Joachim Bischoff (Our Flag, No. 226, vol. IV, 2010)
The group composed of major world economic powers (the G20) has agreed a package of measures to combat financial crisis and economically. The summit host, British Prime Minister Gordon Brown, more broadly interpreted that agreement as follows: "Is there a new world order and we are entering a new era of international cooperation." But clearly, this is an exaggeration.
At the conference, outlined a series of principles for reform of the financial system through for greater regulation of banks, the hedge funds and compensation of executives. It is not clear what concrete steps. Also left unresolved the question of how they will eliminate loans and toxic securities. The IMF, based on the opinion of many economists, has stressed this point as an important prerequisite in the fight against financial crisis.
What concrete results can be displayed? For starters, about 500,000 million dollars more to the budget of the IMF and SDR 250,000 million. In addition, a package has been approved for commercial financing and expanded lines of credit from development banks. All these measures amount to 1.1 trillion dollars. The extension of credit lines, no doubt, contribute to stabilizing the world economy, but its practical implementation will require some time.
For many years, there is a gap between the pompous pronouncements on the peaks and their practical realization. Although some progress was made, the change would mark a new era still produced and, of course, not the London Summit. The latest statements are made mostly of promises will be forgotten soon be broken without an apology or, at best, simply suffer from a lack of content. For policy makers who express the most important thing is to convey to voters and financial markets the message they are trying to find a way to end the crisis together.
- What is the current situation?
The economic crisis that erupted in 2007 has expanded, from bounded field of mortgages-that is, home loans, to a global crisis of financial and credit sectors. Currently, there is no denying that we also face a significant drop in the real economy, in other words, also to industry and services and trade and are experiencing enormous economic downturn.
The thesis of a severe global recession, but that after all is only the end of a cycle, even deeper, is based on a mistaken notion of social development. In this case, we face a grave crisis. In my opinion, debating whether it is a normal systemic crisis or the collapse of the capitalist economy is hardly enlightening. Therefore, I prefer the term "crisis of the century", which is comparable in many respects to the global economic crisis of the 1930s (1).
However, unlike what happened late 1920, the reaction to this split in the structure of monetary and capital accumulation has not been normally cut income and establish financial policies and fiscal policies in public budgets. That capitalist societies reach a situation of deflation and depression will depend largely on the size and type of intervention.
to address the crisis of the century will require at least one or two periods of an economic cycle (4 to 6 years). Programs to combat the crisis that unfolded in late 2008 are decisive in determining the duration and the course of the economic crisis. Although they are much more suitable than those used in the 1930's, do not cover everything you need. The administration of adequate doses of anti-crisis measures is blocked by the fear of the negative consequences of an offensive use of public funds. Keynes pointed out, quite rightly, that "The long-term perspective is leading to error in everyday issues. Economists (and politicians) take the easy way out when they say, in turbulent times, the waters return to their course when it has passed the storm. " For the moment, there are indications that the storm of the crisis is subsiding and there are still possibilities of influencing its course.
- The twin strategy of the political left.
Basically, the political left has to follow a dual strategy: first, it is necessary to recall a political hegemony and relegated to a marginal position neoliberalism, that the crisis has been deprived of its economic and social base for political action at . Secondly, from this base, it can promote the creation of a solidarity economy with a new relationship between the market and social regulation / public.
In his statement on the programs of economic revival in Germany, Heiner Flassbeck economist concludes that: "Germany is facing the toughest economic period since World War II. You do not see that the business cycle will level off or self-stabilizing in the near future. Unlike in previous crises, there are no spaces and economic sectors in the world that are growing and can counteract depression. Germany is now more susceptible to a global recession by its exorbitant rate of exports and weak domestic demand, which adds to the decline for years, real wages. [...] In the spatial dimension of global, time is added, which is decisive: the more prolonged the downturn, the greater the momentum and strength is gained. The decrease becomes stagnant, recession and stagnation in the recession into a depression in the long term. At the same time, inflation, which until recently was considered the main problem through a radical change in significant and rapid price increases can become deflationary trends, which in an instant can cause a real deflation. The financial market crisis and the economic cycle are negative feedbacks. [...] And there are many who continue to ignore the key problem of a crisis. What we are experiencing is not a normal cyclical regression, which happens every few years, but a rapid fall in global investment activity, because in all the world during the financial crisis and afterwards, the relationship of prices, crucial for investors, has changed dramatically and has done at breakneck speed "(Flassbeck 2009). This assessment can be applied to other the major capitalist countries.
- Tasks that result.
From this outline of the "Crisis of the Century" come the following tasks:
1. We are faced with an insolvent financial system and a troubled banking system which requires recapitalization . At present, the dominant idea is that using public funds or guarantees, can be infused into the title stripped of its former value market value. Marx was making fun of the illusory concept to overcome a financial crisis. In times of crisis, reducing the financial volume that had previously been disproportionately inflated. For this reason, the nationalization of financial institutions is not a solution in itself can only be taken clear steps to the organized distribution of the loss in value, among which include the corrections in the stock price of securities of all kinds, and the outstanding loan repayments, which can not be paid. The idea that recovery is possible through capital grants and guarantees of the state is a mistake and only serves to prolong the adjustment process caused by the crisis.
2. In the end, this is an economic cycle is coming down at the same time worldwide as rapidly as in the 1930's, or even more. In a production system which generated economic growth through the expansion of credit, liquidity becomes the central element when the bubble bursts and devalued mortgage securities on a large scale. If the consistency of the reproductive process is based on loans and suddenly, the loans disappear and only the cash account is necessarily lead to a crisis with the sudden demand means of payment. In essence, the financial crisis resulting from the loss of most immediate value of assets and securities of all types (ie, the rights to future social wealth). The crisis is established when one can no longer pay their "assets" and should pay with their money. In times of crisis, the role of money as payment becomes suddenly obvious: the payment chain is interrupted, for the maintenance of liquidity becomes the most important principle.
3. Be relieved of the debt to various groups of borrowers, who include private households that include the U.S., the UK, Ireland, Spain, Greece, etc. Until there is balance in the medium term the differences between wages / income and social gap fill, the reform of the financial system will remain a dead letter. One of the main causes of bubbles in financial markets is the concentration of social wealth. Therefore, a necessary condition for stabilization is a substantial correction of the unequal distribution of income and property. Furthermore, it must stop and reverse the privatization of core elements of social security (pensions, health, education).
4. It is essential to move towards a new financial and economic system. The crisis has shown that the administration of the market capital without political regulation and democratic control because, once again, a social catastrophe. For this reason, democratic control and international cooperation are needed. Financial supervision at national and international cooperation between the institutions of the regulatory and supervisory authorities, in particular within the EU must be strengthened and democratized. Worldwide, it is necessary to set clear limits on the free market and liberalized unlimited mobility of capital. In a new international treaty to overcome the weaknesses of the postwar Bretton Woods, financial stability, the fiscal justification, social justice and sustainability must take precedence over the free movement of capital, goods and services. It must guarantee social rights and the historical achievements of workers. In the deepest economic crisis since the 1930's, caused by the collapse of the financial system, the prevention of risks in the system and the proposed new regulation of the financial sector have come to occupy a central place in the current political agendas. It is true, no doubt, the assumption that without a stabilization of the financial sector, will not materialize a lasting economic recovery.
However, the fact remains that if not stopped the collapse of the economy and not achieved a stabilization of all the social reproductive process, there will be new regulation of financial and monetary system, national or international. Therefore, you should criticize the measures implemented since the spring of 2007, consisting of allocating all its resources to the financial system. Through subsidies and government guarantees will not be forgotten that inevitably have to resize the financial sector. In addition, the recovery operations focus heavily on financial institutions in trouble, forgetting the whole image. In the end, most support programs for the real economy have a sufficient size. Specifically, the approach social infrastructure (social overhead capital) leads to the neglect of labor market policies and to eliminate bias against social programs and the eradication of poverty. Meanwhile, the president of the U.S. Federal Reserve, Bernanke, insists that it requires a strategy that encompasses the financial system as a whole and not just its parts. Before a meeting of finance ministers from the G-20 and G-20 summit in April, with a point on the agenda to discuss a global framework for monitoring the financial system, Bernanke outlines the vision of America: First, it is necessary to get rid of dependence on financial institutions of "systemic importance" in other words, in future it should be possible to phase out gradually all financial institutions in an orderly manner. Secondly, it must radically overhaul the financial infrastructure. This will affect systems, regulations and contracts that organize trade mechanisms, payment and financial transaction markets. Thirdly, it is important to develop a monitoring policy and accounts that are not pro-cyclical effects. Fourth, consider developing an independent authority whose task would be to detect and designate systemic risks. A new internationally oriented policy could help prevent the worst consequences and thus lead to a better functioning of national and global economies. After considering the processes of the crisis and its causes, will return to these efforts to reform the financial system.
- The parallel dimension of the action.
In the near future, which will make decisions concerning the depth, duration and the future prospects of the crisis, come into play four dimensions parallel to the action:
1. Public funds and intervention to support the crippled financial sector:
In recent years the credit boom, the rate of investment outside the traditional banking systems increased dramatically. "The importance of risky investments, long-term and relatively devoid of cash, financed through short-term obligations made many media institutions as always tended to resort to banks, but without protective measures such as deposits security, which are available to the banking system to reduce those risks. [...] However, the fact that the expansion of traditional bank loan was not at all sufficient to offset the decline in lending volume as a result of crash shadow banking "(Krugmann 2009: 189).
In practice, we will not be able, after some zigzags, to prevent the nationalization of large complex financial system, because you can not achieve stability, and an organized distribution of losses in any way.
2. Public funds and state intervention to cushion the fall of the real economy.
For now, the capitalist countries have not addressed what is necessary. The programs have a dimension too limited or too contradictory. The exception would be the package against the crisis of the People's Republic of China.
3. Since the financial and economic crisis has assaulted the countries from the periphery, it is necessary to find a plan Global bailout to alleviate the situation, which confronts developing countries of Eastern Europe and Asia with serious problems.
4. It is also important to develop a new financial architecture, although not yet see the end of the tunnel in the crisis. The fact is that the neoliberal economic and political elites in power have abandoned its guidance, due to the impact of the crisis-driven processes, which does not mean they are ready for an effective policy against the crisis. It is true that has not been completely crushed neoliberalism, or as an ideology, nor as a hegemonic project. However, their social power to determine and impose agendas interpretation has been seriously damaged. The reason for this apparent weakness lies in the strength of the political enemy on the left side of the spectrum, but in the development of social reproduction caused by the crisis.
face the contradiction that is still prevalent neoliberal interpretation, we find strong empirical evidence of an important process of global economic downturn and reports of mass protests, more and more numerous. The most recent and prominent example is Ireland. Not much remains of the much-vaunted prosperity of the Celtic Tiger. However, we can not speak of a resistance movement or radical international outcry. More conditions are paradigmatic in Germany most people consider the economic and financial crisis is a threat that has not yet reached its full potential. Therefore, evidence from several months ago, point to a bleak future. Most people are very alarmed by the development of the crisis. Since September 2008, when the crisis peaked with the collapse of investment bank Lehman Brothers, the crisis has been well rooted in the everyday consciousness of most citizens (Kocher 2009: 5).
Most have the impression that it has no way of judging what is happening. "About 78% are convinced that the financial system has become so dull that completely escapes the understanding of citizens. At the same time, most are aware that the consequences of the crisis, which they believe is responsible States together, are enormous for Germany. Only 2% of the population believes that the crisis really does not concern Germany, while only 3% are not worried. The group of people still react with calm and believe that the consequences are limited amounts to about one-fifth of the population and is composed mainly of young people. The vast majority of people believe that events scared and wonder what is come. Although only a small minority have put their money in speculative investments, to 52% of the population are worried that their deposits are safe. In particular, the older generation is alarmed: 60% of those over 60 years has been concerned recently about the safety of your property, as 58% of people between 45 and 58. Only the generation under 30 years, most of which has not yet been able to save a lot, consider that the financial crisis is not something that directly affects their financial situation "(Kocher 2009: 5).
This context, the hypothesis that maintains the Rosa Luxemburg Foundation we are open to a historical situation is probably overly optimistic (see this issue: Contribution of the Institut für Gesellschaftsanalyse der Rosa-Luxemburg-Stiftung, and Institut für Gesellschaftsanalyse der Rosa-Luxemburg-Stiftung 2009: 8).
- Paradigm shift.
In my opinion, the hypothesis of a paradigm shift among the powerful elites in power is correct. So far most of these elites interpreted the intervention of the state as a mere emergency measure, to be temporary, in the near future would allow for the resumption of old policies of privatization and deregulation. However, some critical minds raise questions about the impact it will have everything in the everyday consciousness and political stability.
No doubt the banks are suffering a systemic crisis in most capitalist countries. Investments and government guarantees are not enough by themselves to save the mountain of debt in a process marked by inflation. For fear of repercussions on the entire process of social reproduction, the bulk of the political class is working hard in the public finances, which also means future income to save tax-credit securities and property that are losing value.
- the only alternative.
After a general nationalization of the entire sector, we can organize a process to eliminate debt and arrange the titles in such a way that takes into account the macroeconomic and social needs and the cancellation of debt obligations in accordance with the principles of social justice. Do not forget that part of the enormous credit boom is based on pensions and other savings, such as stocks of large segments of the population. Due to pressure from the crisis, including the financial world calls for reform normal. However, as always happens in similar situations, the debate surrounding them is not without controversy. It all depends whose interests prevail. When bankers demand the intervention of the state, want to nationalize the losses but the profits remain in private hands. When bankers talk about reforms mean a (new) regulation of parts and management of the crisis in the short term, in an attempt to preserve the neo-liberal rules of the game and make sure everything "business as usual" as quickly as possible. For the good of most citizens, it requires a real change of paradigm: the financial markets should contribute to social justice, economic stability and sustainable development. We can not simply return next year to the status quo ante.
(Referencias):
Flassbeck, Heiner (2009): Global economic upturn - comparable only with the broad depression, New York, 6 2. 2009th Declaración ante la Comisión de Economía y Tecnología del Bundestag inglés el 9 de febrero de 2009, en documentado: German Bundestag Budget Committee, 16 Wahiperiode; Committee Printed Matter 5801 Institute for Social Analysis of the Rosa Luxembourg Foundation (2009): The crisis of financial-market capitalism - a challenge for the Left.
(Marzo de 2009)
quiver, R. (2009): Water for the mill of the left. In: Frankfurter Allgemeine Zeitung, 22 de octubre de 2009th
Krugman, Paul (2009): Die neue Wltwirtschaftskrise. Frankfurt / Main.
(Notes)
(1) It is clear that the current global economic crisis was accompanied by an environmental crisis is also worldwide. At the same time, the political scene is blocked in many countries, so the crisis of politics and the political arena should be part of the evaluation. This text does not consider these aspects.
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