Tallest to (One of) the Fattest: The Enigmatic Fate of the American Population in the 20th Century,” Economics and Human Biology, Vol. 2, No. 1, March, 57-74.
Komlos, John, and Benjamin E. Lauderdale (2007), “The Mysterious Stagnation and Relative Decline of American Heights after c. 1960, Annals of Human Biology, Vol. 43, No. 2, March-April, 206-15.
Lagarde, Christine, and Jim Yong Kim (2015). “The Path to Carbon Pricing,” Project Syndicate, 19 October.
Laeven, Luc, and Fabián Valencia (2013), “Systemic Banking Crises Data Base,” IMF Economic Review, Vol. 61, 225–270.
OECD (2016), Agricultural Policy Monitoring and Evaluation 2015, OECD, Paris.
Putnam, Robert (2000), Bowling Alone, Simon and Schuster, New York.
Thorláksson, Indridi H. (2015), “Veiðigjöld 2015. Annar hluti” (Fishing Fees 2015. Part Two).
In the dialectic between established “certainties” and fundamental ambiguities that characterise north Atlantic islands, Kristjan Ahronson develops the argumentation on the relationships between Scots, Irish, and Norsemen of the early medieval period. The interaction of humans and their environments, as well as peoples’ migrations and the cultural diffusion in the north Atlantic, are the main areas of investigation of a book that is intended to be designed not only for a specialized audience. Popperian theory of science and interdisciplinarity represent the conceptual framework in which the author develops his method or, even better, his crossing of methodologies that are jointly employed to reach a multidimensional pictures of the subjects under inquiry.
KJ. 38 years! Yes, 38 years. It was such a magnificent time in my life. Even if there were always challenges to overcome, sometimes truly tragic ones. Indeed, they started since the very beginning, in 1976, when my family and I arrived in Milan, and spent the very first night in a hotel by the train station. It was another world. For me, a farm boy from Akureyri, it was a bit frightening. I was with my first wife, two children, my daughter, then very little, and my son, who must have been 6 years old. I could hardly speak a word in Italian back then [the present interview was held in Italian in Akureyri on Saturday, 25 January 2015, and then translated into English]. I knew that my teacher there could speak English, though. The following morning we went to catch a bus, the blue kind [for long-distance routes], in order to go to Turin, since my teacher was supposed to be there, at the local music school [It. conservatorio], not in Milan. However, not even that was a straightforward matter…
My teacher, Giuseppe Valdengo, a baritone known as “Toscanini’s baritone” for he was Toscanini’s favourite, and an accomplished violinist and pianist—indeed a great musician despite being somewhat eccentric—was no longer in Turin! As I said, he was eccentric, amusing, but only to a certain point. He took things lightheartedly and liked making fun of circumstances as well as people, often ending up with offending those around him. Well, just about the time of my arrival, he had gravely offended the director of the music school in Turin, so that he had to leave Turin and go elsewhere, which was not a problem for him, given that he found immediately a new position at the music school of Aosta, in the French-speaking part of northern Italy. For us, on the contrary, it was quite a problem: we had to change our plans on the spot and go to Aosta instead. Valdengo was kind enough to help us find an apartment in Saint Vincent, near Aosta, not far from the well-known casino. We found him there, cheerful, pleased, and I had my first class with him the following morning. I was introduced to the director of the music school in Aosta and that is how I commenced my first year of studies in Italy. I followed an intensive programme that should have helped me catch two pigeons with one stone, namely to learn the Italian musical repertoire and, at the same time, the Italian language.
NM. Were you following a regular study course, then?
KJ. Yes and no. I was at a regular music school, but every three months I would take an examination and move up one grade. After one year, if I kept going at that pace, I would be at the second-from-last year of the school curriculum. It was an ambitious plan and a very interesting experience, also because the school was very vibrant and demanding, much more so than here in Iceland, where there is far too little to do and life is far too easy, back then as well as today. Believe me, I do think that, without adequate pressure placed upon the students, real world-class talents cannot emerge.
NM. Do you think that there are still significant differences between the musical education available in the Italian schools and the one that you can get in the Icelandic schools?
KJ. Yes, it is still the case. In Italy you can tell a student that something is wrong and that he must do something about it, put more work into it. If you do it in Iceland, then you, the teacher, are in trouble! It makes an enormous difference.
NM. But why Italy? When you decided to go abroad to pursue your studies as an opera singer, you could have chosen other countries, closer to Iceland, either geographically or culturally, if not both.
KJ. Certainly, Sweden was very much talked about as a suitable option. Nonetheless, choosing Italy was such an important decision in my career. And I have a person to thank for that. You see, I had studied classical singing here in Akureyri with maestro Vincenzo Maria Demetz, who, among other things, had taught me some Italian—very little, in fact, just a few words! Unfortunately, we spoke together mostly in English and in German, since he came from Val Gardena, in the Alps of [German-speaking] Alto Adige. He had a rather particular opinion of me, in truth an amazing insight. He said to me: “You are more southern Italian than the southern Italians [maestro Demetz used the tongue-in-cheek derogatory term “terrone”]: your physique, your temperament, your type of voice; you must not go to Germany or Scandinavia, you must go to Italy! There you will be able to let yourself go and, verily, sing. In Germany, in a way, they might get you to sing Lieder. That way, you could acquire a certain refinement, which would be good for a strong and loud voice like yours. But that is not really the place for you. Go to Italy!” Maestro Demetz was correct on all accounts, for I was not a lyrical tenor, I was not light, I was without agility; I had to get straight into Donizetti, Verdi and Puccini. Then, but only then, I could work on some additional aspects of my voice. He had seen all this back then, already, which is fantastic, for he was right!
NM. Moving to Italy, studying so hard: it must have been not only an exciting time, but also a hard one. What sort of sacrifices did it involve?
KJ. Big sacrifices. I was young, 26 years old, but I was already married. Besides, I had a fairly clearly defined life in Iceland: I had my own small enterprise, which I managed, I had two children, a house… Yet, I said it right there to maestro Demetz: if I go there, I’m going to make it; I won’t to be fooling around, wasting my time. I knew that, at my age, I had to be ready to go on stage in two or three years. Also because, back then, there were no scholarships, no grants, no student loans, like today. When I decided to go, I sold my house, I loaned out my small enterprise for two and a half years, in order to see how things would have worked out, and for that time we lived off the little revenue coming from my small enterprise in Iceland. After two years and a half I felt like I was dying. Moreover, after just one year, it was pretty clear that my wife couldn’t cope: she and Italy didn’t get along with each other. Not to mention the Italians: she thought they were all mad!
NM. As an Italian expatriate, who left his native country for the quieter north, I may be able to understand her!
KJ. Yes, exactly: the quiet north! Well, eventually, she needed to come back to Iceland. And so the troubles started. I began having a little fun around and, in the end, our marriage went down the drain. Also, I felt that she wasn’t really backing me. As regards singing, we didn’t have the same perception of things. She thought that we were going to have some fun for one or two years and then we would move back to Iceland, where I would have kept singing, certainly better than I did before. I wanted more. After six months in Italy, it was clear that things were going well for me at the music school and, at least for a year, my work with Valdengo produced tangible results. I was already giving concerts around, taking part in semi-staged operas. It was the beginning of my professional life. I mean, after just six months, I had my debuts in La Traviata and La Bohème. The voice was good, in all the ways that matter: it responded well, I wasn’t fatigued, and the high notes were good, solid and bright. After a year, I thought it sensible for my wife to go back home, for she was stopping me, rather than supporting me. Still, it was hard.
NM. And your children?
KJ. Our elder boy stayed in Italy with me, studying in the schools there. He grew up in Italy and thinks of himself as Italian. Later on, he went to the University of Bologna. Our daughter, instead, followed her mother back home and grew up in Akureyri. They remain close to each other to this day. My wife and I tried to be reasonable and avoid their mutual separation, as well as being separated from either parent. Besides, my daughter came to Italy when there were school holidays in Iceland. As a child, she would sometimes travel on her own. She was a strong little girl back then; she is a strong woman today—my dear Barbara. It was hard, but that much my wife and I could understand: that we didn’t understand each other any more. I was determined. I was strong-willed: I wanted to be on stage and be good at what I was doing. Furthermore, after a year, right in the middle of all this family chaos and unpleasantness, I felt I couldn’t progress much more with Valdengo. He was too lighthearted, too cheeky, he wasn’t taking things seriously enough for my taste. Thus, after a year, when I kept being told that everything was going well, I could sense, almost by instinct, that I was still lacking much to be a real opera singer.
NM. What couldn’t Valdengo give you as a teacher?
KJ. He was an excellent listener and very helpful. Nonetheless, as I travelled around Italy and attended concerts, also at La Scala in Milan, I heard and understood that there were certain additional elements of my musical education that I had to acquire or improve considerably more. Above all, I had to become an artist. The voice is one thing, but to sing as an artist is another. To interpret the music well, to master the Italian language, to absorb the Italian culture and make it mine: I couldn’t do it there, in Aosta, with Valdengo. So I told him that I was going to study under a tenor in another place. He became furious with jealousy! Just think of this: after Christmas that year, I took part in, and won, the Maria Callas Award: I had a scholarship, an Italian scholarship, and a contract to sing in five performances of Madama Butterfly at the Spoleto Music Festival as Pinkerton. Valdengo was so mad with rage and jealousy that he wrote a letter to the ministry in Rome, complaining that they were a bunch of idiots, that they had awarded the prize to a hopeless case, who sang like a dog, and so on and on… He destroyed me. The scholarship was revoked and I lost my performances in Spoleto. He destroyed me out of jealousy. In the process, he also destroyed the friendship that he had with Demetz, who took upon himself the full responsibility of sending me to Valdengo in the first place. It was horrible. And yet, what could be a catastrophe turned out to be a lucky break. I went to Piacenza, at the Nicolini music school, where I got my BA, studying with Poggi. Also, I studied acting with Eugenia Ratti, a world-class singer that had performed all over the world, including La Scala and the Met, and that taught acting there. It was precisely what I needed: how to move on stage, how to interpret different roles, how to master and use the Italian language effectively, how to make the Italian culture my own and, above all, how to approach the different composers, understand them. I travelled to Tuscany, to Emilia Romagna, to “meet” with Puccini, Verdi, even Bellini down in Sicily.
NM. Did you make many friends during your studies and your travels around Italy, people that helped you to absorb the Italian culture, or did you work primarily at the music school?
KJ. Under this perspective, I trusted and benefited from the music school, most of all. Also, in my profession, it is hard to make real friends. You are too much on your own. There is too much competition for that to be likely to unfold. Besides, you cannot rely on friends, even if you can make them. Still, there are exceptions, and I met at the Maria Callas Award a lovely man that has become a life-long friend, Maurizio Barbacini. But before I talk about him, let me say that, in those years when I was based in Piacenza, life went on rather well. I was singing frequently, there, in Bologna, Parma, at a number of opera societies, in Turin. My name was getting around. Life was nice. I met also a dear Hispanic-American woman, Doria Cavanna, whom I married in May 1983. Sadly, she died the 31 December of the same year. Another tragedy in my life. She was an amazing artist. Much more developed than me as an artist. I learnt so much from her. I tried to absorb all the suggestions that I could get from her, especially when she was on stage. She wasn’t only a singer, by the way. She had been an actress. She had made movies in America. She was a great woman and a great artist. Despite our time together being so short, it was a very healthy and important period of my life. Her death was a terrible blow. Yet, they say that suffering helps an artist to mature and evolve. There can be no joy without sadness; nor sadness without joy. An artist must understand both realms of experience. I paid a terrible price for that understanding, but, over that period, I did open up to acting and to theatre as art forms.
NM. As time went on, given what you are describing, it seems clear to me that you integrated well within Italian society and the local way of life. However, how much of that Icelandic farm boy that had travelled from Akureyri to Milan, Aosta and Piacenza was left within you? Was there anything that you deem quintessentially Icelandic that helped you face and overcome the challenges that you met?
KJ. Absolutely so! I grew up in a big family, seven children, I was second-from-last; I had to fight every time to get anything I wanted, nobody ever gave me anything for free; in this sense, I was tough and autonomous; whenever I liked to do or achieve anything, I knew that I had to fight, on my own, in order to get it. Therefore, even after the shocking way in which my relationship with Valdengo had concluded, the sort of thing that would annihilate a person’s self-confidence, I thought that I would succeed anyway; in fact I wanted it even more than I did before. He told me to go to hell? I will show him that I am a real devil. He told me that I wouldn’t make it? I will show him; I will make it! Nothing could discourage me. And this is very Icelandic: personal autonomy, self-sufficiency. I knew that I had to fight and I did it. Then, you know, in the end, that Maurizio Barbacini of whom I told you briefly before, he helped me too. Consider this: I was penniless, I had been repudiated by my former teacher, I was divorced; in fact, I had left everything to my wife: I thought it was right to do so—and I wanted to be a gentleman. I needed only my toothbrush and I wanted my freedom. Besides, I felt guilty, so, in the end, it seemed right that way. And this is how I actually left Akureyri behind me.
NM. You didn’t leave it for good, though. You kept in touch with Iceland, didn’t you?
KJ. Yes, every once in a while I came to Iceland, almost every year, singing in Reykjavik as well as Akureyri and, of course, to see my daughter. My son was with me, in Italy. My daughter was here, in Iceland, her family was here. In 1982, to tell you the truth, I doubted that I could go on, and started thinking about coming back to Iceland. Yet, here in Iceland, I had made friends, powerful friends, people with money, politicians. I wrote to one of them, I described in the letter my situation; I told them that I was penniless and that my predicament was really desperate; I told him that I had to tour around Germany for some auditions there, and that I was ready to do anything. I got some help in return. Not much, but enough to rekindle hope. You see, in 1981…
Actually, going a little further back, in 1979-1980, I graduated with Poggi, and they asked me to take part in a concert in Mantua. There is a beautiful little theatre there, and it is there that I got lucky: at the piano was Ettore Campogalliani, a great musician, who for 25 years had been working at La Scala, a real giant in the world of music! He was there, at that concert, playing the piano for some of his students, who would later become some of the most important singers in the world. I sang for him both big arias from Tosca and was very successful. I also sang other arias, from La Bohème and other operas by Puccini, receiving great applause—the little theatre truly seemed to be crumbling down upon me with excitation! So I had an opportunity to talk to him. He was a real gentleman and a man of great culture, not only an accomplished musician, but a published author of many books as well. He was also a poet, and he taught at the university in Venice. Over dinner, I spoke to him candidly and explained to him that he could give me what I needed most. Almost everywhere else, included here in Iceland, the music scene was provincial. I say this despite having been born and raised in the theatre here in Akureyri. My house was near the theatre. My father worked there and so did my mother. At the age of two or three I was already in the theatre of my hometown. That was already a great advantage. I had already understood many things there then, but in Milan, at Campogalliani’s prestigious theatre, I could advance so much more!
I needed more culture. That was the point. He said to me: “I really liked you today. In Milan, at least fifty of the best singers in the world have come to me: Luciano Pavarotti, Mirella Freni, Katia Ricciarelli, Gianni Poggi, Carlo Bergonzi…” I couldn’t list them all! Renata Scotto and so many others! “However,” he said, “I normally require an audition, hence you will have to come to Milan and sing for me… No! I’m joking! You proved your worth today: we can start our classes tomorrow, if you like.” So I went to him, and there was also Antonio Tonini, who was a good friend of his, and after two or three months with him he told me that, in Ancona, maestro Zino was going to stage Il Trittico by Puccini and that they needed a tenor, as usual! That’s how I got the job! Back then I knew well Rigoletto, La Bohème, La Traviata and I was preparing Lucia di Lammermoor. “Leave Lucia and study as Rinuccio in Gianni Schicchi“—that’s what he said. After a month, Tonini came to listen to me and told Campogalliani: “Let’s have him for Il Tabarro as well. He should do both, for there is no better singer—and we can save some money too!” This combination of roles is very rare, given that Il Tabarro is complex, deep and dramatic, while Gianni Schicchi is lyrical, even light, since Rinuccio’s role is very high [in the vocal register]. In May we go to the Marche for the rehearsals—and it was so beautiful! I had an enormous success in both roles. I was the newcomer, though, hence I was not getting paid much: I was the last name on the list! Still, it was enough to survive. All these events happening in a rather short span of time. In Ancona, moreover, I met an Englishman, who was the director of the English National Opera. After listening to me, he decided to offer me the role of Pinkerton in Madama Butterfly at their theatre in London…
NM. From one thing to the next…
KJ. Yes. Life seems to move that way. This is also how I met, out of sheer chance, the great maestro Menotti. It was at a concert in Parma. We started talking together. He told me that he was disappointed not to have me singing for him, as Pinkerton, in Spoleto. Then, I had to explain to him what had happened, how an angry person had tried to destroy me, my reputation, my career. He replied: “Don’t worry. In 1983 you come to Spoleto and sing in a new edition of the Madama Butterfly. It will be an over-the-top one, I warn you now!”—Ken Russell, a real genius, was going to direct it… Menotti and I became friends that way. He was then the super-intendant of the theaters in Rome, where I spent eventually 20 years as a regular performer, singing in all the big roles: Tosca, Il Trovatore, La Gioconda, Manon Lescaut.
NM. 20 years, during which you inaugurated with Il Trovatore the newly built opera theatre in Genoa, in 1992, as the city celebrated the 500th anniversary of Christopher Columbus’ first voyage to the Americas.
KJ. Exactly. The theatre Carlo Felice in Genoa. It was 500 years since the “discovery” of the Americas and 50 years since the destruction of the old opera house, which the Brits had bombed during World War II. I remember it very well.
NM. Yes, that is true, only the wing to the east had survived the aerial bombings and is still visible today. The rest is new—so new that it had sparked some controversy…
KJ. What a theatre! And what an occasion! Singing in one of the best roles Opera can give you. It was a remarkable experience. I recall the actual theatre, which is sort of inside-out, for it is meant to give you the idea of singing in a medieval square, like those you see in the old part of the city, which is just nearby. When I saw it, I said to myself: “It is true what they say about the Italians [that they are all crazy!]”. I found it very strange, but, at the same time, very interesting. It was something daring and novel. A stroke of genius, I would say.
NM. Verdi’s Simon Boccanegra is said to be the best opera ever staged in that theatre, for it is possible to create the illusion of being in medieval Genoa, given the subject of the opera and the look of the theatre.
KJ. It’s true. Singing in a medieval square! By the way, I sang also La Gioconda and Rigoletto in that theatre. Somehow, 1992 was the year of my “explosion” as an international tenor. I started singing regularly in Britain as well, which lasted over a period of ten years.
NM. And what was your relationship with Iceland at that point of your career?
KJ. I was far away, very much. The sense of separation ran deep. Also, I was being mocked back home, they said that I had gone to Italy to become the new Caruso… Some rascal, I mean… But I took it mostly as a bit of fun.
NM. You had also Icelanders that supported you, though.
KJ. Yes, certainly. Valur Hafþórsson, the head of KEA, had sponsored me. So did the Town of Akureyri. Not huge sums of money, but enough to make life easier. Above all, I knew that I had not been deserted. They were beside me. They supported me. Nevertheless, I felt distant. I was the first young Icelander to go to Italy in 25 years. After the war, in the 1950s, a few went to Italy to study, without great results. Then, nobody else. Even today, far too few Icelanders go to study in Italy. I cannot understand why. Italy is the cradle of civilization, the cradle of culture, the cradle of Opera. Why are they going elsewhere? Why London or the US? It’s all second-hand there!
NM. Do you think that in Italy there are still the best opportunities for opera singers? The best schools?
KJ. Yes, I do. Absolutely. I am certain of that. Also, think of this fact: while we are sitting and conversing here, today, there are literally thousands of concerts and operas being performed worldwide. More than 70% of them are either Italian or in Italian. Then, what’s the point of studying elsewhere? The main reason why I don’t do German Lieder is that I cannot speak German very well. A singer must have a high level of competence in the languages he wishes to sing in. Now, if more than 70% of the classical singing going on in the world is in Italian, then it is simply logical that anyone interested in opera singing should acquire a high level of competence in the Italian language. You cannot get that in London, Vienna, New York. You can only get that in Italy!
Also, let me add a few words on Maurizio Barbacini, whom I met at that Callas competition of which I was talking to you before. He sang back then and also played the piano very well—a gifted musician. I had him joining me in Iceland for some concerts, conducting the national symphony orchestra. We issued a record together too. Now he is often in New York and Vienna. A great pianist and a man of great musical culture, especially Italian opera. I would consult with him very often in those days, even if his career was not yet blossoming, for I trusted his judgment. He always had great insight in musical matters. Well, I was waiting before commencing at La Scala, which had hired me, but, as you know, theaters have often many-years plans to run through, meaning that, like with the Met, I sang for them in 1986 and then walked on stage in 1990! Well, I met with Barbacini. We conversed, had some fun, did some music together. And then he said to me: “Why do you take on these roles, which everybody else can take too?” He was referring to high lyrical roles in Rigoletto, La Bohème, Tosca, possibly the toughest one among them, La Traviata, some Bellini, like La Sonnambula and I Puritani—I had always very solid high notes, which are de rigueur for that kind of repertoire. He continued: “There must be at least three or four other tenors out there that sing these roles as beautifully as you do. But I know you, your vocal capacity, your temperament, your strength, both of will and of body: you must sing those parts that nobody else, in this day and age, sings really well. Those parts for which you cannot find really good tenors, apart from Luciano [Pavarotti]. He’s the only one.” It was an excellent idea. Also, I had noticed my own mental and physical development over those years, which was calling for something new in my career. Someone once told me that no idiot has even sung well!
NM. An interesting motto…
KJ. One must think about the roles he chooses, the possibilities available in the repertoire and in the theaters, selecting the place and the moment with some wisdom. It is not enough to just go on working, relentlessly. Thus, it was the mid 1980s, I started studying for Verdi’s Un ballo in maschera, which I knew would have been performed in Iceland, with me in it, the following year. Then I started studying Giordano’s Andrea Chénier, for which I had received an informal offer from Florence, with Bruno Bartoletti conducting it. Meanwhile I had sung Tosca in Florence with Zubin Mehta, and it was very successful, at least as much as my Trovatore in Genoa. In between I sang the Gioconda and, in Turin, Il Trovatore. So, I had the Tosca in Florence and Il Trovatore in Turin: I was going back and forth between the two—what a mess! But I was young, lustful and strong! Up to 80 concerts a year! Barbacini was right: with these operas, my strong voice, my will and my wisdom, I must say—I had always 20% of my voice in my pocket, so to speak, for 80% of my strong voice was more than enough, while other colleagues in the same roles would have to push 100% all the time—it could be done. Theatre directors were happy with a singer like me. They long for stability, reliability; they don’t want to worry about whether the lead tenor will make it or not. I had this surplus of vocal strength that they could rely upon. Therefore they were happy to offer roles to a madman like me: “You sing better when you are sick than when you are in good health”, one of them told me once! My friend Barbacini was right: I knew more roles, I was known as reliable, there was now one of these roles available in Vienna, then another in New York, and then yet another in Florence…
NM. You expanded your repertoire and established your career.
KJ. Precisely. And I was always cautious in deciding my next move. I didn’t rush forward. I thought things through, paying attention to the health of my voice, never pushing too hard. I must concur with the adagio: no idiot has ever sung well! You may have a golden voice, but without wisdom you cannot go anywhere!
NM. Let’s get back to Iceland…
KJ. Yes, well, in the late 1980s there was Sigurður Björnsson, conductor of the national orchestra, which was a bit boring, to be frank. They took themselves far too seriously. They didn’t care for Opera. They cared for pure music, especially contemporary, which is good, but to a point. One should never forget what Karajan used to say about orchestras: the best ones play regularly in operas, meaning Vienna and Berlin, for the players must listen to the singers, pay attention to what is going on, following the artists on stage. Sigurður wanted to change this and he did change it, fighting and making use of me in this direction. It was a big bet—on a real racing horse, though! We staged many operas, also semi-staged ones, and there was no year in the two following decades when I didn’t sing something in Reykjavík. Needless to say, many local colleagues became very jealous! His wife, a fantastic soprano, with whom I had debuted in 1981 in La Bohème, was a good friend of mine. We were the best singers in the country. It is as simple as that. But then I could start hear people gossiping about us, spreading lies, being nasty. Now, I am no angel by any means, but things were being twisted and blown out of proportion… All this made me feel more and more separated from Iceland.
NM. Why coming back, then?
KJ. After singing for 30 years around the world as one of the best three or four tenors in the profession, facing also envy and gossip on your own, you become very self-centred. But the world doesn’t spin around you. In 1985, during the rehearsal for Un ballo in maschera, I met the woman that became my wife, with whom we will soon celebrate 30 years together. She was younger than me, a stage actress, I fell madly in love with her; and she with me, fortunately! Everything worked out well. There was something in her that my second wife also possessed: they were women of great culture, educated, and cosmopolitan. I had been alone for two year. Suddenly, thanks to her, I felt inspired again: I could receive so much from such a talented artist. And she understood me. She came with me to Italy without any qualms, She had been abroad herself: 10 years in Norway. There was no uprooting. Nothing radical. She was cosmopolitan. She liked that kind of life. In Iceland, an artist’s life is very hard. Artists are paid poorly and, at times, treated poorly. People expect them to be available to act, sing or play, but they are flabbergasted if then the artists ask for money in return. And what they get is very little anyway. Thus the overall level of artistic life in the country, and I am talking about the widespread mentality not the artistic quality, has been condemned to provincial mediocrity.
NM. Haven’t things changed over the past 10-15 years though?
KJ. Yes, they have. And I think I played a role in this change. I insisted to be taken seriously and so all artists with and like me. It is fine to have amateur singers or artists that win their bread in a different way, but you also need people that go past that stage and turn their art into a career, a profession, a life. A life that can take you around the world: we lived for almost 10 years in Monte Carlo, we travelled regularly between Italy and the US. And we had kids…
NM. That changes things, doesn’t it?
KJ. Yes, I used to joke about the fact that I led a better life than Onassis: travelling worldwide, singing in the best theatres, being famous, wealthy—and always with my family! But then the kids started growing and they had to go to school… As a result, my wife started being less mobile, while I travelled more and more often on my own; then she got seriously ill—now everything is fine, thanks God—and I was constantly worried for her while abroad. All this didn’t go down well, with her especially. She wanted to change things, for herself first of all. As for myself, I had had my shot. Thirty years on the top of the world, so to speak. Now she wanted, she needed, to think more about herself. And I understood that very well. After receiving so much from my family, I had to give back to them. So I slowed down, moved back to Iceland and began to teach on a regular basis, while she went to the university in Reykjavík. Meanwhile, I spent more and more time with the kids; she completed her first degree, got a Master’s degree… Now she earns more than I do! And that is just great: we are ready to face the future together. But be sure about this: I still love being, and I think I am still loved as, a man of music. In fact, I hope to die on stage!
NM. And what would you say of yourself as a teacher?
KJ. I do my best to coach as many young voices as I can. Just few weeks ago, at the opera house in Reykjavík, there was Verdi’s Don Carlo: 8 singers were former students of mine. Some people acknowledged this fact; some didn’t… I am saddened, to tell you the truth, about the way in which Icelandic music schools operate. They are too relaxed, too lenient. Students approach their courses as some kind of fun or entertainment. I have always thought of education as something more than that. Getting an education, enriching your culture, pursuing a study line are meant to take you to some higher or deeper place—a stage at least! It is not just a bit of fun. I teach differently than most of my colleagues. I make demands.
Also, there are too many music schools in the country, which are starved of students, since these are never enough for all of them, hence the schools are always on the verge of bankruptcy, which reduces dramatically the scope for teachers to make demands on the students. Ten music schools, two for singing, would be enough in Reykjavík: there are 19 now! All are competing for the same funds. Fewer, better poles—that’s what we need. As long as the funds are not reduced, then they could be distributed among the fewer schools, which could then hire teachers as needed and increase the level of musical education in the country. Icelandic taxpayers pay about 65% of the cost of advanced students in music schools: the students should ponder upon this fact and behave more seriously, taking their studies more seriously, working much harder. On my part, I try to teach the way it is done in Italy: you pay more to study with me, but you get more hours, both with me and the piano accompaniment, and you are expected to do all that is required, such as music theory, etc. You are to be prepared as an artist. And I am much harder than my colleagues. You cannot spend five months studying one aria! And I can get very angry: sometimes I give the students a dressing-down. They accuse me of being mad, but mad are those students that do not study: they have the opportunity, the general population pays for much of it, and they are registered as students. Why on Earth should they consider studying as a discretionary option, then? If you are a student, then you study. It is that simple!
It has always been a big part of my self-image to be “half Italian and half Icelandic”, although not in a negative way; quite the opposite. I have always been proud of my background and have often wondered if and to what extent it has moulded my personality. Growing up I always felt a bit different from my “pure” Icelandic friends, in a subtle way, perhaps a bit more extrovert at times, certainly a loud and rather gregarious person; all in all classic stereotypical Italian characteristics. But for personal reasons my sisters and I did not cultivate strong ties with Italy initially. Later, my older sister and I have begun a pilgrimage of sorts, attempting to contact our relatives to the extent possible.
In my view it is important for those persons that have multicultural roots to attempt to understand from where they come from, as it is clear that one will better understand oneself in that way. Fortunately, I have not, directly, suffered prejudice during my life, due to being “half” Icelandic, despite having lived most of my life in Iceland. However, I could describe many amusing anecdotes that are related to my family name, which is certainly not a common one in Iceland. One of my favourites comes from the time when I worked as a Deputy Judge in the District Court of Reykjaness. I presided in a case where I had to appoint assessors in a real estate dispute. I later heard that one of the assessors, during an examination of the real estate in question with the parties to the case, read aloud from my court order appointing him for the job. Slowly he began by stating that in the District Court a hearing was held by… and then he paused, clearly having problems with the name of the judge, ending up by saying: “… held by Róbert R. Shampoo deputy judge”!
Currently, I work in a very international setting as a judge in the European Court of Human Rights in Strasbourg, France. In the Court, almost 700 staff members from all over Europe work together in a very interesting and collegiate atmosphere. I have already felt that my international background is an immense asset in this environment for many reasons. Firstly, having lived abroad myself when I was younger, both in Canada and in Italy, makes it easy to identify with others, their differing viewpoints on various issues and on the way they approach certain problems based on different starting points. Secondly, I have been very fortunate to work closely with my good friend and colleague, the Neapolitan Guido Raimondi, one of the Vice-Presidents of the Court and the judge elected with respect to Italy, and all the wonderful Italian lawyers in the Court. This experience has brought me closer to home, so to speak. I can converse with them in Italian and have dealt with many Italian cases for which I am, happy to say, well equipped.
I have four wonderful children, my foster daughter Rán, Karítas Diljá, Egill and Atli. They all have very Icelandic names and, with the exception of Karítas Diljá, they are light-haired and bluish-eyed like their mother, my wife, Arna Gunnarsdóttir, a very talented artist. My older sister, Ásdís Mercedes, is also an artist and a mother of two lovely boys. Unfortunately, Ásdís and I have not been very effective in teaching our kids about their Italian heritage, but hopefully that can be amended in the future.
Last summer my wife and I travelled to the Amalfi Coast to spend a week hiking in the hills, starting off in Ravello and ending in Positano. As I walked through the streets, sat in the cafés, ate pasta and pizza in the restaurants and drank some great red wine with my wife in the evening, I felt at home. It has always been like that, I think: living in Iceland, but sensing, to some extent, that I also have another home, far away to the south. It is a comforting feeling!
Characteristics of a profession
The conditions that an occupation must satisfy in order to count as a profession can be debated although certain elements seem well established as parts of any definition of the concept of a profession. We will approach this topic by considering first the related, but distinct, concept of professionalism and then turning to the concept of a profession.
The general theme of the meeting was CRISIS: Crisis and Crisis Scenarios: Normativity, Possibilities and Dilemmas. In addition we had the special theme Neoliberalism, Economic Crisis and a New Economy.
The general discussion was a continuation of the work of the crisis study group on topics such as: the concept of crisis; democracy in crisis: the European Union and the public sector; crisis, existence and culture; Arctic crisis, climate change and environmental issues; crisis, paradoxes and new technology; globalization and crisis.
In October 2008 dramatic events unfolded in Iceland when it became apparent that its economy could no longer sustain the sensational economic growth the country had experienced in the previous years. To most of the public the news of the downfall came as a frightening surprise. The country’s banking sector, which had led the growth of the economy and expanded to over ten times the gross domestic product (GDP) in a short time span, collapsed almost completely. Nearly all of the largest companies in Iceland were owned by the notorious financial Vikings, who owned the controlling shares in the oversized banks. Iceland’s crash was in part so drastic because of the unhealthy cross-ownership of companies and banks. As a result, share values in the country’s stock market were nearly erased. Iceland’s independent micro-currency, the Króna (ISK), that had attracted a lot of foreign hot money seeking high returns during the boom, was all of the sudden in free fall. Unemployment, which was unheard of during the boom (1%), went all of the sudden to 9% and some analysts worried that it could spiral upwards even more as events unfolded. The instability was underlined with interest rates and inflation moving upwards to a staggering 18 per cent and GDP predicted to fall around 10%.
On the streets people were angry and wondered: How had it come to this? Everything was in tatters. Nothing captures this as well as the story of Landsbanki, traditionally a State-owned bank, which had functioned as a cornerstone of Iceland’s economy since 1885 and played a part in the country’s road to independence in 1944. Under State ownership the balance sheet of the banks had remained for decades modest in relation to GDP and yet stable even though the country did experience some turbulent times. Iceland’s economy is massively reliant on fisheries and the bank had seen difficulties when fish stocks suddenly fell or even when whole stocks like herring disappeared completely. External factors like two World Wars and the Cod Wars against the British did also have their impact. In 2003 the bank was fully privatized in an attempt, as the politicians of the day would phrase it, ‘to unleash the powers of the free market’, which is precisely what happened. In the years from 2003-2008 Landsbanki, under their new ownership, managed to expand its balance sheet from under 50% of GDP to over 250% of GDP, when it eventually collapsed. Such massive expansion was also experienced by the other two main banks, Glitnir and Kaupthing, whereas the banks not only expanded in Iceland but led an outvasion in acquiring huge assets and leading ventures abroad. This was duly felt in the United Kingdom where the financial Vikings grabbed headlines with investment in known brands on the high street as well as English football clubs. One of the main owners and chairman of Landsbanki, Björgólfur Thor, made a trademark oligarch move and bought West Ham United in 2006; he became chairman in 2007, until he lost the club after the crash in 2008. This event raised eyebrows since, given the size of Iceland’s economy, the room their businessman were taking in the UK and elsewhere was considerable.
The country asked assistance from its Nordic neighbours and the International Monetary Fund in order to stop further deterioration of the economy and avert a total collapse. Not only did Iceland face a banking crisis, but also a currency crisis and a huge economic crisis. Politicians in other parts of Europe, where dark clouds were gathering overhead, stressed that although they might have problems of their own, at least they were definitely not Iceland. Such voices have now been silenced, since the country has experienced a remarkable turnaround in economic terms. In August 2011 the country completed its successful IMF programme and the fund concluded that key objectives had been met and the government had stabilized the economy. Growth resumed with numbers that many troubled countries in the Europe would give a lot for (2,7% in 2011, 1,5% in 2012, 3,3% in 2013). The budget deficit was turned into a surplus, unemployment was reduced to 5% and continues to fall, interest rates went down by 12%, inflation was maintained at under 4%, the currency was stabilised albeit under capital controls. Growth for 2014 is predicted to be 3,7%.
Although several economic problems remain, the country has emerged from its deep crisis. New banks were successfully resurrected that are dwarfed, however, in comparison with the monsters that emerged during the financial Vikings’ era. Both private and public debt stabilized and is on a downward trajectory with the sovereign successfully entering capital markets again in 2011. Iceland’s economic crash and recovery has sparked huge interest in this tiny economy of 300.000 inhabitants, which managed banks whose bankruptcies are among the largest in history. The before- and after-crash tale is dramatic, full of surprises and extravagances.
II. Success stories
The success stories told of how Iceland bounced back from its near-death economic experience are many. Here is an example of something I have in mind:
In contrast, Iceland avoided a public health disaster even though it experienced, in 2008, the largest banking crisis in history, relative to the size of its economy. After three main commercial banks failed, total debt soared, unemployment increased ninefold, and the value of its currency, the krona, collapsed. Iceland became the first European country to seek an I.M.F. bailout since 1976. But instead of bailing out the banks and slashing budgets, as the I.M.F. demanded, Iceland’s politicians took a radical step: they put austerity to a vote. In two referendums, in 2010 and 2011, Icelanders voted overwhelmingly to pay off foreign creditors gradually, rather than all at once through austerity. Iceland’s economy has largely recovered, while Greece’s teeters on collapse.
There are various versions, but what they have in common is that they attribute success to the fact that Iceland did not bail out the banks. Some of them thank not the people for halting a bank bailout, but the government at the time. From this supposed fact Iceland did not have to impose austerity policies that are thought to have had a further negative impact on crisis-ridden countries such as Portugal, Ireland, Italy, Greece and Spain (PIIGS). In Iceland policy-makers seem to have escaped an IMF bailout package conditionalized upon imposing austerity and recapitalized oversized banks with toxic assets.  This in turn is given as an explanation as to why Iceland experienced a rapid recovery while the other countries, especially Greece, have seen very little progress.
I think there is a need to urge for caution in comparing economic crises of different countries. Greece and Iceland had very different problems leading to crisis. Greece did not have a banking crisis like Iceland and Iceland did not have a public debt crisis before the crash like Greece. Ireland had a banking crisis like Iceland, but the former has the Euro as currency and the latter the independent Króna. Putting to one side the need for caution in these circumstances, then this Icelandic saga of a heroic escape from the bad banker is just a myth and lacks any factual basis. Iceland attempted a bank bailout, but it failed, and the cost of the Icelandic crash has been considerable both in economic and social terms. Although Iceland escaped better from the circumstances than many had envisaged, the impacts of them are still being felt.
III. The mini-crisis of 2006
The tragedy in the Icelandic case is that so much harm could have been averted if the authorities had only taken measures in a mini-crisis, called the Geyser crisis, that hit the economy in 2006. Analysts, especially outside of Iceland and most notably from Denmarks Danske Bank, gave out warnings that Iceland was heading for disaster as its banking sector was seriously unstable. This is what economist Gudrun Johnsen calls the ‘missed opportunity’ for Iceland and points out that, rather than taking this criticism to heart, domestic politicians and bankers responded to it by shooting the messenger. They maintained that the analysts had ill intentions as they were in competition with the banks or that they did not understand the Icelandic banking miracle. So, instead of reviewing the fundamentals of the financial system and asking questions about the direction of the banking outvasion, all the wrong lessons were learned from the Geyser crisis. Bankers and politicians agreed that in order to correct the misperceptions over the banks, a PR campaign was needed as well as a restructuring of how they financed themselves so that they could continue to grow. The bank managers saw that they could not only rely on the international bond market, as the view was getting more commonplace that all was not fine in Iceland. Funding was getting harder and more expensive by the month, which these heavily leveraged banks could not withstand. Most notably, this meant the banks moved into introducing high-interest-rate accounts. Landsbanki, for example, introduced the now infamous Icesave online accounts out of their branches in the UK and the Netherlands. It managed to accumulate billions of pounds in deposits in just over a year. However, when the accounts became unavailable due to the collapse of the bank in October 2008, the UK authorities used anti-terrorism laws to freeze all Icelandic assets on UK soil, sparking a hefty row between Iceland and the UK that ended before the EFTA court in 2011. In 2013, however, the EFTA court came to an interesting verdict, acquitting the Icelandic State of any claims made by the UK and the Netherlands to reimburse them for moneys paid to depositors of the failed branches of Landsbanki. Rather, the UK and Dutch insurance deposit schemes stand to get reimbursed by the winding-up process of the failed bank but, importantly, the Icelandic State is not liable.
After the 2006 Geyser crisis, the banks did not only change their strategy and turn to the pockets of depositors. In addition to accumulating deposits, the banks manipulated their access to the Central Bank of Iceland and the European Central Bank for funding when international markets closed on the Icelandic banks. As Johnsen notes, ‘[i]nstead of using their existing asset portfolio (which was depleted), they issued new unsecured bonds in the domestic market at a favourable rate, then colluded on exchanging these bonds among themselves. Another bank could then use them as collateral against short-term lending from the Central Bank’. Or to put it simply, the banks were taking money out of the Central Bank in exchange for IOU tickets they had exchanged among themselves. These tickets became known as “love letters” in Iceland. In effect, they were printing money, and on a massive scale. One of the results of this is that the Central Bank of Iceland became de facto bankrupt, with losses estimated at 11.1% of GDP, which is another peculiarity of the Icelandic case. A court case is currently ongoing in Iceland where the CEO’s of Kaupthing are charged for financial transactions and loans made in the final weeks leading to the crash. Part of the money used in those transactions, 500 million Euros, was a large portion of Iceland’s currency reserve loaned to the bank by the Central Bank of Iceland.
The years between 2006 and 2008 are key in understanding the Icelandic case. One of the main questions one gets when discussing the lessons from Iceland is: Was the quick recovery due to how the country ‘burned’ the creditors? Myth has it that when things got tough for the banks, the Icelandic government denied to bail them out and the country therefore escaped the difficult long-term consequence felt by, for example, Ireland. But that is a serious distortion of what happened. The Icelandic banks were on Central Bank life support from 2006 to 2008. After the Geyser crisis, the banks got the funds needed in order to continue their ventures. Paradoxically, what turned out to be Iceland’s luck in the circumstances was that heads of other Central Banks did not abide to the demands of their colleague in Iceland, Davíð Oddsson, for a loan to continue funding the banks. In all actuality, it turns out that it was the Icelandic authorities that were the last to spot the ill health of their own banks. In a response to a letter from the Governor of the Bank of England Mervyn King, where he proposes the need for a downsizing the banking system and that more funds are not what is needed, Mr. Oddsson writes:
‘The Icelandic banks are well capitalized but they are dealing with a problem of perception. The signals we receive from the markets are that a swap facility for the Central Bank would contribute immeasurability to the alleviation of the problem. I hereby kindly ask you to reconsider this matter.’
Mervyn King did not reconsider nor did any other Governor of a Central Bank in Europe, which then meant that the authorities, out of necessity, had to switch to plan B i.e. to split up the banks and make them go into administration. For admirers of historical contingences, this case is a treat. Iceland did not take a calculated decision to let the banks fail, but an attempted bail-out failed. This meant that that its tackling of a banking crisis took an unexpected turn, as banks were put into a winding-up process, a move only considered in the face of failure. If drastic measures against the banks had been taken in 2006, then Iceland would offer a role model for averting crises. But then an interesting political question arises. The banks fuelled sensational growth. What politician would stop the promoters of such growth and who would vote for him? And in a political climate of complete confidence in the self-regulation of markets, the role of regulators gets very small.
V. Iceland’s bad/good bank move
Iceland’s bank manoeuvre has received a lot of interest because it deviates in important ways from the current orthodoxy in crisis response in Europe, where the argument for a bank bail-out is the standard. The recipe needs mentioning. In response to the crisis, the Icelandic Parliament passed emergency laws in 2008 that gave the financial services authority (FME) the tools to take drastic measures and intervene in the financial market. An important part of the legislation was to give all depositors (wholesale and retail) priority status over other creditors such as bondholders. On this basis domestic deposits were moved into new banks that received a capital injection from the State and assets and loans from the old banks matcing the deposits. The failed banks were then put into administration, which makes this a good/bad bank split. And even though Iceland did not deliberately choose this route, it turned out to be beneficial, which proves an important point that alternatives to bank bailouts are possible. One should also note, however, that the good bank / bad bank move is based on sound principles that are sadly overlooked by policy-makers in Europe. If the State finds it necessary to salvage a financial institution, then State funds should only be allocated to such bail-outs provided that the assets of the financial institution are sound and important for the functioning of society. Rather, it may be sensible to seize the opportunity to minimise risk by downsizing the banks and eliminating toxic debt. A bank that faces default is doing so for a reason and the government needs to ensure that it is not throwing good money after bad money. The argument that banks should always receive tax-payer money because of systematic importance and contagion fears should not be accepted as a wholesale argument. The State does not of necessity need to bail out the banks in the exact shape they are in when they seek assistance.
So, although Iceland stumbled upon the correct route eventually, the attempt to sustain the banks since 2006 became immensely costly. Despite the much-praised route taken by Iceland, the total cost of the economic crisis for the State has surpassed Ireland’s, which was thought to be the very bad case, in terms of GDP (Ice 70% Ire 60%). The most recent IMF report discusses this surge in debt and estimates it for Iceland even higher than previously assumed, stating that ‘the collapse of the banking system led to an increase of Icelandic public-sector debt to almost 100 percent of GDP’. The reason is that the pure size of the banking system was such that even though a late good/bad bank manoeuvre rescued Iceland from complete economic annihilation, the crash remained immensely costly for the tax-payer. But there are also important caveats to stress here. The fiscal costs are in part caused by the refinancing of the new banks. A lot of the increase in public debt is due to establishing an adequate foreign reserve of currencies to support the Icelandic Króna. The State also recapitalised the new banks and so the majority of the financial sector is now largely owned by it. And as Iceland’s economy is growing again, the assets of the banks are improving and the State will in the future be able to receive considerable revenue from the banks to repay its own capital contribution. Hopefully, it will all be repaid in full and with interest, which would make up for some of the costs of the crisis. Nevertheless, Iceland did not miraculously escape the crisis; although its recovery has been positive.
VI. Emerging from crisis
There are many factors that explain Iceland’s emergence from the crisis. Economists would point to the stabilizing and downward path of private and public debt and stabilization of currency, which brought down inflation. Another peculiarity of the Icelandic case is the introduction of capital controls in an IMF programme, which helped stabilize the currency. Some would point to how the depreciation of the currency helped hasten the recovery for an export-driven economy. But keeping in line with the peculiarities of the Icelandic experience, I want focus on other factors that I consider pivotal in its recovery. Bergmann notes that in terms of the recovery, a key component of it was that it was welfare-orientated. One of the main aims of the government was to do as much as it could to protect Iceland’s Nordic welfare system and the consolidation measures implemented after the crash were based on social principles. Cuts in the budget were curtailed to shelter the most important elements of the welfare structure. To meet the rising costs of such a social protection scheme after the crisis hit, in addition to falling revenue, considerable tax reform was introduced. An increase in income tax on the highest wages was introduced instead of a flat rate. Capital and corporate income tax rates were raised, new special wealth taxes and a bank levy introduced, environmental and carbon emission taxes launched. The capital controls also helped by preventing capital flight once they were set in place and they also retained the assets of the creditors of the failed banks. A special resource rent tax on the export-driven fishing industry that targeted substantial increases in profits resulting from the depreciation of the Króna was introduced. This and running a deficit to fund certain social programs necessary to soften the impact of the crisis were important in achieving economic progress. For example, in 2011 and 2012, 1% of GDP each year was used to subsidize interest rates to indebted households and a special social stimulus package was introduced in 2011 which increased wages and benefits. Both the IMF and OECD have pointed to this social emphasis with the latter claiming that “[c]onsolidation policies appear to have been designed in an overall equalising manner.”
As a result Iceland was the only country within the OECD where the average income of earners at the top of the scale fell more than that of those at the bottom of the scale. During the boom inequality increased significantly, making Iceland an interesting test case for the debate surrounding Professor Thomas Piketty’s claims on wealth inequality and the development of capitalism. But in tackling the crisis, socially just principles contributed to Iceland’s recovery. The Icelandic authorities were terrified of the prospects of a double-dip crisis which could have easily become the reality if funds were not redistributed through the tax system and social protection shielded from cuts. Strong moral arguments support such an approach, as measures should focus on getting the whole of society through the crisis and not just financial institutions, but they are also economically sensible. The focus should be on maintaining as much as possible the purchasing power of low- and middle-income groups. A counterproductive move would have been to cut unemployment benefits when it peaked, in the name of cost-cutting, and then introducing extra costs in areas people highly rely on, such as education or health services. Austerity not only hurts the individual who lost his job, but also the community that relies on him as a consumer, as his diminished income needs to pay for public services he previously did not have to.
The Icelandic boom, bust and recovery story offers a fascinating study for policy-makers, journalists, academics or just anyone interested in understanding financial crises. The big question is whether Iceland can offer any lessons to other countries that face a crisis. I think the verdict is mixed. There are lessons in the failures leading up to the crisis and in what made the country emerge from crisis. It is right to stress that every country faces a different set of circumstances, even though they are all lumped together as countries facing economic crisis in discussions on “crisis”. But maybe the most important lesson from Iceland is that when tackling a crisis there are always more possibilities available than are usually laid on the table. Even when facing serious consequences, taking the unexpected route is not so disastrous.
Baruchello, G. (2013a), ‘The Picture—Small and Big: Iceland and the Crises’, Nordicum-Mediterraneum, Vol. 9, no. 3, available at: http://nome.unak.is/nm-marzo-2012/vol-9-no-3-2014/73-conference-paper/480-the-picture-small-and-big-iceland-and-the-crises
Bergmann, E. (2014). Iceland and the International Financial Crisis: Boom, Bust and Recovery. Palgrave Macmillan.
Byrne, E. & Thorsteinsson, H. (2012):‘Lessons for Ireland from Iceland’s financial crisis?’, in Lucey, B., Larkin, C. & Gurdgiev, C. (eds): What if Ireland Defaults?, Dublin, Orpen Press, pp. in press.
Halldórsson, Ó.G. & Zöega, G. (2010): Iceland’s financial crisis in an international perspective. Economic Institute Working Paper Series W10:02. Reykjavík, University of Iceland Economic Institute.
Huijbens, E. & Thorsteinsson, H. (forthcoming): ‘Maintaining welfare in the wake of collapse – the case of Iceland‘. Geografiska Annaler B
IMF (2011): ‘Iceland’s Recovery – Lesson and Challenges’ The International Monetary Fund, 27th October, retrieved from: http://www.imf.org/external/np/seminars/eng/2011/isl/index.htm, 9th November 2011.
IMF (2012): Iceland 2012: Article IV Consultation and first post-program monitoring discussion. Washington, D.C., International Monetary Fund.
IMF (2013a): Baltic and Icelandic Experiences of Capital Flows and Capital Flow Measures. Washington, D.C., International Monetary Fund.
IMF (2013b): Fiscal Monitor April 2013 Fiscal Adjustment in an Uncertain World. Washington, D.C., International Monetary Fund (World economic and financial surveys, 0258-7440)
IMF(2014): Iceland: Fourth Post-Program Monitoring Discussions-Staff Report; Press Release; and Statement by the Executive Director for Iceland. Washington, D.C., International Monetary Fund. .
Johnsen, G. (2014). Bringing Down the Banking System: Lessons from Iceland. Palgrave Macmillan.
Lane, P. R. (2012). The European sovereign debt crisis. The Journal of Economic Perspectives, 26(3), 49-67. Chicago
Karanikolos, M. (2013) et al. “Financial crisis, austerity, and health in Europe.”The Lancet 381.9874: 1323-1331.
Konzelmann, S. J. (2014). „The political economics of austerity“. Cambridge Journal of Economics, 38 (4): 701-741
Loftsdóttir, K. (2010). The loss of innocence: The Icelandic fnancial crisis and colonial past. Anthropology Today, 26(6), 9-13.
Magnússon, G. (2010): Lessons from a small country in a financial crisis or Dr. Minsky and Mr. Ponzi in Iceland. Economic Institute Working Paper Series W10:03. Reykjavík, University of Iceland Economic Institute.
OECD (2011): OECD Economic Surveys: Iceland. Paris, OECD.
OECD (2013): Crisis squeezes income and puts pressure on inequality and poverty. Paris, OECD.
Ólafsson, S. and Kristjánsson, A.S. (2012): Skýrsla I: Umfang kreppunnar og afkoma ólíkra tekjuhópa [Report I: The scope of the recession and returns to different income brackets]. Reykjavík, University of Iceland Social Research Centre.
Thorsdottir, T. K. (2013). Iceland in Crisis. Women and Austerity: The Economic Crisis and the Future for Gender Equality, 102.
Piketty, T. (2014). Capital in the Twenty-first Century. Harvard University Press.
Wade, R. and Sigurgeirsdóttir, S. (2010): ‘Lessons from Iceland’, New Left Review, 65: 5-29.
Wade, R. and Sigurgeirsdóttir, S. (2012) “Iceland’s rise, fall, stabilisation and beyond.” Cambridge Journal of Economics 36.1: 127-144.
 For an overview of main economic indicators before and after crash see IMF 2011, 2012 & 2014 and Halldórsson & Zöega 2010.
 Financial Vikings are discussed in Loftsdóttir 2010 and see Baruchello 2014 for discussion on the neoliberal ethos during the boom years.
 Stuckler & Basu. “How Austerity Kills”. New York Times. May 12, 2013. See also Karanikolos et. al. 2013 and see discussion in Byrne & Thorsteinsson.
 See Lane 2012 on crisis packages for European countries especially p. 57-59. On the history of the idea of austerity see Konzelmann 2014.
 Christensen 2006
 Johnsen 2014:93
 Byrne & Thorsteinsson 2011. See also Magnússon 2010.
 Johnsen 2014:185
 IMF 2013b
 IMF 2013b: 11.
 Bergmann 2014:159
 For detailed argument consult Huijbens & Thorsteinsson forthcoming.
 OECD 2013: 3. Gender issues are discussed in Thorsdottir 2013. See also Ólafsson & Kristjánsson 2012 for discussion on how changes in the tax system sheltered low income groups.
 Piketty 2014.
Historical memory is unwelcome by people who have too much at stake in the short term to realise that they may have much more to lose in the medium and/or long term. Historical memory is also unwelcome by people who wish that economic history could fit neatly within the theoretical constructs that they favour because of ideological, political, moral or pecuniary commitments of theirs (cf. Francesco Boldizzoni, The Poverty of Clio: Resurrecting Economic History, Princeton: Princeton University Press, 2011).
The indications are that the costs are 44% of Iceland’s GDP, meaning that it is internationally the third costliest financial collapse ever (Luc Laeven og Fabian Valencia. 2013. Systemic Banking Crises Database. IMF Economic Review, 61, pp. 225-270). The series of events leading to the collapse and what has happened afterwards has had serious consequences for Icelandic society and government. The most obvious sign of these consequences is that trust levels within Icelandic society have declined. The banks enjoy least trust of all Icelandic institutions, as is to be expected, as only 10.2% of Icelanders said in October 2014, six years after the financial collapse, that they trust Icelandic banks (MMR Market and Media Research). Just 12.8% trust Alþingi, the Icelandic Parliament, according to the same source.
One of the consequences of the financial collapse was that in 2009 the Icelandic republic had the first left-wing government in its history, i.e. since it was established in 1944. This government had to deal with all the most serious consequences of the financial collapse. On top of that, it tried to engineer changes to important Icelandic social institutions like the fishing quota system, which has been controversial since its inception in 1983, and the Icelandic constitution. The reasons behind the changes to the quota system were based on justice and fair allocation of natural resources. The reasons behind changing the constitution were not as clear, but it seems to me that the best construal of them is that the attempt to change the constitution was a confidence-building measure, an attempt to reconstruct the most important legal document of the republic´s legal system and secure general trust in governmental institutions. According to the same survey firm as referred to above, the legal system as a whole enjoyed the trust of 28.9% last November, but in November 2013 the same measurement was 38.1% and in October 2009 the trust in the legal system as a whole in Iceland was 36.5%. There is no reason to read too deep a meaning into these measurements, but they are some indication that the preparation, writing and rejection of the draft constitution have not affected public trust in the legal system. Some may think that we can infer from this that the whole affair surrounding the drafting of a new constitution was in vain. But this may be too hasty.
What actually happened in this process? First, there were public protests against the sitting government ending in its fall in early 2009. Second, after the general election in 2009, the first left-wing government in the history of the Icelandic republic was established. The prime minister of that government had long been of the opinion that the constitution needed revision. Third, some general meetings were arranged early in 2009, trying to find out which were the most important values of Icelanders. The government organised a similar meeting in early 2010 to figure out those values that should govern the revision of the constitution. Fourth, the government established a committee gathering data and evaluating various ideas about such a revision, thus preparing the work of a constitutional assembly. Fifth, the government decided that an assembly should be elected by the general public to write a new constitution or revise parts of the existing one. Sixth, the election to the constitutional assembly was declared null and void by the Icelandic Supreme Court after a legal challenge. The government decided then to establish a constitutional committee with the same mission and the same individuals as voted onto the assembly. Seventh, the constitutional committee delivered in four months a draft of a new constitution. This draft was never assented to twice by the majority parliament with a general election in between, as it must do according to the rules laid down by the present constitution.
This book is a collection of essays in Icelandic about this whole process and other democratic experiments in Iceland’s recent years. It is written by two Icelandic authors and six international authorities on democracy and democratic developments. Jón Ólafsson edits the book and writes an introduction describing the development of the constitutional project and other democratic experiments in Iceland. James Fishkin analyses some of the processes that took place in the constitutional preparation and the drafting of the new one, and he evaluates to what extent deliberation and rational discussion were features of them. His conclusion is that neither the general meetings nor the constitutional committee reflected the general population and we should be careful about drawing any conclusion about the views of the meetings and the committee coinciding with the views of the population as a whole. He is also critical of the lack of rational discussion both in the preparations and the drafting of the new constitution.
Hélène Landemore examines the process of preparing and writing a new constitution in Iceland from an epistemological point of view. She is interested in: how the constitutional committee dealt with the problem of writing a constitution; and how it used “crowdsourcing”, meaning the competence and the intelligence of the general public, especially in writing the draft of the new constitution. She is critical of the role of experts in writing and editing the draft of the new constitution; she believes that the process had serious drawbacks, as she thinks that the general public and its representatives are capable of writing a constitution upon the condition that as many as possible take part in the process. She believes that the current Icelandic method for establishing a change to the present constitution or adopting a new one is too restrictive. Tom Ginsburg and Zachary Elkins approach the preparations and process of writing the draft of the new Icelandic constitution from a comparative point of view. They review various views of transparency in such a process, as well as the role of experts. They are, like the other experts writing in this book, favourable to the opening up of the process for preparing and writing a constitution and the government process in general, but they realise that there is no simple solution or simple recipe for a constitutional process, in Iceland or anywhere else. Thus, they ask the difficult question: If the new constitution was the result of a grassroots movement, why was it so easy to stop it in parliament? Why were those parties that opposed the new constitution elected as the new parliamentary majority in 2013? There is no simple answer to that question and there are two appendices to their article that are informative and interesting.
Paolo Spade and Giovanni Allegretti write about novelties in democracy or new initiatives in democracy, especially participatory financial budgeting as practised in a number of Brazilian cities. They explore the connection between these new initiatives and the new possibilities that have opened up on the net. They realise that these connections are complex and they can easily become counterproductive from the point of view of participation, if not used carefully. Democratic experiments in other places are drawn into the discussion such as Portugal, Germany and the United States, and in Reykjavík, Iceland. This is not directly relevant to the process around the constitution but the discussion broadens the picture of new initiatives in democracy. The last article is by Kristinn Már Ársælsson and is an overview of democratic initiatives in Iceland in the years 2009-2013, i.e. the years of the first left-wing government of the Icelandic republic. These include the preparation and the writing of the draft constitution, plus two national referenda on the Icesave agreements between the Icelandic government and the British and Dutch governments. These referenda were engineered by the refusal of the Icelandic president to sign two laws supported by the majority of parliament. In both cases the general public voted against these laws. These were the first national referenda since 1944, when it was decided to establish a republic. He also discusses the initiatives taken by the city council in Reykjavík.
All these articles are interesting, make important points and throw light on the events that have taken place in Iceland in the last five years. This is of particular value for a small society like Iceland, because very few people outside the country can understand what happens here and why. Icelandic scientists are a part of their own society and sometimes find it difficult to analyse what actually happens. The critical distance of foreign scientists can bring benefits.
This distance has its drawbacks too. This is clear from the discussion of the constitutional process. There is no attempt to relate it to the political culture in Iceland. What is most interesting about this process, which elected a constitutional assembly from members of the general public, is also a major break with the Icelandic tradition of politicians and legal experts discussing and drafting changes to the constitution. Part of this tradition is that all the major parties have had to agree to the changes put forward. Even though this is not literally true of all the changes proposed, it is true of most of them. This has guaranteed that the changes proposed and consented to in parliament before it is resolved, are consented too unchanged in the newly elected parliament. This threshold to changes to the constitution has not proved to be serious or impossible in the Icelandic context. Changes have regularly been made to the Icelandic constitution. It is not fashionable nowadays to take Icelandic political culture seriously, since its vices rather than its virtues have been more prominent in recent years, but it seems to me that one of the reasons working against the new constitution was that there were serious political disagreements about it. Pushing it through parliament would have been a serious break with the national consensus tradition. You may not think very much of this tradition, but it is an historical fact; besides, traditions in political cultures have to be reckoned with.
The challenge is tackled in two volumes; “historiemetvetanda – historiebruk” [history usage] rewieved here; and “historisk kunskap” [historical knowledge], in a separate volume, not covered here.
The authors constitute a group who have a background in history teaching and research in history teaching. They cover all three levels of schooling, from compulsory school through upper-secondary and university level.
Continue reading Per Eliasson, KG Hammarlund, Erik Lund & Carsten Tage Nielson (eds.), Historie didatik i Norden: del 1, historiemetvetanda – historiebruk (Malmö & Halmstad: Malmö högskola and Högskolan i Halmstad, 2012)
Dewey’s characterizations of democratic conduct show that he thinks of it as involving a give and take. One’s contribution (according to ability) creates a claim (according to need). The individual has duty to his or her community (or society) and society has corresponding duties toward him or her. The mutual dependence of individual and society is the dynamic that generates values. Intellectual freedom, cultural and intellectual diversity, growth and participation are examples of central values made possible by the democratic dynamic. Democracy for Dewey is thus primary: It is an ideal because of the conditions for value formation that it creates. Other values are then (or can be) derived from the democratic ideal.
It is in this complex sense that Deweyan democracy is a “way of life.” The claim is not that democracy is just one of many possible choices of a way to organize society or a way to live. It is in Dewey’s view the only possible framework for the ever-increasing intricacies of the modern world.
There are two ways to explore the conception of democracy sketched here. One is a thorough exegesis of Dewey’s works to investigate whether this characterization of his view makes sense – to check its correctness. Another is to look beyond Dewey and see whether the approach to democracy so inspired by his philosophy is a good approach to democratic theory, if the goal is to seek a useful justification of democracy. In this paper I am interested in doing the latter. In what follows I will attempt to show that “Deweyan democracy”—i.e. the idea of democracy as a way of life—offers interpretive possibilities that help understand how we can both have a substantive notion of democracy and put it in a justificatory framework where rejecting it is certainly possible, but fails to make sense unless, before rejecting it, one is prepared to accept it, in which case rejection, of course, does not make sense.
The democratic ideal—democracy as a way of life—looks like a moral concept. It has, obviously, a moral side to it in the sense of presenting a morally superior way of organizing social life (to use Deweyan vocabulary) to other available ways of doing so. But it is a mistake to overemphasize this moral side of the concept (although a frequently to be seen in comments on Dewey’s philosophy). The moral side in my view is less important than the epistemic side of Deweyan democracy. Democracy as a way of life provides the environment that protects and fosters science or, more generally, inquiry. The reason is proximity in method: In a democratic arrangement moral and political problems get a treatment similar or even analogous to what scientific method would dictate for inquiry. One must be careful not to take the analogy too far however. It does not mean that the method of science should be used to solve moral issues, but it is a recipe for moral cognitivism. Moral as well as political problems should be approached by reason and argument: Democracy is the intellectual environment that fosters reason and argument.
One should also follow Dewey in drawing a distinction between the idea of democracy and the manifestations of democracy (Dewey 1954, p. 143-144). The forms of power associated with democracy, such as representative government, majority rule, parliaments, elections etc. are no necessary features of democracy. Democracy is thus characterized by its ends rather than by the specific means that have traditionally been used to reach them.
Deweyan democracy has evoked considerable discussion in recent years. Many philosophers, who are generally sympathetic to Dewey, have been skeptical about his democratic theory and some have rejected it outright. Robert Talisse has argued that if democracy is a moral ideal it must be treated as other (possibly competing) ideals and values, from the point of view of value pluralism. Talisse correctly points out that from this perspective one cannot think of it as a shared or basic value, it would only amount to a moral value which could certainly be chosen or desired by any reasonable person, but could equally well be “reasonable rejected” by anyone adhering to different values (Talisse 2012, p. 109). For Talisse, Deweyan democracy fails the “pluralism test.” He argues that Deweyan democracy is simply one version of perfectionism because of the emphasis on human flourishing that it entails. In other words, if we read Deweyan democracy from the point of view of a Rawlsian conception of liberalism, the democratic ideal turns out to be just one more “comprehensive doctrine” which can never serve as a basis for a political organization acceptable to all reasonable persons (Talisse 2012, p. 112-114).
Matthew Festenstein points out—contra Talisse—that the notion of reasonable rejectability is not the kind of constraint that the pragmatist (i.e. the Deweyan) could accept. Since it only proposes a fixed standard to adopt or reject basic values it amounts to an a priori evaluation, which is not very useful from a pragmatist point of view. While Festenstein recognizes that one can reasonably reject the democratic ideal that, in his view, does not exclude it from being a possible “basis for the justification of state power.” It is difficult to see, however, what is gained by his result, since relativizing the democratic ideal does not remove Talisse’s objection, it only refocuses the difficulty (Festenstein 2010, p. 42).
Eric MacGilvray picks a useful element out of Deweyan democracy when he argues that it provides a kind of a test, similar to the pragmatic maxim, to determine whether one or another belief is fit for public discussion. It means that holding—and promoting—a belief about how to justify state power e.g., requires willingness to present it in experimental terms. The threshold for access to discussion about basic values for the social contract need in his view not be higher than that. If a belief can be tested and discussed experimentally—it would not have to be experimentally tested—and its meaning (conceivable consequences) for society can thus be assessed and discussed, there is no way to say that it is unfit for providing a justification of state power (MacGilvray 2004, p. 163-167; see also Festenstein 2010, p. 33). While MacGilvray provides a more interesting way of filtering issues fit for public (and political) discussion, his argument is no direct counterargument to Talisse’s. He carves out a role for Deweyan democracy, i.e. to offer a framework for determining the democratic meaningfulness of beliefs. While I think this is an interesting and in fact very useful and practical way of using the idea of Deweyan democracy, it limits it to a methodological tool.
Other authors such as Elizabeth Anderson have praised Dewey’s experimentalist account of democracy and yet other, such as Cheryl Misak, suggest that by using the more rigorous Peircean approach to inquiry as a model for understanding Deweyan democracy, one can exploit the inquiry/democracy analogy and apply methods of inquiry to the search for common solutions to social, political and even moral problems (Anderson 2006, p. 14-15; Misak 2000, see p. 45-47).
The question still remains whether and why Deweyan democracy should be chosen as an ideal, what kind of choice that would be, and what one has so chosen. I think this choice must be seen as a result of two related beliefs:
- Value articulation: The choice of democracy as a way of life implies accepting the claim that democracy is a necessary condition for articulating central activities, goods and values in community such as freedom and equality, education, public discussion, openness and opportunity.
- Opportunity creation: Democracy is a better way to create opportunities for inquiry, experimentation and in general solve problems using best available means and methods than other models of social organization.
If these beliefs can be sustained, one could see democracy as a prism through which certain values become articulated rather than itself a simple or core value. To reject democracy is therefore to refocus or rearrange social or moral values. If a democratic approach is not seen as basic, values such as the ones already mentioned, as well as many other central values of modern society such as pluralism, toleration and participation loose the meaning that democracy as a way of life gives them. Democracy thus should be chosen as “a way of life” in the sense of a principle of articulation and arrangement.
I depart from the authors I have mentioned in this paper since I want to show that the best argument for democracy comes neither from the independent standard that a Peircean model might create, nor from the experimentalist vision that it entails. The public action test does not per se provide an argument for democracy it only explains how we can make a useful distinction between issues that properly belong to public discussion and those that don’t. One might simply argue, of course, that there is no alternative. In a very practical way democracy is accepted as the only viable kind of social and political arrangement in modern society. The superficial acceptance of democracy does not mean that democracy is ideally practiced (or even practiced at all) in every case. It only reveals the dominance of the discourse of democracy.
There are however alternatives to democracy, some of them quite powerful. Sometimes these alternatives are presented as the necessary basis of democracy and there are social forces that promote them as necessary restrictions of democracy, since without certain restrictions democracy could lead to undesirable results.
As Bo Rothstein has shown, the correlation between democracy and good life is not always in democracy’s favor (Rothstein 2013, p. 15). Many surveys show it to be negative over a range of accepted indicators measuring quality of life. Good governance seems, on the other hand, to be strongly correlated to success in improving the lives of citizens, and increased democracy may lead to deterioration in governance. The alternative to democracy might thus be efficiency and justice in the design of institutions, as well as basic liberties that promote equality and individual freedom in accordance with liberal principles. It is clear in any case that if increased democracy is shown to go against improving the quality of life for citizens that indeed would deliver a strong argument against democracy.
My contention is that by “choosing democracy” one is not choosing a particular method or procedure for a specific kind of decision-making but rather a general framework for public choice and deliberation. One could see such democratic commitment as a moral commitment. In such a case one would argue that the fairness of democratic approaches should commit one to them, even in cases when certain problems might seem better solved using a different approach. But the commitment is clearly epistemic as well: If there is an approach to problem solving best described as democratic to which one is committed, then one is also committed to the limitations of the approach. While Dewey seems not very keen on providing a moral justification for choosing democracy, he seriously attempts to provide an epistemic justification, i.e. argue that democracy will, in the long run, provide a better environment, better tools and on the whole better approaches to problem solving than other conceivable (or available) approaches.
From the Deweyan point of view the epistemic commitment must therefore be seen as prior to the moral commitment. It means that democracy should be seen as a way of dealing with and solving problems. It would not do to argue simply that democracy somehow ensures that the best methods are used or that solving problems democratically will always yield the best solutions. What it does mean is to take seriously the duty to seek not only solutions that can be had by majority decision or solutions that can be forged by negotiation and compromise but to seek the best solutions. If “real” democracy often (even most of the time) falls short of the democratic ideal, this does not make the idea of democracy any less clear. Quite the contrary, since it is the idea by which political decisions should be elucidated and criticized.
In the last part of the paper I want to sketch how I think that the idea of Deweyan democracy should be used to discuss and judge political and administrative practice. The objective is on the one hand to see how democratic practice falls short of an ideal of democracy (or not), on the other to provide a healthy angle of democratic criticism. Dewey’s emphasis on experimentation in connection with democracy, i.e. seeing democracy as the free exchange and discussion of ideas where the point is to have a generation and selection process based on making full use of “intelligence” is key to understanding this conception of democracy (Dewey 1985, p. 362). This means that in democracy as a way of life, individual contribution to decision and policy-making is matched with (conceivable) individual influence on decisions and policy.
In addition to the two basic democratic beliefs—that it is a framework for value articulation and opportunity creation—one should think of two central conditions of democracy:
- The efficiency condition: For each participating individual success does not necessarily entail being able to convince others of one’s point of view or being in the majority but on the efficiency of democratic process. Success is to be a part of a conclusion based on discussion, fact-finding, deliberation, debate and eventually (perhaps) voting that harvests the input of the participants.
- The integrity condition: A decision made, or policy adopted, must be a result of what has been democratically concluded. If the logical space of decision-making is different from the logical space of reason-giving, the procedure used is meaningless.
The efficiency condition deals with the ability of a group to come to a conclusion and the integrity condition with the relation between that conclusion and an eventual decision or action. Democratic failures may appear in both parts undermining either grounds for policies or legitimacy of decisions. The work of parliaments often evokes suspicion about the integrity of the democratic process when the connection between arguments and information revealed in deliberation and the eventual decision seems vague or absent; when positions are known in advance, more or less, and the debate carries only a symbolic function.
The give and take mentioned earlier need not be understood as individual willingness or commitment to participate in public debates or policy-making and therefore the efficiency condition does not depend on actual participation. Instead of seeking a standard to determine the content of public reason, one should seek a framework to connect participation and policy. The point should be access rather than inclusion, where the possibility of participating, not only in exercising free speech, but in actually providing input into policy, is at stake. The problem with participatory approaches taken by governments is often their reluctance to acknowledge the importance of public participation seeing it rather as a possible hurdle in successful governing. Therefore there is tendency to both limit the power of extra-institutional participation and place all kinds of security valves on the possible decisions to be reached by such extra-institutional participants. To illustrate this and at the same time probe the conditions of democracy and the basic democratic beliefs, I want to discuss four recent examples from Icelandic politics:
- National assemblies 2009 and 2010
- Annulment of the elections to the constitutional assembly 2011
- The first Icesave referendum 2011
- National referendum on the constitutional bill 2012
After the financial collapse in Iceland in 2008 there was considerable pressure on the government to use unorthodox methods to change the course in Icelandic politics and promote democracy. The first attempt to create a public voice in order to influence policy systematically was made by an independent group of people who formed an NGO called “The Anthill”. The Anthill organized a so-called National Assembly (Icel. Þjóðfundur) whose purpose was to articulate basic values and general policy goals for Icelandic society (Gunnar Hersveinn 2010). The National Assembly consisted of over one thousand people, a random sample from the general population, who were asked to participate in a meeting held in one day, 14 November 2009. The Anthill then planned to have the government accept the results of the assembly as guiding principles in the political renewal ahead. Although it turned out to be problematic to simply adopt the results of the National Assembly and include them in the various tasks of the government, these results were taken seriously. The government adopted the methodology used in organizing National assemblies for public consultation regionally and nationally. In 2010 the Constitutional commission, whose task was to prepare for the Constitutional assembly, held a second National assembly elected in 2010 in order to revise or rewrite the Icelandic constitution.
There were several problems in the selection of participants for the National assemblies, which strictly speaking make it difficult to talk of participants as random samples of the population. Some other organizational problems have also reduced value of the results, but here I will focus on something else.
The task of the first National assembly was to articulate core values to guide governmental policy. The task of the second was to identify the core values to guide the revision of the constitution. In both cases a number of general policy statements were also generated by participants to further identify policy goals. The problem with these results was their generality. The meetings neither provided priority rankings for goals nor any interpretation of value commitments and therefore policy-makers could hardly use them to plan policy. Therefore, even if the meetings were admirable exercises of public participation and engaged all kinds of people in thinking and talking about political issues—many had perhaps never been consulted except by occasional opinion polls—their overall usefulness was difficult to see. These meetings may have carried some meaning for participants who saw certain general value commitments articulated in a dramatic way as a result of the one-day meeting. They could however hardly have seen it as an opportunity for inquiry since the meeting was not deliberative. Its purpose was to express rather than critically engage the views of the participants. The assembly also fails both the efficiency and the integrity condition. The lack of systematic discussion created a gap between whatever was said during the meeting and the results published after the meeting. No problem was dealt with during the meeting and therefore nothing can be said about efficiency in doing so. Worse since the results were overly vague, it was difficult to see how the integrity condition could be fulfilled either. The relation between these results and eventual decision-making could not be spelled out. From the perspective of Deweyan democracy one could then say that the meetings were democratically meaningless, since while it allowed symbolic participation, it could not effect policy- or decision-making in any meaningful way.
Elections to the Constitutional assembly were held 25 November 2010. A large number of candidates ran for a place in the assembly – 525 competed for 25 seats. The elections were unusual in many ways. The government was criticized during and after the elections for many flaws in how the elections were conducted. There were certain problems with the design of the ballot, the ballot boxes, the voting booths and some of the procedures used. After the elections a group of citizens complained to the Supreme Court who then reviewed the elections and found it to be flawed in six respects. Although the flaws were technical and gave no reason to conclude that the elections had been rigged or the vote misrepresented, the Supreme court used its authority to annul the elections.
One might argue that a decision, made by a judicial body such as the Supreme Court, should not be evaluated in terms of democracy since it is based on the law and on judicial authority. It was clear however, that having pointed out certain flaws in the way the elections were conducted, the Supreme Court had a choice to annul or not annul the elections. Since the results were not in dispute, the Court had no democratic reason to annul, i.e. doing so did not serve to ensure that the democratic will of the electorate was protected, in fact the will of the voters was in this respect not considered to be the most important issue. The decision was thus undemocratic and one could even argue that it was anti-democratic, or, in other words, an attempt to put an end to a democratic process, rather than facilitate it.
From the point of view of Deweyan democracy one should argue that the Supreme Court had a duty to point out the flaws in the elections but also to base its decision on a commitment to serve democracy. As was later pointed out by critics of the decision, it is not in accordance with the rule of law that a judicial body may decide to annul a democratic election conducted legally, without significant failures and whose results clearly express the will of the electorate. Here a commitment to democracy should have guided the Supreme Court. It is an epistemic commitment in the sense that the will of the people was known, it is also a moral commitment since serving democracy will then be seen as a more important value than technical perfection in the conduct of elections.
One of the bitterest issues debated in Iceland after the collapse of Iceland’s international banks, was the so-called Icesave case. Landsbankinn, one of the three big banks that collapsed in October 2008, had in 2007 started individual savings accounts in Britain and Holland that were quite lucrative for private savers. When Landsbankinn’s foreign operations were separated from its Icelandic operations and declared bankrupt, thousands of people lost their savings but were partially compensated by the British and Dutch governments in accordance with the European banking insurance policy. The British and the Dutch claimed that the Icelandic government was liable to pay the compensation and so they demanded to get back the amount paid to the individual savers. The Icelandic government to begin with accepted its responsibility and an agreement was negotiated. When the agreement was put to the parliament for ratification, a huge controversy ensued. Although the agreement was passed in the parliament it was clear that it created much anger among voters, who felt the Icelandic nation was being forced to pay debts created by irresponsible bank managers. The Icelandic president intervened by refusing to sign into law the bill on the agreement passed by the parliament, after having received petitions to do so from thousands of Icelandic citizens.
The Icelandic constitution stipulates that if the president refuses to sign a law, it must be put to a national referendum. As the referendum was being prepared, however, the government entered into new negotiations with the British and the Dutch. When the referendum on whether to accept the agreement passed by the parliament or reject it was conducted, the agreement was no longer relevant. It made therefore no difference whether the voters accepted or rejected the agreement since the government already had an offer that was clearly better for the Icelanders than the one they were voting on, even if not a formal signed offer or agreement. The referendum was therefore meaningless, and no democratic purpose in conducting it. One might argue that from some formalistic perspective it was unavoidable to conduct the referendum since it had already been scheduled. Parliament could however also have revoked the bill. The question here should be what would be more democratic to hold the referendum or abandon it. From the perspective of Deweyan democracy a referendum that fails to give a meaningful result—whatever the result—is not democratic. Other approaches might yield positions such as that holding the referendum is harmless; anyone who fails to see the point in participating could refrain from doing so, and so on. But it seems to me that if there is no problem–solving purpose in holding the referendum, and the whole point of doing it has become secondary, i.e. declaring support for (or opposition to) the government it has lost its democratic legitimacy. Whatever purpose there may be in participating (or not participating) it is different from the question being voted on.
Finally I want to discuss the national referendum on the constitutional bill submitted by the Constitutional Council. The bill was submitted in the summer of 2011 and was meant to be passed before the end of the term in the spring of 2013. In October 2012 a consultatory referendum was held on the bill and at the same time participants were asked to express their view on six key questions on the content of the new constitution. While expressing support or opposition to the bill itself was relatively straightforward and yielded clear results (around two thirds were in favor of the bill, 50% of the electorate participated), the questions were vague and the results therefore begged the question. I will not go into detail in describing the various questions or the problems the evoked. It will suffice to take one example. One of the questions had to do with the national church. Iceland has not taken the step to separate the national church from the state. The current Icelandic constitution says that the state must “support and protect” the Evangelical Lutheran Church. The question in the referendum was whether the voter thought that the new constitution should have a clause dealing with the national church. It did not ask what (if anything) the voter thought the constitution should say about the National church. Since (to many people’s surprise) the result was that the majority wanted there to be something on the church in the constitution, it was unclear how to interpret the will of the voters in that respect.
Again, from the point of view of some democratic theories this flaw in the referendum might not be taken to mean that it was undemocratic, but from a Deweyan perspective one would be able to conclude that since the result was democratically meaningless the referendum did not fulfill the epistemic conditions of democracy. The answer to the question made problem-solving more, rather than less, difficult, and the referendum therefore was meaningless for democratic problem solving.
Dewey’s discussion of democracy and the framework referred to as Deweyan democracy makes sense of a democratic commitment according to which we can assess democratic initiatives and results from an epistemic and moral point of view. The epistemic commitment is prior to the moral commitment since in many cases the moral commitment is a result of the epistemic commitment. Once democracy as a way of life is understood in this context, there is no need to fear that a democratic commitment amounts to committing oneself to a comprehensive doctrine such as an ideology or a religious belief. It is simply to make demands not only about democratic procedure, participation or deliberation but also in regard to the results of democratic decision- and policy-making.
Anderson, Elizabeth. “The Epistemology of Democracy.” Episteme (2006).
Dewey, John. Democracy and Education. New York: Free Press, 1966.
—. Reconstruction in Philosophy. Boston: Beacon Press, 1957.
—. The Public and Its Problems. Athens: Swallow Press – Ohio University Press, 1954.
Festenstein, Matthew. “Pragmatism, Inquiry and Political Liberalism.” Contemporary Political Theory 9.1 (2010): 25–44.
MacGilvray, Eric A. Reconstructing Public Reason. Harvard University Press, 2004.
Misak, Cheryl J. Truth, Politics, Morality. Routledge, 2000.
Talisse, Robert B. “Can Democracy Be a Way of Life? Deweyan Democracy and the Problem of Pluralism.” Transactions of the Charles Peirce Society XXXIX.1-21 (2003).
—. Pluralism and Liberal Politics. New York: Routledge, 2012.
1 The terms democracy and governance are sometimes conflated. In his introduction to a collection of papers on democracy, Giorgio Agamben maintains that “the word democracy is used in most cases to refer to a technique of governing” (Agamben 2011, p. 1). While it is probably true that the term democracy is often used inaccurately, the distinction between governance and democracy is quite clear. Agamben probably overstates the confusion. There is however a tendency to describe administrative restrictions of democracy as part of a democratic framework.
2 The website created for the 2009 National assembly only has information in Icelandic. See thjodfundur2009.is. In the Q and A section of the page it is stated that the goal of the assembly is to create “a strong common vision” for the nation which will help “solve difficult and complicated problems”. In another section the intention to present them to the government with, as well as to institutions and associations whose role it will be to contribute to the recovery of the country after the crisis.
3 The National assembly (also referred to as National forum and National gathering) is described on its website, also available in English. See http://www.thjodfundur2010.is/english/ n.d.)
5 The Constitutional Council was appointed by parliament after the nullification of the elections to the Constitutional Assembly. All 25 elected Assembly members were appointed except on who decided not to participate in the appointed body.
6 Constitution of the Republic of Iceland, Article 62. See: http://www.government.is/constitution/.
There is a story to be told about this turn of events; both a general story about crises in the capitalist system, including this particular crisis, and also about how the crises have unfolded in particular countries. When I talk about crisis in this review I am not referring to the Euro crisis but to the banking crisis.
It is worth pointing out at the beginning of this review that it is a significant fact that a number of countries have avoided this crisis even though they have been affected by it as, I guess, every country in Europe at least has been. The Scandinavian countries, Norway, Sweden, Denmark and Finland have been able to avoid this crisis and the same applies to Canada. Finland has adopted the Euro and is having problems because of it, but all the four Scandinavian countries had learnt their lesson from their banking crisis in the early 1990s and managed to avoid all the pitfalls in the time leading up to the banking collapse in the autumn 2008. The key issue seems to have been a close monitoring of their banking systems and a tough management of the system by the state. It seems to me that the role of the state is probably the most important issue in this crisis. In the decade leading up to 2008 it seems to have become an accepted orthodoxy that somehow the market system needed only a minimum of regulation and was self-perpetuating. If there is any fairly clear lesson to be learnt from this crisis it is that this orthodoxy is a myth. The state is the most important institution for a well-functioning market, not because the state should regulate every minute detail of the market, but because the state must put in place a good legal framework, close monitoring and the willingness of the institutions to use those powers supplied by the state to control the financial market.
The other option is to leave the financial system to its fate in the market, so that the banks and other financial institutions can collapse and become bankrupt like any other business. It is an interesting fact that no government in Europe or North-America was willing to do this. There are various reasons for this but the two most important ones seem to me to be:
(a) First, the risk of contagion, meaning that when one financial institution falls the confidence in the others falls sharply, so that a bank that is in no way insolvent can suddenly become so because people do not trust it any longer. This does not happen in other markets: If a building firm collapses other building firms are not in danger of collapsing and the same does seem to apply generally to the manufacturing industry. What is so special about banks? The reason why financial businesses are not in this position is because they rely so heavily on trust in their operations. A bank is not like a library where money is stacked on every shelf, because the money that you put into your account the bank lends to somebody else, who is willing to pay the interest the bank asks for. So at any time there is only a tiny portion in the bank of the money people have put into it. If there is a run on the bank, it cannot pay all the owners of current accounts their money, even if it is in perfect order. That is the basic reason why we need central banks, banks that lend to other banks, when for some reason or other their own money does not suffice.
(b) The second one seems to me to be the fact that banks have become so important for the everyday life of ordinary members of the public that no government can leave the bank system alone. The smooth running of the banking system has become a matter of security for the public and government is responsible for public security. If government is found wanting in public security this can easily lead to public unrest. This fact, that is, the centrality of the banking system in the life of the members of the modern public is usually overlooked when examining the financial crisis and its importance.
This book explores what would happen if Ireland defaulted, did not pay any of its debts, only paid some, or paid most of them but not all. It seems to be the case that it will in all probability be impossible for the Irish state to pay all of its debt, because the Irish state decided to underwrite all of the debts of its banking system when it was grinding to a halt. This has had the consequence that public debt in Ireland is so large that it prevents the growth of the economy. Also, since Ireland decided to take up the Euro, it does not have the option of devaluing its own currency. So all roads to renewed profitability are paved with serious difficulties. This does not mean that it is impossible, but it will take a long time. The default of a sovereign state is not the same as the bankruptcy of a large business. It is much more complicated and serious, especially for the citizens of that state. All this is examined in this book.
The book is in four parts. The first part is general, where the authors explore research done on crises and contagion and there is a description of the problems facing Ireland and the possibilities the state has in its public finances. The second part consists of four essays on various aspects of the Irish financial crisis. It will probably have to restructure its debt and this will have to be selectively done; the public debt is analysed and it is discussed if the Irish state will be able to finance its public debt on the market when it returns there or whether the interest rate that the market requires will be unsustainable. One essay explores how Ireland´s problems are connected to the problems of the Euro. The third part collects five reflections on financial crises in other countries: Russia, Iceland, Argentina and New York. The fourth part is a collection of essays from various Irish perspectives on the debt and possible default of the Irish state.
This is an important book that deserves to be widely read. Every essay adds something to the panorama and at the end the reader is in a better position to evaluate the possibilities. The viewpoints are clearly expressed and well argued and even though acronyms are to be expected in this field of research they are kept to a minimum and should not prevent understanding of the issues. The arguments expressed here have relevance for many states in Europe at present.
When taking into consideration the warm reception the book has received, as well as the prestigious awards, one ponders upon whether the nation is relieved by the loss of its leading political patron? Or whether this acceptance unveils tolerance towards anyone who tries to tarnish the president’s image. Páll Björnsson deconstructs the very icon that was consciously constructed of Jón Sigurðsson for a political purpose.
The story begins in a society of inequality. The funeral procession in Reykjavík in the spring of 1880 when President Jón Sigurðsson (hereafter “President Jón”) and his wife Ingibjörg Einarsdóttir (1804 -1879) were reburied, was deliberately divided by class and gender. In the very farewell of the nation to President Jón, the occasion token was used for reproducing the existing social inequalities. Women were assigned a lower status in the celebrations to commemorate President Jón. Also, there was lack of consideration towards President Jón’s widow during the preparations for President Jón’s funeral in Copenhagen in December 1879, which was organised in such a way as to promote political consolidation. Páll Björnsson writes the book from a gender point of view, thus making it an uncomfortable reminder of the national patron’s lack of stand when it came to the one of the most controversial issues in political debate of the age.
Páll Björnsson analyses how the political icon of President Jón was cultivated by the new media (newspapers) by appealing to emotions, whereby sorrow was converted into national mourning, remembrance into national commemoration, and funerals into national festivities. This analysis is welcomed by the reader who interprets the political presence of President Jón in modern politics after his death as a key-factor in a nation-building process. where the inhabitants of a country have been transformed into a political nation that is able to have a state of its own. Páll Björnsson does not specifically mention this, but President Jón himself lead actual Icelandic politics, which for decades prevented the parliament of Iceland (Alþingi) from acquiring a treasury under its own power for the sake of implementing a nation-building policy.
The publication of the book has not resulted in the loss of the overnight loss of the icon of Presidet Jón as regards the legitimisation of political authority in modern society. On Iceland’s national day of 2010, the Icelandic Minister of Education referred to his ideas on educational matters in a speech held at President Jón’s birthplace in Hrafnseyri. Páll Björnsson questions, in a footnote, whether President Jón was a prime mover in educating the nation as hitherto believed. His school-policy did not gain ground in his lifetime. Quite the opposite, the focus on independence politics made it impossible for Icelanders to establish a comprehensive school-system as other nations did in that period.
Páll Björnsson‘s book is not about President Jón himself, his life and actions. The book is about diverse exploitation of him as an icon, from souvenir production to image creation of big companies. The book is about Icelanders and how an image has been utilised for political purposes. In the beginning, this was done to preserve a society divided by class, gender, age groups and regions, characterised by the authorities’ fear of common people’s political organisation. The endeavor was to create a single opinion in a disparate society. Páll Björnsson infers how powerful a political weapon the image of President Jón was for those who wanted him in their camp. All stakeholders wanted to have a share in him as their icon of choice.
Páll Björnsson also concludes how difficult it has been for state authorities to honour their duty to pay respect to the “the legacy of President Jón” (pp. 183-211). We read about the problematic realisation of the objectification of the icon in such a way that it can be more than just that. For one, the difficulties in finding an objective for the rebuilding of President Jón’s birthplace at Hrafnseyri in a remote and depopulated area, or in justifying what kind of function it would have. However, the couple’s sepulcher in Reykjavík found its function, while the real success story is the statue standing opposite Alþingi. Páll Björnsson’s book is a contribution to the analysis of the original legend of the birth of a Republic. President Jón himself spent most of his life in Copenhagen, the capital of the Danish North-Western-Atlantic empire. The icon-creators realised the importance of an untainted image of the unequivocally Icelandic Jón Sigurðsson. This can be interpreted as the solution of the paradox for nationalistic thinking of a national -hero who chose to live amidst the claimed oppressors.
The author uses in an original way the fact that the ship carrying the bodies of the couple for the funeral in Iceland had the name of the mythological Phoenix, the bird that in our culture symbolises renewal. President Jón was renewed. Here the reader calls for further analysis of the Jesus-like symbolism that can be found in the writings on President Jón in the first decades after his demise. There are many examples therein of religious symbols being replaced with political ones during a time of secularisation in Western societies. It is clear that the book rests on a theoretical analysis and that the discourse in Iceland on the ideological roots of the Republic calls for theoretical writings on this issue. Here, however, we merely have a description.
Páll Björnsson quizzes the nation on President Jón as a good teacher would do. This is done by using questionnaire (N 1363, response rate 70%). The answers are analysed by gender, age, region and schooling. The result is that image is superior to knowledge. Only a minority knows well the life and work of President Jón and why he was given the title “President”. Highly educated males in the prime of life know President Jón best, other groups less so. However, the majority regard President Jón as an important unifying symbol for the nation, consider it right to honour his memory and are proud of him.
The acceptance that characterises the response to the book Páll Björnsson has written is justifiable. Páll Björnsson enters a new field in the research on President Jón’s legacy. The book is an elaborate treatise. You can appreciate this elaboration even just by looking at the carefully chosen pictures. Some are in colour. Viewed as a whole, the pictures tell us as critical a story as the written text itself. Interestingly, President Jón is revealed as two different characters in two different paintings, as a bronze statue in fabrication, alongside gentlemen, protesters, extremists, women, students, commoners and in a teargas haze. The narrative is lively. The footnotes are quite many and often replicating the text of the sources, thus deepening the premises for the descriptions in the text. The book offers lists of people’s names, pictures and sources. No misspellings or grammatical errors could be found.
This review discussed whether the warm reception of a critical book on a national-hero at his bicentenary represents tolerance towards a new sentiment on President Jón or a liberation from his enduring authority. The book on President Jón written by Páll Björnsson offers the nation a chance to reunite with an ex-national -hero and finds it difficult to understand why he is still so politically massive in spite of his physical absence.
Iceland’s geographical position gave this small nation a special strategic importance in the political and military chess game between east and west during the Cold War era. Placed in the mid Atlantic, Iceland constituted an important post for the NATO defence forces and surveillance activities. This importance can be seen in the presence of American troops at a NATO base in Keflavik from 1951 until 2004. The military base and the NATO alignment created stark divisions among the population and was one of two major cleavages that characterized Icelandic politics throughout the post- WWII era, especially during the Cold War. The other cleavage that marked Icelandic politics of the time was the left-right dimension. The four traditional parties of the Icelandic party system ranked in a different order on these two continuums, with the right wing Independence Party allying with the Social Democrats in its support for NATO and the military base, while the centre agrarian Progressive Party supported NATO membership but joined forces with the Socialist Party in the opposition to the military base. The Socialists however were stern opponents of both the base and NATO membership, while they expressed sympathetic views for the People’s Democratic Republics in the eastern bloc. Left wing socialists held up ties with their sister parties in the Soviet Union and Eastern Europe, while bourgeois politicians cultivated their links with western or mainly American liberal democracy. The political discussion was framed in terms of the Cold War and the press, which throughout most of the 20th century was a party press, continuously suggested that the political motives of their opponents were conspicuously linked to or derived from either the interests of Soviet or Eastern European communism or US capitalist imperialism.
It was in this circumstances that in the fifties and sixties young left wing people sought to undertake their university education in the Eastern block and more often than not the Socialist Party in Iceland (SEI) was in one way or another the go-between in arranging for such student positions. Many of these left wing students kept contact with each other even though they did not study in the same place or country. At a point in the late fifties these students had formed an organisation, SÍA, Sósíalistafélag Íslendinga Austantjalds (The Society of Socialist Icelanders in the Eastern Bloc) that had considerable influence within SEI, the Icelandic Socialist Party. In 1962 members of the youth organisation of the conservative Independence Party managed to get hold of – in fact steal – some of the internal correspondence of the SÍA group and subsequently the correspondence was published letter by letter in the daily newspaper Morgunblaðið along with some political explanations from a right wing standpoint. The correspondence was also published by the Conservative youth organization, Heimdallur, in a special booklet labelled the “Red Book”. Remarkable as it may sound, the correspondence between the Icelandic students in SÍA shows a great deal of criticism of the socialist system as practiced in the Eastern bloc, though in general of course their views were very sympathetic to the People’s Democratic Republics. From the standpoint of the conservatives in Iceland the purpose of the publication of the SÍA correspondence was to show that the students in Eastern Europe, along with the Socialist Party of Iceland, were plotting a communist takeover in cooperation with their communist allies in the east, even though they knew that the system was not working well and had all sorts of flaws. This whole affair exemplifies the frenzy and the tone of the political discussion in Iceland during the Cold War and the suspicion that was created around the students that studied in the Eastern Bloc.
The legacy of heated feelings of the Cold War has in many ways survived the Cold War itself. The demand for some sort of reckoning or historical rectification has frequently come up, particularly in relation to the publication of documents that have become accessible after the fall of communism. This has been felt in Iceland mainly at a general political level but its implications have also been personal – putting the spotlight on the individuals that supported communism and in particular those who studied in the Democratic People’s Republics, not the least the German Democratic Republic. This paper will examine to what extent demands for a historical reckoning are relevant by looking at a particular case that can be found in the Stasi archives. By conducting a case study of this kind a light is shed on important factors that tend to be lost in the more ideological and normative public political discussion. The case examined is the one of a young student who became a Stasi informer in the early 1960s, know as “Kontakt Person Karlsson”.
“Kontact Person (KP) Karlson”
According to the archives of East Germanys State security service (Stasi) one Icelandic student cooperated with the Stasi while studying in East Germany. His name was Guðmundur Ágústsson, who after returning to Iceland became a bank manager. In 1959 he arrived as a young student via Vienna in East Germany, where he first attended a language course in Leipzig before taking up his studies at the University of Economics in Berlin-Karlshorst. Later his sister followed him to East Berlin.
On the 9 February 1963, four years after entering East Germany, a note is found in the Stasi files concerning “making contact with the person”. Before this remark in the files, the Stasi had already gathered information about Guðmundur Ágústsson , since a report explains that he seemed to be “open towards our problems”. In this first description of Guðmundur Ágústsson to be found in the files, his appearance is described as “modest and dutiful”, also his “perfect moral conduct” is underlined, contrary to the one of his sister who, according to the report, is “in some cases very impulsive”.
According to the minutes of the first meeting between the Lieutenant Koch as representative of the Stasi and Guðmundur Ágústsson, Koch explained to the Icelandic student that lately pubic disorder in East Germany was increasingly initiated through West Berlin and therefore it was necessary for GDR “to take measures against the enemy’s intentions. In order to do so we have to involve foreigners, and since we knew that he [Guðmundur Ágústsson] was a member of our brother party SEI, we have turned to his person”. According to the minutes Guðmundur Ágústsson answered positively to the request of the Stasi; he agreed to visit West Berlin and establish contacts with students there as well as to report on activities at the University of Economics where he studied.
Guðmundur Ágústsson was, according to the Stasi files, one of 25 Icelandic students studying at the time in the GDR. All were members of the SEI. They all came to East Germany through the mediation of the SEI or the Federation of Icelandic Trade Unions. During their first meeting Lieutenant Koch asked Guðmundur Ágústsson not to talk with anyone about his contact to the Stasi and they agreed to use the codename “Karlson” for him. After this meeting the Stasi run “Karlson” as a “Kontakt Person” (KP) in its files. “Kontakt Persons” were individuals used by the Stasi, sometimes without their knowledge, but also, as in this case, people who knowingly cooperated with the Stasi. “Karlson” knew, as the documents indicate, that his interlocutors were working for the Stasi.
“Karlson’s” first job assignment consisted of establishing a contact with an Icelandic student in West Berlin, “with the aim of assessing if this contact could be further exploited”. In order to do so “Karlson” should find out, “with whom he [the friend] has contact”, and further, he should report about groups and “their participation in actions against the anti-fascist protective barrier” (meaning the Berlin Wall) and evaluate the general mood in West Berlin. “Karlson”, according to the minutes, agreed to do so. But he did not agree to introduce his acquaintances in West Berlin to the Stasi. The reason he gave was that in his opinion the friend “was politically not ready”. However “Karlson” proposed approaching another Icelander in West Berlin who might be willing to cooperate with the Stasi. According to “Karlson” this was a friend who had gotten an invitation from the Free University of Berlin to become a lecturer. The minutes state that at this time it had not yet been decided whether the acquaintance would accept the job at the Free University or not, because in the words of “Karlson”, a “decision on this matter would be made by the SEI”.
Five weeks later at the following meeting “Karlson” could not report much, because he had not traveled to West Berlin. However, he had by now learned that his friend would take the position at the Free University in West Berlin. Until the year 1962 the acquaintance had been working as a lecturer at the University of Greifswald. Both he and his wife were members of the SEI. “The KP estimated the [name blackened] as a very humorous and outgoing person, who sometimes because of his comical appearance, his physique and his facial expressions is viewed as ridiculous.”
Furthermore, “Karlson” reported in this meeting that he had recently received another visit from an Icelander, but he was politically not organized and in “his political development not yet mature”. Therefore “Karlson” declined bringing him into contact with the Stasi. In addition the Stasi noted in the minutes of the meeting that the KP would “soon get his own flat on the basis of his collaboration and his political work.”
In May 1963 Lieutenant Koch gave his first evaluation of his Icelandic spy:
The [Kontact Person] is honest in the cooperation, but had not yet been reviewed. He takes his tasks seriously, makes his own proposals and he is venturous. His [cooperation] is based on conviction.
Control: Regular meetings every 14 days in the CA [Conspiratorial Apartment].
Range of duty: Supply of suitable candidates for recruitment. Naming appropriate candidates, as well as being used on special occasions in West Berlin.”
In the following meeting “Karlson” and his Stasi officer discussed mainly how to establish the actual contact with the Icelandic lecturer at the Free University in Berlin. First of all, it was agreed that there was “no need to pretend to be a member of the press, but the KP should just contact him as an employee of the Stasi”. “Karlson” agreed to organize the meeting. During the meeting they discussed three more Icelandic students living in West Berlin, but the minutes state that “Karlson” did not want to be the person who “arranges the meeting”. Therefore they agreed on a different approach: while “Karlson” would celebrate the moving into his new apartment with the Icelanders from West Berlin, he would contact the Stasi as soon as his Icelandic friends would leave. On the way back to West Berlin the Stasi would have then the possibility “to address” the Icelanders at the checkpoint in Friedrichstraße: “this way the (KP) would be kept out from the conversation and the staff can safely carry out their own conversation.”
At this meeting it was further agreed that “Karlson” would participate at the upcoming regional Social Democratic Party Congress as a member of the media and report to the Stasi about it. Furthermore he should monitor the preparations for the rallies on May 1 in West Berlin. One day before the first of May “Karlson” received specific instructions. In particular, he should find out where the loudspeaker van with the “inflammatory agitation” was stationed that was supposed to “disturb the activities on May 1 in democratic Berlin”.
During this meeting the status of the recruitment of the Icelandic lecturer was also discussed. According to “Karlson” the Icelandic lecturer wanted to find out whether the people whom he would meet were “really from the Stasi”. Furthermore, the Icelandic lecturer informed “Karlson” that the Senate of the Free University of Berlin had told him that they were informed about his membership in the SEI. They also warned him not to get involved with “Russian agents”.
At the next meeting, on the 1st of May, “the Kontakt Person ‘Karlson’ had returned from his excursion to West Berlin and shared his observations about the deployment of the police, the position of the radio car, the tribune and more, which were then immediately submitted to the headquarter.”
According to the minutes of the meetings “Karlson” reported about his intended trip to England, France and Italy. The minutes end with the note that the next meetings will be arranged by phone. Although there are no further minutes of meetings to be found in the archives, one can assume that the contact continued, since a receipt exists for the 28 January 1964 with the note: “The Kontakt Person ‘Karlson’ was given 50 DM for costs.”
On 20th of November 1964, Lieutenant Koch closed the file, since “Karlson” had returned to Iceland. The file contains also the exact statistics of the border crossings by “Karlson” to West Berlin, and thanks to the collection of data by the Stasi, we also know that “Karlson” for example, on the 4th of February 1964, brought “2 nylon shirts; 2 pairs of women’s stockings, 20 PCs. cigarillos (Intershop); 250 gr coffee and 1 kg bananas” from West Berlin to East Berlin.
The Icelandic lecturer at the Free University in West Berlin refused being recruited by the Stasi. On the 19 December 1963 one meeting had taken place between the lecturer and the Stasi at Café Sofia in East Berlin. At this meeting the Icelander stressed the “security of his person”. He said that “if the contact should become known it would have serious consequences for the party and him.” He also pointed out in this context the “unprofessional work of the security organs of the Soviet Union concerning the radar station in Iceland, where arrests had been made and which greatly damaged the reputation of the Soviet Union and caused great dismay for the comrades of the SEI.” Lieutenant Koch was not very optimistic about a possible cooperation, since the Icelandic lecturer said that he “does not want to have anything to do with the secret service”. But at least the reader of the files learns that the Icelander was very “sloppily dressed”, wore summer shoes in December and “a grey suit, a red shirt and a blue tie”.
“Kontakt Person Karlson” revisited
In Iceland a discussion of the relations between Icelanders, Communist parties and secret service organizations in the eastern bloc have regularly surfaced – not only throughout the Cold War but also in the post Cold War era. Several times the issue has come up whether some Icelander had been working for Stasi.
In early February 1995 a documentary film, “Í nafni sósíalismans”, (In the Name of Socialism) by the historian Valur Ingimundarsson and the journalist Árni Snævarr was shown by RÚV, the Icelandic State Broadcasting Television. The film was based on some documents that the authors had had access to after the opening of the Stasi archives in Germany and it spurred some discussion in the Icelandic media. The name of the banker Guðmundur Ágústsson came up, as it appeared that he had been a Stasi agent in the period 1963-1964. The documentary claimed that Guðmundur Ágústsson had the codename “Karlson” in the Stasi files, and that one of his missions was to recruit Árni Björnsson, who at the time was a guest lecturer at the Free University in West Berlin. Árni acknowledges in the film that he had had some encounters with the Stasi, but that he had not answered indirect requests for him to become an informer for the secret organization. He does however mention an incident when his nice had been visiting him and had gone to a theatre show in East Berlin. When she did not return, Árni Björnsson became worried and went to a border control gate to ask about her. There Árni was detained for a while, until a Stasi officer came and asked if he had not received a message from them some while ago. Árni Björnsson acknowledged that and asked about his nice. There were no news of the girl, but in light of the circumstances Árni Björnsson thought it would be wise to agree to meet with the officer two weeks later. He says that he met with a Stasi officer two weeks later in a coffee shop and that was the end of it.
On the other hand, Guðmundur Ágústsson, alias “Karlson”, had refused to talk to the makers of the documentary, so his side of the story appeared in a newspaper only after the film had been shown on national TV. In an exclusive interview with the newspaper DV, Guðmundur Ágústsson explains that he had agreed to do some trivial exercises for Stasi in order to secure his own peace and eventually a safe passage home for him, his German wife and their child. Guðmundur Ágústsson refers to his contact person at Stasi (Lieutenant Koch) as the “young man with the cigarette”. He tells of a “spy mission” to West Berlin in the following way:
I met the young man with the cigarette and he asked me if I could go over to West Berlin and check if there was a military truck convoy in a certain boulevard in the southern part of the city. I was also supposed to stop by the Wall there in the neighborhood and see if a big hole was being dug in the ground behind a hill. I went to these places, but there were no army trucks, no digging and no hole. So I stood there like a fool. I went back and told the young man that nothing was there. That was the last I heard from Stasi. I probably did not pass the test or possibly Stasi was just training the young man in talking to somebody.
Later in the interview Guðmundur Ágústsson reflects on the documentary value of the Stasi files about himself. “I understand that there is a large folder on me in the Stasi archives. I do not think I want to see it. But the documents are there and people must then remember that the text that is written there is just what a man with a cigarette thought about me. He might even have been trying to look good in the eyes of his superiors. I never wrote a single letter for them.”
As it is apparent by now, two parallel stories have been told of the same course of actions involving “Karlson”. On the one hand there are the files written by Lieutenant Koch, whilst on the other there are the stories and experiences as these are remembered by both Guðmundur Ágústsson, the student, and Árni Björnsson, the lecturer. Much of the factual evidence comes forth in both stories, but the interpretation and explanations of what actually happened and what it meant is very different.
Whose truth? – a discussion
After the Berlin wall came down and the Stasi archives were opened the news came to Iceland that Guðmundur Ágústsson had been a Stasi informer in 1963-1964. More than 30 years later, in 1995, Guðmundur Ágústsson had to explain to the Icelandic press that by cooperating with Stasi he had “secured himself peace and a safe passage home with his German wife and child”. And still just over ten years after the explanations in the DV newspaper, Árni Björnsson, who was the friend of Guðmundur Ágústsson that worked and lived in West Berlin in 1963-1964, came forth in the scholarly magazine Þjóðmál to explain his involvement with Guðmundur Ágústsson and Stasi. Árni Björnsson was reacting to another article in the magazine where he was named as a likely Stasi informant. The title of Árni Björnsson’s article is “Stasi and I. What is the truth?” He does not takes issue with the Stasi files themselves or even the reports by the Stasi officer that approached him, but points out that they are based on the officer´s personal interpretation, social conditions and circumstances. He therefore asks whether that interpretation is necessarily the whole truth. In other words, Árni Björnsson is suggesting a cautious approach in interpreting the files and documents that can be found in the Stasi archives.
At least two lessons can be derived from comparing the two different accounts at issue. Firstly, it seems clear that Stasi did not necessarily ask its Icelandic informers to collect sensitive or hidden information, but asked for all sorts of public information, such as reporting about public student meetings and the curriculum of the Free University. This could make the Stasi request for cooperation look almost trivial to the student in question, so much that it would seem irrational to refuse such a small favour and risk being considered uncooperative by such a powerful organization as Stasi was then.
Secondly, the Stasi files give us a fragmented and indeed limited view of what really was going on. This is due to three main factors:
a) The nature of the reports to be filled out gives limited space for accounting for different and sometimes complex situations.
b) The evaluation and interpretation of the writer of the report is subjective and coloured by Marxist ideological phrases. Furthermore the reports are written by officers for their superiors and it can be expected that things that might be thought interesting for the secret police are overemphasized.
c) The fact that some of the files and reports may be missing limits their comprehensiveness.
In light of the latter point, an important lesson can be learned about the way in which documents and reports of official agencies not meant for publication, be they secret agencies or ordinary embassies, should be interpreted. To be sure, uncovering such secret files can provide valuable and important information, as recent WikiLeaks documents on embassies have shown, for instance. However, such documents call for careful consideration of the circumstances in which they were written and of the values and motivations of those who wrote the files. The limitation of the files makes them useful for political polemics, since they leave so much space for interpretation, but not for careful, detailed historical accounts of the past. And last but not the least, one may also just be stunned by their banality.
Guðmundsson, Birgir and Meckl, Markus, 2008, Á sumarskóm í desember. Ísland í skýrslum austurþýsku öryggislögreglunnar Stasi, in Saga, Tímarit Sögufélags, XLVI: 2, 2008, pp. 86 – 113.
Knabe, Hubertus,1999, West-Arbeit des MfS. Das Zusammenspiel von „Aufklärung“ und „Abwehr“. Ch. Links Verlag, Berlin
Ólafsson, Jón , 1999, Kæru félagar.Íslenskir sósíalistar og Sovétríkin 1920-1960, Mál og menning, Reykjavík
Snævarr, Árni and Ingimundarson, Valur, 1992, Liðsmenn Moskvu, Almenna bókafélagið, Reykjavík
 Ólafur Ragnar Grímsson (1977) The Icelandic Multilevel Coalition System. Expanded version of a chapter in E. Browne (ed) Cabinet Coalitions in Western Democracies. Faculty of Social Sciences, University of Iceland, Reykjavík.
 Ólafsson, Jón , 1999, Kæru félagar.Íslenskir sósíalistar og Sovétríkin 1920-1960, Mál og menning, Reykjavík bls. 212-213
 Ibid pp. 214
 In the archives of the Stasi there are approximately 250 pages concerning Iceland. Among the material is one folder concerning the collaboration of an Icelander with the secret service. A complete overview over the material found is given in Icelandic in the article: Birgir Guðmundsson and Markus Meckl, Á sumarskóm í desember. Ísland í skýrslum austurþýsku öryggislögreglunnar Stasi, in Saga, Tímarit Sögufélags, XLVI: 2, 2008, pp. 86 – 113.
 Report on the contact of the person, BStU, central archives, 1496/65, BL. 9.
 Investigation report, ibid. 3.
 Ibid. p. 5
 Report on the contact of the person, BStU, central archives, 1496/65, BL. 10.
 Minutes of the Meeting, 20. 2. 1963, ibid. 13.
 Ibid. 14
 Minutes of the Meeting for the 15.3.1963, p. 15-16.
 Ibid p. 16.
 Assessment of “Carlsson”, dated on the 7.5. 1963, ibid p. 18. In the documents one can find different spellings for “Karlson”.
 Minutes of the Meeting for the 19. 4. 1963, ibid. 19.
 Ibid. 20.
 Minutes of the meeting, 30. 4.1963, p. 21.
 Report from 6 May 1963, ibid, page 23.
 Recipt, 28.1.1964, ibid., page 27.
 BStU 12225/66
 Report of the 20 12 1963, BStU, central archives, 1496/65, p. 29 f. The matter the lecturer might be referring to here is an episode often called “The Hafravatns case” that came up in February 1963. Two deputies from the Soviet Embassy were expelled from Iceland for trying to recruit an Icelandic man as a spy. See: “Miklu fargi af mér létt”, Morgunblaðið 28th February, 1963 pp. 23-24
 Ibid. 33.
 For a discussion of these connections between Icelanders and the Eastern Bloc see e.g.: Árni Snævarr and Valur Ingimundarson, 1992, Liðsmenn Moskvu, Almenna bókafélagið, Reykjavík; Jón Ólafsson, 1999, Kæru félagar, Mál og menning, reykjavík ; Rauða bókin :leyniskýrslur SÍA, 1984, Heimdallur, Reykjaví k; Helgi Hannesson, 1989, “Sósíalistafélag Íslendinga austantjalds og SÍA skjölin 1956-63”, Háskóli Íslands. Sagnfræðistofnun Ritröð sagnfræðinema, Reykjavík.
 See Morgunblaðið web page: http://www.mbl.is/mm/gagnasafn/grein.html?grein_id=176466 and DV, daily on the 6th and the 7th of February 1995.
 „Fékk frið og heimferð fyrir konu og barn“, DV 7th of February 1995
 DV, daily newspaper. 7.th of February, 1995 pp. 1-2
 Árni Björnsson, „Stasi og ég. Hvað er sannleikur“. Þjóðmál II:4 (Winter 2006), pp. 28
Three of the biggest Icelandic banks, which had been privatized in the late 1990s and early 2000s, collapsed and were taken into public ownership. An economic collapse was a fact and the former Prime Minister Geir H. Haarde asked God to bless the Icelandic nation at a press conference in October 2008. Certainly, the crisis (kreppa) was not a nightmare we would wake up from, but a reality that had to be dealt with. The next step was when the International Monetary Fund (IMF) was called in to organize a crisis management program. Then the currency collapsed. The unemployment rate has since been on the increase; from 1.5% in September 2008 to 8.7% in May 2009 with others taking wage cuts and/or cuts in working hours.
Although the everyday life of the Icelandic general public was in some way perceivably paralyzed in the fall 2008, people began to revive themselves. It was at this time that “The Kitchenware Revolution? was conceived in Iceland. The general public started a massive protest against the government. Icelanders, who have no great tradition of political resistance, rallied in the streets with their pots and pans. In front of Althingi (the national Parliament) people knocked upon their household utensils. January 2009 witnessed masses of people who gathered everyday, aiming to disturb the operations of the parliament, demanding that the government resign. For the first time since 1949, when Iceland’s entry into NATO was objected to, the police used tear gas to keep protesters back from the Althingi. Icelandic society was experiencing formerly unknown turbulence.
The Kitchenware Revolution won its first victory on the 23rd of January 2009, as the government resigned. New elections were called for and took place on the 25th of April 2009. The new government elected confronted the great task of “saving? Iceland from bankruptcy without jeopardizing its rather strong welfare system. For that to be possible it is obvious that the prosperous population of Iceland has to adjust to a new way of living. During these times of kreppa and turbulence both the national government and the municipalities have been facing huge decline in their annual budgets and the undertaking of cutbacks in services has been the biggest task ever since.
It was, and still is, a huge project to restructure the welfare system during these times of great cuts in national budgets. During such difficult times a book like ‘Human rights in crisis: Economic and social rights during an economic crisis’ is greatly appreciated. Not only is it the first research conducted after the economic collapse focusing on human rights issues; it also provides valuable guidelines for those working in the public sector and raises the issue of the importance of awareness of human rights in it.
By outlining some of the main issues of the International Convenant on Economic, Social and Cultural rights, the authors provide valuable guidelines on how the national and the local governments can avoid infringing the human rights of the citizens when cutting down expenses. As the authors Aðalheiður Ámundadóttir and Dr. Rachael Lorna Johnstone point out, it is more important than ever to appraise human rights during financial decline.
The main aim of the book is twofold; firstly to serve as a guide for Icelandic politicians, officialdom and the general public on economic, social and cultural human rights during times of economic crisis, as it outlines what these rights are and how they can be secured and accomplished through laws and policy making. Secondly, to increase the nation’s general knowledge in the field of economic, social and cultural rights. As the authors of the book recognize clearly, it is during times of kreppa that the task of protecting human rights may very well be more important than ever. A primary reason is that during such difficult times the economic situation tends to overshadow every other aspect of society, and the commonly heard phrase “it is not the right time to focus on this now” tends to distract people from other pressing issues and important accomplishments such as first and foremost protecting the actual human rights of the citizens.
Although Iceland has been a country of prosperity, human rights issues can be argued to have rather been in the shadow of public discourse on citizen’s wellbeing. The focus has been on the ‘welfare’ of the citizens, which of course is deeply related to human rights, but does not coincide with it. Indeed, the book casts light on how one of the main issues of past Icelandic governments has been to protect the general public’s welfare, sometimes in conflict with human rights considerations. The book’s body is built around the International Covenant on Economic, Social and Cultural rights and Ámundadóttir and Johnstone argue convincingly why they choose to build on this specific covenant rather then than theInternational Covenant on Civil and Political rights.
The aim of the book to increase knowledge and educate about the International Covenant on Economic, Social and Cultural rights and human rights issues in general is well conceived. The book starts with very informative chapters on the Covenant; its geneses and its role within the nation states and the work of its UN committee. Iceland’s legal obligations are also extensively discussed, since the covenant has been long ratified. Also, there is a chapter that outlines the essence and intentions of the commitments undertaken by the member states.
Since the book is designed for people working in the public sector with very diverse backgrounds and knowledge of the existing laws, these chapters are very enlightening and essential for further understanding the foundations of the covenant and, no less importantly, how it can be applied to policy and planning during times of restructuring and retrenchments in public services. The authors manage to explain the ideology of and the key-concepts pertaining to economic, social and cultural human rights clearly and in a helpful way, also for persons with no legal background. The reader obtains a good overview of the central tenets of the covenant and is likely to be better informed on how retrenchment has to be considered with regard to protecting human rights during economic decline. Good examples of these are the clear explanation of ‘progressive realization of rights’ and ‘progressive-regressive measures’.
Chapters engaging with specific issues of the Covenant in the Icelandic perspective follow these first instructive chapters. Ámundadóttir and Johnstone explain their choice of using the examples of employment rights, social rights and rights to education to outline the implementation of the covenant in Iceland before and after the economic crises. It can be argued that they could have taken different examples from the Covenant, or that it would have been helpful to use more than just three specific fields. However, it can also be argued that the authors manage to give a very concrete representation through their choice of specific fields, especially concerning the aim of the book to serve as a guide for national and local government and officialdom.
As stated above, the unemployment rate in Iceland has risen enormously since the fall of 2008. The chapter on the right to employment gives important insights on how governmental policy and regulations impact human rights and what has to be taken into consideration to keep the commitments under the Covenant on Economic, Social and Cultural rights. The authors give examples about certain things that have worked out well despite decline in budgeting; and they very well advise on what has to be taken into improved consideration in respect of the economic, social and cultural rights. The standpoint of the book is very relevant for the public sector and easy to learn from as it is summarized in a very resoluted manner and without any preciosity.
A good example is when Ámundadóttir and Johnstone point out how changes in regulations concerning the rights of students to unemployment benefits greatly affect their possibilities to make a living during the summer months, since the Icelandic Student Loan Fund only lends funds to students during a nine-month period each year. Therefore these changes in regulation concerning unemployment benefits leave students that do not have a summer job out of their right to enjoy the benefits of the welfare system. This is just one example on how the authors provide constructive illustrations on the subject matters, which gives the reader an idea of what kind of problems they can expect to approach during cutbacks in the public sector and in what ways they might be solved without violating human rights.
The book is in general written in an approachable language suitable for any reader. My conclusion is that Ámundadóttir and Johnstone reach the aims of their book, which is very enlightening and informative and manages to clear the line between ‘welfare’ and ‘human rights’. But as the authors state in the book, the Icelandic focus on ‘welfare’ has somehow shrug off the great importance of respecting human rights. The difference between those two concepts has not been clear enough, neither in political nor in public discourse. The book does deepen the understanding of the importance that the people who participate in the decision-making process with regards to economic, social and cultural rights. As well as it underlines the importance that the citizens themselves be aware of their rights.
This book is also an important contribution to human rights education in Iceland, a field which has been neglected by the educational system. Therefore this book is treasured even more for politicians, public officials and the general public. As Ámundadóttir and Johnstone underline correctly, there is great need to increase human rights awareness in Icelandic society, not least during these times of crisis, in order to enable politicians and public officials to make decisions based on enlightened knowledge of human rights, thus avoiding violations of basic rights of the population. It is also in the interest of the citizens to be more knowledgeable about their human rights, as it helps them to experience themselves as rightful owners rather than receivers of charity and enjoy human rights with dignity.
Today’s demand is resting on open, transparent and trustworthy administration; this book can help to direct us toward that path. It has to be distributed widely among officials and politicians in national as well as municipal governments for the benefit of the wellbeing of all Icelandic citizens and in order to minimize the negative effects of the crisis during times of retrenchment.
Review by Aníta Einarsdóttir
In June 2002 the President of the People’s Republic of China went to Iceland for an official visit. Consequently, some practitioners of Falun Gong, among many others, booked flights to Iceland at the same time, with the airline Icelandair. Somehow, by means still unknown, since Falun Gong keeps no list of its members itself, the Icelandic government had a blacklist of all these actual and presumed Falun Gong members that they believed to be going to Iceland to protest against the Chinese president and the Chinese government’s alleged human rights violations. The people that were on this blacklist were either denied visas, embarkment onto their booked flight, or arrested at the international airport in Iceland and asked all kinds of questions about the purpose of their visit and their personal beliefs. Many of those eventually admitted into Iceland were then arrested and held in a school near the airport, not knowing what was going on and, like everybody else on the blacklist, wondering how their names got on such a list, which no one ever got to look at, except authorities and flight-personnel. The people that were kept in custody at the school were released after being forced to sign an agreement with the authorities about restricted areas and a peaceful stay in the country.
The people of Iceland do not seem to know very much about these events that in so many ways breach the rights of the people travelling, and if there is anything they know it is the little that the newspapers of Iceland, themselves much influenced by the Icelandic authorities at the time, chose to publish. This year, 2012, will be the tenth anniversary of these events in Iceland and it is therefore about time for the Icelandic people to consider and discuss what has been hidden from them and how such a limited access to public information has been inconsistent with the values of 21st century. The Icelandic government managed so extraordinarily to lower the dignity of Iceland and its international reputation, by bending over for the Chinese government, and the people of the country need to be informed of events of this nature.
The book Arctic Host, Icy Visit is about Falun Gong and various events that happened all over the world after the ban of the movement in China in 1999, but the main idea of the book came from the events in Iceland in June 2002. The book gives precise and detailed information, from the founding of Falun Gong until China’s massive campaigns to try to ban its exercise in the 20th and 21st century, both in China and elsewhere.
It took the author, Herman Salton, eight years to write and publish this book, i.e. from 2002, when he began his inquiries after the events in Iceland, until 2010, when the book was released. This has given him a very long time to gather a lot of sources, some of which very good and reliable. He uses old and recent newspaper articles, books written by Falun Gong members and founders, and judgments made by the Icelandic authorities, for instance the Ombudsman. However, despite all the effort put into the bibliography of the book, it is difficult to verify all sources, since Salton refers to a lot of interviews that he personally conducted with Falun Gong members who, for instance, are talking about what they have been through, either with the Chinese government or other governments and authorities. These sources might be valuable, but it can be hard for the reader to evaluate them, since they are made personally by the author. They also take only the side of Falun Gong members, leaving out any other side of the stories, like that of the Chinese and Icelandic authorities.
Given that Salton indicates in the beginning of the book that he writes it for the people of Iceland – “To The People of Iceland Whose Decency and Sense of Democracy Continue to Be a Source of Inspiration” – for them to be able to be informed about events that nobody has talked about or that have been suppressed by the government, it is written in a way that catches the reader’s attention right away from the first page. The author tells the reader a story, not like a novel but like a documentary. He also writes in an English that should be understandable for most people.
Still, even if the book gives good information written in a clear and understandable way, it is not written in a very critical way. The reader of the book should be aware of this and read it with an open mind and exercise caution regarding the author’s interpretation of the events. As mentioned before, he interviews many Falun Gong practitioners and therefore gets their side of all stories, that is, telling all the good things about the practicing of Falun Gong and insisting upon the “innocence” of their activities. He tries, even though he is struggling with it because of his opinion of the matters, to write somewhat from the governments’ side as well, but it is mostly in an ironic way, letting the reader know that despite excuses from the authorities, their actions are wrong. It might be because it is hard to get in touch with governments on these matters, because they know of their wrongs and are therefore not willing to discuss them. There might also be no excuses from the governments’ side and therefore the only information to give is that coming from the Falun Gong practitioners.
There is one chapter of the book that stands out from all the other good chapters, which is the legal chapter. The book might give a good idea of all the things that are wrong in the governments’ behavior, both the Icelandic government as well as any other government that has done similar things. But for a person that knows the law, especially European and International law, it is rather a confusing chapter. The author erroneously conflates European law and the European Convention on Human Rights throughout and the analysis is superficial, when not simply inaccurate.
This book gives good information but there is always, especially because the author almost only takes Falun Gong‘s side in these matters, more than meets the eye. It is obvious though that the Chinese government has an enormous impact on the whole world, and tries to ban Falun Gong everywhere. At the same time, other governments are aware of the influence that the Chinese government has, and may be aware that their own actions are unjustifiable and therefore try to avoid discussions about these matters. They hide the truth and give no comments on their behavior. Salton´s book takes the reader on a journey all around the world, informing them about the things that not many people seem to know of and digs up sources and information that seem to have been somewhat hidden.
Review by Tiantian Zhang
It was after an eight-year-long delay following the controversial event that the book Arctic Host, Icy Visit: China and Falun Gong Face Off in Iceland by Herman Salton was published. Salton was then an officer at the Icelandic Human Rights Center, among other roles. In this book, the author focuses on a 2002 event where a certain group of people, namely Falun Gong practitioners, were ordered by the Chinese government to be banned to enter Iceland before and during the visit of the Chinese President. In-depth research was made and opinions given by the author, along with a detailed review of the event.
The series of events that was thought to tarnish Iceland’s long and well-respected reputation in human rights history is briefly summarized in the foreword and introduction, and then further described in Chapters 3 and 4. It happened in early June 2002, when the President of the People’s Republic of China (PRC), Jiang Zemin, planned to make his visit to Iceland. In the author’s description, what happened before and during the President’s visit was ”unforeseen,”and “bizarre, even burlesque.”. Practitioners of a Chinese “spiritual movement,” namely Falun Gong, were barred from Iceland with various methods. Those methods, including denial or withdrawal of their visas to Iceland, interrogation and refusal of entry at airports before boarding Iceland-bound planes, cancellation of their hotel room reservations and secret monitoring of their activities, are listed and submitted in evidence by the author as major breaches of human rights by the Chinese government and interference with Iceland’s sovereignty. What makes these actions stand out, however, is the fact that they were ordered by the Chinese government, but assisted and partly conducted by Icelandic government.
Being a Chinese citizen who has lived in Iceland for 3 years and majored in law for more than 5 years, I find it quite difficult to offer a conclusive evaluation of the events. In order to be able to give an objective opinion, I realize that a better understanding and in-depth investigation are required before I start judging the events, given my limited knowledge, which is probably colored by my experiences in both countries. After a comprehensive search for information from different media and publications, I would like to say that I have to hold a quite unique view on the Falun Gong movement, the 2002 event and its meaning, and the book as a whole.
By simply looking at the cover and reading the title of the book I sensed immediately a subtle hint of criticism in the main theme. The cover displays a picture of police cars under a gloomy semi-dark sky, giving an impression of heavy and solemn atmosphere along with the title “Arctic Host, Icy Visit.” I indiscreetly came to a conclusion that the book I was going to read could be categorized into a certain stereotype of books and publications, namely those typically critical publications dealing with human rights issues whenever the Chinese government is involved. Mere criticisms of the government’s well-known bad manners ignoring or infringing human rights are not the most outstanding characteristic of such publications. Instead, the criticisms and analysis always lead to the same conclusion, which is a routine of blaming the Chinese government for interference with other states’ sovereignty and abuse of its rising political and economic influence. However, the author manages to give some inspiring information and thoughtful conclusions after a careful examination of the 2002 event.
From what I know about the government by living more than 20 years under its regime, I have not much doubt in the truthfulness about their radical actions in Iceland as told in the book. Nor does it surprise me that the actions and orders were actually operated and carried out by the Icelandic government, whom I suppose to have quite some experience in barring foreigners from the country from my own experience. Information from various sources including newspaper reports, individual interviews of practitioners, witnesses and officials, reports from international human rights organizations, and letters by the Minister of Justice all support the story as reported by Salton. The author provides a considerable amount of information in chapters 3 and 4, covering important particulars and details.
However, one of the major flaws in this book lies in the characterization of Falun Gong. The author has made an attempt to give a concise and in some level accurate portrayal of Falun Gong in Chapter 2, but his view is apparently limited, if not totally biased, by the sources that he could access and lack of direct contact with of the innocently self-profiled organization. Appearing to be a “meditation exercise” in origin, Falun Gong is no longer merely a spiritual or religious group. The author makes a relatively objective introduction but fails in accuracy. It is not to be blamed because Falun Gong’s image is profiled drastically differently in international media compared with the Chinese domestic media as well as with what people have observed, not to mention inconsistency within the Falun Gong group itself.
I agree with the author about the anti-scientific and confrontational character of Falun Gong, which are pointed out in the book, but about their nature and non-violent history I have to hold a different opinion. On 23rd January 2001, some Falun Gong devotees committed self-immolation at the Tian’an Men Square. A similar incident took place once again in Beijing on 16th February of the same year. The incidents were reported by Chinese domestic media and were witnessed by Beijing’s citizens. Even though huge controversy emanated from these incidents and Falun Gong claimed that the tragedy was completely planned and manipulated by the Communist Party (CCP), the truth remains undiscovered. These two events came as a huge shock and had a widespread influence at that time, but were not mentioned at all in the book. It is valuable and important information to consider because it was just a year before the event in Iceland. If the incidents as reported in China were true, then the Chinese government’s concerns and bans would be viewed as more reasonable and understandable, even if of questionable legality.
Besides, as the author also noticed, the anti-government character of Falun Gong is obvious to the public. Radical criticisms and literal attacks towards the Chinese government, especially the CCP, are expressed explicitly in their books, official website, newspapers and flyers. As far as I know, almost every Chinese relative and friend of mine has received propaganda from Falun Gong anti-government movements, most commonly emails, mobile phone messages and home phone calls with recorded tape speeches. It is difficult to conclude that this organization is “peaceful in essence.” However, no matter how the nature of Falun Gong is and what the purpose of their movement is, there is inadequate justification for the Chinese government’s actions according to law. Human rights were breached and no excuses or attempts should be made to excuse their unlawfulness. Still, a crucial error is made when the author tries to analyze the legal challenges and legal assessment concerning this event: he refers to the European Convention on Human Rights as European Union law even though the former is under the auspices of the Council of Europe and is quite distinct from the European Union’s institutions. Further, Iceland has long been a party to the former treaty, but is not (yet) a member of the European Union at all.
When reaching its conclusion, the book approaches a routine of emphasizing freedom of association, speech, assembly and expression, and claims that the Chinese government used its political and economic influence to interfere with Iceland’s sovereignty. Meanwhile it also makes an interesting point that Western States are used to look at China’s human rights issues through colonial eyes, with a paternalistic attitude and teacher-pupil template, and try to use human rights as negotiation tools. But what I would like to add is that it is also important to realize that the fear of the West from the supposed threat from a rising power is usually attributable to lack of communication. China’s blockage of media is worsening the case.
With relatively satisfying accuracy and objectivity, this book gives the 2002 event and its background a through introduction and provides a reasonable conclusion. But throughout the whole book, it shows the typical Western superiority complex of a “peaceful, scarcely populated, proudly independent and highly civilized” state (juxtaposed against China) and the pity of its tainted reputation in human rights by the government and its “obedience” to another political power. But I would take a bold guess that the possibility cannot be ruled out that the Icelandic government was aware of the consequences of potential protests, and was not completely unwilling or even forced, as the book has implied, to carry out and assist the actions reported. Welcoming hundreds of radical protestors to its soil to carry out their activities with unforeseen consequences, the Icelandic government, or any other government that cares about its peace and security, was not very likely to favor this idea. But being forced and having to obey another irresistible power to breach human rights unwillingly seems more forgivable. If that was the case, Iceland should really be concerned to protect its sovereignty and remain “one of the most liberal states” and “proudly independent,” but it must stand firmly on its position and take responsibility for its own decisions and actions.
P.S. The author of this book has provided a reply to the reviewers in issue 8(1) of Nordicum-Mediterraneum: http://nome.unak.is/nm-marzo-2012/vol-8-n-1-2013/51-book-review/351-review-response
The authors state at the beginning that they reject the idea that humans somehow are independent of each other and at some stage consent to becoming members of society; this is usually presented either as an actual historical fact or a conditional requirement on any public decision or as an idea of reason in Kant. The authors think of human beings as naturally social meaning that living in society comes naturally to humans and it is misleading or downright false to think that the primary fact about them is that they are separate individuals that at some stage decide to form a society. Society is part of human life from time immemorial and from the time that any human being is born she is a part of society; she would not stand a chance if she did not have a family to nurture her until she could provide for herself. A family is a social institution. From an evolutionary point of view many developed animals form groups where patterns of behaviour emerge from which human society may have developed. The point is that the question how or when human society was invented does not arise; human society was not invented, it is a basic, internal fact about human life.
One thing the authors discuss is the story behind Grágás (grey goose), the first written Icelandic law book. In 1117 the Icelandic parliament, Alþingi, decided that the law should be written down and published. Alþingi had been established in 930 and for nearly two centuries the laws were recited there during the weeks in late June when the parliament was sitting. It took three years to recite the laws in full so one third was recited every year; they were not all recited annually as it says on p. 1 in the book. Now the question is what is going on from the point of view of the law in this process from the settlement of Iceland in late ninth century AD, in 930 when the parliament was established, and the law recited until it was written down in the winter of 1117-1118? How should we account for this development of the law? The authors´ idea is that in any society there is something that might be called a living law which is not judge made law, positive law, in a sense state law, but the living law is the judgements and choices that people in any society make and become gradually accepted and approved in that society when they recur time and again. This process of gradually creating the living law is not formal in any sense, there is no formal debate or decree that establishes this law but it creates habits, practices, customs and mutual expectations that establish the jural relationships in that community. There is no sharp distinction between a legal realm and a moral realm. It is part of what the authors call “the communal law” or “the communal moral law” p. 3-4). So the living law is a moral tradition. Any moral tradition is such that some parts of it are implicit, others are explicit, and it is not possible to codify fully a moral tradition; there is no way that it is possible to write down all the moral rules and practices that make up a moral tradition. Historically the living law of any community is not written down, but it is a defining feature of the community and establishes entitlements which evolve through the interactions of people living together dealing with the jural demands that this imposes on them. Some of the entitlements may be written down when the communal sense of justice provides a basis for formulated law. Written laws can be either natural or conventional but according to these authors they are not understood as new laws imposed on the community, but are parts of the living law that emerges within the developing communal moral context. So the account to be given of Icelandic law until it was written down in 1117-18 is that at first it grew out of the concerns that the new environment in Iceland created, the judgements and choices of the inhabitants about their own lives and how they resolved their disputes, establishing mutual expectations, a sense of justice and jural relationships and social institutions like Alþingi. Ultimately this leads to the writing down of the law, but it does not mean that being written down created in any sense new laws, rather it was part of the living law of the community and had developed out of it.
This is a very interesting view of the origin of Grágás. I guess there may be differing opinions about how it squares with all the historical accounts that have been preserved about the development of Icelandic law until it was written down. But it is persuasive. This theory of the development of law is intended by the authors as a general account of how law develops and how various parts of the living law are related, so it should apply to any system of laws we care to examine at least in the European tradition. Their theory is also descriptive, it aims to explain law as a social phenomenon in terms of its function in human affairs. They avoid all normative assumptions in their theory. The third important feature of the theory argued for and applied in this book is a number of distinctions that are used throughout the book between the natural and the conventional, the internal and the external, the intrinsic and the extrinsic. I am not sure that the authors would be willing to call this a theory, but rather a method they use to figure out what is just.
The authors discuss many of the most important topics in modern jurisprudence such as justice, natural and conventional, ownership, law, force of law, natural law, justice and the trading order, to name some of them. There is no way in a short review to give the flavour of the analysis of these different issues but I want to mention one: justice and the trading order. This area is of great importance to modern societies and has been extensively analysed and theorised in various academic disciplines. One obvious question is whether there is anything to be gained from analysing the trading order from the Aristotelian perspective of the authors. The answer is yes; there is surprisingly much to be gained from doing so. The trading order is where reciprocal justice is the proper justice. The authors start by suggesting that “in the trading order free exchanges are reciprocally just.” (p. 91). They make another plausible assumption that it is only in the context of exchange and the trading order that reciprocal justice exists. The trading order exists only as a part of a wider, more complex social order and is constantly influenced by this wider order. Hence, there is no trading order governed only by reciprocal justice. The authors contend that if a trading order has developed one must first understand how it works to figure out what legislation is necessary. They also argue that it is a difficult question of fact whether the trading order can be centrally managed. It is the considered opinion of the authors that a trading order cannot be centrally managed. They are careful to point out that it does not follow from this that the trading order cannot cause all sorts of social problems that must be dealt with and that there are those who cannot sustain their lives by trading. The idea is that these are not problems of the trading order but must be dealt with by other means. The central idea of the trading order is that the two or more persons who want to trade must always be free not to for the exchange to be just. Any legislation and management, central or otherwise, of the trading order must respect this fact. It seems that any central management aiming to control correct the result of the innumerable exchanges of the trading order becomes problematic given these assumptions.
In modern political philosophy normative issues are contentious and important. Aristotelian political philosophy has not shied away from normative assumptions and issues. It is very informative to see the Aristotelian way of analysing political and jurisprudential problems working from different premises than is ordinarily done. This book is both radical and traditional and it is splendidly argued. It deserves to be widely read and to be influential.
I would especially like to thank Ágúst Þór Árnason of the University of Akureyri and his team for their tireless work and leadership. I hope that our faculties will continue to cooperate for the strengthening of academic scholarship in Iceland and in the international arena.
The lectures today have provided a wide variety of insights into the original thinking manifested in Professors Barden‘s and Murphy‘s work. We have discussed the concept of law in the Icelandic Commonwealth, the place of law in community in legal theory and law, justice and the trading order. An argument has been made for the legimitate authority of the living law and the value of theory for adjudication as well as a description of law as saga. It has indeed been intellectually engaging and refreshing to hear the different influences Garrett´s and Timothy´s book provide on the learned participants in today’s festivities.
The debate on the concept of law is on-going. Who knows, perhaps Law and Justice in Community will prove to be a seminal event in the history of legal theory!
What distinguishes the left from the right? Is the Icelandic government a leftist government, or is it rather a de facto compassionate right-wing government, like Tony Blair’s New Labour or Schroeder’s SPD in the early 2000s?
Rather than trying to give necessary and sufficient conditions of what defines the left and hence distinguishes the left from the right, it is more fruitful to discuss the context and core values of the current government in Iceland (the idea of a true left government is also slippery and dangerous). The Blair and Schroeder governments were formed in the height of the neo-liberal awakening in the West and arduously worked towards feeding the capitalist animal (especially Blair’s). Britain managed to transform London into a serious financial empire by relaxing regulations, embraced the superiority of the market, had no qualms with the unequal distribution of wealth and managed to appease the fat cats (Rupert Murdoch was pro-Blair and Blair was very much post-Thatcherite). The situation is very different in the West now, and hopefully there is room for change, albeit one worries that the ideological lessons that need to be learned will not be. In Iceland the current agenda of the government is defined by the collapse of a neo-liberal experiment that all of the sudden got very sour and went seriously wrong. Iceland went probably further in the wrong direction than Britain during the boom years and in many ways was more akin to Ireland in developing its form of capitalism. To oversimplify, then the task of the current government in Iceland is twofold: 1) resurrect Iceland’s economy and 2) get in line with the Nordic welfare states. Mission 1 is difficult but mission 2 is painstakingly difficult because in order to achieve it one needs to get the economy right. A modern Nordic welfare state is costly and it will take time for Iceland to get there. But already serious steps have been taken that will help towards achieving this aim.
As a starting point it is important to recognize that when Icelandic private banks and financial institutions indebted themselves heavily, under the guidance of the finance Vikings, there was a great consensus amongst the Icelandic electorate that the country was going in the right direction. The ideology behind the ventures had general support and the finance Vikings were greatly lauded for their business models (which later turned out to be more akin to pyramid schemes than sound business models). The government at the time did everything to support the ‘finance Viking framework’ and in part enjoyed general support for doing so. When the now failed Icelandic banks were privatized (only a decade ago) the move enjoyed the backing of the major political parties. Those who opposed this venture at the time, such as the Left-green Movement (one of the current two government coalition parties), were usually mocked for being old-fashioned socialists and not in tune with the new wave of successful capitalism and globalization. The aftermath, the apparent success of the Icelandic banks abroad, was then used as a further justification of their privatization and when the huge cracks began to show the financial boom peaked and a blind-eye was turned to the weaknesses of the banks. Nobody wanted to be nor listen to a party pooper, so rather than filling that role the show went on until the cracks were too many and could not be hidden anymore. The Icelandic economy collapsed under the weight of its own banks. So the expansion of private banks and there acquisition of an enormous amount of foreign credit is something that was thought of in Iceland to be clever entrepreneurship. I mean in the space of 5-7 years they managed to increase Icelandic foreign debt by thousand of billions of Icelandic Krona without any really serious questions being asked. Business communities in other countries were even mocked for being sluggish and no match for the great Icelandic finance Vikings. The story today is of course very different. After the financial crisis, State control over financial institutions has increased. When the emergency law was passed in the parliament in October 2008 the Icelandic State gained the majority of stake in the largest of the Icelandic banks, i.e. Landsbanki, large shares in Glitnir and Arion, as well as in several other smaller financial institutions. The external debt situation has also considerably improved because the old banks of the financial Viking era ended in administration. But it is difficult to see into what direction the public wants to see its banks go. Personally, I think it would be economically sensible for the State to hold its stakes in the banks and also limit the risk of any adventurous programmes being undertaken in the future.
Is there any concrete plan for the nationalisation of strategic resources (e.g. gas, fish, etc.) and/or productive structures (e.g. failed enterprises)? If there is one, are the IMF, EFTA and the EU cooperating or are they combating such a plan?
The Icelandic government has prided itself for having pursued less austere austerity measures than other European governments: is that what is left of the left? Is there any serious chance that, say, expansionary monetary policy, public investments in schools and hospitals, and public works be utilised to foster development and employment? Or is the government aiming primarily at debt repayment?
After the crisis the Icelandic government has been facing a radical change in State finances. The pre-crisis bubble economy secured a lot of revenue for the treasury. At the time of the collapse of the Icelandic banking system it was estimated to be 10 times larger than the country’s GDP. Of course that meant considerable revenue for the treasury even though the tax on these institutions was low (corporate tax was 10%). After the crises there was a large fall in revenue and a considerable increase in expenditure (due to financing the deficit and measures needed to restore the Icelandic economy), as well as heavy interest rate payments. The expansion of debt and interest rate payments have made it necessary for the government to impose some drastic measures to make the State finance sustainable. That aim is not only pursued because it is sensible to pursue sustainability, but also to minimize the cost of interest falling on the State with the end result of allocating more finances towards the welfare state. It is however important to highlight that the government has minimized the size of cuts in the welfare system. Iceland has followed a different path in austerity measures than many other countries have done in the past, especially countries in IMF programs. This is best seen in how the government has tried to tackle the deficit by trying to reach a balance between revenue and austerity measures. Iceland’s path in this has been noted by emanate economists like Paul Krugman who has always criticized the austerity dogma; that the key to success in a crisis is to forget about the welfare of the populace and focus only on the fiscal side of life. That is why the Icelandic government tried to defend the country’s welfare state and the lowest fiscal cuts have been within the welfare system. So the path of slashing welfare and prioritizing for capital has not been taken. Actually the government can say more than that, because in terms of how much Iceland’s GDP (percentage) is allocated into public spending then there has been an increase since 2007 (the peak of the boom). Several measures have been put in place to tackle unemployment. Some of them are a joint undertakings between the government and the Icelandic pension funds, like for example the building of new National University Hospital in Reykjavík. Others, such as nursing homes and road improvements, have been initiated by the government. If one then looks at the revenue measures, then they have not only been imposed to raise revenue but have also strong and sound egalitarian and environmental principles behind them. The government has for example raised income tax on high income, raised capital gains tax, raised various environmental taxes and raised corporate tax. One of the more interesting outcomes out of this is that the tax burden of the lowest income wage earners has decreased after the crisis. Ireland, for example, has imposed higher taxes on the lowest incomes. In the boom years the tax system in Iceland was framed around the high earners and the rich, but now that it has changed, which in my mind shows the determination of the government not only to turn the State finance around, but also to import again into Iceland’s strong egalitarian principles. One of the more tragic developments in Iceland’s boom years was the huge gulf that developed between the super rich and the poor. As I say, there has been considerable progress in the unwinding of that development. Here is a case whereas missions 1 and 2 mentioned in my reply to your first question go hand-in-hand.
Do the key-members of the Icelandic cabinet believe in the ability of markets to self-regulate and of private enterprise alone to promote prosperity?
It is the dominant view of both government parties that private enterprise does not in and of itself promote prosperity. The pivotal factor in promoting prosperity in the Nordic countries is borne to the fact that the welfare system is robust and the tax system is viewed as a means to redistribute wealth. Equality is also seen as key factor in promoting prosperity. It has been underestimated for a great number of years how costly inequality is for any society. In light of Iceland’s experience I think that it has become a minority view that the markets are self-regulatory and that they are pre-programmed to find the best end result. At least the once seemingly clear boundary between public and private has become murkier. Or maybe it is correct to say that there is a strong demand for the public sphere to have something to say about the private sphere, which is a huge turnaround from the hands-off mantra; that the government should get out of the way because it interferes with the success of private enterprise.
Is there any serious attempt going on to promote endogenous development, i.e. developing the country without peonage to foreign credit, whether labelled as “FDI” or “IMF”?
The aim of the current government is to get Iceland’s debt sustainable and minimize debt, be it fiscal, government or external. Progress has been made in all of these areas and Iceland seems to be one of the first of those countries that has had a large crisis to emerge again.
The Icelandic government seems to consider its “international obligations” only in connection with the IMF, the WTO, EFTA and the EU-related discussions for accession. Yet Iceland is a long-time party to the UN’s ICESCR (International Covenant on Economic Social and Cultural Rights). Hospitals and education, in other words, are not a Christian or social-democratic form of charity, but a duty of the State to its citizens. Is the government aware of this set of obligations?
Iceland takes all its international obligations seriously.
The 150th year anniversary of Sir R.F. Burton and the Speke East Africa expeditions’ (1857-59) discovery of the Tanganyika and Victoria lakes has been celebrated in 2008 (Fig. 1).
Fig. 1 – LakesVitctoria and Tanganika discovered by Burton and Speke 1858 – Stamp
This event is conceptually connected to both the Ólafur Elíasson’s (2008) The New York City Waterfalls  art project and the Yõko Ono’s Imagine Peace Tower (2007) art project in Iceland (Fig. 2) .
Fig. 2 – The New York City Waterfalls, Ólafur Elíasson, June 28-Oct. 13, 2008
The link is made by the Iceland on the brain concept elaborated by Sir R.F. Burton in Ultima Thule; or, a summer in Iceland (1875; preface) .
Landscape nostalgia is at the roots of both Sir R.F. Burton’s and Ólafur Elíasson’s works.
Landscapes treasure past, frame current and affect future environmental, socioeconomic and cultural change. Assuming that landscape is made of what is visible has more than one implication. What does it mean for landscape to be visible? Visible by whom and from where? The last centuries increased use of images makes these questions necessary. Cinema, colour printing systems, satellite pictures and the internet have all contributed to speeding up the circulation of images as well as stimulated and widened imagination. As custodians of the time-space interface and of the sense of place, landscapes also encourage our territorially steered memories, emotions, perceptions and knowledge, as well as our interests, decisions and actions.
At the beginning of the 20th century both flight technologies and the diffusion of electricity have dramatically changed the perception of landscape as well as its representation. As a consequence, cultural landscape changed and its manipulation became a common practice. In this context, landscapes are the media through which the existing and emerging identity features of places and regions are generated, recorded, assumed and claimed. In short, landscapes are constitutive elements and factors of changing territorial identities.
In the 1940’s, designer and cartographer R.E. Harrison understood the potential impact of the bird eye vision and indirectly concurred in modifying the landscape concept . He used a new and unconventional point of view. His innovative maps were published monthly by Fortune Magazine and in Look at the World: The Fortune Atlas for World Strategy . As a consequence of a new landscape perception cartography changes as well. Harrison’s zenithal projection showed an unusual landscape. In his three dimensional maps as in those of cartographers of the 16th century, mountain profiles were painted onto the profile of the globe. This way of seeing the world, previously made popular by the catholic western vision, had until then been the prerogative of god, angels and saints. This zenithal vision has been well represented in both sacred paintings and frescos. In 19th century, man entered the upper spaces until then considered sacred, and transformed his perception of places. Marc Chagall’s and Osvaldo Licini Amalasunte’s dreamlike landscapes are an example of the ongoing change in landscape perception. A new vision which has anticipated John Lennon’s song Imagine .
As a result of this new way of dealing with landscape R. Harrison emotionally reached President Roosevelt’s New Deal America and gave an example of hegemonic use of landscape. Meanwhile – as a consequence of a more and more technological official cartography – ontological landscape elements acquired flatness and conventional colouring while conventional contour lines became a distinguishing feature of landscape representation.
Iceland on the brain
At the turn of the 19th century, a new organization of both global space and global time emerged: the conventional time zones. Industry as well the construction of the extended American rail road system needed workers. Migratory waves of workers brought people from Europe to North America as it also had happened with the previous slave traffic from Africa. The emergence of a new middle class ends in a new expressivity.
Exploration of the continents has begun. Von Humboldt with his expeditions chronicles (1798-1804) to the equinoctial regions opened new frontiers for the geographic and colonialist culture at the beginning of the 19th century. In the same context Sir R.F. Burton (1821-1890) travelled to Africa, India and Near East. During his East African expedition (1857-59) the Tanganyika and Victoria lakes were discovered. Almost fifteen years later (1873) he travelled to Iceland. In his book Thule; or, a summer in Iceland (1875, 2 volumes) he delivered a great quantity of deluded comments about the destination. The most cited and significant, of those comments stands in the book’s preface: Travellers of the early century saw scenes of thrilling horror, of majestic grandeur, and of heavenly beauty, where our more critical, perhaps more cultivated, taste finds very humble features. They had “Iceland on the brain” [3 p. X]. Burton derided the imagination of those who (…) found the landscape thrilling, in his opinion, the only people who were entranced by Iceland where those who had limited experience outside their own country . Burton seemed persuaded that only the other travellers take with them a preconceived idea of Iceland, but in the preface of his book he expressed at least three statements which are in conflict with this assumption:
– The subject (Iceland) is, to some extent, like Greece and Palestine, of the sensational type: we have all read in childhood about those “Wonders of the World”, Hekla and Geysir, and, as must happen under the circumstances, we have all drawn for ourselves our own Iceland – a distorted and exaggerated mental picture of what has not met, and will not meet, the eye of sense [3 p. IX]
– I (Burton) went to Iceland feeling by instict that many travellers had prodigiously exaggerated their descriptions, possibly because they had seldom left home [3 p. X]
– A friend described to me life in Iceland as living in a corner, the very incarnation of the passive mood; and travelling there as full of stolid, stupid risks, that invite you to come and to repeat coming, not like the swiftly pursuing or treacherously lurking perils of tropical climes, but invested with horror of their own – such was not my experience. [3 p. X, XI].
In a way, Burton admitted and denied, within the same text, his preconceived mental image of Iceland.
The Icelandic cultural landscape
There are places where the supernatural, even if well apart from fate and religious practice, is somehow inscribed in the landscape. They are those places and spaces where human settlement is rare and where the genius loci is more often a personal rather than a collective experience. In this kind of deserted sandy or icy landscape, specifically the Icelandic landscape, human survival depends on the aptitude to read landscape and interpret sounds, odours/scents and colours. In this kind of landscape, human survival can be betrayed by an erroneous perception of reality. Senses involved in landscape perception may be thwarted by extreme conditions of nature and amplified by the constant need to remain alert against disorientation, frost, fatigue, wind, light, darkness and possible starvation, as a means of survival. Because of these features a new landscape arises: the parallel world landscape. The invisible peoples (huldufólk) landscape hidden in the visible cultural landscape is definitely a peculiar type of Icelandic cultural landscape.
In 2006 film maker Nisha Inalsingh, presented the documentary titled Huldufólk 102  (Fig. 3). In it she iterviews people (e.g. teachers, historians, farmers, film makers, folklore researchers etc.) regarding the existence of a parallel universe and recounts the interesting and charming landscape related aspects of the Icelandic culture.
Fig. 3 – Huldufolk 102
She says that the movie“(…) is about an idea. How often do you see a documentary that’s about an idea? They are usually about a person or an event or a place, and here we are looking for something that in reality may or may not exist. (…) The charm of the film lies in a blend of breathtaking beautiful scenary worthy of a travel film and the way the Icelandic believers are presented as perhaps eccentric, but never delusional. We get a nice mishmash of history, folklore and first-hand encounters. In the end the impression is of the rare place where the proponents of Christianity were never able to entirely destroy the old gods and beliefs and wisps of Norse goddess Freya still hang in the air. The soundtrack backs up a deliberately ethereal feel. That feeling you get in Iceland, the isolation and also this idea of really being in nature and with nature, we have to be there and get the whole crew feeling that . The documentary is presented on the net with the following words: Beneath the quiet veneer of Iceland lies an invisible nation of huldufólk (hidden people). This fascinating phenomenon, rarely discussed with outsiders, not only pervades Icelandic culture, but also impacts its infrastructure (e.g. road construction and buildings).
(…) Winter’s darkness allows the dazzling and supernatural Northern Lights to pervade the country with its amorphous shapes; casting brilliant colours of yellow, pink and green downward to the land below. Black lava rocks, green mossy rocks, geysers, volcanoes, and glaciers all play their role in this mystical landscape, where the wind snow and light show the power of nature. This spectacular displays reveal the paradoxes that man must contend with-the simplicity of things that we see on a daily basis versus the complexity of things we are unable to see within the world .
In the Icelandic landscape the cultural aspect is not only determined by the visible landscape but it includes all kind of related energies.
Fig. 4 – Vík (South Iceland) from Reynishverfi
(M.S. Campanini, 2006)
The understanding of the Icelandic cultural landscape relies on syntonic vibration of sounds and colours waves, as well as light waves, soils magnetism and poisonous gas or vaporous soil exhalations (Fig. 4, 5, 6). All these phenomena are well described by some of Iceland’s painters, like Kjarval, who depicted the elusive and mysterious sense of the lava fields in his painting.
Fig. 5 – Námaskard, Iceland:
(M.S. Campanini, 2006)
The need of orienting oneself in space and time is primary for humankind. Interpreting landscapes depends on cultural categorizations. The latitude of places and spaces plays a key role in the process. Landscape perception involves the interaction of the five senses generating an emotional response which is then filtered by cultural assumptions. Due to the climate change, at the beginning of the 21st century, the newly acquired accessibility to the Arctic region, until then considered marginal, disclosed the conception of new landscapes. The conception of these marginal landscapes emphasizes both sounds and colours and the need to understand the richness of the native cultural landscape.
Fig. 6 – Búlanstíndur, Iceland
(M.S. Campanini, 2006)
Global village landscapes
The modern globalized world, is in part the result of 20th century technological improvements in the field of transportation, which changed the economic value of spaces. This along with the impressive escalation of the media culture’s dissemination (e.g. press, television, cinema, internet etc.) has paved the road for a large scale migrating landscapes phenomenon. Cultures are nowadays influenced and somehow touched by the landscape other by several means:
– exoticism travel offers
– information events
– entertainment movies
– memory sharing migrants (immigrating and returning home)
These influences satisfy the human need to appropriate somebody else’s landscape and sense of belonging to a peculiar landscape.
Active and passive actions are part of the two steps paradigma process:
1 – acquisition of a landscape (it is part of my acquired culture)
– I know it passive action
– I’ve been there active action
– I’ve seen it active action
2 – sense of belonging to a landscape (it is part of the acquired culture)
– it is the cultural landscape of my origins
. to which I go back when possible
. from which I come
. from which I ran away
. for which I feel nostalgia
– it is the cultural landscape in which I recognize my cultural identity
All together these migrating landscapes evolve into both place and space social representation, as a shared landscape. In few words the phenomenon develops a dynamic of the genius loci based on the emotional need to evoke and materialize a mental genius loci. Little difference stands between the original and its representation.
Due to their ability to evoke emotion, images of landscapes are now being marketed by the media and advertising industry in order to sell products such as cars, life insurance, telephones etc. This type of marketing boomed in the last two decades of the 20th century. The automobile industry for example often uses scenes of Iceland’s uninhabited landscape to advertise cars.
In 1937 W.H. Auden e Luis Mac Neice, back home from a travel to Iceland, sponsored by their publisher, wrote Letters from Iceland . In this epistolary book MacNeice writes a poem to his travel mate in which he says:
That the North begins inside,
How much is this intuition true? Can it be universally accepted? Answering it is difficult. Sir R. F. Burton in his two volumes book Thule; or, a summer in Iceland made evident his estrangement, which was probably difficult for him to identify. As a matter of fact, while trying to diminish the prodigious Icelandic landscape, he keeps on confronting it with the landscape of places previously visited.
What is the origin of this obsessive need to compare? The uniqueness of the genius loci makes the place. Being in a place, and especially being in Iceland, activates space and time related senses. Burton was instead disinterested to find both alpine flora and glaciers on the sea level and 24 hour sun light which put man in the centre of the sun dial. He compared the Icelandic experience with previous ones ignoring that they are filtered by a different circadian rhythm . Burton seemed to be imprisoned in a chaos of rigidly, mentally catalogued landscapes collected during his life of adventure and travel. Burton’s brain was contaminated by landscapes. Is it possible to suffer from overexposure to landscape?
Danish-Icelandic artist Ólafur Elíasson’s approach is different. In each of his works he expresses the Icelandic-ness of his DNA. Elíasson has totally interiorized the surprising fickleness of the Icelandic landscape which enabled him to transform it into a cultural art product. His astonishing art works are inspired by the cheated senses (senses bewildered by extreme weather conditions). They are samples of migrated Icelandic cultural landscapes. The New York City Waterfalls project, with its four waterfalls, reproduces the Icelandic need to contaminate the others landscape with the Icelandic one (Fig. 7, 8).
Fig. 7 – Waterfalls in Thjórsádalur, Iceland
(M.S. Campanini, 2006)
Fig. 8 – The New York City Waterfalls (Ólafur Elíasson, June 28-Oct. 13, 2008) are on display at four waterfront locations in Lower Manhattan, Brooklyn and Governors Island.
(Source:http://www.nycwaterfalls.org/sections/about/waterfalls_brochure.pdf, p. 6)
In the New York Waterfall project – the exhibition of four man-made waterfalls of monumental scale are on view until October 13 at four sites on the shores of the New York waterfront: one on the Brooklyn anchorage of the Brooklyn Bridge; one on the Brooklyn Piers, between Piers 4 and 5 near the Brooklyn Heights Promenade; one in Lower Manhattan at Pier 35 north of the Manhattan Bridge; and one on the north shore of Governors Island  – the artist plays with the topos and the names of places. The word island in the Governor Island (North Shore) name may be read in both English and Icelandic languages. Iceland in Icelandic is Ísland, the name of the island from whose cultural landscape the project is derived. The Icelanders’ need to anchor their space-temporal orientation to peculiar landmarks became evident at the beginning of the 20th century when the state owned ships were named after waterfalls. The location Elíasson chose for his project in New York is on the East river which is part of the New York harbour Estuary system. That means it is a place where fresh water (from the Hudson river) and salt water (from the Atlantic Ocean) meet. The location simulates, in some way, a typical Icelandic phenomenon: the confluence of the icy waters of glacial rivers with fresh water rivers (e.g. the confluence of the river Sogn in Jökullsá in southern Iceland). A similar inspiration and emotion arises also from another art work by Elíasson: the Green river (1998) (Fig. 9).
Fig. 9 – The New York City Waterfalls, Ólafur Elíasson, June 28-Oct. 13, 2008
(Source:http://www.nycwaterfalls.org/sections/about/waterfalls_brochure.pdf, p. 4)
Ólafur Elíasson’s art stresses how light makes visible or invisible landscape features, modifies colours perception and switches on the epyphisis: the biological watch which ties the body to the environment/habitat. The gland seems to have a regulatory function that lets the body survive in all kind of different habitats. This happens through the hormonal secretion of melatonin which works as biological synchronizer and is rhythmically secreted (starting from the syntesis of serotonin) following the light and dark (day and night) alternation .
As told by MacNeice and ignored by Sir Burton: the North begins inside! 
Landscape for peace
The icelandic imaginable landscape has been widened by two events: the construction of the Hring vegurinn (Road n° 1) finished in 1974 and the 200 nautical miles of Exclusive Economic Zone (EEZ) that Iceland obtained in 1975 .
Both events moved the landscape perception from the horizontal to the three levels vertical axis: the sea bottom, the island surface, the space above  (Fig. 10). The point of view on landscape was renewed. The cultural approach as well.
Fig. 10 – The three levels vertical axis of Iceland
(Source: Studi Urbinati, 1993)
The mix of cultural landscapes (sea, land and sky) derived from this new viewpoint is vertically crossed by the four primordial elements: fire (magma and eruptions), earth (formed by emerged magma), water (ice generating rivers and sea), air (sky, clouds and winds).
Due to its strategic location during the Cold War era, and to renewable energy resources such as hydroelectric and geothermal energy, Iceland gained acces to the world geopolitic scenario.
On October 9th, 2007 John Lennon’s birthday was commemorated in Iceland by Yõko Ono with a work of art. Imagine Peace Tower is the work of art she dedicated to him . With her work Yõko Ono has enlighted, switched on, the landscape giving visibility to Lennon’s dream of peace for our globalized world  (Fig. 11).
Fig. 11 – Stamp Imagine Peace Tower, October 9, 2008
(Source: Frímerkjafréttir 3/2008 Iceland Post, Reykjavik)
Her work, as she explains in her web page’s You Tube video, is inspired by both the Icelandic nature and the architectural elements of a recently man-made Icelandic landscape.The heat of the ground is transformed into light to penetrate the sky. Yõko Ono’s work makes visible also the theory of the three levels vertical axis of Iceland and transforms the high temperature magma heat in a peaceful spear of light.
Iceland is now seen as a tower of peace in the panarctic landscape. In Agust 1941 Harrison conceived the Arctic zenithal projection which generated the comprehensive map titled One World One War . The same projection was later used to elaborate the UN flag. It is now time to change the title of the map into One World One Peace. John Lennon defined himself as a dreamer.
You may say I’m a dreamer
Yõko Ono gave ontological form (visibility) to a dream. Iceland is facing a critical moment in its overall weak economic history. It is time to dream and free new energies. Due to the near default of the Icelandic economy (october 2008) for many people in Iceland everything seems lost. Yõko Ono’s art work might appear as a life-belt.[19, 20] (fig. 12, 13).
Fig. 13 – New year’s eve in Bessastadir (Jan. 2010)
(Source: Süddeutsche Zeitung, 2010 Nr. 2 / Seite 15)
Quoting Lennon’s song Imagine, Icelanders are solicited to elaborate a new cultural landscape and become actors of peace:
Imagine there’s no heaven
It’s easy if you try
No hell below us
Above us only sky
Imagine all the people
Living for today
At the turn of the new Millennium, new global economic and cultural landscapes arise from the Arctic, the top of the world. The key of a globalized peaceful future stands on the concept of time 0 and space 0, The point (place) where meridiens as well as time zones virtually start.
The point (place) where meridiens as well time zones start
A new deal can arise from the Arctic core (where time and space originate). Iceland, strategically located in the Atlantic corridor which accesses the Arctic Ocean, plays a new role . The country which hosted the Reagan-Gorbachev historical meeting in 1986, should now (almost thirty years later) be able to promote peace by means of its landscape features. Iceland, the terrestrial guardian of the two marine corridors which give access to time 0 and space 0, should offer humanity its imagined landscape for peace.
According to Burton, Auden, MacNiece, Kjarval, and Elíasson the dialogue with landscape is very personal and intimate. It may include or ignore the rhythms of nature and their alternation. Ólafur Elíasson in New York (MOMA, SP2 and New York City Waterfalls) stresses the two-way dialogue between art and cultural landscape:
– cultural landscape activated by art
– art contaminated by landscapes natural features.
Yõko Ono, in the Imagine peace tower, stresses the power of land art as a landscape element to promote peace. Peace is the new Icelandic genius loci. The world changes, but again and again landscape, art and the written word will appear to be tied together by aspects of the personal and collective identity as well, as the personal and collective perception of landscapes.
You may say I’m a dreamer
But I’m not the only one
I hope someday you’ll join us
And the world will be as one
Imagine no possessions
I wonder if you can
No need for greed or hunger
A brotherhood of man
Imagine all the people
Sharing all the world…
You may say I’m a dreamer
But I’m not the only one
I hope someday you’ll join us
And the world will live as one
 http://burtoniana.org, (accessed on January 28, 2010)
http://www.nycwaterfalls.org/sections/about/waterfalls_brochure.pdf, (accessed on January 28, 2010)
 Burton, R.F. (1875) Ultima Thule; a summer in Iceland, Vol. 1 – 2, W.P. Nimmo, London (Preface Vol. I, p. X)
Google digital copy: ref. 1.267.061 Library of the University of Michigan, accessed on 28 Jan., 2010
 Schulten, S. (1998) Richard Edes Harrison and the challenge to American cartography in Imago Mundi: The International Journal for the History of Cartography, 1479-7801, Vol. 50, Issue 1, pp. 174-188
 Knopf, A.A. (editor) (1944) Look at the world: The Fortune Atlas for World Strategy, New York
 Lennon, J. (1996) Imagine: a celebration of John Lennon, Penguin Studio Books, New York
 Oslund K. (2005) The “North begins inside”: imagining Iceland as wilderness and homeland in the GHI Bulletin n. 36 (Spring 2005), (p. 92)
 http://www.huldufolk102.com/home.html (accessed on January 28, 2010)
 Arpe M. (2006) A little trip into the mystic. Toronto Star, October 27, 2006
 Auden W. H., MacNeice L. (2002) Letters from Iceland, Faber and Faber, London
http://www.publicartfund.org/pafweb/projects/08/eliasson/eliasson-08.html (accessed on January 28, 2010)
 Foster, R. Kreitzman, L (2007) I ritmi della vita. Gli orologi biologici che controllano l’esistenza di ogni essere vivente (original: Rhitms of Life, 2004), Longanesi, Milano
 Jónsson H. (1982) Friends in Conflict . The Anglo-Icelandic Cod Wars and the Law of the Sea, C. Hurst and Co Ltd, London
 Campanini. M. S. (1993) Percezione del territorio islandese attraverso le metafore dell’ultimo millennio (da Snorri Sturlusson a Einar Jónson) in Studi Urbinati, B Geografia p. 25-53), Quattroventi, Urbino, p. 48
 Friðarsúlan í Viðey in Frímerkjafréttir Ny Frímerki september-nóvember 2008, 3/2008 Iceland Post, Reykjavik, p. 6-7
 Lennon J., Ono Y., Sheff D., Golson G.B. (1981) The Playboy interviews with John Lennon and Yõko Ono, Playboy Press, New York
 Klinghoffer, A. J. (2006) The power of projections: how maps reflect global politics and history, Greenwood Publishing Group, Boston
 http://www.john-lennon.com/songlyrics/songs/Imagine.htm(accessed on January 28, 2010)
 Insel des Feuers, (2010) Wirtschaft, Süddeutsche Zeitung Nr. 2/Seite 15, Munchen
 Karlsson, J.MS. (2009) Revolution – Mostra fotografica (Bartolucci. M. editor), Roma
 Campanini M. S. (2005) Three Posters, Borgo del libro, Cavi, (p. 2)
 Campanini M.S. (2009) Spazio e Tempo sul planisfero. Il punto di vista non è univoco. Suggestioni per un PERCORSO DIDATTICO POLARE CON TRAUSTI VALSSON, p. 85-112 in Campanini M.S. a cura IPY 2007-2008 Esperienza transnazionale per il Laboratorio di Didattica della Geografia, Lampi di Stampa Messaggerie, Milano
 Atlante Geografico (2007) Grandi tascabili Istituto Geografico De Agostini (p. 105 modified) Novara: Istituto Geografico De Agostini
Before moving on, it is important to address the key-terms discussed in this article. “Executive compensation” is going to be used as a rather broadly defined concept, including (but not limited to) bonuses, stock options, and even pensions. Their uniting feature is that the company rewards their executives in this way on the basis of company performance (in theory, at least). It is also pivotal to state clearly what I mean by “Board” and “executive”. The former is the body that the stockholders elect to guard their common interest. The latter is an individual chosen by the Board to carry out the day-to-day running of the company. Executives are not members of the Board, but rather their employees.
Executive compensation is of course a very important topic for Boards and the stockholders that they ideally represent. In light of recent events it has become clear that it is also an important topic for politicians and the voters that they ideally represent. The thought has been widespread that if the Board wants to pay their executives ridiculous super-salaries, then that is their prerogative. The shareholders have invested their own money, the Board is their duly elected agent, and if things turn sour it will be the shareholders who carry the loss. Everybody else should just mind their own business. But as we gaze upon the stage today and realize that in Iceland, as well as in many other countries, company ownership is strangely reminiscent of North Korea, then it becomes obvious that executive compensation is in no way a private affair for the Board. Increasingly companies must consider factors like fairness, moderation, and take notice of the interest of other workers, shareholders, and the general public.
Although popular in many other countries, executive super-salary is a concept that only recently invaded the Icelandic psyche. The underlying notion is that by linking the salaries of the executive with the performance of the company, the company is effectively being put on autopilot and the Board members can with good conscience withdraw to improve their golfing handicap. A somewhat perversely socialistic idea of rewarding those that create the wealth and not just those providing the capital (Torrington & Hall, 1998). The obvious difference between these groups of people is that owners and investors bring capital into the company and their gains are proportional to their investment. Executives on the other hand, wager nothing. They have nothing to lose. It does not take profound knowledge of human nature to see that this kind of mutant Marxism will stimulate risk-taking by executives, who have much to gain from the company growing fast, but nothing to lose if things get tough. Some companies have responded to this conundrum by having executives taking loans to buy shares, a practice that I will discuss later in more detail.
But can it really be so that if the company puts forth demanding goals for growth and promises of bountiful bonuses if they are achieved, then no further governance is required? Of course not. Things are much more complicated. The first issue to be resolved is the question: “Which are the appropriate goals?” As shareholders own shares, it might seem logical to tie the goals of the company to share-price. But that is not always the best indicator of a company’s performance. Often shares in riskier businesses rise much higher at a given period than others. And the stock market is not always very sensible. Its behaviour usually seems more related to the mentality of herds rather than the exercise of common sense. Also, in very large companies, it can be exceedingly difficult for executives to affect their actual workings with their contribution. The simplest way for an executive to raise share-price is simply to buy other companies. In its short-sightedness, the market usually always responds to such a measure in a favourable manner. Another short-sighted move the market favours is laying off people. Both of these steps by and large cause share-prices to rise in the short-term. A time period surprisingly often just long enough for the executives to cash in their bonuses. In the aftermath, we find companies that are larger and more complicated or with fewer people on the payroll. The net result of such exercises can be rather slender.
The rather problematic relationship between share-price and performance is well known and has been tackled by some companies by tying bonuses to more numerous and varied goals. However, research has shown that the more complicated the goals become, the easier it seems for the executives to attain them almost automatically without any additional effort. Complex goals show high correlation with the amount of bonuses being paid out, but no correlation with the actual performance of the company. The result is an uncoupling from the interest of shareholders, which has been clearly demonstrated by the fact that the companies that have required the most government assistance in the crisis, have at the same time been contractually obligated to pay out the highest bonuses.
A prime example of the insanity that this culture of executive pampering has led to, tells of a reputed British banker. The man in charge of the Royal Bank of Scotland, who filled the list of the worst bankers in history (a list all too familiar to Icelanders), retired at the tender age of 50 with an annual pension of £703 thousand for the remainder of his life. This sounds quite extraordinary given the fact that Sir Fred Goodwin was responsible for major catastrophes such as the acquisition of the ABN Amro bank that resulted in RBS posting the largest loss by any company in the history of Britain, a staggering £24 billion. Even for an Icelander, accustomed to our banking wizards losing hefty sums, Sir Fred’s capacities in annihilating the balance sheet seem almost perversely admirable. This generous pension scheme had been approved by the Board and was in fact irretrievable despite the obvious and grievous harm that Goodwin had caused.
The eminent Canadian economist John Kenneth Galbraith once said that “the salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself”. As much as I admire Galbraith, I have to disagree with him on this point. First of all, I do think the market determines executive pay and compensations. The problem is that the market is sometimes absolutely brainless. Secondly it is almost never within the power of the executive to decide upon his salaries, but rather it is the Board’s decision. And it is there that the problem lies, and there were improvements can be realized. Granted, the development over the last few years has not been very encouraging. The salaries of top executives in Britain for example, have grown from being 17-times higher than the average subordinate, to 75-times higher in only the last 20 years. And please note that I am talking about average, i.e. not minimum subordinate wages. At the heart of this problem lies the familiar principal-agent dilemma. In line with Galbraith, it is obvious to point out that the interests of the company are likely to be quite different from the interests of the executive. Performance-basing executive compensation should strive toward giving (all) the shareholders the highest return on their investment. That is why it is extremely important that the performance-measures used accurately reflect this. It is for example critical to factor in the time-issue. There is an inherent danger that the long-term interests of the shareholders will be forfeited in exchange for the short-term interest of the executives. One such problem of time is linking executive compensation with stock-price. The value of a stock is based on expectation of future performance of a publicly traded company. But creating expectation of performance is quite different from actually delivering performance.
In this context it becomes very interesting to look at the changes in the role of the executive during the past decade or so in Iceland. It has moved from simply being on top of the employee pecking-order, to becoming compensated as an owner or a risk-seeking investor. Malcolm Gladwell provided an excellent account of the collapse of Enron in an article in The New Yorker in 2002. To an Icelander his observations sound eerily familiar. He maintains that the interests of the shareholders had given way to the interests of the company stars; a culture driven by management consulting firms, whose employees often graduate to executive positions in other companies (including Icelandic ones). Traditional attributes such as experience, education and seniority were redundant at Enron and replaced by inordinately rewarding the company’s stars. All of this was also part of the mantra being repeated for the Icelandic public when it dared to question the raison d’être for the humongous compensations being awarded to our home-grown finance stars. Following extensive deregulation and privatization it took these financial super-beings six years to bankrupt the whole country (interesting for investors to note that crisis unusually often follows deregulation and privatization).
But what is the actual correlation between bonuses and company performance? If we give way to cynicism, we might claim it to be extraordinarily strong: the higher the bonuses, the more spectacular the bankruptcy! But if we are advisors in some company’s remuneration committee, which would be the proper advice regarding the adoption of bonuses? Well, we could state that research shows that there is a weak but positive correlation between bonuses and company performance. The correlation coefficient is between 0.09 and 0.11. But what really stands out when one reviews the literature on executive compensation is that scientific research in the field is almost non-existing. Given the cost that the companies incur, this comes as a surprise. The proponents of these compensation schemes (a position sure to be rewarded with a bounty of invited speaking opportunities at exotic locations) frequently claim that one needs only to look at the annual outcome of companies to see that the more successful ones pay out more bonuses and options. Of course to anyone with a modicum of sense the fact that more lucrative companies pay higher salaries says absolutely nothing else than that. There is nothing to indicate a causal relationship.
What about stock-option contracts in which the employees have to take loans to buy shares and are then stuck in a huge gamble with their private fortunes for two to three years or longer? This was a common practice within the Icelandic financial sector and landed several executives with personal debts worthy of a small country. The laws applying to companies serve to limit the responsibility of shareholders. So stock-option contracts that require executives to take on such personal risks, actually counter the law.
Even though the stated purpose of Boards putting forth bonuses is to make the executives think more like owners, reality may contradict this assumption. Basic theories in portfolio management suggest that it would be in the executives’ own best interest, when they receive additional shares in the company, to sell what they had before. By doing that they would minimize the risk that comes from having too much capital invested in a single company. The risk of this “single company exposure” has indeed more to do with share-owning executives than with other investors, since the executives’ employment status is also linked to the company performance. Accordingly, studies by Ofek and Yermack (2000) show that executives that own shares in their company, usually sell them upon receiving new stock options. That will of course reduce the anticipated incentive the Board has in mind when giving out additional options.
Bonuses have to be considered in lieu of co-workers and cooperation within the company. Bonuses are by definition assigned to individuals. Their role is to further individual performance. That is in itself a conundrum, since we all realize that an individual by himself will accomplish very little within a company. The entirety of his accomplishment is indeed based upon his opportunity to seek help from his co-workers. However, if my supervisor calls me day and night, holidays not excluded, and requires me to work far beyond my contractual obligations, then of course it will leave a sour taste to see him walk away at the end of the year with huge bonuses while I am left with huge black rings under my eyes. Bonuses have to be fair with regards to co-workers. This is evident to most companies and those that dish out the heftiest bonuses are in the habit of ensuring that some crumbs are left for the plebeians. The overall result is often that married with increased risk-seeking, the companies’ overall salaries swell. Unfair bonuses can actually demotivate and destroy morale. In that way they can actually counteract their initial purpose.
An important and largely ignored issue is that of repeated bonuses. There is no question that most people would work like mad and increase their performance, if offered to double their salaries. If offered such doubling again the following year, again most people would readily accept and some people might be able to muster a slightly better performance (not twofold though). The bonus offered in year number three is however, not likely to do anything to enhance your performance, and indeed it is very likely that performance will actually be dwindling, if not for other reasons then exhaustion. Also suffering from exhaustion will be your personal relationships, health and all the really important things. In these situations, bonuses only work in keeping people, but do not have any effect on performance. And this is a key issue. In fact executive bonuses have been intended more to keep them put, rather than increasing their performance. But why do Boards pump more and more money into executives when they know that their performance is unlikely to improve? At some level it is due to a common attribution-error that has permeated both popular and academic writings on the subject. We all have a tendency to take the credit for our successes, whilst blaming our failures on the environment. In the almost unprecedented bubble-atmosphere we have been experiencing in the last few years, where almost all shares increase logarithmically in value no matter what, the Board which actually might have very limited true knowledge of the workings of the company, tends to take immeasurable pride in how shrewd they were in bringing in and/or keeping their star management-team. And thereby completely overlooking the fact that the success is simply driven by an overabundance of cheap credit. It takes strong bones to survive good days and in such a favourable atmosphere it is pivotal that the Board stays grounded in its decisions on remunerations.
A reasonable person will determine a certain degree of fairness between efforts at the workplace and the pay received for those efforts. We instinctively know when we are being treated fairly in that respect. And if we feel underappreciated paywise, we tend to reduce the level of output. Similarly, if given a raise we are likely to contribute a little more. However, if we are receiving, say, 240 times the pay that our lowest-paid co-worker is taking home, then we experience something of a crisis, because we can no longer justify the amount that we get. Still, human beings are, most often regrettably, very well endowed with all sorts of ways to justify themselves. So if we are being overpaid, we tend to justify it by manipulating our own sense of fairness. Instead of focusing on the relationship between your own pay-cheque and your contribution, you start looking at your pay in relation to what others are being paid. Is anyone less competent than you being paid the same amount? Or is someone just as competent as you getting paid more? Since the links to performance have been effectively severed, the end result is just higher wages without any increase in output. This practice then rubs off on other companies that will experience mounting pressure from their executives to play along.
But what happens with executives with stock options and bonus-contracts if the company is doing poorly? Ideally, motivated by their own personal gain, they should increase their efforts. However, that rarely happens. They will experience more stress, but their performance will not improve. The time they spend ogling the falling share prices is not productive. This applies specifically to those executives that have taken loans to finance their stock option deals. If the company is not performing, these people are not looking at lost bonus opportunities but actual personal loss. This is a very dubious way of managing performance.
I suspect a lot of people had high hopes in the aftermath of the current crises, that the super-salaries of executives would become a thing of the past. These hopes are likely to be crushed. I refer you to the strongest laws of economic theory, the bounty of greed and stupidity. The present crisis is neither the first nor the last. The first thing that surfaced from underneath the rubble this time was greed. Bankers are presently waiting to lock in even higher bonuses and options than ever before. Courtesy of the common tax-payer. The reason for these monstrous salaries, is said to be that the banks are in dire need to compensate their best employees, otherwise they may seek employment elsewhere (although where exactly is not fully clear).
But performance-based pay is not altogether a bad concept. It works well in various factories, for skilled workers and even among us lazy, no-good academics. However, I think it is pivotal to rein in the madness that has been going on amongst executives. This is the responsibility of the Board. But since it is the shareholders that select the Board, the ultimate responsibility lies with them. It is in fact noticeable how easily the Boards of many companies have been able to face public outcry.
It is absolutely necessary to keep in mind when deciding upon bonuses, that they should have a predetermined range. For example, that nothing is paid out before 80% of the goals are reached, increasing gradually until nothing extra is paid if 120% of the goals are reached. A part of the problem with bonuses has been a lack of cap. Share prices for example have no upper limit, and I think it really tests the individual to have his/her performance linked to that sort of compensation.
Executive bonuses should also extend longer into the future, even years after the person has given up his/her job. This might better guard against executives cashing out from decaying companies. In the case of stock options, it may prove valuable to put more consideration on the buying price for the executive. Some companies have supplied their executives with stocks below market value, which effectively generates profit immediately. Others have been supplied on the value that they were on the contract day. But isn’t in fact more proper to offer stock to executives at a price that is higher than the market is paying on the contract day? That would most likely guarantee that the executive would need to perform better.
The trading of company stocks is based on trust. The whole crisis for that matter is simply a case of sudden depletion of this most precious asset. People buying stocks must be able to absolutely trust that executives, Board members and accountants do their best to look after the interest of all shareholders. This is especially relevant for small investors since they often do not have the resources or the knowledge to pour over company statistics. Since portfolio theory would recommend the small investor to diversify, it places him in even more problems with monitoring his investment.
In Iceland there has lately been a lot of interest in calling to the table psychologists and psychiatrists to share their insights into sociopathic personalities. This in my view can only serve to muddle the discussion and divert it in unproductive directions. True, mental professionals have long since known that the ratio of sociopathic personalities in the top layers of business is much higher than in the general population, although the exact numbers are a matter of some debate. But if one looks at the definition of such individuals, for example in Cangemi (2010), it is not difficult to see how they become valuable in the environment of modern business. They are callous, focused, have a strong desire to destroy their competitors, delight in inflicting pain, and have remorseless willingness to do whatever it takes to reach their goals. However, I find the current obsession with sociopaths in business to miss the point. It was not that the ratio of these people had dramatically risen in the preamble to the crisis. And all the people that either partook in these dodgy dealings or failed to correctly signal what we were obviously heading toward, were not sociopaths. The cause of the crisis was not a personality issue, but rather one of politics and shoddy systems. And by focusing on personality we risk averting our eyes from, and neglect the real issues that need attention. Anyone who reads history knows that sociopaths have filled the top layer of society from its very beginning. So nothing new there. But focusing on the role of the sociopath in bringing about the crisis also alleviates responsibilities. It somehow brings the message that we have been attacked by criminals, instead of building up a failed system. Greed and stupidity are universal personality trends, not disorders of the few.
The principal-agent dilemma needs to be recognized as a problem of Boards of companies as well as their executives. The Board is the highest authority of the company excluding the shareholders themselves. It fails mainly due to two reasons. Firstly, the owners can be short-sighted and only on the lookout for quick and easy gain. In that case they will soon leave the company a hollow shell having stripped its assets or engaged in excessive borrowing. In Iceland this was a common practice leading up to the crash, and even glorified in the popular press as a part of the Icelandic business genius. Secondly, the Board may be representing the owners by proxy. This happens when the Board is comprised of representatives from pension funds, banks, hedge funds et cetera. Funnily enough, one of the most durable mantra of Capitalist thinking is that people take better care of their own money than other people’s. However, in practice this is rarely the case. Such arrangements really magnify the principal-agent dilemma, and are probably the most important issue to address if we are to regain an acceptable level of trust and sanity within the financial system.
In restructuring our system of finance, business and politics, we would be well advised to head the tried and tested adage; hope for the best but prepare for the worst. An executive will not think like an owner just because he’s being compensated as one. The most dramatic improvement to the financial system would be realized if we could get the owners to think like owners, i.e. to guard the interest of the company in a longer term. This is the really important principal-agent problem, because at the end of the day it’s the decisions made by the Boards, not executives that sink companies.
Conflict of interest
Dr. Arnarsson would like to state that he was himself a recipient of stock options in his former employment within international pharma.
Cangemi, J. P. (2010) Sociopaths In High Places. Organization Development Journal. 15 Feb, 2010. http://findarticles.com/p/articles/mi_qa5427/is_200907/ai_n32127546
Gladwell M. (2002). The Talent Myth – Are smart people overrated? The New Yorker, July 22, 2002
Ofek E. & Yermack D (2000). Taking stock: Equity-based compensation and the evolution of managerial ownership. Journal of Finance, 55, 1367-1384
Torrington D. & Hall L (1998). Human Resource Management 4. ed. Prentice Hall: London.
Until control of the issue of currency and credit is restored to government and recognised as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of democracy is idle and futile… Once a nation parts with control of its credit, it matters not who makes the nation’s laws… Usury once in control will wreck any nation.
William Lyon Mackenzie King
Since the real purpose of socialism is precisely to overcome and advance beyond the predatory phase of human development, economic science in its present state can throw little light on the socialist society of the future.
Philosophers are often and rightly accused of dealing too much with the past, pondering endlessly upon origins, reasons and causes, and too little with the future, leaving hardly any room to proposals, solutions, or calls to arms. To prove myself capable of the latter kind of activity, and despite the unavoidably old noble opinions quoted above, I shall keep Minerva’s owl nailed to a perch. Though Pythonesque, this little cruelty should delay any backward-looking blathering of mine, which is to come eventually in the other sketches.
After all, we are facing a dramatic twofold crisis, ecological and economic, which even uninfluential public figures like the current UN Secretary and US President have acknowledged and denounced as deadly. As for the title under which I allow myself to do so, I shall be content with declaring myself a professor of philosophy who has studied value for some time, i.e. what is important and what is not. In this pursuit, which I regard as valuable, I have reached a fairly simple conclusion: that which keeps all of us and our descendants alive and well is very, very important indeed. Those who deny it or claim my claim to be unscientific can do so because they are tacitly doing all that is necessary in order to stay alive and well enough to be able to talk a lot of nonsense.
But let us dwell no further on this simple subject, about which I have written around fifteen complicated essays in the past ten years—I need another nail… Worthy of Epicurus, I can offer a tetrapharmakos to today’s world, confident to be received by no-one in useful time, for that seems to be the fate for all who dare criticise—as I am going to do—large-scale private banking, the profit motive as paramount, the private ownership of strategic resources, deregulation, and the managerial mind. Some may even call me a “socialist”, as though it were a derogatory and disqualifying term, similar to “criminal”, “pervert” or “rascal”. Probably, given the notoriety of Italians and academics, “old pig” or “bore” would be more fitting insults. Politically, however, I would describe myself as “life-grounded”, not “socialist”. Still, I shall not mind and endure the epitaph with grace, even gratefulness. I shall keep company with Claude Henri de Rouvroy, Comte of Saint-Simon, Albert Einstein, and Bertrand Russell. An aristocrat, a physicist, and a logician…
First, fundamental medication, upon which all else depends: nations should establish, or in most cases re-establish, good public banks. Why? Well, here is something that should have become obvious to anyone who has eyes to see and a fat wallet. As stated by Russian President Vladimir Putin when speaking last year at the World Economic Forum in Davos, the economic crisis that we are witnessing today has destroyed, in about one year, approximately twenty-five years of pecuniary wealth, i.e. the sort of wealth that our intrepid yet “virtual” capitalists were aimed to produce in the first place. Private banks and financial institutions, left to their own devices by prolonged tidal waves of worldwide deregulation, brought themselves down and, with them, much of the world’s “real” economy. Do you remember the real economy? If it goes down, down go also the starving children of unemployed sub-Saharan family fathers. Down into the earth they go, whilst shareholders moan for lost profits and fire a few more people to ease their pain.
Clearly, many private banks cannot do their job unaided. As they were busy concocting mathematically byzantine derivatives and variously vehicled securisation packages in the deregulated shadow of global finance, they forgot about honest bookkeeping, sound reserves, mutual trust, and other basic old-fashioned principles of chronically anachronistic banking. They even forgot about that primitive slave invention, morality. Alas! Such is the genius of the invisible hand free from State direction or, as Icelandic philosopher Mikael Karlsson dubs it, “the invisible brain.” This is not meant to be an insult to anyone, unlike “socialist” or “pervert”. The so-called “Free Market” promoted by “deregulators” has no visible brain, insofar as State-centred social and public planning is regularly rejected as anathema. Still, who came to the rescue of self- (and other-) destructive private banks? The State.
Turned into the banks’ pork-barrel, the State has thrown trillions at the banks in order to keep them afloat—in the Land of the Free, in Great Britain, in Benelux. Was it necessary? No, for the State could have simply taken over the banks. Was it desirable? No, for public banks, still run in communist countries such as China and North Dakota, can spur development, employment, and take far fewer risks than private ones.
It must be emphasised that it is not enough for the State to own the banks; these must be run like public banks i.e. banks for the public good. Some morality is required in the process. Prudently restricted by various strings, these public banks can respond more easily to the needs and aims of actual populations, rather than to the whims and fancies of absentee owners or of their volatile servants, that is to say their bonus-benefitting managers.
What am I saying? Have public banks and run them as such. They must spur real development, not inflate bubbles that transfer wealth from the bottom to the top. Will it hurt the shareholders and wealthier customers of private banks? Certainly. They have already enjoyed the State’s helping hand; it may be time to repay the State with gratitude. Doesn’t anyone remember how to do it? Read history books, study the European Payments Union of the 1950s, ask retired Italian or French bank managers, use your imagination. A few rules of thumb may assist those who lack enough imagination:
(a) Ban financial and currency speculation, at least within and via public banks: the casino belongs to “competitive” gamblers. Yes, people who used to claim that they would succeed or fail like Promethean heroes… Before they all asked for help to the Great Nanny, of course, lost as they were on their er-rand. And please, let the State never again salvage these hypocrites from their own myopic greed. They are now trying to wash their guilty conscience by returning one hundredth of what they have received from the public purse, whilst re-filling their pockets at the State’s expense, with fierce bearish appetite
(b) Lubricate the real economy, if forward-looking, so as to launch much-needed public works, create long-term employment, and generate steady streams of income within the nation. Public banks can do so, at low interest rates: they must be profitable, but not at all costs
(c) Monitor inbound and outbound capital flows, so as to direct investments to socially beneficial areas, and counter tax evasion as well as tax avoidance: far too much has been denied in the past to the very public purse that has then saved the incompetent affluent from themselves. And remember that a stable currency and genuine economic sovereignty can only be secured by abandoning the disastrous freedom of capital flows that has flooded the world with crisis upon crisis since the 1980s: tequila, vodka, whiskey or brennivín, ouzo, they all taste the same
(d) Secure reserves by compelling the capitals of public bodies, pension and social security savings, and the revenues of public banks to be invested in the public banks themselves. The State must be as free as possible from the bondage and the blackmail of its current masters i.e. foreign direct investment and international bondholders
(e) Pay bank managers State salaries comparable to those of other leading promoters of public wellbeing—surgeons, health-&-safety inspectors, judges—and avoid attracting the covetous, self-indulging, big-jet and big-penthouse penis-length-comparing “best and brightest” who plunged the world into a massive crisis. Communities need not such beastly best and brittle brightness. Forget them and their barbaric macho ethos—made of turrets of money, performance-enhancing bonuses (as though they alone were working), fee-demanding buddies-consultants, and PR companies using invariably words like “aggressively” and “targets”.
Finally, do not underestimate the fact that it is difficult to deal with cronyism by voting new governments into office. Yet it is much more difficult to do the same thing by waiting for anonymous and short-lived shareholders to reform their servants, who are so free from supervision as to jot down any number they like in the books without anyone finding out. As Adam Smith forewarned us some time ago, the corporation is amongst the least competitive and the most corruptible of human institutions, hence amongst the most damaging to the proper functioning of capitalism.
And inflation? Don’t worry. Nobody talks about it—a sudden silence. After all, common people are no longer able to buy anything, not even on credit. If anything, the real problem to come will be deflation. Besides, more than 90% of the money circulating around the globe is the result of financial leverage by private institutions. Still, old-fashioned, knee-jerk reactions may be reoccurring soon: pensions and salaries must not go up, for the poor must repay the money lost by the rich; States must rein in public expenditures, which they have been doing for thirty years, unless there was a war to be fought; public assets must be privatised, so as to further enrich the incompetent and further weaken their only saviour; cheap money must stop (now), lest we tax the wealthy to give some jobs to the restless youth, etc. By the way, how is it that bonuses for bank managers could always go up? It must be the same people who think that only private firms can be valid multipliers…
It is ironic that, after two decades during which we had been told that the State and, for that matter, its independent Central Banks could not issue money for schools, hospitals, public works and social projects, quite mysteriously they started printing so much money. Sure, they now tell us that we need private banks to keep credit flowing, for credit is the life-blood of the economy. Without it, there shall be no green-spanning across the meadows. And yet, enterprises and households worldwide are still struggling to get the credit that they need. In truth, the selectively generous Central Banks’ cheap money benefits financial speculation, which is where the trouble started in the first place. How could ever a heartless economy pump any actual life-blood?
Indeed, in California, the local government is at risk of being terminated by the refusal of private banks to subscribe local public bonds because “unsafe” i.e. the State of California could go bankrupt. “What a cheek!” my mother would say, and she has dealt with banks for most of her life. The banks refusing to purchase these sunny bonds today are the same banks that were saved by public money yesterday, when it was raining. But there is more.
Were even these banks to provide enterprises, households and public authorities with the credit they need, they would not do it for free, for the common good, or for a little interest; they would do it for profit, and for as much of it as they can get. Thus, things would be so arranged and, sadly enough, they are being so arranged, as to have public money given very prodigally to private banks, so that these banks may give it to the public far less prodigally.
What is more, in order to be worthy of the bailed-out banks’ money:
Enterprises have been reducing their workforce to be more “competitive”
Households have been returning their homes to banks that had sold highly reliable mortgages towards the purchase of… homes
The State has been thinning out its already skinny body in order to be attractive to the banks, which the State has just rescued from themselves
After decades of TINA-like reduction of all that is public, public money is being given to glaringly incompetent private banks so that their losses be made public and their profits, which were always private, recover and be still private. In the process, public money is not used to counter dwindling employment, secure houses, and, say, fund hospitals, schools, university research, care for the elderly and the mentally ill, public gardens, public football fields, archaeological preservation programmes, amelioration of penal institutions, better garbage collection, sanitation and, why not, aid to starving children. How many tramps will get trapped in the revolving doors of the wealthy’s tower?
That the State may have money for the bankrupt banks but not for its own social functions, it is something that defies imagination, morality, and even legal obligations. Many of them ratified the International Covenant on Economics, Social and Cultural Rights, didn’t they?
Second, life-saving medication: if you skip the middle man, operate good public banks, and have money to use for the common good, then launch a vast programme of green public works. More severe and threatening than the economic crisis itself is the ecological crisis. Ask the United Nations about that. The former crisis threatens fat wallets at the top and starving children at the bottom, yet at different degrees of dangerousness. The latter crisis threatens all equally with death. The grim reaper is the great leveller. Since so much private enterprise has caused the ecological crisis in the first place—the smoky days of the Industrial Revolution—and has continued it in the face of scientific alarm calls as old as Britney Spears, then it is advisable that the State be able and willing to step in and, both by regulation and by direct economic action, reverse the tide.
Forget speculative carbon emission quotas and reduce carbon emissions; ban outright or force rapid conversion of the most obvious forms of life-destructive economic activity; tax the remaining polluting activities and de-tax non- or less-polluting ones; have a major public company undertaking proper refitting of houses on a massive scale so as to make them less energy-consuming; create large public recycling facilities so as to counter illegal dumping of waste at large; found and fund new public research centres for the development of green technologies, free from the yoke of short-term corporate desiderata; ration carbon-based power and use it only for vital and life-enhancing activities…
There are so many tokens of environmentally constructive planning, yet so few that have not been resisted as “too costly”, “too rigid”, “too much for us, who have already done so much”, etc. Were only the people uttering such phrases to consider seriously the fact that they can be so garrulous because the environment is still, barely, able to support them, their bodies, their minds, and the natural and social infrastructures that have allowed them to grow, socialise and, limitedly, mature…
In addition to a life-enabling aim and a counter-cyclical alternative to depressing austerity, politics would also regain its dignity by having a green mission. Strangled by powerful yet incompetent lobbies, and fettered by incompetent yet powerful central banks, politics has been reduced for far too long a time to day-to-day management of production costs in the domestic market and salesmanship in the foreign ones.
Third, important medication: since some neighbours may not like your policies and your currency, then they might respect your resources. States should increase or secure public control of strategic assets: water, oil, gas, the knowledge of its own population—this knowledge having been fostered by public education, healthcare provision, and cultural activities.
Whether by safeguarding the revenues originating in natural resources that would otherwise enrich few and often foreign shareholders, or by reclaiming a knowledge-based industry that would otherwise be outsourced by corporate giants, the State must secure a steady source of income for itself and for the nation’s economy. This income alone should help democratic governments to respond to their constitutional sovereigns, not to rating agencies and “markets” whose lords regularly reside offshore.
As Norway’s long experience in State-run oil extraction and refining illustrates, it is the one and only “trickle-down” strategy that has produced tangible results for an entire nation. States’ assets are not a factor of market distortion, but a factor of production—and one that can help businesses to grow by providing cheap goods and services, as opposed to the endless and costly bloodsucking of postmodern privatised economies. Ideally, it would be good for States to regain control over money-creating central banks, but there are limits even to one’s dreams.
Incidentally, even the many wars paid by the American public purse to secure control over other nations’ oil, or at least force its trade in US dollars, indicate that the public control of strategic assets is not so foolish an idea. And yes, also that getting bombed may be a risk for the nations pursuing the path recommended hereby. Apart from the landowners, cunning agents and financial moguls who have charged prices well over any real cost of production, for all others there is no such thing as a free lunch—Miltons have always known the devil very well.
Fourth, integrative medication: since some powers-that-are may not be pleased with your plans, make sure you can deal with them. Create a just fiscal and regulatory framework, which empowers the population at large and weakens the usual lobbies: close tax loopholes and tax breaks for the usual lobbies; withdraw passports and freeze assets of tax fugitives; tax rents (land, inheritances, capital gains) and de-tax hard work, so as to reward merit and distinguish sharply between earned and unearned income; end subsidies, legal privileges (e.g. limited liability) and tax-breaks to private companies, lest they never compete in a truly free market; nationalise the companies that are too big to fail, as John Kenneth Galbraith advised us to do long ago; reclaim research and development grants and whichever other public credit given to private firms leaving the country; confiscate the assets of companies outsourcing to countries with lower labour and environmental standards; put regulatory agencies and grassroots associations on the boards of private and public companies to fight corruption; inspect constantly and reward those inspectors who discover illicit activities.
Taxes matter. Especially when there is an ever-richer tiny elite of super-rich whose fortune comes as a long free lunch over accumulated wealth, whether in property or capital. They hardly ever pay taxes. They pay fewer than most, since someone else paid taxes before them: those who actually earned that property or capital in the first place. In truth, they may quite simply avoid taxes by shoring their assets off to tiny islands or Alpine valleys. The members of this tiny elite are above and beyond the common citizen, whilst their trusted and highly paid managers rarely go to jail when guilty of fraud or cheating. Above-and-beyondness is a transferrable asset too. If and when hijacked by this elite, States are likely to commit suicide by taxing those who work instead. And if the people sweating and bleeding don’t have enough money, then State activities are to be reduced in the name of, say, the Big Society–of the hopeless and of their hopeless resilience.
In brief, internalise costs that have been externalised regularly and mercilessly at the expense of natural and societal well-being; and effectively re-regulate the disastrously de-regulated playground of the free enterprise–especially but not exclusively of the virtual type–whose only known freedom is that which cages every possible aspect of reality into the life-blind logic of profit-making.
Will anyone undergo this cure? History will tell. And history is full of surprises. Who would have ever thought, for example, that little furry animals could outlive giant dinosaurs and become the first species ever capable of destroying the ecological structures that allow them to live!
Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation.
John Maynard Keynes
There are two ways of conquering a foreign nation. One is to gain control of its people by force of arms. The other is to gain control of its economy by financial means.
John Foster Dulles
In the year 2003 I published a review of Value Wars, written by Canada’s leading value theorist John McMurtry. In it I provided an account of the stunning whistle-blowing by World Bank Chief Economist Joseph Stiglitz vis-à-vis “deregulation” and “globalisation”, two terms that had been dominating economic and political discourse for some time. Quite unexpectedly, and rather shockingly, a well-connected, mainstream, Nobel-prize-winning economist denounced the World Bank and the International Monetary Fund for implementing over a period of at least twenty years a merciless four-step process of re-colonisation of independent nations by international private capital. This was the sort of suspicion that radicals like pop singer Bono Vox and Polish actor Karol Woitila, better known as Pope John Paul II, had been voicing for a long time. As for John McMurtry, he took due notice, since Stiglitz’s revelation was consistent with his own description of world affairs as directed by the profit-motive of the few versus the vital interests of all others. Preferring truth to originality, I endeavoured to spread this description of world affairs around me. In fact, I had given lectures about it, also in Iceland, before 2003.
Nobody seemed to care, however, at least here in the north. Stiglitz’s views were not widely discussed and even less were they taught at the university level, except by a few—sometimes foreign—eccentrics. McMurtry’s views, hadn’t it been for the same eccentrics, would have been left to gather dust in local libraries. Meanwhile, the policies of deregulation and enthusiastic participation in globalisation were not halted. On the contrary, in the year 2003, the three largest public banks were privatised. Immediately, they started to sail the seas of international speculation, never seen before in Icelandic history. “Carry trades” and “financial leverage” became mantras recited on the first page of all newspapers, whilst the businessmen who were dubbed the “new Vikings” set out to raid foreign banks, enterprises, supermarkets, and football clubs, with money that they did not have. But such is late- (or post-) modern capitalism, or “the Icelandic way of doing business”, as I was told back then. Besides, it would appear that only professional economists are entitled to teach about why they, unlike a mere philosopher like McMurtry, got it so wrong. And there’s so much to learn!
What did Stiglitz’s whistle-blowing describe? And how does it apply to the Icelandic case?
First, the permeability of the nation’s borders to private foreign capital is increased by deregulating capital trade and privatising strategic national assets. Barriers, bottlenecks, and “obsolete” protections are removed, whether material or immaterial. Nobody quite remembers why they were there, and even fewer wonder why. Above all else, money must flow. That’s the consensus, at least in the district of Columbia, which is obviously populated by zealous reformers. Their principles are crystal-clear: “public is bad, private is good.” They believe in “The Free Market”, whatever that may be thought to be; and they believe in it so ardently and unflinchingly that Stiglitz and others refer to them as “market fundamentalists.” They even set complicated rules at roundtables to force dissenting markets to be free. Anyhow, this very first step, which may take some time, is achieved by lubricating slow-moving and slow-thinking local politicians, business leaders, present and future ideologues with adequate amounts of grease. Grease, yes, such as co-opting these people into the international jet- and yacht-set, promising or securing that they will have their own golden toilets, washing their brains at spectacular conferences and exclusive think-tank meetings, baptising their best and brightest first-borns in the sacred founts at the sacred shrines, stirring their simmering jingoistic sentiments, or bribing them straightforwardly—indeed Stiglitz talks of this process as “briberization”.
Secondly, money flows into the country. A bubble ensues; in fact, a cyst. Depending on the country’s economic conditions, the cyst can take different forms, but all of them eventually become painful. In the case of a reasonably well-off country, glittering streams of foreign capital inundate the land, turning modest entrepreneurial fields into a glorious harvest of unprecedented projects. Thus refreshed, the local currency and the local shares pupate into surprisingly light-winged and seemingly fertile young fairies, whose well is said to be full of diamonds. Moreover, the nation’s financial institutions become large fountains that can quench the thirst of anyone who is eager to drink from them, including those who do not need it, but have the misfortune to possess a belly. New buildings spring up like mushrooms in the vast new wetlands, luxury and consumer spending—mostly dependent upon credit—fly high like gleaming droplets out of a geyser’s mouth. So mesmerising is this sight, that more permeability is actively sought.
Then, the cyst bursts. As swiftly as it flew in, so does the money flow out. A rumour, a token of gossip, an unfortunate diplomatic incident, a well-paid expert report, or a speculator’s premeditated signal to his colleagues rapidly reverses the tide. The flood ends. A drought follows. Projects—and buildings—remain unfinished, half-mast, like flags at a funeral. The wombs of local currency and local shares reveal themselves sterile; it was all make-up, they now say, even the wings; you should never trust the books. The well in the garden is dry, and full of stones. Moreover, the fountains are dry too. Around them, stunned, jobless, emaciated peons, indebted up to their eyeballs, drown into whirling sand clutching their plasma TV sets. And their TV heroes have not come to save them, be they crusading party leaders or Viking raiders. Who will?
Nobody is without friends, especially after having become part of the international jet- and yacht-set, educating his own children in the best schools, or attending eye-opening conferences and meetings. Not to mention those friends who have already proven so generous in the past. In truth, after having advised on how to render the country prosperous, they now spare no saliva explaining what can be done in order to rescue it from its unfortunate plight. Thus, money is poured back into the nation. High interest rates are, however, de rigueur. One does not give much to drink too easily to a friend who has already drunk too much. What kind of a friend would he be?
The third step is therefore to make up for the mistakes of the past and repay one’s generous friends. Whatever wealth remains must be scrupulously collected so as to honour the debt—or so as to secure further loans. Debt gives salvation from debt, as gamblers understand so well. Certainly, the wealth of the wealthy is better left untouched: they are the producers, the life-givers, blessed fountainheads of the nation’s wellbeing, which needs them so badly under the burning sun of the new sad day. They must be treated kindly, lest they or their wealth be forced to flee by too rapacious and visible a hand—some have already fled, they whisper. The wealth of the poor—or of the poor-to-be—is a better starting point. After all, they may have little, but there are many of them. Besides, since they have little, they cannot flee as easily as the rich, nor can their wealth flee. And whereas the wealthy can go bankrupt and be resurrected cleansed of their debt, like the imperishable Phoenix, ordinary mortals honour their debts, willingly or not. They may protest, but law and order are the last two public sectors whose resources are cut off, unless successful ways are found to privatise them too.
Finally, as the nation struggles in debt and turmoil, groaning so loudly as to disturb its neighbours, the generous friends come back to help. They cannot remain untouched in the face of so much poverty and violence. They have new “plans”, “strategies” and “packages” to sort things out. Yet, to implement them, national borders must be removed completely and an iron framework of conditions for investment and development must be imposed in order for the nation to become a proud participant in fully liberalised, multinational free trade. For example, its tax environment must be suited to foreign investors—may God bless them—and its population as flexible as unthinking reeds in gushing new brooks, to which they contribute sweat and tears.
By the way, where does Iceland stand now? Probably it stands at the threshold of deciding whether to plunge headlong into step three, with signs of the fourth step already lurking behind the waterfalls harnessed for hydropower.
In all normal civilisations the trader existed and must exist. But in all normal civilisations the trader was the exception; certainly he was never the rule; and most certainly he was never the ruler. The predominance which he has gained in the modern world is the cause of all the disasters of the modern world.
Gilbert Keith Chesterton
The economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable, and we should face up to that.
Lawrence “Larry” Summers
It has been long known that Europe catches a cold whenever the United States sneezes. Yet things get even worse when the immune system of rules and restrictions to international capital and currency trade has been removed altogether. Iceland and some young, yet already former, free-market miracles on the Baltic Sea did catch pneumonia this time. Ironic indeed, as they are just another group of market miracles turned into meltdowns—Asia had a few of them in the 1990s. Miracles seem short-lived these past few decades… Though if truth be told, even Lazarus died, after having been brought back to life.
Historians of the future, if there shall be any and if they will be honest, are going to wonder and ponder upon how such intelligent and highly educated “knowledge economies”, capable of the finest mathematical-financial wizardry via the fanciest computer technologies, could bestow upon themselves so much avoidable pain, destroying in the process not solely further scores of planetary life support systems, but also man-made social infrastructures that have generated, depending on the country, genuine welfare for up to three or four generations. These future historians will be at pains to conceive of powerful, well-off, democratically elected representatives who listened to foreign bankers, and not to their own citizens, rushing to implement, whenever they could, multilateral agreements on investment robbing their own cabinets of much of their power.
These future historians will probably fail to empathise with and understand such bizarre people, very much like Voltaire, who could not really explain why our forefathers were willing to slaughter one another over the correct interpretation of the Holy Trinity. After all, they had never seen it (or them?) and Jesus himself had never said anything clear, if anything, about it (or them?). Not to mention the centuries that humankind spent warring, raping, disembowelling, burning, maiming, chaining, flogging and excommunicating one another because of errors of interpretation. Obtuseness is incredibly resilient. And we are not so different today. Check the Athenian cradle of our civilisation if you don’t believe it.
Yes, embodied and expressed by the very same conventional people at the helm of the world’s public and private financial affairs, the wisdom arising from the ashes of the current crisis is astoundingly similar to the one that caused the crisis. Are you indebted? Take on another loan. The private banking sector has betrayed you? Restore it with public money and run it as before. The world’s economy is a gilded cage run on behest of under-taxed oligopolists, tax-evading rentiers and idle absentee owners that squeeze money out of the real economy through banking charges, debt repayments, service fees, monopoly and land rents? Keep it going and call it a “free market”. People are suffering, jobless, and with their tax money siphoned to the creditors that inflated the bubble? Show them tough love and deprive them of further healthcare, education, culture, wages, pensions, childcare, subsidised water and power. Austerity measures turn a crisis into a depression? Implement more of the same measures. The environment is running amok in the so-called free-market environment? The market will fix it; in the meantime, profit will keep being extracted from increased prices in oil, gas, polluting consumer goods, and cancer treatments due to the ecological collapse of the planet. Apparently, the only green rules acceptable are those that transfer further money from the public purse into private pockets. All others are resisted as “costly”, “distorting”, “rigidifying”, “liberticidal”, which may be true—and good. The one and only truly binding international environmental regulation that, so far, has saved us from extinction, preventing excessive UV-irradiation, was a top-down imposition from Montreal.
But life, not to mention a happy and healthy life, has never been the paramount goal of the pursuit of profit. War was and still is a major source of profit, towards which public subsidies to private firms are given generously… Well, they call them “research & development” grants or “national security” strategies… Disease-causing pollution has been mostly an externality that had nothing to do with profit, until pharmaceutical conglomerates found a way to exploit that too. Slaves and their children were most profitable for many, many centuries. Wage slaves… Oops! The flexible working poor and their children are very profitable today too.
And for what must all this wisdom be endured? To give money to people who have money. They have enough, one would believe. They should start communicating it to those who have nothing… little… less. Jesus and Aquinas regarded this as obvious. No, it is not obvious. Money is never enough, especially to those who need yet another fancy dress. But why are these people non-satiable? Why do they complain, lobby and shift electoral allegiance whenever taxation on capital gains is vented? Why do they transfer their fiscal residence to tax havens, whilst benefitting from handouts of the State they are deserting? Why do they outsource productive structures to countries squeezing labour out of turnips, if youngsters are not available? Why do they say that “they have already done enough” whenever life-saving regulation is discussed? Why do they care more about the interest rate they can get, than they care about how their money is invested? Why do they oppose healthcare, old-age pensions, education and culture for all, while they enjoy it for themselves?
It is competition, they answer. There isn’t enough around for all of us, only for the really tough ones, who can then live in much-deserved luxury. But why do people compete for having more for themselves, instead of, say, competing for beauty, generosity, selflessness, equal distribution, full employment? There can be so many different and more constructive competitive aims in life: just look around. Nuns, school teachers, barefoot physicians, rocket scientists, marine biologists, old fishermen, young artists… They may not all dislike some cash, but they do not live for it, or at least they try not to. Since Divine Will is out of fashion, and if you press them long enough, the luxury-deserving competitors are going to tell you, eventually, that we are cruel wolves. How naïve was I! I thought that they were cruel wolves… The world is a cruel place—those ferocious nuns… Nobody waits for those left behind—and they don’t. The market forces accept no barrier. As one of their fairest ideologues so frequently stated, there is no alternative; it is human nature. A hidden philosophical anthropology…
And yet, none less than their poorly understood hero Adam Smith taught us long ago something very different in the opening page of his greatest book, The Theory of Moral Sentiments:
How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it. Of this kind is pity or compassion, the emotion which we feel for the misery of others, when we either see it, or are made to conceive it in a very lively manner. That we often derive sorrow from the sorrow of others, is a matter of fact too obvious to require any instances to prove it; for this sentiment, like all the other original passions of human nature, is by no means confined to the virtuous and humane, though they perhaps may feel it with the most exquisite sensibility. The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it.
This is certainly not the one and only betrayal of Smith by current capitalism. After all, his market was meant to be free from rentiers, who now run the show. Anyhow, why so much mercilessness, then? Have we become worse human beings? Have we lost our humanity? Have we found ways to outcruel the cruel, underfed, superstitious peasants, who, when not breaking skulls in the name of God or King or Country, killed and maimed animals on a farm? Well, as modern and proud of our science-technology as we can be… Well, yes… Overall, subtly, we have. The thinning of solidarity that embraces the whole humankind, which a German-sounding French warmonger studied in depth, is a weaker barrier to the undergoing evil drives.
Or, at least, we have done our best to train impressionable young minds to being ordinarily callous and participating in the most spectacularly life-destructive economic system ever seen on Earth—a system that, as denounced by the scientific community for the past thirty years, has turned the survival of our species into a big question mark. Much is done in this direction, routinely, thousands of times a day, so that our youth may become more beastly than ruffians and more abrasive than criminals. But how? Simple. We (mis-)educate them, and we have tools for (mis-)education that no emperor or church of old has ever owned or mastered. Only a couple of totalitarian dictators gave it a go or two in the blood-drenched century of Charlie Chaplin and Woody Allen… But how, where? Open your eyes. Watch.
Our TVs and media are replete with commercials. They are meant to accompany you from the cradle to the grave. Selectively and scientifically trained marketing strategists, creative psychologists and advertising gurus are paid to induce desires in the subtlest and most effective manners, starting with our children’s delicate souls. These desires will blossom into poisonous “new needs”, as these “experts” call them. These weed-like flowers being sheer wants perceived as genuine individual needs, the delayed satisfaction of which is to generate a sense of inadequacy, anguish, frustration, isolation, or envy towards those who do satisfy them. And these are the only flowers that must grow; hence they are everywhere. Children no longer need an imagination. Marketing strategists make sure that the only pictures that children can have in their mind are those that sell. They speak already like TVs: why shouldn’t they replicate TVs in their brain? Eventually, as grown-ups, these children will be branded, like slaves of old, or cattle still is today. Perhaps, like the slaves of old, they will enjoy freedom one day a year. Or maybe all the days will have been taken away by marketing strategists, who wish to celebrate the sales of Valentine’s Day, Mother’s day, Father’s Day, Marketing Strategist’s Day…
You don’t believe me? Go to any primary school and you will meet hordes of little creatures dressed according to the latest fashion code, or pestering their parents to be so dressed. Those who are not there, because they are busy sewing the actual fashion items, may well try to rob them from the horde one day. These little brats! They want and want and want scores of items that they do not need, the possession of which, moreover, does not grant happiness at all, despite the glittering promises. Were it so, no new purchase would be “needed”, and that would be bad for business. Certainly, one may learn to control such a powerful impetus, but it takes years of self-re-training. Not even hunger and utter destitution placate it. Not even the full awareness of not being able to afford those consumer goods. Nothing will ever erase the deep-rooted psychological mechanisms implanted into our souls when we were little. Is this enough? No, there is more to it.
Our TVs and media are replete with role models—and the medium is the message. Rich and wanna-be-rich people of all sorts shine even when performing the most ordinary activities, such as shaving or concealing their stench with perfume. From slutty heiresses to pimping rappers, from cosmetically mummified bad actors to ignorant footballers, from divorce-addict hair-died tycoons to soon-to-be-millionaires answering questions or showing their private parts in public—these are the saints and blessed inspirers of the modern secular creed. They may be confessing their own sins to a TV host, confident that their words will be forgotten. What remains, instead, is the scent of money that perspires through their placenta-creamed pores. A powerful aura.
The same aura surrounding the action hero, who fights, kills and kidnaps for the sake of justice, peace and freedom… There he comes! Dressed in an Armani suit, he jumps out of a Mercedes, talking briefly on his Nokia. He checks his Rolex, then gets into a Ferrari and drives to Chez Maxim’s. There, he meets a beautiful young lady, whose Valentino dress will soon be ripped at the Hilton’s. And there he’ll kick the guts out of the villain, smashing his Patek Philippe and ruining forever his Dolce & Gabbana jacket… Justice is served. Peace is conquered. Freedom triumphs. That’s the message, isn’t it? And if not much of the beautiful young lady is shown, then children can watch too.
Poor people are less frequently shown. They don’t sell as well as our hero. Moreover, they don’t buy. There exist notable exceptions, though. Poor men and poor women are sometimes on display, like animals at the zoo, to be observed, mocked and, on Christmas day, to feel sorry for. Other times, they are actively humiliated on screen by policemen, judges and other masters of entertainment. Crime, ignorance, savagery: what a show! Once again, as long as it sells, keep it up. There, in the spotlight, for less than fifteen minutes and amidst commercial ads, the poor can shine like greasy piglets on spits, or like the tin their most unfortunate children collect in garbage dumps.
What is the result of this Blendungsroman? Go to any secondary school and you will meet cell-phone-talking walking replicas of the rich, parading themselves in the corridors. Give them an opportunity to put down a “loser”, and they will savour it like their own parents, whose SUVs and triple-mortgaged houses are punches into the Joneses’ stomachs. Even poverty is a risk worth taking to cast the rich’s aura.
The silent walking replicas of the poor are usually in other schools, unless they have dropped out of school already to find a job that will secure their poverty. Some are hiding in the toilets. They are poor and they know it. They look poor. It is not only their clothes that say it, but their bodies. They have bad teeth, small tits, big noses. Their parents have wrinkles. They can’t get fixed, like those people on TV, or their replicas and the replicas’ parents. To cope with this obvious inferiority, they breathe in. In Italy, they sniff cocaine to think that they too are rich. In Rumania, they sniff glue to think that they too are sniffing cocaine.
Either way, none of these kids must worry about being politically active. It is too dangerous. Yes, youngsters still remember how to bark: they haven’t been beaten up into silent submission, yet. Some will have to be locked up, so that trade be free. Don’t give them any wrong ideas. That’s socialism—or any bad “ism” of the day. Don’t give them hope. That’s socialism. Politics is best left to corporate employees, who siphon public money to their shareholders and, God be gracious, to their own bank accounts. That’s the free market. These employees alone are capable of understanding why unemployment is natural and inequality good. They’ve got talent. They’ve got the degrees that get you good jobs. Therefore, unless they are corporate employees, not even the kids’ parents have to worry about politics. Like these happy few, the kids’ parents can take happy pills too or, if pills are too expensive, drink themselves out blind.
Drunk, the poor parents can cope better with the trauma of seeing their children die. Each country has its own special way of sending new winged angels to God. In high-tech market-miracle India, they die of cholera in open-air sewers, where they were looking for edible scraps. In coup-idity-ruled Honduras they die poisoned by pesticides in a free-market plantation, so that the bananas people eat in Canada be not too pricy. In revolutionary France they die stabbed by an angry pusher in a dark alley, but they were not really French after all. In peace-loving America, they die fighting for human rights in another country, since their own country denied them a future. How was it possible? They had trained them at killing people since they were three, on a stolen X-box… Maybe they should have trained them at doing something else, but there is no videogame that teaches you how to free a political party from corporate diktats or join a trade union… Is this enough? No, there is more.
Our TVs and media are replete with experts telling us that greed is good. They are the most interviewed and consulted members of the intelligentsia of our community. Sometimes they even become our presidents, ministers, mayors and godfathers. Go to any university. Some of them feed on tenure and enjoy healthcare and pension benefits, whilst arguing that you shouldn’t have them. You will discover that there is an entire discipline built upon that notion.
If truth be told, a few of its adherents do remind their students, on leap years, that the profit-motive of the homunculus œconomicus is just one drive amongst many. This drive becomes one and insatiable for the sake of toying with mathematical formulae, not for the sake of describing reality, which never works quite like the models do. Facts can be so obstinate. Theory is much more flexible. Occasionally, on elective days, these beautiful souls mention even mysterious, metaphysical, unscientific words: “ethics”, “morality”, “duty”, “respect”, “goodness”, “virtue”, “governance”, “responsibility”… They don’t fully grasp them, though, for they slip out of books and balance sheets. Sometimes they even get their students to learn some history, thus half-stuttering what sort of devastation this homunculus and its leit-motive have caused. Still, these are exceptions, divagations, and the students, between the end of their studies and the beginning of their careers, know it very well.
Our MBAs and the many branches of science and engineering dependent upon private sponsors and future corporate employers are the convent-barracks where our crusading novices, more or less geeky and asocial, are told that only numbers really matter. The fate of a paterfamilias and of his family does not. They are told that persons are not persons: they are costs, opportunities, capital, markets… They are all sorts of things that can be converted into monetary units—numbers, in fact—though most definitively they are not persons. In fact, such things, be they free individuals or free communities, can turn into dependent variables. And if some of these things are laid off by a firm that rationalises an otherwise irrational workplace—what a madness it must have been!—then it may be time to invest money in that firm. If the right numbers go up, then things are just as they should be. If they don’t, they can be massaged. If they still don’t, they can be fixed. If they still refuse to go up, then a couple of hospitals plus half a university, as long as they are public, can be sacrificed to a return to growth.
In the streamlined world there can be recoveries without jobs, business opportunities in famines, increased flexibility via insecurity of employment and future bread, full employment at the natural unemployment rate, goods that do a lot of bad things, and market miracles that melt into destitution because of something bad but the pious market. What lesson is learnt? Everything in the world exists in order to maximise the money of investors and/or their managers. Even old, wrinkly countries must be attractive to such people or face their own demise. Make the rich richer. That is the one and paramount commandment. Such merciless homunculi are no fiction; they are science-fiction: they drive around in Dalek machines. Indeed, to those who do not simply rob and run, being merciless is a fiduciary duty. Apart from this, everything else goes.
Yes, everything else, unless you get caught and cannot pay the best lawyers—what a shame. Business words of the business world tell no lies: lack of scruples is “determination”, mercilessness is “having balls”, inhumanity is “being committed”, callousness is “professionalism”, locust-like behaviour is a “hedging”, stealing traditional knowledge is a “patent”, depriving people of knowledge is a “copyright”, poisoning the destitute is “mutually beneficial trade”, taking public-sector resources to guarantee private profits is “hard work”, threatening employees with unemployment is “personnel management”, gambling is “trading futures” and other cabalistic formulae “over the counter”, oligopolies are “economies of scale” and cartels are “free markets”, sending knowingly drivers to die because of a few faulty cars is a “cost-saving measure”, sending knowingly air passengers to die because of reduced safety controls is a “cost-saving measure”, corruption of inspectors is a “cost-saving measure”, corruption of politicians is “lobbying”, and rent-exacting parasites are “the productive class”. The list goes on and on. Read the news and enjoy the game: destroying peoples is “restructuring”, keeping them poor is “preventing inflation”, colonising a nation is “opening markets”, withdrawing rights is “reform”… By the end of it, you almost believe what they say.
Has any student still doubts or feels uneasy? Then he is told that all is well, for all ends well. Yes, those things that we unscientifically call “people” may seem to be suffering, poor things. And the others, crony criminals who have nothing to do with the free market, are the exception, though the rule just wants to be like them. After all, those exceptional exceptions were on the cover of glossy magazines like Capital, the Cosmopolitan of people who “have balls”… Don’t worry. Everything will be alright. Just wait—that’s what my old priest and the party commissar would say… The invisible hand of the self-regulating market is going to look after all of them. Free from State intervention and from trade unions—for only capitals may associate and go on strike if they don’t like a government—the invisible hand is to generate endless bounty for all—the invisible bounty? Most of the world’s trade is virtual, after all…
Such is orthodoxy today, for which even a Pope’s distribution chests are heresy, utter hilaireous bellocs… If you claim that small is beautiful, the giants get angry: go make your shoes elsewhere! Today, you no longer need to be red to be a danger. It is enough to be as white as a dove. The Market God likes hawks, whose endless preying is the source of all that is good. His transparent hand turns into water all the blood that these hawks spill. As to the tallest shrines, they are no longer erected for the glory of the Sun, Athena or Almighty God, but for the likes of Morgan Stanley. Behind all this, a hidden theology… Maybe Divine Will should be in fashion again.
The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.
Franklin Delano Roosevelt
To avoid glaring inequality or widespread misery I am ready to sacrifice some, or all, of my freedom… I should be guilt-stricken, and rightly so, if I were not.
The child empathises with the dying bird. The adult empathises with the starving child. The nurse attempts to ease the pain of the terminal patient. The teacher smiles patiently at the pupils playing in the courtyard. The schoolmaster hides his unease as the ancient oak is felled. The gardener watches wildlife documentaries on the TV. The mayor goes on holyday to his cottage on the lakeside. None of them likes to be ill. All of them fear death. All of them experienced curiosity or elation as they held a newborn creature in their arms. All of them have been compassionate at some point. All religions have praised divinity as the fountainhead of all that is. Whether physically, emotionally or mentally, all of the above have exemplified the ultimate source of all values.
Years of research about value have led me to conclude that nothing is more valuable than that which allows value itself to emerge: life. Without life—biological, emotional and mental—there can be no value, whether ethical, aesthetic, economic or political. Those that deem life’s value instrumental acknowledge its value nevertheless. Besides, none of them seems likely to prefer beauty or other values to eating every day and being in good health: take away their bread, and they will sell their dearest painting… Of all crazy philosophers ever alive, only a handful rejected life as a value and one alone behaved in a way that denounced actual indifference to life: Pyrrho the sceptic, whom his friends prevented from walking under carts and falling off cliffs. One. As for the few who told us that life is a valley of tears and an endless stream of horrors, none of them ever stopped eating, drinking, and philosophising, i.e. one of the activities that they clearly enjoyed the most. But what can the lives of crazy philosophers teach us about economic matters?
As usual, philosophy can reveal the heart of an issue. If life is so crucial, indeed the source of all values, then it can be inferred that a successful economic system provides universal access to vital goods across generations. Economic efficiency means that the lives of all benefit from it and nothing is spoiled to the point that those who come after us may not benefit too: resources are left for others the way in which we would like to have them left for us, if not better. Improvement is a possibility. An economic system that achieves its vital aims more effectively, thus opening the door to a richer fulfilment of planetary and human potential, is yet a better system. On the contrary, an economic system that does not fulfil its vital aims, either because access is limited to few or some, past or present, or because it delivers goods that are deadly, detrimental to life or irrelevant to life needs, whilst leaving some of these needs unanswered, is a failure.
The current economic system is a failure. As repeatedly denounced by the international scientific community at its highest and most representative levels, human civilisation has become for the first time in its history a threat to the planetary environment that allows for humanity’s own existence. There is no aspect of the Earth’s environment that has not been depleted in the three centuries that have seen the affirmation of capitalism worldwide: the biosphere-protecting Ozone-layer, breathable-air-producing and reproducing pluvial forests and oceanic life-systems, self-regenerating water aquifers, nourishing-food-producing arable spaces, and natural-equilibrium-maintaining and science- and technology-inspiring biodiversity. The continuation of life as we know and enjoy it is at risk.
Much has already been destroyed beyond repair, to the point that bioengineering is being discussed as a tool to cope with the most tragic consequences of “development” awaiting us. Emblematically, one nation of the world is planning already the purchase of land in India in order to transfer its entire population there upon the day when the ocean will have swallowed their ancestral islands. And yet, in the face of current profit losses, all this is treated as secondary. Just read the news and you shall see that the focus of collective action is upon a “return to growth”, as though the sad and deadly harvest of greed were not still vivid before our eyes.
What is more, the mantra of competition goes on unchallenged. But competition for what? To generate profits? And why? Why should rich people become richer? There’s more than enough to go around. Even more ludicrous is the idea that schools, healthcare, free time, old-age security, peace of mind and all those gains for life that people acquired in decades of blood and humanity should be dismantled so that competition be won. By whom? What sort of victory is the augmentation of the money heaps of people who already have it, whilst the quality of life and the living conditions of most are worsened?
F.D. Roosevelt told us seventy years ago that greed is not only bad morals, it is also bad business. When business’ sole purpose is to make as much money as possible as soon as possible, then the somewhat constructive role that business may play in society disappears altogether. It doesn’t matter if any private business actually makes a lot more money, gets bigger internationally or pervades even more diffusely the lives of millions: the standards of evaluation and appreciation for the constructive role of private business belong to the sphere of public wellbeing. And public wellbeing cares about long-term indicators: happy workers retiring in good health, healthy mothers making plans for their children’s education, educated youngsters looking forward to playing on the beach with their grandchildren. If this horizon disappears, then you’d better start to worry. Private business is known to have played far too often a destructive role, as everything, the long-term survival of private business included, can be sacrificed to man-eating Baal.
Short-termism, combined with the relentless pursuit of profit, characterised roaming Goths, wooden-legged pirates and cigar-loving gangsters. The entrepreneur, the glorious creation of modern capitalism, has always been expected to be something different. Restrained by family and personal pride, religious morals, annual dividends, trade unions and other 20th-century legal suasions, his horizon has been defined as a somewhat distant future, his playground the real world of flesh-and-bone persons like him, his reward the admiration of affluent or fully employed fellow citizens that participate in and benefit from his endeavours.
As long as alternative economic systems were either widely discussed or experimented with, the entrepreneur had to justify his existence by creating some tangible, albeit sometimes debatable, token of social worth, such as employment, community networks, or nice new gadgets. Only the speculator, hardly distinguishable from fraudsters, trotted relentlessly upon a different path. But speculators were said to be the exception, not the rule…
Yet the day came when Gordon Gekko and his friends got to control more than three quarters of what is still incautiously dubbed “world trade”. The decades of my life, infested by Maggies, yuppies and wall-less oligarchs, launched “The Financial Revolution”, a pivotal process in contemporary history that no historian has yet so baptised: let this label be my grand legacy to international scholarship.
An equally bombastic historian used this term in the 1960s to describe the emergence of public creditors in 18th-century England… It doesn’t quite compare, I’m sorry. We’ve just witnessed thirty long years of national barriers coming down—and how long it took for both nations and their barriers to come into existence!—so as to allow for a gigantic flood of miraculously leveraged liquidity springing out of… books and vast pools of capital formed by privatising public money in all of its shapes, squeezing profit from de-unionised workforces threatened by—what a coincidence!—unbarred international competition, and such ingenious tokens of financial engineering that only professional mathematicians could make sense of them. All this money travelling much faster than any good or service ever before: computers have replaced the pens and ink of old. The world of Gekko and other reptilian inhabitants of city hedges and wall streets is indeed a very bizarre world.
Originally, these creatures were meant to trade pieces of paper granting a share of the profits made by fairly large private companies. It is something that had begun in Genoa a long time ago and that their trading partners, the Dutch, had brought to the North Sea around the year 1600, sailing thence to the New World, another Genoese discovery… But a share of the profits may be less remunerative than profiting from shares. Gekko’s forefathers started betting on rises and falls in the price of those pieces of paper, sometimes causing them by moving massive amounts of money or dropping a few words into the nearest ear…
In the days of poor old Nixon, in the Big Apple, they traded about 20 million stocks every day. Today they trade 1600 million or so—and there’s more fruit in the basket than just a big apple. Also, as of Nixon’s time, they started playing games with the world’s currencies, namely the money with which common people buy their bread. Again, they started slowly, about 20 billion USD a day, but now, after “freeing” trade worldwide, they are up to 2 trillion. It is by far the largest chunk of trade in the world and it has one severe drawback: it makes the form of trade that normal people think of when they hear the world “trade”—buying and selling bananas, timber, cars, computers, etc.—much more complicated. Not to mention buying bread. But the reptiles don’t worry: they own the future. They buy and sell it.
Actually, they take bets—only a tiny fraction of trade in existing “futures” fulfils the official excuse that these are ways to hedge against risks on purchases of actual goods—on nearly anything that can be grown, mined or brought into existence, influencing the price of all sorts of goods, including the bread that common people wish to buy. Still, since even this casino was not big enough, the reptiles added onto the table the so-called “derivatives”, which are pieces of paper whose value is derived—hence the name—from something else, whether another piece of paper or a price arising from combining a few of them. Anything goes. Also because you can buy or sell these pieces of paper any way you like—over the counter, under the counter, beside the counter… You can actually buy and sell the option to buy or sell them, for short-termism can be so short that, to spare time, it allows certain persons to sell what they don’t have.
Is this too complicated? Too silly? Well, today, around the globe, there’s an ocean of derivatives, for a value of about 500 trillion USD. It is a lot of money… Strangely enough, however, the reptiles that invented them also felt the need to insure themselves against any risk that may ensue from trading in… derivative paper. So they started buying “credit default swaps” from insurance companies and let their friends and colleagues, the bankers, pile them up as assets, claiming that these “swaps” were as sound and good as gold itself. Probably they would have started taking major bets on them as well, had the entire mathematically engineered and economic-science-backed system failed from collapsing under its own virtual weight. Too much genius had been spent for the business world to bear. Under so much talent and foresight, the reptiles’ joints felt suddenly empty of market force. Amazingly, the invisible hand was nowhere to be seen. Fortunately, the State ran to their rescue and gave them a visible, reinvigorating bailout with other people’s money, lest the bank’s own mouthpiece uttered “BBB” or some other silly rating. And that’s where we stand today. The real suffering surrounding us, from the unemployed Spanish worker to the starving Senegalese farmer, is due to a virtual catastrophe. And if the starving Senegalese farmer tries to move to Spain, he shall meet a wall and possibly drown in the sea, while frustrated unemployed Spaniards, trained by modern corporate journalists, will hate guts those that didn’t. Strangely enough, these migrants are to be loathed, not the freely migrating virtual capital that cannibalised both Senegal and Spain.
Like all human endeavours, business can be either good or bad. To know what makes it good or bad, what is nobler than money, means to know how to measure real growth, real development, real utility, real goodness. Who, though, after Pareto’s Protagorean reinvention of economics, is allowed to know what real value is? Certainly not serious economists, who can only acknowledge preferences… The Pope may know, perhaps. He claims to be right like no-one else and that’s maybe why so many people cannot stand him: who likes an old moralising grandpa, in an age in which we are told by our media gurus to give into any juvenile urge of ours that can make them a buck?
Or maybe any living creature knows: they’re all God’s creatures, after all. Yes, even by watching slugs and bugs we can evince something important, which degree-honoured geeks may have neglected while sitting in front of an inanimate computer screen. They are not forgivable, though: no matter how much you masturbate, avatars are not human beings. Here comes the slap; Zen masters should love it: entomology can rescue economics from its value slumber. Vade ad formicam. What a twist! Or maybe not. It all started with Mandeville’s bees, to be honest…
Let me be brief and clear on this. What consistent pattern of behaviour can be observed amongst slugs and bugs? Watch them in your garden, if you have one. Or go and watch them in a public garden, if it hasn’t been sold to developers. As small and allegedly stupid as they are believed to be, all invertebrates try to do their best to survive at all times. And when they take risks, it is because they either look for food, shelter, safety, or attempt to ensure the survival of their species. As economically irrational as animals can be, these small beings can even sacrifice individual utility—one’s safety, food or head—for the sake of keeping, indeed at times just making, their young. Future generations matter, to them. Some seem even to care for their fellows in the anthill, hive or nest in which they live… Life, in truth, matters to living creatures, and yet life can be sacrificed, for more life may thus ensue. The only higher value that life acknowledges is, in fact, life.
And yet, in today’s world, money is still prioritised over life. Listen to our leaders, and with the exception of a pair of Caribbean politicians that corporate media describe regularly as lunatics, what matters most to most who matter most is to keep “growth” going. Capitalism or the “free market”, as they like labelling it despite its dictatorial logic, must keep generating profit, free from State intervention, which does not serve that one paramount end. All this is held, despite the well-known biocide implications of such a process. Yes, capitalism is responsible for the ecological degradation that we are living in with, and leaving to, our children. Has nobody really put together the Industrial Revolution and the collapse of the planet’s life support systems?
I shall help you: the causal link between the pursuit of profit and environmental degradation becomes visible every time environmental regulation is resisted as “too costly” or by-passed by illicit behaviour or by off-sourcing to countries that have actually little such regulation or none at all. Unless business is forced forcefully to comply with existing regulation, which is much more difficult in a barrier-free worldwide market, common praxes show that the primacy of profit persists over, say, not killing other people by dumping toxic waste onto them.
Indeed, in economics, it is methodologically impossible to address the environmental preconditions that make life possible and can secure its long-term flourishing. To the eyes of the economic observer, bread is as much and legitimately a “good” as nuclear waste, as long as a lawful market exists for both of them. It is only through direct State intervention that a bad “good” becomes officially what it is: a bad—and that is just the first step, for enforcement is yet to be secured from lobbying and bribes.
States alone can ban slavery, organ trafficking, child labour, exploitation, air pollution or aquifer poisoning as the bads they are. States alone can make the real economy and earned income primary, and the virtual economy and unearned income secondary. There is nothing intrinsic to market mechanisms leading to that and we have known it for nearly two hundreds of years. Read Charles Dickens’ subversive novels to get a clearly bleak picture. Also, ecosystems are “externalities”, as the language of economics reveals, at least as long as they are not turned into a cost by environmental legislation, into a loss of profit by reduction in reputation and actual sales, or into a market opportunity by persistent spoliation of it—see the oxygen cans sold in the subway in Tokyo.
Protecting life and the environment is something that runs against the logic of profit, even if some business leaders may themselves desire it ardently. Profit can only relate to the value of life instrumentally: as a means to further profit. Money is a fetish, and one that eats living creatures and their dwelling spaces if that generates revenue. Nothing leads profit-driven “rational” agents to doing that which is necessary for planetary survival and, for that matter, for a decent social life on a vast scale. Even public health, the most obvious case of socially beneficial public agency, is opposed as unprofitable hence bad. Not to mention all the money that is made by “growth” via sales of carcinogenic “goods”.
As the world’s money is controlled by gargantuan private institutions and managed to enrich their rich shareholders, even if it means strangling debt-ridden public authorities and diverting resources from public sewers to private coffers, there is little hope that the dominating logic may change. Some used to argue that money should be controlled by public authorities and managed for the public good, as written in certain constitutions… But we have already talked about such a peculiar notion. For the moment, let’s see whether the Philosopher-Kings of Greece will crumble because of the Goths, after being failed by Chelsea-resident haven-seekers and the advice of Goldmen-sackers.
Without ever have been, I never cared much for Iceland. Too much nature and too little density for my tastes. Then, work brought me to Iceland in August 2008. I fell in love—while the Icelandic economy fell apart.
I wanted to learn about Iceland and the Icelandic culture. All the Icelanders I met told me I should read Independent People. So I read about Bjartur’s Winterhouse transformed into Summerhouse as simultaneously I read about the land of ice and fire transformed into the land of bankruptcy and failures.
I was struck by the similarities of the two stories: the basic framework of the plot of Independent People and today’s situation are almost the same. They both start from a status quo. There is an economic boom. There is a delusion that the boom will last forever. The boom includes a real estate boom. There are people buying things that they cannot afford. There is a bad mix of local politicians and local businessmen. There are a lot of bad loans. There is the bust after the boom. There are loans that cannot be repaid. Houses are abandoned, empty, some unfinished. Bjartur’s framework strikes me as the same basic framework as today’s.
But there is a difference, a big difference. After the bust, Bjartur went, on foot, to a destroyed house with no heat, no privacy, with his uneducated young daughter who is killed by a common disease. After today’s bust, people drive to their large high-tech homes and send their healthy kids to college.
This is not a small difference. In a few decades, the country went from having Bjartur’s lifestyles to being able to allow twenty-three year-old men to stay in school without working. To me this is an incredible and marvelous difference!
On Icelandic blogs in English, I read comments about the great figure of Bjartur and the great mistakes of Iceland today. Glory to Bjartur and disgrace to today’s public figures. And I think: hold on! You cannot be serious! The difference between Bjartur’s time and ours is a wonderful achievement and an almost miraculous lesson. Looking back on Bjartur’s time with nostalgia is made possible only because of the wealth that today’s Iceland enjoys. Today, nobody wants to live in a turf house with no electricity, no bathroom, and one bedroom shared by a mother-in-law and three kids, little food, one book, and many diseases.
True, there were mistakes during the recent crisis. Icelanders are human, like everybody else. And mistakes are an unavoidable part of the human condition. But there were also many successes. Iceland did something right, after all. The increase in standards of living from the First World War to the Second seems to me to have been minimal (my knowledge is based again on a novel by Laxness—The Atom Station). By contrast, the growth in the last couple of decades is immense and real.
There was an economic boom and a bust in Bjartur’s time. There was an economic boom and a bust in our time. It is normal to have booms and busts, not just in Iceland but everywhere else in the world. Economies cycle. All of them. There have been cycles in the past, and there will be cycles in the future. They are inevitable. Booms and busts are not the issue. What matters is how well one ends up after the bust. I hope that Iceland keeps doing what it has done recently, rather than trying to go back to what generated misery for centuries.
I believe this economic crisis is an opportunity for Iceland to look at its recent success and to learn what made it possible. This is an opportunity to look back at Bjartur, rejoice at the permanent departure from his lifestyle, and understand what made it possible for very similar events to occur today without Iceland ending up in such a terrible situation.
So let’s go back to Bjartur’s story. Let’s look at the economic boom and bust described there. Booms and busts, with all their differences, are nevertheless similar enough that we can draw parallels. Bjartur’s story and today’s story are similar enough that we can look at one to get a better sense of the other.
In Independent People there was an economic boom. But was there a boom-maker? Was there someone responsible for the boom in that story? Was there a Mr. X at whom we can point our finger and say: “Him—he is the person who made the boom”? No. The beginning of the boom is described roughly as: “and then there was an economic boom.” The boom just happened. It came from abroad, from the presence of the Great War. Bjartur’s Iceland reacted to international economic forces. There was no single politician or political party that was responsible for that boom. Iceland let itself be carried by those external economic forces. Bjartur did not understand what was going on. He just saw that he was making more money by selling wool. He saw the opportunity to improve his lifestyle and build a different house. He got a loan, which was now available. He did build a new house. He was happy and felt fulfilled. The local politicians and “bankers” also did not plan the boom, did not make the boom happen. They, like Bjartur, just saw an opportunity to improve their lifestyle. And they did.
Today’s boom was, in many ways, no different. Icelanders saw their wealth increase, and the opportunity to improve their lifestyle. And so they did. And just like the politicians and bankers in Bjartur’s time, as much as some politicians or bankers of our time may have wished to claim responsibility for the Icelandic boom of the early 2000, they were not responsible for it. Nobody was. The boom was a world-wide phenomenon. Again, there was nobody at whom one could have pointed a finger and said: “Him! He is the cause of our (global) expansion!” Politicians and bankers saw an opportunity to better their conditions and they did—as it was done in the United States and in the rest of the world. One person, no matter how competent, is not able to expand the entire economy of a country and to drag the world economy along in that expansion.
Thinking that there is a boom-maker is a mistake based on human pride and hubris. It is a common claim. But that does not make it true. The economy of a country, even of a small country, is too complex a phenomenon to be controlled by one person or by a small group of people. And when the economy is subject to global forces, that claim becomes even more nonsensical. Politicians like to think of themselves as directing the economy: “See? Look how good I am. I did this!” But claiming to do something is not the same as actually having the power to do it. An economy is not a machine that can be controlled at will. An economy is not a car. An economy is an order that, in a sense, has a life of its own. It lives off the interactions of many, many people—off their decisions, their knowledge. Even the most consciously-designed of human economies did not follow the intended plans and took on lives of their own. An economy is an order, to repeat an old expression, that emerges from human actions but not from human design. We know it exists. We know it works. But at a deep level, we do not know how.
And the bust? Well, again look at the story in Independent People. The bust, like the boom, happened. No politician was able to stop it. It came from abroad. It came with the end of the war. It came with some warnings, which were not taken seriously. And it was no politician or banker’s fault. No individual politician or banker was directly responsible for it.
Similarly, today, the economy experienced a bust. A big one, but still a bust, like others before it. And as with other busts, the local politicians, whether competent or incompetent, honest or corrupt, are not the direct cause of it, no matter what some are willing to claim. One single politician, or even one political party, does not have that kind of power.
The economy in Bjartur’s time cycled. The economy in our time cycles. All economies cycle. They always have. An economy is not stable. No economy is. They expand and they contract. It is a normal part of economic life. The cycles of economies are like heartbeats in humans. A heart that does not beat is a dead heart. Similarly, an economy that does not cycle is not a functioning economy. The difference is that a heartbeat usually comes at a regular rhythm, while economic “beats” are irregular and unpredictable.
Why do economies cycle? Because they are built upon human beings. Human beings make economic decisions. Some decisions turn out to be correct and some decisions turn out to be incorrect. Why do people make decisions that turn out to be incorrect? Ignorance, incompetence, overconfidence, or, often, just bad luck. Circumstances change. So decisions made under different circumstances are no longer applicable. Cycles are important because often they are ways to make ourselves aware of decisions that are not appropriate under present circumstances and to try to change our behavior accordingly. Busts can therefore be valuable in the life of an economy. Busts allow us to adjust to different circumstances.
Nevertheless, we hear all the time that we should avoid busts, that we should smooth the cycle. The idea of smoothing the cycle is appealing. We do not like changes, especially changes that may hurt us in the present or immediate future. Additionally, the idea of smoothing the cycle implies that someone can control the economy and knows how to do it. This is a very appealing idea indeed. Who does not want to play rain-maker? But no one really possesses the power or knowledge necessary to control the economy. Economists know a lot. But they also know a lot about what they do not know. They know that an economy is not a car to be driven at pleasure. And even if the economy were a car, they know they would not necessarily know how to fix it or drive it. The attempts of the past ended the same way—as wrecks. Some economists become policy advisers and their salaries come from leaders who want to be, and publicly claim to be, the drivers of the economic machine. What can we expect such economists to say? “Listen, there is not much we can do…just make sure people play by the rules”? Or instead: “Yeah, we can fix this!”
Saying that the economy is an order that has a sort of life of its own and that it cannot be driven like a car does not imply that there is absolutely nothing that politicians can do. What politicians can do is set up institutions and incentives that either let the economy live or strangle it.
In a sense, if one really wants to think about the economy as a car to be driven by some politicians, then I think that the best car to fit this image would be Herbie, the Volkswagen Bug of many Disney movies. Herbie, to the shock of all its drivers, is alive. It moves independently of the will of its drivers. It moves by itself to attract attention when it needs care. It stubbornly refuses to cooperate when something wrong is done to it. It behaves differently with different drivers: with the “good” drivers it goes fast, but with the “evil” drivers it goes very slowly, if it goes at all. “Good” drivers, of an economy, are good institutions. “Evil” drivers are bad institutions.
Today economists know that institutions matters. The institutions that usually matter for allowing an economy to flourish are freedom and open markets, definition and protection of property rights, political stability, immigration, and development of human capital. As I mentioned at the beginning of this essay, I was struck by the similarity between Bjartur’s time and today. But I was also struck by their differences. What happened between Bjartur’s time and today that made Bjartur’s miserable conditions disappear? Iceland developed many good institutions in the past few decades. Ones it lacked in Bjartur’s time.
What matters, then, is not to avoid every fall, which is not possible, but to fall in the least painful way. The fall of Bjartur was painful. The fall of today is painful too, but it takes place on a much softer and warmer surface than Bjartur’s hard and frozen ground. Bjartur, in his quest for self-sufficiency, basically killed everybody around him (with the exception of his mother-in-law!). Bjartur’s is a life of misery and death. And Bjartur’s Iceland was a miserable economy, poor and isolated from the rest of the world. As Independent People shows us, self-sufficiency is a recipe for misery. Iceland started its way to wealth when it allowed itself to be “dependent,” when it opened itself to the rest of the world. I used the word “dependent” in quotation marks because “dependent” seems to be the most obvious opposite of independent. But it is not. The correct word is actually interdependent. Iceland was able to abandon its poverty when it embraced the rest of the world. The more open a country is, the larger the markets in which it trades, the more interdependent it becomes, the more prosperity that country will have.
Good institutions matter. Having well-defined and enforced property rights matters. Having light regulations and taxation matters. Having an open policy for immigration matters. Having good incentives for the development of human capital matters. But for Iceland, this does not necessarily imply joining the EU. Iceland can benefit from the open markets of the union even without joining it, as it has done in the past. By contrast, actually joining the EU can be used as a blame-shifter. In the future if something goes wrong, one can blame the EU, lending undeserved cover to local politicians. Joining the EU can also be used to add economic disruptions to political games. The more regulations and the more bureaucracy, the more power politicians have. Corruption will have an added layer, rather than being eliminated. The more regulations, the more opportunities to bribe or curry favor though offering to close one eye, or both eyes, or to make an exception. Iceland did well in the past few decades by building the right institutions, without joining the EU. It should keep going in that direction even now.
The current crop of politicians seem to worry about how Iceland can meet the standards necessary to join the EU. But they should be worrying about the cost that that would impose on Iceland. On top of the additional laws, regulations, and taxations that will burden the economy as a whole, fishing (the most valuable industry in Iceland) would be particularly hard hit. The replacement of the Krona with the Euro would also be another major cost. Having the choice between more than currency is by all standards better than not being able to choose. If the prospect of joining the EU would indeed bring hope for Iceland, why are so many Icelanders leaving? Why is even McDonald’s leaving—and saying that there are no plans to come back in the near future? Herbie is coughing and spitting; the threat of the return of some bad institutions seems strong. What if Bjartur’s times come back?
If Iceland did so many good things in the recent past, if Iceland was lucky enough to develop good institutions when the global timing was right, why did Iceland tumble? To ask why Iceland? is like asking why Lehman Brothers? We can point to a direct, immediate cause, but in many ways we have to simply say the answer is “bad luck.” It could have happened to someone else. Iceland, like Lehman, was the first to go. Ignorance and uncertainty about what was going on seem to have mattered. Remedies taken later by others were possible in part because both Iceland and Lehman provided examples for the world of how bad things could get.
How bad is it if a developed country asks for emergency loans and those loans, for some unknown reason, are not granted? Now we know. It is very bad. It is a financial meltdown. Other countries, which asked for emergency loans after Iceland collapsed, got their loans. Their fall was not as bad as Iceland’s. How bad is it if a foreign country causes a bank run (as the UK did in the case of Iceland) and simultaneously freezes the assets of that bank (and of the country to which that bank belongs)? Now we know. It is very, very bad. It is a collapse of the banking system. This, actually, we knew even before. Banks work on a fractional reserve principle. This means that a bank assumes that all the people who have deposits in it will not ask for their money back at the same time. So the bank can use part of those deposits to finance loans. But if all the depositors do ask for their money back at the same time, the bank goes belly up since it will not have enough reserve to pay back all the customers. Maybe the UK forgot? Now, surely, it is reminded, as is the whole world.
So this is what I learned from Bjartur. I hope not to be alone when I look at Bjartur and appreciate how Iceland grew in the past few decades, how much more better off people are today than in Bjartur’s time. I hope that Icelanders will be able to appreciate the miracle they experienced thanks to their successful attempts to build good institutions, and that they will continue on the road to openness and growth.
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