Professor Richard Wolff: The Political Economy of Austerity Now

[marmar]

The Political Economy of Austerity Now
by Richard D. Wolff


Government austerity for the masses (raising taxes and cutting public services) is becoming the issue shaping politics in western Europe, north America, and Japan. In the US, austerity turned millions away from the polls where before they supported an Obama who promised changes from such policies. So Republicans will control Congress and conflicts over austerity will accelerate. In Europe, from Ireland's Sinn Fein to Spain's Podemos to Greece's Syriza, we see challenges to a shaken, wounded political status quo (endless oscillations between center-left and center-right regimes imposing austerity). Those challenges build impressive strength on anti-austerity themes above all else. In Japan, Prime Minister Abe resorts to ever more desperate political maneuvers to maintain austerity there.

In responding to austerity, ever more people find their way to a critical understanding of capitalism. Beyond blaming individuals or groups, such people condemn the system, capitalism, whose structure of incentives (rewards and punishments) drives their behaviors. That system brought the 2007/2008 crisis. It then delivered trillions in government bailouts to fund its survival. And now austerity serves to shift the costs of crisis and bailouts onto the general public. Austerity is today's hot issue not only because it affects practically everyone, but also because it touches the foundations of economy and society.

The austerity policies imposed on western Europe, north America, and Japan are consequences of capitalism's massive relocation underway since the 1970s. Where modern capitalism began (western Europe, then north America and Japan), its production and distribution facilities grew and concentrated mostly in certain industrialized towns and cities from the 1770s to the 1970s. Those regions' rural and agricultural areas became capitalism's "hinterlands" providing industry with food, raw materials, workers, and markets for capitalists' outputs. When local hinterlands proved insufficient, colonialism turned the rest of the world into such hinterlands. Along the way, increasingly well-organized working classes in western Europe, north America, and Japan won rising wages in tough struggles with capitalists there. In contrast, incomes of most people in the colonized hinterlands shrank.

By the 1970s, the wage gap between the capitalist centers and their hinterlands had become immense. That gap, together with the inventions of jet engine air travel and modern telecommunications, created an historic opportunity for capitalists. They could dramatically increase profits by relocating production. Jets and global telecommunications enabled western European, north American, and Japanese capitalists to monitor and control the production and distribution they relocated to new low-wage centers (in China, India, Brazil, and so on). Only the top direction, financing, and diplomatic/military control centers remained in the old capitalist centers.

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Capitalism blocks and negates that economic democracy. It privileges capitalists' freedom to invest over the majority's freedom to participate democratically in determining their jobs, job conditions, and what is done with the profits their labor helps to produce. Today, workers' struggles against austerity are educating them to grasp and confront basic capitalist privileges and their incompatibility with democracy or the economic needs of the people. That is why today's governments are so determined to maintain austerity and so fearful if austerity fails and falls even in one small country like Greece. .................(more)

The complete piece is at: http://mrzine.monthlyreview.org/2014/wolff151214.html