Neither austerity nor growth

Since the French election last week, the news media has pitted the approach of the Germans – ‘austerity’ – to that of the new French president – ‘growth’ as the only two possible answers to the Greek debt ‘crisis’ and more widely the stability of the entire global financial system.

On one hand, we are told that Greek debt (and let’s not be coy, we are hearing the same thing in NZ as we approach a second ‘zero’ budget) can only be solved by major cuts to government spending. We are told that Greece is ‘out of control’: its public service is bloated and inefficient; its tax revenue is insufficient; it is living beyond its means. The cure proposed is massive cuts to wages, benefits, health and education programs.

On the other hand, we have begun to hear another tune from the French. ‘Growth,’ they say, is the way out of the crisis. We must spend our way out of the crisis by creating jobs and expanding, rather than contracting, the economy. Expanding the state’s role in the economy is the textbook socialist response.

Not only can neither of these responses cure what ails the Euro or the global economy, but in fact, either is a recipe for further disaster. It is from this failure in Europe that we in Aotearoa New Zealand need to learn that the root of the problem lies with capitalist economics, not the actions of any particular government, leader or political party.

First, the problems with austerity are largely well known and understood. The failure to spend money in a capitalist system means a contraction of the economy. The state seeks to repay debt incurred in buying imported goods (‘balance of payments’ from countries enjoying ‘growth’) so they cut spending. They cut spending by cutting jobs. Unemployment rises because the state spends less and the tax intake is reduced. People have less income to purchase goods and thus less is produced. The state may choose or be forced by international lenders to sell off assets (sound familiar?) to pay off debt. Having sold the asset, the tax revenue from the asset is now lost. There is a descending spiral of more unemployment and a further contraction of the economy making repayment of the ever-increasing debt more difficult.

Second, the response of ‘growth’ to the global financial collapse isn’t much better. ‘Growing the economy’ effectively means making the gross domestic product bigger. The state intervenes more fully in the functioning of the economy by injecting money into it (watch out for inflation) or by making a regulatory environment that is amenable to capitalist exploitation. Spending more means borrowing more that then leads us back to the issue of debt. Capitalist exploitation means lower wages or environmental degradation or both. Growth is great until we reach the limits of growth and by then its too late. There is plenty more exploitation to degrade the environment for a while yet, but capitalism is an unstoppable force. We have already degraded 80% of New Zealand’s once pristine rivers with traditional farming and are embarking upon a massive programme of aquafarming the most beautiful stretches of sea we have.

Neither of these strategies is going to deliver us from global financial collapse. The reason that neither will save us is that it is simply not possible to fix or reform the distorted and deranged state of modern capitalist relations.

Capitalism is based on the premise of eternal growth. It is not a steady state, but a rapacious system that is never satiated. Under a capitalist system, not growing is not the same as standing still; it is moving backwards.

This is the fundamental contradiction in a finite world. We are hitting the limits of the most essential ingredient in our turbo charged consumer world: oil. Without access to cheap plentiful oil, the world that we now inhabit in most of the Western world is going to change dramatically.

The ramifications of the end of cheap oil cannot be overstated. It is our lifeblood. Sure it fuels our automobiles and drives transport of all variety (air, sea and land). As importantly though it fertilizes most of the world’s food crops. This is why our food prices continue to rise at a dizzying pace. At the same time, the majority world is rapidly developing an appetite for the same cheap oil and consumer oriented lifestyle that the West has had for the past 100 years.

It is not just oil, either, that is being extracted at record rates: gold, silver, uranium, copper, coal, natural gas, nickel, platinum and iron are being ripped from the earth at astonishing rates to make all manner of consumer goods for the world’s nearly 7 billion people.

Hand in hand with this explosion of consumer goods based on an economy of cheap oil is the desecration and destruction of life: toxic waste litters the world’s lands and seas, the extinction of entire species is a daily occurrence, endless drone wars terrorise ordinary people, 99% of the world’s population is totally disinherited from the land, and we are facing unimaginable climate catastrophe.

So if not ‘growth’ nor ‘austerity’ then what?

It is possible for us to live differently. It is possible for us to live in an egalitarian society where the basic needs of everyone on the planet are met. For us to do so, we must reject the fallacy of ‘growth’ in a finite world. We must deal with the very real limitations of the earth’s resources and we must begin the enormous task of figuring out how to live in a steady state with our ecosystem.

This means a change of economic systems. It means a change of political organisation. It means a change of social values.

There can be no fundamental alteration of the status quo without a massive redistribution of the world’s wealth and an abolition of private property. This may seem a scary proposition but consider that 1% of the world’s population already owns 99% of the world’s wealth, and I would hazard a guess that if you are reading this, you probably aren’t one of them. If you are, then you are fairly warned; your age of gross exploitation is coming to an end.

Our current system of political organisation that is premised on legalised violence must also cease to be if we truly seek a different, more just world. There can be neither peace nor justice with standing armies and paramilitary police. Both exist to exercise the will of the tiny minority over the vast majority, to ensure never-ending ‘growth’ at the expense of ordinary people and the ecosystem that sustains life.

Finally, our social values have to change. The ‘ideas of the ruling class are in every epoch the ruling ideas,’ and our rulers have us hoodwinked! We are taught that a society based upon individual greed, intrinsic exploitation and inequality is normal, natural and desirable. Carefully crafted propaganda assaults our critical faculties everyday so much so that we believe war is peace and ignorance is strength. Elite constructions of reality dominate not only what we think about but how we think and reason. As an example, the idea of ‘security’ has become synonymous with notions of national security, ‘anti-terrorism’ and increased militarism, despite the fact such threats faced by ordinary people are so exceedingly rare that one is more likely to be hit by lightning than be the victim of any actual ‘terrorist’ act. Security would be better tethered, in my mind, to access to food, housing, employment, health care and education.

A viable, sustainable and just economic, political and social system isn’t an easy ask. The changes required are urgent and profound. Fear of change is encouraged by those who currently benefit from the existing social order. We have not only to conquer the fear, but also to embrace a radically different perspective and way of being in the world.

We have only the entire world to gain.

ends

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