The New Empire of Debt: The Rise and Fall of an Epic Financial Bubble (11 page)

The gist of the modern empire builder’s creed is that he has a duty to make the world a better place, and he can only do it by telling other people what to do. It is inconceivable to him that others might have their own ideas of what a better world would be like. Or that his own plans are nothing more than his own vain tastes and prejudices. It is as if he burst in on his neighbors to tell them what they were going to do on the weekend; it wouldn’t bother him at all that they had their own plans. His are more important!

The charm in this is not in watching the empire builder make a mess of things, which he invariably does—usually a bloody mess.The charm is in the elaborate lies and imbecilities he spins to cover up what he is doing. His real purpose is no different from those of any Mongol, Greek, or Roman—to feel important, to rule the world and boss other people around, to puff out his chest and pin medals on it, to have power over people and feel superior toward them. The logic of it is inescapable: He feels superior because he rules them. And why does he rule them? Because he is superior!

Since the days of Alexander, empire builders have developed elaborate and heroically absurd proofs for why they are superior. They have before them the evidence of their achievements; they have their neighbors under their heel and not the other way around. Fooled by the randomness of historical events, they look for a reason that explains their superiority and justifies their own rule.

Many are the daffy explanations and spurious proofs offered. Typically, a group believes it is given its right to rule directly from God. Jehovah delivered to the Jews title to the land of milk and honey. It didn’t matter to them that there were other people who claimed title, too. “Slay them all,” says their God.“And woe to you if you let any of them get away.” The Jews thought they had a special covenant with God. But historians will search in vain for an imperial race whose gods opposed them. No matter what vile mischief they take up, people believe they have the gods’ approval.

The European colonial empires in the New World, Africa, and Asia were justified on every imaginable pretext. The Spanish thought they had a duty to Christianize the heathen. The English saw their duty in bringing the benefits of Victorian morals and virtues, including clothing, to the naked savages:

Take up the White man’s burden—
Send forth the best ye breed—
Go, bind your sons to exile
To serve your captives’ need
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—Rudyard Kipling

The French, meanwhile, thought the natives should learn to like baguettes and French poets. Their culture was so superior, it was said, they wanted to share it with everyone. They were all successors to Cicero, who maintained that only under Roman imperial rule could civilization flourish.

It was obvious to them all that Europeans were superior to other peoples. Was it a matter of race? Religion? Culture? At one time or another, they put forward each of these hypotheses—sometimes all of them. Europeans were a superior race; therefore, they had evolved superior forms of religion, government, and culture.

And what accounted for their racial superiority? No delusion was too preposterous. When the Romans were on top of the world, they thought their mild climate must be responsible for creating the world’s best humans. Two millennia later, when the center of empire had shifted to northern Europe, the rigors of European winters were credited with stiffening upper lips, backbones, and virtues. English ladies, traveling in the tropics, wore long-sleeved shirts and carried parasols, for fear that too much of the tropical sun might cause them to “go native.”

The effect of all this self-deception is to turn the imperialists into a race of fools. They have to believe what isn’t true—that they are, personally and collectively, better than the people they boss around. Constant dissembling has a corrosive effect on brains and a numbing effect on souls. European imperialists wondered if the Africans, East Indians, and Asians were fully human; often, they treated their subjects as though they thought they were not.

The impulse to imperial power is always the same, but there are many types of imperium. From the pure simplicity of the Mongols to the incomprehensible complexity of the Austro-Hungarians, you could make a go of almost any kind of empire.Whereas the Mongols got their empire by force, the Austro-Hungarian Empire (1867-1918) also known as the
dual monarchy
came into being largely because they couldn’t think of anything better to do with it. Even its formal name—The Kingdoms and Lands Represented in the Imperial Council and the Lands of the Holy Hungarian Crown (of Stephen)—was a pileup of words on the information highway. Then, as now, no one knew how the empire worked—including the people who supposedly ran it.

But that it was an empire, we have no doubt. “A basic, consensus definition would be that an empire is a large political body which rules over territories outside its original borders,” explains Stephen Howe in
Empire.
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Austro-Hungary ruled over the Kingdom of Bohemia, the Kingdom of Dalmatia, the Kingdom of Galicia and Lodomeria, the Arch-duchy of Austria, the Duchy of Bukowina, the Duchy of Carinthia, the Duchy of Carniola, the Duchy of Salzburg, the Duchy of Upper Silesia and Lower Silesia, the Duchy of Styria, the Margraviate of Moravia, the Princely County of Tyrol (including the Land of Vorarlberg), the Coastal Land (including the Princely County of Gorizia and Gradisca, the City of Trieste, and the Margraviate of Istria).

And this was just on the Austrian side. On the Hungarian side were all the many obnoxious, quarreling peoples of central Europe and the Balkans—the Slovaks, Bohemians, Moravians, Italians, Poles, Ukrainians, Serbs, Albanians, Macedonians, Croats, Bosnians, Herzegovinians, Montegrans, Czechs, Magyars, and many others.

Each of these territories had its own language and customs. Many detested each other. All were jealous of power and how it was used. And at the top were some of the weakest and most confused and conflicted administrators who ever lived. Each had several layers of loyalties: to his own nation; his own class; his own religion; his own family, region, culture, and linguistic group; and his own aristocracy. How could you hope to govern such an empire?

The beauty of it was that you couldn’t. There were two separate parliaments and two separate prime ministers along with a collection of archdukes of various talents and responsibilities. In theory, the one royal house—the Habsburgs—had absolute power over the central administration—particularly the military. In practice, they could do little or nothing; they had no money. Occasionally a forceful edict would issue from the government, such as the April 5, 1897, proclamation from the Austrian prime minister, Kasimir Felix Graf von Badeni that permitted the use of the Czech language, along with German, in Bohemia. The ordinance caused so much trouble that poor Badeni was tossed out and Czech was more suppressed than before. Henceforth, Czech newspapers would have to be printed in German!

Despite these annoyances, the empire was a modest success. It was largely peaceful and prosperous. Between 1870 and 1913, GDP per capita rose at an annual rate of 1.45 percent, which was faster than the rate in Britain or France, and almost as fast as in Germany.

But the imperial family had a bad habit of attracting trouble. Emperor Franz Josef’s only son died under circumstances that are still considered mysterious. His brother had the bad judgment to meddle in the affairs of Mexico and died in front of a firing squad. And, finally, his nephew and heir, the Archduke Franz Ferdinand, had the misfortune to visit Sarajevo in 1914 at the very moment when Bosnian nationalists were gunning for him; he even wore a hat with a huge ostrich plume so they would be sure not to miss.

When did Rome become an empire? Historians look for a particular moment, even a natural, physical boundary—such as when Caesar crossed the Rubicon—to mark the end of one period and the beginning of the next. No such simple marker exists, however, between empire and other forms of government. Nor does any precise boundary exist between democracy and, say, theocracy or dictatorship. Governments are categorized artificially and often arbitrarily on the basis of theories—usually fraudulent ones. It is often said that democracies depend on the consent of the governed, whereas dictatorships and monarchies do not. A moment’s reflection, even by a professor of government, would reveal the lie. All systems of government depend on some measure of complicity.

“Given the very small number and insignificant presence of imperial agents and municipal officials to insure obedience to the state,” explains Ramsay MacMullen in his
Corruption and the Decline of Rome,
“millionaires, magnates, and other local notables of all sorts must have cooperated, and from their own free will.”
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It doesn’t matter whether you call a political society free, a democracy, a dictatorship, or an empire, it always involves a great amount of collusion and cooperation on the part of the population.

“[Imperial] administrators occupied only a minor place in the system. The emperor had only a handful of agents, whose means of reaching the people were few and rudimentary. The police were practically nonexistent. There were neither social workers nor prosecutors,”
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MacMullen continues.

The people who actually ran things “had no official function, or if they had one, they had no need of it to make themselves heard. A huge number of decisions were taken each day and throughout the empire that conformed to their own desires more than to the law, the emperor, or his representatives.What’s more, these decisions were those that counted, those that concerned property, movement, career choices, success on the farm, commerce or banking; sometimes even a person’s physical safety.”
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In business, as in empire, vast, complex, informal systems work largely on the basis of trust. People trust others to do more or less what they expect. The emperor could no more control what was done in Judea or Gaul than we can control what goes into our hamburgers. Still, we trust there is nothing too unsavory in them.

In the Roman Empire, order was transmitted through an extended web of personal connections, family ties, official functions, traditions, habits, and accepted ideas and procedures so that what happened was more or less what everyone expected. The emperor trusted not only his own functionaries to do what they were supposed to do, but also the local big shots with no official post or authority.The lowest slave responded to his overseer, who responded to his master, who responded to his landlord, who responded to his patron, who responded to his
potentiores, consuls, proconsuls, proteuntes, praetors,
and
quaestors,
on up the chain of command to the emperor himself.

Even prisons function with the cooperation and complicity of the convicts. In the Soviet gulag system, for example, a group of people—soldiers conscripted and sent to Siberia against their will—policed one group of prisoners who in turn policed a less fortunate group. Supposedly, the entire Soviet Union functioned as a vast slave society, in which everyone was told what to do and no one had any choice in the matter. But how could it be? If they were all in chains, who held the keys? And why did the jailers suddenly undo the locks in 1989?

We do not argue that the Soviet system was not wretched, but only that the border between its wretchedness and the misery inflicted by other systems of political organization is not nearly as well marked as we have been told. Always and everywhere, nuances and particularities trump the theories.

A dictator cannot rule a country on his own. He needs the help of henchmen and hangmen, soldiers and administrators, tax collectors, and spies. Depending on the size of the country, he might have millions of people all with a stake in his rule. Likewise, what monarch really ruled alone? Even the Sun King, Louis XIV, depended on a whole solar system . . . no, a galaxy . . . of supporters, agents, and factota. He had a vast web of private interests to which he was either beholden, in league, or at odds with: the clergy, the aristocracy, the bourgeoisie, the moneylenders, the armed forces, the tax farmers. There is no discreet line between empire and republic, or any other form of government for that matter. But that doesn’t mean there is no difference. Sailing from the Caribbean to the North Atlantic, a voyager crosses no white line. Still, the weather in the two places is hardly the same.

A nation may have elections and yet not be a genuine democracy. It may have a king, but not be a genuine monarchy. It may even call itself an empire—such as the Central African Empire, which bullied several tribes in West Africa—but that doesn’t mean it is one.

There is plenty of room for fraud and interpretation in political institutions, just as there is in the rest of life. Julius Caesar was accused of being a dictator. He was cut down by the old guard, who wanted to preserve the republic. But Rome had taken the path of empire long before Caesar was born. Like the United States today, it had troops spread far beyond the homeland. For five centuries, the Romans had been imposing themselves, first in what is now Italy and then the Cisalpine region, the Greek Isles, the coast of Anatolia, and down through the Middle East. Caesar himself made his reputation in his wars against the Gauls—people far from Rome who spoke a different language, with different customs, different traditions, different institutions, and different ideas about how things should be done. Caesar believed he was bringing the benefits of Romanization, which to him was one and the same as bringing civilization itself.

Octavian, Caesar’s heir, did not call himself emperor or announce that henceforth Rome would be an empire. He did not need to. The term
imperator
meant “general.” He was already an imperator. Nor was he particularly eager to stir up resentment among the republican partisans. He had seen what had happened to his uncle. Let the empire evolve; just don’t mention it. Speaking to the senate, he was careful to play to the old sentiments: “And now I give back the Republic into your keeping.The laws, the troops, the treasury, the provinces are all restored to you. May you guard them worthily.”
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