What can be done?
Here we are at the end of our story! Professor Andrei Mocearov has been patient enough to take us on this adventurous journey through misinformation, speculation and highly problematic reactions from the authorities, all to unravel the mystery of unpaid prices. At the beginning of our discussion Andrei Mocearov makes a startling claim: unpaid prices could not have been produced by the market. If the market produced them, it would collapse. So what is the source of unpaid prices? Could it be the war? The geopolitical situation? Or deep structural causes and a monstrous coalition of interest groups and high-level politicians? We invite you to follow the outcome of our discussion and see what conclusions Andrei Mocearov draws.
Video (in Romanian)
Well, it’s ok as long as, I repeat, the structure is not tampered with. The market is considered holy and this idea doesn’t come from Romania, it comes from the European Union. I’d like to make that point. Romania has thickened up a bit and I have said why. For two reasons. Firstly, there is a libertarian streak. There are people who hang around the decision-makers, including economists, and the second is a lot of incompetence. They just didn’t realize there was going to be that hole in the budget, although there were some who warned them.
In conclusion, it has come down to the mystery of unpayable prices. Right from the start I was struck by the interview with a specialist from TV5. It was a revelation to me because he used this term, ‘unpayable’. The market couldn’t produce payable prices because they would disappear. As you said, you wouldn’t have paid 20 lei. Hardly anyone was paying. There was complicity. That is to say, these unpayable prices only came about in a complicity of the state with the market barons. Now, this led to the conclusion that it was a major political decision, but it was not taken in normal government meetings or parliamentary meetings.
As Paul Krugman says, they are not conspiracies, they are meetings over a glass of good wine in Monte Carlo, on a golf course, where the head of a multinational is talking to the finance minister and so on. Plus there was a problem: the great macroeconomic dilemma that had arisen had to be resolved. Sure, it couldn’t be solved, but it bought time. So, one of the reasons is the macroeconomy, which has been affected by the inflationary shock, because the energy market has produced an inflationary shock, and therein lies a new great financial crisis. We have already talked about this.
The sudden fall in shares is no longer a voluntary move by the central banks, but supposedly as a result of the response to the inflation caused by the energy shock coming from the war in Russia, and then even Paul Krugman says that Putin is to blame. Although he is a renowned economist, he is ideologically inclined and defends the Democrats excessively. Now no one is saying that it’s the capitalist model that created financial casinos, created markets, gas and electricity market models completely out of whack, but it’s the war in Ukraine and that’s what this financial shock is all about.
Very few people understand how things are; I think I read somewhere that there is a financial crisis, but not in the way I explain it, that this crisis has been hidden. The second aspect is geopolitical. I have already said Russians out, Germans down, Americans in. In the energy version, not the security version that NATO had. That’s exactly what the first NATO Secretary General said: Russians out, Germans down, Americans in. Europe is becoming an economic protectorate, and not only in this case, not only in the case of gas. There are others. It’s a big discussion. Macron raised the issue in his discussion with Biden, but he raised it more to send a signal internally that he’s actually concerned that America is producing there a kind of protectionism and primarily very large subsidies. This is where only Germany can afford it. So he’s basically stealing the lead in this inflation fight. America can afford to do this because Europe has accepted, under the umbrella of strategic autonomy, to actually become economically subordinate, not just in terms of security. The last point is that the transition is green.
Yes. That’s very sad, because it’s like when I say it’s like the fake news story: we’re going to fight fake news, but then we’re still doing private fact checking businesses. It’s like wanting to wake up drunk drinking vodka. I mean, you have a system-generated problem, and you obviously can’t solve it all through market mechanisms, because they created the problem for you. It’s illogical and I don’t understand why this idea is being promoted so strongly.
Hardly, because at present capitalism, which means capital, has defeated labour by knockout. I can’t remember, I forget the name of Trump’s daughter’s husband…
Jared Kushner, who made a plan for peace between Israel and Palestine. The plan was completely asymmetrical:the Palestinians didn’t even count in it.Kushner was asking.” Why did you do this?” And he said, “That’s the balance of power. Do the Palestinians have more power so I can give them more?” So here too: capital defeated labor by knockout. Why give labor more if labor has no power? The truth is that labour has no power; that is, it has normally doubled in volume in the last 10 years, and that’s even in the Financial Times. One of the journalists there said why the left doesn’t win elections, even though there are reasons for them to win. There should have been millions in the streets protesting, but people, on the one hand, don’t know the ins and outs of it, they’re not very familiar with it, and on the other hand it’s a cognitive war on human minds. There are all kinds of narratives circulating, a lot of misinformation stories, and as you pointed out very well, the main misinformation is not from alternative sources, but from the official sources themselves. This example of me with energy is very enlightening. The European Commission has gone beyond any limit of disinformation in this field. I don’t know about the others.
With this presentation we have proved, I think, two things.
The unpayable prices were produced by commercial speculation, let’s call it spot market speculation, speculation that was abnormal. On the other hand, they were increased by a terrible financial speculation that happens in a derivative market of the energy markets. And it has little or nothing to do with economic fundamentals. Somewhere, in the technical part of the committee documents, it shows this thing that I am saying. But the Commission’s political message and the legislative initiative are based on this extraordinary misinformation campaign and actually cover up a political decision.
I have already said that it is being taken for three reasons: macroeconomic, geopolitical and, how to call the third one… environmental, green transition through market mechanisms, throwing the costs to the workers. The funny thing is that it’s Wall Street – Wall Street is a phrase I use to designate the economic elites – so Wall Street, understanding how multinationals work, doesn’t pay, but makes very large profits. Katharina Pistor, who is a professor of law at a university in the United States, wrote an article on 21 September: ‘The Myth of Green Capitalism’, and there she says that the DNA of capitalism is not suited to dealing with the consequences of climate change which, in no small measure, are the very result of capitalism. The entire capitalist system is built on the premise of privatisation, profits and socialisation of costs. And not in an illegal way. That is, we exclude those who steal. This happens with the blessing of European law. The energy market is legally constructed. If we want to stop the privatisation of profits and the socialisation of costs, we must break the law. That’s why I say that Romania’s room for manoeuvre is very small, because the argument goes: “We are Romania!” Well, Romania is in the EU and what does Romania do and what does the EU do? I’ll tell you just one thing: there was a lot of discussion: why was Corbyn ambiguous about Brexit? There were two reasons. On the one hand, Labour voters were divided. The urban electorate in London, the progressives who were against Brexit, but there was also the working class in the north of England in particular, in former industrial or current industrial areas, who were for Brexit. Corbyn had this dilemma to reconcile the electorate. On the other hand, his economic plan which, incidentally, was partly written by Daniela Gabor, an economist from Romania working at a UK university, was incompatible with the European Union. Corbyn, in order to implement his programme, had to leave the EU. He couldn’t implement it because the law wouldn’t let him, as Katarina Pistor says. Privatising profits and socialising costs is legal. The energy laws do all these liberalisations and all these packages produce privatisation of profits and socialisation of costs.
And finally, the last slide of the presentation. Alternatives and remedies. It’s almost utopian, because reversing this liberalization process and returning to the natural monopoly model requires a revolution.
Exactly what you said Albena Azmanova would not want….
I have nothing against Albena, but that’s what a lot of people do: criticize without offering solutions. I proposed a solution, but it’s impossible to achieve. Who will do it? I mean, does some kind of Che Guevara have to come to power? How can someone like him come to power? Some will say: “Well, by winning elections!” Let’s be serious. There is only one case where socialism came to power through elections in bourgeois democracy, as they say. The case was in Chile: Salvador Allende. What is the result? A gun discharged into his abdomen. Not easy. But there are corrective solutions which, in a reasonable capitalist world, which we do not have, could be achieved.
Of course, the question is whether capitalism is reasonable at its core. That is, left free and without competition. But these are already questions of political philosophy.
Definancialising energy markets – that can be done. So Barnier and Ciolos have tried. There is the REMIT regulation. If that applied, that would be excellent, but it doesn’t. Not only that, but ACER (which is sort of their NRA), like our NRA, are populated with libertarians and neoliberals who oppose it. They want us to fish, not get the fish for free.
Returning to long-term contracts and drastically limiting sales – that can be done under capitalism, no revolution needed. On the face of it. Although they started it, the Germans have a 15 year contract with Qatar. A few days ago it was on a sum, on a ridiculous amount compared to what they were taking from the Russians.
Drastically limiting spot trading is possible, because spot trading in these commodities that are also energy is meaningless except for fine tuning. It can be regulated so that above a certain level it is not allowed. There are solutions.
Discouraging virtual trading. These are the commercial ones – it has happened to us. We, as in the financial crisis of 2000, didn’t have those sophisticated financial tools. That’s why we also got off somewhat cheaper. But with us it was virtual transactions. At one point, an extraordinary article was published in the newspaper Ziarul Financiar: energy was “moved” from one to another in order to raise the purchase price a lot, so that money could be taken from the state, even under the supervision of ANRE.
Which, of course, would tell us that we have to fish…
It was a terrible fishing trip. The carbon market waiver. I’ve told the story before: George Bush put the issue on the table and walked away. What’s the carbon market doing here? That can be regulated by taxes or state directives. A mix between state and market or directly state with centralised planning and, of course, increasing the role of the state in its position. Can we do that? It’s a philosophical question. What I have written here is to be achieved in reasonable capitalism. But I repeat, does reasonable capitalism exist? Because natural monopoly existed when there was socialist pressure.
Yes, since it didn’t exist, things have gone crazy.
Yes. I end not in a very optimistic tone, but in an ambiguous tone. I mean I offer some solutions in a reasonable capitalism, not in a socialist revolution. On the other hand I wonder if capitalism is reasonable, because I witness what is happening today. I wonder how we got here and where we ended up. Sometimes I’m sorry that I understand what’s happening
I believe you.
At one point I said privately that ideally I would like to retire to a house in the country or a cabin in the mountains and unplug. The Japanese have a service that decouples you from the world, meaning no one can find you. But that would be the height of depression, even though you’re going out in the middle of nature. so I’m staying here. And, as I say, if this capitalism doesn’t come to its senses, I’m staying to let the aliens who will arrive here, on the Earth desolated by the barbarism we have created, see how we got to the point where humanity has lost its compass.
I mean we’re doing a kind of chronicle of disaster.
A chronicle avant la lettre.
Yes, I thank you very much for your intervention and patience. I will do my part, I will promote these things and, indeed, let it remain as a diary of unpaid prices.
Hopefully we will always look back as a negative episode and not as a precursor to an even bigger disaster.
That attribute or adjective “unpayable” is telling. When I read the interview about unpayable prices, then my jaw dropped: impossible! Actually, it’s not the market.
Yes, exactly. Exactly. So the fishing line story, for those promoting it, will have to wait. Thank you very much for participating.
This transcript was originally published in Romanian here.
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