It is becoming more and more evident that the bosses of the world cannot control the vicious downward spiral that is unravelling. The bourgeoisie is worried!
The most important characteristic of the prevailing situation is that after almost three decades, the ideologues of capitalism are on the defensive. The severity of the crisis and events that are unfolding at lightning speed have forced them to beat a retreat. In a recent editorial in The Economist, these strategists of the bourgeoisie had to admit:
“To the man- in-the-street, all this smacks of a system that has failed. Neither of the main western models has much political credit at the moment. European social democracy promised voters benefits that societies can no longer afford. The Anglo-Saxon model (trickle-down economics) claimed that free markets would create prosperity; many voters feel instead that they got a series of debt-fuelled asset bubbles and an economy that was rigged in favour of the financial elite, who took all the proceeds in the good times and then left everybody else with no alternative but to bail them out. To use one of the protesters’ better slogans, ‘The 1 percent have gained at the expense of 99 percent’.”
As the credit bubbles burst and the world capitalist economy slumped into the biggest crash in its history, there was a spiral of bank defaults that were bailed out by the state exchequers. The sovereign defaults were next to begin. The first serious default was in Iceland, although it was the Greek crisis that sent shock waves across the Eurozone and throughout the world. Portugal, Ireland, Spain, Italy were the next on the verge of a collapse. Now even France is looking vulnerable and no European economy seems to be confident enough to weather the storm.
The European Union (EU) leaders are in a panic. Six or seven summits of the EU heads of state have failed to resolve the crisis and every deal has come apart. The recovery in the US has been fragile and cannot salvage the economic downturn. The American rulers claim to have created 1.6 million jobs in 2011. But there is not much chance to create 8.7 million jobs lost during the height of the crisis. Revival seems to be a mirage for the foreseeable future.
China, India and other BRICS countries that were supposed to save the world economy are themselves slowing down and heading for recession. There are increasing tendencies of protectionism that will further aggravate the recession. It is becoming more and more evident that the bosses of the world cannot control the vicious downward spiral that is unravelling. The bourgeoisie is worried. What their experts are telling them is: “Hope for the best, but prepare for the worst.”
Greece is a case in point. Brutal austerity measures have played havoc with the Greek masses. The European Central Bank, the IMF and the EU commission are demanding even more austerity for the new bailout tranche. As the old English saying goes, you cannot squeeze blood from a stone. Greece cannot pay its debt within the confines of the present economic system. Nor can the bailouts revive its economy or growth rate. Three years of a deep recession have wiped out 16 percent of the Greek economy already. The austerity measures have further devastated society. There is terrible poverty, unemployment and social misery. Small businesses are being ruined. People are lining up in front of soup kitchens; hospitals are running out of medicines and closing down. Bars are closing; people are rummaging through rubbish bins to find food and migrating to the countryside to work on land. Electricity outages are further adding to the agony. It became so horrendous that the power workers’ union refused to cut the electricity supplies of the elderly and the poor and instead cut the supply to the ministry of health and finance.
There have been several general strikes and resistance is mounting. The vote of the Communist parties has doubled in the opinion polls and the support of the ruling PASOK has collapsed from 42 percent to 15 percent. Karatzaferis, the leader of an extreme right-wing party, LOAS, now in the government, warned recently, “Greece can become the Cuba of the Mediterranean.”
If one examines the process of collapse, looming default, bailout funds, payments of debt instalments and the severe austerity cuts that are counterproductive even from the point of view of resuscitating the economy, it seems like Greece is going through a train crash in slow motion where every solution becomes a barrier that breaks away.
The Greek default seems to be inevitable. It will be disorderly and chaotic. This brings up the question of the fate of the Euro, which is uncertain to say the least. The only way they could save it for the time being would be through ‘quantitative easing’, which is printing money. This will lead to massive inflation and pave the way for an even deeper recession.
The Financial Times wrote on January 25, “What better time to hold the World Economic Forum (WEF) than in the middle of the biggest economic crisis since 1945? And yet the delegates who make the trek up to Davos this year are more likely to be disorientated than energised by the state of the world economy. The fear of another big financial crisis, plunging the world into a deep recession or worse still hovers over world leaders. There could be a number of triggers over the coming months. European governments are dancing on the edge of a precipice...There is a grim realisation that years of austerity lie ahead with all the social and political consequences.”
Up till now it has been a vicar’s tea party. To reduce the crisis the ruling elites will have to go for much more brutal austerity programmes. At the moment there is not a single capitalist country that has not embarked upon these vicious cuts and severe attacks on the living standards of the workers and the oppressed masses. It is not ideological — it is economic necessity to preserve and retain this exploitative system. The bosses have no alternatives.
What we are experiencing is not a normal cyclical crisis of capitalism. It is something far deeper and more serious: an organic crisis of the capitalist system, from which there is no way out, except further crisis and deep cuts in living standards. All the attempts of the bourgeoisie to restore the economic equilibrium will destroy the social and political equilibrium. Greece is the proof of this assertion. Already social and political stability have been destroyed. And the realisation that all the sacrifices have been in vain will make the austerity intolerable. The result will be a turbulent period of revolution and counter-revolution that can last for years.
The writer is the editor of Asian Marxist Review and International Secretary of Pakistan Trade Union Defence Campaign. He can be reached at ptudc@hotmail.com
[This article was originally published in the Pakistani Daily Times]