Solidarity during the austere age

5.27.2013 Leave a comment

Aditya Chakrabortty, writing for the Guardian, considered Sweden’s recent and surprising troubles:

More than 20 cars torched in one night. School classrooms gutted by fire. Fifty far-right extremists chasing immigrants around a suburb.

You probably haven’t seen much about it in the papers, but for the past week Sweden has been racked by rioting. The violence began in a suburb of Stockholm, Husby, and spread around the capital’s edge before other cities went up in flames. Police have been pelted with stones; neighbourhoods have turned into no-go areas, even for ambulances. Such prolonged unrest is remarkable for Stockholm, as those few reporters sent to cover it have observed. Naturally enough, each article has wound up asking: why here?

It’s a good question. Don’t surveys repeatedly show Sweden as one of the happiest countries (certainly a damn sight cheerier than Britain)? Isn’t it famous for its equality, its warm welcome to immigrants? Whatever happened to Stockholm, capital of progressivism, the Mecca towards which Guardianistas face for their daily five minutes of mindfulness?

We all know the cliches, but the reality is they no longer fit the country so well. Whether it’s on the wealth gap, or welfare, or public services, Sweden is less “Swedish” than it has ever been. As in other continental capitals, the Stockholm version of the “European social model” is an increasingly tattered thing, albeit still appealed to by the political elites and still resonant in the popular culture. But the country seized by turbulence last week is becoming polarised, and is surrendering more of its public services over to private businesses (sometimes with disastrous effects). Those riot-scene correspondents ought not to be asking: why here? A better question, surely, is: if such instability can happen here, what might unfold elsewhere — including Britain?

Rioting has occurred in other OECD countries. Most notably, they took place in Austria, Britain, France, Germany, Greece, Spain and Turkey since the onset of the Great Recession. The United States also produced the peaceful Occupy Movement, which the various governmental bodies suppressed with rioting police forces. The causes of unrest are the same across Europe and in the United States: Growing inequality, social polarization, austerity and, in some instances, economic stagnation. Sweden is a special case, as Chakrabortty avers. Its welfare state was notable for its commitment to collective security and to economic growth. The Swedish economy continues to grow. But the Swedes are slowly jettisoning their commitment to collective security, to solidarity. This is when the authorities need the police to keep order. This is when the democratic class struggle becomes class warfare.

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Neoliberalism is an ideology and a compulsion

2.23.2012 1 Comment

The symbol of the Euro in front of the Europea...

Mike Whitney and Dean Baker argue that those leading the European Central Bank, the European Union, and the International Monetary Fund (The Troika) find it difficult to experience the world but through the lens of their idiotic economic theory. Baker had the recent opportunity to observe the Troika in action. He drew this conclusion:

There is no economic reasoning behind the troika’s positions. For practical purposes, Greece and the other debt-burdened countries are dealing with crazy people. The pain being imposed is not a route to economic health; rather it is a gruesome bleeding process that will only leave the patient worse off. The economic doctors at the troika are clueless when it comes to understanding a modern economy.

Mike Whitney’s analysis affirms Baker’s assessment. Whitney notes that, “If Greece’s €130 billion loan was going to be used for fiscal stimulus, then it might be worth the commitment. Because that kind of money could put a lot people back to work and kick-start the economy fast.” Yet…he continues by observing:

But the loan isn’t going to be used for stimulus. It’s going to be used to recapitalize the banks and pay off creditors, neither of which will do anything to boost activity or create jobs. So, why bother? Why dig an even deeper hole if it achieves nothing? If that’s the case, then Greece should just default now and start rebuilding the economy ASAP. There’s no point in putting it off any longer.

Indeed, why would Greece accept the bitter medicine dispensed by the European Union?

The troika (the European Central Bank, the European Union, and the International Monetary Fund) is demanding another €3 billion in spending cuts even though unemployment is tipping 20 percent and the economy shrank 7 percent in the last quarter. What sense does that make? You don’t have to be a genius to figure out that Greece won’t reach its budget targets if tax revenues continue to fall because everyone’s either been laid off or taking a pay-cut. It will just make a bad situation even worse. But the troika doesn’t worry about these type of things. They don’t care that their lamebrain economic theories have failed miserably so far, or that their austerity measures have been a complete flop. They just keep plugging along making the same mistakes over and over again, impervious to the criticism of reputable economists, oblivious to the abysmal results, they remain steadfast in their commitment to belt tightening, sure that a strict diet of breadcrumbs and water is the best way to nurse an ailing economy back to health. It doesn’t bother them that the facts prove otherwise.

An austerity politics entails personal suffering for many people. It immiserates them by design. This effect is considered a feature of an austerity regime. And the Greeks have already suffered, as we know. But an austerity politics also makes little sense during a recession. It is a policy regime a crazy person recommends.

The upshot: The government of Greece, if it were rational, would take the Argentinean path to recovery. Country debt and risk are not perpetual prison sentences. If Greece were to take this path, it would default on its obligations and exit the European Union (advocated here). It ought to do so because its current predicament and the proposed — or imposed — ‘remedy’ for it will only serve to transfer wealth to the financial institutions holding Greece’s debt and, of course, to plunder the country of those assets worth owning (discussed by Michael Hudson here). Greek “have-nots” have and continue to protest this imperial imposition on their country. It is rational for them to do this just as it is rational for the Greek government default on its financial obligations and jettison the Euro.

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The consequences of an asuterity politics

2.16.2012 5 Comments

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Greece under the yoke

1.30.2012 1 Comment

English: Various Euro bills.

Reuters reported that:

Greece must surrender control of its budget policy to outside institutions if it cannot implement reforms attached to euro zone rescue measures, the German economy minister was quoted as saying on Sunday.

The fact that the German Economic Minister made this already credible statement indicates that Greece lacks control over its budget. The issue at hand is whether the European Union would exercise direct or indirect control over the Greek budget, not whether Greece would control its own budget.

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Quote of the day

12.14.2011 Leave a comment

Serge Halami of Le Monde Diplomatique appropriately compared the recent European Union, European Central Bank and International Monetary Fund (“the troika”) intervention in Greece’s affairs to the Soviet Union’s termination of the Prague Spring:

For people in countries suffering under austerity measures, the history of Europe provides some outstanding examples. In some ways, recent events in Athens recall Czechoslovakia in 1968: the crushing of the Prague Spring and the removal of the Communist leader Alexander Dubcek. The troika has played the same part in reducing Greece to a protectorate as the Warsaw Pact did in Czechoslovakia, with Papandreou in the role of Dubcek, but a Dubcek who would never have dared to resist. The doctrine of limited sovereignty has been applied, though admittedly it is preferable and less immediately lethal to have its parameters set by rating agencies rather than by Russian tanks rolling over the borders.

Having crushed Greece and Italy, the EU and the IMF have now set their sights on Hungary and Spain.

Both interventions were intended to undermine democratic accountability in a peripheral state. Both, by the way, were successful.

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Quote of the day

12.9.2011 Leave a comment

Michael Hudson wrote:

The easiest way to understand Europe’s financial crisis is to look at the solutions being proposed to resolve it. They are a banker’s dream, a grab bag of giveaways that few voters would be likely to approve in a democratic referendum. Bank strategists learned not to risk submitting their plans to democratic vote after Icelanders twice refused in 2010-11 to approve their government’s capitulation to pay Britain and the Netherlands for losses run up by badly regulated Icelandic banks operating abroad. Lacking such a referendum, mass demonstrations were the only way for Greek voters to register their opposition to the €50 billion in privatization sell-offs demanded by the European Central Bank (ECB) in autumn 2011.

Hudson follows this passage by making a case for the euthanasia of the rentier class (Keynes) and for fiat money. To be sure, his solutions are as politically improbable as they are humanly necessary.

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A note on the obliteration of the ‘responsible’ left in Europe and the United States

11.8.2011 Leave a comment

Serge Halimi rightly points out that:

The Occupy Wall Street protests in the US are also directed against the Street’s representatives in the Democratic Party and the White House. The protesters probably don’t know that Socialists in France still consider Barack Obama exemplary, since, unlike President Sarkozy, he had the foresight to take action against banks. Is there a misunderstanding? Those who are unwilling or unable to attack the pillars of the neoliberal order (financialisation, globalisation of movements of capital and goods) are tempted to personalise the disaster, to attribute the crisis in capitalism to poor planning or mismanagement by their political opponents. In France it’s Sarkozy, in Italy Berlusconi, in Germany Merkel, who are to blame. And elsewhere?

Elsewhere, and not only in the US, political leaders long considered as models by the moderate left also face angry crowds. In Greece, the president of the Socialist International, George Papandreou, is pursuing a policy of extreme austerity: privatisations, cuts in the civil service, and delivering economic and social sovereignty to a ultra-neoliberal “troika” (1). The conduct of the Spanish, Portuguese and Slovenian governments reminds us that the term “left” is now so debased that it is no longer associated with any specific political content.

The current French Socialist Party spokesman explains the impossible situation of European social democracy very clearly: in his new book Tourner la page, Benoît Hamon writes: “In the European Union, the European Socialist Party is historically associated, through the compromise linking it with Christian democracy, with the strategy of liberalising the internal market and the implications for social rights and public services. Socialist governments negotiated the austerity measures that the European Union and the International Monetary Fund wanted. In Spain, Portugal and Greece, opposition to the austerity measures is naturally directed against the IMF and the European Commission, but also against the socialist governments … Part of the European left no longer denies that it is necessary, like the European right, to sacrifice the welfare state in order to balance the budget and please the markets. … We have blocked the march of progress in several parts of the world. I cannot resign myself to this” (2).

Others think the debasement is irreversible because it is connected to the gentrification of European socialists and their lack of contact with the world of work.

The upshot: Leftist reformers in Europe and America’s legacy parties will never implement radical and desirable reforms unless large and active movements compel them to do so.

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Italy’s Silvio Berlusconi offers to leave office

11.8.2011 1 Comment

“There is no alternative….”

Margaret Thatcher

According to the New York Times, Italy’s battered and irrelevant Prime Minister Silvio Berlusconi:

…offered a conditional resignation on Tuesday, agreeing to step down but only after Parliament passes an austerity package — before the country will go to early elections, government sources said on Tuesday evening.

The move comes in the face of an escalating debt crisis that has hobbled Greece, threatens Italy and could infect the rest of Europe.

Infect? Italy’s national crisis is also a significant component of the Eurozone’s system crisis. It is not an agent external to the Eurozone. Italy is Europe’s third largest economy. Because of Italy’s size and importance, it should come as no surprise that:

Speaking after a meeting of European Union finance ministers in Brussels on Tuesday, Olli Rehn, European commissioner for economic and monetary affairs, said Italy’s economic and financial position was “very worrying.” He added that the European Commission was “concerned about the situation and we following the situation very closely.”

Ironically:

“‘The problem in Italy is not primarily the real data,” Germany’s finance minister, Wolfgang Schaüble, said in Brussels on Tuesday. “The debt is high, the deficit is not — economic data are not that bad. The problem is a lack of trust from the financial markets and that of course is a realistic situation. And this trust has to be strengthened.”

It is a matter of “trust,” and thus, in the first instance, “a political crisis as much as an economic crisis,” as David Dayen points out. Finance capitalists across the world just do not trust Italy to resolve its problems, to solve them, in other words, to their satisfaction. This mistrust is contagious. The economic crisis is a political crisis because Italy’s sovereign debt crisis, like those found in Greece, Spain, Portugal, Ireland, etc., ineluctably threatens the core institutions of the Eurozone system. Whence the Euro, we might wonder, when so many national economies collapse?

To be sure, Italy’s sovereign debt crisis will not spare Italy’s political institutions and political culture. The imposition of an austerity regime on Italy will necessarily modify its political institutions, and thus kinds of politics Italians can feasibly give themselves in the future. Alterations of this sort are features of the austerity project. They amount to an economic and political constraint placed on Italy’s democratic institutions.

From the part to the whole: The Eurozone’s political crisis — will it exist tomorrow, the day after? — also helps to determine its financial crisis. After all, imposing austerity regimes on Italy and Greece will fail to resolve the Eurozone’s economic problems. It will, at best, transform them into a diminished quality of life for many living in those countries now suffering sovereign debt crises. This ‘best case’ outcome will, in turn, merely create another political problem for the Eurozone and, naturally, for those countries forced to endure an austerity regime. Europe’s transnational institutions and some of its national institutions will appear less than sufficiently rational and thus able to provide in the future an acceptable standard of living for many living in the Eurozone. In fact, this rationality deficit has already appeared as such: The Europeans and the G-20 have no answers, according to Barry Eichengreen. Consequently, “[t]he republic of the centre [in Europe] has institutions and media behind it, but it is tottering,” according to Serge Halimi. Armies await their orders, for civil order — Which civil order? Whose civil order? — must be kept intact even if the new transnational order demolishes the lives of millions.

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Chairs moving around the deck

11.6.2011 Leave a comment

According to a New York Times report:

After crisis talks on Sunday night, Prime Minister George Papandreou and his main rival agreed to create a new unity government in Greece that will not be led by Mr. Papandreou, according to a statement released Sunday night by the Greek president, who mediated the talks.

Mr. Papandreou and the opposition leader Antonis Samaras agreed to meet again on Monday to hammer out the details. The name of the new prime minister is not expected until then.

The new government is intended to govern for several months to put in place a debt agreement with the European Union, a step European leaders consider crucial to shoring up the euro. Then it is to hold a general election and dissolve.

The new government will unify around imposing a new austerity regime on Greece. It will exist only to serve that end. To be sure, this will not be an all-inclusive political settlement. After all, the government will not include representatives of the Greek protesters who have made their will known on this matter. It will merely be a unified Greek elite who will stand alongside of European Union political elite.

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Quote of the day

11.4.2011 Leave a comment

Alexander Cockburn avers:

I’ve no doubt that if by chance the left in Greece today were to evict the local political agents of the international banks, it would not be long before a NATO intervention, covert and then overt, was under way, using the usual arsenal of assassination, drone attacks and armed support for whatever security forces do not defect to the left.

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