It is all part of a single process. The individual who has lost a job or finds it difficult to pay the mortgage is suffering from the same global process that has forced Britain out of the exchange rate mechanism, caused the collapse on the Tokyo stock market, put Mikhail Gorbachev out of office and is now threatening a triple-dip recession in the United States.
No part of this process can be understood unless the whole is kept firmly in mind. The causes include the collapse of the Soviet half of the world system of authority; the decline of the West relative to Japan; excessive debt in the Eighties; and instability of the world banking and exchange system.
This world crisis is testing to destruction businesses, institutions and governments. Of the world's leading statesmen, hardly one can be confident of holding office in six months' time. We ought, therefore, to have some understanding for the individual national leaders struggling to survive this tempest of state. John Major does look very weak at present, but so do George Bush, Helmut Kohl and Francois Mitterrand.
Mr Major has been forced by events to abandon the main elements of his economic and foreign policy: the ERM and the close relationship with Germany. Mr Kohl and Mr Mitterrand, clinging precariously to the half-deconstructed ERM, seem even closer to final failure than Mr Major.
In each case, the events are bigger than the men, just as they are in the United States, where George Bush and Bill Clinton look out of scale with the challenge. In Britain, John Smith, despite a skilful piece of advocacy in the House of Commons, has as little policy to master events as any of these other statesmen. There will be little reason to turn to him.
How should Mr Major react to a situation he did not foresee, which has forced him to abandon his most cherished policies? He has no policy options that will restore him to control of the national economy. The world tempest is the condition in which he has to work, and his main aim must be survival; not merely his own survival or that of his party or government, but also the survival of Britain as a viable economy and society.
The right policy is not to try to resist the irresistible, but to run before the storm. That is now possible because Britain has left the ERM, but it would be madness, while the storm remains at its height, to contemplate use of the Maastricht anchor. It would not hold, and Parliament will not ratify it.
Whatever the German or French governments may attempt, the next stage of Europe's economic future cannot be planned effectively until this world economic crisis has been survived. The outlook for the German and French economies is at least as worrying as for the British.
This world crisis is also a political one. We do not know what European governments will be put in power by the events of the Nineties, but they will certainly be very different from those of today. Maastricht was always a blunder and is already an anachronism.
If the present Conservative Government is to survive, the British people must be protected from the storm as far as possible. Jobs, mortgages, businesses have all been threatened or destroyed by the excessive interest rates and unrealistic exchange rate of the ERM period. It is essential that interest rates be reduced further - at least down to 6 per cent - and the process should be quite a rapid one.
What matters is that as much as possible of the British economic apparatus should survive. The main world forces are still strongly deflationary; of course, monetary policy in a couple of years' time will need to be watched for inflation, but at present the task is to return the credit level to normal.
Despite the disasters of the past week, which Mr Major will remember for the rest of his life, there is as yet no reason why he himself should not survive. His great strength is that the young rightwingers in his party, now the key group, do not have their own candidate for prime minister. They are absolutely opposed to the most prominent alternatives in the Cabinet, Michael Heseltine and Kenneth Clarke; they believe that either would make a strong leader of a European policy that would be disastrous for Britain.
They do not want to push John Major out so long as there is any chance of his being succeeded by either of these men. They will wait until someone emerges in whom they feel confident.
Yet they are determined that the Maastricht treaty should not be ratified, and many of them are prepared to defeat the Government if that is the price that has to be paid. Probably two-thirds of the Conservative Party in Parliament, and a much larger majority of Conservatives in the country, oppose a return to the ERM or a single European currency.
Yesterday an NOP survey of MPs in the two main parties suggested deep divisions over the Bill to ratify the Maastricht treaty. Of the 112 Tories interviewed, 43 said they would abandon the Bill, 38 said they would press on with it, and 23 said their support depended on changes being introduced. Of the 100 Labour MPs polled, 25 were in favour, 42 were against and 24 said that changes were needed.
Only 21 per cent of Germans favour a single European currency, so it is not surprising that it is so unpopular in Britain. Whatever pressure he is under from Mr Kohl and Mr Mitterrand, or Mr Heseltine and Mr Clarke, the Prime Minister should resist it. He would not survive an attempt to force ratification of Maastricht through Parliament, and the Conservative Government might go down with him.
Perhaps his best course is to hold a referendum. In a period of great changes in policy, this might even be regarded by voters as logical. If he still believes in Maastricht, or feels himself committed to it, he could stump around the country with John Smith and Paddy Ashdown. They would lose the referendum, but it would be an honourable way out of an intolerable dilemma.
At the Conservative Party conference next week, it will become even clearer that the party cannot be held together on a pro-Maastricht policy. Since Mr Major took us into the ERM in 1990, most of the homeowners who support the Conservative Party have lost half their personal equity in their houses. Some have been ruined.
And none is in a mood to be lectured by the Foreign Minister, Tristan Garel-Jones, that it would be 'perverse, reckless and bizarre' to drop the Maastricht treaty. They find him extremely irritating and thus, ironically, he has become a leading recruiting officer for Euro-scepticism.
None of this means that Britain should not remain in the European Community or that there will be no further development of Europe, although a single currency is unrealistic and undesirable. For the present, it is survival that matters. Britain has to stay afloat until the storm subsides. There is no reason why John Major should not lead us to safety, but only if he is prepared to take his cutlass to every entanglement that endangers the ship.Reuse content