From stimulus to austerity: An international class-war policy

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>From stimulus to austerity: An international class-war policy
22 July 2010

The past several months have witnessed a shift in social policy by the
international bourgeoisie even further to the right, marked by a turn from
economic stimulus policies to brutal austerity measures. In the name of deficit
reduction, the ruling classes of all the major capitalist countries are carrying
out a frontal assault on the past social gains of the working class.

The long-term aim of these policies is to eliminate the welfare state,
reestablishing the competitiveness of the older capitalist powers by slashing
workers’ living standards to the level of their impoverished counterparts in
emerging economies like India and China. That the living standards of the
world’s people are to be equalized downward, rather than upward, is an
indictment of the capitalist system.

The “Big Society” speech delivered Monday by British Prime Minister David
Cameron exemplified this shift. It was a manifesto for a return to Dickensian
conditions of working class poverty.

Seeking to camouflage the brutal implications of his plan to impose between 85
and 100 billion pounds in social cuts over the next four years, Cameron
described his “Big Society” as a “huge cultural change” that will “empower” and
“liberate” people. It will supposedly achieve this by privatizing and gutting
government-run social services.

The shift from the stimulus policy of 2008-2009—which centered on the plundering
of national treasuries to bail out the banks, without providing any serious
relief to the working class—to the austerity programs of today coincided with
the 750 billion euro bailout fund announced in May by the European Union and the
International Monetary Fund. The fund was established to stave off default by
euro-zone countries such as Greece, Portugal and Spain and the threatened
collapse of the euro.

It represents yet another massive transfer of public funds to the big banks. As
Mohamed El-Erian of the bond investment firm Pimco put it: “Through the ECB
[European Central Bank], EU and IMF, the official sector has stepped in with its
balance sheet to assume liabilities previously held by the private sector,
thereby allowing private investors to exit in an orderly fashion.”

When the fund was established, the major European governments agreed that the
cost of offloading the banks’ bad debts would be borne by the working class in
the form of savage cuts in social programs, jobs, wages and pensions. Talk of
stimulus to continue the “recovery” was dropped and replaced by the universal
demand for “fiscal consolidation.”

The shift was signaled at the G20 finance ministers meeting the first week of
June and formally ratified at the G20 summit meeting held at the end of the
month in Toronto.

In working out its class policy, the bourgeoisie was emboldened by the
experience in Greece, where the social democratic PASOK government has been able
to push through a series of austerity measures in the face of massive popular
opposition.

In Greece, the ruling class has relied on the trade unions to contain and
dissipate working class resistance by means of token one-day strikes and
protests. The trade union bureaucracy has, in turn, been provided crucial
assistance by the petty-bourgeois “left” organizations such as the Stalinist
Communist Party and Syriza, which have insisted that popular opposition to the
social cuts be subordinated to the unions.

The experience has been the same in Portugal and Spain, where social democratic
governments have announced one set of social cuts, layoffs and wage cuts after
another, and mass working class opposition has been suppressed by the unions.

A series of political changes have been carried out corresponding to the shift
in economic and social policy and reflecting the growth of international
tensions. In May, the Conservative-Liberal Democrat coalition government headed
by Cameron was installed in Britain.

At the beginning of June, the same week as the G20 financial ministers meeting,
Japanese Prime Minister Yukio Hatoyama resigned and was replaced by Naoto Kan,
who immediately announced an austerity program that includes a doubling of the 5
percent sales tax, combined with a cut in the corporate tax rate from 40 percent
to 25 percent.

At the end of June, Australian Prime Minister Kevin Rudd was ousted in a coup
within the Labor Party apparatus and replaced by Julia Gillard. In addition to
reaffirming Australia’s commitment to the US occupation of Afghanistan, Gillard
immediately scrapped a proposed tax on Australian mining companies and announced
a turn to austerity policies.

In Europe, sweeping budget-cutting programs have been announced from Ireland in
the west to Eastern Europe and Russia. Germany, economically the strongest
European state, is imposing 80 billion euros in cuts. France has announced
sweeping cuts in pensions and a 10 percent reduction in local government budgets.

The 750 billion euro rescue package and the launching of austerity programs to
make the working class pay for it have revived the European bourgeoisie’s self
confidence—at least for the present. The euro, which fell 15 percent in relation
to the US dollar in the first six months of 2010, has rebounded sharply over the
past two months. Hovering around $1.30, it has recouped 10 percent of its loss.

While the Obama administration has been at odds with Europe over the timing and
pace of European austerity measures, it has made a similar shift from stimulus
to deficit reduction. It has abandoned even its paltry proposals for new federal
aid to the states. The weeks-long delay in extending federal jobless benefits
for the long-term unemployed is the preparation for ending them completely.

The administration and the Democratic leadership in Congress are tacitly
encouraging a “debate” on jobless benefits—in which aid to the unemployed is
being depicted as a “disincentive to work” and a “new entitlement”—in order to
condition public opinion for depriving millions of laid off workers of any
source in cash income.

In the US and internationally, mass unemployment is being used to bludgeon
workers into accepting poverty wages and brutal speedup.

The international bourgeoisie is proceeding in a highly conscious manner to
intensify its war against the working class. It is keenly aware of the crucial
service provided by the trade unions in stifling the resistance of the working
class. In his recent television interview over the Bettencourt scandal, French
President Nicolas Sarkozy made a point of praising the unions for their
“responsible” role in the economic crisis.

The ruling class is likewise well aware of the critical political role played by
the various petty-bourgeois pseudo-left organizations, such as the Communist
Party and Syriza in Greece, the CP and New Anti-Capitalist Party in France, the
Left Party in Germany, the Socialist Workers Party in Britain, and the
International Socialist Organization in the US.

The central concern of these organizations is the danger that the working class
will enter into struggle outside of and to the left of the social democratic,
“labor party” and trade union bureaucracies. They are above all determined to
prevent such a development.

The Socialist Equality Party anticipates that the working class will seek to
free itself from the reactionary grip of these treacherous agencies of the
bourgeoisie. We fight precisely for such a break and the building of an
international socialist movement of the working class to take power and put an
end to the bankrupt capitalist system.

Barry Grey

http://wsws.org/articles/2010/jul2010/pers-j22.shtml

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