With pouring rain as the backdrop to my Sunday morning snuggle, a BBC News headline on the radio made me sit up: not only is it the 20th anniversary of German unification, it's also the day the German government has made its last payment of reparations from the First World War. Naturally, I threw off the duvet and made a beeline for my copy of Keynes's The Economic Consequences of the Peace, the 1920 book that did more than any other to make his name as a public intellectual. Keynes resigned from the UK's Versailles delegation rather than play a part in a reparations settlement he believed would be horribly damaging. The subsequent course of history proved him right. He ends the chapter on reparation by saying:
“The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and depricing a whole nation of happiness, should be abhorrent and detestable – abhorrent and detestable even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe.”
He went on to predict more or less the subsequent German hyperinflation, quoting Lenin as saying the surest way to destroy capitalism is to debauch the currency. Great risks in Europe, he said, had become unavoidable.
Today's context of international indebtedness is, of course, nothing like that shaped by the Great War and the Versailles peace treaty. But this weekend's milestone for Germany is a timely reminder that debts have real and lasting consequences. And also that those in positions of power should reflect carefully before imposing conditions on whole nations. Finance is not an abstract matter of zeroes and ones zipping around the world's computers; it is livelihoods, trust, social relations. The current crisis stems in part from global imbalances of Asian saving and western borrowing. The Asian reserve mountains built on those high savings are themselves the reaction to the determination never again to have to bow to an imperious International Monetary Fund, as several governments did, in humiliating fashion, in 1997-98.
Thoughts of the First World War also sent me back to Paul Fussell's brilliant and evocative classic The Great War and Modern Memory, an analysis of why that war is still vivid in our culture after nearly a century. He writes that the young men who marched off to the front in 1914 belonged to a unique generation. “It believed in Progress and Art, and in no way doubted the benignity even of technology.” But the Somme was a moment in human history of profound disillusion. “[The war's] dynamics of hope abridged is what makes it haunt the memory.”
