Scotland can be independent from London, but not capitalist markets

Independence for a country that is a dependent capitalist entity is illusory. Scotland, although a core capitalist nation whether or not it remains a part of the United Kingdom, will not prove to be an exception.

The governing Scottish National Party (SNP) promises the people of Scotland that they would hold their fates solely in their own hands should they vote for independence, yet Scotland just showed itself to be at the mercy of the world’s 12th largest petrochemical company. If so, how is Scotland to stride boldly into its future free of London financiers and global capitalist markets when a single multinational corporation successfully issues diktats?

Some of the contradictions inherent in Scotland’s independence bid are reflected in the SNP’s white paper, Scotland’s Future, in which it promises a host of progressive policies to reverse London-dictated austerity while flatly stating that an independent Scotland would continue to use the British pound as its currency and recognize Queen Elizabeth II as its head of state. In part these promises are borne from the SNP’s desire to retain the advantages of being a part of Britain while formally separating. Intended or not, retaining the pound ensures fiscal policy will be decided in London and not Edinburgh.

Scottish parliament during 'Make poverty history' day in 2002 (Photo by Russ McGinn)

Scottish parliament during ‘Make poverty history’ day in 2002 (Photo by Russ McGinn)

SNP leader and Scottish First Minister Alex Salmond doesn’t appear to see the significance of this, telling The Guardian that “The Bank of England and sterling are as much Scotland’s assets as London’s assets. They are certainly not [Chancellor] George Osborne’s assets. We put forward in this paper our willingness to accept liabilities. We are also entitled to the share of assets.”

Although an opponent of independence, former Prime Minister Gordon Brown is closer to the mark, declaring a currency union “self-imposed colonialism.”

It should be noted that the question of Scottish independence is strictly a matter for the Scottish people. If formal independence is their desire, that is that. But there is formal independence, and there is actual independence in a globalized world dominated by markets that tilt heavily in favor of industrialists and financiers.

Swiss company, not London, decides fate of industrial complex

In its white paper, the SNP declares “Independence means that Scotland’s future will be in our own hands. Decisions currently taken for Scotland at Westminster will instead be taken by the people of Scotland.”

Yet a recent decision, with significant consequences for the health of Scotland’s economy, was taken not in the British parliament but by a single corporate leader in Switzerland. That leader, Jim Ratcliffe, is the chairman of Ineos, the petrochemical company alluded to above. Ineos had been locked in a bitter negotiation with the union representing workers at its oil refinery and petrochemical complex in the city of Grangemouth; this is the only refinery in Scotland and processes 70 percent of Scotland’s fuel.

The Unite union had balked at Ineos’ demands for significant cuts. In response, Chairman Ratcliffe shut down the complex. Unite quickly reversed itself, agreeing to the demands. The complex was re-opened and Ineos announced it would invest £300 million and commit to keeping the complex open. In return, the union accepted a three-year pay freeze, cuts to pensions and a three-year moratorium on any strikes.

Scotland may claim 90 percent of Britain’s North Sea oil reserves, but without knuckling under to the demands of Ineos, would have been reduced to importing refined oil. First Minister Salmond called the deal “a great team effort from all concerned,” as if workers and employers were somehow equal, while a Scottish trade union official, Graham Smith, more realistically told the BBC that Ineos had “tried to impose its will on the workforce with a take it or leave it ultimatum.” For his part, Chairman Ratcliffe said he sought “to bring the site into the modern world.”

Reduced wages and living standards is “modernization,” the corporate media tells us; the Ineos chairman said more than perhaps he meant. Scotland’s independence would have had no effect whatsoever on this outcome.

Independence from Britain while staying in British grasp

The policies the SNP intends to implement, should independence be granted and it remain the governing party, certainly represent a sharp break with austerity and neoliberalism, and if realized would represent real gains for Scottish working people. The SNP white paper calls for universal child care, universal “high-quality early learning” programs, reductions in income inequality, reversing the cuts in social services imposed by the British government, provide more support for small farmers, and writing a constitution that would enshrine equal opportunity and “certain social and economic rights” such as a right to education.

On the other hand, the white paper also said it would remain in the Nato military alliance, retain the British currency and queen, and work closely with British security and intelligence agencies. The SNP also intends to focus the Scottish economy on exports while “emphasising innovation, technology and manufacturing.”

Capitalist market competition, which drives production to low-wage locales, will have much more to say concerning Scotland’s ability to become a successful exporter than the SNP. Moreover, Scotland would not be independent of London under the SNP’s formulation. The Bank of England is not likely to consider the needs of an independent Scotland when setting monetary policy. The U.S. Federal Reserve quite likely does not weigh the impact on Panama, which uses the U.S. dollar, when setting its monetary policy. Central banks, in general, are sensitive to the needs of financiers, from whose ranks their personnel come from, not to the needs of working people.

With a population of 5.3 million, Scotland would have no more ability to significantly deviate from the dictates of core capitalist heavyweights like the United States and Germany than other small countries. The interests of big capitalists in Scotland align with the interests of big capitalists elsewhere — maintaining the system in which they operate, at any cost to employees, not at sacrificing themselves to build a better Scotland.

There is nothing new here; the current era of corporate globalization has merely intensified what has long been true. As Rosa Luxemburg wrote a century ago:

“Apart from a few of the most powerful nations, the leaders in capitalist development, which possess the spiritual and material resources necessary to maintain their political and economic independence, the ‘self-determination,’ the independent existence of smaller and petit nations, is an illusion, and will become even more so.”

Even within the European Union, smaller countries like Greece and Ireland have little independence although they long ago broke free of colonial masters. The “troika” of the European Commission, European Central Bank and International Monetary Fund demand brutal cuts to wages, pensions and social services — and none of these bureaucracies are subject to election. The European Central Bank dictates financial policy across the continent on behalf of the financial industry. There is also less political independence than meets the eye — recall that in late 2011 Nicolas Sarkozy and Angela Merkel “summoned” the Greek prime minister to a meeting to curtly inform him there would be no referendum on the latest round of austerity. There was not.

No more living under unrepresentative governments

The foregoing does not deny that the Scottish people could be better off constituting a separate country. They have had to often endure the unpopular rule of the Conservative Party, which wins few votes outside of England, and thus subject to a government not of their choosing. (One of Scotland’s 59 members of parliament is a Conservative.) The Scottish Socialist Party, for example, readily acknowledges the progressive elements among the SNP proposals while arguing that the white paper should have gone much further.

Party officials, in the December issue of Scottish Socialist Voice, write that the SNP white paper did not have any commitment “to repeal the worst antiunion laws in Europe,” mention of a progressive tax system, guarantee of affordable housing, guaranteed right to union membership nor right to strike. Moreover, the white paper’s call for a minimum wage is based on the “good will” of employers rather than legal enforcements.

Scottish Socialist Party national co-spokesperson Colin Fox writes:

“I would also have liked to have seen a commitment to take the renewable energy industry into public ownership — just as the Scottish government did recently with Prestwick Airport — and return our gas and electricity supply industry to public hands. Both measures are concomitant with pledges to achieve greater economic prosperity, social democracy and fairness. … [T]he [party] prefers the very successful Norwegian approach to its oil and gas resources where it took them both into public ownership rather than privatising them as Britain did. As a result of this decision Norway has now accrued £840 billion in a state ‘Oil Fund’ with which to benefit its citizens and future generations.”

Another party writer, Richie Venton, argues that Scottish working people face a choice of going either forward or backward:

“So trade unionists don’t even face a choice between the status quo and independence, but between a further clawing back of gains won by past generations of trade unionists and socialists in struggle — or a chance to improve our lot as workers by voting for the right to get whatever government the Scottish people elect!”

We come back here to the question of reforms or a change to a better world. Welcome as reforms are — and the Scottish National Party proposals are significant and meaningful reforms — they are always subject to being taken back when political conditions change. The era of neoliberalism that dawned in the 1970s and continues to intensify is a concentrated attack on the gains won in prior decades, much of which has been lost.

Socialist changes, such as workers’ control of enterprises and public ownership of key industries such as energy and banking, codified in a constitution, would be the product of a struggle intended to go well beyond reforms and instead seek to create a better world. But no single country can be a socialist island in a sea of capitalism. A Socialist independent Scotland would face the ferocious hostility of the capitalist world, not excepting London bankers and bond traders, and Scottish capitalists.

That a small country could defy the power of capitalist markets — the product of the aggregate interests of the world’s most powerful industrialists and financiers — is not realistic. Those markets are expressed through a variety of means, financial and political, through multilateral institutions and imperialist governments, through webs of debt and military pressure.

A socialist Scotland could only flourish within a socialist Europe designed to maximize human need and potential rather than private profit. Otherwise, London, Brussels and Wall Street will continue to call the tune on behalf of the wealthiest, regardless of the formal political power residing in Edinburgh.

One small step for French workers but no giant leap

France appears on the verge of advancing the rights of workers, and although such a victory will be slight, even a tentative step forward is welcome. But it is no more than that: Once we get past the comedy of business leaders wailing that the sky is falling, do we really have anything other than a small reform that leaves the system intact?

It would seem not. The French National Assembly, on September 30, passed a bill that would grant employees a voice when their company is the target of a takeover attempt and require owners of companies with at least 1,000 employees to seek a buyer for a plant intended to be closed. The French Senate must also approve the bill before President François Hollande can sign it into law.

Marching in Paris against pension reformShould the bill be passed, a committee of workers would be organized inside a company being targeted for a takeover, which would be empowered to appoint an accountant to assess the bid. The board of the target company would be required to take the assessment under consideration before making its final decision. Although it is unclear what legal force this workers’ assessment would have, the company’s “works council” (an employee oversight body larger French companies are required to have) could ask a judge to intervene if it believes the board has not responded adequately to its queries, potentially delaying any deal.

The bill would also put a temporary roadblock in the path of a company that intends to shut a plant or some portion of its operations. Enterprises with more than 1,000 employees that intend to shut a facility with more than 50 workers would be required to seek a buyer for three months. Judge would be authorized to impose a fine if the company fails conduct a search or turns down a serious offer.

The French Senate has a narrow majority bloc of Socialists, Communists, Greens and other Left-leaning members, so it would appear that the bill is likely to pass the Senate, enabling President Hollande to fulfill a campaign pledge to give workers more say in the running of their enterprises.

A tiny change, a giant rage

In reality, these new powers, should they enter into law, would do nothing to alter existing relations within the workplace. Nonetheless the principal of the bill — that workers are entitled to a modicum of control over their working lives, at least in theory — has driven business leaders and the corporate media that loves them into fits of rage.

A Bloomberg report on the bill quotes a series of speculators in full indignation, including a Paris investment banker:

“In the M&A [mergers-and-acquisitions] world, the image of France viewed from outside is deplorable, and this law is adding extra complexity.”

Quelle horreur! Bloomberg itself grumbles:

“Foreign companies have spent $14.8 billion on French targets this year, putting 2013 on track to be the weakest for such deals in at least a decade, according to data compiled by Bloomberg. The new rules may further dissuade potential buyers. France hasn’t seen a major hostile takeover since Mittal Steel Co. bought Arcelor SA in 2006 in a transaction then valued at about $36 billion.”

Oh, the humanity! Seven long years of only relatively smaller takeovers. How is a poor investment bank supposed to keep its speculators in the style in which they are accustomed? Although the underlying imperative of capitalist competition — expand or die — propels the frenzy of corporate mergers and acquisitions, the proximate cause is to enable enormous profits for corporate executives, investment bankers and partners at corporate law firms. The bigger the deal, the bigger the payday for those on the inside.

Keeping score of the money but not the human cost

Definitive totals on the numbers of jobs lost to takeovers are extremely difficult to come by; this is not surprising when the corporate media reports on mergers and acquisitions in breathless terms of the size of the deal and with assurances that jobs will be sacrificed on the alter of “efficiency.” In other words, the human cost is not even an afterthought. To take just two examples, Washington Monthly, in a report detailing the increasing monopolization that characterizes most industries, wrote:

“Consider two recent deals in the drug industry. The first came in January 2009 when Pfizer, the world’s largest drug company, announced plans for a $68 billion takeover of Wyeth. The second came in March 2009, when executives at number two Merck said they planned to spend $41.1 billion to buy Schering-Plough. Managers all but bragged of the number of workers who would be rendered ‘redundant’ by the deal — the first killed off 19,000 jobs, the second 16,000.”

The money to pour into these deals has to come from somewhere. So can measures like those passed by the French National Assembly reverse this trend? Because the limited “voice” to be granted workers is connected to France’s “works councils,” a look at these councils will help us answer that question.

Although only a minority of workers in France are protected by a traditional labor union, all who work in enterprises with 50 or more employees are represented by a works council. French law proscribes fines and even jail terms for employers who interfere with the functioning of these bodies. In unionized companies, trade unions put forth the candidates for the works council, although if more than 50 percent of the eligible voters do not vote, a second election is organized in which any employee is eligible to run.

The works councils are required to be consulted on the management and general organization of the company; personnel decisions, including dismissals; and changes to equipment, working conditions, professional-training procedures, or hygiene and safety issues. The opinion of the works council is not legally binding, however, unlike a collective-bargaining agreement negotiated with a trade union. Works councils decisions are binding in only a small number of minor issues, such as the hiring or dismissal of the labor doctor.

As private-sector union membership in France is low, the works councils provide a modicum of enterprise participation for French workers. The bill that has passed the National Assembly represents a tiny incremental gain while leaving all the prerogatives of ownership firmly in the hands of capitalists. The wailing from capitalists and the corporate media is more of a reflection of their desire for total control than any actual change in labor relations.

Works councils as controllers rather than consultants

Although their consultative status currently makes them little more than a safety valve, France’s works councils could, in theory, form the nucleus of actual workers’ control. The concept of real workers’ councils, assuming control over the decision-making of an enterprise, has taken root at different times in several countries. All the workers collectively make strategic decisions, and elect a council to oversee the running of the enterprise (including supervising management) and to act as links with other enterprises.

Meetings to discuss, and vote on, the enterprise’s business would be a part of the regular workweek. All ownership would stay within the workforce — each would own one share and relinquish it upon leaving or retiring. Shares could not be transferred or sold, except to the collective. Management would be recallable and promoted from within.

Why should democracy stop at the entrance to the workplace? Cooperatives are already flourishing. There are the examples of the Mondragon collective and the recovered factories of Argentina, among others, in which assemblies of all the workers make the strategic decisions and elect supervisory boards that are responsible to the assemblies. Mondragon has been a planned enterprise from its foundation; Argentina’s recovered factories are the products of workers struggling to restart production while slowly gaining the confidence to be their own managers.

Cooperatives are as yet minuscule islands in a vast sea of capitalism. Several countries have works councils, including Germany, where employers must reach agreement with them in regards to rules covering, inter alia, smoking bans, dress codes, overtime, introduction of new technical equipment and policies on pay bonuses. Employees are also represented on corporate boards of directors in Germany, Sweden, Denmark, Norway and several other European countries.

Reforms should be taken whenever possible, but reforms can always be taken away. Instead of being the basis of minor tinkering, why shouldn’t works councils be one starting point for a complete transformation? Top-down authoritarian enterprises that give an elite dominating power over the overwhelming majority of humanity hasn’t been working out so great.

Greece’s depression is IMF’s idea of ‘progress’

The International Monetary Fund congratulated itself last week for the splendid job it is doing in Greece, declaring the country “is making progress in overcoming deep-seated problems.” With an unemployment rate of 27.2 percent, an economy that has shrunk by at least 20 percent and children going hungry, one has to shudder at the thought of what a lack of success might look like.

Temple of Zeus photo by Andreas Trepte (www.photo-natur.de)

Temple of Zeus photo by Andreas Trepte (www.photo-natur.de)

The depression in Greece is the logical conclusion of austerity, but while Greece is the first in Europe to arrive it is not alone — the composite eurozone unemployment rate reached a record 12.1 percent in March. The eurozone unemployment rate rose to 24 percent for men and women below the age of 25; the European Union-wide rate is nearly as high.

The IMF’s solution? Eliminate more jobs. In its latest report on Greece, issued on May 3 following its latest inspection visit, the IMF graciously mentioned that Greece’s wealthy don’t pay taxes:

“Very little progress has been made in tackling Greece’s notorious tax evasion. The rich and self-employed are simply not paying their fair share, which has forced an excessive reliance on across-the-board expenditure cuts and higher taxes on those earning a salary or a pension.”

But the IMF report quickly followed up by grumbling that:

“[T]he over-staffed public sector has been spared, because of a taboo against dismissals.”

Perhaps you will not fall off your chair in shock, but it is the latter of these two concerns that gets the attention when the IMF gave its verdict on what it expects the Greek government to do:

“A strong recovery will need to be built primarily on deepening structural reforms. … The government’s welcome public commitment to improving the business environment and accelerating privatization now needs to be matched with results.”

Diktats masquerading as democracy

Those bland-sounding words take on deeper meaning when we examine the “structural reforms” already imposed on Greece by the IMF, the European Commission and the European Central Bank, the “troika” that dictates Greek policy. In February 2012, for instance, the Greek government agreed to reduce the already low minimum wage by more than 20 percent, to freeze all public-sector wages until the unemployment rate falls below 10 percent and to deep cuts in pensions.

The Greek minimum wage is €751 per month (equivalent to US$990 or £636). How well could you live on such a sum?

Overall, wages have fallen 40 percent and health care spending has been cut 25 percent. Meanwhile, most of the money released by the troika goes straight back to lenders, not for internal relief. As a result of this austerity, it is no surprise that retail sales in Greece have declined by 30 percent over the past three years and an estimated 150,000 small businesses have closed. Poverty has become so widespread that an estimated 10 percent of Greek’s children go to school hungry.

All this in a country where its biggest and wealthiest industry, shipping, pays no taxes — its tax-free status guaranteed in the constitution. Greece’s wealthy pay little or no taxes, stashing their cash outside the country. Government employees are the people who can’t evade paying their taxes — yet they are the ones scapegoated for economic troubles. (A common pattern in many countries.)

The IMF made no mention of its own role in bringing about this depression in the May 3 report, instead blaming a “lack of confidence” for Greece’s struggles:

“Looking over the period 2010–2012, the much deeper than expected recession was overwhelmingly due to a progressive loss of confidence. … With fiscal adjustment set to remain a drag on GDP growth for several years to come, the key challenge is to generate the improvement in confidence needed for a recovery in investment to begin to more than offset this drag. This cannot happen unless Greece can secure broad domestic support for the program and the political stability that would come with this.”

Yes, if only Greeks would believe that hunger is a sign of progress, everything would be better! In lieu of a sudden spasm of optimism, generating “broad support” for bleeding the country dry to pay back financiers who made reckless gambles might be difficult.

Ideology masquerading as economics

Although it might be tempting to note that doing the same thing over and over while expecting different results is unreasonable, reasonableness is besides the point here: Austerity programs are designed with ideology in mind, not with economics based on the real world. One clue to this is that “structural re-adjustment” programs invariably demand sell-offs of public assets — holding fire sales of state enterprises means private capital can scoop them up at very low prices, and profit nicely from doing so at public expense.

The neoliberal concept is that people exist to serve markets rather than markets existing to serve people. Entire countries have been harnessed to the dictates of “markets.” This has long been the pattern imposed by the North on the South through institutions like the IMF; now the stronger countries of the North are imposing it on their weaker neighbors. Taxpayers in those stronger countries are on the hook, also, as some of their taxes go toward the bailout funds, for which bailed-out countries are merely a conduit to pass the money to financiers, often from their own country. Much of the money Europeans lent to Greece was used to bail out German and French speculators.

The race to the bottom, of which austerity programs and the continual shifting of production to locations with ever lower wages constitute crucial components, represents an intensification of market dominance over human life. It is also a result of a scramble to maintain profits, which have been under continual pressure from the economic crisis.

But neoliberalism is not the product of a cabal “hijacking” economies or governments; it is the natural progression of a system that insists “markets” should be the arbiter of all human problems and the model for social relations and institutions. Capitalist markets are not neutral abstractions perched loftily above the Earth; they are the aggregate interests of the wealthiest industrialists and financiers as expressed through the corporations and other institutions they control.

“Markets” dictate that school children faint at their desk due to hunger while billionaires grab ever more. We can do better than this.

Austerity or Keynesianism: Can’t we do better than this?

Austerity. Keynesianism. Voting for the Center-Right. Voting for the Center-Left. Let’s call the whole thing off.

Five years of the economic crisis has yet to shake the stubborn idea that, if only the right policy were implemented, prosperity would be here again. And so this week’s two turns of the electoral wheel — agreement on a “grand coalition” government in Italy and the return to power in Iceland of the two parties that presided over that country’s collapse — demonstrate that traveling in a circle leads you to where you just were.

(Photo by Jim Champion)

(Photo by Jim Champion)

The outgoing Icelandic government earned a reputation for “standing up” to banks and the International Monetary Fund, and refusing to saddle its citizenry with the massive debts of Iceland’s swollen banks. At first glance, it seems curious that Icelanders would vote out such a government and return to office the same government coalition that presided over the country’s meltdown. But a closer look reveals a much different story. So different, in fact, that the IMF praised the outgoing Social Democrat/Left Green coalition government of Jóhanna Sigurđardóttir. Here is an excerpt from an IMF report on November 19, 2012:

“Directors commended the progress made in fiscal consolidation, noting that it is broadly on track.”

That doesn’t mean that Iceland’s dose of austerity is coming to an end. The IMF report goes on to say:

“While welcoming the recent monetary tightening bias, Directors viewed the policy stance as still accommodative. They agreed that further monetary tightening is needed to bring inflation back to target and to normalize monetary conditions in advance of capital account liberalization.”

Iceland’s banks are too big to fail

Iceland didn’t tell the IMF, or the world’s bankers, to take a hike. Iceland, until recently, was unlikely to be at the center of any financial controversy — a country of 300,000 people with an economy traditionally based on fishing. Somewhere along the way, it was decided to convert the Icelandic economy into one based on financial speculation, with the result that the country’s banking sector grew to nine times the size of its gross domestic product. Iceland’s banks offered interest rates well above that of other countries, drawing in foreign depositors (much like Cyprus). Big pots of money led to the irresistible temptation to speculate, with bank-officer compensation tied to the volume of loans made. The usual result followed.

Not that regulators, or parliament, were zealous in checking the financial sector. An official report by an Icelandic parliament committee states:

“It appears that both the parliament and the government lacked both the power and the courage to set reasonable limits to the financial system. All the energy seems to have been directed at keeping the financial system going. It had grown so large, that it was impossible to risk that even one part of it would collapse.”

Iceland took over its three big banks, but quickly sold two of them to creditors, who in turn sold most of their interests to foreign hedge funds. The Icelandic government did agree to all conditions demanded by foreign creditors, the IMF and the British government, but had to somewhat back off only because the package was voted down in a national referendum. So it’s not accurate to say that the outgoing government stood up to anybody. As the Icelandic blog Studio Tendra pungently put it:

“Iceland didn’t bail out the collapsed banks, but that wasn’t for the want of trying. … [T]he Icelandic government tried everything it could to save the banks, including asking for insane loans to pay off the banks’ debts. … So the true story is that Iceland tried and tried and tried and tried as hard as we could to save the creditors. The only reason why we didn’t is that the Icelandic government, then and now, is completely incompetent.”

The outgoing Icelandic government did follow two Keynesian prescriptions in imposing capital controls and currency devaluation, but these did not do much to ameliorate the pain — Iceland can’t detach itself form global capitalism.

For the years 2009 and 2010, Iceland’s gross domestic product declined more than ten percent and its household consumption fell nearly 23 percent. Recovery has since been at a snail’s pace. Making matter worse, Icelandic personal debt is mostly pegged to the country’s inflation rate. As Iceland continues to suffer from inflation, the amount a debtor owes grows as his or her wages decrease. (Wages since 2008 have lagged the consumer price index, according to IMF statistics.)

The suicide mission of Italy’s “Left”

So much for the “Icelandic miracle.” Icelanders have yet to question the economic system that brought them misery, instead opting to swap one set of mainstream parties for another set. That has been the pattern in advanced capital countries. Italy is not yet an exception, although the dramatic rise of the Five Star Movement — sort of an electoral Occupy movement — as a third force in the Italian parliament may be the start of a pushback. Or it could be a brief protest vote without lasting effect. For now, however, Italy’s Center-Left standard-bearer, the Democratic Party, has apparently chosen to complete its suicide mission by forming a “grand coalition” with the main Right party, the wildly misnamed People of Freedom Party.

Italy’s post-war political parties may have collapsed two decades ago, but the same personalities and the same policies and the same interests nonetheless continue to dominate the political sphere. The Democratic Party is the main remnant of the Communist Party of Italy, and is also is a receptacle for the late Christian Democratic Party, a centrist formation that once dominated Italian politics. The new Democratic prime minister hails has roots in the Christian Democrats, but is the nephew of an important aide to Silvio Berlusconi, Italy’s morbid combination of Rupert Murdoch, George W. Bush and the U.S. right-wing corporate “populist” Ross Perot.

Mr. Berlusconi is one of Italy’s richest persons, owns most of Italy’s mass media and is continually mired in multiple legal entanglements; he dealt with the last of these by forming his own political party, the recently renamed People of Freedom, which catapulted him into the prime ministership. “Freedom of Capital” Party or “Silvio’s Get Out of Jail Card” Party would be more accurate, but nonetheless Italians voted this personal vehicle into office three times.

Italy’s Democratic Party is as eager to implement austerity as the Italian Right — voting for it changes nothing. Italy’s outgoing “technocratic” prime minster, Mario Monti — appointed without the tiresome pretense of elections — and the head of the European Central Bank, Mario Draghi, both enjoy Democratic Party support, and the new finance minister has worked closely with Mr. Draghi.

The main potential fracturing point in the grand coalition is personality, which might make for interesting reading but is nothing more than a diversion from a serious discussion of alternatives.

The Five Star Movement’s leader, Beppe Grillo, now the main opposition in the Italian parliament, characteristically didn’t mince words in his blog this week:

“In the last few decades many sides have admitted that this political class lacks credibility, this same class that for the umpteenth time is asking for your vote of confidence. It’s as though this governing team had come down from the moon, as though they are not the ones directly responsible or jointly responsible for what has happened up until now.”

Alternating parties but the same austerity

There’s nothing unique about Italy here. With the exception of Greece, where Syriza (the Coalition of the Radical Left) missed winning the last Greek election by two percentage points, voters in all advanced capitalist countries have been content to alternate the main capitalist parties in office while beginning to voice displeasure through social movements and in polls. One important reason is that the dominant alternatives to the Right — Socialist, Social Democrat, Labour, Democratic & etc. — offer no alternatives to the Right; at best they offer “austerity lite.”

Various reasons, each with some measure of validity, can be assigned as the cause: dependence on corporate money, corruption, domination of the mass media by the Right, philosophical and economic myopia, cowardliness. Although these factors form a significant portion of the answer to the puzzle, an underlying cause has to be found in the exhaustion of social democracy in Europe and liberalism (as the term is used there) in North America. These political formations are trapped by their fervent wishes to stabilize an unstable capitalist system.

They wish to discover the magic reforms that will make it all work again. They do have criticisms, even if they are afraid of saying them too loud, but are hamstrung by their belief in the capitalist system, which means, today, a belief in neoliberalism and austerity, no matter what nice speeches they may make.

The Right, on the other hand, loudly advocates policies that are anathema to the working people who form the overwhelming majority but have the mass media, an array of institutions and the money to saturate society with their preferred policies. But, perhaps most importantly, they have something they believe in strongly — people who are animated by an ideal, however perverted, are motivated to push for it with all their energy.

In contrast, those who are conflicted between their belief in something and their acknowledgment that the something needs reform, and are unable to articulate a reform, won’t and can’t stand for anything concrete, and ultimately will capitulate. When that something can’t be fundamentally changed through reforms, what reforms are made are ultimately taken back, and society’s dominant ideas are of those who can promote the hardest line thanks to the power their wealth gives them, it is no surprise that the so-called reformers are unable to articulate any alternative. With no clear ideas to fall back on, they meekly bleat “me, too” when the world’s industrialists and financiers, acting through their corporations and the “market,” pronounce their verdict on what it to be done.

The reformers can call themselves Socialist, Social Democrat, Labour, Democratic or Liberal, but the label makes no difference. The are dancing to the same tune as their legislative rivals. All dancers will back reforms when there is concentrated public pressure; when the pressure subsides, the reforms are taken back and austerity attacks are relentlessly pushed forward. Major reforms in the United States came in the 1930s and in Europe following World War II thanks to rulers’ fears of being swept away; when the movements responsible for forcing these major reforms became content with reform, the rollback began.

Keynesian reforms would be better than austerity, but would be no more permanent than those of last century; moreover, Keynesianism keeps the capitalists in the saddle, allows them to regain their confidence and gives them the breathing space necessary for them to methodically take back the reforms.

The working peoples of the world’s advanced capitalist countries are living through a structural crisis of capitalism, not simply a rather nasty downturn similar to the repeated recessions of the past. Reforms, not even those on the scale of the mid-20th century, are a panacea. The solution is to be found not on a ballot but rather in organized mass action working for a more humane system not content to settle for reforms that will be taken away. If not today, when?

Cyprus pensioners told to pay for crisis. Who will pay tomorrow?

Either bankers are so confident of their power that they increasingly can’t be bothered to disguise it, or we have to stretch the definition of “democracy” so far that the word loses any sense of meaning. This week’s news that the newly elected government of Cyprus was ordered to make its savings depositors pay for a bailout of Russian oligarchs and real estate speculators is stunning even by the standards of the global economic slump.

None of the previous eurozone bailouts had gone so far as to directly confiscate the savings of ordinary depositors. Not even in Ireland, where former Prime Minister Brian Cowen had huffed and puffed that Ireland would not surrender its sovereignty — which he demonstrated by insisting that Ireland’s ultra-low corporate tax rate not be touched. It wasn’t. European bankers had no issue with that, granting him that one concession while imposing cuts to wages, lowering the minimum wage, drastically raising water rates, raising university tuition and reducing health care services.

The intensity of Ireland’s austerity derives from the decision by the former prime minister to cover all potential losses by Ireland’s major banks, no matter how reckless their speculative lending had become. In other words, the Irish government paid off the bad loans made by its bankers and guaranteed speculators in the banks’ bonds would suffer no losses, and passed the bill onto its citizens. This represented an extraordinary warping of the idea that bank deposits, up to a certain level, are guaranteed. Other countries have had various versions of this austerity imposed on them. But now the European Union and its bankers are attempting austerity from a different angle: Partial confiscation of all savings, even if “guaranteed.”

No, that doesn’t mean that the normal austerity terms aren’t being imposed by the European Central Bank, the eurozone’s finance ministers and the International Monetary Fund. For weeks, rumors had circulated that, this time, that there would be a sharing of the cost of a bailout as Cyprus inched closer to a bailout. In the ordinary sense of this concept, that would mean that bondholders and the banks themselves would shoulder some of the burden. Not surprisingly, there had been pushback against this idea with financiers complaining that making them take responsibility for their own speculation would be disruptive to financial markets.

Finance ministers want pensioners to pay for crisis

Plan B was is to make working people and pensioners who have their life savings in banks and had nothing whatsoever to do with the latest eurozone crisis instead shoulder the burden. The Cypriot government was told point-blank to confiscate a portion of depositors’ savings or all money would be cut off, which would cause an immediate collapse of its two primary banks. No matter that deposits up to €100,000 are guaranteed. To avoid a bank run, Cypriot banks are closed for at least three days so that Cypriot parliamentarians can be hectored by eurozone finance ministers to do their duty.

The Cypriot parliament said no in its March 19 vote, but “no” votes in other countries have been reversed under pressure, so this drama has not yet run its course.

Cyprus needs €17 billion to bail out its banks, but European Union and International Monetary Fund officials are loaning only €10 billion, insisting that the remainder come from a deposit tax and other internal measures, including privatizing utilities. And why do Cypriot banks need all this money? Because they over-extended themselves on loans to real estate developers and others, the same story as in so many other countries. They also absorbed losses when Greek government bonds they owned were devalued in the wake of Greece’s ongoing crisis. An added complication is that about 40 percent of Cyprus’ total deposits are by foreigners, mostly Russians, causing extra challenges.

Cypriot banks are widely seen as money-laundering havens for Russian oligarchs, and a straight bailout of the banks would appear to many eyes as a bailout of money launderers. That in itself would not look good. In addition, German Chancellor Angela Merkel faces re-election later this year and, given repeated assertions by German right-wingers that Germany is bailing out slothful Mediterraneans, is loath to leave herself exposed to more such charges.

Imposing a “deposit tax” only on deposits greater than the government guarantee would be one way out of this political dilemma, but that would leave Russia angry. Not only does Russian President Vladimir Putin seek to protect his country’s oligarchs, but Russia has previously granted Cyprus a loan on which the Cypriot government hopes to re-negotiate easier terms. As it is, Russia strongly protested the proposed confiscation that would have affected everyone.

The Cypriot government is caught between multiple rocks and hard places — subordinate to Germany, the northern European Union countries that ally with Germany on financial issues, Russia, the European Central Bank and the International Monetary Fund. It is also subordinate to financial markets, a nice term that really means international financiers and speculators. Countries far bigger than Cyprus are subordinate to financial markets, and even large countries like Germany are not independent of market forces.

Cypriot banks hold assets estimated at eight times the country’s gross domestic product — Cyprus, like Ireland and Iceland, which had similarly bloated banks, can’t sustain a financial sector swollen to such a dangerous size. Cypriot banks offered interest rates far above rates found elsewhere, which attracted foreign depositors but also signaled significant risk. Banks that do not ask questions of people who deposit huge sums of money are not closely regulated. The downside of that risk has materialized, but rather than impose the cost, financiers and the government ministers who represent them prefer to say “never mind” to the deposit insurance counted on by working people and pensioners banking their life savings.

A crisis of financial domination, not national characteristics

The social risk here, in a broader sense, is that the Cypriot crisis will be seen through nationalist lenses. To accuse “slothful Mediterraneans” or “arrogant Germans” is to be blind to the larger structural forces at work, which pay no attention to national borders. Financiers last year imposed new unelected governments on Greece and Italy so that their preferred policies be carried out. If they can topple one government, they can topple other governments; the pious declarations that Cyprus’ confiscation of savers would be a unique event that won’t be repeated rings hollow given those precedents.

Austerity comes in many forms and no country’s workers are exempt — the German manufacturing “miracle” in fact has a down-to-earth cause — a decade of wage cuts for German workers. Germany is ever more dependent on exports as its domestic ability to consume slowly declines due to the steady drop of wage cuts. When those export markets begin to dry up, German workers will not be able to pick up the slack and German manufacturers and financiers will impose stronger austerity on German workers to buoy profits.

For now, German workers are relatively privileged, a difference exploited to foster divisions. Austerity has been much harsher in the eurozone’s Mediterranean countries and Ireland. Thus far, we have seen only the beginnings of any political fightback, in the form of strong electoral showings by Syriza (the Coalition of the Radical Left) in Greece and the 5 Star Movement in Italy. For the most part, Europeans have continued to alternate among their local dominant parties.

Frequent massive demonstrations demonstrate widespread anger — that is important, as the route to reversing austerity and the system that imposes it lies in mass action. It is a healthy sign of cross-border solidarity that demonstrators in front of the Cypriot parliament carried signs saying (in Italian and Spanish) “today me, tomorrow you.”

But anger without organization ultimately dissipates like steam released from an engine. Such organization has to translate, in part, to challenging political power, which in turn is intimately linked (and subordinate) to economic power. Austerity does not fall out of the sky; it is an expression of power to benefit those in power. Capitalists, including financiers, can remove governments and confiscate savings. What’s next? The return of debtors’ prisons? Mandatory unpaid labor to boost profits? Those might sound far-fetched, but unchecked power has a way of moving toward limitless power. Organizing to reverse this is simply self-defense.

There are no national solutions for Greece, or any other country

There is no Greek solution to Greece’s crisis. There can be only an international solution. However that solution unfolds, the day when a radically different course, a clear alternative to austerity, can no longer be avoided is perhaps drawing closer.

Aware of their dwindling support and the increasing desire among Greeks for a different course, the two “left of center” parties propping up the pro-austerity right-wing government of Greece may yet balk at committing a final suicide.

Four days after the expiration of a deadline handed down by European Union finance ministers, the leaders of Pasok and the Democratic Left were still refusing to fully agree to demands for yet another round of cuts and labor “reforms,” the standard euphemism for eliminating job protections. Those leaders’ reluctance to agree to terms with Prime Minister Antonis Samaras, and their apparent ending of talks (at least for the moment) on October 23, adds more uncertainty to the already conflicting signals coming from the Greek government.

The “troika” — the International Monetary Fund, the European Central Bank and the European Commission — have been unyielding in insisting that Greece impose more austerity on its citizens in exchange for the latest tranche of financing totaling €31.5 billion.

On the one hand, we have Mr. Samaras, head of the conservative New Democracy party, saying at last week’s European Union summit that Greece will be broke next month without the latest loan installment, yet declaring:

“The economy and society are at their limits, the bloodline of the economy that is liquidity is at point zero; unemployment has reached nightmarish levels and every Greek is facing a personal tragedy.”

On the other hand, the Greek finance minister, Yiannis Stournaras, in an October 22 speech to the Greek parliament, declared the country’s nightmare does not reside in the austerity cuts demanded in exchange for fresh loans, but rather in not imposing the cuts:

“The cost for the country will be boundless if we don’t get the €31.5bn installment. … If we don’t get the loan people will go hungry.”

Perhaps the finance minister, one of the “technocrats” who hold most portfolios in the current government, is unaware that Greeks already are starving. Several rounds of imposed austerity has brought only misery to the people of Greece. Here are some of the results:

  • Overall unemployment is at 25 percent.
  • Youth employment is at 55 percent.
  • Average wages have been cut 40 percent.
  • Cuts to the health care system of 25 percent since 2009.
  • Economy has shrunk 18.4 percent since 2008.

The years of austerity were supposed to turn around the Greek economy, yet the deficits only become larger. The country’s deficit for 2011 is now estimated to have been 9.4% and its debt has widened to 171% of gross domestic product. If more people are thrown out of work and those still employed take home less, then less can be bought and less taxes will be paid.

Although the International Monetary Fund quietly admitted earlier this month that austerity does not work, the troika is holding to a hard line in demanding still more austerity measures. Greece is expected to come up with another €13.5 billion in cuts. The troika demands implementing a six-day working week; further cuts to the minimum wage; further reductions to pensions; “increased flexibility” of work schedules; tens of thousands of government workers and professors be laid off; and income-tax rate gradations flattened, which would increase the tax burden on those who aren’t wealthy.

The latest €31.5 billion installment won’t be going to Greeks; virtually all of it will go to banks. A conservative Greek newspaper, Kathimerini, reported (based on a leak from Pasok) that Germany’s finance ministry demanded that an escrow account be set up that would ship money to the European Central Bank. The proposed escrow account would not only be the recipient of all the bailout money, but Greece’s tax revenues would also sent there.

To put this in plain language, Greece would be reduced to a vassal state in which it had no control over its finances and its tax revenues would be used to pay banks instead of for government functions.

European Union finance ministers had demanded, as long ago as February 2012, that such an escrow account be set up for bailout money, but the extension to Greece’s internal revenue is something new. Kathimerini quoted Germany’s finance minister, Wolfgang Schäuble, as declaring:

“In the last program [for Greece] we introduced mechanisms; we need to strengthen those in the sense of control mechanisms, perhaps also automatic stabilizers.”

The “automatic stabilizers” are measures that would automatically further cut Greek government spending beyond whatever is agreed if the deficit grows wider. Given that austerity will lead to less revenue, a wider deficit is the likely outcome. Seeming to draw a line, Democratic Left leader Fotis Kouvelis on October 23, following the impasse in talks with Samaras, added still more contradiction to the government coalition’s signals. Kathimerini reported:

“ ‘If the unacceptable demands of the troika are met, they will increase sackings, unemployment and the recession,’ said Kouvelis, adding that he felt the troika was aiming to ‘flatten’ any working rights that remain.”

It must be asked, however, why Mr. Kouvelis’ Democratic Left, and Pasok, are propping up Mr. Samaras’ pro-austerity government, since such goals have long been in place. Mr. Samaras’ New Democracy — Greece’s leading big-business party — has strong links with European capital and has no basic disagreement with the ruthless austerity being imposed across the continent despite the prime minister’s public worry that the Greek “economy and society are at their limits.”

The waves of strikes that have washed over Greece is a development that Samaras can’t fail to notice. Yet he and his government have nothing to offer other than more austerity; the “troika” certainly has nothing else to offer. A radically different course is necessary. Greece can not survive as an island unto itself — to repeat, there is no Greek solution to Greece’s problems, only an international solution. Financiers and industrialists operate internationally, and working people have no alternative to uniting across borders in order to defend themselves.

That does not, however, mean that Greece can’t adopt new programs internally. The main political current offering a radically different program is Syriza, the Coalition of the Radical Left, the largest opposition party and which currently leads in polls. In a talk last summer, a Syriza representative laid out a different course:

“The reversal of the descent towards degradation and marginalization cannot be achieved without the implementation of a radical program of reforms and transformations of the state, the political system and the entire ‘body’ of the Greek social formation. … [T]he crisis we are living through is a crisis of the system itself, rather than simply a management crisis of the system. Everything must change: the political system, the state, the relation of the citizen with the state and with politics. Consequently, the way out cannot be found in a return to some version of the past. The way out lies in opening up new paths to new productive and consumption paradigms, to new forms of real democracy, to new social arrangements based on equality and solidarity, the respect of human dignity and the environment.”

Among the highlights of Syriza’s program are:

  • New taxation policies to lessen the burdens on low-income people and small businesses to make taxation more fair and to eliminate the large problem of the “black market” whereby many Greeks don’t pay taxes.
  • Elimination of the “clientist” system that rests on the “inside dealing” of the two-party system (New Democracy and Pasok) through a drastic overhaul of the administrative system and empowerment of citizens through bottom-up and top-down changes.
  • New institutions of workers’ control and social control to increase day-to-day democracy and accountability.
  • Democratic planning involving the parliament, the scientific community and society at large, linked to specific policies.
  • Development of long-term plans to reconstruct the economy on the basis of increased bargaining power for labor; reducing dependence on imports and external borrowing, supporting employment and respecting the environment; and building a society of justice, full employment and solidarity, with an enhanced and equal position in the European and international division of labor.
  • Changing the banking system to support the real economy and a targeted productive reconstruction, establishing public control over banking, and recapitalizing banks through the issuing of ordinary voting shares.

Such a program is by no means “revolutionary,” and Syriza supporters don’t claim it is. But such a program (which has much more to it than the above summation) is no mere reform, either; rather, it offers a radically different way of organizing Greek society tomorrow that can be built with the bricks of today. This program also keeps Greece connected to Europe; Greece can’t prosper in isolation.

Present-day Europe, in the form of a European Union dominated by the unaccountable and undemocratic European Central Bank, is not capable of becoming a platform for such a program as outlined by Syriza. Ultimately, Greeks, Europeans and everybody else can only prosper in a democratic system geared toward social good, public accountability and an economy oriented toward full participation and the development of all men and women.

The dismantling of the current structure of the E.U., one-sided trade agreements, international financial institutions and the immense power concentrated in corporate hands will have to be mirrored everywhere. If we are living in a globalized world, then the world’s salvation can only be on a global basis.

A medieval present of austerity, a future of feudalism

By Pete Dolack

Austerity is just another word for punishment. The corporate mass media serves us a daily diet of central bankers, government ministers, financiers and industrialists lecturing us that we must swallow bitter medicine as repentance for living beyond our means.

Those who caused the economic collapse ask everyone else to swallow the medicine, and those financial doctors are not yet done writing their austerity prescriptions. Saddled with high unemployment, a shrinking job base as production and services are steadily moved to overseas low-wage havens and a lack of incentive to invest as the products that are made can’t find a market, the solution, we are told, is: Cut wages and social programs more. Medical doctors long ago stopped using leeches and blood-letting as their primary “cure.” Mainstream economics, sadly, has yet to evolve beyond that medieval stage and its practitioners have no licenses that can be revoked.

The costs to working people who have been forced to pay for the excesses of financiers has been high in many countries. Rather than isolate individual countries, a tactic used to enable finger-wagging at Irish, Spanish, Greeks & etc., let us instead look at several countries at once, and see if we can spot patterns.

Spain: Pain for people, bailouts for banks

  • 25 percent unemployment
  • 52 percent unemployment for people younger than 25
  • Spending cuts and tax increases biggest in Spain’s modern history

Spain ceded its remaining sovereignty on July 10, when the so-called “troika” — the European Central Bank, International Monetary Fund and European Commission — agreed to give Spanish banks a bailout in exchange for the usual harsh conditions. The twist here is that the bailout will go directly to Spanish banks, rather than the previous European practice of using a national government as an intermediary. This is a bookkeeping trick so that the deficit of the Spanish government is not technically increased, but Madrid nonetheless will now have its finances directly supervised by the troika.

The next day, Prime Minister Mariano Rajoy dutifully wielded the ax. According to a report in El País, the national sales tax will rise to 21 percent from 18 percent; cuts in wages and benefits to civil servants and the unemployed will be imposed; tax benefits for employers who hire will be reduced; Christmas bonuses will be eliminated; tax setoffs on mortgage payments will be eliminated; and energy prices will increase. Those measures are on top of earlier rounds of austerity, including new rules to make firing workers easier. In just the first three months of 2012, about 375,000 jobs were lost, representing an estimated loss of about 950 million euros in income tax receipts.

The hard-line vice president of the European Commission, Olli Rehn, strongly hinted that more austerity will be expected: Spain “will have to comply fully” with the new conditions and impose more cuts if told to, El País reported. The Spanish economy was already expected to contract this year, and these measures will depress consumer spending further. Yet consumer spending is the engine of economic activity in Spain, as it is in any other advanced capitalist country. Blood-letting.

Spain is the one country that experienced an even larger housing bubble than the United States. When the bubble burst, Spain’s system of community banks, known as “cajas,” were hit hard because they had lent heavily in real estate and construction. The cajas were consolidated in an effort to create banks with more assets, but instead larger banks with bigger debts was the result. Debts that are to be repaid by austerity imposed on Spanish working people.

Ireland: Asserting ‘sovereignty’ by keeping taxes low on corporations

  • 15 percent contraction in economy
  • Middle-class wages have been cut by about 15 percent
  • 15 percent unemployment

Fifteen does not appear to be Ireland’s lucky number. Seeing no future for themselves at home, Irish students are leaving in droves — more than 1,000 per month. Irish banks engorged themselves on loans to fuel a housing and construction bubble at home, with bank executives and speculators making fortunes but homeowners left holding the bag when the bubble burst and prices collapsed. Ireland’s three biggest banks were bailed out when Brian Cowen, then prime minister, unilaterally stepped in and announced that the government would assume all the debts of the banks.

The ex-prime minister put on a show, huffing and puffing that Ireland would not give in to unreasonable demands, would not surrender its sovereignty. Where did Mr. Cowen draw the line? Was it cutting wages, lowering the minimum wage, drastically raising water rates, raising university tuition or reducing health care services? No, none of those were of concern to him. What he did get worked up about was Ireland’s ultra-low corporate tax rate — set far below what working people must pay. He demanded, and received, one concession: No increases of corporate taxes.

The result was an 85 billion euro bailout of the Irish government by the European Central Bank and International Monetary Fund, all of which goes toward paying back speculators. Ireland has already seen five austerity budgets since 2008, and its repeated raising of taxes and cutting of spending is likely to last for at least three more years. The sales tax is now a punishing 23 percent, while taxes on incomes, cars, homes and fuel are all higher; government-benefits payments have been cut.

An Irish economist, Morgan Kelly, who nearly alone in his country predicted the housing crash, summed up the bailout this way:

“Everyone is a winner, or everyone who matters, at least. … The Germans and French banks whose solvency is the overriding concern of the [European Central Bank] get their money back. Senior Irish policymakers get to roll over and have their tummy tickled by their European overlords and be told what good sports they have been. And best of all … the senior management of the banks that caused this crisis get to enjoy their richly earned rewards.”

Latvia: “Solving” problems through emigration

  • Unemployment peaked at 20.5 percent
  • Real gross wages fell seven percent in 2009 and another eight percent in 2010
  • Population has fallen from 2.7 million in 1991 to 2.2 million in mid-2011

The return to capitalism as Latvia regained its independence with the fall of the Soviet Union in 1991 has not been smooth sailing. First there was hyperinflation, as prices rose more than 1,000 percent in each of 1991, 1992 and 1993; a widespread loss of savings during economic turmoil in 1995 and 1996; and another crash in 1998 as the Russian ruble collapsed. A credit boom sparked by cheap loans from Swedish banks following Latvia’s ascension to the European Union in 2004 did not last long — and times have become so difficult that Latvia is undergoing a demographic implosion as Latvians see no choice but to leave.

Lativa’s unemployment rate has fallen to 16 percent — a decline due to the heavy rate of emigration. The economy contracted by 25 percent for the three years of 2008 through 2010. Assisting in that decline was a 30 percent cut in public-sector wages and cuts to pensions — a so-called “internal devaluation” as the Latvian government refuses to devalue its currency to make its export products more competitive; it maintains a peg to the euro in hopes of joining the eurozone. A slight rebound in 2011 is hyped by neoliberal apologists as “proof” that Latvia is on a sound course, but a look at the bigger picture reduces that claim to rubbish.

The U.S. economists Jeffrey Sommers and Michael Hudson, in a tart analysis, note that nationalism keeps austerity-minded parties in power because the main opposition to austerity comes from a party that represents Latvia’s sizable Russian minority; anti-Russian sentiment continues to remain strong enough to override all other considerations. They write:

“Birth rates fell during the crisis – as is the case almost everywhere austerity programmes are imposed. Only now is Latvia seeing the social effects of austerity. It has among Europe’s highest rates of suicide and of road deaths caused by drunk driving. Crime is high because of prolonged unemployment and police budget cuts. There is less accessible, lower-quality education and there is a soaring brain drain alongside blue-collar emigration.

“The moral for Europeans is that a Latvian economic and political model can work only temporarily, and only in a country with a population small enough (a few million) for other nations to absorb émigrés seeking employment abroad. Such a country should be willing to have its population decline, especially its prime working-age cohort.”

Lithuania: Another Baltic Tiger “stabilizes” through emigration

  • Unemployment peaked at 18.6 percent
  • Three consecutive years of economic contraction, including by 15 percent in 2009
  • Highest emigration rate in Europe

Latvia’s Baltic neighbor has feared little better. A fast-falling economy has led to an exodus out of Lithuania. As in Latvia, unemployment has declined because so many have left. And although the economy did grow last year, that does not mean all the losses will soon be made up: the International Monetary Fund projects that by 2015 Lithuanian gross domestic product will remain 12 percent less than it was in 2008.

Most the emigrants are young people. In 2010, eight percent of all Lithuanians ages 25 to 29 emigrated. The European Institute reports Lithuania’s austerity measures include a two-year freeze in public-sector salaries; a 30 percent cut in public spending; an 11 percent cut in public-sector pensions; and cuts to parental-leave benefits.

Portugal: Forgoing investment in exchange for a dictated bailout

  • Unemployment has reached 15 percent
  • New laws making it easier for employers to fire workers
  • Rent controls eliminated

Portugal last year accepted an 80 billion euro bailout, in return for which the government had to postpone the building of two high-speed rail lines and a new airport, cut spending, impose yearly layoffs and sell off state energy companies. As a result of the austerity, the economy is expected to contract by another 3.4 percent this year.

The European Union did not leave any room for democratic discussion — although the bailout was negotiated during an election campaign in Portugal, E.U. finance ministers announced there would be no release of bailout funds without an agreement by all Portuguese parties. “We call on all political parties in Portugal to swiftly conclude an agreement on the adjustment programme and form a new government after the upcoming elections with the ability to fully adopt and implement the agreed fiscal consolidation and structural reform measures,” the statement said.

Greece: Experiencing the logic of neoliberalism first

  • 22 percent unemployment
  • 40 percent wage cuts
  • 13 percent shrinkage of economy, with another seven percent decline expected this year

With all the coverage of Greece, no more than a brief summing up is necessary here. Two crucial results of the 130 billion euro bailout agreed to early this year are that Greece was required to change its constitution to ensure that banks are paid back before there is any spending on social programs and that the bailout is used almost exclusively to service the interest on Greece’s debt — not even to pay down the principal. Small businesses, the backbone of the Greek economy, are closing by the tens of thousands because few people can afford to buy what they once could.

As I have previously written, Greeks worked, on average, 42.3 hours per week on their main job — the most working hours of any people in Europe). Their reward is the most punishing austerity of any European country. One aspect of that austerity is the crumbling of Greece’s health care system, which has endured a 25 percent cut in spending since 2009. The result of those cuts is under-staffing, shortages of medicines, dangerously long waiting periods for operations and increased out-of-pocket expenses that many can’t afford.

Greece’s largest industry is shipping. Not only do Greek shipping tycoons pay no taxes (not unusual among Greek big business), but the industry’s tax-free status is enshrined in the constitution. Greek business leaders don’t pay taxes, but the people who can’t avoid paying taxes — government workers — are demonized as the cause of Greek’s problems, and are being laid off in large numbers, while those who remain have been saddled with draconian wage cuts. Similar wage cuts and layoffs are imposed in the private sector.

Austerity for who?

It would seem to defy understanding how more of the medicine that has made most of the world’s economies sick could possibly be seen as the solution, until we observe the pattern.

Financiers can’t tolerate losses flowing from their own greed and reckless gambling. Their solution is to have the state guarantee their stratospheric profits, bonuses and salaries. Governments can only do so through extracting money from their citizenry and facilitating the upward flow of wealth within corporate structures. Industrialists don’t mind those subsidies for financiers because the banks will be more willing to lend to them in a time of economic uncertainty and the “market discipline” applied by financiers boosts their own profits.

Markets do not serve people; rather, people exist to serve markets. And “markets” are simply the aggregate interests of the most powerful capitalists, both financiers and industrialists. Entire countries — a list not limited to those sketched above — have been harnessed to the dictates of “markets.” This has long been the pattern imposed by the North on the South; now the stronger countries of the North are imposing it on their weaker neighbors. Taxpayers in those stronger countries are on the hook, also, as some of their taxes go toward the bailout funds, for which bailed-out countries are merely a conduit to send the money to financiers.

The race to the bottom, of which austerity programs and the continual shifting of production to locations with ever lower wages constitute critical components, represents an intensification of market dominance over human life. It is also a result of a scramble to maintain profits, which have been under continual pressure from the economic crisis.

All that is on offer is more pain, more austerity. The most any government, all of which lie prostrate at the feet of their biggest capitalists, is able to offer are weak, unfocused attempts to inflate another financial bubble or to indulge in fantasies of “green capitalism” whereby the same economic system that causes massive environmental destruction will somehow be re-tooled to profit further by cleaning up its own mess.

We are to be servants of the richest, so say “markets” — more a resemblance to feudalism than to a democratic society. Continuing to do so is not simply irrational; in the long run it will be suicidal.