Market Turmoil and the Economics of Self-harm
All money-managers' eyes were on the US jobs report Friday morning, after the US stock market yesterday suffered its biggest drop since 2009, and panic surged through financial markets worldwide. The headline numbers were not as bad as many had feared: the US economy added 117,000 jobs in July, and the unemployment rate edged down from 9.2 to 9.1%. But the decline in the unemployment rate was due to people leaving the labour force, not finding jobs; and the overall picture of the job market in the US is still terrible. Just 58.1% of the US labour force is employed – as bad as it has been since the recession. As my colleague Dean Baker noted, "with the government shedding 30,000 jobs a month, we will be fortunate if the unemployment rate doesn't rise over the rest of the year."
The weakness of the US economy was part of what sent markets into a frenzy Thursday, but it was not the main part. The eye of the storm this time is in Europe, and the European Central Bank gets the credit for triggering Thursday's events. The ECB announced that it was reviving its programme to buy the bonds of distressed governments after a four-month hiatus, but then said that this would not include Italy or Spain.
This set off fears of a financial crisis, for two reasons: first, because of the fear that the financial markets would continue to speculate against Italian bonds, driving interest rates up to the point where Italy would not be able to borrow on the markets and would have to seek loans from the European authorities – as Greece, Ireland and Portugal have already done. Italy's public debt is $2.6tn, which is more than triple the entire economies of the other three countries combined. The European authorities – sometimes referred to as "the troika" of the European Commission, European Union and the IMF – are not yet prepared for a "bailout" for this level of debt.
The second source of fear concerns the European banks, who have hundreds of billions of dollars lent to Italy and Spain. As the interest rates on these bonds rise and their value shrinks, these banks face problems of liquidity and potential losses. The European banks' problems also contributing to fears of a financial collapse.
So why did the ECB send such a frightening message to the markets on Thursday? The simple answer is they are trying to force the Italian government to do more budget tightening. It's another dangerous game of chicken, which we have seen repeatedly in the eurozone. My own view is that cooler heads will prevail and that the European authorities will, sooner or later, do what they have to do to avoid a financial meltdown. They are also reportedly under pressure from the US government to act more aggressively to contain the crisis. And the threat of explosive debt problems in Italy andSpain has been exaggerated.
Unfortunately, getting past the current problems in financial markets won't solve the problem for the vast majority of people in Europe and the United States – economics that have a large impact on most of the world, since the high-income countries are still around half of the world economy. The basic problem is that governments in these economies have got their macroeconomic policies wrong. In this regard, Europe is considerably worse than the United States: at least our Federal Reserve has taken some positive steps in monetary policy, keeping short-term interest rates near zero since December of 2008 and creating more than $2tn in money through quantitative easing.
The ECB is much more rightwing, as was on full display yesterday; they also have short-term interest rates at 1.5% (having actually raised interest rates twice this year), and have been much more conservative than the Fed on monetary policy overall. On fiscal policy, the European authorities are trying to squeeze the weaker eurozone governments to cut budget deficits even as they are in recession, or barely growing – with more than 20% unemployment in Spain and 16% in Greece. It's not working, and it's not likely ever to work.
So now we have the sad spectacle of the United States heading down the eurozone road to stagnation, after our Congress, president and most of the media have reached agreement that reducing our public debt is the top national priority. This despite having more than 25 million unemployed, involuntarily working part-time, or who have dropped out of the labour force. This is absurd, of course: the deficit, at present, is overwhelmingly a result of the recession and weak recovery.
As most Americans now know, the whole "crisis" over the debt ceiling was completely manufactured. In fact, the US doesn't really have a debt crisis at all; we are currently paying just 1.4% of GDP in interest payments, a low number by any historical or international comparison. Our main problem is unemployment, as is Europe's.
Even economists from relatively conservative sources like the IMF and the head of Pimco, the bond fund, noted after the debt ceiling bill passed Congress, that it would likely worsen the economy. The US economy has not even caught up with its pre-recession level of output, and Europe finds itself in similar straits. Meanwhile, China has grown about 40% during the same period of three and a half years: they got their basic macroeconomic policies right.
That is the tragic irony of what is unfolding in the United States and Europe: a lost decade in the making. And it is all self-inflicted, unnecessary and stupid.
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By Tatsuo, Miyachi at Aug 08, 2011 09:53 AM
1.There are only two method to change capitalist society. One is to take over the means of production occupied by bourgeois class. The latter is to refuse to work under capitalist society. The former is fundamental concept of Marxist, and it achieved in Russian revolution 1917. The latter has only supplement of the former as community building. Below is that the latter become more realistic when bourgeois revolutions Are completed,development of capitalist matures as real tactics of revolution The period form 19 to 20C were bourgeois revolution. The distinctive feature is that under feudal system capitalist class emerged and then became political forces, finally took over political power from feudal system representatives. It began in England and spread to France, but their productions were inevitably emerging worker class who spread as political revolution force and spread its forces finally achieved proletariat revolution. According this idea of permanent revolution. In period of bourgeois revolution, Proletariat must adjust the political environment. According to Marx’s permanent revolution, Lenin success in proletariat revolution in which bourgeois change occurred. It succeded in Rusia but in other countries, it defeated.Within bourgeios system Proletariat were given as supplemental position,ahd this system became stability was post-war period. Thus enviromnet of political arrangement radiccaly chnaged compared with Marx,or Lenin’s period. Tactics of using bourgeis revolution and gaining political power was not to be accepted.
2. Today, tactics of permanent revolution lost its ground, How doe means Russian revolution and its collapse? Lessons from Russian revolution results from analyzing the degeneration of proletariat dictatorship. Various factors existed, in today, we must be clear to abolish commodity and money due to dictatorship of proletariat.
3. If Marx said, emerging money from commodities results from instinctively Unconscious collective action of actors who are ruled by will of commodity , To abolish commodities and money is to stop this process. But this instinctive Unconscious collective action cannot abolish from Human wills, So We must start to make a detour which cann make unnecesarry to this Unconscious collective action . Thus to exploit capital, it could acheive by proletariat,their conscious will and political power,but these unconscious collecitve action would be unable by human will,other word, political will.If so,it become clear that NEP’s Inevitability and meaning of NEP under proletaliat as cultural revolution.NEP was to overcome economical deadrock which resulted from war communism and exploit farmers. Thus NEP was trying to save revolution by revival of commodity production.But in that time govermnet saw it tactics of retreat from revolution.So if economical revival was acieved,to abolish money is premise. Today, NEP was not proved retreat from revolution rather the tactics inevitable to lead social revolution avoiding to intervene farmers.Later Lenin knew it, but already he lost powers.
3.Marx; he proved in Capital money is the collective social product which is produced by unconsicious collecive action of commodity holder.But he continued to think to abolish money and commodity due to social
revolution.young Marx aruged that the more political society become ,the less peope only understand the social problem within the political term.To grasp social problem, one must understand the social relations.This differenciation berween political spirit and social sprit needs characteristic analysis. and Marx said that political revolution with social spirit is needed, and political spirit with potical spirit is to be failed.
4.Let start with social understanding.When we want to resolve the problem of social relation, human political spirit cannot go,in other word,by human will may not go. Young Marx considered social revolution is needed by ploretaliat dictator.ButÅ@its programe was different from later Marx.To abolish commodiry and money is impossible by political will,But to abolish capital is possible for human’s will. For example, in Revolution 1917,leftist could abolish capital but could not abolish commodities and money. So, we must start with this stance.Usual alienation revolution theory seeks weakness of capitalist society is alienated labor ,so they aim to liberliation from alienated laborÅBThis idea is latter method bcause of aim at worker’s suject constraction.But this process is limited within immediate production process, and led to trade uninionism. Now,we mind reificatio theory(Versachlung)as a forom of self-alienation,we could not challenge the refication due to alienated state.Refication means that things (Sach)rule peoaple’ mind (reverse is usual)and the thigs that are produced by people unconsciously,so toÅ@resist these things,human’s will can’t go.
The latter line, ie.Å@to refuse work under capitalist may imagine strike or sabotage but its line must continue. Rather,we could difine it as Alternative lives.If workers refuse work under capitalist, and try to live, It is for the time being defined as Workers collecitve. If this area will spread,and invade into capital’s area, capitalists will become unnecessary.Historically, the reverse occured.But it will look away.The cause of failure Usual worker’s collectine,or self-management is its limited aim for example,work for survival and not open to global society,If we can these experience to means of social revolution,Its meaning will change.
5.If we will inherit proletariat dictatorship,Å@Firstly,we overcome democacy,and make clear the perspective. This relate the high political lebel of the people’smovements already overcoming maximum of programe by each leftsist parties. First,to make clear the perspective social revolution,and practrically by people’s movements to answer to abolish commedity and money. Thidly,to form the cultral Fotheory is needes.To form cultural theory,Å@new forms of cultural konoledge. Usual parties oranizaiton of people’s firstly by subject to party’s program,then organize workers by paphret,publishing, and so on .This type of oragization is Stalin’s type,which proved differnt from Lenin’s. Today,such organinization can’t go.
6.permanent revolutuion; It lost meaningless as tactics of revolution,but with historical perspective,term of contiuative revolution becomes
meaning.Revolution began with Ruussia,after it, many revolutions occured and sevral result were produced. In this sense,we live in a global transitional period.And correspondent political counsciousness is produced. From our perspective,difined current society
as global transitional with Russia revolitionary ,then, in many academic,there meny Marxists argued thead two ecnomics of contra dictal systems between caipitalst abd socalism and socialism finatry.a This view is capital collapsed and finary socislidm will ein.This line many comunist was peace movement including to use of congless, whicih Japan commnist party adopt.and this line also collpsed.Comparef witht Our world revolution ,international dictator of prolatarit lead to armed struggle.and it ended by arresting leaders.
If our tactics of labor to refuse is adopted, Politics must be chnaged.New area within capitalist, The differencin Strategy and tactics are resolves.Mass movemet result from the movement that organize in the level maximam demand.
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