Tag Archives: Greece

Organic Crisis

The news today carried tidings of another huge setback for working people in the U.S.  The legislature in New Jersey, one of the most heavily Democratic and pro-union states in the country, has passed a bill rolling back benefits such as pension plans for 750,000 state workers and retirees.  Passage of this legislation, which is sure to be signed into law by New Jersey’s conservative governor, is a huge victory for the Right in the U.S.

There’s a strong thread linking this latest defeat for American public-sector workers and recent posts on the Social Text blog that I help edit concerning the campaign to dismantle unions in Wisconsin and the imposition of structural adjustment policies in exchange for a bailout in Greece.  That thread is austerity.

Elites around the world have decided to deal with the fiscal crisis of the state produced by the latest downturn in the capitalist system by raiding and in effect further dismantling the tottering remnants of the social democratic state, and, along with it, the rump of the mass middle class.

As Anne McClintock explains in her blog posting on Wisconsin, this is a nationally coordinated strategy by the Right rather than an ad hoc response to conditions on the ground.  And, as Costas Panayotakis’s blog on Greece demonstrates, it is a strategy common to elites across much of the Western world.

But this politics of austerity will inevitably intensify rather than ameliorate the current crisis.

First of all, public employees did not cause the current economic crisis.  The crash brought on by shady dealings in subprime mortgages and the many arcane financial tools invented to facilitate rampant speculation by bond traders had absolutely nothing to do with teachers, clerks, and other state employees in places like Wisconsin, Trenton, and Athens.

And pretty much everybody knows this.  So the austerity policies being imposed on public employees and their unions by the Right don’t just create moral hazard; they are also morally repugnant, and are likely to intensify the crisis, turning it into what Antonio Gramsci called an organic crisis, in which the economic contradictions of capitalism provoke thoroughgoing political and cultural crises.  In this case, the organic crisis is likely to create a political landscape increasingly riven with conflict.  The Right’s austerity policies perhaps gain short-term legitimation through arguments that pit workers in the insecure private sector against those in the public sector (who supposedly enjoy unfair perquisites), but such divisive ideology is guaranteed to polarize the political sphere in the long term.

In addition, these policies make no sense in economic terms.  As Costas Panayotakis notes in his blog about Greece, dismantling the remnants of the middle class is a sure-fire way to produce even deeper economic problems, since it is through mass consumption that 20th and early 21st century capitalism produces the three percent compound rate of growth it needs.  The Right uses the same tired arguments from the Reagan era about how we cannot raise taxes during a time of economic trouble, but it is not the rich and the mega-rich who fuel capitalism.  Their purchases of luxury goods are a relatively small segment of any modern economy.

So we can expect an intensification of the economic crisis, and, in tandem, an exacerbation of the naked class warfare of the last three years.

Welcome to the organic crisis.

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Capitalism=Crisis

Greece is in revolt.  Not surprisingly, though, the protests there are being totally misrepresented in the mainstream media.  Much attention in the U.S. press has focused on the spectacle of the riots and on the three tragic deaths in a bank in Athens.  Cogent analysis of the underlying crisis has been hard to find.

This relatively neutral sounding article in The Guardian is typical.  The article describes the sovereign debt crisis in Greece as a product of the fact that the Greek government relies on foreign loans in order to balance its debt.  In a thinly veiled racist reference that’s typical of these sorts of crises (remember the rhetoric about lack of fiscal discipline during the Asian crash in the late 1990s?), the article cites Greece’s unusually generous welfare state and its problem with tax evasion as an important ingredient in the current economic debacle.

To its credit, the article does also cite the role of U.S.- and U.K.-based credit ratings agencies, which recently downgraded the government’s debt to “junk” status, making it virtually impossible for the government to borrow any more money.  There’s mounting anger in Greece and the rest of continental Europe towards the decisive role such dubious “Anglo-Saxon” ratings agencies – which, after all, gave gold stars to the banks that were pushing dangerous mortgage-based derivatives to the hilt – are playing in stoking the crisis.

Little mention is made, in this or any of the other articles in the mainstream press, of the underlying crisis of capitalism.  There are no discussions, for instance, of the role of speculative capital flowing from banks in northern Europe and the U.S. into the (again thinly veiled racially demarcated) PIGS: Portugal, Ireland/Italy, Greece, and Spain.  No analysis can be found of the underlying crisis of overaccumulation that produces such inflows and wrenching withdrawals of speculative capital.  And nowhere can one find defiant rejections of the shifting of this burden onto the backs of the Greek working- and middle-classes.

Ironic, really, given the fact that exactly the same thing is happening now – although to a lesser degree – throughout the rest of the global North.  Here in NYC, for example, Mayor Bloomberg has just announced a budget in which 11,000 teachers are going to be fired in anticipation of draconian cuts in the state budget.  1,000 employees of the Metropolitan Transit Authority are going to be fired.  These cuts are a gut punch to average New Yorkers.  They’re also totally short-sighted since they are going to make it harder than ever to get the economy moving again.

Where to turn for adequate analysis of the crisis?  David Harvey has just published an incredibly (and characteristically) lucid new book called The Enigma of Capital.  He’s been out on the lecture circuit recently to promote the book, and some of his public presentations are now available online.  Check out the talk below.  Listen until the end, because Harvey discusses not just the roots of the crisis but also the solutions: we need to take public control of the economy in order to avoid the kind of destructive gyrations that we’ve been seeing with increasing frequency since the dawn of the neoliberal era, and, as recent posts of mine have I hope underlined, in order to forestall climate chaos.

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