imc indymedia

Los Angeles Indymedia : Activist News

white themeblack themered themetheme help
About Us Contact Us Subscribe Calendar Publish RSS
Features
latest news
best of news
syndication
commentary


KILLRADIO

VozMob

CopWatch LA

ABCF LA

A-Infos Radio

Indymedia On Air

Dope-X-Resistance-LA List

LAAMN List





IMC Network: www.indymedia.org africa: ambazonia canarias estrecho / madiaq kenya nigeria south africa canada: hamilton london, ontario maritimes montreal ontario ottawa quebec thunder bay vancouver victoria windsor winnipeg east asia: burma jakarta japan korea manila qc europe: abruzzo alacant andorra antwerpen armenia athens austria barcelona belarus belgium belgrade bristol brussels bulgaria calabria croatia cyprus emilia-romagna estrecho / madiaq euskal herria galiza germany grenoble hungary ireland istanbul italy la plana liege liguria lille linksunten lombardia london madrid malta marseille nantes napoli netherlands nice northern england norway oost-vlaanderen paris/Île-de-france patras piemonte poland portugal roma romania russia saint-petersburg scotland sverige switzerland thessaloniki torun toscana toulouse ukraine united kingdom valencia latin america: argentina bolivia chiapas chile chile sur cmi brasil colombia ecuador mexico peru puerto rico qollasuyu rosario santiago tijuana uruguay valparaiso venezuela venezuela oceania: adelaide aotearoa brisbane burma darwin jakarta manila melbourne perth qc sydney south asia: india mumbai united states: arizona arkansas asheville atlanta austin baltimore big muddy binghamton boston buffalo charlottesville chicago cleveland colorado columbus dc hawaii houston hudson mohawk kansas city la madison maine miami michigan milwaukee minneapolis/st. paul new hampshire new jersey new mexico new orleans north carolina north texas nyc oklahoma philadelphia pittsburgh portland richmond rochester rogue valley saint louis san diego san francisco san francisco bay area santa barbara santa cruz, ca sarasota seattle tampa bay tennessee urbana-champaign vermont western mass worcester west asia: armenia beirut israel palestine process: fbi/legal updates mailing lists process & imc docs tech volunteer projects: print radio satellite tv video regions: oceania united states topics: biotech
printable version - js reader version - email this article - view hidden posts - tags and related articles

Downward Spiral

by Claus Peter Ortlieb Saturday, Nov. 24, 2012 at 8:59 AM
marc1seed@yahoo.com

To Krugman, the increasing ideological blindness of German politicians can only be explained by their belief that "hard times must be the necessary punishment for earlier excesses." Krugman overlooks that the hard times and excesses do not concern the same people.

DOWNWARD SPIRAL

No Way out of the Debt Crisis

By Claus Peter Ortlieb

[This article published in Konkret 11/12 is translated abridged from the German on the Internet, http://www.exit-online.org/druck.php?tabelle=autoren&posnr=511.]

The austerity dictate prescribed for the euro-zone will only intensify the crisis that should be combated. This is increasingly clear. National economies under the thumb of the “troika” (the International Monetary Fund, the European Central Bank and the European Commission) are carrying out the austerity conditions to the collapse of domestic demand. The triggered or intensified recession makes unemployment rise which necessitates greater social spending while the gross domestic product (GDP) and tax revenues simultaneously decline. As a result, the indicators of state indebtedness, the debt state and the new indebtedness as a percentage of the declining GDP, worsen. The “troika” causes this. On account of its criteria, the troika cannot do anything but tighten the thumbscrew and intensify the austerity conditions which forces down domestic demand again.

This spiral of savings, recession, greater savings and even sharper recession is known from the 1930s in Germany under the slogan “Bruning emergency order” and in the USW where the government of President Hoover followed a similar course. The depression event at that time can be observed now in Southern European crisis countries: an unemployment rate around 25 percent while youth unemployment is at 50 percent. There is one distinction. While governments ruined their own national economies in the 1930s, this job is done in the euro-zone by the German government with the consequences that only the German economy still grows a little while the euro-zone as a whole shrivels economically.

As everyone knows, Keynesianism arose in the 1930s as a reaction to the worldwide economic crisis and the crisis-intensifying economic policy at that time. Its advocates led by Nobel Prize winner Paul Krugman are bewildered about the austerity policy propagated by German politics (cf. the article by Justin Monday in Konkret 8/12). To Krugman, the increasing “ideological blindness” of German politicians can only be explained by their belief “that hard times must be the necessary punishment for earlier excesses.” That the hard times and excesses do not concern the same people is overlooked by Krugman. Economic programs are promoted as an alternative to the austerity policy. “Today governments must spend more money and not less until the private sector can again support the upswing.” Outside Europe, such an economic policy is now actually followed by the US government, the Federal Reserve and China.

The crisis is not as simple as Krugman describes. Keynesianism economic policy assumes that the private sector sill be able to support the upswing some time or other as the famous bottomless barrel. But this presupposition has not been fulfilled for a long while. For more than thirty years, the world economy has only been kept going through (state and private) contracting debts. Keynesianism already broke down in the 1970s when the economic programs now demanded again only led to double-digit inflation rates and were not able to trigger a self-sustaining capital accumulation.

As everybody knows, Keynesianism, was replaced by neoliberalism that contrary to its own monetarist doctrine pursued everything other than a policy of a stable money supply. Rather the state indebtedness was speeded up (as through the excessive armament Keynesianism of US President Reagan) and the deregulation of the financial sector expanding the possibilities for money creation out of credit. Inflation disappeared by shifting massive sums of money from mass consumption and the real economy into the financial sector, more exactly from consumer goods to the stock- and real estate markets (asset inflation), a very desirable effect.

For example, the Dow Jones Index rose by a factor of 7 adjusted for inflation from 1982 to 2000. There were similar phenomena on the real estate markets where price increases on houses bought on credit were used to finance the consumption of their owners until the bubbles finally burst.

Examined in the light, the emphasis on “finance-driven capitalism” that for a long while was called “a new regulatory model” only meant the real economy was financed and kept going by debts. One model for this is the deficit cycle…

“Finance-driven capitalism,” must stutter or come to a complete standstill as soon as creditors suspect their debtors cannot repay their debts. This happened again and again for 30 years on the local plane and first assumed worldwide dimensions with the crash of 2008 on account of the length of the credit chains. To rescue the financial system from complete collapse, states had to assume the costs as seemingly infallible debtors. State economic programs of $3 trillion were put on the table in 2009 alone. A depression as in the thirties was thereby prevented. However a self-sustaining real accumulation was not initiated any more than in the previous decades.

The answer given by the neoliberal revolution to the crisis of the 1970s consisted in “the most gigantic credit-financed economic program ever,” as the conservative sociologist Meinhard Miegel admitted. Whoever as a true conservative now demands an end to the “excesses” ignores or conceals that these “excesses” keep the world economy going for more than thirty years. Conversely whoever calls for more state economic programs does not want to know that the effects of the crisis can only be mitigated but not overcome. Only state indebtedness increases until nothing happens any more.

The supposed alternative of austerity policy on one side or economic programs on the other is in reality a dilemma situation, a choice between the plague and cholera, between saving to ruin and state bankruptcy. Examined more closely, it is a choice that implies a sickness for others because the state depends on successful capital exploitation for which it has to create the presuppositions.

Global capitalism cannot solve the over-accumulation crisis since the 1970s because an ever-smaller part of the worldwide labor force is enough to produce for everyone with the rise of microelectronics and its application in production. That would be the “end of the work society.” Thus the disappearance of labor from the production process is not a disaster. Most of us can imagine something better than lifelong drudgery. A problem first arises from this development since capitalism is based on exploitation of labor, generating profits in a serious capitalist way only through the use of human labor power. Profits are now the meaning and goal of all capitalist economies.

No economic policy comes near this core of the crisis. Since abolishing capitalism does not seem a realistic perspective, only the option remains to money-subjects to steer clear of the negative consequences of the crisis and shift them to others. The German policy of the last ten years shows what this means in a situation where fewer and fewer people are still exploitable for capital and the population of whole regions is superfluous.

The success story with which the allegedly lost “international competitiveness” was regained begins with the low-wage sector developed in the course of Agenda 2010 and the related pressure on wages even on the higher floors. In the EU, Germany is the only country where real wages fell between 2000 and 2008. Wage-dumping was practiced and the high productivity growth was not passed on to the wage-earning population…

The “German success model” is not abandoned. Instead the whole EU should now follow this model. This is crazy according to the criteria of the false system logic because the model is based on an asymmetry, namely the balance of trade deficits of the Southern European crisis countries as the backside of the German balance of trade surplus. All this only makes sense as the goal of making the euro-zone “internationally competitive” which certainly means bringing them to a corresponding level regarding living and working-conditions. Greece shows what this means.

If the successful ones are followed, the further crisis course is marked out. Since success in the location competition means the few who can export their products must keep down their costs, especially costs for luxuries like caring for the sick, elderly and other boarders who do not contribute to economic success. The struggle over competitiveness can only lead to a further downward spiral that has long been underway.

That the temporary winners of this competition can hardly celebrate their victory is not really comforting. Who will buy their products on the islands of capitalist prosperity that are becoming ever fewer and smaller?

RELATED LINKS:

Tomasz Konicz, “The Crisis Explained,” 2012
http://portland.indymedia.org/en/2012/01/413591.shtml

Ernst Lohoff and Norbert Trenkle, “The Economic and Financial Crisis,” 2012, from “The Great Devaluation”
http://www.indybay.org/newsitems/2012/11/03/18725029.php

Rosa Luxemburg foundation, “The World Crisis and Beyond,” 182pp, 2009
http://rosalux-europa.info/publications/books/the_world_crisis_and_beyond/
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


Local News

Segregation in the City of Angels: A 1939 Map of Housing Inequality in L.A. A15 7:44PM

Justice Dept. seeking info, IDs on 1.3M visitors to protest website DisruptJ20.org A15 1:04PM

San Francisco Rally Protests Hate Crimes in Charlottesville A14 5:38PM

New Google algorithm restricts access to left-wing, progressive web sites A02 1:52PM

Tracking Twenty Years of Stockton Killings by Law Enforcement A02 1:27PM

Garcetti Cronyism - Why and How to Ignore Your LA Dog License A01 5:05PM

Nation's Worst Meltdown Was In LA J31 4:54PM

As RV towing resumes in LA, officials say program won't 'target homeless' J31 1:15PM

Class War on the Waterfront: Longshore Workers Under Attack J21 10:18AM

Limits to Growth Published Forty Years Ago J18 5:15AM

KPFK's Indy Media on Air Now on Wednesdays J25 9:13AM

Lessons From Portland’s Clashes With Fascists J13 7:36PM

Dr. Maryse Narcisse of Haiti Visits Southern California M20 5:55PM

May Day March in Riverside M02 10:35PM

Nuclear Shutdown News: April 2017 M02 4:38PM

Jewish “Defense” League: Nazis in Skull-caps A07 11:13AM

Nuke Shutdown News 3/17 A01 4:13PM

More Local News...

Other/Breaking News

Stéréotypie paraphysique S22 11:36PM

Eye Opener S22 5:43PM

There's a pretend world and a real world S22 3:38PM

Winner takes all S22 3:12PM

Doggy style S22 2:59PM

Development Group Says Debt Relief Can Provide Quick-Recovery Aid to Caribbean S22 10:32AM

Nuremberg trials needed S21 8:53PM

The Shortwave Report 09/22/17 Listen Globally! S21 4:37PM

Darkness over the White House S21 4:17AM

Paraphysique de biodynamie généralisée S20 10:09PM

6 Arrested in Female Genital Mutilation Business in La Vonia Michigan S20 10:32AM

Gang Stalking by fbi S19 6:14PM

Hurricane Maria Slams Dominica and Heads Towards Puerto Rico S19 10:18AM

Phone Privacy? S19 6:42AM

Paraphysique de l'orthopraxie S18 10:40PM

Reem’s Cafe Owner Has a First Amendment Problem S18 9:07PM

Evidence of USA Murderous Decadence &Threat to Civilization S18 5:46PM

The World at Risk under Trump S18 6:00AM

Fbi are human monsters S18 5:00AM

August 2017 Honduras coup update S17 10:50PM

Perpetrators of atrocities are employed by or associated with fbi S17 5:48PM

Mr. President ... S17 2:13PM

Nicaraguas fake Communist Gov. Forcing Canal on Southern Portion of Country No MoneyHealth S17 1:47PM

Allied Efforts in WW2@ Shortened Length of Time Nazi Party Terrorized Western Theater S17 1:36PM

Identity TRheft Rings Hurting all Classes Races and Types in USA Identity Sytems S17 1:26PM

Celebrate California Safe Schools S16 11:56PM

Revolutionary Internationalist Youth Founded S16 8:04AM

Dura lex, sed lex S16 4:22AM

More Breaking News...
© 2000-2003 Los Angeles Independent Media Center. Unless otherwise stated by the author, all content is free for non-commercial reuse, reprint, and rebroadcast, on the net and elsewhere. Opinions are those of the contributors and are not necessarily endorsed by the Los Angeles Independent Media Center. Running sf-active v0.9.4 Disclaimer | Privacy