What begins with the borrowing of some capital ends 14 hours later with cataclysmic disaster. It is a drama thousands and thousands in the western hemisphere watch these days — from Seattle to New York, from London to Milan, and from Munich to St Petersburg. Ticket prices are high, although sponsorship money flows in luxuriant quantities hand-in-hand with public subsidies; after all, the show (which originally was intended to be produced only once, the set consumed for ever in the last scene’s flames) is notoriously expensive to produce.

The show in question is, of course, Wagner’s Der Ring des Nibelungen, arguably the greatest and surely the longest piece in the repertoire that the opera houses of the world have to stage in order to be taken seriously. And never more so than now…with Wagner’s 200th birthday looming.

In the Ring’s first scene a credit relationship is established. Alberich receives some valuable capital from the Rhinemaidens, the Rhinegold, which they did not use for productive purposes (if we put aside the joy of its glimmer). The transaction is not voluntary but from an accounting point of view this hardly matters. Alberich has some debt-financed capital and the Rhinemaidens have a new ‘receivable’ (an amount owed to them) in their accounts. But what really matters is that Alberich, an entrepreneurial genius of the highest order, gets the capital moving. In no time, he creates a successful industrial business that generates a massive surplus and he celebrates his success by commissioning the eponymous ring.

Same time, different place. God Wotan’s new house, Walhall, is almost finished. Wotan has had a few good times but, right now, is broke. The construction company, Fasolt & Fafner Inc., had feared as much when they accepted Wotan’s building contract and, fortunately for them, had insisted on some collateral, which Wotan had somewhat flippantly granted in the form of his sister-in-law, Freia. Freia, for her part, grows, as a sort of hobby, fine apples that play a crucial role in the gods’ diet.

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At the beginning of the second scene of part one (on the trilogy’s eve, as Wagner wanted Rheingold to be known) we see Wotan’s wife Fricka worried about the bills. Insolvency is imminent and so is the fatal loss of Freia. Wotan calls in his fugleman and fixer, Loge, and half an hour later there is a bailout package: Wotan’s debt is to be refinanced through a loan from Alberich, an idea the lender greets with some reluctance. However, a little force (which makes for much merriment in scene three) achieves swift compliance. And so Wotan pays off his builders in scene four and moves into his new family dwelling.

Sounds plausible, familiar and financially sound? It is worth examining the main players’ balance of accounts at this stage. There are the Rhinemaidens who essentially have made an asset swap and now have, instead of the gold, their claim against Alberich, all of it solid equity. Then there is Alberich, whose accounts look quite formidable in the middle of the first evening. His debits: the ring, the tarnhelm and a giant hoard of gold. The credits: his obligations towards the Rhinemaidens and quite a bit of equity. But an hour later ring, tarnhelm and gold have all been swapped for Wotan’s bond. Wotan himself owns his new house but has no equity whatsoever. And, finally, there is Fasolt & Fafner Inc. who have created a substantial surplus through their own hard labour before the opera’s opening chords of E flat major. At the end of the first night they own ring, tarnhelm and the hoard of gold, all of which is covered by a sensational 100 per cent equity. Entrepreneurial conservatism at its most extreme! (It should be mentioned that the firm enters into Fafner’s sole ownership after the tragic death of his brother Fasolt, shortly before the end of the first evening.)

What would an auditor say on examining these accounts after the first two hours of the Ring? Fafner Inc. looks solid, the Rhinemaidens already less so. They may not have any debts but their claim on Alberich no longer looks enforceable. The auditors should be seriously worried when examining Wotan with his single (unproductive and completely debt-financed) asset. With a London-style property bubble, yes, he might be all right, but without it, his portfolio would soon be downgraded to junk status. And what about the industrialist Alberich? Only with a gargantuan appetite for risk would one bet on him as it is entirely unclear how he would replace his lost means of production…

Until not so long ago, the analysis would probably have stopped there but it’s 2012 and we have learnt about the dangers of contagion and become afraid of the domino effect. What if the agents in our (liquidity-poor) economy want Wotan to pay up but fear that he cannot? Things would then look bleak not only for him but also for the next domino, Alberich, and if he were to fall, even the Rhinemaidens would seem precarious. Of course, economists will see the solution and the potential for a happy ending for the Ring, and it’s not a complicated one: Fafner just needs to spend, consume or invest, and the show can go on.

Alas, Fafner just sits on his hoard. He saves and saves. We learn about this on the second evening and see it on the third. As time passes and Wotan procreates and his children procreate further (with each other), Fafner’s saving habits drive the world ever closer to collapse.

Wotan’s last chance is war but he has neither the financial nor political means to start it himself. So he waits for a ‘free hero’ who will do the deed for him: kill Fafner and free the resources. The hero is Siegfried, and Siegfried does slay Fafner and when he puts the ring on his finger there is a moment of hope. But Siegfried has none of Alberich’s entrepreneurial mettle, nor is he director of the IMF. He explores new countries, learns foreign languages, signs contracts, loans the ring and takes it back again; but he does all this aimlessly, without a goal or intent. His negation of economic rationality might make him a rather sympathetic figure in the play but it does lead, during the fourth and final evening, straight into the twilight of the gods. In debt up to his gills, Wotan sits and waits for the end that Brünnhilde, his most beloved daughter, finally ignites.

The world goes up in flames and Brünnhilde hands the Rhinegold back to its maidens. By erasing the first scene’s loan there is a tiny spark of hope for a new beginning: capitalist Alberich is still alive, of course.

Steffen Huck is professor of economics at UCL and director of Economics of Change at the WZB in Berlin.

This article first appeared in the print edition of The Spectator magazine, dated