Daily Times

Six months after the acute
economic crisis that had engulfed Europe, threatening the expulsion of Greece, collapse of the euro and breakup of the European Union, it seems that the economic and financial Armageddon has been averted. The reality is different. Far from being resolved, it has penetrated from the peripheral economies to the main European countries that are facing sovereign defaults and even worse scenarios.

This instability and collapse of the confidence of the strategists of capital is reflected in violent mood swings from black depression to euphoria at the stock exchanges. In an article titled “Great Reversal” in The Washington Post, Robert J Samuelson describes the crisis in the following words: “What we are witnessing in Europe — and what may loom for the United States — is the exhaustion of the modern social order. Since the early 1800s, industrial societies rested on a marriage of economic growth and political stability. Economic progress improved people’s lives and anchored their loyalty to the state. Wars, depressions, revolutions and class conflicts interrupted the cycle. But over time, prosperity fostered stable democracies in the United States, Europe and parts of Asia. The present economic crisis might reverse this virtuous process. Slower economic expansion would feed political instability and vice versa. This would be a historic and ominous break from the past.”

In spite of the frantic efforts and wild proclamations of ‘recovery’ by financial gurus, the European Union has not recovered to the position of 2008 when it crashed into a deep recession. Now they are collapsing into another recession. The preceding boom of world capitalism was based on expanding credit to increase demand. But when capitalism is forced to function in the domain of credit financing, it goes over its natural limits and defies its own laws. Credit markets are, after all, bottomless pits. This condition reflects in reality a deeper crisis of overproduction, or the saturation of production.

There are trillions of dollars of cash-rich companies lying unused in banks but they have not invested for almost five years now. This fiscal austerity shows the doom and gloom of the capitalists and the pessimism about the future of the economy. In a situation of recession, the two main strategic methods of capitalism have failed to pull the economies out of the slump. The monetarists, or the advocates of the so-called trickledown economics, cut spending drastically, which further contracted consumption, causing an even deeper slump, as we have seen in Greece, Spain, Italy and other countries. On the other hand, the Keynesians, or ‘state capitalists’, argue for an increase in spending and a rise in wages to stimulate consumption. This inevitably leads to the ballooning of debt, sovereign defaults and busting of state finances. With inflation, stagflation and massive printing of currency, the economic collapse is only aggravated. Then the markets move in and we see speculative raids on stock exchanges.

Germany, which has been the locomotive of the EU economy, is slowing down. Its growth rate this year is predicted to fall from two percent to 0.4 percent. In Italy this year, family incomes will be as low as 27 years ago. France lost 20 percent of its markets in the last five years, as most EU economies are stagnant or in recession. The budget deficit of France is 1,850 billion Euros, which amounts to 91 percent of its GDP. The growth rate in Spain is minus two percent, showing the deep slump. Official unemployment is 26 percent while youth unemployment has shot up to 56 percent. The housing bubble has burst and there have been 350,000 home repossessions by the banks in the last three years. Such is the irony that the money given to the church in subsidies is equal to the cuts in the welfare state in Spain. There is an increasing tendency in Britain to leave the European Union, which will not solve the economic crisis or avert a ‘triple dip recession’. This is a ploy to churn up national chauvinism to perpetuate class coercion. Bankers and politicians are hated as never before. The left reformists have sold out to capitalist vultures and people are despondent. But these economic policies and acts will have political ramifications in Europe. The existence of European bourgeois democracy depends on giving certain concessions and strengthening the trade unions and reformist parties. More than 50 years of concessions and reforms have to be taken back to sustain capitalism. Even during the slump, capitalists have been making colossal profits, but no regime or party that is collaborationist with the system is prepared to seize that obscene wealth in order to meet the needs of the masses. The ‘only option’ they have is to attack the living standards of the masses and dismantle the welfare state.

However, the paradox is that the European proletariat has never been so strong. Hence, it will be difficult for the ruling classes to carry out repression as in the pre-war period, although we have witnessed elements of parliamentary Bonapartism, mainly in Greece and Italy, as the crisis ferociously unravelled. The tactics of ‘national unity’ governments will not work for long. National unity is the hollowest of all hollow slogans. How can the interests of the parasitic bankers or the sharks of the stock markets be the same as those of the unemployed workers and the deprived people?

The movements that erupted in 2010 and 2011 were sidelined and exhausted mainly due to the treacherous betrayals of the leaders of the traditional parties of the working class and the unions. But the masses are learning fast. As Napoleon once said, “Defeated armies learn well.” There might have been a certain retreat or inertia in the class struggle, but the European proletariat is far from defeated. They are being forced to adopt this ‘new normality’ of cuts and austerity. There is hardly any serious bourgeois expert who is truly optimistic about the state of the economy. The maximum they predict is a slow, weak recovery over a long period of time.

Europe is the eye of the storm. But as night follows day, there will be new waves of class struggle that will arise in the months and years ahead. Without a revolutionary leadership and party, these struggles will be protracted, with a continuum of instability and socioeconomic turmoil. To reject it, the working classes will have to go the whole hog to abolish the system that has failed to provide them a decent human existence.

The writer is the editor of Asian Marxist Review and International Secretary of Pakistan Trade Union Defence Campaign. He can be reached at ptudc@hotmail.com