• Alternatives to the Crisis

  • By Frédéric Viale | 09 Nov 10 | Posted under: Contemporary Capitalism , Transformative Strategies
  • A Comparison of Left Alternative Proposals

    One of the hackneyed refrains churned out by the neoliberals in power today and propagated by the dominant media, is the insistent repetition that there is no credible alternative to the existing system. They claim that emerging from the crisis cannot occur through fighting liberalism (by definition insuperable) but only by marginal adjustments to it or by further strengthening it.

    In this case the solution would be still more neoliberalism. Expressed so crudely, it might seem absurd and even cynical, which, indeed, it is. However, the ruling elites regularly serve it up, saying that to carry out counter-reforms in the middle of a crisis is itself cynical. Doing so, they claim, would be taking advantage of society’s inevitable state of shock, which inevitably occurs in a serious crisis, to smuggle in pre-meditated measures, but in a more serious and deeper manner. The austerity plans (or more correctly deprivation plans) abruptly imposed in Greece may be very dramatic but similar harsh measures are being imposed on other countries that fear attack by currency speculators. (We could ask who has empowered the latter to inflict harm.) They are adopting belt-tightening as a preventive measure – knowing that it is other people’s belts that are being tightened, those of ordinary people. From this point of view, the plans in Italy, Spain, Great Britain or France all bode harsher conditions. The severity of this future is certain, while the subsequent bliss promised as a consequence of submitting to austerity in a far-off future resembles the celestial afterlife served up not too long ago by a clergy empathising with the working populations. Happiness will come later, perhaps after death, if we suffer in silence in the here and now. This is where we are, transposed to political discourse.

    Abundance of proposals

    It so happens that some are not resigned to this. There is even a noticeable abundance of other proposals. It is enlightening to look at of some of them, and in what follows we propose to do so. To this end, I have collected some proposals put forward by political parties, academics and organisations of the social movement: the Left Party (France), the European Left party, Transform! (in particular its Euromemorandum), the European Network of Trade Unions (June 2010), the CADTM, ATTAC, and a statement by over a hundred Italian university economists.

    First observation: the various diagnoses converge

    No one dreams for a moment of repeating what the media says on a daily basis: “the public debt is the source of the trouble, it must be reduced to re-assure the markets”.

    No. The crisis is not just Greek, it is worldwide, it has not a single source but is systemic (and some talk of several combined crises, financial, economic, of production, of distribution, institutional and democratic crises). The crises are intrinsic to the system – indeed one could well ask if, from the system’s point of view, it is not so much a crisis as the normal expression of the system itself.

    The event that triggered the crisis (the sub-primes) ultimately derives from the increased skewing if income in favour of capital and away from labour. Those who only have their work to live on had to resort to massive loans – loans massively granted by private organisations on any conditions whatsoever, and then transformed into shares by dealers who became uncontrollable since the deregulations legislated in the 1980s in a globalised casino-style economy. Now the banks, massively bailed out with public money, are turning against the states, exploiting the public debt to compel the population again to pay for the crisis that it did not cause. The people will have paid three times over: the first time to bail out the banks, the second by being subjected to competition, insecurity and poverty and now for the third time by the austerity plans, which are just a way of again giving in to the banks and the financial markets. In this the diagnoses are in general agreement.

    However, the crisis does not just date from the breakdown in autumn of 2008. Here too, the point is broadly agreed on. Even before the crisis, the European countries had experienced a sharp increase in poverty, including among those with jobs (the emergence of “impoverished workers”). Poverty will increase still more as result of unemployment and of the drop in income of pensioners resulting from the austerity plans being adopted. In fact, the governments are seeking to reduce their budgetary deficits brought about by their massive expenditures to save the banks and measures taken to support demand. Social expenditure is being subjected to severe cuts. Meanwhile, the urgency of the struggle against climate change has been partly eclipsed.

    Private debts became public

    We are thus witnessing a second phase in the treatment of the crisis, which consists of transforming a crisis due to private debts (the sub-primes) into one imputed to public debts (the public deficits). The states saved the banks at gunpoint. Indeed, it was impossible to let them collapse, as that would have had the effect of stopping all economic operations, really all, this blackmail being generally expressed by the idea of too big to fail.

    The states were obliged to take measures to launch some revival (although largely insufficient). Now they are assessed by the rating agencies that pinpoint (for the very investors responsible for having created and spread the toxic shares throughout the economy) those states that they consider economically “fragile” enough to justify their refusing them credit except at exorbitant rates, thus increasing their financial and budget difficulties. At the time of writing, the ECB was not yet authorised monetarily to finance the public debts because of the Lisbon Treaty. The governments under pressure have decided on some relaxation of this principle, which remains in force. In any case, their populations are caught in a vice.

    Another point of convergence: the solutions put forward by the European Union have been unable to provide any answer equal to the issues involved. Very briefly, the proposals for reforming the financial system focused on the least critical aspects. In any case the strategies for emerging from the crisis merely consisted of lowering wages with the aim of maintaining competitiveness, encouraging social dumping and fiscal competition. They failed to draw up of any policy of budgetary coordination.

    Criticism of the strategy pursued by Germany was generally severe. However, it was not directed at Germany as such, but at the logic of the political orthodoxy prevalent there and indeed in the Union – one entirely based on exports. This little game has devastating effects on other countries of the Union at which the exports are aimed, since it incites them to imitate this export model and engage in deflationary policies. It is the whole model that is criticised, because it is based on forcing down wages and working conditions (in Germany for the sake of the competitiveness of its firms, and elsewhere also to capture markets and ward off speculative attacks). Its effects are also ecologically disastrous.

    Second observation: the level of the riposte.

    Here there is debate at the national and European level – and even worldwide. The political parties, acting in the perspective of eventually taking office, see the necessity of making alliances and conducting political struggles at European level and seriously envisage freeing themselves from the European directives by suspending their enforcement once in office. The social movements do not have this problem – they are content to say that all levels are involved.

    Perhaps one could say that there is no real division here, just differing conceptions of the time for action: “immediate action at national level to change the political balance of power at the European level with the aim of alliances to re-orient the E.U.’s policy” could be an acceptable solution to this important strategic problem.

    Third observation: the kind of riposte

    Here there is a strong overall convergence: the initial idea is that, fundamentally, the crisis is a systemic crisis, which means that democracy is undermined even though the leaders of our countries keep pontificating about it. In reality it is the markets that lay down the law, not the peoples. It also appears necessary (to ATTAC, ELP, French Left Party, Euromemorandum) to rebuild the European Union on new foundations based on new criteria capable of putting the people and the law before profits.

    How can this be achieved? The answer involves inverting the present state of affairs, hence the idea of a tax on the financial markets, of regulating the banks and the financial sector (ATTAC and all the others). Separating high street banks from merchant banks is also frequently raised (the letter from Italian economists, LP, ATTAC). The creation of a “public banking centre”, possibly involving the expropriation of some banks (CADTM) has been proposed, the idea here being to see credit as a form of common property, thus making it legitimate to control credit policies by the citizens in one way or another.

    Objectives for the ECB

    Another proposal: the role of the ECB. Its independence from governments is generally considered unacceptable, if only because it is not independent of the neoliberal dogmas. It should at least act with the obligatory objectives of employment and development and not only that of combating inflation. Moreover, some (Transform!, ATTAC, LP) say that it must also finance national debts. In addition, (according to the ELP, ATTAC, Euromemorandum) the role of the ECB must be changed based on the criteria of jobs, social development and ecology. The ECB must be subject to public and democratic control. The Growth and Stability Pact must be replaced by a new solidarity pact that favours growth, full employment and social and environmental protection.

    On the whole, “Credit must be considered a public good. The deposit banks must be separated from the investment banks. Public, cooperative and non-profit establishments must be favoured. The largest banks must be subject to effective public control. The activities of investment banks and investment funds, especially speculative hedge funds, must be firmly controlled. With regard to the financial markets, all new instruments must be subject to approval by a public regulatory authority to avoid excessive complexity. Credits as a whole must be supervised and a public European rating agency set up”.

    Cancellation of illegal debts

    An extremely interesting point: CADTM, which up to now has mainly taken a stand on the struggle for the cancellation of the Third World debt, is now taking a stand on the Greek debt and that of the other states of the Union. In a radical way, CADTM recommends (among other things) the expropriation of banks, civic control of the banking sector thus created, and a unilateral moratorium (without accumulation of overdue interest) of public debts. On the basis of an audit, this would mean the cancellation of illegitimate debts, the establishment of genuine fiscal justice, a fair distribution of wealth, curbing the financial markets by creating a register of the real owners of shares and by forbidding short selling. To this it adds more general measures for reducing working hours and for socialisation of companies that have been privatised in the last few years.

    Indeed, CADTM is not the only one to connect employment and budgetary policies. Other organisations and parties do likewise, considering that the crisis is not just a financial one. Work, and beyond it, the sharing of wealth, are also involved. The issue is to rehabilitate the instruments of intervention in the economy, especially taxation, but using taxation for a real policy of sharing wealth – very different from fiscal policies that support financial globalisation and are characterised today by higher taxation of taxpayers unable to move their capital resources rather than on the really big fortunes. Against the current practice, the idea of taxing capital is widely shared.

    The ecological issue is also present: The Euro-memorandum states: “an ambitious programme of ecological conversion must be set up in the areas of fuel and power, housing and transport. Such a programme can take part in both economic revival and the transition towards a more sustainable economic model”. The ELP puts things differently: in its 2009 platform it says it is: “in favour of the immediate and coherent development of a new international treaty that conforms to the report of the Intergovernmental Commission on climate change, including this in the European Union’s 2007-2009 plan of action”. ATTAC’s position is that social and climatic issues are linked. The present crises are systematic and cannot be treated separately from the challenge of climate change and a reorientation of the modes of production and consumption. This shows a clearly different orientation between those who see the crisis as a way of altering the system’s very foundations and those who stress the immediate necessity for economic revival.

    The whole agenda has to be changed

    In conclusion, it is clear that no one attaches much value to technical solutions. All say that the problem is broader and that there must be a break with the present unsustainable kind of production as well as with the fundamentally undemocratic way of running public affairs, which are, in the end, those of finance. There is an abundance of proposals for breaking with neoliberal dogmas as well as with European policies, which are seen to be other means of constraining the people. The political parties in particular advocate stopping the application of European directives in the event they gain control of public affairs. Proposals also include the complete reorienting of fiscal policies – ending especially fiscal dumping – and budgetary policies – ending this miserable European budget that is hardly able to control shortages. Others insist on the necessity for completely reviewing the aims and purposes of production, of the present mode of production, as it generates the violent upheavals that we are experiencing.

    The task is huge. We absolutely cannot count on the existing governments without creating the new balance of power needed— hence the necessity for resistance at every possible level.

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