The new normal
14 July 2010
Two months after the announcement of a €750 billion European bailout halted a panic on world stock markets triggered by the Greek debt crisis, it is clear that this bailout was the occasion for a sharp reorientation of European and international politics. Claims that the economic crisis was a temporary aberration have been set aside. Instead, the continuous impoverishment of the working class is to be the “new normal.”
The bailout was designed to stem a stock market selloff driven by fears of opposition in the working class and bitter infighting between major European powers over how to fund Greek and international debts. It was reportedly arranged after threats that France would otherwise abandon the euro. European Central Bank chief Jean-Claude Trichet warned that relations between the European states were the most tense since the outbreak of World War II.
As the ruling class contemplated the risks inherent in dissolving the common currency—the breakdown of European trade, the collapse of German exports, even the possibility of a Franco-German war—it decided to save the euro on the backs of the workers.
Funds to repay the bailout, which amounts to yet another gigantic handout to the major banks, are to come from social cuts on a truly unprecedented scale. This decision was seconded by the installation of a British Conservative-Liberal Democrat coalition government in May, and formally ratified by the world’s major powers at last month’s G20 summit in Toronto. The G20 communiqué declared that “countries with serious fiscal challenges need to accelerate the pace of consolidation”—that is, budget-cutting.
The austerity measures extend well beyond the shattered economies of Greece and Spain, where workers now face new cuts every few weeks. They are meant to usher in a transformation of social life throughout the Western world.
In Britain, 85 to 100 billion pounds in cuts are expected to cost 1.3 million jobs, a dramatic rise in homelessness, the collapse of infrastructure maintenance and public services, and 25 to 40 percent reductions in local government budgets.
Germany, the fiscally strongest European state, plans €80 billion in cuts.
In France, President Nicolas Sarkozy plans sweeping pension cuts and a 10 percent reduction in local government budgets, while handing out €30 million tax rebates to well-connected billionaires like Liliane Bettencourt.
This broader shift in policy highlights the significance of the US government’s recent refusal to extend unemployment benefits—a decision threatening to leave millions of workers destitute. Instead, the Obama administration is promoting its National Export Initiative, announced in the president’s State of the Union address last January. This measure aims to double US exports by forcing American workers to compete, through a brutal reduction in their wages combined with higher productivity, with their impoverished counterparts in countries like China, India and Vietnam.
The ruling classes sense that their policies will face mass working class opposition. Hence, their austerity programs are accompanied by a press campaign to legitimize dictatorship and war.
Coordinated budget cuts, while temporarily staving off inter-state conflict within Europe, only aggravate tensions between the imperialist countries and rising powers such as China. At the same time, the austerity measures decrease the West’s economic and strategic strength relative to newly industrialized countries, threatening the established international order with collapse.
Financial Times columnist Martin Wolf notes that, in addition to its technological advantages, which are rapidly being eroded, “the West reached its pinnacle at least as much by rent-seeking or, to put it more bluntly, by plundering the world’s physical and human resources.”
Under these conditions, the use of military force to defend the prerogatives of the Western financial aristocracy seems increasingly appealing to the ruling classes. In a recent International Herald Tribune article calling for more European military spending, French foreign policy expert Thérèse Delpech warned that Asia must be viewed as a “strategic headache” due to China’s rising economic importance worldwide. In the case of a US-Chinese conflict, she added, Europe must be ready to wage war against Beijing “in the Middle East, for example, helping block maritime routes” carrying oil to China.
Internal as well as external opposition is to be targeted for violent assault—as shown by the police repression of the G20 protests in Toronto, mass police roundups in Colombo, and the Thai army’s massacre of Red Shirt protestors in May. Underlying this repression is the growing feeling that only such measures will allow the ruling classes to preserve their privileges.
In a recent Globe and Mail comment, editorialist Neil Reynolds asked if democracy can “peaceably” dismantle the welfare state, answering: “No, it can’t.” Focusing on Italy, he observed that the one force in history that had been able to slash state debt and government expenditure was Mussolini’s fascist regime, which took power in 1922.
Such comments highlight the profound political and moral crisis of capitalism. It stands exposed as a system poised to unleash the same poverty and bloodshed it produced in the first half the 20th century. In their drive to slash social spending and prepare for war, the ruling classes turn governments into a chemically pure illustration of the Marxist definition of the state as a collection of bodies of armed men whose purpose is to enforce the material interests of the ruling class.
Until now, workers have found themselves blocked from effective opposition to social reaction and war because the existing political organizations are led by middle-class charlatans or right-wing union bureaucrats, hostile to a struggle against capitalism and fight for socialism. Even one-day “general strikes” in Greece or France are a form of political shadowboxing, in which popular opposition is contained and dispersed by trade union officials who are preparing, negotiating, and helping implement the cuts.
Workers can oppose the ruling class policies of social reaction and war only by breaking with these treacherous organizations and undertaking a revolutionary struggle for socialism.