Ever since Iceland’s economy collapsed in 2008, the country has been busy reinventing itself. The first step was to restore democracy through a turbulent nonviolent struggle, then to force resignations in the financial sector and secure a criminal conviction of their prime minister for dereliction of duty. Now they are exploring getting a new currency: the Canadian dollar.
If Icelanders think their traditional money has lost its legitimacy, why not adopt the euro or the U.S. dollar? Too much influence from the big banks of Europe and the U.S., they believe. Better to risk interference from the smaller and much better-regulated banks of Canada. (Canada, like the publicly-owned state bank of North Dakota, did far better in the 2008 crisis than most of the U.S. and Europe.)
For decades, Iceland was part of the “Nordic model” of social democracy, with the high standards of living, free university education, universal health care, full employment and other benefits. Like Norway and Sweden, in the late 1980s the Icelanders flirted with neoliberalism, but unlike their Viking cousins they went all the way. The right-wing party privatized banks, cut regulations and lowered the corporate tax rate. The banks, in turn, created a bubble through hysterical foreign borrowing, and the bubble broke in September 2008. Banks failed. Unemployment and inflation shot up, and crisis reigned.
In mid-October, the singer/songwriter Hörður Torfason stood in the public square in the capitol of Reykjavik with an open microphone, inviting passersby to speak. Every Saturday people gathered to speak and protest, to the point where 2,000 people gathered outside the parliament building on January 20. They banged pots and pans to disrupt the meeting of parliament – the “Kitchenware Revolution,” they called it.
The crowds grew to 10,000 — out of a total population of 320,000! — and the increasing turbulence forced Prime Minister Geir H. Haarde to announce that he and his cabinet would resign and new elections would be held. Although politicians responsible for Iceland’s financial life were resigning, the campaigners didn’t stop there; they demanded — and won — the resignation of the governing board of the Central Bank.
The social democrats came back into power and started to clean up the mess, with help from Sweden and Norway. Iceland was hurt and people had tough times. However, the social democrats refused to do what capitalist wizards expected. Instead of trying to pacify international investors, Iceland created controls on the movement of capital. Instead of initiating an austerity program, the government expanded its social safety net.
According to The New York Times, “Some economists have argued that the collapse of its banks forced the country to deal with its problems faster and aided a swifter recovery.” Iceland’s economy is expected to grow 2.5 percent this year and next.
But the mood of the cheated Icelanders was not, “Let’s move on.”
In March, Iceland opened a criminal trial against its former prime minister. Continues the same Times article:
Mr. Haarde was charged, in effect, with doing too little to protect the country against the depredations of its bankers as they pursued wildly expansionary lending that resulted in financial disaster for the country.
Haarde was found guilty. Former executives of the failed Kaupthing Bank have also been indicted.
The movement of Icelanders that rejected a European Union-style austerity program and instead put accountability where it belonged did not come out of thin air. Even while some Icelanders were trying to buy glamour through neoliberalism, others spent the years between 2000 and 2006 protesting the Karahnjukar hydropower project that the Icelandic 1 percent sponsored along with the Alcoa and Bechtel corporations.
Decades before that eco-justice campaign, Icelandic women shut down most of the nation for a day in 1975 to force passage of a civil-rights bill for women’s equality.
I see two big lessons that the rest of us can learn from the painful Icelandic experience. First, avoid assuming that activism is a “sometimes thing,” to be put aside after major victories are won. Icelandic activists achieved much but then almost lost it. As Canadian labor unions are fond of pointing out, “The struggle continues.”
Second, it is possible to take your country back from the mismanagement of the economic elite if your campaign’s strategy generates broad participation. Iceland mobilized no less than 3 percent of its population in direct action. For U.S. activists, that implies giving serious attention to campaign organizing and generating allies. The model of just occasional “mass bashes” doesn’t cut it.
Iceland is certainly a unique case – it’s interesting to see that they have turned to expanded social policies instead of implementing austerity measures. A very different approach than a lot of other countries.
A friend pointed out to me recently a strategically relevant feature of the Icelandic case: Many of the investors who stood to lose from the country’s decision to punish the banks were outside of the country, and therefore didn’t have a voice in the political system. You can imagine, for instance, how much easier it would’ve been for the U.S. to side with victims of Bank of America’s lending practices if the bank didn’t hold the savings and homes of so many Americans, and if it didn’t have such an iron grip on American politicians. We in the U.S. should be sure to take these factors into account so we understand better what we’re up against.
Your friend’s good point is partof a larger point that mst be made. Most Americans are trapped in a web of corporate, political,judicil and economic control. Getting free of this tyranny will require more than piecemeal reforms. Regulating or reforming our banking system, for example is just one piece of tht web. Another is the on your friend entioned, and to address that piece will require major changes in the nature of the securities market and corporate ownership.
It was only when I spent 10 years researching for nd then writing The Devil’s Marriage: Break Up the Corpocracy or Leave Democracy in the Lurch that I realized how America is trapped in a vast and powerful web of tyranny.
George Lakey poses a thesis that has the utmost relevance for transformational change in the U.S.: “Second, it is possible to take your country back from the mismanagement of the economic elite if your campaign’s strategy generates broad participation.” The success of Iceland’s campaign strategy was based in the relative ethnic, cultural and economic homogeneity of its rather small population, something that does not exist in the U.S. A more relevant model for the U.S. is the movement for Indian independence led by Gandhi. Because of their homogeneity, Iceland was able to generate broad-based participation primarily through political action. Unlike Iceland, efforts to create sustained broad-based campaigns in the U.S. through political action alone has proven to be only marginally successful at best. Gandhi understood that transformational change in a society as diverse as India required that political action be grounded in a strong constructive program. Although American progressives have yet to figure this out, thanks to Occupy and its horizontalists, the radical left is finally making some real “progress.”
One of the keys to a vibrant constructive program is the realization that the primary engine for social change is the micro-economy rather than macro-economy. This is most evident in the food movement but is happening all across the economic spectrum on the household and community level. A good illustration of how ordinary, often apolitical people, just meeting their basic humans needs for food, shelter, right livelihood, and community can be a radical force for change is in “Autonomy, Solidarity, Possibility: The Colin Ward Reader.” A broad-based campaign for transformational social change in America needs political action that is based on economic independence , equality and justice for all life, liberating education and living accord with ecological law (sustainably).
Yes, yes, a thousand times yes. Although I don’t think it’s our lack of homogeneity that is the problem here.. all the times I’ve ever asked people around me why they don’t get more involved, and they usually say that they don’t believe there is any hope for change. I think hope would come with a good game plan, which is sorely needed in the Occupy movement, ect. Although I would also cite our lack of sense of community in many areas.
One thing I think would really help, is if people all started remembering that we’re all human, and want to be happy, and that that is enough to bring us together in this.
For me, a great example of enlighted colletive thinking coupled with action. Bravo!
Iceland’s tax rates…
Income tax 22.9%, 25.8% and 31.8%
Municipal income tax 12.44%-14.48%
Personal tax credit 558.385 SK
Fisherman’s credit ISK 493per day
Fee for the Construction Fund for the Elderly 9.182ISK
Capital income tax 20%
National income tax – limited tax liability 15%-18%
Real-estate tax 0.180%-0.625%
Value-added tax 25.5%
Value-added tax on food 7.0%
Place you want to emulate?
Better question: At the moment, is it working? Because right now, yeah, maybe it’s not such a bad idea.
Absolutely.
Iceland, along with the democratic-socialistic influenced economies of Northern Europe, tops the world in freedoms and living standards.
This whining about the taxes Icelanders pay dries up when you see their consumer-price index is practically zero as wages keep up with the cost of living partly because of what those taxes pay for: top-quality education, health care, transportation, retirement security, courts, emergency services, communications, and on and on.
Working class Americans, under 35-years of Trilateral Commission induced neo-con garbage, have seen their jobs off-shored, wages plummet, freedom eroded and living standards pushed to the bottom of the industrial pack. And while US taxes for working people in fact aren’t much lower than Iceland, Americans get way less for what they pay for since most of it goes to military and war and propping murderous regimes across the globe and endless hand-outs to corporations, banks and spoiled rich parasitic elites.
This is why I would make a bad republican. I care more about happiness than money or tax rates. If it allows for people to live their lives happily, then I am all for it. Besides, the things that are really responsible for an individual’s happiness are not rooted in money, but in the mind. Of course, you need to allow for Maslow’s Hierarchy of Needs.. people need basic things like food, shelter, ect. But really, we can do without much of what we consume. We would even be happier for it, as we would be focusing on what really matters- community and a modest, self sustained local economy, where people can work less and enjoy life more.
The Canadian dollar is debt burdened too, and only looks good by comparison. Our publicly owned Bank of Canada ran very much like the public Bank of North Dakota, from 1938-1974. Then we switched from credit creation to borrowing from the major private banks,(which got bailed out very quietly after they engaged in gambling with derivatives.) The present CEO of the B of C is a former Goldman Sachs man.
If I were Icelandic, I would only use the $C for international trade.