Europe ’s dirty secret

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Fri Nov 19 09:00:08 CET 2010


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Europe’s dirty secret
19 November 2010

In a revealing admission concerning the relationship between capitalist
governments and international financial interests, the Financial Times on
Tuesday wrote of “Europe’s dirty secret.”

The newspaper editorialized against the plan of the European Union, the European
Central Bank (ECB) and the International Monetary Fund to loan Ireland tens of
billions of euros in order to guarantee in full the investments of international
bankers and bondholders in the country’s failing banking system.

Under the plan, Ireland will effectively surrender sovereignty over its economic
policy to the EU and the IMF and agree to claw back the latest bailout of the
global financial elite by imposing a new and even more savage round of attacks
on the wages and living standards of the working class.

The Financial Times argued that using the €440 billion European Financial
Stability Facility (EFSF) to cover the bad debts of the financial elite by
propping up zombie banks, while driving the Irish state closer to default, would
be “a fatal mistake.” The Times insisted that such a policy was shortsighted and
self-defeating, since sovereign defaults would trigger new financial panics and
bankruptcies.

“It would,” the Times wrote, “keep the Irish people indentured to those who
recklessly fund their banks: EFSF funds must, after all, be paid back by
taxpayers. It would also give an official EU imprimatur on Europe’s dirty
secret: public treasuries will do anything to make private bank creditors whole.”

What the Financial Times calls a “dirty secret” is hardly news to those who have
followed developments since the collapse of Lehman Brothers 26 months ago. What
is remarkable, however, is the bluntness with which this organ of British
finance capital acknowledges the existence of a dictatorship of the banks over
government policy throughout Europe. Nor is it any different in North America,
South America, Africa or Asia.

The newspaper admits that a tiny financial elite, which it describes as
“reckless,” is looting public treasuries in order to cover its speculative
failures, reducing entire populations in the process to the status of
“indentured” servants. It is this single-minded pursuit that drives the
decisions of governments throughout Europe.

Regardless the nominal political coloration of a particular government—whether
“left of center” (as the social democratic PASOK regime in Greece and the Fianna
Fail government in Ireland) or “right of center” (as the Conservative-Liberal
Democrat coalition in Britain and the Gaullist regime in France)—it takes its
orders from the major banks. This is the meaning of the recurrent references by
government leaders to “market realities.”

The Times’ acknowledgement of the “dirty secret” of bourgeois politics lifts the
veil on the fraud of so-called democracy under capitalism. Governments uniformly
pursue anti-social policies in defiance of popular opposition. The state is, as
Marxism has long explained, the instrument of the corporate-financial ruling
class for the suppression of the working class.

Over the past year, finance capital has intensified its offensive against the
working class. The Irish events, following the Greek debt crisis of last spring,
marks a new stage both in the objective crisis of world capitalism and the
response of the ruling classes to this crisis.

Taking their cue from the United States, governments all over the world
initially reacted to the financial crash of September 2008 by pumping trillions
of dollars in public funds into their respective banking systems to prop up the
major banks. This was the essence of the so-called “stimulus” programs enacted
by governments around the world.

In part to prevent an uncontrolled collapse in consumption and a downward spiral
into global deflation, and in part to provide political cover for the looting of
public funds to rescue the financial aristocracy, governments enacted limited
relief measures to minimally buffer the social impact of the recession. These
measures enabled the ruling classes to buy time.

By the second half of 2009, however, when it was clear that the immediate threat
of collapse had been averted, that the bankers and speculators would suffer no
consequences for their semi-criminal activities, and that no serious financial
reforms would be enacted, the stock markets bounced back, along with bank
profits and CEO bonuses.

The most powerful financial firms were allowed by the political elites to emerge
from the first stage of the crisis more dominant and wealthy than ever.
Emboldened by these developments, at the end of 2009 global finance capital
intensified its offensive, targeting Greece to establish a precedent for a
global shift from stimulus to budget-cutting and austerity.

Last spring, under pressure from the banks and bond markets, the European Union
adopted its program of austerity, launching historic attacks on what remains of
the welfare state and all of the past social gains of the working class. The
Irish crisis represents a new stage in this class-war offensive.

Its aim is a fundamental realignment of class relations worldwide. Whatever
remains of welfare programs are to be obliterated. Wages in developed capitalist
nations are to be slashed to a level comparable with low-wage “developing”
countries. Conditions for the working class are to be rolled back to those which
prevailed a century ago.

Such a social transformation cannot be carried out within the framework of the
traditional methods of bourgeois democratic rule. In one country after another,
workers and young people protesting against the budget cuts—in Greece, Portugal,
Spain, France, Great Britain—have faced state repression.

An article in the Wall Street Journal this week, headlined “Crisis of Democracy
Faces Euro Zone,” notes that the establishment of an EU-ECB-IMF troika dictating
Irish economic policy means that the country’s “independence is no more than
notional.” The author warns of the danger of social upheavals because “designing
a new form of government that does not have democracy at its heart will anger
voters and provide an opening to extremists.”

None of the measures being taken can resolve the crisis of the world capitalist
system. More than two years on, it is clear that the crisis is not merely a
conjunctural downturn, but rather a systemic crisis of the system as a whole. As
in the 1930s, slump and austerity go hand in hand with ever more bitter
international economic conflicts and the slide toward world war.

The global financial elite is on the offensive not because the working class
accepts its demands. Workers in country after country have demonstrated their
willingness to fight, carrying out mass strikes and protests. These struggles
have to date been sabotaged and defeated because of the treachery of the trade
unions and their allies in the official “left” parties and middle-class
pseudo-left organizations.

New and greater struggles are coming. The critical issue is the building of a
new leadership and new organizations of struggle, the fight for a socialist and
internationalist program, and the development of revolutionary consciousness in
the working class. This is the key to mobilizing the working class
internationally to break the dictatorship of the banks and establish genuine
democracy and social equality on a world scale.

Stefan Steinberg and Barry Grey

http://wsws.org/articles/2010/nov2010/pers-n19.shtml

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