Most importantly, perhaps, a message has been sent to the Anglo-Saxon establishment, the presumptive leader of the world economy, that all bets are off. Berlin, London and New York – all have been put on notice. If the only result will be to curb U.S. imperialistic ambitions, so much the better and it will not have been in vain.
In what do I base my confidence? The situation at hand reminds me of the fallout which preceded the dissolution of the Soviet Union. Poland, Yugoslavia, the Czech Republic, Hungary, each an insignificant satellite state when taken in isolation, together have succeeded in toppling a first class empire.
If U.S. imperialism can be dealt the same blow, and the odds are better than good, we should all be the winners. Even if it takes an interim "socialist" solution.
Article comments
— go to most recent comments1 - Igor
Good article, Roger. Very thought provoking.
2 - Dr Dreadful
As non-Anglo-Saxon as the French (and most of the European) economy may be, the election of Hollande does promise to provide us with a "test case" for the argument as to whether austerity or stimulus is the best way out of a monetary morass.
France is a major player in the sense that it, together with Germany, is the de facto leader of the EU, one of the world's most influential economic blocs. This should be interesting. While I don't think Hollande (who is not really a socialist but a social democrat) can deliver all that he promises, and the stars in the eyes of French voters will probably fade fairly quickly, France has surprised us before.
3 - Igor
IMO, the USA has relinquished world leadership in civic affairs and there is a big opening for just such a move by another country.
4 - Anarcissie
The banks have given up control? I guess I don't understand the Euro zone.
5 - roger nowosielski
U don't think I was saying that, Ana. My argument is that France is an excellent position to break the stronghold.
6 - roger nowosielski
Thanks, Igor.
I don't think it's so much a question of a test, Dreadful, as to which what set of policies are most likely to work. I take it as axiomatic that implementing austerity measures without paying attention to real growth is bound to fail.
The real question, I take it, is whether global and local economies can take off on their own without interference from, and control by, global financial interests.
My bet is that they can.
7 - Igor
Righto, Roger. Austerity just makes a depression even more depressed. It's 'pro-cyclical' reinforcement: the bane of any economy.
8 - Golden Boots
Ana: "I guess I don't understand the Euro zone."
Join the club; no one understands the eurozone - including the eurozone itself.
Some of the countries in southern Europe forgot the basics of goodn housekeeping: don't spend more than earn, and don't borrowm if you can't pay it back.
Now let's see those profligate Frenchies go down the same track.
It's a worry ... seriously, it really is.
Here we are, on the cusp of a global recovery, and the froggies elect a socialist president bent on spending more government money.
Who'd a thunk?
If Europe goes down the pan, watch everyuone else go down the gurgler with it.
I bet the Poms are quite glad they kept the pound as a separate currency right about now. They must be standing on the white cliffs of Dover, looking across the channel at the seething continent, and wondering: "Modern-day Napoleon? Let's hope not".
Once again, a small body of water probably never felt so large.
9 - STM
Reassuringly large, that is ...
10 - Anarcissie
The point of austerity is to induce depression, thereby disciplining the lower classes. But I don't understand its application outside capitalism.
In any case, I think both the lower and higher classes agree on certain general principles, although their interests and methods differ: 1. keep your stuff; 2. get more stuff; 3. as fast as possible. Now, if you drive a vehicle as fast as possible, you will run off the road quite often. In capitalism, the ruling class drives the economy as fast as possible, with the broad approbation of the ruled, especially through the inflation of equities, debts and entitlements, so it is quite popular except during the running-off-the-road events. I don't see what Hollande is going to change in terms of the basics, because mostly what he has been asked to do is not be Sarkozy, certainly a sensible request but hardly a radical one.
The fact that the Holy Roman Empire of the German Nation has been able to impose austerity deliberately and overtly is interesting in terms of political technique; inflation is the usual way of stealing from the working class, and depressions are just supposed to mysteriously happen to happen when some extra creative destruction is needed. But as I said I don't think I understand the Euro zone.
11 - Igor
@8-golden: It's amazing that you repeat this bogus homily:
"...basics of goodn housekeeping: don't spend more than earn,..."
The USA was built in defiance of that notion by people who bought houses, cars, washing machines, TVs, etc., on time payments that indebted them to much more than they could pay off.
In fact, the US revolution was financed by big loans from Europeans, as was the US half of the Civil War (Confederate lenders were stiffed).
WW2 was fought on borrowed money. The post war boom was financed by home loans and household loans.
Where do you get such strange ideas?
12 - Dr Dreadful
Igor, STM's (for that is the true(ish) identity of "Golden Boots") full remark was "don't spend more than you earn, and don't borrow if you can't pay it back".
It's true that many of the combatants in WWII borrowed money to finance the war effort. The United Kingdom only finished paying back its war debt to the United States about five years ago. But it was paid back.
In contrast, it does look as if Greece and a couple of other Eurozone nations borrowed knowing that they couldn't pay the money back. And as if some twit lent it to them knowing the exact same thing.
13 - Igor
The risk that twits take when they lend more than the borrower can pay is that they might get stiffed.
So, what's the problem?
Especially if Greece stiffs Goldman-Sachs, as deserving a bunch of twits as can be found. Or Morgan Stanley, whose Maximum Leader Jamie Dimond just blew $2billion on bad bets and expects the FDIC to bail him out (thanks to ending Glass-Steagal, now people who thought their money was in a safe low-interest savings account can pay for Jamies joyrides; hello, suckers!).
14 - Anarcissie
Actually, it's the Greek government, under the direction of its ruling class, that borrowed money, not 'the Greeks' or 'Greece'. An important part of high finance is elaborate obfuscation which makes it difficult for non-specialists to have the slightest idea what's going on. The people in general may be faulted for consenting to this arrangement, but otherwise its details are not in their hands. There is a certain theatricality to what is going on, although the suffering of the people is, as usual, real enough, and is certainly undeserved -- check the average hours worked per employed Greek as compared to those of other Eurozone states. A Calvinist interpretation is not only wrong (in more than one way), it is silly.
15 - Cannonshop
#11 Except that credit-card economies always fail, Igor-because your economy doesn't (in practice) keep growing at a rate faster than your interest payments-which is why we had the crisis in 2007/08/09/10, why the S&L crisis happened in the eighties, etc. etc. etc.
If your production (that'd be your production of REAL wealth and assets, as opposed to paper wealth) doesn't keep up with your spending, you can 'stimulate' enough to hide the pain for a while-think of it as using Morphine to hide the pain of an injury-but in the end, the bills (And interest) come due.
They ALWAYS come due.
16 - roger nowosielski
Ana, understand that I'm looking for a silver lining here. There's so little hope to derive from the everyday business of global politics, politics as usual, that one almost has to grasp at straws.
I still contend that it is possible to try to divorce the functioning of local, even national economies, from the kind of stronghold that's being enforced at present by IMF and international finance, and the French experiment presents a perfect opportunity to do precisely that -- to drive in a wedge.
I don't suggest it would solve all the problems, because financial capitalism is only one part of the problem. But I contend that rendering financial capitalism superfluous, to say the least. would count for something.
17 - Igor
@15-Cannon: Except that there are many credit economies that have not failed.
So you can't say 'always'. I'm not even sure you can say 'often'.
The USA credit economy survived for decades until the de-regulation mania took hold. It took regulation to make it work, so it fails when you de-regulate.
Bring back financial regulation!
Government regulation isn't a problem, it's the solution to financial problems.
Haven't we all learned that by now? From bitter experience?
18 - Anarcissie
It seems to me that the crumbling of capitalism is inevitable, and I derive hope from that perception. (Imagine if everything were hunky-dory!) I concede it is a dangerous situation. The last time 'man [was] at last compelled to face with sober senses his real condition of life and his relations with his kind' man didn't do very well.
19 - roger nowosielski
Well, this kind of facing up to, of being so compelled, is kinda scary, isn't it?
It would take nothing less than taking full responsibility for one's future, in an Ayn Rand's, though non-perverse, kind of sense,
20 - Igor
Capitalism will not disappear, but it can be reduced to less important functions. It's good for making light-bulbs and other commodities but it's no good for giant enterprises and monopolies. It's too dangerous.
21 - roger nowosielski
You're confusing capitalism with mobilization of production. Production can and has been mobilized along non-capitalist lines.
22 - Igor
Some organization of money (capital) is also required.
In the meantime we should start putting bigtime criminals like Jamie Dimond away in secure jails where they are prevented from stealing other peoples money.
23 - Cannonshop
#17 Igor, many if not most of those regulations were there to RESTRICT credit, to dis-encourage spending in excess of one's ability to (eventually) pay the bills racked up.
Unfortunately, yes, we do need actual REGULATIONS-which is different from government rent-seeking, and different from government choosing who gets easier access based on political, as opposed to economic, criteria.
The S&L crisis, and the crisis of the last decade, both happened as direct results of eliminating things like reserve requirements, laws 'encouraging' banks and S&L's to lend to credit-unworthy persons for political reasons, and SEC validation of instruments that the designers of said instruments did not understand the workings of.
Carter deregulated the Savings and Loan industry, and for almost a decade it ran red hot, then broke down (which it would do in such a situation).
We DO need regulations on banking institutions-that is, fixed rules that all must comply with EQUALLY, and rules blind to any factor in lending save a particular debtor (or potential debtor)'s ability to pay back the loan, reserve requirements because beyond a specific point, lending is a gamble, and depositors need to be protected-not by a government insurance programme ('cause Uncle Sam's out of cash) but protection from irresponsible money-managers who went to the same business schools that turned out the illiterates in congress.
Regulation, like Taxation, needs to be 'goldiloxed' to where it performs its function, without either strangling production, or being so light that it fails its function.
Function is where it's at, Igor-the regulations must be simple enough to enforce, while being effective at their primary task-which is to keep the economy stable and productive by maintaining a uniform environment with solid rules...and no exceptions. That last bit is the killer, and the reason why many people wind up opposing regulations to begin with-the exemptions and exceptions, mostly politically motivated, make the regulations a joke.
24 - Cindy
Does "organization of capital" require capitalism?
25 - Cindy
I probably should have said 'organization of money' instead of capital.