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The Icelandic Volcano Erupts: A New Era of People Power in the Streets?

Can a hedge-fund island lose its shirt and gain its soul?

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After going hat in hand for bailout funds to Washington, the Bank of England, and the European Central Bank, Iceland turned to Russia and, reluctantly, to the global lender of last resort, the International Monetary Fund, that temple of privatization and globalization. Usually along with money, the IMF imposes its own notions of what makes an economy work -- as it did in Argentina until that country's economy collapsed eight years ago, leading to an extraordinary rebirth of civil society and social upheaval. In Iceland, the process was reversed: first upheaval, then the IMF. Now, you have an insurrectionary public and a new incursion of the forces of neoliberalism that helped topple the country in the first place.

As economic hard times have spread, so have a spate of protests and insurgencies across Europe -- of which Iceland's has only been the most effective so far -- suggesting that a new era of popular power in the streets may be arriving. Iceland's upheaval poses the question of what the collapse of capitalism will bring the rest of us. Last fall, major financial newspapers were already headlining "the end of American capitalism as we knew it,""capitalism in convulsion," "the collapse of finance" and "capitalism at bay." The implication: that something as sweeping as the "collapse of communism" 19 years earlier had taken place.

Since then, the media and others seem to have forgotten that the body in question was declared terminally ill and have focused instead on how to provide very expensive first aid for it. This avoids the question of what the alternatives might be, which this time around are not anything as one-size-fits-all and doctrinaire as old-school socialism, but a host of existing localized, grassroots, and mostly small-scale modes of making goods, providing services, and serving communities -- and remaining accountable.

Sod Houses to Private Jets and Beyond

Iceland is a strange country, as I found out. Situated on the volcanically and seismically active seam between the North American and European tectonic plates, the place seems to belong to both continents, and neither. Usually regarded as part of Scandinavia, it was controlled by Norway, and then Denmark, from the collapse of its proudly independent parliamentary system in the thirteenth century to 1944. That year, while Denmark was occupied by the Nazis, it officially became an independent republic.

But the United States military had arrived three years earlier and would stay on another 62 years, until 2006, at its huge air base in Keflavik. Before the collapse last fall, some of the biggest protests in the republic's history were about the occupying army, which broadcast its own television shows and brought a host of Americanizations and some prosperity to the island. More recently, Iceland became a place of wild neoliberal ambitions and Scandinavian welfare-state underpinnings. Ordinary people worked too many hours, like Americans, and took on too much debt to buy big cars, new condos, and suburban houses.

Poverty was not very far behind just about everyone in Iceland: person after person told me that his or her grandparents or parents had lived in a sod house, built out of the most available material in a country with scarce small trees, and that they themselves or their parents had worked in the fish-processing factories. The country's best-known artist showed me, with a deft flick of his wrist, how his grandmother could fillet a cod "like that," and added that most of the island's fish was processed offshore now. Until recently Reykjavik, the capital, was just a small town, and Iceland a rural society of coastal farms and fishermen.

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