The Financial Crisis, Lecture 9: Progressive & Radical Alternatives

36. 36
Neo-liberalism and the crisis
• Neo-liberalism did not create the economic crisis
• Quite the opposite: the crisis created the need for
the neo-liberal ideology – as a response to the crisis
• It was the internal contradictions in capitalism
itself which led to the crisis – a systemic crisis
• Neo-liberalism won hegemony also due to the lack of
resistance from the trade union and labour movement

37. 37
Considerable redistribution from wages
to profits played a decisive role
for the development of the financial crisis.
The purchasing power became too weak
to buy all the goods and services
which were/could be produced.
This was partly compensated for through
increased loaning, which together with massive
speculation resulted in
a gigantic financial bubble.
A crisis of overproduction

38. 38
The war on workers (wage share)
Lohnquoten in der EU15, in Deutschland, den USA und Japan, 1975-
2006
62
64
66
68
70
72
74
76
78
80
82
1975
76
77
78
79
1980
81
82
83
84
1985
86
87
88
89
1990
91
92
93
94
1995
96
97
98
99
2000
2001
2002
2003
2004
2005
2006
in%derBIPzuFaktorkosten
EU-15 USA Japan Deutschland75
Quellen: European Economy , 6/2002 und 6/2006, jew eils Statistical annex, table 32

39. 39
Financial capital and GNPTrillion$

40. 40
Capital’s need for expansion
• Surplus of capital (financial capital)
• Desperate hunt for profitable investments
• Public sector the biggest potential
• Unparalleled financial speculation
• ‘Globalisation’ is not a law of nature –
it is the result of deregulation and
capital’s strategy for expansion

41. 41
The social partnership ideology I
• A true-born child of the class compromise
• The result of a very specific historic development
in which the balance of power shifted towards labour
• Capitalists felt their interests threatened and
gave in to workers demands to damp their radicalism
• The need for popular support in the Cold War against
Soviet Union contributed in the same direction
• The result: 20 years of unprecedented social progress

42. 42
The social partnership ideology II
• Social progress was less and less seen as a result
of certain power relations in society
• It was the compromise itself – social peace and
social dialogue – which led to social progress
• This contributed to depoliticising, deradicalising
and demobilising the working class/trade unions
• Changed the character of social democracy – from a
class movement to a mediator between the classes

43. 43
Regulation of capital
Fixed
exchange ratesCapital control
Regulation of
investments
Trade protectionism
Labour legislation Huge public sector
Private capital

44. 44
The turning point
• The 1970s: crisis in the world economy
and a continued deep crisis of capitalism
• The triumph of neoliberalism and the
following restructuring of global capitalism
• Deregulation - abolishment of capital control
• Immense shift in the balance of power
(and it’s all about power, stupid)
• The breakdown of the class compromise

45. 45
The neoliberal offensive
Fixed
exchange ratesCapital control
Regulation of
investments
Trade protectionism
Labour legislation Huge public sector
Private capital

46. 46
The neoliberal offensive
Capital control
Regulation of
investments
Trade protectionism
Labour legislation Huge public sector
Private capital

47. 47
The neoliberal offensive
Regulation of
investments
Trade protectionism
Labour legislation Huge public sector
Private capital

48. 48
The neoliberal offensive
Trade protectionism
Labour legislation Huge public sector
Private capital

49. 49
The neoliberal offensive
Labour legislation Huge public sector
Private capital

50. 50
The neoliberal offensive
Labour legislation Reduced public sector
Private capital

51. 51
The current situation
Attacks on labour legislation Reduced public sector
Private capital

52. 52
What went wrong?
• The social pact was not a stable situation
• A compromise in a concrete historical situation
• Tactical compromise became the final aim
• Basic power relations remained in tact
• The ideology of the social pact deradicalised
• Taken by surprise by the neo-liberal offensive

53. 53
Labour movement in crisis
• Deep political-ideological crisis on the left
• System criticism is more or less non-existent
• Few attempts at mobilising for a power struggle
• No efforts to curb the power of financial capital
• The labour movement is losing trust, since it
has supported the policy which led to the crisis
• Left parties in governments have been a failure

54. 54
«Neither society nor democracy»
«In the last decade European social democracy has
ceased to be about either society or democracy.
In government it has embraced liberal economic
principles that undermined solidarity and association.
Along the way the idea of the common good has
been lost and there is no vision of a 'Good Society'.»
«The Future of European Social Democracy»
published by the social democratic Social Europe Journal

55. 55
Is there an alternative solution?
• The crisis gives an opportunity to disarm
financial capital and regulate the markets
• The public sector should be used to damp the
effects of the crisis and stabilise the economy
• A radical redistribution of wealth is necessary
• Only the trade union movement has the
potential to push solutions in this direction
• Potential is one thing, practice something else
– a formidable mobilisation will be necessary

56. 56
Need agency and strategies
• We need alternatives, but not without also
considering agency – who is going to carry out
the struggles – social forces, alliances
• Wishful thinking and arm-chair theories,
alternatives and models are easy to produce
• What is realistic, what is possible, how do we
prioritise – and how to we get there (strategies)?
• This is too little discussed on the left today

57. 57
Right wing populism/extremism
• The capitalist crisis creates a real basis for
alienation, exclusion, discontent and polarisation
• Workers feel betrayed by their ‘own’ politicians
• The extreme Right supports all discontent
and channels it in perverted political directions
• The only alternative: A policy of the left
which politicises the discontent and channels
it into real fights for collective solutions

58. 58
A strategy for the unions
• Alternative analyses – a system-critical view
• Building of new, broad social alliances
• Development of concrete alternatives
• Due to the party political misery, trade unions
must take a broader political responsibility
• Develop solidarity across all borders
• Create democratic and action-oriented unions
prepared for the confrontations which will come

59. 59
Emancipation is our goal!
• The (positive) effects of a class compromise can
never be more than a temporary achievement
• Emancipatory social policies presuppose
a huge shift in the balance of power in society
• Today, we demand too little and accept too much
• As authoritarian rule and oppression increase, our
response has to be bolder and more radical
• If the right to strike is restricted or banned, trade
unions have to win back the right in practise

60. 60
A minimum programme
• Fight austerity – defend our public services!
• Redistribute our wealth – Let the rich pay!
• Cancel public debt created by the financial crisis!
• Socialise banks and financial institutions!
• Defend democracy – break with trade & fiscal pacts!
• Unify the environmental with the social struggle
• Organise, mobilise and meet the confrontations!