Nov 30, 2012
The following article is translated from a text that appeared in Lutte de Classe, the political journal of the comrades of Lutte Ouvrière, issue #148, December 2012.
The present financial crisis, triggered in 2008 by the bankruptcy of Lehman Brothers, is not just the most recent in a series of financial disasters and stock market collapses that have impacted the economy since the 1980s – at the average rate of a major crisis every three years. It is also the deepest crisis in 30 years. Four years after Lehman’s demise, the crisis has taken on a different shape and its center of gravity has shifted. But it remains unsolved. It continues to weigh on the economy, and has so far prevented production from taking off. The productive sector, after registering somewhat better results in 2010 (though not good enough to send unemployment on a downward slope), is apparently going through a genuine global “recession” that started in August 2011. Government-sponsored international bodies like the World Trade Organization (WTO) are now describing the period we have just entered as the “The Big Recession,” in reference to the “The Great Depression” that came in the wake of the stock market crash of 1929.
In 2012, production continued to slow down. The number of unemployed continues to grow. And there are no indications of a turnaround, which suggests that the economy has not yet hit the “bottom” of the 21st century’s own “Great Depression.” In other words, there is worse to come.
This situation is further aggravated by the threat of a new and brutal financial crisis involving, this time around, the European Union.
We have more than once explained the cause of the economy’s “financialization” and its humongous proportions: it is big capital’s answer to the market’s general downturn that started in the early 1970s and has so far alternated periods of stagnation or limited growth with periods of clear setback.
The domination of finance over production is of course nothing new in the capitalist economy. A century ago, Lenin already considered that the power wielded by financial capital over the rest of the economy was one of the cornerstones of imperialism.
What has come to be known as the economy’s “financialization” is the tendency of big capital, confronted by the lack of creditworthy buyers on the market, to decrease productive investments and devote an ever bigger share of profits to financial investments. As time goes by, the “financial industry” becomes cancer-like, permanently inventing new, more sophisticated and more speculative financial “products.”
One of the indications of the shift from a period of growth – or “economic boom” – to a period of crisis is the falling rate of profit. For the bourgeoisie, it is also the most preoccupying aspect of any crisis. Big capital’s policy, in reaction to the downturn of the early 1970s, consisted of trying to maintain the rate of profit by aggravating exploitation – in other words, increasing the capital owners’ returns at the expense of the total labor force. The big capital-owners’ policy was a success because they waged a genuine war against the workers, freezing wages, increasing the workload, taking advantage of the fear of unemployment, cutting the budgets of basic public services (health, education, collective means of transport, etc.) and reducing social spending.
In six years, between 1982 and 1988, the share of wages in France’s national revenue went from 73.2% to 63.4%.
In the early 1990s, the capitalist class recovered the rate of profit it had enjoyed before the crisis. Their success was not due to renewed dynamism, nor to a growing creditworthy market, pulling after it new investment in production. The consequences of the return to a pre-crisis rate of profit did not result in an increase in productive investments, nor new jobs, nor a new economic cycle. More profits simply meant that more money was going to be injected into finance.
The growing complexity of the economy’s financialization has continuously increased since 1982, a year marked by an important recession. Inflation was reaching new highs and in order to hold it back, the states decided to switch from a policy based on the money machine to one based on indebtedness. Of course, the money spigots were never completely turned off, but instead of printing more currency to counterbalance their budget deficits, the states started borrowing money from the banks and, more generally, from international finance. The system thus created depended more and more on credit for its smooth functioning, that is, on increasing indebtedness. The states raised the cash they needed by selling Treasury bills, notes, bonds, etc. And this system was a big gift to the banks, which acted as the intermediaries between the needy states and the big owners of capital on the lookout for profit-making opportunities.
A quick look at the growth of the United States’ public debt sheds a crude light on the recent evolution of the system [the following figures concern the federal government’s debt, not that of the individual states or local governments].
The United States’ public debt was 305 billion dollars in 1963 and 370 billion in 1970, just before the crisis that hit the international monetary system and the first oil shock (1973-1974) which marked the beginning of the crisis we are still living through. The U.S. national debt grew to 907 billion in 1980, 3.23 trillion in 1990, 5.67 trillion in 2000, reaching 10.02 trillion in 2008, at the beginning of the present financial crisis. At the end of 2010, after the state’s intervention to bail out the banking system, the U.S. national debt reached 15.15 trillion dollars – that is, roughly 100% of the country’s GDP.
U.S. private debt has also grown enormously.
The same can be said of every imperialist country. France’s public debt, for instance, has gone from 22% to 84% of the country’s GDP in twenty-odd years.
For three decades, states have had to rely more and more on the international market to face up to their commitments, raising money by offering, in exchange, fresh treasury or other bonds or securities, etc. But they must reimburse their debt at a given date and they have to pay the interest on these bonds.
The vicious circle is complete. Debt feeds debt. Creditors (banks, investment funds, insurance companies) face an overflow of money coming their way. The interest owed by borrowing states and governments is a growing share of their budgets.
The same can be said of companies’ indebtedness. With one major difference however: the debt floated by companies ensures the repartition of surplus value between industrial capital and financial capital. Let us keep in mind that investment funds and banks lend not only their own money but also the money of big industrial or commercial businesses.
As for the public debt, the state uses its exclusive prerogatives (as a tax collector for instance) to empty the citizens’ pockets, especially those of the working class, in order to feed financial capital. The racket which is thus organized by the state becomes a more and more indispensable addition to the amount of surplus value extorted through exploitation.
In order to justify the racket and to defend its austerity policies, each and every government blames the huge public debt, arguing that it’s up to the citizen to pay his/her share of the national debt that must not be left for his/her children or grandchildren to pay!
Government representatives who repeat this, parrot-fashion, are less talkative when it comes to private debt. Those who are privately indebted are not pilloried day in, day out for threatening the global economy. But the fact is that those private debts – most of which belong to companies, banks and the better-off individuals – are three times the size of the public debt.
According to the Committee for the Abolition of Third-World Debt, “the grand total of worldwide private debts is 117 trillion dollars, that is, almost three times the total amount of public debt (41 trillion)” [Source: McKinsey Global Institute’s report.]
These private debts could, tomorrow, cause a chain of business bankruptcies. They are as threatening for the global economy as is the public debt of this or that state. Let us keep in mind the consequences of Lehman’s bankruptcy!
In 2008, a few weeks after the demise of Lehman Brothers, we wrote a text on the crisis of capitalist economy for our yearly Congress. After examining the different explanations of the causes of this financial disaster, we wrote:
“Since the brutal aggravation of the financial crisis, on September 15, 2008, and the bankruptcy of Lehman Brothers, one of the pillars of Wall Street, a bunch of economists who can only ‘foresee’ past events blame deregulation, liberalism, globalization or a failure to supervise the financial system as the fundamental cause of the crisis. These aspects all played a role in the succession of events that eventually led to the present financial crisis and to the form it has assumed. However, none of them is the genuine cause of the crisis: capitalist economy simply CANNOT function without periodic crises.”
Commenting on the 1920-1921 crisis, Trotsky wrote: “So long as capitalism is not overthrown by the proletarian revolution, it will continue to live in cycles, swinging up and down. Crises and booms were inherent in capitalism at its very birth; they will accompany it to its grave.... In periods of rapid capitalist development, the crises are brief and superficial in character while, in periods of capitalist decline, the crises are of a prolonged character while the booms are fleeting, superficial and speculative.”
We went on to say, in 2008: “Imperialism emerged more than a century ago, with its trusts spreading their tentacles all over the world, increasing the complexity of economic activity. These developments have rendered the periodicity of economic cycles less predictable. They have multiplied the ways crises can occur and have worsened their damage, but they have not made them less avoidable. Crises constitute essential phases of capitalist reproduction. In fact, it is through crises that the market economy, the motor of which is blind competition, reestablishes the equilibrium between production and solvent demand, between the different sectors of the economy – notably that of the means of production and that of consumer goods – or between the different companies engaged in the successive phases of the production process. Crises express the fall in the rate of profit resulting from the saturation of the market. By destroying part of the capital engaged in production, by getting rid of the less profitable companies, crises create the conditions for launching a new cycle, in which the rate of profit begins to increase, investments start back up, and hiring begins.”
One of the consequences of the economy’s financialization is that it modifies and weakens this regulating role of crises.
Each time production was about to be hit by a recession, governments reacted by opening up the credit gates, by increasing the quantity of money, of debt certificates or of circulating credit. From rescue to rescue, the economy has now ended up with this hypertrophy of the financial sector. And it cannot escape from it.
We have always stressed the fact that, from the capitalist’s point of view, capital is always capital, whether it be industrial capital or financial capital. Big capitalist groups carry out financial activities as well as productive ones, very naturally....
Making a distinction between finance and the productive economy is impossible or even meaningless if one is trying to understand their role in the normal functioning of the system. But on the scale of the whole economy, the significance of financialization is that finance – a sector where no surplus-value is produced – takes a growing share of the wealth created by exploitation. Financialization is an expression of, as well as a cause of, the parasitic nature of finance.
The present financial crisis is an offshoot of the sub-prime real estate bubble which got under way in the early 2000s and blew up in 2007, causing Lehman’s bankruptcy in 2008 and threatening to transform itself into a general crash of the banking system.
The mechanism that threatened to destroy the banking system in 2008 may not have led to catastrophe then, but the same mechanism is installing itself today by banks that hold too many debts from states that are no longer able to reimburse them. In 2008, every banker knew that all of them held a huge quantity of securities that had become worthless because they were somehow linked to the U.S. real estate bubble. The bankers’ distrust of one another threatened to bring the exchanges between banks to a standstill, in other words, to completely clog the thousands of daily exchanges between banks which constitute the economy’s arteries and veins, its circulating system.
To avoid the predictable thrombosis, imperialist states agreed almost immediately to bail out the big banks and to buy back their “rotten” or “doubtful” securities. The states’ rapid intervention and the hundreds of billions of dollars and euros poured into the system prevented the looming global crash.
However, this injection of huge amounts of paper money carried inflation in its wake. This was a complete departure from the policies of the 1980s, when states slowed the printing of their own monies, looking instead to borrow money in the international financial markets. Since the alarm of 2008, all the states that can afford it do both. But not in the same way and not with the same consequences.
The end result is an increased state indebtedness and a growing distrust of the states’ capacity to pay back their debts. The crisis of public debt replaced the banking crisis, or rather, it was added to the banking crisis. As events have shown, this is how a vicious circle is built: distrust of a state then becomes distrust of that state’s banks.
Another consequence of the emergency measures that saved the banking system was the shift of the crisis’s center of gravity from the United States, where it originated, to Europe, or rather to the eurozone. The eurozone was plagued by a contradiction from the minute it was born: it may have a single currency but it never gave itself a single state, having today seventeen states with different, often contradictory interests. This unusual situation did not reveal all its explosive force until the present financial crisis got under way. But the roots of this situation go back much earlier.
The existence of a single currency did not put an end to the disparities between Europe’s richer countries, in other words, its imperialist countries, and its poorer countries.
In the beginning, the creation of the eurozone meant that the big banks of the richer countries invested disproportionately more of their capital in the not-so-well-off countries. At that time, the talk was about the benefits gained by countries like Spain, Portugal, Ireland, and to a lesser extent Greece, for having rallied around the euro.
A good deal of the capital which was being invested in these countries came under the guise of “aid” to the building of badly-needed infrastructures. However, the capital which left the richer part of Europe and emigrated to its poorer part was not aimed simply at financing the more or less useful projects. The owners of that capital also had speculation on their mind and were ready to play on the discrepancies (development, prices, etc.) between different countries. The 2008 financial crisis itself increased the phenomenon because in its early days, it brought about the transfer of huge amounts of liquidities. The bankers, looking for means to invest their extra liquidities, lent wherever they wanted, including to Greece, Portugal or Spain.
In Spain, the bulk of these transfers ended up in real estate. At the time, economists praised Spain’s high growth rate, without ever putting the figures in perspective or pointing out that most of the “growth” was in real estate. So, when the real estate bubble created by speculators finally burst, the spectacular growth rate of Spain came to a spectacular halt. The balanced budget of the Spanish state became unbalanced. The banks collapsed and the Spanish state tried and is still trying to bail them out, with the result that it is now itself covered with debt.
Ireland attracted capital for different reasons – one of them being its very ‘bank-friendly” tax policy. Portugal’s asset was the fact that the size of the infrastructure works to be financed by the European Union (EU) meant interesting profits. Greece may have been attractive as a potential borrower only because it was in dire need of making up for its own deficit.
Until 2010, banks were not very critical when they had to assess the overall trustworthiness of the states that borrowed from them. On the contrary, they were pushing the states to borrow money. In 2010, Greece and most Greek companies could still borrow money at the same rate as Germany. And so they did! At the end of 2010, the European banks’ exposure in Greece totaled 162 billion dollars (public and private debt). Some German banks and French banks thought they had found the pot of gold! But when distrust started to grow, the whole setup came tumbling down, and speculators began betting on a collapse of the Greek economy. All Greek assets, whether owned by Greek or foreign businessmen almost instantly lost a good deal of their value.
The transformation of the financial crisis into a sovereign debt crisis then sparked off the crisis of the euro. [A sovereign debt is one that is guaranteed by a state.] The important thing here is that the distrust that a state would not be able to reimburse what it had borrowed did not have the same consequences for countries like the United States and GreatBritain, which have their own currency that they can manipulate at will; compared to an EU country, which cannot, theoretically, do the same thing.
The U.S. federal state can always pay its debts by printing more dollars. Things are different inside the European Union. According to EU treaties, the European Central Bank cannot finance the public deficit of a member state by churning out money. And each of the seventeen states, although belonging to the Union, is the only one responsible for its own debt and for the debts of the banks that are present on its territory.
Speculation seized on this flaw in the EU.
With the interest rates on bonds varying depending on the reputation of the borrowing state, “confidence gaps” formed the basis of a new type of speculation. The interest rate determines the price a state will have to pay to borrow money on the financial market, that is, from the dozen big banks and investment funds that dominate the market. Any lack of trust of a particular state means that the interest rate for that state’s bonds will go up, but then a high interest rate increases the general distrust, etc.
The financial markets found a new object of speculation without any limits: the variation in confidence toward the German state at the one pole, toward the Greek state at the other pole, and toward the 15 other states somewhere in between.
Trading on the exchange rates of currencies has always been one of the main fields for speculation. The conviction that one currency is losing its value faster than the next currency is an indication for the owners of capital that it is time to get rid of the currency which is losing part of its value to get one that is in a better shape. This type of speculation continues to be used on a daily basis in the global financial markets. Each multinational company carefully optimizes its portfolio, filling it with various currencies, outstanding debts and obligations. Within the framework of its own needs, it tries to keep a minimum amount of weak currencies and a maximum of solid ones .
In the case of the euro, this speculation takes on a special form. Of course, it is always possible to speculate on the euro itself, as opposed to the dollar, the pound, the Swiss franc or the Japanese yen. But the novelty of the eurozone is that there is a single euro, used in seventeen different countries, each with a different level of creditworthiness in the eyes of investors.
Instead of gambling on one currency against another, speculators gamble on the states’ reputations.
However, there is a strong cross-dependence between the states and the banks operating on their soil. In 2008, when the states re-capitalized the banks to save them, each state was expected to come to the rescue of its own banks. If the so-called Greek crisis posed so many problems to the leaders of the imperialist world, it was not out of pity for the Greek state. It was primarily due to the fact that the main banks operating on Greek territory were not Greek, but French or German banks or linked to them.
Now what is to be done if a given state is too weak to bail out its own banking sector? The successive European summits bear testimony to the governments’ desperate attempts to find a solution to the problem.
The aggravation of the sovereign debt crisis became a boomerang that worsened the banks’ positions.
The big French, German and other European banks that had speculated against Greece and its public debt had tons of Greek national bonds in their vaults – a situation which caused the other banks (mostly foreign banks that were less involved in these speculative maneuvers) to become wary. As a result, the same distrust as in 2008 started spreading in the banking system, threatening to transform itself into a crash.
The lack of confidence in the eurozone banks resulted in the capitalists who had entrusted their capital to those banks moving to take it back and invest it in safer banks. These banks now have problems borrowing the money they need from healthier banks.
Was it possible to stop the movement? Theoretically, there was, at the outset, a way out of this critical situation, namely, the mutualization of the debt. It would have involved a commitment by all eurozone states to bail out a state threatened with bankruptcy. But practically speaking, how do you get states to pay for another state’s debt, when their first and foremost preoccupation is to defend the petty interests of their national bourgeoisie?
The discussion showed that, not surprisingly, the most reticent state was the richest one, Germany – the one that would have paid the most for the debts of states in difficulty. The question of the mutualization of the debt was at the heart of the discussions that went on in European summits. It was not just a theoretical question and the haggling was for real. Who is going to pay? How much? And to whom? How is it possible to assess each state’s contribution to the EU’s solidarity fund? What counterpart is it possible to ask from the states that are on the receiving end?
In fact, the reaction of Europe’s leaders was the exact replica of what had been done by the American authorities, even if it involved ignoring once more the ground rules of the eurozone.
The United States is living through its third “Quantitative Easing Program” (QE3), which consists of the Federal Reserve’s printing more paper money to buy U.S. bonds from the banks, which gives them more liquidity and, at the same time, maintains artificially low interest rates on the U.S. debt.
Finally, after yet another round of summits, Europe’s leaders found a way of trampling over the eurozone’s rules without attracting too much attention. They told the ECB it could buy, from private banks which held them, the sovereign debts of the states that were financially shaky. They were thus killing two birds with one stone: they were ridding the banks of the least trustworthy securities still in their possession; and alleviating the pressure on the weaker states. But all of this is a way of feeding inflation.
They compelled the states which benefitted from these loans to engage in a drastic austerity policy.
On September 6, 2012, the announcement that the ECB would buy back the sovereign debts of eurozone countries confronted with financial difficulties, without any limitations, marked a new stage in the unfolding of events. Every bank or investment fund that speculated on the Greek or Spanish debt was now assured that it could recover its initial capital. The financial markets immediately praised a decision which even Le Figaro (a French pro-establishment daily) criticized as “one of the most disastrous decisions in the monetary history of Europe,” because, it argued, that decision would fuel inflation.
But the ECB was only following in the steps of the U.S. Federal Reserve, with some delay. There was nothing unique about this decision.
This decision saved the banks that had speculated on the Greek or Spanish debts, and it calmed down the speculation on the interest rate differences between eurozone countries. But it’s not at all clear that it will save the euro itself. It may well not even put an end to the distrust between European banks. While underlining the efforts made by the ECB to “hold back” the crisis, a French monthly review (Alternatives économiques, special issue #94, October 2012) indicated that through longterm refinancing schemes, the ECB “had already lent almost one trillion euros to the banks between December 2011 and March 2012.” [That is, before the “open window” operation]. “Inside the eurozone, credit is once again difficult to get from the banks, which is particularly harmful for global activity since traditionally, in Europe, a major part of the economy is financed by the banks.”
Once again, the so-called solution to one of the phases of the crisis aggravated the economy’s financialization, creating the conditions for the next phase of the crisis.
Behind the jolts of the financial crisis, the crisis of the productive economy lingers on and becomes deeper and deeper. The global, yearly GDP is on a downward slope, even if the global retreat is produced through fleeting local variations. These variations allow blissfully optimistic commentators to write, without lying, that “last month, industrial production slightly improved in the UK” or “unemployment figures better than expected in the United States” or “Germany’s foreign trade is picking up.”
However, if the local situations vary greatly, the overall picture is quite clear. In 2012, for example, the eurozone’s GDP is lower even than it was in 2008.
More significant is the evolution of industrial production. According to Problèmes Economiques (a French monthly review), “in 2012, industrial production is smaller than in 2006, including in Germany.” The author of the article explains that “domestic demand is decreasing, especially concerning investments” and that “France’s industrial output has gone back 15 years.” [There was an 8% decrease between 2000 and 2011.]
Of course, the indexes of industrial production are hardly less abstract than the artificial figures for GDP. Nevertheless, these indexes show unambiguously a downward evolution, which is reflected even more starkly in the figures of layoffs, shutdowns and growing unemployment!
Another sign of the aggravation of the crisis is the drop in the prices of raw materials used by industry (iron ore, bauxite, nickel, etc.) Until recently, these raw materials were subject to speculation. Their prices went up not because they were more difficult to extract but because there were speculations on whether their selling price would continue to go up – or not.
A recent “dossier” published by Les Echos (a conservative business daily) under the title “Raw Materials: End of the Golden Age,” declared: “After ten years of almost uninterrupted price increases, ten years during which the prices of gold and copper were multiplied 7fold, some people are calling the markets themselves into question today. Since the beginning of the year, the evolution of the price of raw materials has been chaotic. This is even truer since the beginning of the second quarter and its plummeting prices.”
It’s another sign that big capital does not believe in a quick upswing of the industrial sector, not even in countries like China, which was said to be a raw-materials-hungry competitor that would continue to pull prices upward.
The lower-than-expected profit margin examined by the Galois Report on French industry is probably another sign of the aggravation of the crisis. The notion of profit “margin” is an indirect approximation of the rate of profit. However, the present drop of the profit margin could well indicate that, after having restored the rate of profit during the 1990s, the bourgeoisie has to deal with a lower rate of profit today. That would be a clear indication that the crisis has become malignant.
The Galois Report and the urgent measures taken by the French government clearly show that for the capitalist class and their government, the money that is needed to compensate the bosses’ losses should come out of the workers’ pockets. This summed up what has been the bourgeoisie’s policy since the beginning of the crisis.
In any case, it must be underlined that whether or not there is a downward trend of corporate profit margins, the dividends paid by big companies, in other words, the “payout,” is not at all affected. The Galois Report itself admits, in a bottom-page note, that “the money paid back by CAC40 companies to stockholders has roughly remained the same despite the high volatility of profits.” Because of the crisis, the gap between the share of the GDP that goes to the worker and the share that goes to capital-owners is widening.
The year’s balance sheet thus shows a bigger-than-ever financial sphere and the prospect of a worse inflation.
For the exploited classes, the situation is already dramatic. On the one hand, the crisis of the productive economy continues, with unemployment on the rise and with workplaces shutting down. On the other hand, the financial crisis has meant austerity policies in countries like Greece or Spain, and, more generally speaking, in the poorer European countries. The crisis is also being aggravated in the imperialist countries of Europe and in the United States. As unemployment increases, the number of workers who live below the poverty line, although they have a more or less stable job, is increasing, even in countries like Germany, Sweden, or the United States.
Some bourgeois spokespersons – economists or politicians – emphasize the extent to which the crisis is aggravated by austerity policies. Reducing people’s consumption is a recipe for killing any hope of an upswing and the start of a new economic cycle. The ever bigger levies taken by finance stifle the capitalist economy and prevent any sort of recovery. Nonetheless, no one does anything – the interests involved are too powerful.
Reformist economists, that is, economists who dare criticize the way the capitalist economy has evolved over the last 30 years, think that this is due to domination by neoLiberal economists, the “market fundamentalists.” Those reformist economists dream of a return to policies that would allow the state to intervene and for “social solidarity” to express itself. As if the large-scale tendencies of economic development were controlled by ideas, by debates between this and that group of scholars instead of being decided by the interests of the dominant class. At best, economists are able to nicely formulate the demands of capitalists. But nothing is more utopian than to dream of an ideal capitalism, hinting at that of the 1950s and 1960s, when the activity of the banks were more or less regulated by the state, and when the state’s social programs maintained consumption at a certain level.
But this system was never an ideal society for the working class, and no reformist politician or party has ever come up with a “rewind” button that would allow history to go backwards.
Financialization spells disaster for the people and for the capitalist economy itself. But it did not come from outside the capitalist system, even less from some political decision.
Political decisions, deregulation, the free hand given to finance only accompany and facilitate the interests of big capital in a context of crisis. Aggravating the exploitation of the working class to compensate the limitations of the global market or increasing the role of credit and indebtedness in the economy are basic trends of today’s economic orientations, pushed forward by powerful class interests, even if these interests are filled with contradictions.
Today, there is no sign of a possible turnaround. The simple fact that these trends last means a worsening of the situation for the exploited classes. It is not a coincidence that the two objectives that are presented as capable of saving the country – including the two richest countries – are the need to pay back the country’s debts and competitiveness.
The first expresses the requirement of finance to increase the share of what it takes from production. The second indicates the will of big capital to increase the exploitation in order to increase global surplus value.
Even if there is no financial catastrophe leading to a general economic collapse, the coming period will be worse and worse for the exploited classes.
Most of the media and the politicians present competitiveness as “a great cause around which the whole of society should rally.” The bourgeoisie has always presented its own interests as those of society, from top to bottom. Today’s slogan is the umpteenth version of “What’s good for General Motors is good for the United States.”
The owners of capital are not content with enrolling the working class in their commercial global wars against their competitors. Its politicians try to lure workers into supporting their trade wars.
This cynicism is nothing new. What is missing in the picture is a proletariat that consciously speaks up and refuses this form of “sacred union.” Why should workers espouse the cause of a privileged class which, as time and the crisis go on, shows the extent of its failure and its incapacity to run the economy and society?
Besides, saying that the crisis should be fought against by improving “the nation’s competitive position” is completely stupid. The problems of the French economy are not limited to France’s territory or even to the borders of the European Union. They cannot be solved by increasing the competitiveness of “made in France” products by increasing exploitation of the workers. That might reinforce the French bourgeoisie and help them overtake their international competitors, but it cannot alleviate the crisis, because the crisis is a global crisis.
The United States may be preoccupied with the euro’s future today – but only because it knows that a collapse of the eurozone would bring about a genuine economic debacle which would necessarily bring down the U.S. economy....
While the various bourgeoisies are involved in a merciless war against one another, they are like gangsters tied to the same chain. If one sinks, the others drown also.
In the abstract, many of the measures put forward by economists who lament the excessive financialization of the economy are “realistic”; that is, they could be applied within the framework of capitalism. In fact, they are inspired by policies the bourgeoisie carried out in the past. These policies included various forms of banking regulations, a more or less active state intervention in the economy, a fuller policy of social benefits and/or protectionist measures.
Some of these measures could be accepted by the bourgeoisie today. But this doesn’t mean that the capitalist class could get rid of financialization, or even wants to – even if it is fully conscious of the catastrophic consequences of financialization. If the bourgeoisie were guided by reasoning, there would be no speculation, no financialization, no more competition and no more devastating commercial wars. The bourgeoisie is guided by its own interests and, in the case of financialization, by its very short-term interests.
As a class, the bourgeoisie is completely irresponsible toward society and incapable of controlling its own economy. Could the contradiction between its own financial interests and its interest in finding a new period of growth in production lead the bourgeoisie to revert to policies carried out in the past? No one can say that – certainly not unless there is a social cataclysm or a war. Let us not forget the panicky speeches on the need to regulate the banking system, when they thought, for a few weeks in 2008, that their system was being threatened! None of the speeches was put into effect.
Communist revolutionaries must oppose any proposals, even if they are made in “good faith,” coming from people who pretend to show the exploited a “way out” that stays within the framework of capitalism. As long as the crisis of capitalist economy will remain unsolved, the only preoccupation of the working class must be to defend, inch by inch, its conditions of existence, by standing for its own class interests opposed to those of the bourgeoisie. If unemployment were to disband the working class, if moral decay were to hit the main productive class of society, this would constitute a dramatic setback.
The interests of the working class and those of the bourgeoisie are totally irreconcilable, more than ever in this period of crisis. Workers must be aware that any serious struggle to defend their own vital interests would inevitably become an all-out confrontation challenging the bourgeoisie’s political and economic domination over society.
To fight for a demand as elementary in this time of crisis as “the prohibition of layoffs and the sharing out of work among everyone” already directly calls in question the power of the bosses over the companies and of the bourgeoisie over the whole society.
This simple sensible demand automatically brings up another one, linked to it, also based on an elementary need: the need for control over the companies by the workers and by the people in general, organized around that objective. Without such a control, the bosses, share-owners, bourgeois people have a thousand ways of demonstrating that it is not feasible, that going against the bosses’ right to lay off workers kills business.
On a more general level, that of the functioning of the economy as a whole, the bourgeoisie themselves or their political representatives periodically raise the question of control over the banks. However, the same people who find it difficult to get credits for their businesses and are victims of the weight of the big banks and of their appropriation, also have liquidities and must find a safe place to put them: they need their financial operations to be carried out secretly.
The control over the banks and over the companies is in the interest of the huge majority of society. However, only the working class will be able to impose this control through a powerful and above all a conscious struggle.
We are not yet in such a situation. But the task of communist revolutionaries is to anticipate that situation, even if the great majority of the working class, which is reduced today to defensive fights only, is not yet conscious. There can be no effective way for the working class to defend itself in this period of crisis unless the working class is conscious that the fight to defend itself must be transformed into a challenge of the power of the bourgeoisie and a struggle for the power of the working class.