WEARY OPTIMISM

By Robert Kurz

[This article published in: Neuen Deutschland 5/5/2006 is translated from the German on the World Wide Web, http://www.exit-online.org/druck.php?tabelle=autoren&posnr=260.]




The weather will finally be warmer and the economic research institutes are beginning to sing like the birds of spring. According to polls of businesses, the notorious “upswing” has been spun by the media and is now heard in the spring expert opinions. The German growth prediction for 2006 was raised from 1.2% to 1.8%. Economic minister Glos extolled the strength and solidity of the “current upswing.” What is really happening is nothing but the usual stimulation after the winter months. The instrumentalized optimism is normally rather weary. For 2007, the experts’ opinion sees a decline to 1.2%; the government itself forecasts a meager 1%.

In an historical comparison, this upswing is more a stagnation. The third industrial revolution sets inner limits to real capital exploitation. A real self-supporting upswing must include the regular labor market on a broad front. While 3% growth or more would be necessary for positively affecting the labor market in Germany today, 3% growth is illusory. In reality, structural mass unemployment is completely untouched by business cycle fluctuations. What is stimulated is the spread of precarious and irregular low-wage conditions forced by the coercive measures of state labor- and crisis management. The higher sales tax planned for 2007 will intensify poverty on a large scale. The most important characteristic of a real upswing, expansion of consumer demand in the whole European Union, not only in Germany, is missing. Retail trade is suffering a bitter setback, the exact opposite of upswing.

The optimism relying on export is identical with the unstoppable transnationalization of capital in crisis. Irrespective of nominal growth rates, the process of globalization will lead to more factory closings and mass dismissals. The world economy that excludes more and more people in all regions of the world stands on shaky foundations. The exploding oil price stimulates the import demand of producer countries whose dollar investments finance the trade- and balance of payments-deficits that as everyone knows suck in a considerable part of the global commodity- and capital streams. However the constant rise of energy costs threatens to strike back like a boomerang on the global economy.

The voodoo economy supported by the US deficits that goes along with transnational capital investments in China, India and Eastern Europe is also on the razor’s edge. On the plane of currency conditions, the imbalance in the US foreign balance getting out of control can crash the dollar at any time. To banish the inflationary impulse starting from the oil price, the European Central Bank feels bound to raise the interest rates. The contradictions of the deficit-nourished world economy are inevitably expressed in interest- and currency relations. The pressure to raise interest-rates and the latent dollar weaknesses will bring the upswing down to earth with a crash. The instrumental optimists should dress warmly.