Britain's riots and the new financial crisis

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London is burning. The violence and looting have spread to other English cities. Thieves outnumber police. The situation appears to be beyond control and its growth contagious.

Throughout the rest of the world, stock markets are tumbling at a rate not seen since the 2008 global financial crisis.

Are these two phenomena related? If so, what might their relationship say about where we are and where we are headed?

The violence and looting tells us that people are angry, and that in apparently affluent societies, the benefits are not shared in a satisfactory way. Riots throughout history have been driven by grievances which come down to basics: food, security, confidence about survival.

What is happening in London has not been contained to that city. And, I suspect, it won't be restricted to the UK. Unemployment in the US and many European countries is high and refuses to come down. Behind the unemployment figures hide people who are underemployed and others who have just given up looking for work.

This formula suggests the precedent in Britain could be just the beginning for people seeking a way to vent their frustrations.

The collapsing stock markets and the downgrading of the credit rating of the US tell us that the problem is only going to get worse. Investment capital is disappearing from markets, hidden, if it exists, in the deep pockets of terrified individuals and companies. These investors have suddenly seen their net worth collapse again for the second time in four years.

And what will be the effect? No new jobs created; people being made redundant because their companies can't afford to pay them; the government of the wealthiest nation on earth (the US) now virtually insolvent, and unable to stimulate an economy on whose prosperity so many others depend.

The result: more frustration among alienated people who see no future for themselves in societies where the financial gap between people is growing larger each day; riots driven by resentful people trying to settle scores they've wanted settled for a long while; crackdowns by governments whose legitimacy and control are threatened; misery and misfortune for any swept up in this whirlwind.

Trouble is ahead. There's no end in sight just yet to the stock tumble. And the frenetic energy of angry and frustrated people in Europe and the US is far from spent.

Apparently untroubled by this US/European collapse, Asian economies appear to be chuffing along at a great rate: high growth rates, export surpluses. China is the biggest holder of US currency. The sky is the limit as both the absolute and relative positions of Asian economies get stronger.

But not for long if US and European currencies decline, purchasing capacity reduces and banking strength is compromised. In such an interdependent world, what happens in Europe and the US will have an impact in Asia, probably sooner rather than later.

What will be the response? The reaction of governments, particularly in China and Vietnam, to the Arab Spring earlier this year is instructive. Non-democratic governments across Asia were terrified that what has been happening in North Africa and the Middle East might spread to Asia. That provoked heightened activity by the police and internal security officials.

The impact upon the Church will be significant.

In the first instance, if instability leads food shortages, medical needs or traumatised people, Church agencies will be involved in addressing these issues.

But the impact on the Church in some countries (China, Vietnam or Myanmar) might be sharper. Authoritarian governments across Asia see the Church as a threat — an independent community that can go its own way, relate to foreigners and, in the view of some, be the basis for sedition.

China has long been known to have a life of demonstrations and riots that rarely get reported. There are allegedly 20 to 40 million workers on the move around China all the time looking for work. The social instability and its impact on the economy are abiding concerns of the Chinese leadership and a constant force for many commentators on China's ballooning growth.

Such a period of instability could lay ahead if the European and US volatility endures. For Asia, the impact will be later but significant.


 

Mick KellyFr Michael Kelly SJ is the executive director of UCA News, where this article first appeared.

Topic tags: Mick Kelly, London riots, David Cameron, police shooting, Mark Duggan

 

 

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Existing comments

The rioting and violence in England are deplorable, but instead of simply castigating the culprits everyone should acknowledge the causes.

They are not hard to find: unemployment, racial intolerance and the frustrated energy of young people - all leading to hopelessness.

It is easy to identify the remedy: a fairer society with less emphasis on gaining greater wealth by the already-wealthy - or greed, as it was once called.

A fairer distribution of wealth and opportunities is needed in class-conscious England and many other countries, even Australia.
Bob Corcoran | 11 August 2011


Surely Father Kelly's analysis highlights the deep inadequacies of the prevailing economic system and the way, just to take one aspect, human labour is continually replaced with technology for profit purposes. A typical example is the installation of self-service checkouts at one particular retailing giant and the de-manning of other checkouts to compel customers to use them, who in doing so, aid and abet in the redundancy of staff. The prevailing goal of economic activity is not to make a comfortable living but to squeeze more and more profit from small family businesses as well as ordinary wage punters, and conservative government policy encourages this.

I think his analysis also highlights the consequences of the ambivalence to be found in Church attitude to the problems of modern capitalism; it finds itself increasingly stretched to provide support for the poor through voluntary charity the more it refrains from criticising the upper end of town.
Stephen Kellett | 11 August 2011


You've overlooked a key factor, Fr. Welfare dependency.

The most violent, desperate communities in Australia are the remote indigenous communities (eg Wadeye) and those parts of Sydney and Melbourne where, as in those parts of the UK, welfare dependency is at the max. That's at a minimum in successful Asian economies - especially, eg, Hong Kong, Singapore and Taiwan, etc, where economic liberty is the order of the day.

We can be unconsciously racist here. Asians aren't some freakish special case. If you give any human beings the freedom to create their own wealth they'll get to and do it, restoring self-esteem in the process. People are net producers over a life span, not consumers, when economically free. So, as in the Asian economies, slash taxes - especially income at the lowest brackets, labour regulations (including minimum wages, unfair dismissal laws, etc), unemployment and most disability "benefits" (actually poison to the recipient) and all the bloated paraphernalia of our modern Western nanny state: in other words, give people the say in running their own lives themselves with the opportunity to keep more of the wealth they create, and a huge chunk of these problems would wither away.

Not a solution bleeding heart liberals would like, but what's most important?
HH | 11 August 2011


And then again, we have to be careful not to stereotype. This is also a crie de coeur from the marginalized rich... [From: The Telegraph] "Among the accused was, for instance, Laura Johnson, the 19-year-old daughter of a successful company director. She lives in a detached converted farmhouse in Orpington, Kent, with extensive grounds and a tennis court. She is an English and Italian undergraduate at Exeter, favourite of the Boden-wearing classes. Before that, she attended St Olave’s Grammar, the fourth-best state school in the country, and its sister school, Newstead Wood, gaining nine GCSE A grades and four A*s. At St Olave’s, she studied A-levels in French, English literature, geography and classical civilisation [Which classical civ? The Huns or the Vandals? HH] Yesterday, at Highbury, she was accused of something slightly less civilised – looting the Charlton Curry’s superstore of electrical goods worth £5,000." Then there was a 23 y.o. scaffolder (trainers/bodywarmer from sportswear shop), a 31y.o. primary schooworker on 1000 pounds a month (electrical goods shop), a postman and his nephew with a van load of laptops and televisions, a final year electrical engineering student (flatscreen TV) Yep, lots of frustration to vent with those miserable backgrounds. Call in the counsellors.
HH | 11 August 2011


Michael rightly looks at the impact on the church of riots and such matters. I would like to learn more about the impact of the church. Where were the Archbishops, bishops,clergy and parish members? Where were all we professing Christians? What were we doing.
Gerry Costigan | 11 August 2011


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