The Constraints of the International Capitalist Economy…

We’re in the midst of a never-ending economic, especially European, crisis where Greece has received its second ‘bail out’ through the neoliberal Eurozone/IMF led bailout, as minimum wage is cut by 22%, the unemployment rate is 20.9% (record high), job losses continue to rise with 30,000 public sector jobs suspended, and the constitution now enshrines a commitment that debt reduction is more important than public sector investment/continuation of services. Furthermore, this deal was worked out on optimistic budget and projected economic ‘developments’, with Greece expected to reduce its debt through the package from 160% to 120% GDP, well shy of the new European Treaty 60% GDP debt restriction soon set to be part of countries’ who sign up laws. However, this condition, alongside a commitment to maintaining a less than 3% GDP deficit has been part of the European Union since the ’90s but is only facing renewed attempts to ensure its enforceability given the crisis, and given the primarily ‘advanced’ countries such as France ignoring the conditions resulting in the conditions even being suspended at one point. In fact, France’s historic level cuts are in part influenced by the pressure coming from the European Union regarding their off target debt and deficit limits.

So debt. Debt debt debt debt debt. That’s all we hear about. Everyday. On the news. In the streets. People have been told that debt is the big issue. They aren’t told that we built the NHS and welfare system, which itself is under systematic attack since the 1980s, with over 200% debt. More specifically, debt is a fundamental part and aspect of capitalism. Capitalism needs debt to survive. It needs debt so that people access endless credit so they can indulge in excessive consumption through the endless production of false needs, especially given the 1950s invention of the credit card helping with the rapid movement towards post-Fordism. Cameron said that personal debt on credit cards needs to be removed to help tackle the economic crisis. Indeed. But it doesn’t stand up when Cameron supports a capitalist system that wouldn’t exist without access to credit. This is especially true when the international system is increasingly acting out policies as in Greece and in Portugal where unemployment is 14%, with workers’ holidays and compensation packets when made redundant being cut with talks of a second bailout likely, so the majority of the population are paying for the crisis set about by this flawed system and the dominance of a private sector and financial system. Job cuts slashes the disposable income that people have to spend on the ever increasing production, relating to the falling rate of profit as more money is utilised to invest in capital spending at the expense of workers’ wages, as prices of products go up to offset the profit deductions caused by endless stagnant capitalist investments.

However, that isn’t to naively purport an easy way out of the current international restraints placed upon socialist, progressive cooperatively organised forces that are trying desperately hard to resist such pressures. Immanuel Wallerstein has made some very interesting contributions regarding the international crisis, tracing the development of what he calls a world system, that being more specifically a capitalist world economy. Influenced by dependency theory that criticised the simplistic view that economic growth equals progress, there is a critical analysis of how the world system is shaped so that certain (core) countries exploit the majority of other countries (periphery) with the help but also whilst undermining other in-between countries (semi-periphery). Wallerstein believes that resistance within a system is limited so that the left often have to choose the lesser of the two evils, whilst working towards forming a new type of system given his analysis that the capitalist world system will collapse in around 50 years. For Wallerstein we have been experiencing a financial crash since the 1970s, with the development of finance and extension of consumption.

These restraints placed upon progressive decisions are evidential even at a local level. I have written previously about the challenges the local councils face given there are around 30% cuts to the local governmental budget and the continual council tax freeze with practically null ability for local councils to raise revenue. As I said there, it is similar to the situation in France where departments are given more responsibility, whilst central government ignores the constitutional right to pass with these increased responsibilities more resources. Whilst preaching the power of the ‘big society’ and specifically the government’s so called related ‘localism’ drive, councillors are seen as easy scapegoats by the likes of Pickles to denounce and penalise when making decisions with limited autonomy.

You only have to look at the controversy regarding the only Green ran council in Brighton to see the effects this can have on progressive forces. There have been several members of the Greens leave because of Green councillors decision (except one vote against) to vote through an amended budget by the Tories and Labour after the Greens had their own budget amended regarding their proposal to increase council tax to offset the problems due to the freeze not helping councillors in the long term, condemning them to committing more cuts. Whilst I agree with those critical of the councillors’ voting in favour of Labour/Tories’ amendment and the apparent stifling of debate at conference is concerning, importantly we must remember that many including our own MP, Caroline Lucas, have voiced opposition to this. Even saying that, there are interesting points against rejecting the amended budget, when remembering the considerable constraints the Greens face locally (which party members should have been aware of when accepting the Greens role as a political party standing for public office in an evidential corrupt unfair system.) Furthermore, those leaving seem to also be leaving on the basis that the Greens even proposed a budget and didn’t just set an illegal budget. This is something I have talked about before, I only really see the potential of an illegal budget if it was coordinated amongst a majority or substantial number of councils.

This isn’t to say that I am a pro-cutter, I am adamantly against cuts given they are purely ideological and not needed, as mentioned above given the expected nature of debt in a capitalist system, the illogical destruction caused by cutting (falling rate of profit, etc.) and how debt was dealt with differently after the war. However, this is a reflection of an unequal corrupt capitalist defined international system, and I find walking away from substantial progressive attempts to make society better just because it isn’t 100% pure seriously counterproductive to the left’s efforts and I fail to see what they expect to achieve. This isn’t a decision like the Libdems who choose to go to bed with a fascist right wing Tory party at a national level, the reason we are seeing councils being cut at stupid amounts, whilst renouncing on pretty much all of their progressive policies in a desperate bid for power. Again, it comes back to what is the lesser evil, and for me the LibDems would have been better undermining the Tories’ power through remaining an independent, free thinking party. Instead, they have became a shadow of the party they used to be, and for me are set to come extinct.

This relates also to my view that we shouldn’t be adverse to working with Labour. Labour, like the Greens, have many progressive members constituting their activist base. They are having influence, as Ed Miliband’s good comments are often painted over by left fractionation and right wing propaganda in the media (Jay Baker has set up an interesting weekly analysis of things we don’t see Ed Miliband say). We need to remember the reality of a system that we live in, for me the real enemies should be the Conservatives in the UK. We need to work together to try and marginalise the damage and pain that is being caused by a party so drenched in Social Darwinism. I’m not naïve to the problems of Labour, but nor am I naïve to the problems of an international system always undermining and cutting chance for progressive resistance. Again, it comes to being pragmatic sometimes when working within the system in a hope of helping alleviate the pain and suffering caused by a system obsessed with greed, corruption and profit. Wallerstein believes we have seen a change to the dominant power relations, as whilst those at the top still have the same right wing ideas, there are more forces arriving challenging this hegemonic dominance as people’s political resistance grows and grows. The continual problems with the Eurozone, the ineffective so-called bailouts and the ongoing business as usual approach demonstrates that neoliberal and this capitalist world economy cannot keep going as it is indefinitely, we need to come together to minimise the damage in the short term and move towards a fairer different political economy, maintaining that ideal society in our mind whilst respecting the undermining practical current reality.

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7 thoughts on “The Constraints of the International Capitalist Economy…

    1. Exactly; instead of abstaining or voting for things that completely go against what they stood for before the election, they could have become a useful opposition force. Instead they sold out and will pay the price for such deceit.

  1. Unemployment of the 18 to 24s in these countries is nearer 50%. How will this age group be voting in future? Or will they even bother? I guess it will depend in part on whether they by into TINA or not and capitalism being the least worse system that all the mainstream parties seem to endorse.

  2. Wow, that’s madness. The devastation that’s going to be caused to these generations is unbelievable. Apathy might well be the result, but extremism or just acceptance may be other things. I guess it depends. I read that the opposition parties to the budget in Greece have 40% in the polls – what Germany will do if say these parties get in power is another thing. Democracy is under threat, for sure.

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