A crisis of capitalism
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Dugsie



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PostPosted: Thu Sep 22, 2011 1:58 pm    Post subject: A crisis of capitalism  Reply with quote
A crisis of capitalism

The financial problems plaguing Europe and Italy are not home-grown. They are part of a global attack on labour.

Riccardo Bellofiore
guardian.co.uk, Wednesday 21 September 2011 22.30 BST

History repeats itself, Marx wrote, first as tragedy, then as farce. If you wonder how it might repeat itself the third time, look at Italy: a country where the most effective opposition to government are Ė literally Ė comedians, and where the prime minister himself is a joke. This has distorted most analysis of the country's economical and political situation, as if Italy's problem is just its PM, distracted by sex and trials.

To understand the true nature of the Italian crisis we need to look at it in a wider European context. The limits of the eurozone are well known: it has a "single currency" that isn't backed by political sovereignty, a central bank that doesn't act as lender of last resort or finance government borrowing, and no significant European public budget. The flaws of the ECB's obsessive anti-inflationary stand, and its propensity to raise the interest rate whatever the cause of price rises, are also plain to see. And Germany's tendency to profit from southern Europe's deficit while simultaneously imposing austerity budgets on those countries pertains more to psychiatry than economics.

That said, the European crisis is not a home-grown one, the sovereign debt crisis is not truly a public debt crisis, and Italy's crisis is not Italian-born. German neo-mercantilism induced stagnation in Europe, which survived thanks to US-driven exports. When "privatised Keynesianism" Ė mixing institutional funds, capital asset inflation and consumer debt (a model exported from the US and UK to Italy, Spain and Ireland among others) Ė exploded, European growth imploded.

The sovereign debt crisis is thus the private debt crisis in disguise. Deficits are not of the "good" kind (planned to produce use values, and self-dissolving through qualitative development), but of the "bad" kind (induced by real stagnation or saving finance).

The problem has been the unwillingness to refinance first Greece, then Ireland, then Portugal. Their share in the euro area public debt to GDP ratio is ridiculously low: cancelling the debt would have been less painful.

The crisis came because "markets" and rating agencies saw the stupidity of European leaders, who were ineffective when it came to rescuing indebted countries, and who introduced self-defeating austerity programmes. Fear produced a ballooning of the interest rate spread. The sharp decrease in the already very low Italian GDP growth rate (1.3% in 2010, 0.1% in the first quarter of 2011) and the dramatic rise in interest rates paved the way to Italy's current nightmare.

Italy's economy does have serious failings, but they are structural, long-standing ones. They date from the mid-1960s, and they resulted in the continuous decrease in both labour productivity and the growth rate. Capitalists answered workers' struggles with a kind of investment strike Ė through the intensification of labour rather than innovation. Industrial sectors disappeared; technology was imported; public enterprises were privatised. Mid-sized Italian companies profited from international exports, but they were dependent on outside-generated growth. Public debt was a means to assist a de-industrialising economy.

The fatal blow came with the policies of flexibility (that is, casualisation) of labour, which led to a collapse of labour productivity. For a while, this led to full under-employment in the centre-north. The crisis is revealing the hidden truth, and the drama of Italian unemployment and further casualisation is only just beginning as the impact of increasing regressive taxes and savage cuts is felt.

Default plus exit from the euro will not help. In 1992, Italy left the European monetary system and witnessed a huge devaluation: the structural problems deepened, and workers' conditions deteriorated. This time, Italy leaving the euro would mean the end of monetary union, and a dramatic broadening of the European and world crisis.

The crisis can be overcome only by dealing at once with the European crisis in order to stop the domino effect. One suggestion has come from Yanis Varoufakis and Stuart Holland: eurobonds not only as financial rescue but also as finance to a wave of investments.

However, this crisis is not just a financial crisis, but a capitalist crisis: it is part of an attack on labour. From this point of view, a New Deal should be part of a wider programme of the European left, who should push for a socialisation of investment, banks as public utilities, the intervention of the state as direct provider of employment, and capital controls. It is not (yet) Marx. It is Hyman P Minsky. Unfortunately what's really missing in Europe is not the money to finance debt; it is internationalism. Only European struggles can resist austerity and deliver decent reform.
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Dugsie



Joined: 22 Dec 2009
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PostPosted: Thu Sep 22, 2011 2:09 pm    Post subject: Reply with quote
A crisis of capitalism

I would like to get some feedback on this.Is there a case for the establishment of a European Socialist Party, beyond anything which exists at the moment, and, if so, what might it look like ?
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Lee



Joined: 09 Aug 2010
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PostPosted: Thu Sep 22, 2011 4:39 pm    Post subject: Reply with quote
This is a really bad article, written from an orthodox neo-liberal point of view, full of mysticism and almost supernatural causes resulting from a conscious entity called "the market". Its pretentious rubbish. This is not how things happen.
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Dugsie



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PostPosted: Thu Sep 22, 2011 4:58 pm    Post subject: Reply with quote
He appears to be a Professor of economics who writes extensively about Marxism. However, most of his work seems to be in Italian and so will be much more accessible to you than to me.
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Lee



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PostPosted: Thu Sep 22, 2011 5:20 pm    Post subject: Reply with quote
I wont bother to look him up. This article was bad enough. There is a crisis, but it has very little to do with what he describes and it certainly doesnt happen in the way he suggests, unless you really believe that the "market" is a conscious entity, and that he is privileged to understand its secret thoughts. This is in no way a Marxist analysis. Being Italian, he may well even think he is a marxist, as Italy is one of the few places in the west where it is still socially fashionable among the intelligensia to claim to be a marxist. I have met many in my time. This guy is so orthodox neo-liberal, it hurts.
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Dugsie



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PostPosted: Thu Sep 22, 2011 8:06 pm    Post subject: Reply with quote
Yes, of course. I can see why you think that this is neoliberal Lee.

'However, this crisis is not just a financial crisis, but a capitalist crisis: it is part of an attack on labour. From this point of view, a New Deal should be part of a wider programme of the European left, who should push for a socialisation of investment, banks as public utilities, the intervention of the state as direct provider of employment, and capital controls. It is not (yet) Marx. It is Hyman P Minsky. Unfortunately what's really missing in Europe is not the money to finance debt; it is internationalism. Only European struggles can resist austerity and deliver decent reform.'

Of course, it's not an academic paper written at a high level of abstraction, just a short article written for the Guardian. It's now £1.20 per copy. I can only afford it ever other day.
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WolfySmith



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PostPosted: Sat Sep 24, 2011 5:45 pm    Post subject: Reply with quote
Dugsie, you are correct he is a professor of economics at the University of Bergamo in Italy, as to how good he is I donít know. What we can say is that the global crisis is both a crisis of finance capital and a part of the systemic crisis of capitalism.

The sovereign debt crisis is about implementing a neo-liberal programme of privatization and austerity. If we accept that the capitalist system needs a global economic growth rate of 3% to sustain it, and that the neo-liberal and neo-conservative project has been about solving the crisis of class power that occurred after thirty years of Keynesian welfare capitalism. The problem now is one of finance and lack of capital for the capitalist classes and financial institutions to invest in since the property bubble burst in 2008 due to a lack of real growth.

Privatization of public utilities was part of the neo-liberal solution to the crisis of class power for Thatcher and Regan and now itís seen as a solution to the crisis of finance capital. Just as the recession in the 1980ís was made worse by neo-liberal economics it justified a draconian neo-conservative response to the labour movement. This is the strategy of the Tory/Liberal coalition and conservative/liberal governments across Europe and weak social-democratic governments which have accepted the neo-liberal/neo-conservative consensus. † † †

Itís a long time since I read Stuart Hollandís book Out of Crisis a project for European Recovery which was published in the mid 1980ís and I guess the world has changed politically and economically to the degree that many of his prescriptions of that time would be hard to implement exactly. I presume his current suggestion for a Left Alternative European plan where he says that the interest rate should be decided by Eurozone ministers, rather than the market, and the European Investment Fund should issue tradable bonds to pay for growth-boosting infrastructure projects across the single-currency zone are the kind of alternatives that the European Left should be advocating.

I agree with Riccardo Bellofiore when he argues for a European Left-wing Programme as the socialist alternative to the attack on the Keynesian model of welfare capitalism that has been adopted by the European Union since the Stability and Growth Pact and Lisbon Treaty which oblige EU member states to privatize state owned industries, social provision and to introduce market forces and budgetary discipline on member states. This is exactly what Thatcherism and Reaganomics was about in the 1980ís, and just as then it will not cut the deficit in fact it puts up state borrowing but transfers wealth from the working class to the capitalist class which is the real objective. † †

As for a ĎEuropean Socialist Partyí, I would think this very hard to build and to achieve mass support. There is of course the Party of European Socialists (PES) which is in reality a coalition of the social-democratic parties of Europe which includes the Labour Party. As Iíve already said these parties have in effect like the British Labour Party accepted the ideology of neo-liberalism and neo-conservatism, and this is why I believe the European Left and European United Left/Nordic Green Left Group represent the most realistic political opposition to the neo-liberalism/neo-conservatism consensus of Conservative, Liberal and Social-Democratic parties.

As Pierre Laurent who is President of the European Left Group as well as National Secretary of the Parti Communiste FranÁais will be attending the European Conference Against Austerity & Privatisation along with Len McCluskey the General Secretary of Unite, this represents the best opportunity to build a European Left Alternative. Itís why Iíve argued against those in the Communist Party of Britain that are against the European Left Group because they see it as accepting the legitimacy of the European Union. † †

My argument being whether we call for withdrawal from the EU in principle this isnít about to happen under a Tory/Liberal coalition or a Tory or Labour government. The attack on the British and European working classes and the concrete gains achieved by communist, socialist and social-democratic activists within the labour movement in the 20th century are under attack now by the political parties and institutions of the nation state, European super-state and international institutions of global governance. †

If Len McCluskey of Unite, Bob Crow of the RMT unions, Sevim Dagdelen of Die Linke, and Jeremy Corbyn of the Labour Party are taking part in the European Conference Against Austerity & Privatisation then this is where the leaders of the British Left parties should be if they want to be taken seriously by communist, socialist and social-democratic activists and the people of Britain and Europe.

Riccardo Bellofiore may or may not be the best economist or Marxist, but he is supporting the conference called for on the initiative of Pierre Laurent of the French Communist Party and this is where Rob Griffiths the General Secretary and John Foster International Secretary of the Communist Party of Britain will hopefully be on the 1st of October building a European Left Alternative to the anti-working class agenda of the Tory/Liberal coalition and their counterparts in the European Union.
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Dugsie



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PostPosted: Sat Sep 24, 2011 6:11 pm    Post subject: Reply with quote
Thanks Wolfy. I don't see anything neoliberal about Riccardo Bellofiore is all I was claiming.

We surely don't have to support the EU to have contact with its left-wing. Some flexibility in the cause of socialist unity is, I think, entirely justified.
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WolfySmith



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PostPosted: Sat Sep 24, 2011 6:22 pm    Post subject: Reply with quote
As you know from Red Pepper my position is for unity as a Marxist with non-Marxists whether in the Labour, Socialist or Communist Party. And my argument with those who use the issue of support or non-support for EU membership as an excuse for not being part of a united left group of resistance is that they are being sectarian and what Lenin called infantile ultra-leftists, if we cannot unite then the working class loses. In that case any group that opts out of the conference loses legitimacy with the labour movement and the working classes of Britain and Europe as internationalists. As a Marxist theory has no value if itís not translated into practice this was both Marx and Leninís position. It was why Lenin persuaded William Gallacher  that British communists should work with left-wing Labour activists and support the Labour Party in bourgeois democratic elections.
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WolfySmith



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PostPosted: Sat Sep 24, 2011 6:45 pm    Post subject: Reply with quote
If we support the election of Ed Miliband as leader of the Labour Party in the next election, then we should be able to support the European Left Group as part of our Marxist strategy for advancing the cause of socialism in Britain and Europe. Marx and Lenin both advocated using bourgeois democracy in the struggle against the capitalist classes and towards the goal of a workers democratic state. Socialism has been in retreat since the mid 1970ís and the advance of free market capitalism has proved the need for left unity and that we cannot afford the luxury of ideological purity and infantile sectarianism. No one expects the Spanish inquisition nor do we expect Monty Pythons Peoples Front of Judea (PFJ) splitters. Sad        

http://www.youtube.com/watch?v=iS-0Az7dgRY&feature=related


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