Flip on the Today programme in 2022 and you might hear about rising fuel bills, Russian war on Ukraine and a discussion about whether central banks should stop minting electronic money. Oh, and a lot about Downing Street parties.
Most of us struggle to keep up, but not Helen Thompson—she doesn’t merely grip each strand, but ties them together. Long a Cambridge political economist with an expertise in energy, Thompson has more recently achieved wider prominence as half of a double act on the hit Talking Politics podcast, which is just now finishing a six-year run, where her everywoman Midlands style complemented her more upper-crust co-host David Runciman. Her trick is spotting the hidden nail on which the coat of a particular politician (or party or country) will eventually unravel. She was included in Prospect’s top 50 global thinkers last year.
In her new book Disorder, Thompson moves from snare-spotter to theorist of everything. Those Today headlines are only the start: much more is knitted into the quest for “a comprehensive explanation of the last decade’s disruption” around the world. Syria’s ruin is re-interpreted as five-dimensional geopolitical chess; Hong Kong’s repression explained with reference to China’s thirst for dollars; and the origins of Green New Deal schemes in Washington traced back to a recent turn in Beijing’s industrial policy.
The inevitable question, which I’ll return to, is whether any book can coherently take on so much. But if anyone is qualified to try, it is Thompson: she carries in her head a century of oil prices, the evolution of every party system in Europe, plus the geography of every last pipeline and shipping lane. For the rest of us, perhaps liable to forget whether 2016 was a boom or bust year in the oil market and where exactly the Straits of Malacca are, it’s safest to start considering each panel of her triptych—energy geopolitics, the world’s monetary system and the state of liberal democracy—separately.
The first 100 pages on geopolitics demonstrate how oil has lubricated power politics for a century. It was, Thompson thinks, merely a happy coincidence that the first industrial revolution took place in a continent rich in the coal that powered it. Trouble was inevitable when we moved into an age of oil—which Europe lacked—and has been perennial since.
Thompson explains, quoting a British foreign secretary, how the Allies in the First World War “floated to victory upon a waveof [American] oil,” and retells the Second World War in similar terms. The ebbs and flows of Cold War and détente are then analysed via the shifting balance between Soviet and US energy production, with an especially eye-opening new read on the Suez crisis.
Where the standard story of the 1956 Suez debacle focuses on the lingering delusions of imperial grandeur in London and Paris, Thompson traces the root to a contradiction in Washington. Bent both on hogging its own oil for domestic consumption and wanting to avoid its allies lapsing into Soviet energy dependence, Eisenhower’s America carried on as if it were guaranteeing European access to the wells of the Middle East. But the US had no appetite for “boots on the ground,” and so quietly outsourced the imperialism its objectives required to Europeans—until it changed course, that is. The nods, winks and covert US operatives (who had contributed to coups in Syria and Iran) stopped coming, leaving Britain and France in the lurch. Before long Europe turned to Soviet oil.
If anyone thinks “war for oil” is an empty leftist slogan, Thompson’s account will comprehensively disabuse them. She quotes Nixon’s defence secretary, James Schlesinger, characterising the first Gulf War as an American “choice to secure oil by military means,” and the long-serving chair of the Federal Reserve, the Republican Alan Greenspan, implying the 2003 invasion of Iraq was “essential” for energy markets to function.
Although Thompson wrote the book before the current Ukraine crisis, she sheds new light on it, from Russia’s motives (lingering resentment at the gas-transit fees long charged by Kiev) to its Eurasian strategy for escaping the consequences (centred on the Power of Siberia pipeline into China). The broader upshot is that today’s rocketing energy prices and the shifts demanded by climate change are bound to create turbulence.
Thompson sweeps just as impressively through the monetary field, tracing the flaws that would doom the postwar currency system back to hairline fractures in its earliest days. In drawing up their blueprint at the 1944 Bretton Woods conference, John Maynard Keynes and his American counterpart, Harry Dexter White, built in serious capital controls to keep the speculators at bay. But after he became president in 1945, Harry Truman “made little effort to stop the New York banks receiving illegal capital outflows” and, before long, a growing stream of dollars was also flowing out of the US. Once that currency could be stashed as dollar deposits in London and elsewhere—in the so-called “Eurodollar markets”—the connection between nation and currency began to fray in a way that still haunts us today.
Through what economist Milton Friedman called the “mystifying” magic of the “bookkeeper’s pen,” the overseas banks did what banks do and used deposits to invent more money—with the twist that the money created was not in their own currency, but America’s. Thompson traces a direct line between this early, postwar offshore finance and the spectacular global money market failure in 2007-2008. She isn’t distracted by the particularities of derivatives or other complex gambles, but focuses on the big, slow story, in which America’s money became global and fell out of kilter with its original, territorially bounded political authority. As long ago as 1974, central bankers acknowledged this problematic mismatch, but balked at tackling it, affirming that “at the moment of crisis” an unspecified “solution would be forthcoming.”
Nearly 50 years on, we have discovered what this solution is. However isolationist America’s mood, it now feels obliged to stand behind much of the global financial system, through so-called “swap lines,” which allow central banks to trade their own currencies for the dollars they need to shore up their institutions. Where naked support for a country is politically impossible, workarounds can be found. During the Covid crunch, providing Beijing with a “swap line” felt off-limits, so Washington allowed states to borrow against their US Treasury holdings, which in China’s case were vast. Such ad hoc moves have stopped the system falling over—so far. But, as economic historian Adam Tooze has also stressed, they hardly constitute solid foundations.
The third section on democracy bolts two distinct stories together. The first is a broad-brush account of politics since antiquity, characterised as a swing back and forth between “aristocratic excess” (surely the heading to file the Downing Street parties under) and the other extreme of “democratic excess,” in which a tyrannical majority can debase everything from the currency to the rule of law. It is pacey and readable, but—for me—too sweeping. One could equally argue that the deepening of democracy and minority rights have often advanced hand-in-hand.
More compelling is the second sub-plot: a forensic prosecution of the European Union for a crisis in democracy on the continent. Thompson thinks modern liberals miss an umbilical connection between democracy and the nation state that is palpable through history: from the French Revolution to every 20th-century decolonisation, the self-same voices have demanded national autonomy and popular sovereignty. The link is not merely contingent but logical and inherent. Noting how often the words “nation” and “people” have been interchangeable, Thompson argues the “idea of a democratic people who share citizenship” is what stops elections “unravelling”: the losers consent to move on from defeat because their allegiance to the national community trumps their partisan affiliation. But absent anything akin to European national identity, there’s an important sense in which EU “citizens” are in reality no such thing.
Amid the messy realities of Brexit, such highfalutin’ complaints could seem beside the point. But Thompson is devastating in documenting how Europe’s democracies have been faring in practice. Since the 1992 Maastricht treaty, we have seen: Germany’s government in an ever-more perilous dance with its constitutional court to avoid its European embroilments being declared in breach of the ideas about democratic national authority enshrined in its Basic Law; the collapse of France’s main centre-left and centre-right parties; a run of EU-related referendums being promised but not delivered in Britain, before David Cameron finally called the one that would sink him in 2016; and the regular remaking of Italian governments to insulate the finance ministry and sometimes the premiership from election results. The technocratic takeover of Rome has now reached its denouement with the arrival of the former European Central Bank chief, Mario Draghi, as PM. One can add to all this the authoritarian turn in Poland and Hungary, and the lack of all consequence from Greece’s anti-austerity referendum in 2015.
Thompson is devastating in documenting how Europe’s democracies have been faring in practice
Thompson pins some of the blame on the peculiarities of the Euro, a currency whose reach doesn’t correspond to any conscious political community. But even before it, she charges the European Community with diluting democracy by putting industrial policy and migration beyond political contest. To back up her argument she quotes some eminent eurocrats. After his proposed EU constitution was sunk by French and Dutch voters, former French president Valéry Giscard d’Estaing justified sneaking “all” of its planks back into the Lisbon treaty: “public opinion will be led—without knowing it—to adopt the policies we would never dare present to them directly.” Despite such chicanery, European leaders have since come to understand that they can’t amend EU treaties without triggering a democratic detonation. So they shrink from it, leaving the institutions looking unreformable and perhaps lethally sclerotic.
Thompson boxes pro-Europeans into a corner where they either have to come up with an alternative explanation for the 30 post-Maastricht years of democratic malfunction, or else dismiss it all as an extraordinary coincidence. I remain inclined to support the EU as a facilitator of travel, trade, and—more importantly—peace among its members. But after reading Thompson, I’ll certainly weigh the offsetting negative effect on democratic functioning with more care.
Thompson joins a few important dots across her sections. She highlights, for instance, the dangerous geopolitical potential of financial crises in strategically important countries—such as Turkey—to which western central banks don’t bother offering swap lines because they aren’t “systemic risks” in narrow monetary terms. Likewise, siloed economists and energy experts could miss the inextricable link she sees between America’s 2010s shale boom and the easy-money policies that followed the crash.
Still, what, if anything, truly holds this book together? Though Thompson never puts it this way, the overarching theme is the west’s fracturing. The other constant is mood: a sense of trouble ahead. The energy specialist applies a logic of entropy to international relations, finding reasons why every order will decay into disorder. With historical forays going back as far as Ancient Rome, this might seem justified. All things must pass—eventually.
But such is her emphasis on the centrifugal and the unsustainable that I found myself marvelling that any of our institutions have survived at all. She traces an existential faultline through Nato to the admission of Turkey in 1952, three years after its foundation: this spring the alliance turns 73. She points to the shaky paper foundations of the fiat-money system that has reigned since Nixon suspended dollar-gold convertibility in 1971. This shonky structure has survived for twice as long as Bretton Woods itself, and longer than the pre-First World War “classical” gold standard. She isn’t wrong that “the founding of the American republic” reliably “ignite[s] disintegrative political passions,” but that republic has endured for two-and-a-half centuries.
So the judgment about whether this is really one book or three—and concerning the argument that we face uniquely dangerous times—depends on whether you share Thompson’s blue disposition. Either way, there’s much to learn from the Cassandra of Cambridge.
