{"id":309,"date":"2014-05-28T13:26:08","date_gmt":"2014-05-28T13:26:08","guid":{"rendered":"http:\/\/nome.unak.is\/wordpress\/?p=309"},"modified":"2021-09-14T19:59:48","modified_gmt":"2021-09-14T19:59:48","slug":"the-picture-small-and-big-iceland-and-the-crises","status":"publish","type":"post","link":"https:\/\/nome.unak.is\/wordpress\/09-3\/c73-conference-paper\/the-picture-small-and-big-iceland-and-the-crises\/","title":{"rendered":"The Picture\u2014Small and Big: Iceland and the Crises"},"content":{"rendered":"\n\n\n\t
\n\n\t\t<\/i><\/span> <\/a>\n\n\t<\/div>\n\n\n\n\n\n

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0. Introduction<\/i><\/span><\/p>\n

I was invited by the organisers of this Winter Symposium of the third research group of the Nordic Summer University (NSU), devoted to the concept of crisis<\/i>, as an Icelandic citizen and scholar to offer a concise picture of the events in our country, which experienced in the year 2008 a much-televised economic crisis or kreppa<\/i>, as it is called locally. In what follows, I provide two<\/i> succinct and inevitably selective pictures: one small, another big. The small picture is a three-step account of what led essentially to the economic crisis, what this crisis consisted primarily in, and what followed it that induced a recovery. I focus upon the third step in particular, since it is less known abroad than the prior kreppa<\/i>. The big picture is a brief twofold reflection on how the Icelandic experience fits within larger global trends, i.e. I assess it from an economic-historical perspective and from an axiological one. Under both perspectives, I make use of two chief intellectual reference points, both Canadian, namely the work and wisdom of the economist John Kenneth Galbraith and of the value theorist John McMurtry. Given that the audience at this symposium is not fluent in Icelandic, I make use only of English-language sources (and spelling of Icelandic names) and as far as possible, given the electronic format of the journal in which this paper is going to be published, of sources that are easily accessible online.<\/span><\/p>\n

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1. The Small Picture<\/i><\/span><\/p>\n

1.1 The Boom<\/i><\/span><\/p>\n

What preceded the crisis was a fairly long phase of transformation of the country\u2019s laws and economy, spearheaded by the governing Independence Party and its leader: \u201cPrime Minister David Oddsson\u201d (Gissurarson, 2004). Writing in 2004, Oddsson\u2019s personal friend, policy advisor, fellow Central Bank board member, Mont Pelerin Society vice-president and long-time university professor Hannes H. Gissurarson describes him as \u201cthe longest serving leader in the Western world, having formed his first government in 1991\u201d, to whom \u201c[m]uch of the credit goes\u201d for launching \u201ca radical and comprehensive course of liberalization that mirrors similar reforms in Thatcher’s Britain, New Zealand and Chile\u201d (Id.) <\/span><\/p>\n

What Gissurarson (2004) depicts and praises as a \u201c[m]iracle on Iceland\u201d is a set of policies truly analogous to those seen in Thatcher\u2019s Britain and Pinochet\u2019s Chile, such as: \u201ccut[ting] extensive direct and indirect government subsidies early on, mainly by dissolving some public investment funds and privatizing others\u201d; \u201cstabiliz[ing] the economy with monetary and fiscal restraint\u201d; \u201cprivatizing\u2026 small companies, later turning to large fish-processing plants, factories and financial companies\u201d; \u201cderegulat[ing] the economy [by] target[ing] the special privileges of groups such as pharmacists, and, more importantly, allow[ing] the free transfer of capital in and out of the country and competition in the telecommunications sector\u2026 creating conditions for competition in Iceland’s hydro-electrical system by bringing in foreign investors\u201d;\u00a0 \u201creduc[ing] the corporate income tax to 30% from 50% and abolish[ing] a special tax on company turnover\u2026 [and later] further\u2026 cutting the corporate income tax to 18%… phas[ing out] [t]he net-wealth tax\u2026 and\u2026 greatly reduc[ing] the estate tax\u201d; and \u201cstrengthening private property rights, both to capital and natural resources\u201d. <\/span><\/p>\n

Joining the European Economic Area and weakening the trade unions\u2019 bargaining power could be added too, but Gissurarson (2004) laments that \u201cmuch remains to be done\u201d, since \u201c[t]he health and education systems are publicly operated, and so are the utilities, some broadcasting stations, and the hydro-electric power system.\u201d Between 2004 and 2008, part of what was left to be done was done, including tuition-charging private universities, which received State subsidies as well (OECD, 2008). Despite such a blatant example of corporate socialism (cf. Galbraith, 1967 & 1977), the ideological inspiration of the country\u2019s transformation over the 1990s and early 2000s is described plainly as non-socialist: \u201cFree-market economists like Friedrich von Hayek, Milton Friedman and James M. Buchanan all visited the country in the 1980s, influencing not only Mr. Oddsson but many of his generation. In the battle of ideas here, the right won.\u201d The aim of this transformation is also not difficult to identify, i.e. to let Iceland be among \u201cthe richest countries in terms of GDP per capita\u201d.<\/span><\/p>\n

Gissurarsson\u2019s article does not focus upon the privatisation of the country\u2019s three largest banks, which was concluded in 2003 and that, five years later, proved to be the pivotal cause of the nation\u2019s sudden and spectacular crisis (cf. Boyes, 2009; J\u00f3nsson, 2009). Back then, the privatisation of the largest banks in the country was opposed in Parliament by only one minor left-wing political party (the \u201cLeft-Green\u201d) orbiting around 8% of the popular vote, which indicates a rather widespread popular approval of the self-declared free-market right-wing course of action that Gissurarson (2004) dubs a \u201c[m]iracle\u201d (cf. Horn, 2012). Although Iceland enjoyed already in the 1980s very high standards in education, health, cultural and recreational life, most voting Icelanders might have dreamed of something else: fancy cars, high-tech gadgets, bigger houses and an \u201c<\/span>American-style\u201d life, high private indebtedness included (Huijbens & \u00deorsteinsson, 2010: 21).<\/span><\/p>\n

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1.2 The Bust<\/i><\/span><\/p>\n

As commonplace in the history of several countries that underwent analogous transformations after the end of the Bretton Woods system, Iceland\u2019s \u201cmiracle\u201d (Gissurarson, 2004) turned into a meltdown. Elaine Byrne and Huginn F. \u00deorsteinsson (2012: 135-6) write: \u201cin October 2008. Within a span of less than a week, the entire financial sector, ten times the gross domestic product (GDP) of Iceland, went bust. The stock market was nearly wiped out. The economic outlook was not favourable. Interest rates and inflation were at 18 per cent. Unemployment sharply rose from 1 per cent to 9 per cent. Government revenue was rapidly evaporating but government expenditure had surged. The Icelandic kr\u00f3na (ISK) was in free fall and the reputation of the country was in absolute tatters. The entire financial sector had collapsed lock, stock and barrel.\u201d <\/span><\/p>\n

The Viking Tiger, just like the Asian, Latin-American, Baltic and Celtic ones, discovered itself to be a sacrificial lamb upon the altar of free trans-national capital trade. Rather than shining like a new wealthy \u201cLuxembourg\u201d (Gissurarson, 2004), Iceland\u2019s boom-bust cycle mirrored the events that have repeatedly taken place in a plethora of former Western colonies since the 1980s and a number of post-communist countries since the 1990s (cf. McMurtry, 1999 & 2013). In this specific case, the crash of the derivatives-filled financial market in the US\u2014the private \u201ctoxic assets\u201d that somehow have already disappeared from mainstream public discourse and the mass media in lieu<\/i> of \u201cpublic debt\u201d and nations \u201cliving beyond their means\u201d\u2014produced a \u201ccredit crunch\u201d (cf. Chand, 2009). In essence, not knowing how \u201ctoxic\u201d another\u2019s books could be, private banks stopped lending to each other for fear of facing major losses, both nationally and internationally. As a consequence, it became impossible to continue to refinance the massively leveraged (i.e. debt-based) and poorly collateralised growth of Iceland\u2019s \u201cthree main banks, Glitnir, Kaupthing Bank and Landsbanki.\u201d (Byrne & \u00deorsteinsson, 2012: 135) Caught with their pants down, if you allow a crude but vivid expression worthy of a finance minister, the recently privatised banks \u201ccollapsed creating significant turmoil in the financial markets. This in effect shut down the foreign exchange market and caused a dramatic depreciation of the kr\u00f3na. The immediate consequences were the nationalisation of these three banks, which accounted for 85 per cent of the banking system. The International Monetary Fund (IMF) immediately intervened with a $2.1 billion package in order to avert a further meltdown of the Icelandic economy.\u201d<\/span><\/p>\n

Such a vertical and critical collapse led to a modicum of soul-searching, which found a bulky and permanent expression in the 2010 Report of the Special Investigation Commission of the Icelandic Parliament (SIC), part of which has been translated into English. In it, the technical details of the banks\u2019 collapse are presented at length, as well as the many anti-competitive and anti-meritocratic practices occurring within the country\u2019s financial sector, the impotence of under-funded regulatory bodies, and the unethical complacency of much of the nation\u2019s media, academia and political class (cf. also Boyes, 2009; J\u00f3nsson, 2009). Among them, Time<\/i> (2009) magazine singles out former \u201cPrime Minister David Oddsson\u201d (Gissurarson, 2004) as one of \u201cThe 25 People to Blame for the Crisis\u201d worldwide, since he had not only promoted the \u201cexperiment in free-market economics\u201d discussed above, but also been at the helm of the country\u2019s Central Bank since 2005, i.e. just in time for failing to keep the meltdown from occurring (Time<\/i>, 2009). Indeed, such a vertical and critical collapse led to unprecedented street protests and what was later named Iceland\u2019s \u201cKitchenware Revolution\u201d, which made us \u201c[t]he first country to throw its government out of office as a result of the global financial crisis\u201d (Thomas Jr., 2009). <\/span><\/p>\n

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1.3 The Recovery<\/i><\/span><\/p>\n

The change of government meant that, for the first time in decades, the conservative party would not steer the course of the nation\u2019s fate. A left-wing government was formed, inside which the formerly minor 8% political party opposing the privatisation of the State\u2019s banking sector had grown into a two-digit strategic player, especially via<\/i> \u201cIceland\u2019s finance minister, Steingrimur J. Sigfusson, a lifelong leftist\u201d (Id.). Iceland did not turn into a Nordic Cuba, though. <\/span><\/p>\n

Quite the opposite, over the following three years, Iceland pursued economic policies \u201cin close contact with the I.M.F.\u2019s representative [t]here\u201d that included \u201csharp cuts in health spending and higher gas prices\u2026 [h]igher interest rates\u201d, cuts to culture and education, and further\u00a0 \u201csevere economic restrictions that the country has been forced to endure to qualify for more money from the I.M.F. and other Nordic lenders.\u201d (Id.) The tax revenue from the ballooning financial sector had evaporated, while the bill for unemployment benefits had soared at the same time: pressured by its historic Nordic partners, Norway in primis<\/i>, the options on the government\u2019s table seemed limited. Far from challenging orthodoxy, the new government followed \u201cthe fund\u2019s recommendation that [they] maintain high interest rates as well as capital controls \u2014 a prescription [Steingrimur J. Sigfusson] describes as similar to wearing a belt and suspenders at the same time.\u201d (Id.) <\/span><\/p>\n

As peculiar as such a statement may sound, the pants were up this time; and so they have stayed thus far. As Elaine Byrne and Huginn F. \u00deorsteinsson (2012: 137) report: \u201cin the three years since the 2008 Icelandic collapse, the Nordic country has made a remarkable and noteworthy economic recovery. The IMF approved the final loan tranche in August 2011, marking the end to a 33-month rescue package. The Finance Minister, Steingr\u00edmur Sigf\u00fasson, subsequently announced that \u2018All the program objectives have been achieved.\u2019 Nemat Shafik, IMF Deputy Managing Director and Acting Chair, likewise stated \u2018Key objectives have been met: public finances are on a sustainable path, the exchange rate has stabilized, and the financial sector has been restructured.\u2019 The economy has stabilised, fiscal adjustment has been successful, economic growth is picking up and the sovereign financed itself successfully in the bond market in May 2011 on what were considered good terms.\u201d <\/span><\/p>\n

Were high interest rates and severe budget cuts the crucial recipes of this second Icelandic miracle? Yes and no. Orthodoxy did play a role, but so did heterodoxy, starting with capital controls, which the IMF, a long-time enemy of them (cf. Chwieroth, 2009), regarded as necessary on this occasion. On top of these controls, which are still in place and make Iceland reminiscent of the Bretton Woods\u2019 days, the new Icelandic government pursued: the re-nationalisation of the recently privatised banks; their dismantling into viable good banks (thus saving domestic depositors) and bankrupted bad banks (thus causing shareholders and foreign investors to lose their risk capital); the steering of the banks\u2019 credit in support of domestic entrepreneurship and employment; the regular consultations among the government, the employers\u2019 associations and the trade unions in order to keep joblessness under control; a new markedly progressive taxation of income; and the principle that the regressive measures, i.e. the many painful cuts to public investment, should be done in a progressive manner (cf. Johnstone & \u00c1mundad\u00f3ttir, 2011). Thus, unlike the 1st<\/sup> letter of intent with the IMF, which was passed before the \u201cKitchenware Revolution\u201d, the 2nd<\/sup> letter of intent with the IMF made it clear that Iceland would retain its Nordic Welfare model (cf. \u00c1g\u00fastsson & Johnstone, 2013). I believe this explicit reference to welfare qua<\/i> conditionality for the IMF intervention to be the first and only in the IMF\u2019s history.<\/span><\/p>\n

Additional factors played an equally important role: the depreciated national currency led to a surge in the country\u2019s export of goods and incoming tourism; the people of Iceland rejected twice the so-called Icesave<\/i> agreements with Holland and the UK, which would have burdened the country\u2019s public budget with new loans to repay the Dutch and British customers of foreign branches of now bankrupt Icelandic private banks (Icelanders voted the latter time against the advice of nearly all parties, both left and right of the political spectrum); and the curious fact that, as Huijbens and \u00deorsteinsson (2010) notice, the orthodox IMF recipes of sweeping liberalisation and privatisation could not be applied, since they had already taken place in the seventeen years before the eventual meltdown. That which\u00a0Time<\/i> (2009) dubs \u201cfree-market economics\u201d could not come to the rescue, for it had already been the prime cause of the country\u2019s shipwreck.[1]<\/span><\/a><\/span><\/p>\n

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2. The Big Picture<\/i><\/span><\/p>\n

2.1 Economic History<\/i><\/span><\/p>\n

Sub sole nihil novum est. <\/span><\/i>On a national level, the Icelandic crisis trod along the lines of the notorious 1929 Wall Street crash and successive US financial collapses (e.g. the savings & loans crises after the 1986 tax reforms, the 2000 dot-com bubble). All of the key-ingredients discussed in John Kenneth Galbraith\u2019s 1954 classic study of the 1929 Great Crash were there: financial speculation prevailing over genuine productive investment; media-inflated irrational euphoria; private over-indebtedness by easy credit; blind, biased and bought punditry; irritated dismissal of critical voices; successful corporate lobbying for lax regulation; endemic corruption across private and public sectors; business-friendly legislation for businesses befriending legislators through generous campaign donations and revolving-door incentives; reduced taxation on higher incomes (cf. Thorvaldsson, 2009). In truth, even Galbraith\u2019s (1987) main fear vis-\u00e0-vis <\/i>modern economies was there: the sheer ignorance of, and\/or wilful blindness to, the lessons of economic history; could things be really different this time? Had the Icelanders truly found a special, Viking way of doing business, as a colleague once told me with great pride before 2008?[2]<\/span><\/a> As Galbraith (2000) would quip: \u201cThe oldest Galbraith rule is that when you hear that a new era has dawned, you should take cover.\u201d<\/span><\/p>\n

On an international level, the Icelandic crisis trod along the lines of innumerable post-Bretton-Woods meltdowns (cf. McMurtry, 2013). Latin America, Sub-Saharan Africa, Pakistan, South-East Asia and post-communist Europe have given ample testimony to the chaos that Cornelius Castoriadis (1996\/2005: 82) predicted qua<\/i> inevitable outcome of the re-introduction of free capital trade worldwide: only a \u201cplanetary casino\u201d could emerge from \u201cthe absolute freedom of capital movements\u201d.<\/span><\/p>\n

As to the British and Dutch attempts to impose onto Iceland via<\/i> Icesave<\/i> agreements a system of self-perpetuating debt, that is precisely what de Bernis (1999) calls the \u201cusury model\u201d of the so-called “Third World”, whereby national governments find themselves burdened by such amounts of debt that, apart from reducing all forms of public spending but the army, they service their debt by taking on more debt, which in turn has to be serviced in the same way. That is analogous to current developments in southern Europe, where the governments of countries such as Greece and Italy are burdened by a considerable debt level, and yet keep increasing it in order to pay their creditors, while at the same time reducing the provision of human-rights-mandated public services to the population\u2014to an extent that can be technically defined as “cruel” (cf. Baruchello, 2013b).<\/span><\/p>\n

What is conspicuously different in the Icelandic case are some rather unusual outcomes of the crisis: banks i.e. shareholders were not bailed out (for once, the laws of competition were applied, though possibly out of inability to do the opposite, given the disproportion between the banks\u2019 losses and the country\u2019s GDP; cf. Byrne & \u00deorsteinsson, 2012); sweeping reforms were implemented (but in a protectionist sense, e.g. by re-nationalising recently privatised banks and protecting local depositors); free capital trade has been suspended since the emergency laws were passed in response to the 2008 meltdown (again, at least in part, out of sheer necessity); and further privatisations and fire-sale handovers to foreign investors have been avoided until now. <\/span><\/p>\n

Do note however that performing a second miracle on Iceland was not enough for the 2009 governmental coalition to win the 2013 elections, which brought the so-called \u201ccrisis parties\u201d back to power\u2014Iceland\u2019s Lutherans, unlike Catholics, are hard to sway with miracles, especially when the one saluted by Gissurarson (2004) turned out to be rather dubious. Not to mention that the second miracle itself might have seemed dubious to many Icelanders, whose private debts have endured qua <\/i>assets of the new \u201cgood\u201d banks capitalised after the demise of the old \u201cbad\u201d ones, while their purchasing power has fallen together with the national currency and the dreams of a fancy way of life\u2014the kind of inane consumerist life that so many TV programmes, movies and adverts have been showing them on a daily basis since early childhood (cf. Castoriadis, 2003 & 2005; Galbraith, 1967 & 2004; Fromm, 1966). On top of that, many Icelanders might have wanted to reward the one and only party opposing the Icesave<\/i> agreements on both national referenda, while also campaigning for a large-scale private-debt write-off (the \u201cProgressive Party\u201d; cf. Young, 2013).<\/span><\/p>\n

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2.2 Axiology<\/i><\/span><\/p>\n

As McMurtry (2013) observes in his latest book, Iceland and, for that matter, all<\/i> meltdown countries are cases of societies turned into means to multiply the money demand of private money possessors as the supreme goal of the economy and society itself. In all<\/i> these cases, with no exception whatsoever, the countries\u2019 economy and, which is constitutionally worse, the State\u2019s life-protective functions were, have been, and are being turned into means to this lifeless end, whether by hijacking the State to re-set it towards business-serving functions (e.g. competitiveness-aimed new public management) or by selecting out life-serving functions not subordinated to this lifeless end (e.g. budget cuts to public care for the disabled and to public cultural activities). This macro-law of the money-sequence axiology is revealed whenever performance and success, both individual and collective (e.g. of States), are measured regularly and primarily in terms of money-value alone (e.g. American-style consumer goodies, pay-checks, bonuses, growth, RoE, FDI), rather than by means of well-being indicators (e.g. Bhutan\u2019s pioneering 1972 Gross National Happiness [GNH] metrics, the UNDP’s 1997 Human Poverty Index, the Council of Europe’s 2005 Social Cohesion Indicators) or fulfilment of human-rights-defined standards of sufficient nutrition, access to education and healthcare, democratic participation, and freedom to form and\/or join a trade union (cf. ICESCR, 1966).<\/span><\/p>\n

As Gissurarson\u2019s (2004) reveals, what justified politically and axiologically the possibly miraculous transformation over the years 1991-2008 was to let Iceland be among \u201cthe richest<\/i> countries in terms of GDP <\/i>per capita\u201d (emphasis added). When this reductio ad pecuniam<\/i> happens, then money becomes de facto<\/i> the guiding supreme value, which determines individual choices (e.g. one\u2019s \u201csensible\u201d studies and \u201crational\u201d career moves) as well as collective ones (e.g. \u201csound\u201d governmental policies), above and\/or beneath cultural traditions and constitutional duties. It is not happiness that counts above all else; not health; not children\u2019s well-being; not human rights; not nature\u2019s pristine continuation and provision of life-supporting conditions; not stability; not secure and full employment. Money alone does (cf. McMurtry, 2013).<\/span><\/p>\n

Iceland is not isolated in this modern form of fetishism, which Castoriadis (1996\/2005) regarded as a token of pseudo-rationality; i.e., rational behaviour is assumed to be the one that promotes economic growth, but no valid rational justification is given for this unqualified growth to be taken as primary. McMurtry (2012: 49 & 59) dubs such a presupposed rationality “moronic” and poignantly remarks: “no place on the balance sheets is provided for doing good for others, or even providing for anyone\u2019s life need.”\u00a0The world at large testifies today to this inane accounting deficit, which threatens the sustainability of \u00a0civilisation itself (cf. Motesharrei, Rivas & Kalnay, 2014).\u00a0<\/span>Across today\u2019s Europe, for one, States act regularly as though they were meant to serve money-value alone (e.g. recurrent references to the \u201cwill\u201d and \u201csentiment\u201d of \u201cinvestors\u201d, the TINA-esque ‘must’ of \u201ccompetitiveness\u201d, the desirability of unqualified \u201cgrowth\u201d), while their citizens are either a resource (i.e. a means to an end) or an obstacle (e.g. \u201ccosts\u201d, \u201cexpenditures\u201d, \u201cunproductive\u201d classes). <\/span><\/p>\n

However, the citizens\u2019 wellbeing, as captured for instance in human-rights jurisprudence, is the actual aim and justification of State power under all existing constitutional arrangements: salus populi suprema lex<\/i> (Cicero, 1st<\/sup> c. BCE\/n.y.: Book III, Part III, Par. VIII). People are meant to be safe, healthy, educated, socialised, acculturated and enjoying progressively better living conditions (cf. Baruchello & Johnstone, 2011). Money-value is a means to these ends, which embody and exemplify higher values (e.g. cultural identity, happiness, family life). In a successful society, people enjoy better and better psycho-physical well-being and opportunities for intelligent self-realisation. If the economy facilitates the attainment of such goals, then it is good. It is bad, instead, if it hampers such goals, e.g. by making people\u2019s livelihood insecure, their minds and bodies ill, their understanding bamboozled by media propaganda–i.e. regular features of today\u2019s global consumerist “market societies” (cf. Castoriadis, 2003 & 2005; Galbraith, 1967 & 2004; Fromm, 1966;\u00a0McMurtry, 1999 & 2013<\/span><\/span>). <\/span><\/p>\n

Not to mention the depletion of the Earth\u2019s life support systems (UNESCO, 2002-14). Unlike actual people, money-value does not need pristine environments, clean air and potable water; hence it either turns them into priced goods that only moneyed consumers can purchase, or destroys them in the pursuit of other profitable activities (cf. McMurtry, 2013). Modern meltdowns, like the life-threatening environmental crisis of our age, are not unforeseen natural disasters akin to tsunamis, but the inevitable result of an institutionally endorsed economic system that aims at money-value maximisation instead of life-sustenance and amelioration. An axiological blunder lies at its heart. As McMurtry (1999: 243) stated long before the 2008 crisis: \u201c[F]inancial crises always follow from money-value delinked from real value<\/i>, which has many names but no understanding of the principle at its deepest levels.\u201d<\/span><\/p>\n

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References<\/span><\/b><\/p>\n

\n

\u00c1g\u00fastsson, H.O & Johnstone, R.L. (2013), \u201cPractising what they Preach: Did the IMF and Iceland Exercise Good Governance in their Relations 2008-2011?\u201d, Nordicum-Mediterraneum<\/i>, Vol. 8, no. 1, available at: <\/span>http:\/\/nome.unak.is\/nm-marzo-2012\/vol-8-n-1-2013\/48-article\/354-practicing-what-they-preach-did-the-imf-and-iceland-exercise-good-governance-in-their-relations-2008-2011<\/a><\/span><\/p>\n

Bagus, P. & Howden, D. (2011), Deep Freeze. Iceland\u2019s Economic Collapse<\/i>, Auburn: Ludwig von Mises Institute. <\/span><\/p>\n

Baruchello, G. (2013a), \u201cThe Hopeful Liberal. Reflections on Free Markets, Science and Ethics\u201d, Nordicum-Mediterraneum<\/i>, Vol. 8, no. 2, available at: <\/span>http:\/\/nome.unak.is\/nm-marzo-2012\/vol-8-no-2-2013\/58-conference-paper\/395-the-hopeful-liberal-reflections-on-free-markets-science-and-ethics<\/a><\/span><\/p>\n

Baruchello, G. (2013b), \u201cCruelty and Austerity. Philip Hallie\u2019s Categories of Ethical Thought and Today\u2019s Greek Tragedy\u201d, Nordicum-Mediterraneum<\/i>, Vol. 8, no. 3, available at: <\/span>http:\/\/nome.unak.is\/nm-marzo-2012\/vol-8-no-3-2013\/69-conference-paper\/442-cruelty-and-austerity-philip-hallie-s-categories-of-ethical-thought-and-today-s-greek-tragedy<\/a><\/span>\u00a0 <\/span><\/p>\n

Baruchello, G. & Johnstone, R.L. (2011), \u201cRights and Value: Construing the International Covenant on Economic, Social and Cultural Rights as Civil Commons\u201d, Studies in Social Justice<\/i>, Vol. 5, no. 1: 91-126. \u00a0<\/i><\/span><\/p>\n

Boyes, R. (2009), <\/span>Meltdown Iceland: Lessons on the World Financial Crisis from a Small Bankrupt Island<\/i>, New York: Bloomsbury.<\/span><\/p>\n

Byrne, E. & \u00deorsteinsson, H.F. (2012), \u201cIceland: The Accidental Hero\u201d, in B. Lucey & C. Gurdgiev (eds.), What if Ireland Defaults?<\/i>, Dublin: Orpen Press: 135-47. <\/span><\/p>\n

Castoriadis, C. (1996\/2005), \u201cThe Rationality of Capitalism\u201d, Figures of the Thinkable<\/i>, available at: <\/span>http:\/\/www.notbored.org\/FTPK.pdf<\/a><\/span><\/p>\n

Castoriadis, C. (2003),\u00a0The Rising Tide of Insignificancy: The Big Sleep<\/em>, available at:\u00a0http:\/\/www.notbored.org\/RTI.html<\/a><\/span><\/p>\n

Castoriadis, C. (2005), Figures of the Thinkable<\/i>, available at:\u00a0<\/span>http:\/\/www.notbored.org\/FTPK.pdf<\/a><\/span>\u00a0<\/span><\/p>\n

Chand, S.K. (2009), \u201cThe IMF, the Credit Crunch and Iceland: A New Fiscal Saga?\u201d, Center for Monetary Economics at BI Norwegian School of Management, Working Paper 3\/09, May 2009, available at: <\/span>http:\/\/www.bi.edu\/cmeFiles\/wp%2009%203.pdf<\/a><\/span>\u00a0\u00a0 <\/span><\/p>\n

Chwieroth, J.M. (2009), Capital Ideas: the IMF and the Rise of Financial Liberalization<\/i>, Princeton: Princeton University Press.<\/span><\/p>\n

Cicero, M.T. (1st<\/sup>\u00a0c. BCE \/ n.d.),\u00a0De legibus libri tres<\/i>, available at:\u00a0<\/span>http:\/\/www.thelatinlibrary.com\/cicero\/leg.shtml<\/a><\/span><\/p>\n

De Bernis (1999), \u201cGlobalization: History and Problems\u201d, ISMEA<\/i>, December 1999, available at: <\/span>http:\/\/www.ismea.org\/asialist\/Bernis.html<\/a><\/span><\/p>\n

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[1]<\/span><\/span><\/a> Just like old-time Marxists could claim the failures of \u201creal socialism\u201d not to be failures of Marxism, so can die-hard liberals of all stripes find ad hoc<\/i> explanations getting their ideology off the hook whenever crises occur (e.g. individual cases of corruption, somehow unpredicted greed, faulty State regulation, national character), as I discussed in a previous contribution to the NSU research group #3 (cf. Baruchello, 2013a), but that demonstrates the unscientific nature of liberalism in assuming<\/em> the free markets\u2019 unique ability to bring about prosperity whilst refusing to face what so-called free-market economies have actually been like in their history (e.g. Bagus & Howden, 2011; cf. also Galbraith, 2004).<\/span><\/p>\n<\/div>\n

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[2]<\/span><\/span><\/a> This was not the only peculiar, highly revealing statement that I came across in conversations with local business experts. Another, whose name I also omit for reasons of professional courtesy, told me that some of the scholars in his university department had concerns about the country\u2019s boom, but kept quiet: \u201cwe did not want to rock the boat and, above all, we did not want to be taken for leftists\u201d. Ideological self-censorship runs deep in academe.<\/span><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

This paper was written for the 2014 Winter Symposium of the Nordic Summer University\u2019s (NSU) research group number three, dealing with the concept of crisis<\/i>. In it, I provide two pictures of Iceland\u2019s notorious 2008 economic crisis and unexpected 2009-2013 recovery: one small, another big. The small one is a concise three-step account of what sort of policies preceded the economic crisis, what this crisis consisted primarily in, and what sort of policies followed it. The big one is a twofold reflection on how the Icelandic experience fits within larger global trends, which means considering the country\u2019s experience from an economic-historical perspective and from an axiological one.<\/span><\/p>\n","protected":false},"author":254,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[73],"tags":[776],"coauthors":[990],"class_list":["post-309","post","type-post","status-publish","format-standard","hentry","category-c73-conference-paper","tag-crisis-economics-iceland-galbraith-mcmurtry-david-oddsson-icescr-free-markets-neoliberalism-imf-rationality"],"_links":{"self":[{"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/posts\/309","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/users\/254"}],"replies":[{"embeddable":true,"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/comments?post=309"}],"version-history":[{"count":5,"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/posts\/309\/revisions"}],"predecessor-version":[{"id":9843,"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/posts\/309\/revisions\/9843"}],"wp:attachment":[{"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/media?parent=309"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/categories?post=309"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/tags?post=309"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/coauthors?post=309"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}