The July edition of the Socialist Voice is out now
The July edition of the Socialist Voice is out now.
See it online here, or download the PDF. In this editions the articles include:
- Growing assault on workers’ terms and conditions
- First World democracy-In whose interests?
- The time is long overdue for the people to have their say
- Austerity is working!
- Hope and defiance: Picnic in the park
- Whose default?
- Growing inequality as public health suffers
- Saving the assets of the Irish people: ICTU supports a campaign on the illegitimate debt
- The degeneracy of the Labour Party-in or out of government
- The game is not over
- Social democracy and the crisis-Part 1
- A line of struggle for the overthrow of capitalism [Elisseos Vagenas]
- Palestinian issue divides Germany’s Left Party
- Delegates from northern European countries meet in solidarity with Cuba
- U2 pay tax?
- Book review: Dissent into treason
- Another bullseye for the New Theatre
- Building solidarity through Irish
Below is one of the articles, about the TASC discussion paper The Debt and Banking Crisis: Progressive Approaches for Europe and Ireland.
Social Democracy and the Crisis - Part 1
Tom McDonnell’s discussion paper for TASC (”The Debt and Banking Crisis: Progressive Approaches for Europe and Ireland”) fails to offer a real analysis of the crises facing us.
The reasons for this are simple. Firstly, the paper does not ask crucial and obvious questions, such as: What is the relationship between production, finance, and the government sector? What is the level of wealth in the economy, how is it distributed, and what does this tell us about the crisis? Why were huge sums of money invested in financial and other speculation in recent decades? Is there a systemic problem, or can the system be restored and improved through correct policies?
What is the nature of sovereign debt, and what does this tell us about national economies and government budgets? What is the nature of the EU, and what is its relationship with Ireland? Is the EU the answer or part of the problem?
Secondly, the paper is informed by social-democratic politics and so never considers class beyond a general commitment to a fairer form of capitalism; never asks whether capitalism needs to be transformed rather than softened; never questions the limits of liberal democracy or whether democracy should be extended beyond the political sphere to all areas of society and economy; never understands imperialism as the systematic organisation of the world by capitalism that serves specific class interests and so never understands the class nature of the organisations and structures that support it and implement its policies (EU, UN, WTO, IMF, World Bank, etc.).
In short, this type of paper and the politics it informs are unable to offer more than a demand for a better, fairer capitalism. And it is this failure to understand that capitalism itself is the problem that undermines social democracy from the beginning.
This is not to deny that capitalism can be forced to provide better conditions for working people. History bears witness that gains can be made through struggle, and post-war social democracy in parts of Europe certainly improved the lives of many. But, even with those gains, capitalism provided no solution for the working class: the wealth created through the productive activity of workers continued to be expropriated by capitalists; imperialism continued to visit poverty, social deprivation and war on millions of people around the world; real democratic control over their lives continued to be denied to people everywhere; and the potential for human development continued to be held back.
Social democrats are, mostly, concerned about the well-being of ordinary citizens and want to see the lives of the poor and less well off, indeed of all citizens, improved; and they are, mostly, committed to a better, fairer distribution of resources. That is not the problem. The problem is that the failure to identify capitalism as the source of the social ills they wish to remedy, and to understand that capitalism is a class system that systematically advances the interests of one class at the expense of another, means that social democracy is doomed to reproduce this system of expropriation and exploitation.
There is much in the discussion paper that echoes the positions of the socialist left. It argues that “taxpayers ought not to be obliged to honour any of the private debts of the failed banks,” and that “Ireland’s bank guarantee should be removed entirely and immediately replaced by a guarantee covering deposits only.” It goes on to insist that “fiscal consolidation . . . must be accompanied by a countervailing programme of strategic investment designed to create conditions for recovery.”
Elsewhere it identifies some of the problems in the European Monetary Union that we are familiar with: “the impossibility of setting an interest rate appropriate for each of seventeen different heterogeneous economies,” “the separation of control over monetary and fiscal policy,” and “the absence of a guaranteed Lender of Last Resort controllable by member states.” These problems are essentially about the different interests of the member-states, their different economic cycles, and the democratic deficit in the EU and the euro zone.
The paper recognises that “the transfer of debts from the private banking system to the general public is amongst the largest per capita social transfers in modern economic history and is deeply inequitable.” It points to the contribution to the crisis of “a failure of regulation and the reckless lending practices of the Irish and European banking system.” The Keynesian understanding that “extreme austerity” traps states in “a vicious cycle of low growth and high costs of borrowing” and makes it difficult for states to emerge from crisis is also noted. And it concludes by insisting that “full implementation of the fiscal adjustment necessary to achieve Maastricht compliance will substantially inhibit economic growth and employment creation in the medium term.”
There is, the paper says, a “need for a mechanism to operate as a countervailing force to the programme of austerity being undertaken on the Euro zone periphery”; this mechanism must provide a “large-scale level of investment.”
There is much here that we can partly or fully agree with; so what about solutions? Without much supporting argument, the paper consistently asserts that the solution can be found only within the EU and the euro zone. It would not be unfair to say that TASC sees saving the euro and EMU and correcting their shortcomings as the most important goal and the principal answer to the crisis.
On the banking crisis the paper recommends that taxpayers should not be made to pay the private debts of the failed banks; Ireland’s bank guarantee should be replaced with a guarantee for deposits only; the non-systemic banks should be left to their own devices (i.e. allowed to fail); new state-owned banks should take over the deposits and physical infrastructure of the systemic banks; and these good banks would restore lending to the domestic economy and provide relief for troubled mortgage-holders. This would all be “contingent on the political acquiescence of our European partners as Ireland’s economic future is inextricably linked to that of Europe.”
In response to the debt crisis, the paper proposes that Greece’s sovereign debt should be restructured; the euro zone should create a euro bond worth up to 60 per cent of each member-state’s GDP (60 per cent is the Maastricht target debt-to-GDP ratio), which would both reduce the difficulties of borrowing on the markets for some states and lower the costs of borrowing; the ECB should be given the new responsibility of providing guaranteed liquidity to member-states; this should be accompanied by “strict fiscal oversight and supervisory mechanisms” for the members-states’ economies (presumably overseen by the EU and ECB); and the ECB’s remit should be extended beyond price stability to include output, full employment, and financial stability.
Finally, as a solution to what it calls the “crisis in the real economy,” the paper recommends “a new Marshall Plan for Europe,” funded and run by the euro-zone countries. This would be a “permanent centralised investment fund” for the euro zone. In the current crisis it would be used principally to support the peripheral countries; in the longer term it would be used counter-cyclically to maintain stability in the euro-zone economy.
The second part of this critique will appear in the next issue and will deal with the lack of class understanding within the TASC economic analysis. It is difficult to understand any discussion of economic policies that is neutral in relation to this central question.
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EU Should Admit Greece is Bankrupt | Christian Rickens
The unvarnished truth - the second Greek Bailout should not have happened.
The mistake isn’t the size, but the construction of the bailout package. It isn’t geared to the requirements of the people of Greece but to the needs of the international financial markets, meaning the banks.
How else can one explain the fact that around a quarter of the package won’t even arrive in Athens but will flow directly to the country’s international creditors? The holders of Greek government bonds are to get some €30 billion as an incentive to convert their old paper into new bonds. The aim is to keep alive the illusion that Greece isn’t bankrupt — after all, the creditors are voluntarily forgiving part of the debt. The financial sector is cleverly manipulating the fear that a Greek bankruptcy would trigger a fatal chain reaction.
That leaves €100 billion. But that too isn’t geared to what Greece needs in order to get back on its feet. It’s linked to an estimate of how much debt the Greek economy can bear without collapsing. International technocrats agree that with debts amounting to 120 percent of gross domestic product, the country can just about go on servicing its debt. That’s the level at which the cow can go on supplying milk without dying of exhaustion. So 120 percent became the goal.
Collaboration, with our European partners | Cunning Hired Knaves
The European project was supposed to be a bulwark against the dangers of fascist ambition, but now it is the instrument used to dismantle European democracy in the interest of the risk adverse looking for a steady income stream from the provision of the social net by those who cite the words and actions of old fascists while doing so.
The post Collaboration, with our European partners by Richard of Cunning Hired Knaves summed up in one sentence. For much better sentences and many more urgent points read the post.
On Sunday there were massive demonstrations throughout the Spanish state, with half a million people on the streets of Madrid and 450,000 in Barcelona, protesting against the labour ‘reform’ planned by the Partido Popular, the right-wing party that most closely represents the interests of the power elites that conserved their position when the transition from dictatorship to democracy was undertaken.
S.P.A.R.K. protest at cuts to lone parents, Dublin 18th February 2012
Many families were cut in the last budget but lone parent families were particularly hit by the Fine Gael/Labour Party government.
The key elements are that single parents can’t take advantage of training such as Community Employment (CE) Schemes and when the youngest child turns 7 years old, the parent is declassed as a lone parent but treated as an ordinary worker even though there are few affordable creche places. There is a bill coming up in March which will copper fasten some of the worst elements of government plans.
There is particular anger directed at the Labour Party because they are associated with women’s rights and a more progressive society.
Please share the link to this video
Exiting the euro | Michael Roberts
Michael Roberts argues that those in Greece who cite the example of Argentina when suggesting that Greece should leave the Euro are not necessarily looking at the whole picture. The situations are not the same, Roberts points out, citing Argentina’s former central bank governor at the time, Mario Blejer and his recent piece in the Financial Times. He also points to research based on the the experience of five recent devaluations of economies in crisis (including that of Argentina) which “shows that they lead to a 10-20% fall in real GDP and take five to ten years to recover to previous real GDP levels. But that is not to say that there is no alternative to “lowering wages, privatising the state sector, reducing taxes for the corporate sector (especially big business) and ‘deregulating’ labour markets i.e. the super-exploitation of the Greek people to raise profitability.”
But the left could also find an alternative policy to exiting the euro where Greece negotiates a full default on its debt to private and foreign bondholders; takes over the banks; and uses the savings from bond and interest repayments (€17-20bn a year) to start state directed investment in jobs, technology and funding small businesses, while staying in the euro to protect the savings of the people from destruction, keeping down inflation and avoiding a rise in foreign debt. The question of exiting the euro then becomes an issue for the Euro leaders to impose (and to be resisted by a campaign within Europe), not as the main policy plank of the left.
Corporate tax avoidance: where are the worst offenders?
This table comes via the Tax Justice Network (and Richard Murphy). It’s from a table produced by U.S. researcher Kimberly Clausing and as TJN notes “demonstrates which countries are working hardest to wage economic warfare on the United States (and, by extension, on other countries,) via the global tax system”.
Solidarity campaign to support the people of Greece
Mikis Theodorakis, famous Greek composer of Zorba’s Dance, and Manolis Glezos, veteran resistance fighter against the Nazi occupation, have issued a call for a European Front to defend the people of Greece and all those facing austerity. We have decided to support this call and work with trade unions, campaigns and parties across Europe to establish a European Solidarity Campaign to defend the people of Greece. We will organise solidarity and raise practical support for the people of Greece; they cannot be made to pay for a crisis for which they are not responsible.
Chris Dillow | Capitalism against freedom
[...]
During the Cold War, opponents of communism routinely, and not entirely wrongly, claimed to be champions of liberty. Freedom for capitalists and freedom of speech and thought go together, it was claimed. “Freedom is indivisible” wrote Bruce Winton Knight in 1952. “Economic freedom is…an indispensable means toward the achievement of political freedom“ wrote Milton Friedman in Capitalism and Freedom. And back in 1944 Friedrich Hayek complained that “We have progressively abandoned that freedom in economic affairs without which personal and political freedom has never existed in the past.”
Today, though, this seems wrong. Many threats to freedom come from capitalists. The story is no longer capitalism and freedom, but capitalism against freedom.
Ian Stewart | The mathematical equation that caused the banks to crash
In The Observer, Sunday 12 February 2012
Anyone who has followed the crisis will understand that the real economy of businesses and commodities is being upstaged by complicated financial instruments known as derivatives. These are not money or goods. They are investments in investments, bets about bets. Derivatives created a booming global economy, but they also led to turbulent markets, the credit crunch, the near collapse of the banking system and the economic slump. And it was the Black-Scholes equation that opened up the world of derivatives.
The equation itself wasn’t the real problem. It was useful, it was precise, and its limitations were clearly stated. It provided an industry-standard method to assess the likely value of a financial derivative. So derivatives could be traded before they matured. The formula was fine if you used it sensibly and abandoned it when market conditions weren’t appropriate. The trouble was its potential for abuse. It allowed derivatives to become commodities that could be traded in their own right. The financial sector called it the Midas Formula and saw it as a recipe for making everything turn to gold. But the markets forgot how the story of King Midas ended.
Greece: a Sisyphean task | Michael Roberts
In a Eurozone that is unwilling to share its surplus with weaker, hardest hit economies there is no other option for those economies but default. Despite the agreement of Greek politicians to shorten their political life and accept the deal all that they have done is simply postpone this eventuality once again. However, even that postponement might be shortened by the Greek elections in April where the smaller leftist parties outside the coalition currently have 40% of the vote. Or so says Michael Roberts:
Whatever the Greek coalition leaders agree to and try to implement, such is the weakness of Greek capitalism, it will not be able to meet its fiscal targets or get its debt down to reasonable levels. Before the end of the year, the Troika will have to report that Greece is not delivering. Then the EU leaders will have to decide whether they ‘let Greece go’ or not. The EU leaders have agreed to more money for Greece (or more accurately its bondholders and banks) in return for draconian cuts in living standards in order to provide more time to try and ‘ring-fence’ other vulnerable Eurozone states like Portugal and Ireland (where they are preparing extra funding). So when Greece goes down, it will not affect the rest (or so the EU leaders hope). Of course, the Greek people may force the issue earlier if they vote in an anti-Troika government in April.
As Greece stares into the abyss, Europe must choose | Maria Margaronis
Do we really want to live in an economic union that must destroy the future of millions in order to just tick along? Maria Margaronis points out that the situation in Greece today says little about Greece and everything about the EU.
The trouble with historical metaphors is that they can obscure the present: what’s really at stake here is not Greece’s identity but Europe’s. All eyes are fixed on Athens, but the way out of the crisis requires a choice about what kind of Europe we want. The one we have now, with its deep structural inequalities and its rigid adherence to a failed economic ideology, protects neither democracy nor human rights. Stiff-necked and punitive, it prefers to eat its children.
Comment by: krupskaya
Jul 20th 2011 at 14:07
I hope this ‘class’ analysis is going to explain how it squares with the CPoI’s advocacy of devaluation and exiting the Euro - as the beneficiaries of this would solely be locally-based exporters, that is multinationals (or at least the ones who decided to stay).
It would do nothing to alter the balance of class forces in Ireland, or certainy not favourably.
It would also push Irish reunification further back on the horizon (which the CPoI says is supports), unless it is envisaged that An Punt Nua would link to Sterlng once more………? Please, say it ain’t so?
Comment by: David Cribbin
Jul 21st 2011 at 13:07
I agree with the, “The problem is that the failure to identify capitalism as the source of the social ills they wish to remedy, and to understand that capitalism is a class system that systematically advances the interests of one class at the expense of another, means that social democracy is doomed to reproduce this system of expropriation and exploitation.” (SV-79)
It seems to be the central problem with the so-called new-left in general, whether it be in Ireland, or Europe. It is the growing political position of the left that social justice (equity and equality) now means nothing more than a greater share in the participation of status consumption under consumer capitalism. The recent revolutions in the Middle East are striking for their lack of ideological backbone. The main source of the malcontent seems to be the desire to have this sense greater buying power, and therefore, through it, a “fairer” share in the participation of consumer choice. This is now what “we” are to call freedom, and it has become synonymous with democracy itself, i.e. democratic freedom for the world’s oppressed peoples now means nothing more than having an equitable share in the choice of what one is to consume. Even socialist distinctions of class are now reevaluated through this new-left position. They no longer use the distinction that you are working class if you work to earn your living, rather than own it. No, now, you are working class because your buying power limits you to a certain level of status consumption, and middle class if you have greater choices in what you consume. And it is the freedom the new-left promises to gain for the oppressed. “Here we do not have workers wanting to control the means of production,” they say, “or workers wanting to liberate their labour from the drudgery of subsistence. No we have workers that want an equitable sake in choosing to consume what the middle classes also consume.” These are the capitalist platitudes and now they are paraded by those that say they belong to the left! So now we have a left where a Labour TD can say that claiming Social Welfare is a “life-style choice”. (Although I might remind her of Orwell’s remark, “Everyone is free to live under a bridge, but it is only the homeless who find it necessary to do so.”)
Comment by: David Cribbin
Jul 22nd 2011 at 00:07
@krupskaya - I like to point out -
1. You cannot make a claim to belong to the left if you place nationalism before socialism.
2. To ratify any agreement with the IMF - EURO zone plans is already to acquiesce to the dismantling of the institutions of social justice that are already in place - and I might add, are only in place thanks to a labour, and social justice, movement to goes all the way back to James Connelly. It is to do under the guise of “austerity measures”, which call for the reorganization of Irish society by those unelected by the Irish people.
You are representative of the new-left. A anti-socialist movement that equates buying power with equity, and consumer choice with liberty. You may as well dig up the bones of all those who gave their lives, and toiled so hard, for some measure of social justice in this country. Dig them up and cast them into the abyss of oblivion.
Comment by: William Wall
Jul 23rd 2011 at 15:07
Does ‘a greater share in the participation of status consumption under consumer capitalism’ translate as more jobs and better wages?
Comment by: David Cribbin
Jul 23rd 2011 at 19:07
@william Wall - “Does ‘a greater share in the participation of status consumption under consumer capitalism’ translate as more jobs and better wages?” - This question confirms the attitude of the new left, i.e. that equity means nothing more than brokering a better buying power deal for the same amount of labour. i.e. it commodifies that labour all over again, rather than fining a solution to this phenomena of “reification” (Lukas) through a viable dialectical opposition. Ergo, it is a position the reenforces the capitalist hold on labour without opposition. This is the trap of consumerism. This is the trap of consumer aspiration. This is the betrayal of the new left’s agenda to liberate labour form it serf-like position.
Recent revolts and revolutions (in the middle east and Greece) show that this position has become the ideological norm. It means that these revolts and revolutions do not aim at liberation, rather they only succeed to reenforce and reproduce the conditions of their malcontent. i.e. these are NOT revolutions of dialectic change in social relations, but are ONLY disputes over the value of labour and its potential as a buying power in consumer society. They recreate the conditions of their own “reification”. Thus they are “useless”.
It is the same thing in brokering a deal with the Euro-zone over debt. It recreates the conditions that have caused it. Debt drove consumer production, which drove up GDP. It’s a false economy of boom and bust. The gripes about whether it brokers better buying power deals, or inhibits them, is a useless gripe, since they only succeed in stagnating the social relations that enslave us to these conditions of privation in the first place.
Unless the left recovers a viable dialectical opposition to consumer capitalism - it will always be complicit in reenforcing the conditions of social inequity.