L’Ordre de la Terre Plate
I consider myself a relatively sophisticated American when it comes to understanding other countries. For instance, I know that there are other countries, and I could probably name, like, twelve without going on Wikipedia. But even I was surprised by Merkel and Sarkozy’s proposal that every eurozone country adopt a balanced budget amendment into its constitution.
As my fellow Americans will recall, the Balanced Budget Amendment–in America it’s important enough to capitalize–is an old hobby-horse of the Republican Party, which the nation will have the pleasure of debating once again thanks to Obama Mission Control’s latest 11-dimensional chess move in re: the debt ceiling. The BBA has always struck me as a kind of dull-witted nostalgia for a plainly false idea, the macroeconomic equivalent of flat earth astrophysics or the Latin Mass. But now that the French and Germans have embraced it, I guess I’ll have to give it a second look; for like all half-educated Americans, I consider Europe practically the brand label of humane enlightenment.
All kidding aside, the sheer backwardness of the proposal is astonishing: as the entire eurozone sputters to zero growth–with Germany and France more or less there already–the leaders of the zone’s two leading economies propose to throttle down government spending? (Or maybe raise taxes? Har har.) To riff off an observation by Paul Krugman, it’s as if the US and Europe are in a game of Chickie Run, except neither one of them realize that it’s also losing to go flying off the cliff.
This raises an interesting question, one that is surprisingly tricky to answer if you really think about it: what is austerity all about? Now at the most elemental level, it’s just a smash-and-grab by capital against the working classes. Fine. But what about when the smash-and-grab begins to threaten the macroeconomy, as austerity measures clearly are doing? Richard Seymour frames the question thoughtfully:
My assumption was that the austerity project was mainly opportunistic, that it condensed policies long desired by capital, and that it was pushed rapidly in order to preempt the Left and keep the initiative in the hands of the ruling class. As a result, I anticipated that they would have enough flexibility to backtrack on or delay any measure that looked like seriously endangering their long-term profitability. They could always return to the ‘Keynesian’ emergency management of 2008.
But surveying the recent policy actions of the advanced capitalist states, Seymour concludes that
in these circumstances, ruling class opinion is likely to be fractured and highly unstable. And it’s not impossible that as the economy continues in its parlous state, as the ruling ideologies lose their plausibility and traction, and as states lose the ability to coordinate workable policy responses, the weight of opinion will form behind the slash-and-burn option.
I’d go even further: it’s more than not impossible, it seems rather the likely thing.
Austerity makes some sense–not in terms of being correct, but in terms of being explicable–in the peripheral countries, like Greece or Ireland, that have simply lost their sovereignty to their creditors. There’s even an argument for it–not in term of being good, but in terms of being arguable–in Europe, where capital may want the fiscal space for an additional round of bailouts without overloading national debts, given the absence of a proper central bank. But what’s the point in Japan, with its obvious need for disaster recovery, or the US, where creditors honored a sovereign downgrade by lending to the government literally for free? There isn’t any…except the smash-and-grab.
Today’s capitalist in his business dealings has the following ingenious strategy: reduce wages, reduce benefits, pocket the difference. And in his politics he says: reduce spending, reduce entitlements, pocket the tax cuts. Thus the policy of the bourgeoisie as a class is just the “big” version of the individual bourgeois policy, much as mashed potatoes in a heap form a heap of mashed potatoes. It doesn’t much matter that austerity is repudiated in any 100-level textbook on macroeconomics. Just as Thatcher said, “There is no such thing as society,” today her children say: “There is no such thing as macroeconomy.”