Monday, July 11, 2011

Gurdgiev and Lucey misunderstand Euro Debt Crisis

Much of the radical Left/Right falsely posit the source of the current
capitalist contradictions as existing within the process of circulation of
capital. This is why they persistently confine themselves to solutions that
are grounded in the process of circulation of capital. They focus on money,
credit, spending, taxation and commodities. Each one of these forgoing
forms are necessarily confined to the sphere of circulation. Consequently
they cannot provide the key to the solution of the Euro crisis let alone the
Current world capitalist crises. Much of the the radical Left/Right are the present day King Canutes. The crisis of capitalism is the crisis of the radical Left. It is also a crisis of consciousness, organisation and leadership within the (if today I can suggest such a phenomenon) working class movement.

The Euro crisis, today, has found its extreme expression, economically and
politically, in Greece. The Greek social system is enormously indebted to
such a degree, that it cannot sell government bonds to acquire credit with which to meet the cost of running the state. Consequently the Greek ruling class is being forced to seek loans from the EU under extremely strict conditions that will, in the short term at least, further hinder growth. These austere conditions involve enormous privatisation of state companies and large cut-backs in state spending. Much of this austerity package will entail job losses, diminished incomes and reduced welfare benefits. Even this forthcoming Euro loan will not go near getting Greece out of its financial and economic problems. At most it may merely temporarily alleviate the financial problem. This punctuated policy amounts to death by a thousand cuts.

Some commentators mistakenly argue, Constantin Gurdgiev and Brian Lucey,
that the better approach is a comprehensive deal now that sorts out Greece's
problems once and for all.This, they claim, must involve debt forgiveness
and presumably economic restructuring. They argue that a piecemeal approach
can only but prolong the crisis leading in the future to an even more devastating situation. This, they claim, can only intensify the problem thereby rendering the collapse of the Euro more likely. This event will have widespread ramifications.

The EU tops, and their subalterns, argue that their punctuated policy is the best policy in the circumstances. By staging financial help to Greece accompanied by the imposition of belt-tightening it appears that the EU hopes to protect the Euro.The overall fear among the European bourgeoisie is the collapse of the Euro and the ensuing fallout. Neither policy can solve the crisis. The Euro crisis is the result of a much deeper dynamic.

The problem has its source in the failure of capitalism to produce sufficient absolute surplus value to compensate for the falling general rate of profit --the regulator of the capitalist economic system. Resisting this ongoing falling volume of surplus value will not be sorted out by throwing more debt (paper) at the problem. At most this just postpones the crisis leading consequently to an even more devastating crash.

The solution has to be the production of more surplus value. This economic problem is lodged within the production process --not in the circulation process. This means that transformation must take place within the process
of production.Consequently this leaves only two options open. The capitalist solution: A massive development and investment of technology on an unprecedented scale leading to an enormous increase in the rate of surplus
value and thereby a corresponding enormous increase the volume of total
surplus value produced.

The communist solution: A revolutionary transformation of the production
process involving the abolition of capital and thereby the valorisation process. Under these conditions the production process will exist to serve the needs of the people. It is then no more than the production of use-values --profitability is longer the driving force.

Throwing more debt, in the short or long run, at the problem will not solve the problem. This is precisely because the source of the problem does not lie within the process of circulation of capital (i.e. money and credit ). It is contained within the production process.