1. Scared to death that all the lights were about to go out after pulling the plug on Lehman Brothers, the bourgeoisie rolled up its sleeves, girded its loins, crossed its fingers, and reached deeper than deep for that thing of all things, that relation of all relations that is the life of all lives for the bourgeoisie—OPM, other people's money.
Tapping the unrestricted credit lines offered by the banker's banker—the government—the bourgeoisie helped themselves to what they knew they were entitled to, the public purse.
For the bourgeoisie, it's always other people's something or other. For capital to be capital, it must command other people's labor. For finance to be finance it must command other people's money. So when the bourgeoisie through those great organizations of inter-governmental cooperation, regulation, and exchange call for austerity, it's always somebody else's austerity.
After the billions in direct transfers from public treasuries to private accounts, after further billions in government guaranteed debts, after more billions in government sponsored special investment vehicles, after more than more billions in toxic assets, non-performing loans, bad debts bought and overpaid for—after all that expenditure of other people's money, the bourgeoisie had come to the shocking conclusion that: 1) money changes everything; 2) whatever changed, it wasn't enough; 3) a hundred billion dollars here and a hundred billion Euros there and pretty soon you're talking about serious money; 4)somebody has to pay; 5)somebody else has to pay; 6)there is no such thing as being too rich or too thin. "We," say the bourgeoisie "can never be too rich. You [meaning all of us] can never be too thin."
So first from the hack economists, journalists, commentators, representatives, ministers, senators—those agents and bagmen employed by the bourgeoisie—come the expressions of shock that other hack economists, journalists, commentators, representatives, ministers, senators—other agents and bagmen of the same bourgeoisie—could have acted so irresponsibly, could have acted with such profligacy. This only means that the bourgeoisie needs this other section of hacks to act even more irresponsibly, with even more profligacy. This time, however, the wastefulness requires a specific universality—a wastefulness in the very basis for human existence; a wastefulness determined to deprive human lives of the bare necessities for living a human life. Then even and ever greater misery and poverty must be piled atop that mountain of misery and poverty already piled up as the more than equal but opposite symbols of capitalist wealth.
First comes the shock then comes the austerity.
2. When in April and May of this year the government of Greece stood just a stone's throw from collapse, suspended between pit of bankruptcy and the pendulum of mass demonstrations and strikes, the European Union hesitated to provide a "rescue" package, transfixed so it seemed, not by the spectacle of the conflict, but by the image of itself it saw in Greece. It wasn't the cost that paralyzed the governments of the European Union, it was the mirror.
Merkel was reluctant to approve the "rescue" of the government of Greece without assurance that Germany's interests would be protected, which meant that Germany's contributions would be considered as senior to, and secured prior to, any other obligations. Merkel, of course, was only reprising the role she thought her mentor and role model would have played in the discussions. Her role model is Margaret Thatcher, but not the Thatcher of 1981, of Attila the Hen fame, but the Thatcher of today whose addled brain and lack of recognition of her current environment make her the once and future champion of everything bourgeois.
After the hemming and hawing, the toing and froing, the after you Alphonse-ing, after you Johann-ing, the half-hearted and half-assessed agreement on a "rescue," the high command of the European Union received a phone call from US Treasury Secretary Geithner. Geithner's elevated stature among the titans of finance is due as much to the fact that he sits on a telephone book at his desk and in restaurants as to his previous and ongoing service in Maiden Lane I, Maiden Lane II, Bear Stearns, Lehman Brothers TALF, TARP, PPIP, ABCPFF campaigns.
"You guys and dolls need to do something big," said secretary Geithner to his counterparts, counter-parties, across the Atlantic. "You need to do something dramatic. You need to impress the markets," he said getting to the real issue, the only issue.
"Yeah," he said, gaining confidence if not height with each pregnant pause. "You've got to do something completely different. Like create an off-balance sheet funding facility with a really big number and guarantee its initial capital with the revenue of the EU itself, and then you get the IMF to supplement, to partner, in this vehicle, with the IMF vetting the economic program of any government stupid enough—check that—finding it advantageous to request funding by this off-balance sheet special funding facility guaranteed by your own revenues. How does that sound?"
They looked at each other, these ministers, presidents, financiers. "It sounds just like Greece to us," they said.
"Exactly," said Tim, sounding less like a munchkin and more like a wizard in Oz. "That's the point. You're all Greek to me."
3. Greece revealed that Europe was the sick man of Europe. The markets translated that as "you're all Greek to us."
Banks in the sixteen euro zone countries had amassed a euro 1.25 trillion exposure to sovereign and private debt instruments of Greece, Portugal, Ireland and Spain. UK banks had amassed euro 270 billion in exposure. French banks accounted for euro 370 billion, and German banks for euro 394 billion, with approximately euro 624 billion of the total in private debt instruments and euro 140 billion in government debt issues [it was this sovereign debt exposure that Deutsche Bank was so reluctant to reveal to EU bank commissioners during the "stress test" evaluation].
The total amount of debt outstanding from these four countries exceeds euro 2 trillion. Outside this group of four, Italy alone has outstanding debt of approximately euro 1.7 trillion.
With so much debt concentrated in such poorly performing economies, the European Union commercial banks and other financial institutions found themselves virtually unable to refinance their own operating requirements in the commercial paper money markets. Banks that did attempt to circulate their short-term instruments in these markets were forced to pay three or four times their previous average interest rates.
The European Central Bank, by the end of 2009 having guaranteed bank debts in the amount of euro 433 billion, increased its direct loans to euro zone commercial banks. At the end of June 2010 the volume of these loans measured euro 879 billion. In addition to finance the operating needs of its member countries, the ECB took to directly purchasing government debt issues.
With the commercial paper markets inaccessible, with cross border lending essentially frozen, the banks themselves decided that the best, if not the only place, to risk their cash was no place at all, depositing over euro 300 billion with the ECB itself.
Meanwhile, the costs of credit default protection on the sovereign debt of Greece, Portugal, Spain, Ireland and the UK soared. The credit default swap costs on the debt of EU private financial institutions reached the levels of costs after the collapse of Lehman Brothers in 2008. Debt auctions failed in Hungary, and in Germany, with issues not being fully subscribed and discounts from face value exceeding discounts planned by the issuers.
It was all Greek to the markets, with Greece itself emerging as the leader of a new world economy—a Dubai World economy with the world itself running out of Abu Dhabis.
4. So, enter austerity. Austerity appears to aim at ensuring the repayment of debt, the bourgeoisie's first and last words being, "pay me." In essence, in its social reproduction, austerity serves a different purpose.
If debt originates in the lags, delays, the a-synchronicity of capitals' metamorphoses from money through commodity production and back to even more money as a claim on that expansion of value, debt concludes, realizes, itself on the extinguishing, the annihilation, the devaluation of the accumulated values of society necessary for the reproduction of value but which themselves, can no longer be sustained, be reabsorbed, recirculated, reproduced as value. Primary among that expanse of social accumulation that can no longer be sustained is the reproduction of labor power, and all that makes up labor power, itself.
So to that part of the population who are working, austerity means some will be working harder, longer, some will be working less, and shorter, but all will be reproducing a lesser social basis for reproduction. All that was substantial will become marginal, and the marginal will become substantially greater.
For that part of the population retired and receiving a pension, fewer will retire; fewer will receive pensions, those that do will receive less.
For that part of the population born into poverty, deprived of a basic, necessary education, of proper medical care, even more will be born into greater poverty. Even more will be cheated of and by an even poorer education. Even more will be excluded from already inadequate medical care.
All value must be devalued. "Everything must go!" is the slogan of this bourgeoisie's staying in business forced liquidation sale.
The call for austerity, the programs of austerity are about destroying the overproduction of accumulated values, even and especially the miserably paltry assets of public health, transportation, education—those things that make up the social basis for expanded reproduction which is inverted into overproduction and becomes a burden to capital.
5. "Everything must go!" proclaim our salesmen of austerity. But not exactly everything will go.
Military spending—that's one thing that doesn't really have to go, as Greece itself has shown.
Greece, the largest importer of conventional weaponry in Europe; Greece, with military spending as a percentage of its GDP twice that of the European Union; Greece whose deficit revision "scandal" has in fact been driven by military expenditures; Greece who year ago purchased two submarines from Germany neither of which has been delivered; Greece with plans to buy six frigates and 15 military helicopters from France; Greece having purchased 24 F-16 fighters from the US , has managed to exempt those expenditures from its austerity program.
Military spending is the near perfect vehicle for non-reproducible accumulation by the bourgeoisie. It is not-reproductive production, it is finance made real, its values only being realizable in not only their own destruction, but in the destruction of all other values. Military spending acts as a conduit of recuperation for the bourgeoisie, with taxes transferring and restoring a portion of the wage expenditure to capitalism and without any need for enhanced social reproduction to make use of the commodities.
If revolution is one way, the exploit-ed's way, of resolving the contradiction of use value and exchange value, military spending is the exploiter's penultimate way of resolving the same contradiction. War, of course, is the bourgeoisie's ultimate method of resolving that contradiction.
Greece shows the way to, for, and of the brave new Dubai World where submarines that list to one side, helicopters with nowhere to go, circulate among the artificial islands bursting with abandoned homes, vacant condominiums, and empty streets.
When Greece, upon agreeing to the EU rescue package, enacted the terms of its austerity program, a financial analyst remarked, "They were supposed to make these changes ten years ago." Maybe "they" were, as part of the entry into the European Union, but guess what? Seven years ago, Portugal did make such reforms as part of its adherence to the European Union, and today it finds itself in the same predicament as Greece.
And something else not for the guessing: This is the economic contraction capitalism was supposed to have ten years ago, after the capital spending bubble of the 1994-2000 period.
6. Besides collateralized debt obligations and synthetic asset backed securities, the legacy of the administration of Ronald Reagan, the US's idiot version of the UK's Thatcher, includes "new federalism." "New federalism" was designed as the mechanism through which the national government dramatically reduced its participation in, and administration of, social welfare programs. Some forty three social welfare programs were returned to the administration of the individual states, with the national government awarding block grants which the states were to utilize toward defraying some of the costs of these programs.
The "reasoning" behind this policy was painfully clear to the most casual observer. The legislatures of many states were configured to dramatically reduce the political strength of the urban centers, and consequently, the urban poor. State governments were much more permeable to corporate influence, and much less vulnerable to that of organized labor.
Capital thought globally and acted locally well before any leftist made that a slogan.
Lobbying by corporate and large-scale agricultural interests, allied with the small town and rural distrust of big cities could, and did, effectively maintain the burden of regressive financing on the urban and poor populations. The fact that these same corporate interests proceeded to close industries, reduce employment, shatter the wage structure and generally devastate the small town and agricultural areas was precisely part of the agenda tucked within the "revenue sharing" of the "new federalism."
The enduring legacy of the Reagan era, manifested initially in the collapse of the asset-backed securities markets, is evident both in the condition of the state budgets of the United States, and the austerity programs generated by those states.
Sales tax and personal income taxes account for 80 percent of state government revenues in the United States. Since 2008, these flows have declined by 12 percent. So while US corporations have booked over $1 trillion in cash and liquid assets, over the next two years, state governments are facing budget shortfalls amounting to $127 billion. In some states, pension liabilities are underfunded by half.
After imposing furloughs, wage reductions, and cutting support to education and transit, states have responded, as states always respond, by attacking the weakest, the most vulnerable, those most in need of service and support. Home care services to the elderly and disabled have been reduced. Illinois has ended its support for Meals-on-Wheels programs. Alabama has reduced its provisions for housekeeping assistance to elderly people. California is proposing to eliminate adult day care centers and home support for 400,000 disabled or elderly people. Nearly every state has reduced eligibility in and payment for Medicaid services.
As reported in The New York Times of July 21, said the director of senior and disabled service for Rogue Valley, Oregon, "I've seen, in a matter of months, thirty years of work go down to drain."
"In a matter of months, thirty years of work down the drain." There in a dozen words is the liquidation of pensions, 401Ks, the attacks on immigrant laborers, the destruction of wages, the rolling back of opportunity and equity for women in the workplace, in the doctor's office, in the schools. There in a dozen words is the past, present, and future of capitalism, of human beings under capitalism. There in a dozen words is all you need to know about valorisation and devaluation.
7. It is not the task of the working class, or of Marxists, to reverse capitalism, to restore capitalist valorisation in the face of capital's self-devaluation. It is the task of the working class, of Marxists; it is the task for revolution to oppose this devaluation that capital imposes upon all human relations, not things, not commodities, but actual human relations.
It is the most essential, critical task of the working class to defend the need for better than adequate medical care, better than basic education, better than tolerable public transit; to meet the needs for home care assistance, day care centers; to defend immigrant labor, women's access to safe health care; to defend the social basis for human beings actually reproducing themselves as social human beings.
That defense requires the disavowal, rejection, cancellation, shredding of the debts accumulated by capital in its own attacks on that social basis; of the debts accumulated by our asset-liquidationist bourgeoisie. That disavowal of debt requires in turn the immediate end to all military spending.
And that's just the beginning.
July 31, 2010
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