Dear Friends,
Over the last year and a half I have been building up my website
(www.rdwolff.com) so that it might serve as a repository - available always and
free of charge - of both short and long essays on the economic crisis as well
as
pieces on economic theory, Marxism, and strategies for social change. We have
also loaded onto the website audio interviews and videos of media interviews,
lectures and entire multi-session classes on the crisis, class analysis, and
Marxian economic theory (intro and advanced). Dr. Harriet Fraad and I together
also produce podcasts and separate blogs on this website's Economy and
Psychology sub-section. More is always being added to all parts of the website.
Translations of various items are also available in a variety of languages
(Chinese, Greek, Persian, Bengali, German, French, etc).
As the time for making up class reading lists arrives, I wanted to invite you
to
make use of the website for teaching purposes (a major part of the motivation
behind its existence and constant updating). The same applies to my DVD
"Capitalism Hits the Fan" (cost = $19.95) and my more recent, 2010, book,
Capitalism Hits the Fan: the Global Economic Meltdown and What to do About It
(cost = $18.00 retail or around a discounted $14 if ordered via my website).
All
my books as well as those co-authored with Steve Resnick can be ordered via my
website (and the DVD as well) through its automatic hook-up with Amazon which
actually ships the items to buyers.
I'd be glad to answer any questions about the website, etc.; you can reach me
by
email via the website. Thanks.
Rick Wolff
ps: A sample of the kinds of short written pieces on the website is one recent
work also published in the Monthly Review webzine, Common Dreams, etc. is
reproduced below.
www.rdwolff.com
www.capitalismhitsthefan.com
****************************
Austerity: Why and for Whom?
by Rick Wolff
Clearly, the global capitalist crisis that started in 2007 will be neither
short nor shallow. The government rescue of the US financial industry pumped
enough extra money into the economy and sufficiently reduced interest rates to
give banks and the stock market the heavily hyped "recovery" that started
March
2009 and is now over. What is worse, their recovery never reached much of the
rest of the economy. Efforts to broaden the recovery or extend it beyond one
limp year have failed. That failure cost Washington trillions in borrowed
funds from lenders who now demand guarantees that those loans will be repaid
to
them with interest. Similar demands now confront many other governments who
likewise borrowed heavily to cope with the crisis in their countries.
The guarantee demanded by lenders is "austerity." Lenders want governments to
raise taxes or cut government spending or both. Governments will then have
more money available to pay interest on loans and to repay those loans.
Governments that fail to impose austerity will face higher interest on new
and
renewed loans or will be denied loans which would cripple those governments'
usual operations. Austerity is yet another extreme burden imposed on the
global economy by the capitalist crisis (in addition to the millions suffering
unemployment, reduced global trade, etc.).
Who are these lenders demanding austerity? The globally active financial
enterprises -- mostly banks that collapsed in the crisis and were rescued by
their home governments -- are, together, also major lenders to those
governments. Banks own their own governments' debts but also other
governments' debts. For example, major banks in France and Germany are among
the Greek government's chief creditors. US banks and related financial
enterprises hold significant amounts of other governments' debts and other
nations' banks own much US government debt.
Global capitalism's 2007 crisis froze the credit system that sustains
capitalist production. Private borrowers -- enterprises and individuals -
could no longer repay loans because their investments had generated too little
and their incomes had failed to grow enough. Banks had failed to properly
assess risks in deciding how much to lend to whom. They therefore stopped
lending to private borrowers because that had become too risky. As private
borrowers defaulted and new lending atrophied, banks' capital and their
profits
collapsed. The whole capitalist system ground toward a halt because credit
became unavailable. The only solution most leaders in capitalist countries
could conceive was to unfreeze credit by having the government guarantee bank
solvency, guarantee many private debts, invest massively in and lend to
private
banks, and become the ultimate borrower of a huge portion of loanable funds.
Banks everywhere lent to governments because it had become unsafe to lend to
almost anyone else. Governments everywhere used the borrowed money to rescue
banks and other financial enterprises.
This peculiar "nationalization" of debt served capitalism by having the
government temporarily function as the lender and borrower of last resort.
Nationalization unfroze the credit system sufficiently to stop the crisis
from
collapsing global capitalism. Few policy-makers (and few others) in 2008 and
early 2009 worried much about the consequences of so massively increasing
government debts. The looming possible capitalist system collapse overwhelmed
worry about any "longer run."
The international banks that were rescued (from their own bad loans and
investments) by governments now worry that governments they lent to won't be
able to repay those loans. Banks threaten to make further loans much more
costly or even impossible unless those governments impose "austerity." Most
political leaders recognize that the banks' threats, if carried out under
their
watch, would end their careers quickly and badly. All capitalists see in
possible government defaults the specter of another credit freeze with
terrifying ramifications for global capitalism. Still worse for those banks:
governments in default would not likely be able to borrow again to rescue
banks
again.
Nearly all current political leaders of major capitalist countries responded
positively to the banks' demand for austerity (as in Canada's recent G-20
meeting). This immediately raised a basic political conflict always simmering
inside capitalism: who will pay increased taxes and who will suffer decreased
government spending? Militants in Europe have already marched and struck
against austerity as an unacceptable plan to make workers pay to fix
capitalists' crises; more general strikes are set in many European nations
with
a Europe-wide general strike now scheduled for September 29. Meanwhile,
capitalists work with politicians to define as "reasonable in crisis times"
austerity programs mixing both tax increases (chiefly on workers) and spending
cuts (chiefly on workers).
An Athens trucker says, "Public employees here don't work hard enough, so it
is
reasonable to cut their pay." A Parisian clerk thinks it "reasonable to
postpone the official retirement age a few years; we all live longer now." A
Minneapolis office worker agrees that it is "reasonable, in crisis times, to
get by with fewer public services." A New York laboratory technician supports
a new tax on cell-phones as "probably reasonable; after all, people overuse
them." Remarkably, such notions of "reasonable" are silent about other
possible and, to say the least, more "reasonable" forms of austerity.
Let's consider some alternative "reasonable" kinds of austerity (i.e.,
austerity for others) and then question austerity itself. Serious efforts to
collect income taxes from US-based multinational corporations, especially
those
who use internal pricing mechanisms to escape US taxation, would generate vast
new federal revenues. The same applies to wealthy individuals. The US has no
federal property tax on holdings of stocks, bonds, and cash accounts (states
and localities levy no such property taxes either). If the federal government
levied a 1 per cent tax on assets between $100,000 to 499,000, and 1.5 per
cent
on assets above $500,000, that would raise much new federal revenue
(everyone's
first $100,000 could be exempted just as the existing US income tax exempts
the
first few thousands of dollars of individual incomes). Exiting the Iraq and
Afghanistan disasters would do likewise. Ending tax exemptions for super-rich
private educational institutions (Harvard, Yale, etc.) and for religious
institutions (church-goers would then need to pay the costs of their churches)
would be among the many other such alternative "reasonable" austerity
measures.
Comparable alternatives apply -- and are being struggled over -- in other
countries.
A capitalist system that generates so massive a crisis, spreads it globally,
and then proposes mass austerity to "overcome" it has lost the right to
continue unchallenged. Should we not be publicly debating whether America
(and
the world) might be better served by going beyond capitalism? Can we not
learn
from capitalism's repeated cycles (failures) and change to a new,
non-capitalist system? Having learned hard lessons from the first socialist
attempts during the last century in Russia, China, and beyond, can we not rise
to the challenge to make a new attempt that avoids their failures and builds
on their strengths? When better than now?
________________________________
Rick Wolff is a Professor Emeritus at the University of Massachusetts in
Amherst and also a Visiting Professor at the Graduate Program in International
Affairs of the New School University in New York. He is the author of New
Departures in Marxian Theory (Routledge, 2006) among many other publications.
Check out Rick Wolff’s documentary film on the current economic crisis,
Capitalism Hits the Fan, at www.capitalismhitsthefan.com. Visit Wolff's
Web
site at www.rdwolff.com, and order a copy of his new book Capitalism Hits the
Fan: The Global Economic Meltdown and What to Do about It.
________________________________
URL: mrzine.monthlyreview.org/2010/wolff030710.html
________________________________
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