NOBEL prize winner Amartya Sen has attacked austerity and said the imposition of public spending cuts at the behest of banks has created a democratic deficit in Europe.
Speaking at the York Festival of Ideas, the Indian economist said the continent has made a major contribution to the advancement of democracy in the world, but is in trouble today and has to get its house in order, economically, politically and socially.
The 81-year-old is regarded as one of the most influential economists in the world and his lecture attracted an audience of nearly 900 people at York University.
In an interview with The Yorkshire Post, Mr Sen said big changes in policy such as the introduction of austerity need a mandate from voters, “which wasn’t done in this case, it was done by financial captains supported by the governments”.
He added: “That’s a violation but the bigger violation is the demand of democracy as requiring consultation. In terms of the thoughts of (the philosopher) John Stuart Mill, you should think of democracy as government by discussion.
“Any discussion of this kind requires widespread public discussion and full disclosure of relevant information, what is known and what is not known, and in the absence of that I think Europe led into various policies of which the most prominent is the demand of austerity, which has pulled Europe back for many years.
If you want to live in a democratic society you shouldn’t shun public reasoning
“It has pulled this country back too, despite the fact that it is now having positive growth rate though… Britain’s per capita income is lower than what it was in 2008 and if you look at economic growth from the bottom of 2009 to today Britain compares favourably though not better than the rest of Europe but compares very unfavourably with other countries like the USA or Japan not to mention the faster-growing economies of Asia.”
Mr Sen said discussions should take place before decisions rather than follow them. He added: “The European way has now been, in the context of austerity, to take a decision with very inadequate consultation and support and when that proves to be problematic make the heads roll. That happened in France, Spain, Portugal, Greece, Italy.”
Mr Sen said: “If you want to live in a democratic society you shouldn’t shun public reasoning. To John Stuart Mill it would have looked like the most obvious thing that anyone could have said.
“It looks very unobvious now since we have got very used to financial leaders of society telling you either you do this or the economy will be in a long-term decline.”
Mr Sen, who is married to a member of the Rothschild dynasty, criticised financial institutions for having “a breathtakingly narrow view of human society”.
He said the public’s understanding of debt has been completely misled. Mr Sen added: “For example, when Gordon Brown was accused of having unsustainable ratio of public debt to GDP, the ratio was 70 per cent, whereas when Harold MacMillan said ‘you have never had it so good’, the ratio was 120 per cent.”
The ratio was more than 100 per cent for nearly 20 years after the Second World War, he added.
* The York Festival of Ideas will host a day of speakers and debate on democracy and economics on June 19. Guests include John Kay and Polly Toynbee.